samchain/econo-pairs-v1 huggingface dataset:
Second, it is almost always the case that the situation proves to be much worse than one thought. When the capital is at zero on paper, there may in actual fact be a large deficit. It is not without controversy that the government is given the right to nationalise a bank. It may be particularly sensitive in countries that have a recent history of state ownership. But I believe that the possibility for compulsory acquisition of the shares is a proper tool. Again, the owners enter into the business knowing that a serious breach of the supervisory regulations should result in the revocation of the licence and the loss of control over the bank. The fact that an expropriation may be an alternative to the revocation of the licence in such a situation when financial stability is at risk is important to restore a proper balance of powers. As long as these powers of the state are clear beforehand, this should be acceptable to the shareholders. 8  BIS Review 62/2008  Returning again to the Swedish crisis, I believe that it was a decisive factor that the banks realised early on that the government support measures were no free lunch. When this was made clear, the owners had strong motives to recapitalise the banks themselves. Of course, the idea should not be to end up with a state owned banking system; equally important is to have an exit strategy.

A bank failure affects not only shareholders and professional investors, but also all the ordinary people who have put their money in the bank in the belief that it will be safe there. It is not without reason that you often hear the reference to widows and orphans running the risk of losing their money in connection with bank problems. And even if the depositors may in the end recover much of their money in a subsequent insolvency procedure, they may lose access to the money in their bank account, and the possibility to make payments from it, for quite some time. As most of us have most of our money in a bank account, we may find it difficult to quickly find the means needed to pay our rent and food if this happens. And you may also be affected by the failure of other peoples’ banks. For instance, if your employer’s bank gets into problems, the pay-roll account might be frozen and you might not get your salary. And if your employer cannot quickly get credit from another bank, he may not be able to pay his subcontractors and his utility bills. He may also find it difficult to manage the risks in his business, for instance in relation to trades in a foreign currency. At worst, he may need to shut down entirely. A bank failure can thus have negative effects on the real economy.
This is a very strong encroachment on the principles prevailing in a free market  7  The argument outlined here is particularly relevant for holders of senior bonds. 8  See Pigou, A. (1920), The Economics of Welfare, London: MacMillan. 9  10  There are a variety of advocates of this view. Cf., for instance, King, M. (2009), speech at the Lord Mayor’s Banquet for Bankers and Merchants of the City of London at the Mansion House, June 2009. It is fair to acknowledge at this point that there is a lot of controversy and only weak evidence on the existence and size of returns to scale and scope in banking. BIS central bankers’ speeches  5  economy, which is – among other things – based on the principle that firms are best positioned to select their business plan and should do so freely within the appropriate incentive structure. Increasing capital requirements and imposing a capital surcharge The “Pigovian” approach is often more suitably and closely aligned to the principles of a dynamic market economy. In the problem at hand, the Pigovian approach may take the form of the imposition of higher capital requirements together with a capital surcharge, modulated to take account of the systemic risk of a financial institution. The benefits of increasing capital requirements are manifold. First, imposing more equity capital naturally makes an institution more robust and able to withstand adverse scenarios. This reduces the probability of bankruptcy, thus the severity of the externality.

In order to illustrate this point, I will look at the incentives with regard to risk-taking by the various stakeholders of a bank and try to gauge the likelihood that these incentives lead to decisions that would be optimal from society’s viewpoint. In my second section I will focus on the “too big to fail” (TBTF) problem. My goal here will be to discuss the variety of solutions that can be envisaged in order to restore proper incentives and in particular assure that the capital necessary for maintaining the vital functions of financial institutions will in the future come from sources other than taxpayers. I will argue that higher capital requirements, in part in the form of contingent convertible bonds (Cocos), together with appropriate organisational measures, can fulfil the objective of a “partial” bankruptcy and lead to improved incentives for key bank stakeholders. In this speech I will adopt a relatively academic point of view, appropriate for today’s circumstances, which will lead me to the conclusion that sound theoretical principles underlie the TBTF package currently submitted to the Swiss Parliament.1 Finally, I would like to address the question of the likely impact of current regulatory efforts on the cost of capital for banks and their expected return on equity. 1  The importance of this issue for the Swiss National Bank (SNB) is reflected in the number of times it has been addressed by members of the SNB Governing Board.
Some hedge funds that had used Bear to borrow money and clear trades were withdrawing cash from their accounts. Some large investment banks stopped accepting trades that would expose them to Bear, and some money market funds reduced their holdings of short-term Bearissued debt. The rumors of Bear’s failing financial health caused its balance of unencumbered liquidity on March 13 to decline sharply to levels that were not adequate to cover maturing obligations and funds that could be withdrawn freely. This precipitated the phone call that I described in the beginning of my testimony. The news that Bear’s liquidity position was so dire that a bankruptcy filing was imminent presented us with a very difficult set of policy judgments. In our financial system, the market sorts out which companies survive and which fail. However, under the circumstances prevailing in the markets the issues raised in this specific instance extended well beyond the fate of one company. It became clear that Bear’s involvement in the complex and intricate web of relationships that characterize our financial system, at a point in time when markets were especially vulnerable, was such that a sudden failure would likely lead to a chaotic unwinding of positions in already damaged markets. Moreover, a failure by Bear to meet its obligations would have cast a cloud of doubt on the financial position of other institutions whose business models bore some superficial similarity to Bear’s, without due regard for the fundamental soundness of those firms.

Part of the dynamic at work was that banks were forced to provide financing for – or take over – the assets in a range of structured investment vehicles and conduits financed by asset-backed commercial paper. As some investors attempted to liquidate their holdings of these assets, many of the traditional providers of unsecured funding to banks pulled back from their counterparties in anticipation of the potential withdrawals of funds by their own investors. BIS Review 39/2008  1  Market participants’ willingness to provide term funding even against high-quality collateral declined dramatically. As a consequence, the cost of unsecured term funding rose precipitously and the volume shrunk. Banks were funding themselves at shorter and shorter maturities. As unsecured term funding markets deteriorated, the premium on liquid, marketable collateral – such as Treasury securities – rose considerably. Even with the dramatic actions by the Federal Reserve and other central banks to address these liquidity pressures, the strains in financial markets persisted. In many respects, conditions worsened materially in February and March. Credit spreads on financial institutions widened, equity prices declined and market functioning deteriorated sharply. By the early part of March, the threat of a disorderly adjustment was growing. What we were observing in U.S. and global financial markets was similar to the classic pattern in financial crises. Asset price declines – triggered by concern about the outlook for economic performance – led to a reduction in the willingness to bear risk and to margin calls.
The baseline scenario assumes that inflation will be temporarily above 4 percent and will return to 3 percent over the course of 2015. This will partly be the result of the economic slowdown of recent quarters will give way to lower inflationary pressures going forward. There are risks, however, as it is difficult to gauge the actual sizes of output gaps and sales margins. For instance, the labor market is still tight by historical standards and relative to the recent evolution of GDP, which could influence the inertia and sensitivity of nominal wages to actual inflation. However, other labor market indicators, such as the behavior of salaried employment and vacancies suggest that gaps are also building up in this sector. A second risk in the domestic economy has to do with the poor performance of investment over the past few quarters. Although the baseline scenario assumes a slight recovery in the near future, the inherent inertia of this component may prolong said poor performance beyond forecasts. As a matter of fact, from last September to date the projection of annual investment growth in 2014 has been revised downwards by more than 5 percentage points. The Financial Stability Report Our Financial Stability Report (IEF) discloses semiannually (every June and December), the recent macroeconomic and financial developments that could affect the financial stability of the Chilean economy. Let me now give you a brief description of some of the main topics covered in this issue of the Report.

Headline CPI went from 1.5 percent annually in  BIS central bankers’ speeches  1  October 2013 to 4.7 percent in May 2014 (figure 1). We expected this rise in inflation to some degree, because it came from a low level and the peso depreciation we have been observing since mid-last year also had an impact. A look into inflation rates over the past six months shows that the biggest increase has concentrated in those components of core inflation of goods and services whose prices are connected – directly or indirectly – to the exchange rate (figure 2). We have also seen an acceleration of nominal wages in recent months. Inflation has behaved thus in a context of sharply decelerating output and demand. In the first quarter this year, output grew 2.6 percent annually, confirming the slowdown that began in the third quarter of 2013. Overall, this outcome was in line with forecasts, but composition shifted towards higher growth in those areas more closely linked to the external sector – like some branches of manufacturing and agriculture – and slower growth in those areas tied to domestic demand, especially services. Leaving out inventories, y-o-y growth in domestic demand picked up from end-of 2013, basically due to a milder drop in investment – especially its machinery & equipment component – and increased dynamism of public expenditure. Domestic spending is still weak, however. Investment has posted negative variation rates for three quarters in a row, while private consumption, mainly of durables, is slowing down (figure 3).
Along with thanking this support, we promise to maintain the same motivation, proactivity, and cooperation in the next stage, precisely because there is still so much that remains to be done. Thank you. Page 9 of 19  Figure 1 Mobility (1) (moving seven-day average)  20  20  0  0 Europe (3) U.S.  -20  -20 Latin Am. (2)  -40  -40 Chile  -60 -80 25-Feb.  -60 -80  26-Apr. 26-Jun. 26-Aug.  26-Oct.  (1) Average of the categories stores and leisure, supermarkets and pharmacies, transport stations and workplaces. (2) Simple average of Argentina, Brazil, Mexico, Colombia and Peru. (3) Simple average of Germany, Spain, France, Italy and United Kingdom. Source: Covid-19 Community Mobility Reports, Google. Figure 2 GDP, selected economies (variación anual, porcentaje)  1Q.2020  2Q.2020  3Q.2020  5  5  0  0  -5  -5  -10  -10  -15  -15  -20  -20 U.S.  Eurozone  China  Latina Am. (*)  Chile  (*)Weighted average at PPP for Argentina, Brazil, Colombia, Mexico and Peru according to the World Economic Outlook (WEO, October 2020). For Argentina, the figure for Q3.2020 is the average of the annual variations of the EMAE for July, August and September. Sources: Central Bank of Chile, Bloomberg, and International Monetary Fund.

Page 16 of 19  Figure 15 Sovereign rates' volatility, EM (1)  Exchange rate volatility, EM (1)  (basis points)  (annualized percent)  P25 - P75  25  Chile  Commodity exporters (2)  25  25  20  20  20  15  15  15  10  10  10  5  5  5  0  0  0  16  17  18  19  20 Nov.  16  17  18  19  20 Nov.  (1) EM includes Brazil, China, Colombia, Hungary, India, Indonesia, Malaysia, Mexico, Peru, Poland, Russia, and Turkey. (2) Includes Australia, Canada, New Zealand, and Norway. Source: Central Bank of Chile based on Bloomberg data. Figure 16 Uncertainty (*) (Dec.2018=100)  300  300 Chile  250 200  250 200  150  Global  150  100  100  50  50  0 18 Dec.18  0 19 Apr.19  19 Aug.19  19 Dec.19  (*) In both cases the Economic Policy Uncertainty (EPU) index is used. Sources: Bloomberg and CLAPES UC.
This is due to the great regulatory steps taken recently by the state which helped establish a solid base for  BIS Review 59/2006  5  sustained growth. What we have heard recently of huge initiatives and projects in the oil, gas, petrochemical, mining, transport, electricity water sectors and infrastructure projects in housing, education, and health, would indicate the size and momentum of the coming economic expansion which will be accompanied by a notable rise in the per capita income. It is expected that the private sector will have a greater role in these projects and in the pace of the overall activity. Thus, the financial and banking sector is entering a very dynamic and exciting phase with acceleration in all areas. There are new players, new market opportunities, a range of new products and services, and significant growth in traditional services. The financial sector should be able to fully leverage its tradition of openness and liberalization, its large investment in technology infrastructure, internal control, and development of its manpower. It is entering a new era of increased consumer participation and awareness, greater competition, enhanced transparency and strong supervision and corporate governance. The financial sector is in a strong position to rise up to these challenges and meet the demands of a rapidly growing economy and consumer expectation. I emphasize my wishes and expectations that the Saudi Financial Sector will continue to be a leader and a major player in the domestic and regional economic activity. I thank you for your attention.

Looking ahead, the financial system and the banking sector will benefit from the state’s efforts to diversify the economy and improve the investment environment through regulatory and structural measures taken in the various sectors. A number of new laws and regulatory guidelines have been enacted to enhance economic growth and achieve further opening of domestic markets. The laws included the Foreign Investment Law, the Capital Market and Cooperative Insurance Laws and a new Labour Law. Another important development is the Kingdom's accession to WTO. Turning to the Capital Market, its contribution to the growth of the Saudi economy has been clearly evident. Over the preceding few years, the market has witnessed remarkable development, and its role as a financial intermediary between savors and investors has been boosted. It would be appropriate to indicate that the recent market correction witnessed by the market has had no adverse consequences on the banks and banking system. This is because SAMA, through its supervisory functions, has undertaken measures necessary for safeguarding banks and customers against any unfavorable developments in the market. The measures included tightening prudential limits related to lending for trading in the market, issuing controls for consumer loans and other measures which would protect customers and banks against expansion in consumer loans which may end with trading in the equity market. Consequently, Saudi Banks have managed to do well in the first quarter of 2006.
That’s too short a time for monetary policy to have much effect. Prices of other, non-energy traded goods aren’t quite as volatile, their direct effects take longer to feed through and therefore affect the overall rate of inflation for longer. But they’re still unlikely to have that much of an impact a couple of years ahead, the sort of timescales it takes monetary policy to have its peak effects. So although the pandemic was clearly much less disinflationary than central banks and other forecasters had predicted – the demand-shifting and supply-impairing effects on goods prices were very significant – it nonetheless seemed likely at the time that these effects would dissipate, along with the virus itself, within that medium-term horizon. I think there are some signs this has begun to happen. One of the higher-profile effects of the pandemic was a dramatic rise in the cost of shipping. Also well reported were the steep rises in prices and delivery times for computer chips and the cars on which they rely. In all three cases rates of inflation have fallen back markedly over the past few months (Charts 6a and 6b).

François Villeroy de Galhau: Overcoming the energy crisis - a European perspective (and beyond) Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Paris EUROPLACE Tokyo International Financial Forum 2022, Tokyo, 15 November 2022. *** Ladies and Gentlemen, It is a great pleasure for me to be with you again –physically with you – in Tokyo for this International Financial Forum organised by Paris Europlace. I am honoured to share the closure of this event with my colleague and friend Governor Kuroda. We face together the awful Russian war in Ukraine, and its consequences on energy and economy. I will start with a brief description of the macroeconomic outlook in the euro area, and with our monetary policy normalisation (l). I will then focus on sustainable finance in France, Europe and Japan: it has a key role to play in our ecological transformation, more needed than ever (II). I. Macroeconomic outlook in the euro area  A. Despite recent shocks, growth outlook has shown overall resilience so far Let me start with the macroeconomic situation in the euro area, which has so far shown resilience. In 2021 our economy had strongly recovered from the Covid crisis: growth had reached 5.2 %, and even 6.8 % in France. We Europeans have remarkably overcome the Covid crisis, which hit us early and strongly. We achieved this through enhanced European unity, for instance in purchasing vaccines, and in implementing common budgetary measures to support our recovery (SURE(i) and Next Generation EU programmes).
Debt restructuring mechanisms need to be more efficient, so as to promptly resolve the insolvency problems some firms are experiencing. Other structural policies could also contribute to shoring up the composition of firms’ debt in order to assign a greater weight to capital. These policies might include the elimination of the preferential tax treatment of debt as opposed to equity and headway in developing equity markets in Europe. Finally, as mentioned on various occasions, all these measures must form part of an ambitious reform agenda aimed at tackling our economy’s structural problems. These include most notably high unemployment, labour market duality and the low productivity of our firms. And, in parallel, we must design a credible strategy for reducing, in a gradual but sustained fashion, our fiscal imbalances. Such a strategy may be implemented once the pandemic is behind us and the economic recovery is firmly entrenched. It would entail significant benefits, by increasing the economy’s reform-led potential growth and by enhancing the credibility surrounding the sustainability of public finances in the medium term. That, in turn, would increase the existing fiscal space available and would boost the expansionary effects of the current fiscal measures. In short, so we may have the fiscal leeway needed to be able to increase support measures to the economy should pandemic-related developments so require, we must resolutely implement the reform agenda, plan the fiscal consolidation process and reform support instruments to make them more flexible and targeted. Thank you very much. 9

Ladies and gentlemen, you will agree with me that automation of processes brings in some efficiency which should translate into effective utilisation of resources. Instead of spending time processing bulk payments, employees will have time to concentrate on other more important assignments, such as deposit mobilisation, credit portfolio growth and administration, all of which are important for the wellbeing of an institution in terms of profits, enhanced shareholder value and growth of the economy at large. The world is changing in terms of technological advancement and new methods of doing business are being developed every day. As a country and through innovations like the product we are launching today, we need to constantly keep up with these developments. Ladies and gentlemen, as you are aware the government continues to give tax and other incentives for institutions and individuals importing computers and computer parts. This is deliberate. It is aimed at stimulating economic growth and as such we all have no excuse for not taking advantage of this development. We expect all commercial banks in Zambia to take full advantage of this for the benefit of the Zambian people through improved service delivery. In this connection, I would like to take this opportunity to call on Zambia National Commercial Bank Plc, as a national bank, to take the lead in responding to our call and indeed government’s call to reduce lending interest rates further.