samchain/econo-pairs-v1 huggingface dataset:
Related to all this, the EU must ensure that requirements to clear through CCPs apply also to exchange-traded derivatives and to vital cash markets, not just to “standardized” OTC derivatives. Whatever anyone says, there is really no excuse for where things currently stand on this in Europe. The MIFID II package provides an opportunity to correct it next year. 1  Thanks for comments to Andy Haldane, Edwin Schooling-Latter, Anne Wetherilt, Graham Young and David Lawton (FSA). BIS central bankers’ speeches  1  Those who argue that the gap in the EU’s framework should persist are serious about private gain but, sadly, not about stability. The crisis that threatens to engulf us all illustrates why we should give no room to such sentiments. 3. CCP default and resolution  There is a big gap in the regimes for CCPs – what happens if they go bust? I can tell you the simple answer: mayhem. As bad as, conceivably worse than, the failure of large and complex banks2. We therefore need effective resolution regimes for CCPs (and other financial market infrastructure). The Financial Stability Board will drive this forward as part of our work on the resolution of SIFIs. (A comprehensive package on the resolution of banks and dealers will go to the G20 Leaders Summit shortly. If endorsed, and Finance Ministers have already given their endorsement, it will become a Standard to which countries/jurisdictions pledge to abide.) The EU’s own work on resolution regimes has been a hugely positive input to this global process.

Yet, a fundamental policy objective should be that the recovery of activity and the repair of the financial system have to be achieved in a manner that will ensure a sustained growth performance and will prevent the recurrence of episodes of financial imbalances and market excesses that can threaten again financial stability and economic welfare. Put differently, it is important that the policies and reforms pursued today lay the foundations for sustained growth. Let me now elaborate on these issues by focusing on the role and contribution of central bank policy and of financial system reform. Central bank policy The ECB’s monetary policy and provision of liquidity have played a key role in containing the downside risks to price stability, supporting economic activity and stabilising the financial system. The extent of the monetary policy easing since last October has been unprecedented, with key ECB policy interest rates having been reduced by 275 basis points. At the same time, money market rates have declined even more from the peaks reached in October 2008 as a result of the reduction in the policy rates and the provision of unlimited liquidity to banks at a fixed interest rate (against an expanded range of eligible collateral) since last October. At present, Euribor rates of maturities up to three months are below or very close to the main refinancing rate (MRO) of the ECB and at historically low levels – ranging between 0.93% (overnight) and 1.56% (3 months).
Progress has clearly been made in the management of market and operational risks, but the advances made in the area of credit risk are, I think, particularly illustrative. Loan officers and risk managers now have at their disposal an everexpanding array of software, databases, models, and risk rating systems intended to provide empirical insight into a risk once not readily quantified. Our examiners have noted growing sophistication in banks’ internal risk rating processes, portfolio management methodologies, and the use of stress testing. As you know, all of these new tools and processes were developed and refined to promote a bank’s competitiveness and to protect it against loss - and not just to respond to a regulatory mandate. The resulting benefits to the stability of the financial sector can be seen objectively in the much lower number of problem banks, and the lower level of problem loans, in the recession that began early last year, compared to the previous one. For bank supervisors, the industry’s own growing emphasis on enhancing risk management practices has allowed us to shift our approach from evaluating financial results to understanding and assessing the quality of internal processes. By looking at the strength of internal controls and the quality of analysis and judgement that management applies, we are better able to understand how well a bank will weather potential future challenges or business downturns. In this context, one area that has come under increased scrutiny is how firms manage their compliance activities across the organization.

Banks with better measures of their economic risks will be able to allocate capital more efficiently and more closely in line with their actual sensitivity to the underlying risks. By doing so, the Basel II framework encourages developments in the management of a wide range of risks on a firm-wide basis and developing a more comprehensive approach to managing those risks together. Second, to achieve those capital benefits, the more advanced approaches to credit and operational risk require banks to meet strong process control requirements. Again, the increasing focus on a bank’s control environment gives greater weight to the management disciplines of measuring, monitoring and controlling risk. As an example, by relying on banks’ own internal credit assessments, the IRB approach builds on the risk management practices that most internationally active banks are already in the process of adopting for their internal purposes. To qualify for the IRB approaches, banks will need to adhere to various specific parameters and standards that may not be fully in place as yet. Our pilot reviews of U.S. bank readiness do indicate that there are a number of areas that both banks and supervisors will need to work on to be ready for full IRB implementation. These include addressing concerns about independence of the rating process, and accumulating necessary internal default and loss data to be able to produce more reliable quantitative estimates. Enhancements in these areas will be important, not just to ensure readiness for IRB, but for further improvement in credit risk management more generally.
‘Persistently rising debt levels potentially increased the probability that any adjustment to household balance sheets would be abrupt rather than smooth, with an attendant risk of a fall in asset prices and, thus, in the value of collateral. In those circumstances, there might also be implications for financial sector behaviour and associated constraints on household credit availability, which could feed back into spending and so somewhat amplify the effect on aggregate demand. In the view of some members, therefore, rising debt levels risked increasing the volatility of output and so of inflation in the medium term, potentially making future inflation outturns more uncertain. Other members placed little or no weight on this’. Had I been there I have little doubt that I would have aligned myself with the first group, and given this it will not surprise you that my policy decisions have from time to time been influenced by my attitude to the build up of debt vulnerability and leverage. In my view there are circumstances which can justify monetary policy being tightened in advance of potential shocks, a form of insurance or risk management if you like: keeping interest rates a little higher to prevent potential risks crystallising at some point in the future. It is sometimes important to have in mind possible trade offs between deviations of inflation in the near term from deviations from target further ahead. So this was a factor on a number of the occasions when I voted in the minority.

The cumulative output decline was 24%; unemployment peaked at 20%. Compared with this economic collapse, even some of the euro area peripheral countries were faring relatively better. Keeping the euro peg was considered by many as a “mission impossible”. External devaluation was presented as the only way forward. But Latvia did not choose the easy “quick fix”. It embarked on a courageous fiscal consolidation path and structural reforms. Two years later, the speed of the economic rebound is as extraordinary as the depth of the recession. Against all the odds, Latvia recorded a real GDP growth rate of 5.5% in 2011. While domestic demand was the main driver of growth last year, exports have also recovered very strongly. Evidently, Latvia’s competitiveness has improved, even though many challenges still lie ahead. The economic dynamics behind this swift stabilisation and recovery merit close examination. Equally interesting is the political economy of the Baltic adjustment. Jean-Claude Juncker once said: “we all know what to do but we don’t know how to get re-elected afterwards”. This saying, often referred to as “Juncker’s curse”, unfortunately seems to be confirmed by the crisis in vast segments of the euro area. Italy, Greece, Ireland, Portugal: in all of these countries the government fell directly as a result of its handling of the economic crisis. Latvia seems to be the exception to the rule. Despite harsh austerity measures the Prime Minister managed to get re-elected twice. Many ruling politicians in Europe these days may look upon this with incredulous admiration.
First, of course, is the fact that one cannot rely on a backup computer site for Y2K contingency if that site also uses the same software that is the cause of the Y2K problem at the main site. In some cases, it is impractical to build a duplicate software system from scratch simply to provide for Y2K contingency. In these cases, as a senior banker explained at one of our New York Y2K forums, contingency planning amounts to, “Testing, testing, and more testing.” Contingency planning can also be separated into components that are firm-specific and those that are market-wide. Each individual firm will need to develop its own contingency plans designed to maintain the integrity of its operations during the changeover to the Year 2000. The FFIEC has recently issued guidance to banks in the United States regarding the core elements of their own contingency planning.5 The Joint Year 2000 Council will also be developing a paper on contingency planning for the benefit of the global financial supervisory community. This paper will seek to address firm-level contingency as well as issues of market-wide contingency. 5  See www.ffiec.gov/y2k/contplan.htm BIS Review 56/1998  - 10 -  Market-wide contingency refers to the planning by participants and supervisors done to ensure that individual disruptions can be managed in ways that will prevent them from causing disruptions to critical market infrastructures.

Ivan Iskrov: Global and regional challenges to the economy and the financial system. Do we have working solutions? Opening address by Mr Ivan Iskrov, Governor of the Bulgarian National Bank, before the International Scientific Forum “Global and Regional Challenges to the Economy and the Financial System: Do We Have Working Solutions?” organised by the VUZF University, Sofia, 10 May 2012. *  *  *  Dear Mr. Rector, Dear Participants and guests of the conference, Ladies and gentlemen, It is an honour and a pleasure for me to take part in the opening of this International Scientific Forum organized by the VUZF University. I would like to thank its Rector, Prof. Vazov for inviting me, and through him to congratulate the University on the occasion of its remarkable 10th Anniversary. The academia are famous for their conservatism but here, only a decade after its foundation, your University established itself as one of the leading universities in Bulgaria in the area of finance and insurance. An example of the high European standards to which the VUZF University aspires, are the joint bachelor’s and master’s degree programmes with the University of Sheffield. In addition, the Extended “Erasmus” University Charter awarded by the European Commission provides opportunities to VUZF University students to train and have internships at EU universities and companies. It was announced lately that in the recent five years 55 thousand people have graduated economy in Bulgaria.
In light of these risks, the responsible public policy objective was to get together those with a direct financial interest in an orderly rescue of Long-Term Capital, to discuss its problems openly and objectively, to provide a sounding board for solutions, and if necessary, a calming influence. In my view, we achieved this objective. What did the New York Fed do? BIS Review 78/1998  -4-  Because events were moving swiftly, and with my approval and support, my colleague Mr. Fisher invited representatives of the three firms, which we felt had the greatest knowledge of the situation at Long-Term Capital and a strong interest in seeking a solution, to an early morning meeting on September 22nd. The three firms were Goldman Sachs, Merrill Lynch, and J.P. Morgan. Continuing discussions which commenced the day before, Mr. Fisher explained our interest in being aware of developments and in reducing the risk of an abrupt and chaotic close-out of Long-Term Capital. The firms present stated that they were not aware of any other initiatives then being actively pursued, to resolve Long-Term Capital’s problems. They voiced their own concerns about the risks to the markets of a close-out scenario. They discussed various approaches to stabilizing Long-Term Capital including the concept of a “collective industry” or consortium approach.

In the aftermath of Long-Term Capital, we need to pursue these leverage-related issues, and others, in conjunction with our colleagues at the Federal Financial Institutions Examinations Council. The insights that we gain should be of value to bank supervisors, and for the study of the Long-Term Capital matter that is to be done by the President’s Working Group on Financial Markets, announced by Secretary Rubin last Friday. BIS Review 78/1998
The Bank for International Settlements (BIS) defines the objective of macroprudential policy as follows: “…The objective of macroprudential policy is to reduce systemic risk by explicitly addressing the interlinkages between, and the common exposures of, all financial institutions, and the procyclicality of the financial system.”  8  BIS Review 113/2010  New rules regulating the financial sector have now been adopted in the US. A new council, the Financial Stability Oversight Council, will be established to monitor risk in the US financial system. The Council can propose stricter regulation of systemically important financial corporations, approve any proposals from the Federal Reserve to break up large banks and require that systemically important financial institutions other than banks are subjected to supervision. In the UK, a proposal has been made to assign responsibility for supervision and regulation of the financial sector to a subsidiary of the Bank of England (the Prudential Regulation Authority). A Financial Policy Committee, similar to the Bank’s Monetary Policy Committee, will also be established within the Bank. In the EU, the European Systemic Risk Board (ESRB) will be established and will probably be chaired by the president of the European Central Bank (ECB). We can distinguish between two approaches to the design of instruments to safeguard financial stability. One is to make the financial system more robust by, for example, reducing interdependency among financial corporations. The other is to curb procyclical behaviour in financial corporations.

I am sure you will quickly get to know him just as well – and I am equally sure that he will represent your various views on the business conditions here in the region to the Monetary Policy Committee just as objectively and forcefully as John Beverly has done. I’d like to thank John publicly this evening for all his work, on both your and our behalf, over the past three years. I thought that in my opening remarks I would talk about the state of the economy as a whole, about the substantial imbalance between the domestic and the internationally – exposed sectors of the economy and the regional impact of that imbalance, and about the difficult dilemma which that poses for monetary policy. I will then happily try to answer your questions. Let me start then with the overall economy. The economy as a whole has grown consistently quarter by quarter now for over seven years – at an average annual rate of 3.2% which is well above its long-term trend rate. Consumer price inflation has averaged some 2.7% over this period. Employment has risen to a record level; and the rate of unemployment has fallen to a near 30 year low. All of that is very encouraging. But since the summer of 1996 our effective exchange rate has appreciated by about 12% and we have been affected by a global economic slowdown resulting largely from the financial crisis that began in Asia two years ago.
The SNB is concerned about exchange rate developments. The SNB forecasts are based on the premise that the exchange rate developments will stabilise in the medium term. Should the exchange rate again be subject to significant changes, a reassessment of the inflation outlook would be required. Since the last monetary policy assessment, the M2 and M3 aggregates have been growing at about 7% year-on-year. Some of this high growth rate is attributable to the current low interest rates. Overall, ample liquidity is available in the economy and this means potential risks for price stability in the long term. Mortgage lending has also continued to increase substantially, growing at a rate of 4.7% in April. In an environment of low interest rates and substantial advances in real estate prices, a high rate of growth in mortgages can harbour risks for financial stability. In the speech that follows, my colleague Thomas Jordan will outline for you the SNB’s Financial Stability Report. In view of the potential risks for the financial sector, the SNB continues to closely observe the situation on the mortgage and real estate markets. 2  BIS central bankers’ speeches  Chart of conditional inflation forecast The (dashed) red curve on the chart represents the new conditional inflation forecast. It shows the future path of inflation, assuming that the three-month Libor remains constant at 0.25% over the next twelve quarters, and it covers the period from the first quarter of 2011 to the first quarter of 2014.

As set forth by the Regulation, this exercise should include elements of an asset quality review as a basis for a thorough solvency analysis. This analysis should also be instrumental in identifying potential legacy problems. It is important that the financial clean-up of these legacy problems will be undertaken by the responsible Member States and not by the ESM and certainly not by the ECB. Just like an insurance policy, the SSM can cover future risks. Past omissions must be resolved by those who are accountable for them. This does not rule out interim solutions involving actions by the SRM and (privately financed) resolution fund as well as by the ESM. Fourth, appropriate safeguards to mitigate reputational risks – for both the supervisor and the monetary policy maker – are needed. It is therefore critical to implement an actual internal separation between supervisory and monetary functions, that should also be coupled with an external dimension, reinforcing the outside perception of such clear operational and accountability separation. The Chair of the Supervisory Board is responsible for discharging the accountability duties towards the European authorities (European Parliament, finance ministers of participating Member States, the European Commission). They may also, on occasion, be asked to report to national parliaments. More regularly, the representatives of the national competent authorities will perform such a role at the domestic level.
Caleb M Fundanga: Improved economic and financial developments in Zambia Opening remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the Bank of Zambia/Deutsche Bank workshop on Capital Markets, Lusaka, 15 April 2010. *  *  *  The Deputy Governor – Operations at Bank of Zambia Officials from Deutsche Bank Officials from the Ministry of Finance and National Planning Distinguished Resource Persons Colleagues from the Bank of Zambia Ladies and Gentlemen I am delighted to officiate at this important workshop on Sovereign Bond Issuance. Let me from the onset express my gratitude to our colleagues from Deutsche Bank who have demonstrated a desire and commitment to share with us their experiences in the area of international capital markets, particularly with respect to sovereign debt issues and ratings. I am particularly delighted that this workshop is a follow up to an earlier meeting with officials from Deustche Bank in December 2009. The willingness of the Deutsche Bank officials to come back four months later to further discuss the issues with a wider audience is truly heartening to us and commendable indeed. Ladies and Gentlemen, Zambia like many other countries in Sub-Saharan Africa is one of the countries that have for a long time relied on concessional funding and multilateral financial support in implementing her development agenda. Whereas other parts of the world have enjoyed respectable growth rates supported by private capital flows, our region has lagged behind.

Ladies and Gentlemen, with these few remarks I hereby declare this workshop officially open. I thank you for your attention. 2  BIS Review 51/2010