samchain/econo-pairs-v1 huggingface dataset:
This is drawn up quarterly, with each forecast having a horizon of three years. The inflation forecast gives us an indication as to whether our current monetary policy stance is appropriate for keeping future inflation within the range consistent with price stability. It is our compass, so to speak, showing us whether we are heading in the right direction. It plays another important role in that it gives the public an indication with regard to the need for monetary policy adjustments going forward. The inflation forecast is based on the assumption that a given interest rate remains unchanged over the entire forecast horizon. To date this has been the three-month Libor, and from now on it will be the SNB policy rate. This brings me to the third element of our monetary policy strategy. This determines how we communicate the level of money market rates we seek to maintain. To date, we have used the target range for the three-month Libor for this purpose. We will now do so by setting the SNB policy rate. In implementing our monetary policy, we will ensure that the secured short-term money market rates are close to the SNB policy rate. In this regard, we are focusing on SARON, the most representative of the short-term Swiss franc rates. SARON is an overnight rate. Given that we are now focusing on an overnight rate rather than a three-month rate, there is no further need for a target range.

Against this backdrop, we continue to expect the economy to grow by around 1.5% in 2019. As is the case with the global economy, the risks for this scenario remain to the downside. In particular, an unexpectedly sharp slowdown internationally would quickly spread to Switzerland. Exchange rates, interest rates and inflation expectations  Let me now move on to address monetary conditions – that is to say, exchange rates and interest rates – as well as inflation expectations. My comments here relate to the developments since our last news conference in December, and not just those during the past quarter. Monetary conditions are similar today to six months ago. The Swiss franc remains highly valued. The situation on the foreign exchange market is still fragile. When the trade dispute between the US and China escalated again in May, the Swiss franc and the Japanese yen appreciated. Both currencies are sought after as safe havens in periods of uncertainty. In light  Page 4/5  Berne, 13 June 2019 Thomas Jordan  News conference  of the high valuation of the franc and the fragility of the situation, our willingness to intervene remains necessary, as does the negative interest rate. This brings me to the development of interest rates since December. At the beginning of the year, the US Federal Reserve signalled that it would be patient with regard to raising interest rates further.
BIS central bankers’ speeches  Although Solvency II is a European directive, with the vast majority of the technical rules in place, a review is planned of the standard elements in 2018, as is typical with many directives post-implementation. In addition to establishing a European-wide regime, work is also underway to try and harmonise at least some elements of a global capital standard for insurers5. A simple Basic Capital Requirement (BCR) for Global Systemically Important Insurers (GSIIs) has already been agreed. The UK currently has two GSIIs – Prudential and Aviva – out of the 9 globally. Work is now ongoing on a Higher Loss Absorbency (HLA) Standard which will reflect the degree of systemic importance of the firm/group. The plan is that all GSIIs should meet capital requirements based on the BCR plus HLA by 2019. The third step in the international plan is to develop a risk-based global International Capital Standard which would apply to all Internationally Active Insurance Groups (IAIGs). That is likely to be challenging, not least because of the different accounting principles used in different jurisdictions, but that is the long-term direction of travel. Work is also ongoing in the IAIS to identify the assessment approach which most accurately identifies whether or not reinsurers pose systemic risk. The final element on insurers is that stress testing is also being applied to the sector.

Peter Praet: Deleveraging and the role of central banks Speech by Mr Peter Praet, Member of the Executive Board of the European Central Bank, at the Conference “The effect of tighter regulatory requirements on bank profitability and risk-taking incentives”, Bocconi University, Milan, 26 October 2012. *  *  *  I would like to thank Roberto Motto, Fédéric Holm-Hadulla, Cornelia Holthausen and Angela Maddaloni for their contributions to the preparation of this speech. Ladies and Gentlemen, I am pleased to speak today at this renowned banking conference at Bocconi University. The banking sector’s deleveraging process in the euro area has been underway since 2008. Until recently, most of the adjustment was achieved by increasing capital via equity issuance, conversion of hybrids, capital injections and retained earnings. With the intensification of the sovereign debt crisis there has been stronger pressure to also adjust via asset shedding, especially those assets with higher risk weights. The deleveraging process, while necessary, always bears the risk of becoming abrupt and disorderly, thus threatening the provision of credit to the non-financial sector and the transmission mechanism of monetary policy. In my remarks today I will highlight the challenges for the central bank in dealing with this process, arguing that the measures undertaken by the Eurosystem in recent years have helped to prevent self-enforcing spirals and a credit crunch. I will then focus on the special circumstances of the euro area, given its institutional features.
So there should be a presumption that the results of these dynamic stress tests are taken, for example, to banks’ risk committees. And banks’ executives should periodically be asked how they intend to respond to these findings, including how effective their defensive responses are likely to be when the stress is system-wide and how the results affect liquidity and capital planning decisions. •  Fifth, transparency to regulators and financial markets. The bank-specific results ought to inform regulatory decisions about firms’ capital and liquidity buffers. Indeed, there is a case for having these results set out regularly in firms’ public reports. This would hopefully help exert a degree of market discipline over management choices, as has been proposed by the Treasury Committee. 15 Existing disclosures by banks are a patchwork of different practices which make cross-firm comparisons of risk nigh on impossible. Having a standardised, published set of such stress-testing results would help improve financial markets’ understanding and hence pricing of bank-specific risk – a particular problem during this crisis – thereby helping address the external incentive problem. Working alongside the other Tripartite authorities, the Bank would be interested in exploring with financial firms the feasibility and desirability of putting this five-point plan into practice. This plan is about making stress-testing more robust but also more relevant. It is about providing that missing informational public good. In the arm-wrestle with management, it is about supplying power to the elbow of risk-managers. Conclusion Let me conclude.

The second principal-agent problem, between firms and the authorities, is different in kind but similar in consequence. It arises because of a familiar public policy problem – timeconsistency. If the ex-post failure of an institution risks destabilising the system, any ex-ante pre-commitment by the authorities to let it fail will lack credibility. This is simply a variant of the old adage that if you owe the bank a small amount it is your problem, a large amount it is theirs. These days, if a bank owes a small amount it is their problem, a large amount it is the authorities. This time-consistency problem weakens incentives for banks to consider for themselves large-scale risks to their balance sheet which might induce failure. The safety net becomes a comfort blanket, the backstop a balm. And the greater the risk these institutions themselves pose in the event of failure, the weaker the incentives to manage risk. These are topsy-turvy incentives from a public policy perspective, with risk management discipline weakest among those whom society would wish it to be strongest. And the evidence? A few years ago, ahead of the present crisis, the Bank of England and the FSA commenced a series of seminars with financial firms, exploring their stress-testing practices. The first meeting of that group sticks in my mind. We had asked firms to tell us the sorts of stress which they routinely used for their stress-tests.
Preliminary figures indicate that approximately 130 million giro payments were made over the Internet during 2001. Between 1998 and 2000 the number of giro payments initiated over the Internet increased by a good 890 per cent. Today all Swedish banks offer Internet banks with rapidly growing range of services. Studies also indicate that Sweden is way ahead with regard to utilisation of Internet services. At the end of 2001 there were more than 3 million bank customers subscribed to Internet banks. For the banks the electronic payments entail considerable opportunities for rationalisation, probably to a much greater extent than could be foreseen just a few years ago. Some time ago I met the manager of a banking office in Stockholm who told me that he now had the same number of employees as five years ago, but his turnover was almost 50 per cent higher. This was largely due to the fact that the companies (including small and medium-sized companies) that had earlier been serviced by the bank could now carry out many of their transactions themselves via the Internet bank, which simplified their work and facilitated cash management. The companies could, for instance, with one click (as we say nowadays) pay all wages through a paperless transfer from the company’s account to the employees’ accounts and at the same time do the bookkeeping and pay slips, all without the long paper strips that needed to be manually checked.

IT is also a necessary condition for the methods used to calculate financial risks in portfolios of securities or credits. The new Basel Committee rules on capital adequacy in banks, to take an example, are entirely dependent on such calculations. Network effects in the payment system The banking sector in Sweden is, as we know, strongly concentrated. This can raise questions in certain contexts as to how well competition functions. However, the concentration has also enabled, as I pointed out earlier, a more rapid exploitation of network effects and economies of scale connected with IT developments. Let me go into this in more depth, hopefully without becoming too abstract. The development of payment services is governed, just as on other markets, by supply and demand. Supply is affected by costs and technology, while demand is affected by factors such as price, acceptance, comfort and accessibility. Advantages of scale within the production of payment services arise as these services are often connected with high fixed costs and relatively low flexible costs. Building up a new computer system is expensive, but every transaction that passes through the system costs less. The economies of scale effects provide incentive for various types of co-operation and joint solutions, where producers join forces to utilise the economies of scale and spread costs over greater volumes. There are also advantages of scale on the demand side, the in the form of positive network effects. Positive network effects mean quite simply that a particular system becomes more usable the more people who use it.
Small companies may find it particularly difficult to change bank, as a long-term relationship between the company and the bank is an important part of the bank's credit assessment. These factors mean that few customers change banks; only 14 per cent of the population have changed one or more banking commitments during the past three-year period. The fact that bank customers do not readily change bank may mean that there is less price pressure on certain products than would otherwise be the case. However, regulations and tax legislation may also have the effect of subduing competition. One area that is worth particular attention is saving in funds. Although competition appears to be good for new savings, there is a considerable deadlock effect resulting from regulations on capital gains tax. This helps dampen competitive pressure. One area that is still an object for old-fashioned, national limitations is cross-border payments. Despite electronic systems and the fact that the EU is supposed to comprise a single market, substantial costs are involved in transferring payments between banks in the different countries. 11  This applies if one compares with other profit-making banks. The non profit-making banks, for instance, co-operative banks, which are common in Germany and France, have even lower profit margins. The margins are calculated as the difference between the interest rate offered to consumers and the interest the bank receives if they invest the money without risk, e.g. in treasury bonds.

Svein Gjedrem: Economic perspectives Address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the meeting of the Supervisory Council of Norges Bank, Oslo, 17 February 2005. The Charts in pdf-format  can be found on the Norges Bank’s website. *  *  *  Introduction This year, Norway is commemorating the centenary of the dissolution of the union with Sweden. Historically, an important part of nation-building has been the establishment of a monetary system and a central bank. In Norway, the stage was set for the introduction of a national currency in autumn 1814. With the prospect of a union with Sweden, a clause was included in the Constitution stipulating that Norway should maintain its own bank and its own monetary system. The monetary unit was the specie daler. In 1875, the Storting (Norwegian parliament) decided to join the currency union that Denmark and Sweden had established two years earlier. The specie daler was then replaced by the krone. One Norwegian krone was worth 0.40323 grams of fine gold. In the latter part of the 1800s, Norway benefited from free trade and free capital movements and became a relatively prosperous country. The standard of living in Norway did not lag behind that of Sweden. The currency union was maintained after the political union with Sweden was dissolved. The agreement lost its practical significance after the gold standard was suspended in 1914. The agreement was not formally terminated until 1972.
At the outset of the Conference, it has been clearly articulated by our EU speakers that the enlargement of the EU and the economic and monetary integration of acceding countries will not only strengthen the role of the EU as a global player in the long term, but also make a sustainable contribution to global stability and prosperity. On the developments and prospects for ASEAN, our ASEAN speakers have more than stressed that the overall economic and financial transformation that has occurred in ASEAN since the Asian financial crisis has resulted in an ASEAN that is a mutually reinforcing region of growth; an ASEAN that has an increasing role in the creation of wealth; and an ASEAN that will remain as an important region in promoting and supporting global stability and growth. This Conference has revealed to us that both our regions are currently at the confluence of favourable factors; factors that have led to a marked expansion in the base of opportunities that we can offer each other. It is imperative that our discussions on taking advantage of the emerging opportunities be translated into concrete actions. We are of course aware that implementing these actions will demand decision and leadership from both ASEAN and the EU. From the proceedings of the Conference, it seems to me that there may be a need to develop a more entrenched mechanism to leverage further on our respective core capabilities and which seeks to find simpler, faster and more effective ways that would enhance our joint endeavours.

Ooi Sang Kuang: Expanding ASEAN-EU economic links - the role of the euro Closing remarks by Mr Ooi Sang Kuang, Deputy Governor of the Central Bank of Malaysia, at the Euro Conference - “Expanding ASEAN-EU Economic Links - The Role of the Euro", Kuala Lumpur, 15 July 2005. *  *  *  Yang Berhormat Dato' Mustapa bin Mohamed, Minister in the Prime Minister's Department Mr. Klaus Regling, Director General, European Commission Your Excellency Ambassador Thierry Rommel Excellencies Distinguished speakers and guests Ladies and gentlemen, Indeed, we have come to the end of a very fruitful set of discussions at this Conference. I was pleased to note that the tone of our discussions has underscored that the bilateral spirit of cooperation between ASEAN and the EU is intact and strong. I sensed a unanimous recognition that it is only by continuing to work together and cooperate with each other that we can reinforce this positive partnership to perpetuate continued shared prosperity. Against the background of strengthening our partnership, I sensed the acknowledgement among participants that we do have a dynamic partnership, but that there remains more to be done to foster greater symmetry in the relationship for increased wealth creating possibilities. I believe the Conference has set in motion how the prevailing economic and financial developments as well as prospects in ASEAN and the EU can contribute further to the agenda of taking our partnership forward.
BIS central bankers’ speeches  3  Costly and inefficient Self-insurance remains the most popular tool. Individual countries’ reserves remain the largest component of the global financial safety net – reserves have risen from $ trillion in 1995 to over $ trillion now. To be sure, self-insurance is prudent to a point – indeed it is something we have encouraged banks to do. But there are several problems with excessive reserve accumulation: (i)  First, reserves are distributed very unevenly across and within some regions. Emerging markets with adequate reserves (largely in Asia and the Middle East) are over-insured by about $ trillion in total. By contrast the Central and Eastern European region and Latin America are underinsured by around $ billion [Chart 3]. This suggests the distribution of reserves does not correspond well to the distribution of risks. (ii)  Second, even when they are in abundance, there are doubts about countries’ willingness to run down their reserves. In the last financial crisis, nine of the largest emerging market economies refrained entirely from using reserves. There is some evidence that markets judge countries according to their relative rather than absolute level of reserves. So no one wants to blink first by running them down. (iii)  Third, issuing high yielding local currency debt to purchase reserves is costly to emerging markets, resulting in an annual cost of around 0.5% of GDP 8. (iv)  Finally, reserve accumulation causes distortions to domestic economies with potential spillovers to the global system.

As with an independent central bank that houses supervision and liquidity provision under one roof, there are advantages to combining country surveillance and lending in one global institution, with an impartial and experienced staff. And risks are most efficiently pooled at a global level. This is the raison d’etre for the IMF. 8  4  Bank of England staff estimates based on the spread between returns on reserve assets and those paid on domestic bonds. BIS central bankers’ speeches  Unfortunately, signs of fragmentation of the global financial safety net are obviously in part a reaction to the failure to implement the 2010 quota and governance reforms to bolster the IMF’s resources and the representation of emerging market economies. The priority must be to implement those. But we also need to consider whether and how the temporary resources collected by the IMF in the form of bilateral loans when it passed the hat around in 2012 could be put on a more permanent footing. One possibility is to extend these bilateral loans further. Another possibility is for the IMF to borrow directly from capital markets 9 during a systemic crisis which would create safe assets when demand for them is high, allowing funds to be recycled to those parts of the world with temporary liquidity needs. A more reliable and flexible resource base would allow the IMF to more credibly perform a crisis prevention role of providing committed lines of credit to sound sovereigns through its Flexible and Precautionary Liquidity lines.
Change is, I believe, inevitable. The question is only whether we can think our way through to a better outcome before the next generation is damaged by a future and bigger crisis. This crisis has already left a legacy of debt to the next generation. We must not leave them the legacy of a fragile banking system too. I have explained the principles on which a successful reform of the system should rest. It is a program that will take many years, if not decades. But, as Bagehot concluded in Lombard Street, “I have written in vain if I require to say now that the problem is delicate, that the solution is varying and difficult, and that the result is inestimable to us all.” References Admati, A.R., DeMarzo, P.M., Hellwig, M.F., and Pfleiderer, P (2010), “Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital regulation: Why Bank Equity is Not Expensiv” Stanford Business School, mimeo. Arrow, K.J. (1951), “An extension of the basic theorems of classical welfare economics”, In Proceedings of the Second Berkeley Symposium on Mathematical Statistics and Probability, ed. J. Neyman, Berkeley: University of California Press, 507–32. Arrow, K.J. and Debreu, G. (1954) “Existence of an equilibrium for a competitive economy”, Econometrica 22, 265–90. Bagehot, W. (1873), “Lombard Street: A Description of the Money Market”, Wiley & Sons, (reprinted 1999).

Mervyn King: Banking – from Bagehot to Basel, and back again Speech by Mr Mervyn King, Governor of the Bank of England, at the Second Bagehot Lecture, Buttonwood Gathering, New York, 25 October 2010. *  *  *  I am indebted to Stephen Burgess, Philip Evans, Andy Haldane, Andrew Hauser, Vicky Saporta, Jenny Scott, Paul Tucker and especially to Iain de Weymarn for their useful comments and suggestions on earlier drafts. 1. Introduction  Walter Bagehot was a brilliant observer and writer on contemporary economic and financial matters. In his remarkable book Lombard Street, Bagehot brought together his own observations with the analysis of earlier thinkers such as Henry Thornton to provide a critique of central banking as practised by the Bank of England and a manifesto for how central banks could handle financial crises in future by acting as a lender of last resort. The present financial crisis dwarfs any of those witnessed by Bagehot. What lessons can we draw from recent and current experience to update Bagehot’s vision of finance and central banking? Surely the most important lesson from the financial crisis is the importance of a resilient and robust banking system. The countries most affected by the banking crisis have experienced the worst economic crisis since the 1930s. Output is somewhere between 5% and 10% below where it would have been had there not been a crisis.