samchain/econo-pairs-v1 huggingface dataset:
They, surely, have both liquid liabilities and engage in maturity transformation; and, of course, they do actually operate partly through banking entities outside their home jurisdictions. Again, however, I think appearances may deceive. The liabilities of the houses are not in fact a bit like bank deposits. While it is true that the houses have increased the extent of their unsecured funding, for example through public issues, the bulk of their liquid liabilities are still secured - with, as I said, some 55-80% of the total funding of the US houses we have looked at typically in the form of repos. Nor do the houses hold themselves out to take deposits BIS Review 13/1997  -7-  from the public at large. Nor, finally, are their liabilities directly usable as a payments medium. In all these respects the houses’ liabilities are non-monetary - even if they can rapidly be turned into money. On the assets side of the balance sheet, the securities houses continue to invest primarily in liquid, marketable assets which can readily be sold. This is partly a reflection of the nature of investment banking business, in particular trading, underwriting and so on, and of regulatory requirements, but also of funding uncertainty: the securities house protects itself by being able, if necessary, to contract the size of its balance sheet very rapidly.

While a clear consensus on the best way to capture these risks has yet to fully emerge, these are very active areas of risk modeling at banks, and this is clearly a frontier area in both the regulatory and consensus economic capital regimes. In this regard, an important question to ask is how well the current capital frameworks capture the possibility of extreme events, those far in the “tail” of the distribution. Stress testing can play an important role in addressing these concerns. Stress tests should allow institutions to assess likely losses under extreme market events, those that happen too rarely to be captured under traditional value-at-risk measures, but that could cause very significant losses to the institution should they occur. Institutions have long engaged in this kind of analysis for internal management purposes. Now, however, those at the forefront of risk management are assessing the adequacy of their value-at-risk results against stress losses and finding ways of integrating the results of stress testing into their capital frameworks. Indeed, an important aspect of our supervisory process includes critically assessing stress-testing regimes. More rigorous and comprehensive stress testing of large shocks across multiple markets, geographic regions and business lines is vital, particularly for systemically important institutions. In this context, we need to see more attention paid to risks to market liquidity, and the effects on market liquidity that could result from the exit of a major dealer.
The NPC has prepared a well-focused action plan after detailed deliberations with all stakeholders and is the apex body for payment system development policies and operations. I understand that India and some other countries too have NPCs. It  BIS Review 79/2007  5  may also be important to set up a secretariat in one of the countries to lead the regional payment initiative. The SPC, as well as the task forces, should establish close links with international organizations such as the WB, IMF, BIS and also with other regional payment groups and developed country central banks for guidance and technical assistance. As I mentioned before, the ACU is the only regional clearing mechanism that exists today among SAARC member countries. It needs a clear reform agenda to mitigate risks involved in that system and ensure safe payment flows among the member countries. Already, a technical committee has been appointed under the Chairmanship of Sri Lanka to look into some elements of modernizing the ACU. The whole of yesterday we debated on some of the short-term measures that need to be introduced to the ACU clearing arrangements in order to avoid any disruptions to cross border flows. That committee too could report its recommendations to the SPC. There may be many other modifications, modernizations and reforms that need to be introduced at national and regional levels which will shape the annual work program of the SAARC regional payment initiative.

Although it is a Herculean task, establishing an acceptable level of regional coordination to generate and facilitate trade and investment and ensuring that cross border flows take place safely and efficiently, without disrupting the national financial systems is an imperative. The rapidly changing global payment system infrastructure is challenging the existence of domestic and regional payment systems that are lagging behind in the pace of development of technology, communications and globalization. Each country has to reform their payment  BIS Review 79/2007  1  systems to keep up with advanced technologies and complex processes. Given the nature of cross border transactions, the need to mitigate risks involved in them and the high cost of quality infrastructure, it is advantageous for countries in the region to undertake reforms collectively in coordination with each other. A regional payment group can attract rich intellectual and resource capacity for payment system development in the region. Within the framework of a common payment initiative, all members can create productive and collective working relationships to address issues relating to the common quest for developing the national and regional payment systems. In this regard, the central banks should promote close coordination among experts in the region to strengthen the payment system infrastructure. 3. Case for a SAARC region payment initiative  The SAARC region-wide payment system has a long way to go in improving its performances, as many others have organized themselves better for the task.
3  The slow decline in consumption is consistent with a recent rebound in employment and reduced local political and economic uncertainty. Developments in the global economy, prior to the banking turmoil, operated in the same direction. Thus, seasonally adjusted, recent months have seen an increase in employment, especially salaried jobs, which has contributed to a slight rebound in the wage bill. Indicators of domestic uncertainty have declined significantly, approaching the levels observed prior to the October 2019 social outbreak. The slower adjustment in consumption also coincides with an increase in revolving consumer credit flows, which reflects a greater use of credit lines and credit cards (figure 5). In contrast with consumption, investment has been performing poorly for several quarters. The revision to the National Accounts also shows that, seasonally adjusted, the level of gross fixed capital formation has been stagnant since mid-2021. This is consistent with the increase in the cost of credit; for some quarters access to long-term financing was severely constrained; and business expectations deteriorated amid high local political-economic uncertainty. Some of these factors have eased their importance in recent months (figure 6). As for the current account deficit, in the last quarter of 2022 it showed a significant decrease, and partial first quarter data suggest that this trend will continue. Considering the data for the end of 2022, the cumulative deficit for the last four quarters narrowed to 9%of GDP (10% in the third quarter).

This was especially true in the United States, where the task of containing inflation was still pending and history teaches us that the process has never been easy. In fact, in the last few weeks, some of the risks that we identified in the face of a process of interest rate hikes in the developed world have materialized. Doubts about the financial situation of some banks in the United States have opened up a major channel of uncertainty. 8  So far, its impacts have been contained. In fact, the central scenario of this Report considers that there will be effects on growth in the developed world and this will have repercussions on our economy. But these are impacts of a much smaller magnitude compared to episodes such as the Global Financial Crisis of 2008. Now the effects are associated with lower confidence and, therefore, with a contraction of credit levels and tighter financial conditions, a consequence of the search for safe assets worldwide. Since the most recent focus of uncertainty originated in the banking sectors of other economies, it is important to review what is happening in our country. The first thing to reiterate is that the Chilean banking system is subject to adequate regulation and supervision, which makes situations such as those that triggered the current uncertainties in international banking very unlikely to occur. This does not mean that the Chilean economy, including the banking system, is immune to a further deterioration of the external scenario.
Obviously this can delay the whole process - a point to which I will return later. This is only a very short description of the mechanics of a workout and hardly does justice to what can be an enormously complicated exercise involving banks with widely different levels of security as  BIS Review 45/1999  2  well as non-bank creditors whose interests also need to be taken into account. But I hope that I have given you enough to illustrate the central principles of the process: a willingness by the debtor to recognize that there is a problem and to approach the banks to seek assistance, matched by support and forbearance by the banks and a willingness to work together to reach a solution by consensus. That solution may not be the optimum one for every individual bank but the objective should be that each bank is at least better off than it would be in a liquidation and is treated fairly vis-à-vis others. In the course of preparing this speech I have had the benefit of talking to a number of market participants about how effectively the workout process in Hong Kong and the HKAB Guidelines are working. It is fair to say that there are varying shades of opinion on this point, but there is general agreement that the Guidelines have made an important contribution in codifying what is expected of banks in Hong Kong. It is equally true that there may be room for improvement in the workout process.

Caleb M Fundanga: Payment system developments in the region Speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the official opening of the 2007 SADC Payment Systems Regional Conference, Livingstone, 2 April 2007. *  *  *  • SADC Payment Systems Project Team Leader; • SADC Payment Systems Project Country Leaders; • Chairperson, Bankers Association of Zambia; • Delegates from all SADC Countries; • Distinguished invited guests; and • Ladies and Gentlemen On behalf of the Bank of Zambia and indeed on my own behalf, I wish to welcome you all to Zambia and Livingstone in particular. For those of you coming to Livingstone for the first time, you will no doubt soon discover that this historical city, which incidentally was Zambia’s capital city until 1935 when it was moved to Lusaka, is one of the world’s pristine tourist destination and boasts of a number of magnificent sights and places of cultural interest. For those of you that have been here before, I wish you a joyous time as you renew your acquaintance with this beautiful city and enigmatic Victoria Falls. To all of you, I implore you to shop around and take a piece of Livingstone as souvenir on your return. Ladies and Gentlemen, allow me to thank you all for being here for the 2007 SADC Payment Systems Regional Conference. This event has now become interwoven into the tradition and fabric of SADC.
These developments have spurred the necessity of our having to better understand and perform more analysis on banking risks. After all, banks do live and prosper by accepting risks, but these risks have to be managed with proper care. As we have all seen, well-managed banks have tended to stay resilient to the banking crisis and provided a backbone for restoration of financial stability. We must therefore, continuously adopt new techniques and technologies in risk analysis to ensure appropriate risk management of all financial institutions in the future. Of course, prevention is always better than the cure. As financial regulators, one of our main tasks is to provide a prudential framework ensuring the overall improvement of risk management of financial institutions. In the case of Thailand consolidated supervision as well as prompt corrective action will be introduced under the new Financial Institutions Act. Study is also on the way to prepare ourselves for the implementation of the BIS New Capital Regime, and we look forward to their conclusion for an explicit framework that will complement our current practices where we ask the Board to understand the nature of their organization’s business activities and risk appetite in order to provide an adequate internal control system to monitor and mitigate risks. Risk-based supervision represents yet another endeavor to tackle the effectiveness of risk management of financial institutions as transaction testing may no longer be an effective approach to examine the ever-more complex financial institutions of today.

For a small, open economy like Switzerland, in particular, the effectiveness of monetary policy measures can be largely dependent upon acceptance by the international environment. An important example for our country is the minimum exchange rate – an exceptional measure taken in an extreme situation. With this measure, the Swiss National Bank is countering distortions in the foreign exchange market which can be traced back to international events. The minimum exchange rate is accepted internationally because markets, international organisations and foreign central banks have understood the objective and motivation behind it, which they see as justified. BIS central bankers’ speeches  1
In the same way, the crisis revealed the critical deficiencies in the toolkits available to the regulators to deal with nonbank institutions in duress. Emergency lending by the Fed might be enough to forestall the disorderly failure of a systemically important institution and all the wider damage such a failure might cause, but it was a blunt and messy solution, employed as a stopgap measure because better alternatives were not available. What is needed – what our country still lacks – is a large-firm resolution process that would allow for the orderly failure even of a systemically important institution. 2  BIS Review 6/2010  Thus, in the fall of 2008, regulators and policymakers found themselves facing the prospect of the total collapse of a complex and interconnected system. It was these circumstances, and the prospect they created for an even deeper and more protracted downturn in real economic activity and employment, that required truly extraordinary actions on the part of the Federal Reserve, as well as the Treasury and many other agencies. This is a situation in which the United States must never again find itself. For its part, the Federal Reserve is hard at work on developing and implementing new regulations and policy guidance that take on broad lessons of the recent crisis. We are working with other banking regulators in the United States and overseas to strengthen bank capital standards, both by raising the required level of capital where appropriate and improving the risk capture of our standards.

The fact that the Fed needed to take those actions provides a stark illustration of the significant gaps in our regulatory structure, gaps that must be eliminated. Among those holes was the absence of effective consolidated oversight of certain large and deeply interconnected firms; the collective failure of regulators – including the Federal Reserve – to appreciate the linkages and amplification mechanisms embedded in our financial system; and the absence of a resolution process that would allow even the largest and most complex of financial institutions to fail without imperiling the flow of credit to the economy more broadly. Addressing these shortcomings will require important reforms in our country’s regulatory architecture. We entered the crisis with an obsolete regulatory system. For one, our regulatory system was not structured for a world in which an increasingly large amount of credit intermediation was occurring in nonbank financial institutions. As a result, little attention was paid to the systemic implications of the actions of a large number of increasingly important financial institutions – including securities firms, insurance conglomerates and monolines. In addition, many large financial organizations were funding themselves through market-based mechanisms such as tri-party repo. This made the system as a whole much more fragile and vulnerable to runs when confidence faltered. With the benefit of hindsight, it is clear that the Fed and other regulators, here and abroad, did not sufficiently understand the importance of some of these changes in our financial system.
In the area of monetary and banking policies, SAMA followed monetary policy aimed at achieving stability in the financial sector and providing the necessary liquidity to meet domestic demand for credit, by taking a package of proactive measures to enhance the liquidity position and reduce the cost of lending in order to ensure that banks continue their financing role in the development process in the Kingdom. The most prominent measures were: reducing the Statutory Reserve requirements ratio, the Repo and the Reverse Repo Rates several times, enhancing the liquidity position in the banking system by placing long term deposits in local currency and US Dollar with local banks on behalf of government institutions and organizations, reducing the pricing of treasury bills, facilitating foreign exchange swaps in order to provide the necessary liquidity in US Dollar for the local banking system. As for fiscal policy, the government continued the expansion in public expenditure and increasing the pumping of funds to specialized lending institutions by an estimated amount of Rls 40 billion during 2009. Custodian of the Two Holy Mosques, In spite of the adverse impacts of the successive financial crises, they clearly resulted in combining international efforts to review the global financial system and commence taking reforming measures to perform its role effectively and positively in the global economic activity and international external trade.

The thresholds for establishing and operating companies have been lowered. Existing production processes can be made more efficient. The internet has made information more accessible and many firms can cut transaction costs. There is less need to hold large stocks that tie up capital. The same applies to consumers, who can quickly search the internet for cheap goods and services. So far, however, prices on the internet differ relatively little from shop prices. But this will presumably change as the internet continues to be developed and usage rises. Sweden, spearheaded by the telecom company Ericsson, is one of the countries where the IT sector is relatively large. This sector is also contributing a growing share of our annual output. But we are also one of the countries with a relatively high level of spending on the introduction of new information technology in various parts of the economy. The introduction and development of information technology in Sweden has been facilitated by an efficient capital market, particularly as regards the supply of venture capital. So, as I have tried to show, the favourable economic development at present has many aspects. But it should not be forgotten that the fundamental economic laws still apply, just as they did in the late 19th and early 20th centuries. That makes it important to prevent a build-up of imbalances that can create tensions and jeopardise a continuation of good economic growth and low unemployment. This brings me to the subject of stabilisation policy.
At the end of my speech I expressed concerns that the correction of financial imbalances, and the associated re-pricing of risk, might not have run its full course. As we now know, this was indeed the case. Only ten days later, the re-pricing in markets took a quantum leap. In mid-September the turbulence turned into a full-blown crisis. The chart of money market spreads tells this tale clearly. BIS Review 103/2009  1  As you can see, credit spreads soared. Financial market activity fell dramatically, volatility spiked and the global financial system came close to seizing up. Central banks stepped into the breach, addressing this unprecedented market failure. The ECB was in the vanguard of actions to contain these intensified tensions, taking a number of standard and non-standard measures. The measures by the leading central banks eventually paid off. As you see in the chart, money market spreads – a symptom of the market failures that I mentioned – retreated from their peaks. They are now back at levels comparable to those before the intensification of the crisis last year. But they still remain elevated in a longer time perspective. The crisis triggered a freefall in economic activity. The chart shows that within a few months only, from January to July 2009, the projections for 2009 shifted massively to the left, in highly negative territory. After they centred around -1.5% in January 2009 and -3.2% in April 2009, they dropped to -4.5% in July, entirely outside the distribution range still a few months earlier.

They went through three crises – the subprime crisis in 2007, the 2009 global economic slowdown and the euro crisis from 2010 on – without a common fiscal backstop (that only came in 2010 with the European Financial Stability Facility) and without the foundations of a banking union. If we were to draw lessons from the experience, I would rather insist on the fact that the euro area was too late and too timid in cleaning up and shoring up its banking system, i.e. stress testing the banks, raising capital and shedding bad loans. That partly explains why our recovery is lagging behind that of the United States. In banking matters, forbearance doesn’t serve a purpose. You can’t buy time. We’re catching up now, but we still have some way to go, and the banking union isn’t complete. Some countries, such as Germany, insist that there should be a limit on euro area banks’ sovereign exposure. Do you agree? There are three dimensions in my view. There is the question of sovereign risk for banks. But we must also consider the consequences for government financing, and the functioning of financial markets, which need risk-free assets as liquidity instruments. If you focus on one aspect of the problem and ignore the others, you run the risk of shifting risk around instead of reducing it. The ECB’s policy is increasingly unpopular in Germany. Do you foresee a moment when it might become an obstacle to your own action? Europe nowadays is a source of irritation for many.