samchain/econo-pairs-v1 huggingface dataset:
I will return to the important issue of transparency in a moment, when I discuss the ECB’s monetary policy strategy. With regard to accountability, let me simply highlight that, drawing on the successful experience of several central banks, in October 1998 the Governing Council of the ECB decided to publish a quantitative definition of price stability. This definition of price stability as an annual increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2% provides a clear yardstick against which the public, its elected representatives and agents in the media can hold the ECB accountable. The ECB’s monetary policy strategy Within this institutional framework, how should price stability be maintained? This question is addressed by the ECB’s monetary policy strategy. It is obvious that the development of the ECB’s strategic framework drew heavily on the experience of euro area NCBs prior to Monetary Union. This is one area where the experience of national central banks was extremely influential and important. Prior to the introduction of the euro, several central banks, including the Banque de France, assigned a prominent role to money within their monetary policy strategy. Some announced intermediate monetary targets, while others adopted monitoring or reference ranges for monetary growth. At the same time, other euro area central banks emphasised the role of inflation forecasts as the key monetary policy indicator. Of these, several proceeded to announce direct inflation targets, as became fashionable in the 1990s.

Furthermore, many NCBs in what is now the euro area were pursuing exchange rate targets within the context of the European Monetary System. In several cases, central banks adopted various combinations of the above approaches. This rich and varied experience provided the context in which the ECB’s strategy was designed. I should like to make two observations. BIS Review 44/2000  2  First, the range of approaches employed by NCBs in what is now the euro area was considerable. Nevertheless, once the commitment to price stability was affirmed, each of these approaches achieved a large measure of success. The convergence of inflation rates to low and stable levels across the euro area in the 1990s was a significant - and, in many quarters, unexpected - achievement. In my view, this experience offers a powerful illustration that there are several ways to achieve and maintain price stability. The strategy adopted by a central bank should reflect the circumstances that it faces, including the initial conditions and consequent need for transition. Those who claim that there is only one acceptable or efficient way to operate monetary policy fly in the face of history and experience. Second, on the basis of our investigations of these various approaches conducted at the EMI, we concluded that the differences among various central bank strategies - differences which are often highlighted in the academic and journalistic debate - are much less important than the similarities.
Each of these intangible assets has value, but this value can be lost in a heartbeat. While it is true that a tangible asset such as a factory can burn to the ground overnight, intangibles, unlike a factory, usually cannot be insured. A challenge to current accounting - and disclosure - rules, therefore, is how to reflect accurately not only the value of intangible assets, but also their vulnerabilities to sharp downward revaluations. BIS Review 57/2002  5  In terms of complex financial transactions, this past year's events have made clear that accounting and disclosure rules have failed to keep pace with financial innovation. Complex financial arrangements, such as those funded offshore or through special-purpose entities, are not effectively addressed in today's accounting and disclosure rules. We also saw telecom equipment manufacturers run up billions of dollars’ worth of customer guarantees, which under current accounting and disclosure guidelines did not have to be recognized in financial accounts or disclosed to investors until their customers defaulted or were near default. In these cases, it seems clear, one of the basic tenets of accounting and disclosure rules - that there should be no “hidden” liabilities - seems to have been violated. I would like to see much more done to address these deficiencies without unduly burdening the readers of accounting statements. 4. Disclosure  Disclosure is most useful as a complement to accounting statements.

I believe that corrective action - taken voluntarily - is not only overdue but also morally sound. This evening, I would like to focus on the effects of public policy on executive compensation. As you know, in 1993, the IRS ruled that the maximum tax-deductible salary a company can pay an employee is $ million per year. Compensation above $ million has to be “performance-related” to be considered a tax-deductible expense. This change in public policy gave firms that wanted to minimize taxes the incentive to introduce performance-related pay structures for executives earning above $ million a year. The policy change is a key reason that stock options have become the most prevalent performance-related structure for executive compensation. Option-based executive compensation raises a number of issues. For example, one feature of the 1993 IRS ruling is that the $ million salary cap for tax deductibility is nominal and not indexed. This means that as the average total compensation for executives rises over time, the incentive to use stock options increases. Another issue stems from the fact that stock options are non-transferable. Therefore, an increasingly large fraction of an executive's compensation in the form of stock options represents a non-diversified risk. Moreover, if the firm goes bankrupt, the options become worthless at the same time that the executive’s job is lost. As a result, firms may have to increase the amount of options they offer an executive to offset the increased riskiness of this form of compensation.
8  Contrary to what the party’s name suggests, the Republican Party established by Jefferson in the late 18 century was in fact the forerunner of today’s Democratic Party. 9  Hamilton only served as Treasury Secretary until 1795, after which Wolcott, a fellow Federalist, took over until 1801. But Wolcott is generally perceived as having continued and completed the policies of Hamilton until Dexter took over, for a few months only. Gallatin took office in May 1801. 2  BIS Review 106/2008  th  and, finally, the creation of the first Bank of the United States. 10 The Bank of the United States gave the federal government a tool to manage short-term credit and cash flow and to influence – and thereby help safeguard – the stability of the emerging financial system of the United States. 11 The Bank also significantly extended access to credit for private enterprise. During these extraordinary years, Gallatin first served as a representative in the state legislature of Pennsylvania. He was involved in the adoption and ratification of the state constitution. After a brief period as a senator, Gallatin became a member of the House of Representatives in 1795, where he served until 1801. 12 As a congressman, he established himself as a leading figure in the emerging Republican Party led by Thomas Jefferson. Gallatin quickly gained the reputation of being the member of his party with the most profound understanding of public finance.

As emphasized by the Director of the State Statistical Office, Mr. Apostol Simovski, the Republic of Macedonia has long been integrated into the system of the so-called IMF’s Data Standards Initiatives. This system is extremely dynamic and started to develop since the mid-1990s, in response to the then international financial crisis, in order to promote transparency of both economic and financial data. I say dynamic, given that its construction blocks have been continuously changing and increasing. Its last, third construction block is the SDDS plus which reflects the weaknesses identified in the statistical data infrastructure that surfaced with the latest global economic and financial crisis from 2008. It is a fact that the genesis of the crisis was not located in the lack of data, but fact is also the identified need for an enriched data set for conducting more effective economic policies. This crisis has clearly shown how inadequate regulation and excessive risk-taking can lead to a collapse of the financial system. It has shown how the underestimation of the strength of the links of the financial system with the real sector, as well as the underestimation of cross-border exposures of economies and financial integration, could lead to inadequate assessment of macro-financial links and underestimation of risks. The SDDS plus is actually a response of the international financial community to these statistical gaps. This initiative means enrichment of statistics, in both scope and quality, in order to timely recognize and appropriately react to vulnerabilities that may arise in an economy.
BIS central bankers’ speeches  9  between the sexes, often apparent in simple tests, tend similarly to disappear once attempts are made to create an environment which avoids gender stereotyping about numerical ability. 56 Overall, then, identity-based characteristics, such as gender and ethnicity, may provide a useful basis for judging some aspects of behavioural diversity. But these differences may be as much the result of differences in environment and cognition as identity per se. Identity may be more measurable proxy, than root cause, of diverse decision-making. 57 The evidence here is revealing. Looked at through an historical lens, the “Medici effect” – historical episodes of great leaps forward in ideas and innovation – typically arose from a melding of cultures, disciplines and experiences, rather than genders. The creativity exhibited by five-year old children derives from their cognitive processes, not their gender or ethnicity. Tetlock’s “super-forecasters” are defined by their cognitive and environmental diversity, not their identity. And crowd-sourcing and gamification are means of harnessing the cognitive and experiential creativity of crowds, blind to their identities. And so on. Moving the diversity dial Against this backdrop, what might be done to support diversity? The “first wave” of diversity initiatives has been building steadily over recent decades. This has tended to focus on identitybased characteristics, such as gender and ethnicity. And it is heartening to know that considerable progress has been made here. Trends in female labour market participation have improved significantly.

Indeed, there was so little urgency that, unfortunately, in the last 15 years there has not been a single labour reform capable of preventing our rigid labour markets from suffering, for the third time, an adjustment along the old familiar lines of leaving millions of Spanish workers jobless. Voices are sometimes heard casting doubt on whether labour reform is urgent, arguing that the labour market is not at the root of this crisis. This is quite true, but it is an argument which does not constitute grounds for ignoring the prime importance of this reform. If you allow me the metaphor, our labour market has shown itself to be a fragile ship which, each time there  6  BIS Review 27/2010  is a storm, springs leaks which are enormously costly to seal. Obviously the storm is not the fault of the ship’s captain, but he can make repairs before it is sunk by the storm. But, what is more, our labour ship also functions poorly when there are no storms. In the periods of highest growth of the world economy, we continue to have the highest unemployment rate and our labour productivity growth is mediocre, limiting the scope for wage increases. The ship does not sink but it sails – in terms of productivity and of reducing unemployment – at a poor speed in comparison with the rest.
Situation in the banking sector As our Financial Stability Report published today describes in detail, the situation in the Swiss banking sector deteriorated considerably in 2008. The turbulence in the money and credit markets that had erupted in mid-2007 worsened in 2008, also spilling over to other areas. The two big banks, in particular UBS, were hit hard by these negative developments. As you know, together the two institutions recorded a total loss of some CHF 30 billion in 2008. 1 They took extensive measures to strengthen their resilience. In addition to reducing risky positions, they raised sizeable amounts of private capital. The resilience of UBS was further strengthened by the package of government measures announced by the Federal Council, the SNB and the then Swiss Federal Banking Commission (SFBC, now FINMA or Swiss Financial Market Advisory Authority) in October 2008. Owing to all of these measures, the big banks’ capital situation at the end of 2008 improved slightly compared to the end of 2007, despite the massive losses incurred. However, our assessment is that, overall, risks in the big banks’ books are still material. This is all the more serious since, compared to the end of 2007, the profit potential of the big banks is lower. Banks with a domestic business focus, i.e. cantonal, regional and Raiffeisen banks, present a much more favourable picture. Although the overall profitability of these bank categories declined in 2008, it still remains above the long-term average.

However, we cannot rule out a significantly deeper and longer-lasting recession than that forecast in the basis scenario. In this adverse scenario of a deep and long-lasting recession, large losses would be possible for banks with a domestic business focus as well as for big banks. Such losses might lead to a depletion of a substantial share of the banks’ current capital reserves. This might in turn impair market confidence in their soundness. Given this risk potential, it is therefore essential that the big banks take all the necessary measures to ensure their resilience to any further significant deterioration in conditions. These measures include another reduction in their risk positions, a further strengthening of their capital base, the preservation of an adequate liquidity cushion and the alignment of their cost structure with the changed market environment. The opportunity offered by the somewhat calmer environment at present should be used to take these measures. The SNB and FINMA will monitor developments in these areas closely. In this respect, the SNB explicitly welcomes the fact that, at their last General Meetings, the big bank shareholders agreed to the creation of authorised capital. This allows the big banks to react appropriately and flexibly to market developments. Regulatory agenda However, if the stability of the financial system is to be increased in the medium and longer term, the authorities themselves face challenges, and not just the banks. Intensive efforts are currently going into the development of appropriate solutions, both at the international level and in Switzerland.
The capital needs arising under the adverse scenario are moderate at the aggregate level, although there is considerable heterogeneity across banks. Specifically, the reduction in the CET1 capital ratio for large institutions with a significant international presence is 0.4 pp, standing at 2.7 pp for other SSM-supervised banks and at 0.6 pp for less significant institutions. The difference obtained between internationally active institutions and other institutions supervised by the SSM shows the significance of geographical diversification in absorbing shocks. The lower decline in the capital of the less significant institutions is largely due to their lower credit risk and the lesser weight of their exposure to the real estate sector, i.e. to their better asset quality. The results obtained are generally more favourable than last year. This is because banks have made use of the past year to lessen their exposure to changes in the prices of certain assets, such as foreclosed assets. Specifically, banks have offloaded considerable packages of foreclosed assets during 2018 and in 2019 to date. Turning once more to the main sources of risk to financial stability, the last such source I wish to mention relates to financial institutions’ operational risk. Operational risk accounts for 9.3% of Spanish deposit institutions’ volume of risk-weighted assets, slightly below the European average (10.5%). In any event, the deterioration of solvency associated with an operational risk event may be high based on past experience.

The added pressure of the economic environment on bank profitability is the second element of the balance of risks that I would like to highlight. Once again, this is not something specific to the Spanish financial system. Indeed, Spanish banks’ profitability is higher than the European average, but it remains below the cost of capital. Maintaining appropriate profitability is crucial, among other factors, if banks are to generate capital organically and, in this way, reinforce their solvency levels. Spanish bank profits in the first half of the year, down by 11.5% in year-on-year terms, are a sign of the growing likelihood of this risk materialising. Contributing to this decline have been the reduction in gains on financial operations and, to a lesser extent, the increase in operating expenses, although a portion of this was due to extraordinary expenditure associated with the restructuring of certain banks. In addition, the ongoing reduction in impairment losses that began in 2012 is showing some signs of exhaustion. Indeed, in terms of their year-on-year rate, impairment losses increased for the first time since 2012, posting a rise of 3.9%. And we should not forget that, at present, the NPL ratio is still significantly above that recorded before the financial crisis. Specifically, in terms of lending to the resident private sector, in business in Spain, the NPL ratio stood at 5.3% in June 2019, 8.7 pp down from the December 2013 high. Foreclosed assets evidenced a further decline, standing below € billion in June 2019.
Looking at all these events, there is a recurrent pattern: innovation in the real or financial economy and deregulation measures are followed by accelerated growth, which is accompanied by a very expansive lending policy on the part of banks. Sooner or later, the boom comes to an end and price corrections take place that often end in a recession. As a rule, the stronger the boom is at the start of the cycle, the larger is the subsequent harm to the economy and to society. BIS central bankers’ speeches  1  This pattern is often complemented by another factor. Particularly, but not exclusively, in the financial sector – a sector with fierce competition between regulated and non-regulated financial market participants – regulatory loopholes are actively exploited in order to gain competitive or other advantages. This is particularly well illustrated by the example of assetbacked securities (ABSs). From the middle of the 1990s, the originate-to-distribute model, i.e. the securitisation and resale of loans, was seen by many as the financing model of the future, not just in the United States, but also in Europe and Germany. Many saw it as a solution to economic and socio-political problems and took measures in favour of ABS financing in terms of regulatory requirements. Accordingly, banks were able, for example, to finance their ABS-based special-purpose vehicles solely through short-term credit lines, credit lines that are in place “until further notice”.

This expanded role reminds us that the monitoring responsibility of a Central Bank is crucial. Our dedication to stability and our forward looking approach in a globalised financial world is a challenging task. Long lasting cooperation among Central Banks and stimulating conferences like this one largely contribute to this achievement. Thank you for your attention. 6  BIS Review 113/2010
Manufacturing – which accounts for approximately 8 percent of total Texas employment – added over 27,000 jobs. All told, the private sector in Texas expanded by 266,400 jobs in 2011, while the public sector contracted by 54,800, due primarily to layoffs of schoolteachers. In sum, Texas payrolls grew 2 percent, significantly above the national rate of 1.3 percent. This performance is not unique to last year. As you can see from this graph of nonagricultural employment growth by Federal Reserve district going back to January 1990, the Eleventh District has outperformed the nation on the job front for over two decades. Note the slope of the top line, which depicts job growth in the Eleventh District compared with each of the other districts and, importantly, relative to employment growth for the U.S. as a whole – denoted by the black line, the seventh one down. As was pointed out in high relief by the media when a certain Texas governor was briefly in the hunt for his party’s presidential nomination, we do have some serious deficiencies in the Lone Star State. We have a very large number of people earning minimum wage; we have an unemployment rate that, while trending downward, is still too high, abetted by continued inflows of job seekers from less-promising sections of the country.

If other countries with stable governments offer more attractive tax and regulatory environments, capital that would otherwise go to creating jobs in the U.S.A. will migrate abroad, just as intra-U.S. investment is migrating to Texas. Thus, even if one were to somehow have 100 percent certainty about the future course of Federal Reserve policy and be completely comfortable with it, without greater clarity about the future course of fiscal and regulatory policy and whether that policy will be competitive in a globalized world, job-creating investment in the U.S. will remain restrained and our great economic potential will remain unrealized. I pull no punches here: We have been thrown way off course by congresses populated by generations of Democrats and Republicans who failed the nation by not budgeting ways to cover the costs of their munificent spending with adequate revenue streams. The thrust of the political debate is now – and must continue to be – how to right the listing fiscal ship and put it back on a course that encourages job formation and gets the economy steaming again toward ever-greater prosperity. No amount of monetary accommodation can substitute for the need for responsible hands to take ahold of the fiscal helm. Indeed, if we at the Fed were to abandon our wits and seek to do so by inflating away the debts and unfunded liabilities of Congress, we would only become accomplices to scuttling the economy. I was in Mexico last week.