samchain/econo-pairs-v1 huggingface dataset:
Financial crises are even costlier in emerging economies than in industrialized countries, as their ability to bear such costs is severely constrained by spillovers between the banking system and sovereigns and the related vicious circle of escalating risk premia. BIS central bankers’ speeches  1  The crisis has also revealed that effective policy remedies have a transnational perspective. In the European Union the idea of a Banking Union emerged as a solution to break the above-mentioned vicious circle, thus putting a stop to financial fragmentation and helping restore the normal capital flow from the core EU countries to the periphery. In addition, the Banking Union has the merit of removing the contradiction between the pan-European nature of banking activity and keeping banking supervisory and resolution tasks at the national level. In this context, Romania’s membership in the Banking Union comes as a natural choice, given that euro area banks hold three fourths of the total assets of the Romanian banking system and two thirds of its capital. As was the case with EU membership, the national interest may be better served in the banking sector by relinquishing some of the national policy prerogatives. In the context of such a high financial integration, preserving the banking supervisory powers at national level would only entail suboptimal results, due to the limited access to information on parent banks and the lack of a cross-border perspective.

Data from the Bank’s sterling money market data collection showed that in the first quarter of this year there were on average only 9 deposits a day underpinning 6 month sterling Libor, with a total daily value of £ million. This lack of transactions means that panel banks have to use their expert judgement to make their submissions. And this means they have become increasingly uncomfortable about doing so. And if those panel banks stop submitting, there is no Libor benchmark. Given the pervasive use of Libor historically, this creates a fragility at the heart of markets – that financial markets are reliant upon an unsustainable piece of infrastructure1. This financial stability risk is something the Financial Policy Committee has therefore been closely monitoring.2  The FCA has secured a breathing space to enable the transition, but only until end-2021. The best way to make the most of the timetable set for Libor to end is for markets to focus on transitioning away from it, to new risk free rates. For sterling markets, to the new risk free rate is SONIA, an overnight benchmark provided by the Bank and underpinned by transactions worth about 40 billion pounds a day. The need to transition is a critical one for all involved. We impressed this upon firms in our Dear CEO exercise; a key objective of which was to ensure Board level responsibility for transition.
Bandid Nijathaworn: Reserves accumulation and global investmentsavings adjustment – an Asian perspective Speech by Dr Bandid Nijathaworn, Deputy Governor of the Bank of Thailand, at the seminar on “New trends in reserve management and its meaning for the international financial system”, organized by The Reinventing Bretton Woods Committee and the People’s Bank of China (PBOC), Shanghai, 2 November 2007. *  *  *  First, let me thank the Reinventing Bretton Woods Committee and the PBOC for the invitation and for the excellent arrangement. Reserves accumulation and external surplus are important issues at this time, and their significance to the global financial markets deserves greater attention by all. Thailand, being a small economy with external surplus, is also a small part of this development. So, today’s meeting provides a good opportunity for us to discuss this issue. Between 1995 to September last year, global reserves rose from $ 1.3 trillion to $ 4.8 trillion, a large part of which was observed in Asia. The latest number now is probably much higher, and a number of important features of the recent increase in global reserves have been noted. First, the size and the rapidity of the increase was not totally expected by the market and policymakers. Second, which is most important, is that the increase mirrors a regime shift in the external payments position between developed and developing economies, and involves a large number of countries. This is to say while the deficits, i.e.

BIS Review 134/2007  3  This is because reserves accumulation to date reflects successive years of external surpluses rather than borrowed reserves. Going forward, productivity improvement and continued careful policy management by emerging markets will help maintain this relative position. Therefore, for some or for most countries, the regime shift that we are seeing now may be more of a permanent feature. So, the world is now different, and this change needs to be recognized more fully by the market. More importantly, the configuration of policies at the international level, especially by the Bretton Woods institutions, also need to adapt to this shift. On reserves management, the size of reserves that we have now in emerging markets, the fiscal costs associated with reserves accumulation, and the opportunity cost of investing excess reserves, all these may induce reserves managers to explore opportunities for enhancing returns by adopting more aggressive investment policies. Such actions will undoubtedly affect financial markets. On this, it is important to remind ourselves that this style of investment can also come into conflict with the mandate of central banks in preserving stability and orderly markets. So, the challenge is to achieve a proper balance. Thank you, Mr. Chairman. 4  BIS Review 134/2007
Liikanen made a range of recommendations, but these did not go in quite the same direction as the IBC  7  See speech by Andrew Gracie “TLAC and MREL: From design to implementation”, 17 July 2015, Bank of England website. 8  Financial Services (Banking Reform) Act, 2013. 9  For example, see the range of estimates in the IMF Global Financial Stability Report, April 2014, Chapter 3. BIS central bankers’ speeches  9  proposals in that they recommended ring-fencing of the high risk activities within a group, whereas the IBC focussed on ring-fencing the retail deposit and payments activities. The anticipated outcome is that whatever is finally decided for the EU should not require UK legislation to change. Work on implementing structural reform is underway: initial plans were submitted by the banks at the start of 2015, have been reviewed by the PRA, and are being further developed. Structural reform must be fully implemented by the affected banks by 1 January 2019. Other This lecture wouldn’t be complete without addressing issues around the behaviour of firms, boards and individuals. Along with capital and liquidity, firm governance is one of the most crucial aspects for a regulator. In particular how boards are constituted and how they operate. It has long been recognised that most firm failures can be traced back to governance issues.

Should they carry contractual foreign rates or some typical ISK rate, such as the benchmark rate published by the Central Bank of Iceland? In the former case, the blow to the capital position of the banking system would have been very serious indeed, requiring massive recapitalisation and possibly jeopardising the overall stability of the system. Those responsible for financial stability gave a sigh of relief when the Supreme Court ruled in mid-September that loans with illegal exchange rate linkage clauses should carry reference ISK rates published by the Central Bank of Iceland. After this decision, it is clear that the blow to capital ratios should be well manageable and only a very limited recapitalisation will be called for, if any. The reconstruction of the domestic financial sector paves the way for badly needed debt restructuring among households and businesses. This issue has remained unresolved due to delays in recapitalising the banks and the uncertainty following the first Supreme Court ruling. But it has also lagged because the framework for such debt restructuring has been a highly contested political issue. We have seen that Iceland has made significant progress on three main policy fronts. But before investigating how this progress has stabilised the economy, let us turn back to the recession in the Icelandic economy. As I said earlier, Iceland was well on its way into recession in 2009 before the banks collapsed in the autumn of 2008, and actually before the currency crisis materialised earlier in 2008.
This is eminently logical and sensible, since with more cautious bank lending and enhanced risk management within the HLI sector, it should be very hard for the HLIs to build up excessive leverage and concentration in the major financial markets. This measure is being pursued with earnest in both the public and private sector. The Basel Committee on Banking Supervision, and IOSCO have issued respective guidelines on sound practices for interactions with HLIs for banks and securities firms. The latest discussion has focused on the kind of supervisory incentives for the compliance of risk management standards. The Basel Committee on Banking Supervision has put forward two proposals for the revision of the Capital Accord, which would help address the concerns on HLIs. One is abolishing the maximum 50% risk weighting for non-bank OTC derivatives exposures; and the other is encouraging counterparties to impose an initial margin on repo transactions. From the private sector, the Counterparty Risk Management Policy Group formed by twelve leading international financial institutions produced a report in June 1999. Five major hedge funds also produced an industry group report in February 2000 on improving counterparty risk management and internal control. While we agree that enhanced risk management of HLIs and their counterparties is a useful first line of defence, two major concerns remain. First, the return of competitive pressure may lead to a relaxation or even a breakdown in risk management standards again in the future.

Rapid deleveraging of positions in markets associated with the default of an HLI of the size of LTCM could have systemic impact even in large and mature markets, thereby threatening the global financial system. It has been said that a repeat of the like of an LTCM debacle is most unlikely to occur, given the downsizing of hedge funds. I certainly hope that this is the case but I also notice that the recovery of investor sentiment has seen more money from institutional investors as well as high net worth individuals flowing to the hedge funds. The second scenario, commonly known as the “Elephants in the Pond” problem, is a situation whereby the HLIs take very large and concentrated positions in smaller financial markets and adopt aggressive trading practices that could be destabilising to such markets. It is very encouraging that the “Elephants in the Pond” problem is by now recognised quite extensively as a real issue to be tackled. What is being done and is it enough? Different approaches have been floated to tackle the problems arising from the two scenarios I just described. The prevailing approach is through improving counterparty risk management. This is done indirectly by asking the banks and other financial institutions to be more prudent in granting credit lines to the HLIs, and directly by encouraging the HLIs to enhance their own risk management standards.
Mark Carney: Uncertainty, the economy and policy Speech by Mr Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, at the Bank of England, London, 30 June 2016. *  *  *  Today I want to discuss what uncertainty means for the UK’s economic performance, and how the Bank of England can best respond to it. The result of the referendum is clear. Its full implications for the economy are not. The UK can handle change. It has one of the most flexible economies in the world and benefits from a deep reservoir of human capital, world-class infrastructure and the rule of law. Its people are admired the world over for their strength under adversity. The question is not whether the UK will adjust but rather how quickly and how well. Nonetheless, the decision to leave the European Union marks a major regime shift. In the coming years, the UK will redefine its openness to the movement of goods, services, people and capital. In tandem, a potentially broad range of regulations might change. Uncertainty over the pace, breadth and scale of these changes could weigh on our economic prospects for some time. While some of the necessary adjustments may prove difficult and many will take time, the transition from the initial shock to the restructuring and then building of the UK economy will be much easier because of our solid policy frameworks. At times of great uncertainty, households, businesses and investors ask basic economic questions.

Moreover, its effects will be reinforced by tighter financial conditions and possible negative spill-overs to growth in the UK’s major trading partners. In sum, the material slowing in growth that the MPC had identified as a risk associated with the referendum now looks likely to be our central forecast. Using reports from our nationwide network of agents, private survey evidence, and hard data, in the coming weeks we will estimate the extent of the deceleration as we formulate our August projections. 3. Policies in an uncertain world  When uncertainty is high, policymakers should have three objectives. First, conduct a sober, objective assessment of the outlook and the risks to it. Second, develop and communicate a plan to reduce those risks and to seize new opportunities. And third, do no harm, by  BIS central bankers’ speeches  9  minimising any possible confusion about the commitment to core macroeconomic policy frameworks themselves. In Tim Geithner’s famous dictum, “plan beats no plan.” And in my experience, a plan that is clearly articulated and transparently executed is best of all. A plan for the UK’s current challenges would include a comprehensive strategy for engaging with the EU and the rest of the world – including clarifying the UK’s future trading arrangements, calibrating its openness to migration, ensuring the continuity of capital flows, and confirming the appropriate regulatory framework for the UK financial system. The impact of concrete progress towards these objectives would be amplified by an overarching, positive and animating narrative for growth in a post-Brexit world.
This is not just a ‘wholesale’ question of improving the efficiency, security and functionality of the huge cross border flows of transactions driven by financial globalisation: a global capital market and an integrated global financial sector. It is also increasingly a ‘retail question’ both about improving global financial inclusion and also about facilitating the increasing use of cross border retail transactions that technology has made possible. I will look briefly at each of these questions. Availability and acceptability of cash  The provision of secure physical cash is a core part of our mission. The Bank has made clear its commitment to continuing to produce cash for as long as people want to use it. Last week, we launched our new polymer £ depicting JMW Turner and containing the latest cutting-edge security features to ensure its safety and reliability. But as we have seen from other countries, and are beginning to see in the UK, the availability and acceptability of cash requires more than its physical production. Availability requires distribution by the 6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  private sector – banks and ATM providers. The declining use of cash means loss of economies of scale. That changes the economics of such distribution. Acceptability requires not just that banks distribute and ‘bank’ cash. It also requires that merchants accept it. That depends on the all-in cost and convenience of using cash versus electronic payments.

It’s time to talk about money Speech given by Sir Jon Cunliffe, Deputy Governor Financial Stability, Member of the Monetary Policy Committee, Member of the Financial Policy Committee and Member of the Prudential Regulation Committee  London School of Economics, London 28 February 2020  I am grateful to Alex Michie for his assistance in drafting these remarks and Ben Dyson, John Jackson, Josh Sadler, Tom Mutton, Alice Carr, Emma Sinclair, Ryland Thomas, Michaela Costello, Chris Ford, Simon Scorer, Justin Jacobs, Wayne Chapman, Samantha Riley and the Bank’s Archivists for their input. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches  Intro One of the questions that I find hardest to answer simply is “what does the Bank of England do?” I get asked this penetrating question a lot, especially by children when I visit schools as part of the Bank’s outreach and education programme – which incidentally is one of the most rewarding parts of my job. There is a long, comprehensive and accurate answer of course, describing our monetary policy and financial stability objectives, policies and actions and our role in demand management. When I talk to economics classes in schools, I can often feel their teachers willing me to come out with these textbook answers. But I find that the better and simpler answer is that we are responsible for ensuring that the money of the United Kingdom ‘works’. Money, like electricity and water, is crucial to the operation of a modern society.
It worked well for a long while, and some call the period from 1950 to 1970 the golden years. Yet there were inherent flaws in this set-up that contributed to its demise in the early 1970s, not least the well-known Triffin dilemma regarding the conflict between the domestic economic objectives of the country providing the main reserve currency and the required international supply of that currency. Then capital accounts were opened up, with strong momentum in the 1980s and early 1990s. Capital controls were increasingly undermined by technology and financial innovation, and strong arguments were being made to the effect that open capital accounts would bring significant benefits. After all, ongoing real economic integration at a global level demanded at least some degree of global financial integration. As the BIS reminded us in its latest Annual Report – and Jaime Caruana might touch on in his keynote speech later in this session – trade and finance tend to go together. Freer capital movements in turn undermined pegged exchange rates and thus contributed to the spread of flexible exchange rate regimes and inflation targeting. 1  There can be little doubt that both real and financial global integration have brought enormous economic benefits. Still, it has been increasingly questioned of late. We partly understand why. We know that there are significant gains from real integration but that there are winners and losers. The losers can be compensated in principle, but in practice this does not always happen.

There are a number of industry initiatives across the world to explore further public-private partnerships to provide ultimate backstop for systemic losses. Clearly there is a limit to the size of losses that private insurance capital can cover, and it is worth exploring whether an explicit public-private backstop along similar lines to Pool and Flood Re in the UK is one way of mitigating the risk of a shock to supply of insurance. But we should be mindful of the risk of moral hazard and of crowding out private capital. To return to the example of cyber risk, the industry is now able to provide explicit cyber cover for those aspects of the risk that are insurable such as recoverability, physical damage and the cost of notification of lost records. And we know there is appetite in the market to keep the insurance business model relevant and seek out alternative sources of profit by underwriting new risks. As investors in longer-term, illiquid assets, insurance companies are well suited to support the UK’s economic recovery As this audience will be well aware, the industry’s contribution to the economy goes further than transfer and pooling of physical and financial risk.
In this context, the Governing Council confirmed its forward guidance that it continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time. This expectation continues to be based on an overall subdued outlook for inflation extending into the medium term, given the broad-based weakness of the economy and subdued monetary dynamics. With regard to money market conditions and their potential impact on our monetary policy stance, we are monitoring developments closely and are ready to consider all available instruments. Let me now explain our assessment in greater detail, starting with the economic analysis. Following a rise of 0.3% in the second quarter of 2013, real GDP in the euro area increased by 0.1%, quarter on quarter, in the third quarter. Developments in survey-based confidence indicators up to November are consistent with a positive growth rate also in the fourth quarter of the year. Looking ahead to 2014 and 2015, output is expected to recover at a slow pace, in particular owing to some improvement in domestic demand supported by the accommodative monetary policy stance. Euro area economic activity should, in addition, benefit from a gradual strengthening of demand for exports. Furthermore, the overall improvements in financial markets seen since last year appear to be working their way through to the real economy, as should the progress made in fiscal consolidation. In addition, real incomes have benefited recently from lower energy price inflation.

The financial services industry - globally and not just regionally within Europe or nationally - has been going through a prolonged and continuing period of unprecedented change. There are to my mind two main drivers of that change - first, the progressive shift - within the industrial world but increasingly also over the past decade or so in emerging markets and transition economies away from varying degrees of centralised economic administration towards an increasingly open, market-based approach; - and, secondly, the revolution in information and communications technology. The potential economic advantages of free market competition nationally, and its logical counterpart in free trade and the free movement of capital internationally are now pretty well taken for granted just about everywhere. While no-one would pretend it's a perfect guide, profitability is the best guide we have to allocating limited real and financial resources to wherever they can be most productively used. So it is - potentially - the most effective means we have of generating the wealth, and employment and rising living standards we all want to see. And liberalisation or deregulation - including liberalisation in the financial sector - needs to be seen in this context. Of course it cannot mean simply a free-for-all. Markets need to be fair as well as free if they are to function efficiently in practice - they need rules which minimise artificial or non-commercial distortions and the related resource misallocation that would otherwise arise.