samchain/econo-pairs-v1 huggingface dataset:
Considering the important informational synergies between micro-prudential supervision and systemic risk analysis, bringing micro-supervision close to, if not under the same roof as, other central bank functions seems an attractive proposition. This should contribute to better management of overall economic stability. A concern has been expressed that an expanded role by central banks in this direction could compromise their independence that is so critical in defending their primary objective of price stability. That may indeed be a risk. But precisely because central banks are generally among the most independent institutions, they can strengthen the independence of the supervisory environment. The risk of political pressure delaying a needed tightening in credit conditions via macro-prudential tools, for example, can be minimised if the central bank has a key role. In my view, this benefit, together with the benefit of informational synergies, outweigh the risks. *** I close with a very old lesson for central banks: humility. This crisis was not just a once-in-ageneration crisis. It proved to be much worse. I hope subsequent relative calm allows our 22nd century counterparts to characterise this as a once-in-a-century event. But central banks must not let their guard down. The next crisis might well challenge the limits of our knowledge in new and as yet unknown ways. References Williams, John C. (2009) “The risk of deflation”, FRB San Francisco Economic Letter, 12, 27 March. BIS central bankers’ speeches  3  4  BIS central bankers’ speeches

The forthcoming NGFS work should therefore also focus on shorterterm horizons (2030, and not only 2050) as the transition to a low-carbon economy may be less linear than anticipated, with tipping points accelerating the transition in a disorderly way. [Slide] We generally need to better understand the long-term trade-off, in terms of GDP, between transition and physical risks and the cost of delayed action. The chart breaks down the GDP losses under three scenarios into the costs of transition and physical damages. Under the “Paris Agreement” scenario, GDP would be 5% lower in 2060 and around 7% lower in 2100, and most of this reduction can be attributed to transition policies. Under the two “Too-little too-late” scenarios, the transition costs are limited, but by the end of the century the impact of physical risks becomes much larger, leading to overall losses that could range between at least 10 and 20% of world GDP level. From an economic and rational standpoint, the prescription is clear-cut: an orderly transition would require a governmental forward-looking guidance, sending long-term signals and anchoring credible but ambitious commitments. This “climate forward guidance” should include an appropriate pricing of carbon; and as long as we don’t have such global pricing, a carbon border adjustment mechanism (CBAM), as recently put forth by the EU in order to prevent carbon leakage is appropriate. We all know how politically sensitive these issues are, domestically as well as internationally.
It is too early to say whether this will eventually affect the distribution of profit to the Confederation and the cantons. There is no need for action at this stage. The profit distribution agreement between the Federal Department of Finance and the SNB sets out clearly defined threshold values for a review. The current agreement – which runs until the end of 2017 – will be reviewed at the latest with regard to the distribution for the 2013 financial year. Should the distribution reserve, which has been built up over the last few years, be depleted before then, the agreement calls for an immediate review. BIS Review 173/2010  3  It is currently too early to say anything definite about the outcome of the review. Seen from the current perspective, it would come as no surprise, however, if the annual distribution had to be reduced somewhat. We have repeatedly emphasised that an annual distribution of CHF 2.5 billion cannot be guaranteed in the long term. 4  BIS Review 173/2010

This means that no shock that the economy will face in the future is incorporated into both the forecast and the decision. In other words, there is no way of avoiding the last-mentioned uncertainty connected with future shocks and neither the central bank nor the markets have any superior information about them. The uncertainty surrounding the first two mentioned points – the current state of the economy and future monetary policy – will be the heart of my remarks tonight. Being forecasters we all face uncertainty surrounding the knowledge about the current state of the economy. This current state should be thought of as a shortcut to all the inflationary determinants brought from the past, but due to the transmission lags having an impact on future developments. Every forecaster, and of course also the central bank, has his own opinion about the economy’s current state. One question arises immediately: Should the central bank look at market forecasts and use them as a source of information about the economy’s current state and for its decision-making? My answer is: Market forecasts should not be neglected. On the other hand they cannot be the core for decision-making and the central bank must rely primarily on its own structural modelling. This implies that despite all the transparency and communication, the central bank will – from time to time – have to surprise other forecasters and the market. BIS Review 10/2005  1  Let me now briefly explain why this is the case.
15220 16494 4800 3892 25465 1648 1136 2868 2220 560 732 574 9445 1485 1226 3262 760 575 52805 6188 1044 1767 1255 1771 300 1523 32000 333 100  23,420 25,580 34,630 18,340 25,880 18,000 24,630 22,870 19,510 27,970 18,850 13,530 19,300 22,010 26,390 13,440 23,530 37,930 2,650 2,410 1,250 3,200 1,270 9,320 13,350 6,100  Log data staff 9.63 9.71 8.48 8.27 10.15 7.41 7.04 7.96 7.71 6.33 6.60 6.35 9.15 7.30 7.11 8.09 6.63 6.35 10.87 8.73 6.95 7.48 7.13 5.70  popln staff/pop 17.87 18.22 18.64 17.88 19.38 16.69 15.89 16.13 17.19 15.46 15.44 15.10 17.86 16.55 15.27 17.48 15.99 15.76 18.81 17.47 15.94 16.15 16.94 16.11 15.07  -8.24 -8.51 -10.17 -9.62 -9.23 -9.29 -8.86 -8.17 -9.48 -9.14 -8.85 -8.74 -8.71 -9.25 -8.16 -9.39 -9.36 -9.41 -7.94 -8.74 -8.99 -8.67 -9.80 -8.63 -9.36  gdp 2.58 2.29 #NUM! 1.31 1.07 1.65 2.55 2.90 1.11 1.52 2.29 2.10 2.93 1.69 2.46 #NUM! 1.44 1.55 #NUM! #NUM! #NUM! #NUM! #NUM! 2.85 1.85  10.06 France 10.15 Germany 10.45 Japan 9.82 UK 10.16 US 9.80 Austria 10.11 Australia 10.04 Belgium 9.88 Canada 10.24 Denmark 9.84 Finland 9.51 Ireland 9.87 Italy 10.00 Netherlands 10.18 Norway 9.51 Spain 10.07 Sweden 10.54 Switzerland 7.88 Russia 7.79 Poland 7.13 Bulgaria 8.07 Czech Republic 7.15 Romania 9.14 Portugal 9.50 NZ  BIS Review 33/1997

Allow me to return to the first topic of the day and say a few considerations about Artificial Intelligence, Machine Learning and Big Data. The interconnected use of new technologies is 1/2  BIS central bankers' speeches  already a common practice in many operational fields, such as the defense industry, the automotive industry or the healthcare sector. It is, therefore, natural that new technologies would penetrate the financial sector. Their applications are diversified in design and scope, examples of which are: algorithmic trading, portfolio optimization, scoring and pricing models. Moreover, the use of these new technologies receives more and more attention in the financial and economic areas, as the transition from classical banking sector products and services is growing exponentially. In this context, the focus moves from the individual to more general issues and the question arises about the effects that the trinity described by artificial intelligence, machine learning and big data analytics, have on the financial system. Implicit answers to this question are formulated as considerations of financial stability. In other words, the key question is related to the costs and benefits that the new technologies listed above have on financial stability. The answers to this question are quite varied, given that this issue has not been thoroughly investigated up to this moment. Among the best-known benefits, some of the areas where progress can be made by using the specified technologies are: regulatory compliance, systemic risk monitoring, fraud detection and supervisory effectiveness.
These topics, as I understand, will be discussed this afternoon under the two scheduled working group sessions. To broaden the geographical reach of the large pool of useful reference documents on IRB-related issues produced for its meetings or contributed by the member jurisdictions, the AIGV has developed an electronic library on eBIS to store these documents for access by the supervisory community. The hosting of this event is well timed, as some jurisdictions have already entered into the implementation phase of the Basel II IRB framework and other jurisdictions, including many from Asia, are in the pipeline for the introduction of the framework for adoption by their banks. The event is therefore a good opportunity for representatives of jurisdictions which have yet to adopt Basel II to hear from jurisdictions already implementing the framework about the emerging issues, and to facilitate future communications on this topic among participants. As Chairman of the EMEAP Working Group on Banking Supervision, the HKMA certainly welcomes the opportunity to host this outreach event, and would like to thank the AIGV members who have stayed behind after the regular meeting to provide support. A major innovation of Basel II is that it allows banks to calculate their regulatory capital requirements using the output of their internal rating systems, subject to supervisory approval. Under the IRB Approach, banks employ internal rating systems to produce estimates of one or more risk components, which are then used as the key inputs to the calculation of regulatory capital requirements for credit risk.

Importantly we – and you – can see how we are performing month by month in relation to our mandate. We also have a tested analytical framework. We model possible future outcomes and we look at the balance of risks around a central view. We can rely on experience and judgement to make regular policy decisions. And we can alter our policy decision on interest rates each month as the data and circumstances evolve. ii)  Financial Stability and why it is different  If financial instability occurs, costs to society may be high. Damage to our reputation could be potentially high too. Yet judging the optimal amount of resources to devote to prevent crises is problematic. What degree of resilience do we want? And what should we be prepared to pay for  BIS Review 36/2005  1  insurance? This is a familiar problem in public policy – what is the optimal size of the fire brigade or army? The challenges we face in seeking to maintain financial stability are very different to those in the monetary policy arena. •  Firstly there is neither a clear over-arching analytical framework nor a commonly agreed set of indicators of incipient financial instabilities. •  Secondly the task is made harder because we are dealing with tail events – low probability scenarios – rather than central projections. It is about aberrant rather than normal behaviour and situations: less predictable and harder to model.
Low bond yields reflect global economic conditions: Governments, businesses and households are seeking to save more, while demand for safe investments has increased. Substantial asset purchases by central banks are pushing in the same direction. Low yields may also reflect modest expectations of economic growth further ahead. Historically, equities have yielded higher returns than bonds. We also expect that to be the case ahead. Still, it is doubtful that equity prices will continue to rise at the same pace as in recent years. Weak or moderate growth in the real economy will feed through to the return on equities. The share allocated to real assets has increased gradually after equities were first introduced in 1998. Soon, almost two-thirds of the fund will be invested in real assets. As we gain experience in real estate investing, it may be natural to invest in other types of real assets, or increase the equity allocation further. In the long run, a bond allocation of 20–25 percent should suffice to maintain the fund’s needed hedge against fluctuations in equity prices and execute the rebalancing strategy. Chart: Global investments Another of the fund’s characteristics, which in particular has an effect on risk management, is its large size. A main tool to manage the risk faced by the fund is diversification. With a fund of this size, we have ample opportunities to diversify.

Inflation targeting, or following Svensson “inflation forecast targeting,” has placed the forecasting process at the heart of monetary policy decision-making. Under inflation targeting, the forecasting process centres around future price developments. This does not necessarily mean, though, that central bankers are obsessed with inflation. In fact, inflation targeting requires assessing all the available information, including real economic developments, monetary analysis and external balance of the economy, in a systematic and complex way. It is hence more demanding from this point of view than the alternative monetary strategies. The inflation forecast is not only an important internal decision-making tool, but also a crucial communication device. Monetary policy has become considerably more transparent over recent decades. It is now commonly believed that open communication of monetary policy is beneficial to the stability and predictability of its transmission into the economy, and is also crucial for the accountability of an independent central bank. As a result, the inflation forecast, including its underlying assumptions and policy implications, is openly explained to the public. Nonetheless, we must always bear in mind that even highly developed, technically advanced and wellorganised forecasting procedures are not an automatic pilot for inflation-targeting central banks. They are no more - but also no less - than an important input into the monetary policy process. Eventually,  BIS Review 11/2004  1  the decision is always based not only on the central forecast itself, but also on the decision-makers’ discussions about all the associated risks.
Indeed, we at the ECB consider it of the utmost importance to ensure that the participation of the outs occurs on equal terms as the Euro Area countries. On resolution, we need to find creative solutions to ensure a level-playing field between ins and outs. This holds also true for the backstop for the single resolution fund which is currently the subject of much discussion. Taking part in the Banking Union from the beginning would bring many benefits. Having a chair at the table now allows participants to steer the practical implementation of the SSM – for example the development of the supervisory manual, guidelines and general instructions, as well as benefit from the “healing effect” that the comprehensive assessment should bring. Let me make a third remark: The banking union should be about strengthening the internal market, rather than fragmenting it. Both the single currency and the single market are key pillars of growth and prosperity in Europe. Both should be maintained and enhanced. Hence, the banking union should not create new barriers within the internal market. If countries choose not to join, they should not be discriminated against. Two safeguards will be crucial in this regard: having a single rulebook that sets the same standards for all, and having a strong and effective European Banking Authority with a fair representation of the outs. The relationship between banking and fiscal union Let me now turn to the relation between banking union and fiscal union.

If we knew that “banks in the periphery will not face severe problems” or if we knew that “the recapitalisation needs will be a double digit bn figure” we could spare the effort in conducting this exercise. All these statements are mere speculation. The comprehensive assessment is an extraordinary opportunity to rebuild confidence in the banking sector and promote the long overdue repair of bank balance sheets, which in turn is a precondition for a sustainable economic recovery. One particular point needs to be stressed: credible national backstops must be put in place. If not, the credibility of the whole exercise is put at risk as the outcome will then almost certainly be negatively perceived by market participants. Doing this balance sheet assessment without a backstop in place would be a bit like getting on a boat in rough weather conditions, and not taking a life jacket on board. Any recapitalisation needs uncovered by the exercise should of course first and foremost be covered by the market. National budgets and national resolution funds may intervene as a second line. Finally, a European backstop, the ESM with its existing instruments, meaning a banking sector programme like in the case of Spain, may be available. The second key element of a banking union is the Single Resolution Mechanism, a European equivalent to the Federal Deposit Insurance Corporation. The crisis has shown that simple coordination among Member States has been inadequate to organise the resolution of crossborder banks in an efficient, quick and least-cost manner.
Taking these two elements together, I can conclude that, at the time of our February meeting, the risk-free forward curve – together with all the other factors influencing markets’ and experts’ inflation expectations – could be seen as compatible with a return of inflation to the 2% target in the medium term. And we acted and communicated in accordance with this assessment. First, we reiterated our determination to stay the course of raising interest rates significantly at a steady pace and keeping them at levels that are sufficiently restrictive to ensure a timely return of inflation to its 2% medium-term target, in a manner consistent with our December communication. Second, we approved a 50 bp rate hike that had already been discounted by the market. Third, we announced our intention to raise rates by another 1  The fo rward curve is used as an indicato r o f the future expected path o f the sho rt-term risk-free interest rate (as represented in the euro area by the € an index o f banks' o vernight bo rrowing co sts that very clo sely tracks the ECB’s depo sit facility rate). Strictly speaking, the fo rward curve is no t an exact indicato r o f the expected po licy rate path, because fo rward rates also co ntain term premia that fluctuate o ver time.

Last winter we saw how short the path was from a local virus outbreak in Wuhan to a global health crisis. Covid-19 followed the same routes as tourists, labour and goods. The virus showed how closely interconnected and interdependent countries are. 2 See The Productivity J-Curve: How Intangibles Complement General Purpose Technologies Erik Brynjolfsson, Daniel Rock, and Chad Syverson NBER Working Paper No. 25148, https://www.nber.org/system/files/working_ papers/w25148/revisions/w25148.rev0.pdf  6  NORGES BANK  Chart 5 Growth in global trade has stalled Share of global GDP. Percent 30  30  Trade in goods Trade in services  25  25  20  20  15  15  10  10  5  5  0 1977  1983  1989  1995  2001  2007  2013  ECONOMIC PERSPECTIVES 18 FEBRUARY 2021  0 2019  Sources: Refinitiv Datastream, WTO and Norges Bank  A rising number of countries have been integrated into world trade over the past decades (Chart 5). The gains have been substantial. Poverty has been reduced. Crossborder cooperation has enabled technology to advance faster than it would have done otherwise. Since the financial crisis, growth in global trade has stalled. While service exports have continued to rise, trade in goods as a share of global GDP has been more or less flat in recent years because a number of sources of growth in goods trade are drying up. Large countries such as China and India are now fully integrated into the global economy.
Step 1: Initiation of financial sector consolidation The Central Bank initiated the planning of the consolidation programme several years ago, and since then, a number of things have been done to bring it into reality, with procedures being carefully articulated for smoother implementation. As a result, in 2013, the Central Bank officially informed the Ministry of Finance, through a Budget Proposal, of the need for a strong and dynamic financial sector, by consolidating the institutions in the banking and nonbanking sectors in a prudent manner to ensure enhanced financial system stability and to spearhead economic growth. To support this initiative, His Excellency the President, in his Budget Speech on 21 November 2013, proposed to grant special tax concessions for expenditure incurred by banks and NBFIs, if they merge with, or acquire one or more financial institutions. Further, in view of providing better financial services for the development activity of the country, His Excellency proposed that two development banks, that is, NDB and DFCC be merged, for which too, qualifying payment status would be granted. Ladies and gentlemen, as the Central Bank is charged with the duty of securing financial system stability by its mandate, the major responsibility of implementing the consolidation programme announced by His Excellency the President was entrusted to the Central Bank. Further, in order to meet the funding requirements for the implementation of the consolidation programme, the Monetary Board approved a budgetary allocation from the Central Bank.

The BNB Governor also outlined the second work block in this direction, on which the BNB is currently working, i.e., the overall framework of determining the amount of funds to be contributed by banks to the Single Resolution Fund and the amount and way of transferring funds from the Bank Resolution Fund in Bulgaria, which was set up in 2015, to the Single Resolution Fund. The third work block covers the overall activity of planning and conducting resolution activities, including the distribution of responsibilities and tasks between the Single Resolution Board and the BNB after our country joins the Banking Union. With regard to the expected effects on the economy and the business, the BNB Governor highlighted that it was positive to reaffirm Bulgaria’s strategic course, and that the process is already being filled with content and specific timeframe. The whole process stands as a positive counterbalance against the more general uncertainty from the global and European economic environment. 1/2  BIS central bankers' speeches  Among the more direct positive effects from this first stage on the path to the euro area is the anticipated improvement of the country’s credit rating, as announced by the credit agencies, should the process run successfully in the short-term. That would improve the funding conditions in the country. At the same time, the effects of joining ERM II will not be tangible in regard to the macroeconomic policy and neither will our monetary regime change.