samchain/econo-pairs-v1 huggingface dataset:
Second, the Fed, as the financial system’s lender of last resort, should play an important role in the consolidated supervision of those institutions that have access to central bank liquidity and play a critical role in market functioning. Our ability to directly oversee the risk profile of these institutions is essential to our capacity to make the judgments necessary for using our lender of last resort tools, including critical judgments about liquidity and solvency for individual institutions and for the system as a whole. Those judgments require the knowledge that can only come from a direct, established role in supervision. And replacing our ongoing role as consolidated supervisor with stand-by, contingent authority to intervene would risk exacerbating moral hazard and adding to uncertainty about the rules of the game. Third, the Federal Reserve should be granted explicit responsibility and clear authority over systemically important payment and settlement systems, and the ability to continue to encourage broader improvements in the over-the-counter derivatives markets. Fourth, the Federal Reserve Board should have an important consultative role in judgments about official intervention where there is potential for systemic risk, as is currently the case for bank resolutions under FDICIA. And, finally, the responsibilities for market and financial stability that are accorded the Fed in current and any future legislation will require that the Fed adopt a more comprehensive  4  BIS Review 95/2008  approach to financial supervision and market oversight.

I would like to offer some observations, from my perspective at the Federal Reserve Bank of New York, on some of the broad considerations that should guide this process. Changes to the structure of the U.S. financial system It is useful to start with a brief review of the changes in the structure of the financial system that should motivate reform. Our system was once organized around banks—defined narrowly as institutions that take deposits and make loans. Over time there has been a gradual but pronounced decline in the  BIS Review 95/2008  1  share of financial assets originated and held by banks, and a corresponding increase in the share of financial assets held across a variety of non-bank financial institutions, funds and complex financial structures. The lines between banks, investment banks and other institutions have eroded over time, as have the lines between institutions and markets. Loans made by both banks and non-banks were increasingly sold by the originating institution and packaged into securities. And these securities were repackaged into even more complex instruments and products, many of which resided off the balance sheets of the major financial institutions. Innovations in credit derivatives over this period made it easier to trade and hedge credit risk. Access to credit was extended on a dramatic scale to less creditworthy borrowers, without a commensurate increase in the risk premiums on the securities that embedded this more risky credit.
Vítor Constâncio: Interview in the Financial Times Interview with Mr Vítor Constâncio, Vice-President of the European Central Bank, in the Financial Times, conducted by Ms Claire Jones on 11 May and published on 16 May 2018. * * *  People have become concerned about a slowdown in growth, and we’ve recently seen a poor print for core inflation, which is now just 0.7%. What can the ECB do if growth and inflation continue to disappoint? And is there a risk that you don’t have enough ammunition left for the next downturn if the journey to the exit of the non-standard measures is slower than you currently anticipate? First, let me say that I don’t consider that the slowdown is such an unexpected or serious matter. We knew there would be a deceleration of growth from 2018 onwards. Perhaps some indicators in the first month have been more disappointing than expected, but very slightly so. I still believe that we will have the kind of growth that is forecast in our staff projections, so I am not worried too much about that as long as there is no extraordinary international event that derails world growth. So it’s not an immediate question what the ECB could do next. But it is, of course, to be expected that some time down the road there will be another recession. There is this concern that perhaps, then, monetary policy, with its standard measures, would not have enough policy space to respond to that.

Fact checkers have also developed a code of conduct to enable users to assess the veracity of their work. 34  There have also been examples of new institutions being created to enhance trustworthiness in areas where trust has been eroded. In the wake of the series of misconduct scandals around misselling of financial products, LIBOR and foreign exchange rigging, two institutions were established. The first, the Banking Standards Board, is focused on improving conduct standards in banks. The second, the FICC Markets Standards Board, seeks to pre-empt future problems by establishing acceptable standards of practice in wholesale financial markets. These initiatives will take time to bear fruit, but are illustrative of trying to rebuild trustworthiness when it has lapsed. Schools and universities will have to do more to educate students to be more discerning consumers of information, and public awareness campaigns on media literacy may be warranted. 35  In a striking piece of  research based on testing of thousands of students across the United States, the Stanford History Education Group concluded that young people’s ability to reason about information on the internet could be summed up as “bleak.” They tested students on whether they could distinguish an ad from a news story or whether they noticed that data came from a political lobbying group. “At every case and at every level, we were taken aback by students’ lack of preparation.
It may also be inferred from this symmetry that, since inflation has been below-target in recent years, fulfilment of the aim in the medium term may require it to be above the aim at some time in the future. Consequently, the ECB Governing Council has announced that it stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner. Against this background, we have tasked the relevant Eurosystem Committees with examining options, including ways to reinforce our forward guidance on policy rates and options for the size and composition of potential new net asset purchases. There is a possibility that durably low or even negative interest rates may have effects on financial stability and bank profitability. It is true that Eurosystem estimates suggest that so far the positive effects, in terms of greater economic activity and improved credit quality, offset the adverse effects on banks’ net income. But it is necessary to monitor this matter continuously in order to determine whether measures are needed to mitigate the adverse effects of low rates on the banking system’s intermediation capacity. The Governing Council has thus also requested that the Eurosystem’s technical committees analyse a potential tiered system for reserve remuneration. It should be recalled that, in March, new quarterly longer-term financing operations were announced.

Reform headway is particularly slow as regards the elimination of obstacles in the provision of professional services and in the network industries, and improving the business environment by reducing the administrative burdens that hinder new start-ups. Greater efforts should be a priority in at least two areas. First, we must improve human capital and active employment policies to promote the rapid reallocation of workers towards the growth industries. Second, public and private spending on innovation must increase to create new business opportunities. Europe cannot stand on the sidelines as new  15  See P. Hernández de Cos (2019), “A framework for the Countercyclical Capital Buffer”, opening address at the Second Financial Stability Conference, Banco de España/CEMFI. 16 The reason for this is that supply-side expansionary policies tend to be deflationary. This limits their expansionary effects in a setting such as the present one in which the capacity of monetary policy to accommodate these inflationary pressures by means of further interest rate cuts is relatively limited. See Ó Arce, S. Hurtado and C. Thomas (2016), “Policy Spillovers and Synergies in a Monetary Union”, International Journal of Central Banking, 12(3), September, pp. 219-277. In addition, structural reforms may be particularly effective in the euro area economies where the private sector remains immersed in a deleveraging process; see J. Andrés, Ó. Arce and C. Thomas (2017), “Structural Reforms in a Debt Overhang”, Journal of Monetary Economics, 88, pp. 15-34. 13/16  technologies are developed and as the United States and China battle for technological supremacy.
One possible way to cut through Too-Big-To-Fail is to adjust our sense of what “Fail” involves. Perhaps it does not have to involve liquidation or administration. Perhaps it does not have to involve a binary shift from “going concern” to “gone concern”. But it does have to involve loss for equity holders and uninsured creditors. It does have to rekindle market discipline. It does have to preserve the flow of financial services. Those are, surely, the essential components of the resolution leg of the regulation, structure, resolution triangle that make up the reform debate. Individual countries or economic areas such as the EU can get only so far on their own. To cope with distress in global banking, we need to decide whether or not we want international collaboration in the resolution of cross-border banking groups. That is a question which, one way or another, the highest reaches of the authorities should answer as part of the reform debate. Once that is clear, some of the questions about structure and regulation might become clearer. A lot rests on whether we can resolve distressed LCFIs. We need to answer the big questions. 6  Examples of such safeguards include: creditors left no worse of than in liquidation; netting and set-off agreements respected; secured creditor claims and collateral kept together; and capital market arrangements, such as covered bond programmes and securitisations, protected. 6  BIS Review 33/2010

Europe also needs to solve its supply constraints and challenges, and this refers to two structural policies: first, energy transition, starting with the revision of the too volatile pricing of electricity; second, better training and employability of the labour force. We cannot remain in many European countries including France with so severe labour shortages while still being above 7% unemployment. Page 3 sur 3 * As a conclusion, let me quote a famous Franco-Czech writer, Milan Kundera: “The novelist teaches the reader to comprehend the world as a question. […] In a world built on sacrosanct certainties the novel is dead”. For us central bankers, only one thing is certain, but it is key: we will do everything in our power to fulfil our price stability mandate. And like in good novels, we will bring it through many uncertainties to a successful end. Thank you for your attention. References i  François Villeroy de Galhau, Monetary Policy Post-Pandemic: Balancing between Science and Art, Predictability and Reactivity, Speech, 27 August 2022. ii In a letter to Frederick II, King of Prussia, on April 6, 1767. iii Blanchard, Panel discussion, presented at “Monetary Policy: A Journey from Theory to Practice. An ECB colloquium held in honor of Otmar Issing, March 2006.
Caleb M Fundanga: Innovative financial products on the Zambian market in relation to credit interest rates and the private sector development Remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the Zambia International Trade Fair Symposium on “Innovative financial products on the Zambian market in relation to credit interest rates and the private sector development”, Ndola, 30 June 2011. * 1.0  *  *  Introduction  Financial development contributes to economic growth in a very significant way and it has been demonstrated that countries with more developed financial systems tend to grow faster. Therefore, the financial sector is key to economic development and policies aimed at developing the sector would be expected to contribute to economic growth. 2.0  The current financial sector policy environment in Zambia  During the 1970s and 1980s Zambia pursued a policy of fixing interest rates for long periods and at relatively low levels, with the ostensible purpose of promoting growth. However, these administrative actions introduced economic distortions into the financial structure of the economy including the following:   The hindrance to economic growth arising from the inefficiency in the allocation of resources (with credit controls and distorted price indicators). These controls resulted in both low levels of domestically generated savings and investment, thereby reducing the economy’s growth rates.   The financial system remained generally under-developed with inefficient lending patterns that failed to achieve their distributional goals.

Jean-Pierre Danthine: Does cash have a future? Summary of a speech by Mr Jean-Pierre Danthine, Vice Chairman of the Governing Board of the Swiss National Bank, at the Assemblée Générale de l’Association des Alumni HEC, Lausanne, 8 May 2014. *  *  *  The complete speech can be found in German on the Swiss National Bank’s website: www.snb.ch. One of the traditional tasks of the Swiss National Bank (SNB) is to provide the economy with banknotes and coins. Since the establishment of the SNB, banknotes have constituted the most visible link to the population. As an everyday article of use, but also symbolically, banknotes embody the quality, security and stability of the SNB, and of Switzerland in general, not least of all also for the rest of the world. It is therefore of key importance that the SNB undertake the task of cash supply and distribution conscientiously. The role that banknotes play in the public’s trust in the institution and its decisions is not to be underestimated. In turn, this trust is an important prerequisite for the SNB to be able to fulfil its core monetary policy mandate, and thereby ensure price stability. Due to technological developments in the post-war period, the significance of cash declined, as measured in terms of economic performance. Since the beginning of the 1990s, however, the demand for cash has hovered at a stable level, and since 2008, in the wake of the financial crisis, there has even been a marked increase.
3  See, for example, Joseph Gagnon, Matthew Raskin, Julie Remache, and Brian Sack, “Large-Scale Asset Purchases by the Federal Reserve: Did They Work?” Federal Reserve Bank of New York Staff Report no. 441, March 2010. Several private-sector firms have estimated yield effects of similar magnitude. In addition, a working paper by James Hamilton and Jing Wu, “The Effectiveness of Alternative Monetary Policy Tools in a Zero Lower Bound Environment,” finds that changes in the Federal Reserve’s asset holdings produce considerable yield effects. 2  BIS Review 128/2010  Under this view, the FOMC’s influence on financial conditions is associated with the size and composition of its securities portfolio. This perspective provides a clear rationale for the reinvestment decision made at the August FOMC meeting. The decline in the size of the Federal Reserve’s portfolio that would have occurred in the absence of the reinvestment program would have amounted to a passive tightening in the stance of monetary policy, as the portfolio balance effect would have gradually reversed. Moreover, the extent of this tightening was increasing in response to the weakening of the economy, as lower longerterm yields were leading to more rapid repayment of MBS. This perverse effect was seen by the FOMC as working against its efforts to reach its dual mandate. In effect, the policy approach that was implemented before the August meeting acted to mute the amplitude of movements in longer-term interest rates.

If that is the cause, bring out the bodies. For this would imply low returns to innovation and low future growth. Falling real rates would instead signal secular stagnation. The pessimists would have it. 42  Hansson and Stuart (1990). 43  There are less optimistic interpretations of this rise in savings, including that it reflects a “savings glut” among in particular emerging market economies (Bernanke (2011), or that is reflects a shortage of supply of safe assets for investors (Caballero (2013)). BIS central bankers’ speeches  9  I want to argue, in a typically two-handed economist way, that both sides of this argument are right. There are good grounds for believing technological forces are driving innovation and hence growth, in a classic Neo-Classical cycle. But there are equally-good grounds for believing sociological forces are retarding growth, in an endogenous-growth pattern. Let me start with the secular innovation side of the argument, the Neo-Classical account. It contends that future growth will be forged in the white heat of a digital revolution. All GPTs take time to reach their melting point.44 Even very rapid, or exponential, rates of technological growth take time to become truly transformative at an economy-wide level. 45 Given past trends, it could take 30–40 years or longer for GPTs to reach critical velocity. That was the case with earlier GPTs, including the steam engine and electricity.
However when the acquisition of high yielding assets is funded from short term sources, the financial institution is not only exposed to losses on the asset side but also to adverse changes in funding costs. In such a situation, the Central Bank finds itself in a position where it is more exposed to losses on collateral. Whereas the Central Bank will be constantly prepared to provide the necessary liquidity to the banking system to perform its intermediation role, the Central Bank expects that credit institutions will be looking primarily to the market for their funding requirements. Among the many lessons that may be drawn from the experience of the international financial turmoil, one that stands out is the importance for each banking institution to keep a prudent mix of dependable sources of funding, to limit the level of financial leverage and to maintain a sound balance sheet. The merits of traditional banking practices are echoed in the recent remark by the German Finance Minister. He said, “I believe it is in the interest of the financial sector itself that it should concentrate more on its proper role of financing the real economy, and ensuring that  6  BIS central bankers’ speeches  capital is allocated in the most intelligent way, instead of banks conducting the bulk of their trading on their own account”. Such considerations provide the foundations for drawing the desired roadmap for the future evolution and growth of Malta’s domestic banking sector and the preservation of financial stability.

It is therefore essential that, while staying abreast of innovations in the financial world and taking on the changes that are required to stay competitive and improve efficiency, the domestic banking sector must also continue to build upon the strengths of the traditional model. By contrast, the financial turmoil of recent years has had a negative effect across many countries, particularly on financial institutions that rely on wholesale funding sources. In response to the rapid drying up of the interbank markets and with liquidity abruptly disappearing in many key financial markets in the euro area, the Eurosystem has for the past three years been implementing a broad programme of enhanced credit support. In particular, the Eurosystem has been providing liquidity on a fixed rate and full allotment basis and has also extended the maturity of its re-financing operations. These non-standard measures have been instrumental in avoiding a credit crunch and supporting financial stability. These measures are designed to ensure an effective transmission of monetary policy – to maintain the flow of credit to the real economy, avoiding liquidity problems and supporting growth in productive activity. However, there may be instances where the availability of these funding sources may induce some credit institutions to embark on alternative business models where access to central bank funding becomes the primary source of funding. I would like to make it very clear that the Central Bank of Malta is not prepared to support such ventures. When the conditions are favourable a higher leverage ratio increases the return on capital.
As we meet today we welcome the various measures taken by the Bretton Woods institutions to reduce the impact of the devastating effects of the turbulences in the international monetary and financial markets and look forward to future reforms to help ease the burden on our economies. Another issue I will like to mention is the aspect of voice and representation which is critical for us to be fully represented in these institutions and we are happy that these issues are being addressed. For the next two days we will discuss issues relating to Africa in the context of global financial and economic crisis, lessons learnt and the way forward at the Miatta Conference Hall. This Dinner gives the opportunity to set the scene and get familiar with each other as there are a host of Bank Governors and Finance Ministers here coming from all over the continent, some, if not most, of us are meeting for the first time. I am certain it will not be hard for us to get to know each other because we share a lot in common, in terms of language, culture and socio-economic conditions. It is my belief that it is this common history and economic experience that brings us together and gives us a unique advantage in understanding our collective situations to help us reach consensus on all of the issues on the table for discussion.

We have a long history of working together and reaching remarkable useful consensus on critical issues when it matters most, this time will be no different. Honourable Ministers and Governors I am sure we have all had a very hectic day on discussing all these issues and look forward to a very relaxed evening. For those that have not had time to look around this beautiful and historic city I implore you to find time to explore our beautiful beaches and various historic sites. BIS Review 115/2010  1  I wish you fruitful deliberations and hope that Freetown would forever be remembered as the venue where key decisions affecting the African continent would be made. I thank you. 2  BIS Review 115/2010