samchain/econo-pairs-v1 huggingface dataset:
In Sweden, our conclusions are published in a semi-annual Stability Report, where we analyse the development of risks in the banking system and where we state our overall view on systemic stability. The reports have increased the general knowledge about the stability situation of the Swedish financial sector and they constitute the basis for discussions with the financial institutions and with other authorities. Whether they will help us avoid the next financial crisis is still to be seen. International standards Financial systems and markets are increasingly interlinked across the country borders. In order to avoid international financial disturbances all countries that wishes to participate in cross-border transactions must adhere to a set of minimum rules for regulation. Also supervision must reach adequate levels in all countries, including cooperation and exchange of information between supervisors in different countries. In 1997, the Basel Committee took the initiative of writing the Core Principles for Effective Banking Supervision. Complying with the Principles constitutes a minimum platform for any country that strives to have basically sound regulation and supervision of banks. If I may say so, there is nothing radically new with the Core Principles - all the underlying standards that countries are asked to fulfil are well established and internationally recognised. The main use of the principles is rather as a yardstick, whereby a country can evaluate itself in order to identify weaknesses in its present regulations and supervision and to take remedial measures to improve.

Albeit many people today acknowledge that the traditional kind of regulations do not produce the desired results, we tend to keep them too long. Let me give you an example. In Sweden, we had foreign exchange controls in place until 1989. Even though it was obvious that the controls were easy to circumvent and quite inefficient, the authorities were worried by what might happen if they were 1  BIS Review 66/2000  abolished. Perhaps there would be a huge capital drain? Hundreds of pages were written in attempts to map the consequences, but no comfort was provided this way. Eventually the central bank decided to go ahead in spite of the remaining uncertainty. To some surprise and some disappointment, nothing particular happened in the market. The move had been anticipated and the controls inefficient enough to allow the capital flows to adjust prior to the move. Credit controls and interest rate regulation had been abolished in Sweden four years earlier, in 1985, again probably far too late. Some people argue that the banking crisis we had in the early nineties might have been much less severe if the banking system had been forced into a competitive environment by deregulation a decade earlier. Keeping regulations too long is a danger, getting rid of them too quickly is another. This may sound peculiar, but let me again give you an illustration. When, in 1985, credit controls were abolished in Sweden, they had been in operation for more than forty years.
The size of the fluctuations is in turn affected by the functioning of the economy. I now intend to describe briefly what we know about how economic cycles manifest themselves and what consequences they have. 1.  International developments  International studies show that fluctuations in economic activity have become somewhat less dramatic over the past 20 years, a phenomenon usually known as ”the Great Moderation”. 8 In Sweden the situation is slightly different because of the unusually profound crisis we suffered in the early 1990s. However, since then the fluctuations appear to have also declined here, although the period of time has been too short to draw any definite conclusions. If one studies the volatility in world growth since 1970 and onwards, one can see that it has declined since the mid-1980s. There are many possible reasons as to why economies have become more stable. One reason that is usually put forward is that the world economy has quite simply suffered smaller shocks in recent decades. Often the significance of modern economies having larger service sectors is put forward as a reason, because these are not as affected by international developments as the industrial sector. Improved stocks management can also have had a positive effect. Deregulated financial markets have made it easier to obtain credit and thereby smooth consumption over time. Finally, it is often pointed out that the changeover in fiscal and monetary policy, with budget targets and greater focus on price stability, is a contributory factor.

The greater price transparency in the European market brought about by the euro’s launch also has an influence on Switzerland’s domestic economy, heightening awareness of the need for structural changes. Finally, initial fears that the exchange rate relation between the Swiss franc and the euro might be destabilised by the introduction of the euro have not come true. Notwithstanding a few fluctuations, the relation between the two currencies has remained remarkably stable. Overall, therefore, the cohabitation between the Swiss franc and the euro is definitely a “success story”. BIS Review 49/2003  1
Irrespective, perseverance and patience are required if we are to achieve results. We should not allow the management of the Fund to be ruled by the impulsive and changing priorities that beleaguer so many public programmes and sectors. When we invest the Pension Fund’s assets, we are guests in our neighbour’s house. The requirements for the exercise of ownership rights cannot therefore be based solely on Norway’s values and culture. We must acknowledge that the dividing lines between politics, ethics and management may be different in other countries. When we point a finger at a company, we are also pointing a finger at the laws, regulations and practices of countries where the company is based and operates – and we are pointing that finger as a representative of the Norwegian state. 8  BIS Review 18/2008  When other countries look at Norway, they may agree with another Norwegian poet whose 100th anniversary we are celebrating this year, Olav H. Hauge, when he wrote that “selfesteem grows with the size of your bank account”. 7 We have enjoyed great economic prosperity over the past 10-15 years. But perhaps a warning can be found in one of Hauge’s poems. Allow me to recite: “Too happy by half – the pot’s boiling over, the scale arm is pointing sky-high! I must do something contrary, throw cold water on the pot, hang a stone on the scales, fell the biggest pine I’ve got. 8 Thank you for your attention!

Indeed markets are becoming ever more important as individuals bear increasing responsibility for financing their retirements and insuring risks. It is vital markets work well - and are seen to do so. Only real markets can deliver. Real markets are resilient. They don’t collapse when the going gets tough. Real markets are fair. Participants compete on merit rather than collude online. Real markets aren’t ends in themselves but means to much greater ends. Only markets that transparently serve the real economy can retain the trust of society to operate; in other words, only real markets have social licence. The crisis and its aftermath laid bare that many of our markets didn’t live up to these standards. At times, some of the most important Fixed Income, Currencies and Commodities (FICC) markets proved fragile, unfair, ineffective and unaccountable. The twin crises of the solvency and legitimacy of finance undermined trust in market mechanisms and the effectiveness of the financial system. 1  Old and New London by Walter Thornbury ('Guildhall', Old and New London: Volume 1 (1878), pp. 383-396. BIS central bankers’ speeches  1  It is hardly surprising that only a third of people believe markets work in the interests of society.2 The more people see, the less they like. People trust markets less with age. And yet, most people think markets will become ever more important. And they’re right. As I wrote this week to G20 Leaders, the structure of financial system has changed significantly since the crisis.
8 A spread of this size between the Federal Reserve’s two administered-rate tools is expected to be narrow enough to provide sufficient interest rate control but wide enough to preserve a reasonable volume of trading in the federal funds market and to keep the Federal Reserve’s footprint in the nonbank financial sector from growing too large. As suggested by operational guidance in the March minutes, policymakers may adjust either side of the spread between these two rates, as needed, once normalization is under way. Fourth: Qualifications around the use and settings of an ON RRP facility. The FOMC intends to use an ON RRP facility only to the extent necessary and will phase it out when it is no longer needed to help control the federal funds rate. But what is necessary, and how can the facility be phased out? As the minutes of recent FOMC meetings show, Committee participants differ in their answers to those questions, but all agree that demonstrating sufficient control over money market rates during the critical early stages of policy normalization is a priority. Against this backdrop, the Committee has noted that it plans to allow the aggregate capacity of the facility to be temporarily elevated to support policy implementation at liftoff, but also expects that it will be appropriate to reduce ON RRP capacity fairly soon after policy firming commences.

The Committee noted that an ON RRP facility will be used only to the extent necessary and will be phased out once it is no longer needed to help control the federal funds rate. With respect to the Fed’s balance sheet, the Committee intends to reduce securities holdings in a gradual and predictable manner, primarily by ceasing to reinvest repayments of principal on securities held in the SOMA. 3 In the longer run, the Committee intends that the Federal Reserve will hold no more securities than necessary to implement monetary policy efficiently and effectively, and that it will hold primarily Treasury securities. The March 2015 minutes augment the September Principles and Plans with additional details about the FOMC’s intended operational approach at the commencement of policy firming. Specifically, the Federal Reserve intends to target a range for the federal funds rate that is 25 basis points wide, and to set the IOER rate and the offering rate associated with an ON RRP facility equal to the top and bottom of the target range, respectively. It intends to allow aggregate capacity of the ON RRP facility to be temporarily elevated to support policy implementation. It can also adjust the IOER rate and parameters of the ON RRP facility, and to use other tools such as term operations, as necessary for appropriate monetary control based on policymakers’ assessments of the efficacy and costs of their tools.
For reasons of time, I would like to concentrate briefly on monetary policy in order to provide an example of the type of analysis which will be conducted, and is being conducted, also in other areas. There is now a broad consensus that the policy of very low interest rates, especially in real terms, which was followed in particular in the United States in the period 2002-04, increased the incentives for financial institutions, households and businesses to raise their levels of indebtedness and to take high-risk speculative positions. 1 In a recent paper, John Taylor illustrated that if the Federal Reserve had implemented a less expansionary monetary policy, and had instead followed a simple rule to determine interest rates, in line with past  1  J. Taylor (2009), Getting Off Track: How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis, Hoover Institution Press. BIS Review 66/2009  1  behaviour, less liquidity would have accumulated at the global level. Clearly, this is an ex post evaluation. And it is too easy to lay the blame at the door of the US monetary authority. Looking back at the analyses conducted at the time, it can be seen that this policy met with the approval of the academic world, market analysts and political parties. Following the bursting of the technology bubble and 11 September, there was a general consensus that deflation represented the greatest risk and needed to be countered by strong and sustained monetary expansion.

If a marketplace has a high level of liquidity in an asset, many people will probably trade there, as they will be able to trade at the best, that is to say, the most correct prices. If a marketplace has liquid trading in one asset, it will often attract trade in other assets, as other companies want their instruments to be traded on a marketplace with many participants. In other  BIS Review 66/2004  3  words, there are natural tendencies towards concentration in financial instruments trading. The same applies to settlement and registration of ownership. However, technological developments have enabled increasing integration of the various parts of the transaction chain. This has also created incentives to establish automated systems all along the line, from order placement to settlement. The result is a vertical integration, where different stages of the value chain are integrated. Integration requires cooperation between, or even a merger of, the various parts of the infrastructure. Even if this, as I have mentioned earlier, leads to lower transaction costs, it is not certain that these cost reductions will benefit the end customers. When all of the stages of the chain are implemented automatically and ownership of the various parts may even lie with the same organisation, everyone will be dependent on a single supplier. This creates a risk that pricing will follow monopoly principles, which rarely benefits the economy.
Bandid Nijathaworn: “Implementation of Basel II and IAS” from a regulator’s perspective Keynote address by Dr Bandid Nijathaworn, Deputy Governor of the Bank of Thailand, at a meeting hosted by the Thai Bankers’ Association and organized by the Bankers Association of the Philippines and ASEAN Bankers Association, Bangkok, 4 October 2007. *  *  *  Distinguished Participants, Let me first thank the Thai Bankers’ Association for the invitation to give today’s keynote address, on the “Implementation of Basel II and IAS” from a regulator’s perspective. Looking at the agenda, the meeting in the next two days will dwell into a number of important regulatory issues. Therefore, to help set the stage for the discussion to follow, I would like to take this opportunity to speak on the Bank of Thailand’s perspective on the implementation of Basel II and the International Financial Reporting Standards (IFRS), looking in particular at the benefits from such adoption, the progress we have made on implementing the two standards, and the challenge and adjustments that need to be made for a successful implementation. Ladies and Gentlemen, Recognizing that today’s global financial system has become increasingly complex and interdependent, a number of organizations around the world have been working on improving international standards to ensure sound risk management and disclosure by financial institutions. Among these, Basel II and IFRS are undoubtedly the most important recent efforts. As an international framework for capital adequacy, Basel II is designed to ensure soundness and stability of the global banking system.

Such effort can be as close as forming an alliance to pool the necessary data for model development, or as loose as sharing the costs of training and seminar similar to the one we are having here today. I should now end my talk. It has been a pleasure to share with you a regulator’s perspective on the implementation of Basel II and IFRS. I hope my remarks and observations have been useful. We are traveling on an important and challenging path towards achieving a robust and resilient financial system, and steady progress is being made. You, as a key stakeholder, are also an important part of this journey. I wish the rest of the seminar great success and accomplish its objective, and be interesting and educating to all. Thank you very much. 4  BIS Review 114/2007
Here too, the CCP authorities and banking authorities should join forces and get a broader picture of this issue, making use of the available data and developing network analyses.20 CPMI-IOSCO together with the BCBS and FSB will soon launch joint analytical work in this field. Conclusion I have made the case that the global regulatory agenda implemented since the crisis has made CCPs considerably safer. If these requirements are applied consistently, significant improvements to CCP loss-absorbing capacities may not be required. CPMI and IOSCO are currently reviewing CCP risk-management practices on a global scale and will identify any areas where greater consistency or granularity is needed. If the need did arise for further loss-absorption capacities, we will have to make sure any new requirements provide the right incentives for CCPs and their members, offer authorities a  18  See OTC Derivatives Assessment Team, Regulatory reform of over-the-counter derivatives: an assessment of incentives to clear centrally, October 2014. 19  See also Bailey, D., “The Bank of England’s perspective on CCP risk management, recovery and resolution arrangements”, Speech at the Deutsche Börse Group and Eurex Exchange of Ideas conference, London, 24 November 2014. 20  On the interconnectedness of CCPs, see Wendt, F., “Central counterparties: Addressing their Too Important to Fail Nature”, IMF Working Paper, WP/15/21, January 2015. BIS central bankers’ speeches  9  certain degree of flexibility and do not create disincentives for central clearing.

Authorities see the distinct benefits of central clearing and wish to set proper market incentives for participants to move away from bilateral trading and into the centrally cleared world. Mandatory central clearing allows risks to be pooled, monitored and properly  3  See CPMI-IOSCO, Recovery of Financial Market Infrastructures, October 2014. 4  See FSB, Key Attributes of Effective Resolution Regimes for Financial Institutions, FMI Annex, October 2014. 5  See CPMI-IOSCO, Disclosure Framework and Assessment Methodology, December 2012. 6  See CPMI-IOSCO, Public Quantitative Disclosure Standards for Central Counterparties, February 2015. 7  See FSB, Eighth Progress Report on Implementation of OTC Derivatives Market Reforms, November 2014. 2  BIS central bankers’ speeches  managed. However, pushing more complex products towards mandatory central clearing makes risk management more challenging, and therefore may increase the risks to which CCPs and clearing members are exposed. Authorities may need to assess whether overly complex products should really be submitted to central clearing, so as to ensure CCPs can continue pooling risks in a safe and efficient way. In recent months, concerns have been expressed regarding the adequacy and consistency of the level of risk management across the CCP landscape. At this stage, it is too early to say whether current regulations are insufficient. New requirements may well prove necessary but the impact and coverage of the existing regulatory framework should first be comprehensively assessed.
The advantage of such an approach, given that the central banks should succeed, would be stabler real developments thanks to the fact that household consumption and business investment would be stabler if bubbles in the equity and property markets could be avoided. As stability is an important objective for all central banks it is an attractive idea to try to limit the emergence of prices in these markets that deviate substantially from those warranted by fundamental economic factors. As in so many other situations the problem is that this is easier said than done. Firstly, the central banks have to identify when a bubble arises. In other words they have to be able to distinguish between what is warranted by fundamentals and what represents unreasonable expectations of continued price increases. Secondly, once a bubble has been identified, the central banks have to be able to “burst” it. Asset markets are indeed sensitive to the interest rate situation, but it is possible that it would take such large rate adjustments from the central banks to neutralise a bubble that the negative effects on the rest of the economy would be far too high. For example the force of the most recent equity market bubble gives the impression that monetary policy would have to have been tightened considerably in order to slow the increase of almost 150 per cent that was seen on the Stockholm exchange between 1998 and March 2000. Few central banks today say that they counter bubbles actively.

4. Conclusion  We are under no illusions. The Great Recession was a calamity. Britain’s workers have borne many of the consequences. Our job is to ensure the economy achieves its potential and to maintain price and financial stability, for sustainable growth in jobs and incomes. But monetary policy cannot do it alone. Others – including trade unions, government and businesses – will determine the potential of this economy. You will ultimately determine the size of Britain’s pay rise. BIS central bankers’ speeches  9  Those in work need to be able to seize new job opportunities in a world where technology and globalisation cause labour markets to shift rapidly. Skill levels need to be raised continually. That is of course first and foremost about education. But crucially it also means access to lifelong learning, both on and off the job, available to all. The TUC’s engagement with the UK’s skills agenda is a major contribution to realising that imperative. In the past year alone, unionlearn, has supported over 200,000 people to invest in their skills. Such investments are crucial for the durability of this economic expansion and for Britain’s future. They will help to deliver long-term productivity – so that the British people get the pay rise they deserve. 10  BIS central bankers’ speeches  Chart 1: UK unemployment rose by less than in the US initially and fell more rapidly than in the euro area subsequently.