samchain/econo-pairs-v1 huggingface dataset:
The Riksbank now publishes a twice-yearly report analysing the stability of the Swedish financial system. In a crisis situation, the central bank plays a very important role. It may then need to go in and act as lender of last resort, that is, to grant emergency liquidity assistance (ELA) to banks and financial companies if this is considered necessary to prevent the financial system from collapsing. The two objectives of price stability and financial stability are related to each other in different ways, in addition to both being important components of an efficient payment system. The stability of the financial system is of course a necessary condition for a policy aimed at price stability, as the latter is fairly meaningless if the country is threatened with economic collapse. The financial stability objective can therefore in one sense be said to be superior to the objective of price stability. At the same time, it is very probable that price stability in the long run promotes financial stability, for instance, by making the price system function better and thereby reducing the risk of bad investments. However, price stability is no guarantee of stability in the financial system, which is illustrated, for instance, by the problems in the Japanese banks at the beginning of the 1990s. There is thus no reason for central banks to focus solely on the price stability objective and thereby assume that financial stability will follow automatically – both objectives are important. Other objectives than price stability and financial stability?

Of course a fall in house prices benefits buyers just as it hurts sellers so there is no necessary link to wider consumption. But the belief that in housing you could have your cake and eat it – that is your house would not just provide a place to live but would also provide an assured capital gain – has become widespread and the shock to expectations appears to be having a wider impact on confidence. There are also signs in some of the more timely survey indicators of consumer spending that weakness is spreading there too. If nothing else were going on, the MPC would expect this prospective weakness in overall demand to put downward pressure on inflation in the medium term and that would be pointing to further rate cuts. The commodity price cycle However, there is something else going on! Because if the US still drives the financial cycle, it has become less dominant in the world economy. According to the IMF, emerging and developing countries together generated around 70% of world growth in 2007, with China alone generating around 25%. And the world economy has been and still is growing strongly. That is what has been driving the rise in oil and commodity prices. For example, since the start of 2005, China has accounted for almost all of the increase in world demand for key metals such as aluminium, copper and zinc. And since 2000, around one-third of the increase in world demand for oil has emanated from China.
Christian Noyer: European financial markets – opportunities for growth and value creation Speech by Mr Christian Noyer, Governor of the Bank of France, at the First French-Indian Financial Forum, Paris EUROPLACE, Mumbai, 16 May 2007. *  *  *  Ladies and Gentlemen, In the absence of Mr Mestrallet, Chairman of Paris EUROPLACE and CEO of Suez Group, who cannot be with us today because of last minute commitments that require his presence in France, I have the great pleasure of welcoming you to our first French-Indian Financial Forum in Mumbai. India’s rapid economic growth in recent years makes it an attractive investment destination for international investors. And the economic revival in Europe also offers interesting opportunities to Indian investors and issuers wishing to diversify their investment strategy. That’s why Paris EUROPLACE believes that we all have a common interest in attending this forum today to discuss business opportunities between European and Indian Financial Markets. I would like to express my warm thanks to my friend Dr. Rakesh MOHAN, Deputy Governor of the Reserve Bank of India, for being with us today. We are also very honoured to welcome Mr Ashok WADHWA, Chairman, Capital Markets Committee of FICCI, the partner of Paris EUROPLACE in the organization of this forum, Mr Ravi NARAIN, Managing Director and CEO of the National Stock Exchange of India Ltd and Mr Peter KURIAN, Chairman of the Association of Mutual Funds in India, as well as all the other distinguished representatives of the Indian and French financial communities.

As you may know, Paris EUROPLACE brings together the whole range of market participants – issuers, investors and intermediaries – in order to contribute to the development of European capital markets and promote the Paris financial center. The financial industry in India, as in Europe, is expanding significantly. And we have already seen in the past few years the flourishing of partnerships between French and Indian financial institutions: such as in the asset management industry, the joint venture between Sundaram and BNP Paribas Asset Management, or the SGAM and SBI Mutual Funds partnership; in insurance services, the Bharti and Axa Life Insurance partnership, and the joint venture between SBI Life and Cardiff; and in online brokerage: current developments involving Cortal Consors and Geojit. It is for this reason that it was decided by Paris EUROPLACE to focus our program on the development of opportunities and potential new partnerships between Mumbai and Paris, as well as to review how the expertise of the Paris financial marketplace can be used and leveraged. Let me highlight the following questions: -  Why has the European financial market become a major pillar of international finance? -  And what are the key advantages offered by the Paris financial market place? 1. First, why has the European financial market become a major pillar of international finance to compare favourably with the other large markets of the world?
We identify common control profiles for process types and assess their effectiveness based on risk ratings and past risk events. That informs the second line’s recommendations to business areas on control protocols. We also use the common control profiles to assess where we are over-controlled and have the opportunity to shift resources to other priorities. The risk information collected and the risk analysis performed by the second line is the basis for operational risk reporting in the Bank’s risk profile report that is presented to the Risk Subcommittee, the Management Committee, and the Audit and Risk Subcommittee. The risk profile report shows the Bank’s most significant risks (including operational risks) along with a risk rating and the status of mitigating actions and mitigation plans. In addition, the report highlights significant and notable risk events along with the event’s impact, root causes, and remediation activities. We have found that the risk profile report provides the necessary flow of information to create meaningful committee dialogue around risk issues, feedback to business areas, coordination across Groups and lines of defense, and when necessary, additional escalation. Past, present, and future As the theory and practice of operational risk management and the complexity of our operations have evolved, so has our approach. In the mid-2000’s, the Bank formalized its operational risk program.

Most familiar are likely to be the Bank’s execution of market operations to implement monetary policy directives of the Federal Open Market Committee and financial supervisory activities. As significant in the Bank’s operational profile are the financial services that the Bank provides to the U.S. government, financial institutions and businesses, and to foreign central banks and international institutions. Notably, the Bank operates the Fedwire® electronic payments and securities transfer service, which is a critical part of the nation’s payment system infrastructure. The Bank performs fiscal agency functions for the U.S. government including the auction of Treasury securities, and it provides correspondent banking and custody services to foreign central banks and international institutions. 1 The Bank’s risk framework Operations imply operational risk, so how does the Bank approach operational risk management? Let me back up for a moment, since a useful starting point to answer this question is to begin by describing the Bank’s overall approach to managing risk within the Bank’s risk framework. In particular, the risk framework is designed to enable the Bank to understand and communicate its risk profile to key stakeholders, assess how risks may change in response to planned activities or changes in the environment, take action to ensure risks remain at acceptable levels, recover quickly and effectively from risk events, and continuously improve the effectiveness and efficiency of the risk management. As part of the risk framework, the Bank defines risk management roles and responsibilities using the three lines of defense model.
The fact that the increased lending results in an equal increase in deposits is due to all transactions in Swedish kronor being made through the banks’ accounts in the RIX payment system, which the Riksbank administers. The loans are distributed in the Riksbank’s auctions by means of the banks presenting bids for how much money and at what interest rate they want to borrow at each separate auction. Immediately after the auctions are over the money is distributed between the banks according to the bids that have come in. The Riksbank credits an amount corresponding to the allocation in the respective bank’s account in the RIX system. Then when the banks' transactions and payments are made during the day, the allocation of money between the banks changes, but the money never leaves the system. As we have already noted, the Riksbank has lent money to the banks on a wide scale since last autumn as a result of the financial crisis. However, monetary policy motives have gradually also gained significance in the lending. As the repo rate is close to zero and can in practice hardly be cut further, a need has arisen to supplement monetary policy with loans at longer maturities and at a fixed interest rate to also bring down slightly longer rates.

After this I shall discuss in greater depth the individual items on the balance sheet, to see how they have been affected over the past year. I shall conclude by looking ahead and discussing the question of when and how the extraordinary measures can be phased out. The Riksbank’s balance sheet Let us begin by looking at how the Riksbank’s balance sheet looks in rough outline under normal circumstances and at how it has changed during the crisis. The Riksbank’s balance sheet, like those of other companies and organisations, reflects the activities we conduct. The liabilities side shows how our activities are financed and the assets side show what the financing is used for (Figure 1). Figure 1 The Riksbank’s balance sheet  Assets Gold and foreign currency reserve Lending to banks Other assets  Liabilities Banknotes and coins Deposits from banks Other liabilities Own capital  Under normal circumstances the Riksbank primarily finances itself by issuing banknotes and coins and through its own capital. Banknotes and coins in circulation normally comprise the largest individual item on the liabilities side. Own capital is the next largest. In addition, the  BIS Review 160/2009  1  liabilities side in principle consists of deposits from banks and the item “Miscellaneous”. These items are usually small and less important than banknotes and coins and own capital. The Riksbank’s assets normally consist mainly of gold and the foreign currency reserve.
2 For instance, a long-term U.S. government bond can be a safe investment for a life insurance company  (because the security carries no credit risk and matches the duration of the life insurance company’s liabilities), but it is not money. 3 See, for instance, Thomas Eisenbach and Sebastian Infante, “What Makes a Safe Asset Safe?,” Federal  Reserve Bank of New York Liberty Street Economics (blog), November 27, 2017. 4 See Benjamin Lester, Andrew Postlewaite, and Randall Wright, “Information and Liquidity,” Journal of Money,  Credit and Banking 43 (s2), October 2011 and “Information, Liquidity, Asset Prices, and Monetary Policy,” Review of Economic Studies 79 (3), 2012; and Bengt Holmstrom, “Understanding the Role of Debt in the Financial System,” Bank for International Settlements Working Papers no. 479, January 2015. 5 For the purpose of these remarks, I assume that, as is largely the case in developed economies, the monetary  authority is able to keep prices stable; I therefore disregard the difference between nominal and real future payoffs. 6 Assets accepted as collateral are assigned a lendable value deemed appropriate by the central bank, taking  into account a haircut that reflects an assessment of credit risk, historical volatility, and market liquidity. However, the assets (and associated risks) remain on the balance sheet of the borrower. 7 Previously, the Federal Reserve had sterilized its liquidity provision by running down its Treasury portfolio.

In addition, FDIC deposit insurance complements strong capital by reducing depositors’ incentives to run on banks. Following the financial crisis, the regulatory and supervisory framework has been extended to more directly reduce risks from swings in the supply of liquidity within the financial system. In particular, the Liquidity Coverage Ratio (LCR) reduces the likelihood of runs by forcing banks to hold highly liquid assets against expected future cash outflows.11,12 Example of money fund reform Runs can also occur on nonbanks. One particularly spectacular run during the financial crisis followed Lehman’s bankruptcy and the Reserve Fund’s “breaking the buck” as investors fled prime money market funds. This run was stopped dramatically by a government guarantee. Recent work by some New York Fed colleagues provides a real-world example of how, in normal times, new regulation can induce investors to distinguish between safe and money-like assets.13 They used the Securities and Exchange Commission’s (SEC) recent implementation of measures to reform the MMF industry as a quasi-natural experiment to characterize investors’ preferences for money-like assets.14 In 2014, the SEC approved a new set of rules aimed at mitigating the fragility of prime MMFs. As of October 2016, prime funds have been required under certain conditions to impose liquidity fees on redemptions or gates halting the redemption of shares.15 Additionally, prime funds offering shares to institutional investors may no longer price such shares with fixed NAVs; instead, they must price their shares at the market value of the underlying securities, much like standard mutual funds.
The Basel Committee has done a great deal in upgrading capital and liquidity rules. Under the direction of G20, there is long list of other regulatory reforms, including those dealing with the moral hazard problem arising from “too big to fail” and the risks observed in the OTC derivative markets. Some national authorities have introduced, or plan to introduce, measures that would separate core retail and commercial banking from  BIS central bankers’ speeches  3  investment banking. Although, as I have said, very few people would dispute the need for urgent reforms, there are differences in views on whether the reforms that are underway are indeed adequate or entirely appropriate. 16. I hope that, at tomorrow’s Forum, you will have the opportunity to discuss these and other pertinent issues as we continue seeking to re-evaluate both the nature of risk management and the role of regulation and supervision in the wake of the Global Financial Crisis. Once again let me welcome you all and wish you Bon Appétit! 4  BIS central bankers’ speeches

Page 7/8  these outgoings, either benefits could be decreased or the period of benefit payments could be shortened. We do not express any preference as to which of these mechanisms is used. Making such a choice always involves a delicate balancing of interests, which is a matter for political circles rather than the SNB. Under these circumstances, however, it is clear that there is unfortunately no easy, universal solution. Adjusting to the realities of the investment world and demographic change comes at a price. And something else is also clear: in a pension system like ours, in which the key parameters are defined in nominal terms, this price will keep rising until such time as the problems are tackled. But holding on to the status quo also comes at a price. For example, we are seeing a rise in redistributions from young to older insureds, which was never intended by the system. This is also why the term ‘lifestyle’, as used in the relevant article of the Federal Constitution, targets purchasing power rather than any nominal quantity. Workable solutions can be found At the start of my talk I drew your attention to an international ranking of pension systems (cf. chart 6). In other countries, too, the population enjoys rising life expectancy while savers bemoan the low interest rates. Denmark and Sweden, for example, which are now ranked several places ahead of our country, have implemented far-reaching and thus painful measures to stabilise and modernise their pension systems.
Clarity will be required as to whether, and if so how, such activities fall within their formal remits. In some cases they may be able to use existing tools designed for monetary policy purposes, as they did in the Covid crisis. But in others, those tools may prove poorly suited to the task, and new ways will be needed to achieve those ends, whether through outright purchase and sale operations, repo facilities or other means. 11  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  11  Second, central banks will need to decide which marketable assets should be in scope of any new tools. The most obvious candidate is government bonds, which lay at the epicentre of the dash for cash. For other, riskier, assets to qualify, a case would need to be made both that they are sufficiently core to monetary and financial stability, and that central banks can price and risk manage them effectively. It is notable that many central banks bought a range of assets beyond government bonds during the 2008-9 and Covid crises, including corporate bonds and commercial paper. Third, central banks will need to reflect on whether the use of their balance sheets to address market dysfunction should remain primarily discretionary, or whether at least aspects of that role should be formalised into standing facilities, the terms of which are known in advance.

Muhammad bin Ibrahim: Central bank collaboration in Asia – facilitating the use of local currencies for settlement of trade and investments Remarks by Mr Muhammad bin Ibrahim, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Signing Ceremony of the Memoranda of Understanding between Bank Indonesia and Bank Negara Malaysia and Bank Indonesia and the Bank of Thailand, Bangkok, 23 December 2016. * * * My delegation and I are pleased to join Governor Veerathai and Governor Agus here in Bangkok today to mark the collaboration between our central banks to facilitate the use of local currencies for settlements of trade and investments. Our economies face common challenges in managing the risks from heightened volatility in the global financial markets. We can expect continued episodes of volatility to occur in the periods ahead, driven by a combination of policy uncertainties, negative sentiment and speculative activity. The arrangements signed today are part of our continuous efforts to provide the institutional and policy framework to promote orderly financial market conditions and support the efficient management of financial risks. In particular, these arrangements will enable exporters and importers in our countries to better manage foreign exchange risks by using local currencies to settle trade and investment activities. In addition to improving cost efficiencies for businesses, the increased demand for local currency financial products will also contribute towards deepening the region’s financial markets. This is important to further strengthen conditions for regional financial stability.
2  BIS central bankers’ speeches  But to be clear, the MPC has no pre-set course. The ultimate decision will be data-driven. At this point it is safest to conclude, as the MPC has, that there remains scope for spare capacity to be used up before policy is tightened and that a host of labour market, capacity utilisation and pricing indicators should be watched closely to determine how that slack is evolving. Growth has been much stronger and unemployment has fallen much faster than either we or anyone else expected at last year’s Mansion House dinner. So far this has been largely matched by indicators which suggest that there is more supply capacity in the labour market than we had previously thought. As a result of these two welcome developments, despite rapid jobs growth, pay pressures and unit labour cost growth have remained subdued.3 The MPC expects the rate at which slack is being eroded to slow during the second half of this year as output growth eases and productivity growth recovers. But thus far there are few signs of a deceleration in output growth. And a challenge in deciding when to begin normalising policy is that actual output can be observed but potential supply cannot. That is why the MPC is monitoring a broad range of indicators including coincident ones such as the behaviour of wages and prices. Of course navigating the upcoming bend in the river isn’t the end of the journey.

Rather than appeal to the stately Duchess of York on which my predecessor sailed, I will look to the trusty canoe – a craft that can navigate the most rapid and treacherous waters…provided its paddlers work in sync. Those economic currents are flowing swiftly, with the economy expanding at an annualised rate of 4% and jobs growing at a record pace.2 But there are rapids ahead, with old imbalances persisting and new ones emerging. The economy is still over-levered. The housing market is showing the potential to overheat. And the current account deficit is now at a record level. Navigating these hazards requires close coordination between all those in the boat; that is, between fiscal, monetary and prudential authorities. Tonight I want to explain the Bank’s contribution to delivering a durable expansion characterised by balance in the macroeconomy, the housing market, and the financial sector. Before doing so, I would like to join the Chancellor in paying tribute to two individuals. The first is Sir David Lees, who as Chairman of Court has overseen the transformation of the governance and responsibilities of the Bank. David, I am extremely grateful for your support during my first year as Governor. I’m also enormously grateful for the wise counsel of Charlie Bean during the past year. Always working, Charlie is tonight discharging his duties as President of the Royal Economic Society. Throughout his career, at the Treasury, in academia and at the Bank, Charlie has been a leading thinker and practitioner in the pursuit of macroeconomic balance.