samchain/econo-pairs-v1 huggingface dataset:
First of all, I’d like to underscore that we are well aware of both the power and the limitations of monetary policy instruments. Monetary policy can help bring about a smooth economic adjustment, but this can only be done in order to fulfil the primary objective, to maintain price stability in the euro area. The ECB responds to the price stability symptoms of the crisis, not to its fiscal and structural root causes. Seen from the perspective of the authorities responsible for fiscal and structural policies, monetary policy can buy time for reforms that become effective with some time lag, monetary policy can alleviate the macroeconomic duress that past policy mistakes can inflict on citizens, but it cannot substitute for reforms. The ECB’s response was composed of two types of measures, standard and non-standard. Standard measures activate those instruments we have also used before the crisis to achieve price stability, primarily changes in short-term interest rates. After the intensification of the global financial crisis in September 2008 – the second layer of the iceberg – the ECB reduced its main interest rate from 4.25% in the summer of 2008 to just 1% in May 2009. This was a series of rate cuts that was unprecedented in speed and size over such a short time-span. However, the third and fourth layers of the crisis also posed a threat to the effectiveness of such standard measures.

We  BIS Review 68/2004  1  believe that improving risk management helps to increase the stability of the global financial system - a goal that would benefit not just banks, but more broadly businesses and consumers. To foster greater financial stability, the Basel Committee blended several policy approaches to replace the existing capital framework. Basel II consists of three mutually reinforcing pillars. The first pillar aligns the minimum capital requirements more closely to banks’ actual underlying risks. Many banks will rely on external measures of those risks to determine their capital requirements. These might include drawing on credit ratings issued by external rating agencies or on supervisors’ assessments of the degree of operational risk inherent in various businesses. More sophisticated institutions, in comparison, may qualify to rely partly on their own measures of those risks when determining their capital requirements, an innovation that will help to create economic incentives for banks to improve those measures. The second pillar - supervisory review - allows supervisors to evaluate each bank’s assessments of its own risks and to determine whether those assessments seem reasonable. Ultimately each bank’s own management is responsible for assessing and responding prudently to all of the risks that a bank faces, including those risks that might not be captured entirely in the first pillar. The second pillar will therefore foster a dialogue between banks and their supervisors on the nature of the risks that banks face and the measures they take to control them, including holding aside sufficient levels of capital.
Elvira Nabiullina: Review of Russia's economic and financial developments in 2016 Speech by Ms Elvira Nabiullina, Governor of the Bank of Russia, at the plenary session of the State Duma of the Russian Federation, Moscow, 9 June 2017. * * * Dear Vyacheslav Volodin, and deputies of the State Duma! The Central Bank is guided in its actions by strategic objectives. I want to note that across the country, every employee of the Bank of Russia knows what these are. They are the basis on which key performance indicators for employees are formulated. These objectives are: price stability; financial market sustainability; availability of financial products and services for households and businesses; development of the national payment system; development of technologies and support of innovations in the financial market. These objectives follow directly from the functions of the Central Bank, as defined by the Constitution and by the law. Yesterday, I took another look at the speech I gave to the Duma four years ago. Yes, of course, life has made adjustments. No one back in 2013 expected such negative external factors, the sanctions, and the drop in oil prices. So the task of ensuring financial stability has come to the forefront of our activities. But in dealing with this problem, we have tried not to lose sight of strategically important activities that we assigned ourselves four years ago, and we must continue to work towards the completion of these.

This will come to the fore over the course of the next five years. Creating conditions for development involves: introducing a system of individual pension capital – essentially a voluntary system for individuals; developing non-bank financing and the bond market; developing the capital market – in essence, creating long-term money for the country. At the moment we don’t have long-term money, and so we must and will be doing everything we can to create it. Further development of the payment system will involve a smooth transfer of the salaries of public sector employees and social payments on to a card system called “Mir". To make this transfer smooth and orderly is our task for the near future. We will also be aiming to expand the acceptance of the Mir card outside of Russia. We have already begun plans and arrangements with other countries on this front. Finally, I will return to the topic of financial technology development – I have also spoken about 2/3  BIS central bankers' speeches  this previously. The development of financial technologies will in large part determine the specific actions to be taken by us in the coming years. This will involve active joint efforts with businesses. Legislative support is also important here, particularly in terms of remote authentication, which will make new technologies and digital technologies possible. This implies a transition to electronic document workflow in the financial market.
BIS Review 29/1997  -4-  The bottom line in all this is that if EMU goes ahead on time and whether the UK is in or out, the impact on your business will depend very much upon the nature of the business you are in. Up to now, we at the Bank have concentrated mainly on ensuring that the banking system and the wholesale financial markets will be ready to operate in euros from Day 1, because they will be affected first, and they will be affected whether or not the UK is a part of the “first wave”. But we are conscious of the developing thirst for information from the rest of the business community. With this in mind, we have co-operated with the CBI and the British Chambers of Commerce in organising regional workshops - including one to be held here in Liverpool on 23 April. We are participating too in seminars organised by the Forum of Private Business - and I am sure that if you are interested you will be able to prevail upon Stan Mendham, who I am delighted to see here this evening, to organise such a seminar here too! If you are really lucky, 007 might even provide you with a short Bank of England guide: “Introduction of the Euro - what does it mean for business?” which, for reasons that I can’t quite understand, in this case comes absolutely free.

In the present setting of ongoing deleveraging of the non-financial private sector, mounting regulatory pressure and narrow interest margins, re-sizing of the industry was essential. Much of this re-sizing has come on the back of the intense process of rationalising the balance sheets of the banks that received public support, in accordance with the conditions laid down in the restructuring and resolution plans approved by the Banco de España and the European Commission. Moreover, the concentration processes involving the integration of some of these institutions into other bank groups (for example, Caja 3 in Ibercaja, Banco Gallego with Banco de Sabadell, Banco de Valencia with Caixabank, CEISS with Unicaja and, most recently, Catalunya Banc with BBVA), added to those completed previously, have reduced the number of bank groups in Spain by more than 30 in recent years. Accordingly, the reform of the Spanish financial system may be said not only to have restored stability, but also to have placed the banking sector in general back onto a normal footing, through the recapitalisation and consolidation processes undertaken, the clean-up of balance sheets and the reform of the savings banks. Upcoming challenges Nevertheless, however positive this return to normal – which has now been evidenced by the tests conducted in the run-up to the SSM – has been, especially following the turmoil experienced, there is no respite, as there are major challenges ahead for Spain’s banks, as there are for the banks of our European partners.
Their response to the cry of this time is different is to assert that “it almost never is.” Why, then, is it so hard to understand the true picture of financial crises? I think that the issue here lies clearly in the characteristics of banks. One of the conclusions of work on the history of financial crises is that they have worse outcomes when they involve banks. As an example, if you remember the stock market crash of 1987, which seemed very bad at the time, it did not threaten the banking system, and its effects were contained. It was not a major financial crisis in its own right. The reasons for this difference when banks are involved have to do with the nature of banks. At the heart of banking is a technical term called maturity transformation, or more simply, banks borrow at a shorter term and lend at a longer term in respect of the duration of their deposits and loans. This is the essence of banking. Banks transform savings that may be required by their owners at short notice into longer-term loans. This is a benefit to the economy and society because it allows longer-term borrowing by companies and by all of us to buy houses. But it makes banks inherently illiquid. If all depositors decided to ask for their money back at the same time the bank would struggle to pay-out and survive. This is because the bank will generally find it difficult to realise its assets in time.

But the moves are still small relative to those we saw ahead of the Referendum. On a day-to-day basis, we continue to use our balance sheet in support of monetary policy and financial stability. Our regular market operations will continue to keep market rates anchored to Bank Rate, and we will continue the programme of gilt reinvestments that maintains the stock of APF purchases at its target level for as long as the MPC choose to maintain it there. And our monthly Indexed Long-Term Repo liquidity facility continues to see regular usage, with £ allocated in September’s operation. Looking further ahead, the TFS is now closed to new drawings, and will gradually unwind in the coming years as banks repay their loans. In June the MPC gave updated guidance that it will not reduce the stock of asset purchases until Bank Rate reaches around 1.5%, and any decision on what happens then will of course be a decision for the MPC of the time and will depend on the economic circumstances prevailing at 28  the time. As and when our balance sheet shrinks, it is likely that its size will return to being determined by the level of SMF participants’ demand for reserves (as well as the amount of banknotes in circulation), rather than by the quantity supplied.
Black, A and Fraser, P (2002), “Stock Market Short-termism – An International Perspective”, Journal of Multinational Financial Management, Vol. 12, pp. 135–158. Campbell, J and Shiller, R (1988), “Stock Prices, Earnings, and Expected Dividends”, The Journal of Finance, Vol. 43 (3) pp. 661–676. Carr, N (2008), “Is Google Making Us Stupid? What the Internet is doing to our brains”, Atlantic Magazine, July-August 2008. Chartered Financial Analyst Institute (2006), “Breaking the Short Term Cycle. Discussion and Recommendations on How Corporate Leaders, Asset Managers, Investors, and Analysts Can Refocus on Long-term Value”, CFA Centre for Financial Market Integrity/Business Roundtable Institute for Corporate Ethics. Cuthbertson, K, Hayes, S and Nitzsche, D (1997), “The Behaviour of UK Stock Prices and Returns: Is the Market Efficient?”, The Economic Journal, Vol. 107 (443), pp. 986–1008. Dean, G, and Irwin, J O (1964), “The stock of fixed capital in the UK in 1961”, Journal of the Royal Statistical Society, Vol. 3, pp. 327–358. Department for Business Innovation and Skills (2011), “A Long-term Focus for Corporate Britain, Summary of Responses”, March. Duruigbo, E (2011), “Tackling Shareholder Short-termism and Managerial Myopia”. Fama, E F (1970), “Efficient Capital Markets: A Review of Theory and Empirical Work”, The Journal of Finance, Vol. 25 (2), pp. 383–417. Financial Times (2011), “BNSF chief hits at short-termism”, 12th Feb. Graham, B (1949), “The Intelligent Investor”, HarperCollins. Graham, J R, Harvey, C R and Rajgopal, S (2005), “The Economic Implications of Corporate Financial Reporting”, Journal of Accounting and Economics, 2005.

The rational discount uses an average risk free rate from our cross sectional data sample (1.085). This is illustrated even more clearly if we consider payback periods. Under rational discounting, payback occurs in 9 years (Chart 7). Under upper bound myopic discounting, the investor today would erroneously assume that payback would never be made. These differences have the potential to alter radically project choice. The net present value of this  12  BIS central bankers’ speeches  project evaluated over 50 years falls from $ under rational discounting to a loss of $ under extreme myopia. In other words, a NPV-positive project would be resoundingly rejected. To put the point more starkly, Table 7 asks at what point in the future the residual value of a future cash-flow hits a level of 10%, 1% and 0.1% of its face value, under rational and myopic discounting. Under rational discounting, cash-flows even 50 years ahead retain more than 1% of their face value. Under strong myopic discounting, this residual threshold is reached after 25 years. Virtually zero weight – less than 1000th of the face value of the cashflow – is placed on projects with income streams much beyond 35 years. The long is dramatically shortened. This is a market failure. It would tend to result in investment being too low and in longduration projects suffering disproportionately. This might include projects with high build or sunk costs, including infrastructure and high-tech investments.
I am not going to reflect on that tonight, but while the original announcement came as a shock to some business models, the PRA’s assessment was that it did not appear to compromise the safety and soundness of firms in way that threatens our objective, and nor did it threaten our insurance objective of policyholder protection. No firm has failed, but bear in mind that orderly failure is very much consistent with our objectives being met. That is what should happen in my view, namely the prudential position should be sufficiently safe and sound to accommodate changes in other areas of public policy. It is not easy in our world to point to indications of when our objectives are met, a point made to us quite rightly by the National Audit Office. I would offer this as one such indicator. I will spend the rest of my time commenting on a four areas where we are either taking action or watching very carefully to determine whether action may be required. The first is the capital framework for banks – which is distinct from, but related to, the capital position of banks that I mentioned at the start. There are now three planks to the capital framework: a risk-based assessment which may be based either around firms’ internal models or a standardised approach; a measurement of leverage; and stress tests.

Jean Claude Trichet: Welcome Malta! Speech by Mr Jean Claude Trichet, President of the European Central Bank, at the event for launching the joint communication campaign for the euro changeover at the Central Bank of Malta, Valletta, 30 September 2007. *  *  *  Ladies and Gentlemen, It is a great honour and pleasure for me to be here at this festive moment. This is to mark the launching of the joint communication campaign for the euro changeover in close co-operation with the Central Bank of Malta and with our friend, Michael Bonello, just 92 days before Malta adopts the euro on 1 January 2008. This will signify a great milestone in Malta’s history, especially since Malta only joined the European Union (EU) almost four years ago, on 1 May 2004. Let me first offer my warm congratulations to all of those who have helped bring Malta to this point. In 2002 for the countries that were in the euro area at the time, as well as for Slovenia this year, it was a memorable moment and a positive step. So I can well imagine how the Maltese feel at the moment. You can be proud of Malta’s successful convergence process. In fact, we are very pleased about the fruitful cooperation between the European Central Bank (ECB) and the Central Bank of Malta in the preparations for the changeover, be it at the technical level or through the participation of Governor Bonello as observer in the Governing Council since last July.
The credit quality of loans backed by the State through the Official Credit Institute (ICO) deteriorated somewhat in 2021, although at a slower pace than in the previous half-year. At December 2021, 20.2% of ICO-backed loans were classified as Stage 2 exposures (up 3.9 pp on June 2021), and 3.5% as NPLs (up 1.4 pp on June 2021). It must be noted, however, that 30% of these loans continue to benefit from grace periods, which will come to an end in summer 2022.6 In the present setting, these credit exposures with some sign of impairment may, in turn, be more vulnerable to the materialisation of risk. Accordingly, careful monitoring is needed, together with early and correct recognition of potential losses. Third, profitability improved substantially7 in 2021. Specifically, return on assets (ROA) stood at 0.67% (compared with -0.21% in 2020 and with 0.51% in 2019). 6  In the sectors hardest hit by the COVID-19 crisis, the proportion of Stage 2 loans is higher (35.5% and 22.7% in hospitality and transport, respectively); this is also true of NPLs (6.5% and 4.5% in hospitality and transport, respectively). 7  Consolidated net profit totalled € billion in 2021, an increase of € billion on the losses recorded in 2020. 7  Extraordinary items, which were negative in 2020 and positive in 2021,8 had the most impact on profitability. Excluding extraordinaries, ROA stood at 0.57%, an increase of 37 basis points (bp) on 2020 and down just slightly compared with 2019 (0.63%).

If I may quote from John Exter’s Report of 1949 on the establishment of the Central Bank of Ceylon, (the former name of the present Central Bank of Sri Lanka), it states “It is the monetary, financial and payment systems that facilitate the flow of money in the economy and as such, the Central Bank of Ceylon undertakes a great responsibility in promoting the economic well-being of the country”. Although modern central banks concentrate primarily on price stability and financial system stability, these objectives cannot be satisfactorily achieved without simultaneous development in the payment systems. Therefore, at some stage, all central banks have to  BIS Review 35/2008  1  pay attention to payment system development, although it was taken for granted by many until recent times. 5. Advances and transformation in payment systems development  5.1 Payment systems have undergone profound changes in recent years, primarily in terms of the increased complexity of the production and differentiation of payment services offered to customers nationally, regionally and internationally. Payment systems are evolving towards an evermore universal and sophisticated level of operation. In both wholesale and retail areas, new technologies, new participants and new alliances are beginning to transform the payments system landscape. This transformation is largely due to developments in information and communication technology, and integration and globalization of financial markets at the regional and international level. 5.2 One by-product of this transformation is the blurring of the distinction between wholesale and retail activities.
Mario Draghi: Hearing at the Committee on Economic and Monetary Affairs of the European Parliament Introductory statement by Mr Mario Draghi, President of the European Central Bank, before the Hearing at the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, 15 February 2016. *  *  *  Mr Chairman, Honourable Members of the Economic and Monetary Affairs Committee, Ladies and Gentlemen, The first weeks of this year have shown that the euro area and the Union at large face significant challenges. A strong effort by all policy makers will be needed in the months ahead to overcome them. I am therefore grateful to be back before your committee to discuss these challenges and how the ECB can contribute to tackling them. In my remarks today, I will address in turn the global economic context, recent financial developments and the state of the euro area recovery. I will conclude by briefly presenting our most recent decision to disclose the Agreement on Net Financial Assets – or ANFA – as I know this topic is of concern to some of you. The state of the global economy Let me start with the state of the global economy. In recent weeks, we have witnessed increasing concerns about the prospects for the global economy. Activity and trade data have been weaker than expected, turbulence in financial markets has intensified and commodity prices have declined further. Slowing growth in emerging market economies is a focal point for this uncertainty.

Recent data show core inflation, which excludes volatile food and energy prices, running at about 3-1/2 percent, which is well above the Federal Reserve’s longer-term 2 percent goal. Taking a closer look at the data, it’s clear that this spike in inflation largely reflects the transitory effects of the rapid reopening of the economy, which is pushing supply and demand in extreme ways. As the economy gets through these unusual dynamics, I expect inflation to come back down to around 2 percent next year. Given the complexity of this topic, I’ll go into this in more detail. I find it helpful to view recent developments in terms of three categories. The first is related to prices for goods and services that underwent huge declines during the pandemic but are now rebounding as the economy reopens. For example, in the first year of the pandemic, prices for airfare and lodging fell sharply as people cut back on travel. Since then, we’ve seen these rebound toward their pre-pandemic trends, pushing the inflation rate up. One simple way to get a better read of inflation that is not overly influenced by these big swings in prices is to take the average inflation rate from the start of the pandemic. That calculation shows that core inflation has averaged 2-3/4 percent since February of last year. But even that number is heavily influenced by the effects of the pandemic on the second category: used vehicles.