samchain/econo-pairs-v1 huggingface dataset:
The day after the results were published, I remember that Bridgewater Associates – which had said the banks needed considerably more resources – published a paper evaluating the SCAP results. The banner headline was: “We Agree.” So this was important. However, I would note that it is important not to draw too strong a conclusion from just one episode. In the SCAP process, I also think it is important that we had some good luck. First, the banks’ needs were not that great. What people didn’t appreciate going in was that U.S. banks have strong revenue-generation capabilities: the banks had already set aside a large amount of reserves and taken large mark-to-market losses, and the banks had already bolstered their capital resources via capital raises and the sale of ancillary businesses. Second, the economy started to look a bit better in May at the time the SCAP results were released. This made the stress scenario more credible. Third, the capital markets were open to the banks. This was important because, as we saw, private capital was viewed as very much superior to Treasury mandatory convertible preferred shares. Fourth, although we made the correct decision to disclose, this was a difficult and close call. The fact that the loss experiences for the different asset classes varied across the banks helped to bolster the credibility of the results. Going into the spring of 2009, there was a prevailing view that several of the largest banks would have to be nationalized.

1  Relevant documents are published on our website: https://www.snb.ch/en/ifor/finmkt/fnmkt_benchm/id/finmkt_reformrates  Page 3/5  Berne, 13 December 2018 Andréa M. Maechler  News conference  Charts  Page 4/5  Berne, 13 December 2018 Andréa M. Maechler  News conference  Page 5/5
Moreover, in a highly competitive environment, many institutions whose customer base was typically linked to a specific region responded by looking for new markets, opening branches beyond their traditional geographical area. Clearly there was no sense in maintaining these organisational structures and such a dense branch network, with all the associated costs, at a time when the future outlook for banking activity was considerably less favourable than previous to summer 2007, and considering also the impact of possible margin squeezes. Restructuring is clearly the responsibility of the banks themselves. But the authorities designed the FROB (Fund for the Orderly Restructuring of the Banking Sector) as a mechanism to further this process in a way that would minimise the burden for the taxpayer. As a result, and as the banking sector overall is in a healthy position, Spain has been spared the voluminous and widespread recapitalisations, with no commitment to restructuring, seen elsewhere. The FROB envisaged action on two fronts. On the one hand, it gave the Banco de España broad powers to take control of any institution that were to fail. And on the other, on what we could call the preventive side, it allowed financial support to be provided for the restructuring of viable institutions and their management teams, and helped them digest the process; that said, the institutions themselves, and especially those that had experienced management failures, would have to bear the attendant cost.

This significant step frontloads the transition from the prevailing accommodative level of policy rates towards levels that will enable the timely return of inflation to our two per cent medium-term target. Current challenges of monetary policy Let me now elaborate a bit more on some of the most important challenges that Monetary Policy faces today. The crux of the matter is that the pandemic and the war in Ukraine have created significant macroeconomic uncertainty, associated with a high degree of output growth and inflation volatility. In such an environment of lasting output and inflation volatility and uncertainty, one of the main questions is how governments and central banks should formulate policy. Fiscal policy will be critical in improving the robustness of our economies. With debt ratios at record highs, expenditure should be targeted and prioritise social cohesion and productive green investments that will help assure long-term prosperity and develop fiscal flexibility needed to cushion future shocks. Non-targeted fiscal policy will counteract monetary policy efforts to contain inflation. At the same time, central banks must safeguard price stability through, mainly, monetary policy. When the degree of inflation persistence is unclear, effective policy suggests a strong reaction to deviations from the target in order to limit the risks of inflation continuing to be high for an extended period. The risk of high and persistent prices, together with signals of tightening in the labour market, create an environment which makes it possible for higher inflation expectations and higher prices to become entrenched.
Auctions of funds against wider collateral of the kind introduced by the Fed and the Bank of England side-step the stigma problem by having a number of banks borrow at the same time. They have definitely helped to underpin the system. But, compared with a facility, those auctions are available only periodically – fortnightly in the UK at present – rather than every day. The DWF is available on a continuous basis, and is designed to avoid the stigma problem. In particular, in its usual mode of operation, it involves a collateral swap, so there is no give away of its being used in the size of either the banking system’s reserves balances or our open market operations. And we publish data on its use on an aggregate, averaged basis and with a lag. This puts onto a permanent footing some of the technology of the Bank’s Special Liquidity Scheme, which was used in 2008 to provide 3-year financing, via a collateral swap, for assets that had become illiquid as a result of the crisis. 20 How the facilities can work in extremely stressed conditions Monthly, wide-collateral repos for a 3-month maturity and typically of fairly modest size, together with a continuously available Window for 30-day collateral swaps, are now permanent features of the Bank of England’s regime. Various parameters can be adapted in the face of extremely stressed conditions of the kind we have been facing. Thus, the widecollateral repos have been held fortnightly rather than monthly, and for very large sizes.

If companies are relying on CCS to achieve net zero carbon emissions, investors will want to assess how they plan to get there – and who they expect to pay for it. 26  The IPCC estimates that additional investment of $ 190-900bn is required annually in the energy sector alone if the rise in average global temperature is to be capped at 2C. www.ipcc.ch/report/ar5/ Mercer estimates that additional cumulative investment in efficiency improvements, renewable energy, biofuels and nuclear, and carbon capture and storage could be in the range of $ by 2030. www.mercer.com/insights/point/2014/climate-change-scenarios-implications-for-strategic-asset-allocation.html  8  BIS central bankers’ speeches  of attempting to use such changes in prudential rules – designed to protect financial stability – for other ends. More properly our role can be in developing the frameworks that help the market itself to adjust efficiently. Any efficient market reaction to climate change risks as well as the technologies and policies to address them must be founded on transparency of information. A “market” in the transition to a 2 degree world can be built. It has the potential to pull forward adjustment – but only if information is available and crucially if the policy responses of governments and the technological breakthroughs of the private sector are credible. That is why, following our discussions at the FSB last week, we are considering recommending to the G20 summit that more be done to develop consistent, comparable, reliable and clear disclosure around the carbon intensity of different assets.
Another natural reason for the presence of low interest rates is our history of low and stable inflation rates, at least in comparison with other countries. As a result, international investors view Switzerland as a kind of safe haven, which gives rise to an interest rate advantage in nominal as well as in real terms. If Switzerland were to give up its monetary independence by pegging the franc to the euro or by joining the euro area, it would lose its privileged status and, consequently, Swiss interest rates would increase to European levels. Since higher interest rates mean lower asset prices and lower levels of investment, and also higher mortgage rates, the Swiss are understandably not keen on giving up their national currency. Since any major decision in Switzerland has to be approved in a public referendum, the prospect of euro membership in the near future is thus highly unlikely. The final point I would like to make is that going for a currency peg instead of adopting the euro outright is not an option for Switzerland either. It could even be a dangerous solution. Currency peg not an option It is no secret that the majority of Swiss are against EU membership, at least at the moment. But you may ask: Even if Switzerland isn't an EU member, couldn't it peg the Swiss franc unilaterally to the single currency? Wouldn't this help eliminate the exchange rate risk, without giving up monetary flexibility entirely? There is no such thing as a free lunch in monetary affairs!

Looking at our development over the last ten years, I do believe that price stability, due to monetary independence and flexible exchange rates, has been beneficial to the Swiss economy. It has maintained a low interest rate environment which has facilitated the private sector's adjustment to the rapid changes of the world economy. And what about Israel? I think that the arguments in favour of Switzerland's monetary independence apply even more to this country. While we at the SNB concentrate primarily on domestic developments and trends in the euro area, the Bank of Israel also has to take into account economic conditions in the US. Thus, there are three major sources of shocks that Israeli monetary policy has to respond to in order to achieve the goal of price stability. BIS Review 46/2006  7  Despite difficult circumstances, Israel was able to stabilise its monetary framework in the 1990s. The Bank of Israel now operates with an inflation target and will soon benefit from a new law that will modernise its decision-making process and strengthen its autonomy. All the necessary ingredients are now in place for the implementation of a successful independent policy in this country, as was once also the case in Switzerland. May I wish Stanley Fisher and his colleagues all the best in this endeavour. 8  BIS Review 46/2006
Stress test results for the banking sector reveal the resilience of the sector as a whole in case adverse macroeconomic scenarios materialise, yet the impact of the interest rate risk on the banking sector is notable, owing to the balance sheet structure featuring longer asset duration. The analysis of interest rate-sensitive assets and liabilities shows a potential loss of 13.69 percent of own funds, assuming a standardised/uniform shock of 200 basis points on the term structure of interest rates (the analysis takes into account a parallel upward shift in the yield curve). The impact would result, ceteris paribus, in a potential decline in total capital ratio at system level by up to 2.6 percentage points (Figure 10). 2  Liquidity ratios for the banking sector continue to post, on average, significantly higher levels than the minimum requirement. The average liquidity coverage ratio (LCR) at aggregate level is 239 percent (September 2017), standing above the EU-wide average of 145.6 percent (June 2017). The LCR ratio (Figure 11) confirms that the Romanian banking sector holds a stock of quality liquid assets adequate to withstand a stress scenario for a 30day period. However, the immediate liquidity ratio calculated as the ratio of cash and bank deposits at net value and unpledged government securities to total liabilities – the minimum prudent level being 30 percent – fell marginally to 38 percent.

Yves Mersch: Risk management in times of non-conventional monetary policy Keynote speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the Joint Bank of Portugal and European Central Bank Conference on “Risk Management for Central Banks”, Lisbon, 25 September 2017. * * * Let me start by thanking you for coming to this joint ECB-Banco de Portugal conference, and the Banco de Portugal for hosting us on this occasion. I am delighted to see central bank risk managers, practitioners and academics here in Lisbon to exchange views on risk management for central banks. This topic has gained such importance in recent years as central banks across the globe, including the ECB, have sharply expanded their balance sheets, even though the time for ever more of the same is behind us. Like the many great maritime expeditions that started out from this country, some of our endeavours in recent years have taken us into uncharted territory. Now is a good time to take stock of what we have learnt and map out what may come next. Following stable principles in the Eurosystem’s risk management framework The Eurosystem has a clearly defined objective, enshrined in the Treaty, to preserve price stability in the euro area.1 The Treaty does not speak of eligible counterparties, collateral haircuts or issue share limits for bond purchases.
Small risk of a crisis on the Swedish property market In recent years, we have once again seen rapid price increases for commercial properties in Sweden. These prices have now begun to fall, however, and the question is whether this can lead to major loan losses for the banks in the same way as it did during the crisis of the 1990s (see Figure 11). The current downturn is after all much worse than that of the 1990s. I do not believe, however, that the effects on the property market will be so serious. The years prior to the property crisis of the 1990s were marked by a rapid rise in the price of office premises. This was mainly a result of the deregulation of the credit market as a pent-up demand for loans led a rapid expansion of credit. A large part of the loans went to the property sector, where optimism was high as a result of the favourable situation on the market for office premises. The good times on the property market signalled the start of a construction boom. However, when the downturn came, prices fell and real interest rates  6  It is important to point out here that the statistics regarding property prices in the Baltic states are not complete and difficult to access, which may make if difficult to get a fair picture of the situation. This may mean, therefore, that both the dramatic increases and the substantial decreases that we are now seeing are exaggerated.

That is why, as I explained in my letter to the Chancellor, we believe that a slowdown in the economy this year, creating a margin of spare capacity, will be necessary to dampen price and wage pressures and ensure that we fulfil our remit by returning inflation to the target. And growth is now slowing quite sharply – broad money growth is falling, business surveys point to particularly weak output growth in the second quarter and growth is likely to remain subdued for the rest of the year. Where Bank rate will ultimately need to move to bring inflation back to target is impossible to judge now. Decisions on Bank Rate will be made one month at a time in the careful way that the MPC has developed over more than ten years. But there should be no doubt that the  BIS Review 79/2008  1  MPC is prepared to take whatever action is needed to return inflation to the 2% target and to keep expectations of inflation in the medium term anchored to the target. The fact that growth and inflation are heading in opposite directions has led some commentators to question our monetary framework. Target growth not inflation is the cry. I could not disagree more. This is precisely the situation in which the framework of inflation targeting is so necessary. Without it, what should be a short-lived, albeit sharp, rise in inflation, could become sustained.
But, like many others, I see a role for professionalism in finance. The Banking Standards Board in the United Kingdom is a thought leader in this field. According to its most recent annual review, which I recommend to you all, “[P]rofessionalism comprises the attitudes, judgement and high standards of behaviour, knowledge and skill expected of individuals working in banking. . . . [G]reater professionalism in banking would help create a sector that, now and in the future, better met the needs and expectations of its customers, clients, members, employees, the economy and wider society.”14 In my view, various aspects of professions have a lot to offer. The eligibility requirements for many professions improve the likelihood that a practitioner will meet standards of competence and behavior in her professional conduct. These requirements cover character, prior record, and reputation—not only skill or education. Members of professions also benefit from codes of conduct that transcend specialized practices. These principles offer an ethical framework within which to tackle problems that are not easily resolved by narrow rules or processes. They make it easier to make and stick with good decisions. Gatherings in which members of a profession can come together and exchange ideas and opinions are crucial. They help members of a professional community keep up to date on important industry-wide developments and raise issues that present the need for collaboration. They also help to instill a shared sense of purpose and responsibility for carrying out the goals of the profession. A profession can also provide personal accountability.

This is good professional advice 6/7  BIS central bankers' speeches  as well.”). 11 See supra n.4. 12 See Dan Awrey, William Blair, and David Kershaw, “Between Law and Markets: Is There a Role for Culture and  Ethics in Financial Regulation?” 38 Del. J. Corp. L. 191, 208 (2013) (“Proximity is a measure of the physical, psychological, social, or cultural distance between a decision-maker and those whom their decisions affect.”). 13 Tim Besley and Peter Hennessy, Letter to Queen Elizabeth II (July 22, 2009), (“So in summary, Your Majesty, the  failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole.”). 14 Banking Standards Board, Annual Review 2017/2018. 15 See Dudley, supra n.6; Michael Held, Reforming Culture and Conduct in the Financial Services Industry: How  Can Lawyers Help? Remarks at Yale Law School’s Chirelstein Colloquium (Mar. 8, 2017). 16 See Preet Bharara, Criminal Accountability and Culture, Remarks at the Federal Reserve Bank of New York’s  Conference: Reforming Culture and Behavior in the Financial Services Industry: Expanding the Dialogue (Oct. 20, 2016), (“here would be less corporate crime and less painful consequences arising from the crime that does occur if more people said something early on rather than remain silent or look the other way.”).
Thomas Jordan: Comments on Swiss monetary policy Speech by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the 108th Ordinary General Meeting of Shareholders of the Swiss National Bank, Berne, 29 April 2016. *  *  *  Mr President of the Bank Council Dear Shareholders Dear Guests Our last ordinary general meeting was dominated by the discontinuation of the minimum exchange rate. The past year has been a difficult one, with the Swiss economy once again demonstrating great flexibility and adaptability. It was also a year during which there has been broad discussion in the public arena of the monetary policy of the Swiss National Bank. It is essential that the judgements we make and the measures we take are fully understood, if our monetary policy is to be effective and trust is to be maintained in the SNB. In my comments today I would therefore like to outline once again our current monetary policy and our views on key issues. I shall divide my speech into two parts. First, I will talk about economic developments and briefly recap our reasons for discontinuing the minimum exchange rate. Then I will take a look at the current economic situation. In this context, I will discuss our mandate of ensuring price stability. I will conclude this part by looking ahead to the challenges that face us in the future.

These characteristics constitute a challenge for policymakers in that key economic variables are prone to volatility, being highly sensitive to external events and to shocks in specific sectors or individual enterprises which, though small in absolute terms, can have a disproportionately large impact in a small country context. Such an economy clearly stands to benefit from joining a monetary union, particularly in terms of greater stability and policy credibility. 1 From a central banker’s viewpoint, moreover, a key advantage is the elimination of the risks inherent in managing a small, vulnerable currency. Permanently fixing the Maltese lira / euro exchange rate, moreover, did not appear to be a radical change. The ECU, and since 1999, the euro, had in fact been the main reference currency in the exchange rate baskets since 1989. By 2002 the euro already carried a weight of 70%. Furthermore, Malta’s only devaluation, which took place in 1992, confirmed that exchange rate adjustments are not the most effective means for safeguarding an open economy’s competitiveness. The initial advantage derived from the devaluation was soon reversed, owing to the inflationary impact of compensatory wage increases resulting from a partial wage indexation mechanism and the high import content of inflation. If anything, the irrevocable fixing of the exchange rate and the economic policy co-ordination and monitoring procedures of EMU seemed to offer a congenial environment for implementing the structural changes necessary for a lasting improvement in the country’s international competitiveness.