samchain/econo-pairs-v1 huggingface dataset:
But their number will depend on the basket of deliverables of the futures contracts and how those baskets are defined. The alternative would be for a group of different countries’ bonds to be traded interchangeably, but that seems an unlikely outcome. On the OTC markets, the last 18 months has seen the proliferation of trades based on changing perceptions of the likelihood of convergence for the traditionally high-yielding countries and trades based on the differential yields of French and German government bonds. If I might embark on a regulatory diversion here, just for one moment, we at the Bank expect those banks involved in convergence trading to undertake rigorous stress testing of their portfolios to assess the market risk they are running on open positions. That testing should also shed light on the potential for changes in their credit risk - for example if an OTC contract is moving further in the money due to a market movement, the bank would become more exposed to its counter-party. We believe that the credit exposure implications of stress testing should be taken seriously too and are encouraging banks as best practice to do that. In our view not enough institutions do so yet. After EMU, one would expect to see the elimination of exchange rate risk narrowing yield differentials in the bond markets. With exchange rate risk removed and a single monetary policy in operation, national bond yields will differ principally because of differential default risks and differences in market liquidity.

I note with interest that your own assessment is that the best option for the futures and options business in London would be for EMU to go ahead and for the UK to participate in the first wave. It is a moot point as to whether the impact on the profits and bonuses of derivatives traders will be the number one criterion in the minds of Labour MPs when they come to reach a view on EMU, but I will certainly draw it to their attention if you would like me to do so. BIS Review 67/1997  -3-  By contrast, you are slightly, though not exaggeratedly pessimistic about business opportunities in London if EMU goes ahead with the UK a ‘slow track’ country. I regard this as a pessimistic assessment, and will attempt this morning to persuade you that you are wrong. My first point, and perhaps the strongest, is that uncertainty about UK participation in EMU has persisted now for a considerable number of years - perhaps indeed since the late 1970s when the UK government’s response to the original EMU plan was distinctly lukewarm. And certainly no British Prime Minister has given an enthusiastic endorsement of the most recent Delors Plan for EMU, at any stage.
6  BIS Review 5/2010  Chart 2  Monetisation of economy* percent  40  35.9  35 30  29.9  34.5  32.2  25.6  25 20 15 10 5 0 2004  2005  2006  2007  2008 * M3/GDP  Source: National Bank of Romania, National Institute of Statistics  The exchange rate appreciated in both real and nominal terms. The domestic currency appreciated in nominal terms from nearly RON/EUR 4.1 in January 2004 to RON/EUR 3.1 in July 2007 (about 24 percent). Along with the relatively high fiscal dominance and the net debtor position of the National Bank of Romania (NBR), heavy capital inflows became a serious matter of concern in terms of implementing inflation targeting, i.e. the new monetary policy strategy adopted in August 2005. While boosting disinflation, the domestic currency appreciation was so strong that it tended to affect the external competitiveness of Romania. To this added the episodes of high volatility on the foreign exchange market. As in other CEE countries, foreign banks operating in Romania took funds from their euro area parent-banks. In 2004, nearly 72 percent of liabilities came from the euro area and 21 percent from the United Kingdom. During 2004–2008, foreign liabilities of the banks in Romania increased more than six times, from EUR 3.8 billion to EUR 24.5 billion. Such rises were reported across the entire maturity spectrum. The surge in banks’ foreign currency holdings and the appreciation of the domestic currency acted jointly towards boosting lending in foreign currency.

Let’s be clear on this: French and European savers aren’t going to become Americanised in their savings behaviour or appetite for risk. These transatlantic differences have historical, cultural and sociological roots. And it’s not our role to go into them here, even less try to change them. However, the French debate would be made much easier if we distinguished clearly between the two main objectives underlying savers’ aversion to risk: security and liquidity. With regard to security, or capital protection, this is something that is important for savers. Genuine risk-taking, with all the potential gains it entails, will only ever be for a minority of investors. In the case of liquidity, however, increased life expectancy, lower pension replacement rates and the greater health risks associated with living longer are all pushing French savers to adopt longer and longer investment horizons. We need to be able to offer them suitable savings products: ones that are less liquid, with or without a long-term capital guarantee, and that allow savers to benefit from the higher returns offered by equities over the long term. A crucial point is to avoid any tax distortions that might mean these products are penalised more than liquid and risk-free investments. This level playing field in terms of taxation should also apply to the companies that are financed: in other words we need to avoid making debt financing more attractive than equity financing.
Financial activities of the Bank of Albania  After intensive efforts by our staff members with the assistance by foreign experts, and in close communication with the external auditor, for the first time in 2015 the financial statements were compiled in accordance with International Financial Reporting Standards (IFRS). This is a qualitative development for enhancing the financial transparency at the Bank of Albania. The Bank of Albania’s financial statements in accordance with the IFRS are expected to be finally approved on 30 March 2016, at the Supervisory Council meeting. It will also include the opinion of our external auditor, KPMG Albania. Following the Supervisory Council’s approval, the statements will be sent to the Assembly of the Republic of Albania for information. Honourable Chairman, Honourable Committee Members, The presentation of the activity of the Bank of Albania is a key moment for its annual activity. In my brief presentation, I tried to speak about all the aspects of our activity, and shared our expectations and objectives for the period ahead. In the full version, we have tried to include more data, analyses and informative sections. I hope that the Annual Report 2015 is in line with the expectations of the Assembly, and take this opportunity to assure you that the Bank of Albania will continue its endeavours to improve its performance towards perfection in the future.

Significant improvements have been made to procedures related to the inventory, processing  2  BIS central bankers’ speeches  and storage of banknotes, including those for destruction. Particular attention has been paid to setting clear criteria to guarantee high integrity of the employees designated in charge of values or assigned in other units engaged in control, supervision or other similar activities. 2. Economic developments and monetary policy  The Albanian economy continued to improve in 2015. The growth rate accelerated compared to the previous year, and the main indicators of economic and financial equilibriums have been overall improving. Thus: •  current account deficit reduced;  •  budget deficit fell 1.6 percentage points against the GDP;  •  firms’ balance sheet appear more liquid;  •  banking system non-performing loans and profitability indicators have been improving. However, aggregate demand remains insufficient to fully utilise production capacities. Subsequently, the internal economic environment has exercised low pressures for rising inflation, which have been further strengthened by the disinflationary trend noted in international markets. While upward, inflation continued to range below our 3.0% target, during the past year. Following, I will present a summary of the macroeconomic backdrop underlying Bank of Albania’s monetary policy decisions and their results. According to INSTAT data, the Gross Domestic Product rose 2.7% during the first three quarters of 2015. Available data suggest that the economy continued to grow at a similar pace even in the fourth quarter.
In this scenario, either much of the past decade of prosperity was an illusion or, alternatively within the space of only a few years, the productive potential of the U.S. collapsed for some unexplained reason. I suppose it is natural to believe that some elements of the story are true. But for me, the evidence for this is minimal, and the implications for productive capacity are exceedingly pessimistic. And even if it is true, the market mechanism should cause wages and prices to adjust in order to reemploy unused resources. For example, there should be some lower real wage that would make it profitable for firms to fund the necessary on-the-job training for workers who need some modest acquisition of skills. According to this pessimistic hypothesis, something is preventing the market’s pricing mechanism from achieving such results within a satisfactory time frame. My own view is more optimistic and, I believe, more consistent with the idea that our best days are ahead. Without a compelling explanation for the hypothesis that the productive capability of the U.S. has been diminished, I think the evidence favors the belief that aggregate demand is simply much too low today. After all, today there are roughly 14 million unemployed Americans. Only a few years ago, there were only about half that many. It is hard to believe that an additional 7 million Americans have suddenly lost the necessary skills to work in today’s economy, and I have not seen any evidence supporting such a dramatic and rapid loss of skills.

In the context of the UK’s highly developed and increasingly integrated financial services industry, in which distinctions between banks, building societies, investment intermediaries, insurance companies and so on have been becoming increasingly blurred, the argument for moving away from a fragmented supervisory and regulatory structure, in which banks were separately regulated, was compelling - and Howard and his team have done a tremendous job in bringing all the different strands of financial services regulation together under the FSA umbrella seamlessly and in a relatively short space of time. A potential downside from the Bank of England’s perspective was the possible loss of information from, or contact with, the banking sector which might reduce our capacity to exercise our responsibility for the stability of the financial system as a whole. Now of course it is early days to begin to assess the new arrangements from this perspective. It is true that we have not had any serious threats to financial stability in this country over the past three years, but I suppose that putting that down to the new structure would be a bit like the man who claimed that the absence of pink elephants in Hyde Park was the direct result of his clicking his fingers there on his regular morning walks. We really haven’t been tested.
As the size of the repo transaction is based on a forecast of the borrowing requirement during the coming week, and the RIX accounts must be regulated daily, the bank system may nevertheless need to borrow or deposit in the standing facilities on individual days. If the amounts are large, this could risk leading to major fluctuations in the overnight rate. The Riksbank is therefore prepared on a daily basis to carry out what are known as fine-tuning operations. These operations involve meeting the bank system’s borrowing or deposit requirement on a particular day at a rate of interest that is 10 basis points above or below the repo rate. To summarise this relatively detailed outline, the Riksbank’s monetary policy steering system means that the Riksbank, by supplying a payment system and lending and deposit facilities, confines the market’s overnight rate within an interest rate corridor of 150 basis points. But it is through the weekly repo transaction and the daily fine-tuning operations that we ensure that the overnight rate is close to the repo rate. Following the most recent monetary policy decision, we want the overnight rate to be close to the repo rate of 4.25 per cent. In practice this means that this week’s monetary policy repo will be carried out at a repo rate of 4.25 per cent. Same objective but different systems Many other countries also have the objective of steering the short market rate. However the systems used may differ.

The bank can count on being able to invest any surplus remaining at the end of the period in the market at a rate close to the policy rate. It is possible that the formulation of minimum reserve requirements can affect the need to stabilise the overnight rate in periods of financial turmoil. As it does not normally entail any additional cost, there may be an incentive for the banks to increase their deposits with the  BIS Review 51/2008  5  central bank at the beginning of the minimum reserve period when there is great uncertainty in the interbank market. This can entail a reduction in supply and thus rising interest rates in the interbank market. Recent developments Since last summer, developments in the financial markets have been turbulent. The problems were triggered in the US subprime market, which caters to borrowers with low credit ratings. The problems actually began back in 2005 when rising interest rates affected many borrowers. When loans were renewed at new, higher interest rates the loan costs for these borrowers rose substantially. And when property prices fell, there was no scope to mortgage the house so householders could borrow their way out of their problems. Many borrowers could no longer make the interest and mortgage payments on their loans. This caused major loan losses for many mortgage institutions and a general unease among investors. The loans had moreover been repackaged into what are known as structured products and sold on to investors around the world.
There are many indications that an increasing number of companies are now approaching the limit where they can no longer meet the increase in demand without recruiting new staff. We are thus beginning to see signs of a turnaround, but the question of the labour market and the significance of monetary policy for employment remains important. To what extent can the problems in the labour market be said to be due to the Riksbank having conducted an excessively tight monetary policy? If we had succeeded in predicting the high productivity we would probably have conducted a slightly more expansionary policy, but my answer is nevertheless that one is overestimating the power of monetary policy if one believes that it could have solved the problems in the labour market. A large part of unemployment is due to structural reasons and therefore does not vary according to the economic cycle. I do not believe that it would have led to so much higher consumption and investment if the repo rate had, for instance, been on average half a percentage point lower during 2002 and 2003. My assessment is thus that it would probably have led only to marginally lower unemployment. If one wishes to achieve a lasting improvement in employment, measures are required that will stimulate the functioning of the labour market in different ways and lead to investment and a good corporate climate.

However, the reverse can also apply: stock market developments also have some significance for the shaping of monetary policy. The price of  2/7  various assets, such as shares, is important in itself for the dynamics of a country’s growth and inflation trends. If, for instance, share prices rise, this stimulates household consumption and corporate investment, and vice versa. This in turn affects price trends. Thus, the stock market, like the housing market, can affect the Riksbank’s monetary policy decisions. Since the 1960s and 1970s, Swedes have been saving more and more in shares, both directly and via mutual funds and insurance, and the market has developed considerably during this period. The return on shares has been very good, seen over the past 30 years, but it has also been something of a roller coaster ride. Here I am thinking of periods of overvaluation, which have been followed by sharp price falls, for instance in connection with the financial crisis and the later IT bubble. Despite these periods of falling share prices, the percentage of shares in household wealth has increased, and stock market developments have thus become increasingly important for households’ consumption decisions and for inflation. Another reason to be interested in the stock market is its significance for efficiency and thereby for growth. An efficient securities market fulfils many important functions, for instance, as information bearer, channel for risk management and as mediator of capital.
François Villeroy de Galhau: Supervision of business practices Opening speech by Mr François Villeroy de Galhau, Governor of the Bank of France and Chairman of the Autorité de contrôle prudentiel et de resolution (ACPR), at the ACPR conference “Supervision of business practices”, Paris, 20 November 2015. *  *  *  Ladies and gentlemen, I am delighted to welcome you today to this new conference organised by the Autorité de contrôle prudentiel et de résolution and would like to thank you all for coming. This is an opportunity for me to tell you for the first time how important I find this type of event, where the Authority that I chair explains its actions and the principles that guide it. It is also an opportunity for us all to listen to the parties concerned, on a topic that brings us together today – that of the supervision of business practices – on which I would like to put forward three ideas: (I)  First, our supervision of business practices is important for the current mobilisation of the nation. (II)  Second, our supervision of business practices is important for financial stability. (III)  Lastly, our supervision of business practices must increasingly take account of developments in technology and changes in Europe. Our supervision of business practices is important for the current mobilisation of the nation. Many lessons can be learned from the dramatic events of Friday 13 November in Paris and its suburbs, which requires of us a total mobilisation.

This is a major innovation, a robust step, in the wake of the 2008 crisis and the loss of confidence of customers in their financial sector in many advanced economies, sometimes due to deceptive business practices. Restoring confidence is of course in the interest of all those present in this room. This means, for us, ensuring compliance with existing laws and regulations, as well as with the best practices observed or recommended by the ACPR. BIS central bankers’ speeches  1  Naturally, this consumer protection task is not designed to enforce these different rules in a blanket fashion. Rather, it must be done in accordance with the principles underlying these regulations and fully understanding the reality of these business practices. To sum it up in one sentence, these principles aim to balance relations between clients and professionals. This rebalancing is mainly achieved by taking account of the information asymmetry that can exist between these players. This may include rules that are specific to vulnerable clients, to a category of complex products, to the obligation to consider the interest of customers when the product is designed or in the organisation of product distribution. The reality of business practices, however, is difficult to sum up in a few words. This is where the work of ACPR staff comes into play; in the supervision as well as analysis of different data and through contact with both professionals and consumers. Collecting data on business practices is a prerequisite for the ACPR to guide its supervisory duties.
I am optimistic that Europe will come out of the crisis stronger and more robust. But that won’t be true of the euro area’s growth potential, will it? Many economists now think that will be much lower. We don’t traditionally publish our estimate of that. However, we must work on the assumption that the potential growth rate has slowed down – owing to the lower use of labour and, especially, the fall off in investment. The long-term development is still unclear. If the crisis is used to push through the necessary reforms, potential growth may accelerate. But we also need to consider the rapid ageing of the population, which will depress potential growth. Let’s now look at the current situation. The ECB is more sceptical than many economists – many would even say “pessimistic” – when it comes to the economic outlook. What is that assessment based on? I wouldn’t say that we are pessimistic. We are currently seeing the confirmation of what we have been expecting since December: the euro area is recovering very slowly in the course of the year, and that improvement will continue next year. However, there is no reason for our growth forecasts to go shooting up, and that is why we remain cautious. And that is why the ECB is continuing to try to use its forward guidance to shield the euro area economy from rising market interest rates in the event that the ultra-loose monetary policy in the United States comes to an end?

We work diligently to respond to the challenge, while paying attention to the two points of communication – immediate communication with the public and communication with the media. We do our best to follow the best practices of the European  central banking union, which is largely confirmed with the assessments of our transparency. In doing so, we not only struggle to increase intensity, but also quality of our communication. Here I would mention the practice of constantly improving the quality of information and analyses we publish, improving the methodological explanations for the statistics that we publish, timely informing of all novelties in statistical surveys, improving the structure of our website, concurrent publishing of statistics and statistical press releases for their explanation, providing international comparability of our data through continuous implementation of international standards. In this regard, we are in the final stage of creating an analytical tool for easier access and search of statistics by all external users. We hope that our commitment is noticeable for you as media representatives, who analyze our work on a daily basis, by following the press releases, data and positions that arise from the central banking operations in the country. For us, you, the journalists, are one of the main conveyors of monetary policy messages to the public. Not as our spokespersons, but as individuals and professionals respected by the public, who daily follow our work, which is very often presented in tables, graphs, reviews and data series that almost always require focused reading and analysis before being commented.