samchain/econo-pairs-v1 huggingface dataset:
In my remarks today, I would like to expand on three points. First, I want to show how a very severe double dip crisis required the ECB to deploy unconventional instruments to ensure price stability. And our measures are proving effective: incoming data confirm that the cyclical recovery of the euro area economy is becoming increasingly solid and that downside risks have further diminished. Second, I will discuss the possible side effects of these measures. I will consider the different dimensions in which our monetary policy affects people’s finances and welfare, which are sometimes overlooked in the current debate. Finally, I will outline why the ECB cannot be the only actor contributing to the recovery. Other economic, financial and fiscal policies are essential to ensure a sustained recovery. Recovering from the crisis: the role of monetary policy Let me start by recalling where we came from. The Great Recession, as it is called, resulted in a protracted period of low inflation and low growth. Specifically, the euro area faced two interlinked and successive crises – a financial crisis in 2008 and a sovereign debt crisis that started to emerge in 2011 and derailed the rebound. The recovery that began in mid-2013 lost steam in the summer of 2014 as the external environment became more uncertain. At the beginning of 2014, credit growth was contracting at an annual pace of more than 3%, while overall economic growth was stalling.

First, that headline inflation is on a path to levels below, but close to 2% over a meaningful medium-term horizon; second, that inflation will be durable and stabilise around those levels with sufficient confidence; third, that inflation will be self-sustained, meaning it will maintain its trajectory even with diminishing support from monetary policy. And finally, the relevant metric in each case is euro area inflation, not the inflation rates of any individual country. However, in order to reap the full benefits of our monetary policy measures, other policy areas must contribute much more decisively to strengthening economic growth. This depends on the policies pursued by Member States, where national parliaments have a key role to play. But it also depends on our collective ability to further strengthen the architecture of Economic and Monetary Union in a way that fully reflects the interdependence among the euro area economies. Pursuing such policies will ensure a higher growth trajectory. I am now at your disposal for questions. 1 See ECB press release of 15 December 2016: Governing Council statement on Macroprudential Policies 2 See Structural reforms, inflation and monetary policy, Introductory speech by Mario Draghi, President of the ECB,  4/5  BIS central bankers' speeches  ECB Forum on Central Banking, Sintra, 22 May 2015. 3 The Five Presidents’ Report: Completing Europe’s Economic and Monetary Union  5/5  BIS central bankers' speeches
But a distinctive feature of the policy is that it should be responsive to economic and financial conditions. The primary aim is to ensure that the financial system should be sufficiently robust that it doesn’t act to amplify economic cycles, by increasing the supply of credit in good times and curtailing it in downswings. And if it’s to react in this way macro-prudential policy needs to be flexible over time. This raises the question of its interaction with monetary policy. In moderating financial risks macro-prudential policy could in principle affect activity and inflation, for which the MPC is held responsible. Conversely, if changes in interest rates affect asset prices and credit markets, they may have an impact on financial stability. And if both policies affect both objectives, how should they then be used? Is it right that official interest rates should be set only with inflation in mind, leaving financial stability to prudential policy alone – or should the burden be shared in some way, in which case decisions might better be set by a single committee or somehow co-ordinated across the two? When policy co-ordination matters: There are many examples of these issues in the economics literature. While the details are often case-specific, there are basically two sets of conditions that tend to favour coordination. One is that there are material cross-policy spillovers: A’s actions have to have a significant effect on B’s objectives (or vice-versa). Without these, it makes no difference whether two policies are set jointly or separately.

On this visit I will also meet with a wide range of people to talk about what we do and to hear first-hand the economic and financial issues important to you in the Hudson Valley so that I can best represent all my constituents in my work at the Fed. I also look forward to walking across that magnificent old railroad bridge, the Walkway Over the Hudson, for the spectacular view that I’m told awaits me. I thank the Center for Research, Regional Education and Outreach for inviting me to speak at SUNY New Paltz today. This morning I will talk about economic conditions in the nation and the region, paying particular attention to how the recession has affected the labor market here. As always, what I have to say reflects my own views and not necessarily those of the Federal Reserve System or the Federal Open Market Committee (that is, the committee that sets interest rates – also known by its initials as the FOMC). Introduction to the New York Fed By way of introduction, let me start with a synopsis of what the New York Fed is, what we do and what makes my job so interesting. The New York Fed is part of the Federal Reserve System, America’s central bank, which was created by Congress in 1913. With this act, Congress delegated to the Fed System its constitutional authority to manage the supply of money in the nation’s economy.
We have also carried out a comprehensive review of the supervisory and regulatory frameworks, to better address the risks to the banking sector: operational risk, market risk, credit risk and liquidity risk. Finally, we have actively participated in an international forum for addressing this phenomenon, known as the Vienna Initiative, and have enhanced our communication with international partners and home-country regulatory agencies. Third, we have spent a lot of time and energy administering a consolidation process in the banking sector. As a result of this process, which may now be considered as finalised, the number of banks has now been reduced to 12. This has created the premises for the banking sector to be more motivated to lend, innovative in terms of products, and more competitive in terms of cost. From a broader perspective, the Bank of Albania has worked on improving the regulatory architecture of the financial system in Albania and strengthening financial safety nets. Together with other public agencies, we have, established the Financial Stability Advisory Group; improved the legal framework for the functioning of the Deposit Insurance Agency; approved the Resolution Law; drafted a sub-legal and regulatory framework; and, established the necessary structures for them to function. In parallel, we have adopted a modern framework for formulating and implementing the monetary policy, and steadily maintained an accommodative stance. Monetary stimulus has enabled the financial environment in Albania to be transparent, and have low interest rates, ample liquidity and moderate exchange rate fluctuations.

Although the international money markets have now calmed somewhat, we have not yet seen the end of the turmoil on the financial markets – neither for the financial institutions involved nor for the international economy. After four years of strong growth and low inflation, this means more difficult times ahead for the Swiss economy. Due to the turbulence on the financial markets, the economic outlook has become more uncertain while, at the same time, inflationary pressure has heightened over the past few months – not such a comfortable position for a central bank. A positive element remains the achievements of the past few years, which have laid the foundations for a higher long-term growth trend. These need to be further improved in order to retain Switzerland as a dynamic business location. BIS Review 21/2008  1
But this certainly requires strong supervision, effective cooperative oversight arrangements, and setting up the right incentive structure so that CCPs don’t lose sight of public interest, starting with the interest of their indirect members. Let me conclude. Central clearing will make the global financial system safer. However, it also has the potential to redistribute risk. Its overall systemic effect will thus depend on the incentives for risk-taking and central clearing that accompany risk redistribution. Hence the need for the official sector to provide the right incentive framework ex-ante, produce data that can help understand the distribution of risk, and tightly supervise CCPs in a spirit of cooperation across jurisdictions. Thank you for your attention. BIS central bankers’ speeches  5

In these rapidly changing times, innovation has to be far from static and to continuously keep ahead of time. Just as the needs of the economy and society change, Islamic finance also needs to evolve to keep pace in being part of the solutions. To achieve quality growth, innovation has to focus on amplifying the positive value and impact of Islamic finance to the economy and society. This necessitates Islamic finance moving beyond being perceived as mere imitations of conventional finance. A step up is to have distinct modifications made to the products, services, business practice and operations of Islamic finance. The desired level of innovation is however – to significantly improve the offerings of Islamic finance and to build a sustainable business model to meet the unfulfilled ‘real’ needs of the economy and customers. The delivery of products and services to SMEs for example, can be remodelled to reflect deep understanding of their needs and circumstances. This paves the way for tailor made financial services solutions that can better assist aspiring entrepreneurs. To illustrate, the financing model of Islamic banks for SMEs can be more holistic – to include provision of entrepreneurship training and consulting services, as well as infrastructure support. This model not only leads to greater sustainability, but also provides more 2/5  BIS central bankers' speeches  meaningful customer experience. Within the Islamic capital market, we already see good examples of innovation in the form of green sukuk, an innovative financing vehicle to combat climate change.
Allow me to illustrate this in a figure showing what we know and what we don’t know about the effects of climate change, see Figure 1. First, there is scientific consensus on the fundamental connection between rising greenhouse gas emissions and rising temperatures. But there is considerable uncertainty surrounding the extent of the effects on temperature, precipitation and sea levels. The IPCC – Intergovernmental Panel of Climate Change4 – has calculated how concentrations of greenhouse gases in the atmosphere will increase in two scenarios; one in which emissions continue at their present rate, and one in which emissions decrease, see the red and yellow lines respectively in Figure 1. Figure 1 also shows the estimated effects of the two scenarios on the temperature, precipitation and sea level in Sweden. If emissions continue at their current 3  See Bolton et al. (2020), NGFS (2019) and World Economic Forum (2019). All the scenarios use year 2000 as base year and they were updated in 2005. A detailed description of the scenarios can be found at https://tntcat.iiasa.ac.at:8743/RcpDb/dsd?Action=htmlpage&page=welcome#citation. 4  2 [18]  rate (red figures), we can expect the temperature to rise by between 4 and 7.9 degrees, precipitation by between 17 and 41.4 per cent and the sea level by between 21.4 and 66.4 centimetres. If, on the other hand, we manage to reduce emissions in the second scenario (yellow figures), the effects will be less, but far from negligible.

First, last February, concerns surrounding a faster-than-expected tightening of monetary policy in the US triggered a major stock market sell-off and a corresponding volatility spike (green curve). Then, in May, political uncertainty in Italy led to a considerable widening of the yield spread between German and Italian 10-year bonds (blue curve). Demand for various asset classes regarded as safe havens, such as the Swiss franc, increased. Finally, in August, we witnessed a huge sell-off of certain emerging market currencies and an increase in their volatility (yellow curve). Fears of global contagion resulted in the franc appreciating strongly. It remains a safe-haven currency during periods of high uncertainty. Indeed, an analysis of the options market confirms that the Swiss franc was in demand as a safe-haven currency during the three events described above. Risk reversal shows that during these events, participants were prepared to pay a higher premium to hedge against losses resulting from a steep appreciation of the Swiss franc vis-à-vis the euro than against a depreciation. As we can see from chart 5, three-month risk reversal for the EURCHF pair was significantly negative. Even today, risk reversal is still well below zero, indicating that the situation on the foreign exchange market remains generally fragile. And now I would like to hand back to Andréa Maechler. As we have just seen, without this kind of in-depth analysis as a supplement to traditional macroeconomic analysis, it would not be possible for us to capture the complexity of markets simply and comprehensibly.
Coming now to my second point: even though regulatory arbitrage is a risk, consistency between sectors should not be mistaken with uniformity and a “one size fits all” approach could lead to unintended adverse consequences. From a financial stability perspective, one can easily draw the conclusion that risks of bank’s runs and shadow banking entity’s runs are very similar and therefore should have a similar regulatory treatment. Yet, the timing and consequences of higher lapses in insurance are hardly comparable to the banks’ one. Moreover, the shadow banking sector is much more complex, not harmonized and hard to fully capture, even after the massive reduction of activities related to this sector which followed the financial crisis. Indeed, entities such as insurance companies, CCPs, asset managers and any other non-bank actors have their own business models and specificities. Therefore mirroring by duplicating the GSIBs approach to these non-bank actors may either lead to inadequate policy options (TLAC for CCPs, ill calibrated Higher Loss Absorbency (HLA) for GSIIS) or to fostering pro-cyclicality. In this latter case, all market players would take the same positions, on the same financial instruments at the same time fostering a “one way” market. This herd behavior can lead to detrimental consequences in terms of financial stability by amplifying an irrational market decision based upon no fundamentals, which could rapidly spread to the whole financial sphere.

However, banks have not yet been able to fulfill their intermediary functions as effectively as expected. This results mainly from the fact that the banks are still the principal fund-raisers to finance public deficits. Reducing the ratio of public deficits and debt stock to national income will increase disposable resources and this will remove the obstacles to credits extended to the real sector by the banking sector. The implementation of modern risk management in credit facilities will equip banks and companies with a more robust financial structure. Needless to say, all these developments mean that the banking sector supports the capital accumulation process in the private sector by providing the real sector with resources. This, in turn, shows that the current program is providing critical support for the real sector through banking reform. The second issue is tax reform. Although important steps have been taken regarding tax reform in Turkey in the last few years, our tax system still has some flaws in matters of equality, effectiveness and management. In order to remove the unfavorable effects of the tax system on the economy and to assure permanent increases in income, the tax system should be simplified and the effectiveness of tax administration should be increased. The tax system should be equipped with a simple, comprehensible and fair structure that will avoid discrimination between different sectors. Studies to broaden the tax base, formalize the informal economy and restructure income management, which are among the reforms envisioned in the current program, have not been completed yet.
If the government in this kind of situation chooses to finance an increasing share of its expenditure by getting into debt (either via new bonds or central bank reserves), the result will be that inflation rises. The government's indebtedness is thus financed, at least partly, by a so-called inflation tax. This is a tax paid by all citizens in that money loses its value. The Riksbank is an independent central bank that makes independent decisions on government bond purchases with the aim of attaining the inflation target. The Riksbank shall thus act independently and the purchases may only be based on the Riksbank’s own assessment. In other words, the holdings may not mean that the state and the Riksbank enter into an interdependency. The purchases thus do not entail any monetary financing and do not lead to soaring inflation in that the Riksbank states that the purchases are made for monetary policy purposes. 53 Within the EU law there is for example restrictions regarding the scope of the government bond purchases. 22 [35]  Change end development – also within the Riksbank's field of operations In the economic cycle, all of the parts are connected. If there are changes in a part of the economy, this affects the other parts. Things such as technological developments, changes in demand, changed competitive conditions and new trade opportunities lead to the economic conditions constantly changing. In a larger perspective, the changes contribute to the resources being used where they do the most good and this promotes economic developments.

The concept Dutch disease stems from the negative effects on the Dutch economy of the spending of revenues from the substantial gas resources of the Groningen field. From the end of the 1960s, these revenues financed strong growth in public expenditure, which led to higher costs and a decline in manufacturing. The situation went too far, resulting in large balance of trade and government deficits which required tightening measures. This in turn led to a sharp rise in unemployment in the first half of the 1980s. But the Netherlands is not the first example of a nation that failed in this respect, and far from it 2. A very clear example is provided by Spain as early as in the 17th century when the colonisation of South and Central America provided the country with access to vast natural resources and gold. The historian David Landes describes the effects on Spanish society in his book “The Wealth and Poverty of Nations” where he cites a happy Spaniard who proclaimed the following in 1675: “Let London manufacture those fabrics of hers to her heart’s content; Holland her chambrays; Florence her cloth; the Indies their beaver and vicuna; Milan her brocades: Italy and Flanders their linen, so long as our capital can enjoy them. The only thing it proves is that all nations train journeymen for Madrid and that Madrid is the queen of Parliaments, for the world serves her and she serves nobody.”  1  See Report no.
those which, given their significance, would not be wound up in the event of insolvency, are required to hold a minimum volume of loss-absorbing instruments in the event of resolution. This is known as the MREL (Minimum Required Eligible Liabilities) requirement. 4/10  Accordingly, the European regulations are precisely tailored to the new resolution principles and contain provisions that minimise the likelihood of crises resulting in the disbursement of sizeable public funds. That said, the challenges posed by the practical implementation of these provisions are manifold. For example, the relative rigidity with which it is stated that receiving public aid generally implies the non-viability of an institution and, therefore, facilitates the activation of the resolution (or, where appropriate, winding-up) process, considerably constrains the supervisor’s management of financial crises. It might be advisable to make this aspect of the regulations more flexible, albeit maintaining, in any event, the subjection of any public support to the prevailing State aid arrangements managed by the European Commission. Yet the main challenge for the industry and its supervisors stems, to my understanding, from the potential implications of the new resolution framework for banks’ business models and for the structure of the banking sector. Allow me to expand on this. The demands of the regulations would point, in principle, to a configuration of the financial system that, in simple terms, would comprise two groups of relatively differentiated banks.

29.11.2016  The challenges of the European resolution framework Closing address of the Conference “Corporate governance and credit institutions’ crises”, Mercantile Law Department, UCM (Madrid) Fernando Restoy Deputy Governor  1 Introduction  Let me begin by thanking the organisers for the invitation to close this conference on corporate governance and credit institutions’ crises staged by the Law Faculty of the Madrid Complutense University. It is always a pleasure to return to the University where I was an undergraduate and a lecturer for several years, even if it is to a different Faculty from mine back then. The recent financial crisis, like others before it, has been marked by the use by national authorities of sizeable public funds assigned to preventing the bankruptcy of numerous credit institutions in situations of non-viability. To minimise systemic risk and prevent a serious deterioration in financial stability, substantial State aid in the form of capital was granted across the EU from 2008 to 2014. In countries such as Spain, Belgium and United Kingdom, the figures were around 5% of GDP, in Germany and the Netherlands between 2% and 3.5%, while in Greece and Ireland aid was in excess of 20% and 30% of GDP, respectively. Given the severity and high public cost of the financial crisis, the response by the international authorities has been most resolute. First, solvency requirements have been appreciably strengthened, which will increase the resilience of the financial system and, therefore, reduce the likelihood of similar crises in the future.