samchain/econo-pairs-v1 huggingface dataset:
Both the involvement of supervisors in assessing a bank’s risk management capabilities and the discipline that greater transparency and active markets bring to bear on management can reinforce a bank’s desire to remain adequately capitalized and in control of its exposure to risks. 2. Improve the risk-sensitivity of the capital framework  The New Accord will likewise achieve the second and parallel goal to align regulatory capital requirements more closely with the underlying economic risks that banks face. It will do so by departing from the 1988 Accord’s "one-size-fits-all" methodology that assesses credit risk based more on the type of borrower, offering instead a selection of methods to evaluate credit risk based more on the potential for loss. Under the new standardized approach, for example, banks with smaller loan portfolios or less advanced risk management systems will be better able to incorporate a borrower’s creditworthiness into their capital management by relying on external assessments of credit quality. Larger or more sophisticated institutions, in turn, will be able to rely increasingly on their own assessments under the internal ratings-based approach. Similarly, now that the industry is developing a more refined sense of operational risk – the risk of losses caused by failures in processes – the New Accord will "unbundle" this risk and allow banks to differentiate between, and manage separately, their exposures to credit, market, and operational risks. 2  BIS Review 52/2002  3.

The group is made up of senior line supervisors – that is, the people who actually assess banks’ risk profiles – and is led by Nick LePan, the Canadian Superintendent of Financial Institutions. Applying the Basel Accord in the non-G-10 countries Many other countries are similarly preparing for the final leg of our journey, and I applaud your persistence and dedication to this endeavor. At the same time, the Committee recognizes that some countries have only recently adopted the original 1988 Accord and may still be working to ensure a basic level of capital adequacy. I would like to take a moment to address the supervisors of those countries and emphasize that the Basel Committee’s efforts to revise the Accord are focused on the international banks that compete in the global capital markets and that have the greatest potential to create systemic risk. The need for a common approach to capital adequacy regulations for such banks is what drove the Committee to create the 1988 Basel Accord. As I have noted, however, the original Basel Accord has in some sense become the victim of its success, having been adopted in a number of countries and applied to entire banking systems, including banks both large and small. Now, as the Basel Committee is clearly moving away from a single approach to capital, it is important for the Committee and supervisors worldwide to reflect on the choices available to regulate the capital of banks that are neither highly complex nor internationally active.
18 documents some similar results from a recent IMF (2008) exercise, showing that the cumulative output loss in outright recessions, as well as in milder slowdowns, on average tends to be almost twice as much if preceded by a financial crisis. The results of Furceri and Mourougane (2009) suggest, moreover, that part of this output loss is permanent; they find that the typical OECD financial crisis knocks around 2% off potential output, which rises to 4% for deep crises. These findings suggest that financial crises can have a material impact on both the dynamics of the business cycle and on the underlying equilibrium growth path. The literature on the “broad credit channel” and the “financial accelerator” points to an amplifying effect of changes in firms’ financial health on their cost of capital. In particular, when borrowers have less collateral they face a higher external finance premium to compensate lenders for the increased monitoring costs (see e.g. Bernanke, Gertler and Gilchrist, 1999). But the quantitative magnitude of the effect in this type of model is usually relatively modest. And the banks in this class of model are simple or non-existent, and any incentive or information problems relate to the borrower, rather than the financial intermediary. Instead, it seems likely that the adequacy of bank capital and the associated phenomenon of financial sector de-leveraging are likely to play a central role. Capital is essential because it is the means by which intermediaries persuade creditors that they will almost surely get their money back.

However, as the economy bounces back, such a large-scale programme is now mostly pushing up housing prices, and this rise is not covered by the subsidised interest rate. Nor does it improve the affordability of housing for people, while the main goal is to increase the affordability of housing for people. We needed a shift to more targeted programmes addressing social issues, rather than focused on boosting construction in general. This is exactly why the parameters of the subsidised programme were changed, as was announced by President Putin. The next measure is reducing people’s and companies’ costs for covering their daily financial needs. In other words, this is not only loan restructuring and new loans which largely offset plummeting incomes, but also lower costs in the financial sector. We introduced a free limit of 100,000 rubles for P2P money transfers in the Faster Payments 2/5  BIS central bankers' speeches  System and obliged all banks to provide convenient access to the FPS in their applications. In addition, we limited acquiring fees to reduce companies’ costs related to cashless payments. This was a temporary measure, but it helped companies save 1.5% of their non-cash flows. Accommodative monetary policy and, accordingly, lower deposit rates made people opt for more profitable instruments in the stock market. Russia recorded a surge in the number of retail investors. As of the current moment, almost 13 million people have entered the stock market. They are mostly newcomers in the stock market, and we need to protect their rights.
As consumers embrace the digital era, insurers will need to rethink their distribution strategies and partner relationships as digital and remote options are rapidly replacing commonplace functions and tasks. Digital technology can be deployed effectively to accommodate customers’ priorities in ways that would promote customer support and loyalty whilst significantly enhancing the consumer experience and satisfaction. In many ways, the human capital and technology imperatives share characteristics that are borderless. We are living in a globalised world, with significantly greater capital and labour mobility than in any other period in history. For multinational organisations, this enables ideas and innovations to transcend borders and be more easily replicated to great positive effect, to grow successful businesses and transform the economies in which they operate. This is where foreign partners of local entities with international presence have enormous potential to make a significant contribution to the development of local economies. As international entities that actively operate in more developed insurance markets, foreign insurers should bring new and proven systems, technology and experiences which can enhance their domestic operations and benefit the wider economy of the host country. This is the fundamental value of foreign direct investments. We know of successful cases in Europe where digitisation has been transformational, where a higher adoption of straight-through  BIS central bankers’ speeches  3  processing, paperless documentation, usage of customer analytics and electronic payments have all led to improved efficiency and higher service value for insurers.

Let me explain why in more detail, and then conclude with where that leaves my policy thinking. The Brexit vote  Turning first to Brexit. The vote to leave the EU leaves the UK in a position which is not just unusual but unique. As my colleague the Governor said recently, the Brexit negotiations are the biggest challenge as well as the biggest opportunity facing the country at this moment. And the outcome of those negotiations remains the most significant influence on the economic outlook, as well as the greatest source of uncertainty about the future. As a member of the MPC, my task in the face of this uncertainty is to balance any trade-off between the speed at which inflation returns sustainably to target and supporting employment and activity, in line with our 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  remit from the Government, as the UK economy transitions to whatever end state results from those negotiations. What does that mean in practice? In the MPC’s assessment, consistently held since before the referendum, Brexit is affecting the UK economy via three main channels – that is, through its effects on supply, demand and the exchange rate. On the supply side we expect Brexit to have both a long and a short run effect on productivity. 5  The long run effect comes about through the effects on the UK’s openness. We know that on average being more open to trade makes an economy more productive.
In communications on the level of the neutral real interest rate that pre-date my membership of the MPC, a distinction has been drawn between ‘capital R-star’ – a low frequency concept, which ‘looks through’ the impact of short-term economic shocks – and ‘little r-star’ – a higher frequency concept, which is influenced by shocks. 6. In the recent past, the MPC has assumed trend real GDP growth in the UK of around 1½%pa, albeit with the year-toyear evolution of potential GDP more modest in recent years owing to a series of adverse supply developments associated with inter alia Brexit and the Covid pandemic. Supply trends are of course uncertain and regularly reviewed by the MPC. An updated MPC assessment of those trends is scheduled to be published as part of its February 2023 Monetary Policy Report. 7. By the same token, other countries – notably the US – that are net exporters of natural gas (typically in liquefied form as LNG) have seen a substantial, mirror image improvement in their terms of trade. On this dimension, developments in most Western Europe countries (including the UK) are therefore quite different from those in the US. 8. Abstracting from monetary policy, the textbook optimal response to a (real) terms of trade shock would be to switch the composition of demand away from domestic to external sources while sustaining aggregate demand at levels consistent with the full utilisation of available resources, i.e. an ‘expenditure switching’ rather than ‘expenditure reducing’ response, typically associated with real depreciation.

Jean-Pierre Danthine: Presentation of the Swiss National Bank’s Financial Stability Report Introductory remarks by Mr Jean-Pierre Danthine, Vice Chairman of the Governing Board of the Swiss National Bank, at the Media News Conference of the Swiss National Bank, Berne, 18 June 2015. *  *  *  As my colleague Thomas Jordan has explained, global economic growth in the first quarter of 2015 was below expectations. However, over the last 12 months, we have seen an improvement in international economic and financial conditions, although substantial risks remain. The domestic environment has become more challenging due to the strong appreciation of the Swiss franc that followed the discontinuation of the minimum exchange rate in January 2015. Against this background, I would like to examine the situation at Swiss banks from a financial stability perspective, looking first at the big banks and then moving on to a discussion of domestically focused banks. A more detailed assessment of the situation can be found in the latest Financial Stability Report published today. Big banks Further improving resilience Over the past year, the Swiss big banks have continued to improve their capital situation, albeit at a slower pace than the year before. They already meet most of the requirements which will apply from 2019. While acknowledging the progress made, the SNB recommends that the big banks do not lose momentum in their efforts to improve their resilience. This is particularly warranted with regard to the leverage ratio.
The weakening of this status of being a safe asset in some countries added renewed fragility to financial institutions. Five years into the crisis, there remain manifold challenges to global financial and economic stability. The situation continues to be extraordinarily complex, and there are no easy solutions on offer. The exceptional dimension of the crisis – the real threat it presents for the prosperity of the people in Europe and around the world – requires a forceful response by national and international authorities. However, several factors are limiting the capacity of authorities to react around to world. Most importantly, the weak fiscal positions of many countries are placing severe constraints on the capacity of governments to – somehow – spend their way out of the crisis. In some cases, this has led to calls on monetary authorities to act more. In addressing the crisis, we should not forget that policy responses shape future expectations. We cannot afford to take measures that entail the risk of adverse economic consequences, such as moral hazard in fiscal policies or an unanchoring of inflation expectations. In my remarks, I will focus on the euro area’s framework for economic governance and on the crisis resolution measures taken in there. In view of enormous challenges that had to be dealt with, both the ECB and the euro area governments have taken important policy measures.

For instance, international developments may be weaker than expected if the US economy slows down more suddenly than expected. With regard to economic activity in Sweden, we instead see a risk that we are underestimating domestic demand. The way energy prices will develop in future is another genuinely uncertain factor in our forecasts. Let me finally, before I summarise what I have already said, say a few words about our views on fiscal policy. As I mentioned at the beginning, the economic policy regime we have had in Sweden over the past decade has functioned well. It has created a stability in the economy that we have not experienced in decades. An absolute condition for this regime has been that fiscal policy is conducted in a way that is compatible with long-term sustainable public finances. This condition would certainly appear to be met. Having said that, one may observe that the formulation of fiscal policy in the short term affects supply and demand, employment and inflation. It thereby becomes a factor that needs to be taken into consideration when formulating monetary policy (Figure 14). The new budget entails a slightly more expansionary fiscal policy and thereby slightly stronger consumer demand than we had earlier assumed. However, above all the budget contained measures aimed at improving the labour market. In qualitative terms it appears reasonable to assume that these measures will increase the labour supply and gradually also employment.
Conclusion It is important for the Riksbank to analyse the housing market and household indebtedness, not least because they can have an impact on our ability to perform our tasks relating to price stability and financial stability. Our expansionary monetary policy aims to maintain confidence in the inflation target. Today I have pointed out that international monetary policy establishes a framework for Swedish monetary policy. Inflation is now moving in the right direction. However, one precondition for the success of our monetary policy strategy from a longerterm perspective is that we take measures elsewhere to reduce risks linked to the housing market and household indebtedness. Developments are definitely moving in the wrong direction! There are several potential risks for the real economy, financial stability and price stability, which are connected to household indebtedness and the housing market. I have attempted to shed some light on several of them today. The Swedish housing market could be likened to a “blind spot” in terms of economic policy. In its latest statement on Sweden’s economy, the IMF described the situation on the Swedish housing market as self-inflicted. 23 It is essentially each individual bank’s responsibility to ensure sound long-term credit lending. This is a central principle in a market-based system, and something which we should not forget in the debate about the housing market and household indebtedness. However, the authorities are responsible for taking action if developments threaten macroeconomic and financial stability. Sweden is lagging behind in this regard.

For the past couple of years the banks, along with international bodies and fast-food chains, have become the main target for antiglobalisation and anti-capitalist protests. I leave others to muse on the motivation and justification for such actions, but I do note that bank finance for developing countries, and more particularly the question of debt forgiveness, are prominent items on the protest agenda. I also note that this is a subject which has for several years been keenly debated, more soberly, by governments, international organisations such as the IMF and World Bank, and banks themselves. It is a complex issue. One must never lose sight of the fact that bank lending involves a contract between the bank and the borrower, and the parties should be expected to honour that contract. If it is treated otherwise, then the basis for all future relationships crumbles. But in practice the situation is hugely complicated if there is a syndicate of lenders, giving rise to problems of co-ordination and potential free riding, or if the World Bank or IMF are involved, which typically expect to be at the front of the queue for repayments. At the end of the day, commercial banks may decide that a degree of debt forgiveness (possibly disguised as a generous rescheduling) is advisable as the best means of minimising overall losses and, perhaps, preserving longer-term business opportunities with the country or customer in question. But this should be a commercial decision.
In this respect, three points are worth mentioning: ·  the monetary policy framework contains a wide set of instruments chosen with a view to observing the principles of market orientation, equal treatment, simplicity, and transparency. The decentralisation of the operations of national central banks has undoubtedly contributed to the smooth functioning of the framework. Maintaining a close contact between commercial banks and their national central banks has helped the financial markets to quickly adopt the harmonised practices relating to open market operations, eligible collateral for credit operations and minimum reserve systems. ·  operational efficiency is highlighted by the precise adjustment of banking liquidity and effective steering of short-term interest rates; the Eurosystem has demonstrated this th efficiency, in the days after the tragic events of 11 September 2001, by acting quickly and by ensuring a smooth and orderly functioning of the European financial markets. ·  security is provided by the procedures and systems implemented, both for the execution of interbank transactions, and vis-à-vis large-value payments. The inter-bank market became integrated thanks to the setting up of the Target system for the real-time transfer of largevalue payments throughout the euro area and in other EU countries. Let me turn now to the introduction of euro banknotes and coins, which has been the last step of a now more-than-twenty-year process of monetary integration. The euro changeover On 1 January 2002, the euro banknotes and coins were issued and became legal tender in the countries participating in the euro area.

Accession of new Member States to the EU and EMU Twelve countries from central, eastern and southern Europe are currently negotiating accession to the EU. According to the calendar endorsed by the European Council, new accessions will take place as st from the 1 of January 2004. It provides further evidence, if such were necessary, of the attractiveness of the European framework, which has provided us with both political stability and economic progress for almost half a century. The accession countries have accomplished significant progress in stabilising and strengthening their economies and institutions. Observing the accession countries since the beginning of the nineties, we see the huge improvements that these countries have made, in barely 10 years, on the road towards convergence with the EU. Nevertheless, there is also a general agreement on the fact that the gap in terms of average GDP per capita between the accession countries and the euro area, although diminishing, still remains quite significant. On average, GDP per capita in terms of purchasing power parity is around 44% of that of the euro area, while in terms of current exchange rates it is only around 22%. The size of the gap, combined with the limited growth differentials between the two groups of countries, suggests that the process of real convergence will be very gradual and will have to continue far beyond the tentative dates for EU accession.