samchain/econo-pairs-v1 huggingface dataset:
Other shocks, such as changes in energy prices and other so-called supply shocks have thus reasonably been relatively more important for developments in inflation. The flatter Phillips curve also means that the central bank must influence demand more than previously to achieve a given change in inflation. This means that if the central bank reacts in the same way as before to supply shocks that cause inflation to deviate from the target, the fluctuations in economic activity will be greater. Say, for instance, that the central bank has been used to subduing a particular part of an upturn in energy prices. A flatter Phillips curve would mean that demand has to be dampened more than before to prevent inflation rising. Over time this would entail greater fluctuations in economic activity. This could be perceived as an undesirable effect and gradually give rise to dissatisfaction with the central bank’s policy. Ultimately, this could also mean that the independence is  5  See, for example, Krugman (2013). 6  See, for example, IMF (2013) or Wolf (2013). BIS central bankers’ speeches  5  brought into question. One possibility would thus be for the central bank to try to become slightly more “flexible” than before in this situation and to react somewhat less aggressively to supply shocks – and thereby try to find an economically more acceptable combination of fluctuations in inflation and fluctuations in economic activity. If inflation expectations are securely anchored, there should be scope for this.

Therefore, coordination between the different national authorities participating in these CMGs will be relevant in the application of TLAC. Some examples of these key decisions are: (1) determining adjustments for Multiple Point of Entry groups regarding the location of deductions and requirements; (2) identifying material subsidiaries and resolution entities; and (3) discussions as to whether the minimum TLAC is sufficient to ensure orderly resolution or whether additional firm-specific requirements are needed. TLAC is quite a demanding new standard. The estimated increase in issuances of TLAC debt is not negligible, if we consider the impact assessment performed by the Financial Stability Board and the Basel Committee: the aggregate shortfall for G-SIBs under the low calibration represents 16.9 % of the € trillion G-SIBs unsecured debt market. Compliance will be facilitated by the agreed phase-in for TLAC and the replacement of unsecured liabilities maturing in coming years which will be an important source of TLAC eligible instruments. However, the success of both the roll-over and the issuance of new TLAC-eligible instruments will depend on the absorption capacity of financial markets. In any event, we should monitor compliance with the requirements and any potential unintended impact during the transition period. 4. The plan to address misconduct risks  With the publication of the TLAC term sheet, the Financial Stability Board has virtually completed its work to address the too-big-to-fail problem in the banking sector. But there are other important areas where the FSB is working to fulfil the G20 mandate.
Though this added flexibility needs to be recognised for the positive effect it has on potential output, the role of retraining programmes by the ETC remains of utmost importance in better matching skills with vacancies and further reducing the rate of unemployment. Turning to the fiscal dimension, government forecasts the deficit to decline to 2.1% of GDP this year and to 1.6% in 2015. This is a financially responsible objective which needs to be truly maintained. The government debt-to-GDP ratio has reached around the 70% level. This ratio needs to plateau and eventually to drop and this requires sustainable management of both budgetary inflows and outflows. Clearly, budgetary performance depends on economic performance as higher growth ensures higher tax revenues. In turn, faster growth is only possible by producing and delivering more goods and services. This can only be attained by being competitive. Moreover, other significant challenges remain. Inefficiencies in public administration processes hamper the development of the Maltese business environment and need to be improved, so as to better support competitiveness and encourage foreign direct investment. As I already mentioned, there is also room for further improvement in the business environment in terms of access to credit. The cost of credit in Malta remains on the high side and further easing would help our businesses to invest at a lower cost. Going forward, various initiatives are envisaged to improve the current situation, including the introduction of  BIS central bankers’ speeches  5  a credit register that will be administered by the Central Bank.

La conclusion était que l’euro ne se ferait jamais ! Ces critiques ont été démenties par les faits. Mais elles conservent toute leur utilité lorsqu’il s’agit de répondre à la question des conditions à remplir pour une pleine réussite de l’euro. On peut en souligner quatre : - En premier lieu, celle de la crédibilité de la politique monétaire garantie par l’indépendance de la Banque centrale européenne, scellée dans le traité de Maastricht et fondée sur l’indépendance de chacune des banques centrales nationales. Pour être une monnaie crédible, l’euro doit inspirer confiance aussi bien aux 290 millions d’Européens de la zone euro qu’aux non-Européens avec lesquels nous faisons des affaires. Cette confiance ne peut être gagnée qu’en résistant à toute forme de pression, notamment politique, sur le mode de gestion de la nouvelle monnaie. Le fonctionnement harmonieux de l’équipe monétaire européenne composée de la BCE et des banques centrales nationales des onze pays fondateurs facilitera la réalisation de cette première condition. - En deuxième lieu, le respect des dispositions du Traité et des orientations du Pacte de stabilité et de croissance en matière de politique budgétaire. La coordination étroite des politiques budgétaires et la surveillance vigilante des “ pairs ” au sein du conseil informel des onze États membres participants — ” l’Euro 11 ” — et du Conseil Ecofin qui réunit les ministres des Finances des 15 sont indispensables pour assurer un “ policy mix ” équilibré dans toute la zone euro.
The uncertainties associated with such reactions make it very difficult for policy-makers to calibrate the appropriate budgetary path. There is a risk of a cliff effect, beyond which market participants tend to loose confidence in the ability of sovereign states to repay their debts and regain it only after a very long and painful adjustment. The contagion effects we observed last spring suggest that this risk should not be underestimated, raising a series of issues that have not yet been considered in  1  Leeper, E., “Monetary Science, Fiscal Alchemy”, presented at the Economic Policy Symposium organised by the Reserve Bank of Kansas City, August 26–28 2010. BIS Review 126/2010  1  full, even in the literature. What kind of scenarios could develop if the sovereign debts of several advanced economies are no longer perceived as risk-free assets? How do financial markets work in the absence of a risk-free rate? Second, the asymmetric distribution of public debt across the world economy has important implications for the adjustment of global imbalances. On the one hand, there is the risk that the protracted and excessive public and external indebtedness of advanced economies could ultimately prove to be – once again – unsustainable. On the other, if debtor countries adjust internal imbalances and lift national savings, who will assume the role of consumer of last resort once played by the United States? This is an oft-posed question in international policy debates. Let me address these two issues in reverse order.

The devaluation of the currency would raise the stock of the debt in relation to GDP, which in turn would further contribute to make the peg more difficult to sustain and thus fuel speculative attacks against the currency, in a vicious circle. Under these circumstances, if a peg could not be sustained, the devaluation would have to be accompanied by a restructuring of the debt or a partial default to stabilise the situation. This is not the case in most advanced economies, either because the debt is generally denominated in domestic currency or because the peg is a “super-hard” one, as in Greece’s case. Certainly, if Greece were to exit the euro – a hypothesis that I make just for the sake of reasoning, but which I consider absurd – its debt burden would de facto worsen given that it is denominated in euro, and partial default or restructuring would in that case be unavoidable. However, thanks to the irrevocable nature of participation in the euro, the debt trap is avoided. What many analysts – or I should say doomsayers – have not understood is that the debt problem is the biggest incentive for Greece to remain in the euro area. Second, in many previous crises in emerging market economies, the debt issued by the country was largely held by foreigners. A restructuring of the debt thus mainly hit foreign citizens and was thus, from a political and economic viewpoint, relatively less costly for domestic residents.
Extending the above example, single-name credit default swaps have been pooled together into standardised indices. That creates a synthetic market in generalised corporate credit risk, enabling investors wishing to hedge or establish a new position linked to macro-economic risk to do so. And there are many parallels such as products tracking equity indices or commodity prices or emerging market debt to name but a few. 10 The value of standardised indices to financial intermediaries can be illustrated by considering a credit default swap dealer, who may find at the end of a day’s trading that they have been a net seller of default protection on several dozen corporates. The dealer could hedge such a position by buying protection on the standardised indices. The hedge would of course not be perfect as in all likelihood the firms in the standardised indices would not be an exact match to those whom the dealer had sold protection. But because indices are relatively liquid and thus cheaper to trade, the dealer may decide that the resulting saving in transaction costs may outweigh the residual “basis” risk that results from the hedge being imperfect. And through competition, the benefit would tend to be shared by corporate borrowers and investors in corporate credit risk. 11 Taking the example further, investors who wish to take exposure to generalised corporate credit risk but who wish to limit their potential losses can do so through trading options contracts on the standardised indices.

Since 2011 and the end of the "too-big-to-fail" doctrine, these groups have become increasingly aware of this, and have drawn up their recovery plans and worked closely with the authorities to ready themselves for crisis situations. The role played by the authorities in these continued efforts is crucial. Accordingly, the ACPR in France, and the ECB and the SRB at Banking Union level, guide and support these efforts, while also preparing for failure scenarios. 4  To this end, as of 2015, the ACPR has provided a decisive boost that has led to the drafting of the first resolution plans by France's leading institutions. Today, all institutions under the authority of the Single Resolution Board have a resolution plan in place. As for the institutions under the direct responsibility of the ACPR, a first wave of plans has been completed and plans will be finalised for all the 142 institutions concerned at the end of 2018. These combined efforts to pre-empt and to manage crisis situations must therefore be maintained in order to ensure the continuity of banking operations that are essential to the functioning of the economy, to avoid harming financial stability, to protect the resources of the Member States and to strengthen protection for depositors and investors. 5
The net value of non-performing loans for the last 12 months decreased by over BGN 660 million. Their share represents 2.66% of the total net value of loans and advances, and their amount is fully covered by the capital surplus above the regulatory requirements and buffers; Profitability, measured by the amount of profit of BGN 1.7 billion, guarantees a return on assets and capital, and is a serious source of internal support for balance sheets if necessary. In this context, the main challenges facing the banking sector to date can be summarised along three lines: the dynamics of the macroeconomic environment, the pro-cyclical behaviour of banks, and the potential risks to their profitability. The macroeconomic environment, as I noted at the beginning, is characterised by high uncertainty and the potential for escalation of risk scenarios. This implies the continuation of stress tests for the banking sector with various hypothetical negative scenarios. The banks' pro-cyclical behaviour is associated with continued credit growth. Under upward credit dynamics, the capacity of borrowers to service their obligations is sometimes overestimated. That is why the supervisory policy will continue to aim at ensuring that credit institutions act conservatively. 3/5  BIS - Central bankers' speeches  The profitability of the banks is put at risk along two lines simultaneously. First, due to the need to set aside additional provisions under a growing probability of non-performing loans; and secondly, due to limitation of the banks' scope to generate income from core activities.

To understand important economic concepts like full employment, financial security, productivity growth and the impact of education, it is vital to understand not just the average experience but rather how all cohorts of the population are faring. This understanding is important in and of itself, especially in evaluating the impact of critical trends affecting the economy, like technological innovation or demographics, as well as the policies intended to respond to the impacts of those trends. We cannot fully understand whether policies have improved social welfare unless we understand how the impact of those policies varies across individuals. But understanding heterogeneity is important even if we are just examining policy impact in the 1/2  BIS central bankers' speeches  aggregate. The most innovative macroeconomic models, those at the frontier of current economic work, recognize heterogeneity across consumers in assessing how monetary and fiscal policy changes are transmitted through the economy. These models incorporate individuals with different marginal propensities to consume, with different amounts of wealth or access to borrowing, or who face different risk exposures, such as the chance they become unemployed, over the business cycle. Incorporating these factors can yield quite distinct insights about how changes in monetary or fiscal policy can affect growth, employment, wages and inflation. For those who want to know more, we published a blog post on Monday of last week that describes the output of just such a model.
The successes we have scored so far in this area will not have been possible without the support and contribution we have received from the Board of Trustees of this Charity. On behalf of the Board of Directors, Management and Staff of the Bank of Sierra Leone, I will like to thank them for their dedication and hard work. Within a short period of time the Board of Trustees comprising six members have worked tirelessly and assiduously to actualise the objectives of the Bank, and in the process attract  BIS Review 32/2008  1  the attention and admiration of the public. As a result, the Charity has started receiving contributions from individual members of the International Community. I therefore want to take the opportunity to single out the laudable gesture of Mr Paul Wilson and Mr Glyn Williams of De La Rue in England who in their personal capacities donated generously towards the Trust. As recent as this morning, the Trust has received contribution from Mrs Sheila Lee, mother of Mr Tom Lee. Their initiative is worthy of commendation. I therefore wish to thank them profusely through Mr Tom Lee who also is a member of the De La Rue family and who has been an effective Ambassador of the Trust, for their humanitarian gesture. This I believe should serve as an inspiration for our local collaborators to follow suit.

Their relationships with sponsor banks are sometimes very ambiguous. There may be a gap between the legal commitments taken by the banks through liquidity support and credit enhancements, and the “true” level of responsibility they felt obliged to take to protect their reputation. This conjunction of complexity and fragility may have been too much for the system to bear. So it is worth to pause and ask ourselves whether we can eliminate those vulnerabilities and still keep the benefits associated with securitization, especially in terms of financial innovation. One good starting point is to look at the economic and financial rationale for securitization. Securitization is meant to perform two functions: the first, and most "advertised" in recent years, is to allocate and distribute risks, hopefully to those agents and investors best equipped and most willing – to carry it. The "slicing and tranching" process allowed banks to offload credit risk from their balance sheets and transfer it to other financial investors. But, historically, securitization is borne out of the more simple desire to shortcut banking intermediation by using markets to directly match the needs of lenders and borrowers. Since both have different liquidity preferences, this usually involves the issuance of tradable – i.e. liquid-securities which can be sold to the ultimate investors. Thus, a well functioning securitized system would meet two characteristics: (1) allow for a permanent reallocation of risk between market participants according to their preferences, expectations and risk aversion; and (2) make liquidity (market liquidity) permanently available throughout the system.
The embarrassing summersaults that various governments had to perform by unceremoniously ditching some of their most sacred and fundamental policies, have also been better understood, by many communities. Now, what is needed is to move forward decisively within this new paradigm. To do so effectively, we have to essentially place some barriers to deal with unsustainable risk taking. The freedom of the wild ass that supported unfettered and reckless economic actions to create things out of nothing has to be dealt with. At the same time, we need to revisit some of the fallacies that developed over the last decade or so, including those that indirectly said: “Don’t worry too much about a few bubbles”; “markets are always right”, “innovation should not be discouraged”; “state intervention is dangerous”, etc. In a way, some of these positions perhaps prompted a kind of an unconscious regulatory anarchy! The resulting subdued regulatory reactions were of course exploited by the greedy market and the rest is history! This time round therefore, the wisdom of such concepts and absolute reliance on them, would need to be critically reviewed. What then should we do? Maybe, we could start by making a “Wish-list”, and then moving towards making a “To-do list” to realize such wishes. What could we wish for? First, perhaps we should wish for effective “immunization” mechanisms to safeguard national financial systems from the contagion effects of globalized viruses and cross border toxic elements.

Ajith Nivard Cabraal: Ensuring stability and integrity of the world’s financial system over the next few years Keynote address by Mr Ajith Nivard Cabraal, Governor of the Central Bank of Sri Lanka, 27th International Symposium on Economic Crime, Jesus College, University of Cambridge, Cambridge, 5 September 2009. *  *  *  Chairman, Professor Barry Rider, Distinguished Delegates, Ladies and Gentlemen; I am delighted to be here this afternoon at the historic University of Cambridge to deliver one of the closing addresses at your 27th International Symposium on Economic Crime. Thank you very much for your invitation, which I am honoured to accept. I am also happy that this year, 2009, marks the 800th Anniversary of this great institution. Therefore, I would like to take this opportunity to congratulate the University of Cambridge on reaching this amazing milestone, and extend my best wishes for the centuries ahead. Mr. Chairman, at your invitation, I would, today, discuss the ways and means of ensuring the stability and integrity of the world’s financial systems in the future. As in the case of all serious and complex reviews, our starting point should necessarily be to critically examine the basic and underlying reasons for this crisis.
Also as with income, the net effect of monetary policy on measures of wealth inequality is negligible. The unequal prior distribution means, however, that monetary gains are heavily skewed, with the top two deciles accounting for 60% of total net wealth gains. Charts 14-17 look at the effect of monetary policy on income and wealth looking across the age distribution. They show some notable generational differences. In percentage terms, the income gains from looser monetary policy have been largest among the young, largely due to improved employment prospects. 28  Recessions typically generate sharper rises in unemployment among those who are less educated or less skilled, so it is also worth noting that the loosening in monetary policy during the crisis played an important role in limiting that effect. Older cohorts, by contrast, lost out in income terms due to lower interest receipts on their savings. By contrast, wealth gains have been evenly spread across the age distribution in percentage terms, with every cohort gaining. In money terms, the largest beneficiaries have been older age groups, the value of whose pensions and houses have been boosted by the policy-induced rise in asset prices. Looking at the oldest age group, this boost to wealth has exceeded their income losses by a factor of around 10. Looking at the effects of monetary policy by region, the benefits of monetary policy on incomes have been evenly spread in percentage terms (Charts 18 and 19). Monetary policy has not caused any significant widening in regional inequality.

The benefits the world economy has reaped from having pursued that path are now only too clear. Global integration and co-operation has boosted dramatically flows of goods, services, people and monies. Each is at levels never previously seen. This, in turn, has helped deliver higher living standards and lower levels of 1  poverty in pretty much every country on the planet. Finch would have wholeheartedly approved. Looking to the future, however, this wind is at risk of changing direction. The global financial crisis has left lasting scars. That has created pressure to place speedbumps, or in some cases roadblocks, on flows of goods, services, people and monies. One of the key policy challenges ahead will be to prevent the hard-won gains from global integration and co-operation being lost. The stakes could scarcely be higher. Tonight, I want to discuss a different policy challenge facing policymakers, specifically central banks. It too has risen in prominence since the global financial crisis. It too has posed big questions about the existing policy order. And it too needs, I believe, to be tackled transparently and comprehensively if stability and trust in the international monetary system is to be preserved. Just before the 2016 referendum on EU membership, Professor Anand Menon of King’s College London was explaining to an audience in Newcastle that, in the view of most economists, leaving the EU would be bad for their economic health. GDP was likely to fall.