samchain/econo-pairs-v1 huggingface dataset:
The advent of credit risk modelling techniques such as CreditMetrics allow such an exercise to be attempted. Any results under this sort of approach need to be treated with a fair amount of caution, given the number of assumptions involved. The work we have done at the Bank, experimenting with these models and using different parameters, at least supports the proposition that G10 international banks (the target constituency for the Accord) should have capital on the basis of a one-year default probability that is consistent with an investment grade rating. Assuming that we can somehow identify the current confidence level implicit in the existing capital Accord, we may, as I suggested above, nevertheless want to debate the question of whether the Committee would be right in aiming to replicate this under the new Accord. Is this a reasonable objective? Or are we being too conservative? Clearly there are types of banking exposures for which too much capital is being demanded, such as lending to very high quality corporates. This has led to some exposures being moved outside the banking system, through disintermediation or regulatory arbitrage. This problem is one of the main drivers behind the Basel Committee’s current review of risk measures. However, there are equally transactions for which the Basel minimum is severely inadequate, such as lending to some OECD countries. But the question is really whether on average the regulatory requirement produces the right level of protection.

Corporate bankruptcy law grew up as it became clear that market forces delivered losers as well as winners and that some orderly means was needed of dealing with the losers. In this way, bankruptcy law supports the market mechanism. The situation is no different in a sovereign context. A well-articulated framework for dealing with sovereign liquidity problems should reduce the inefficiencies and inequities of the current unstructured approach to standstills. It would support the international capital market mechanism. It would be no  7  BIS Review 70/2000  more likely to induce debtors to default than bankruptcy law is to induce corporate debtors to default. In neither case is default a soft option. We would of course hope and expect sovereign standstills to be the exception rather than the rule. But it is better to plan for all contingencies, and to articulate these plans, than have international public policy made on the hoof. In this respect, crisis-fighting shares many similarities with fire-fighting. Fire-prevention is ideal, but will never entirely prevent fires occurring. So it makes sense to have a fire-fighting plan, which everyone understands and abides by, to minimise the damage when fires do occur. Would standstills work? The issue of whether standstills should form a part of the official sector’s toolkit of responses remains under active debate. A number of arguments against the use of standstills have been made by policymakers, academics and the private sector. Let me try and articulate some of the concerns.
Ajith Nivard Cabraal: Standards, codes and rules – friend or foe of poor nations? Presentation by Mr Ajith Nivard Cabraal, Governor of the Central Bank of Sri Lanka, at the luncheon of the Commonwealth Finance Ministers’ Meeting, Colombo, 12 September 2006. *  *  *  Your Excellencies, Honourable Ministers, Distinguished Delegates, Ladies and Gentlemen, On behalf of the Central Bank of Sri Lanka, it is my great pleasure to welcome all of you to Sri Lanka and to host this Luncheon today. I hope all of you had a pleasant journey and have been able to settle down well in our city so as to be ready to face the rigours of the tight programme that is ahead of you over the next few days. I am also delighted that I have the opportunity to speak to you this afternoon, knowing that it has provided me the platform to share some thoughts with a very diverse group that constitutes the Commonwealth. As we all know, the family of Commonwealth countries is a truly global, multi-ethnic, multi-religious, multi-cultural, multi-national collection of vastly differing economies, societies and political ideologies. It may also be not inappropriate to state that the Commonwealth is enriched greatly by this diversity.

Hence, it is clear that not only are the present day poor nations struggling in the emerging, highly complex and controlled economic environment, they are also facing reduced resource transfers, and not being accorded special treatment they should be afforded in order to propel them out of poverty. Some may however argue that the tremendous benefits of globalization has levelled the playing field and that advantages are available to any and all who care to access, and it is just unfortunate if some persons are unable to take advantage of these conditions. Nevertheless, I believe we are all aware that weaker communities have lesser chances of access and that situation leads to widening even further, the ever-widening gap. Therefore, it is timely and appropriate that this forum addresses the need to impress upon the more wealthy nations to increase aid flows, open out greater trading opportunities, and move towards higher investment and resource build-up in the lower income countries. Lest I be misunderstood, let me add that, not for a moment am I suggesting that the progressive steps the world and the international community have taken over the past few decades in developing new standards and norms are in any way, inappropriate or unwelcome. Those initiatives were certainly necessary and have been beneficial for the overall advancement of society.
The overall assessment of inflation, based on an unchanged instrumental rate, accordingly pointed to a risk of the inflation target being exceeded as economic activity became stronger. Moreover, the high inflation expectations contributed to excessively high wage settlements in the spring of 1995. It was partly this—not the price effects from budget consolidation—that warranted the upward adjustments of the instrumental rate from August 1994 to July 1995. Transitory effects again conditioned the rate of inflation during 1996 and 1997 but now in a downward direction via falling house mortgage interest costs. The krona’s appreciation, in connection with the rapid enhancement of confidence in budget policy, also tended to lower the CPI. Had the Riksbank continued to reduce the instrumental rate—after the earlier cuts had had a transitory downward effect on inflation’s current rate—it would have tended to destabilise the economy. The Riksbank would, as it were, have been chasing its own tail, with interest rate cuts that became increasingly large and frequent. Inflation expectations and actual inflation would ultimately have risen, obliging the Riksbank to swing to a markedly restrictive stance. As interest rate increases also have transitory effects on inflation, the Riksbank would BIS Review 5/1998  -4-  again start to chase its own tail but now in an upward spiral. This illustrates how absurd it would be to raise or lower the instrumental rate as a response to the direct, but transitory, effects of the Riksbank’s own monetary measures.

But the Riksbank does not simply assess the future, adjust the instrumental rate and then sit back and wait two years for the outcome. Instead the assessments are continuously reconsidered in the light of new information and the monetary stance is adjusted accordingly. In this way we work systematically to fulfil the 2 per cent inflation target and aim to avoid unnecessarily large changes in the repo rate. Even so, the monetary stance may have to be altered more markedly from time to time if a situation arises that is considered to call for this. BIS Review 5/1998  -3-  The other matter that may underlie the discussion about monetary policy asymmetry is, I believe, the question of transitory effects on inflation. Such effects may come, for example, from changes to taxes and subsidies, rising or falling house mortgage interest costs in connection with monetary policy measures, or external shocks that affect the price level via sudden changes in the price of oil, for instance. Such changes in the price level show up as a temporary increase or decrease in the rate of inflation; with the methods that are used to measure inflation, the impact on the price level will last for twelve months. The Riksbank has declared that such transitory effects should be of secondary importance for monetary policy in so far as they do not affect inflation expectations and thereby generate a more lasting impact on inflation.
Moreover, firms today appear to be adapting their costs to more strained financial conditions, which has resulted partly in less office space per employee. A bubble in the housing market? Developments in the housing market have been markedly different than those in the rest of the property market. Housing prices have risen by almost 60 per cent since 1992. During the same period the general price level has increased by around 20 per cent. The sharp rise in prices has continued despite the economic slowdown in recent years. This is a new experience that distinguishes the situation from previous business cycles. A significant driving force behind these price developments is the lower interest rate level. Lower interest rates mean that households and firms can finance more expensive properties, all other things being equal. The low-inflation economy that has been established in Sweden since the crisis at the beginning of the 1990s has therefore also brought with it higher debt ratios among households. Debt as a proportion of disposable income has risen on average from 90 per cent in the mid-1990s mitten to around 120 per cent at the end of last year.2 In spite of this, households’ interest ratio, i.e. the proportion of disposable income that is used to make interest payments, has fallen from 7 per cent to below 5 per cent. In comparison, the ratio during the crisis years was up to 11 per cent.

High-speed, interconnected global networks like the Internet provide new ways to conduct commercial transactions, generate new markets and revenue streams, lower transactional costs, and forge new relationships between businesses and consumers.” Nowadays, it is impossible to speak about the potential explosion of the Internet and electronic commerce without a discussion of the appropriate role of Government in fostering and regulating electronic commerce. In the United States, the question of the Government’s role in global electronic commerce was answered when, in July 1997, the White House released its “Framework for Global Electronic Commerce” white paper. The Framework is the clearest and most comprehensive articulation of the United States Government’s view of its role in the creation of the global information infrastructure as a vibrant international market-place. The overriding theme of the Framework was summed up in a statement made by President Clinton upon the release of the report. He said that: Governments can have a profound effect on the growth of electronic commerce. By their actions, they can facilitate trade or inhibit it. Government officials should respect the unique nature of the medium and recognize that widespread competition and increased consumer choice should be the defining feature of the new digital market-place. They should adopt a market-oriented approach to electronic commerce that facilitates the emergence of a global, transparent, and predictable legal environment to support business and commerce. To ensure that the acts of the United States Government comport with this view, the Framework sets forth five principles intended to inform the Government’s actions in this area.
Bear Stearns and JPMorgan continued to negotiate changes to the merger agreement that would tighten the guarantee and provide the necessary certainty that the merger would be consummated. All the parties shared an overriding common interest: to move toward a successful merger and avoid the situation in which they found themselves on March 14. The extended Easter weekend saw intense sets of bilateral negotiations among the three parties. The deal, finally struck in the early morning hours on March 24, held benefits for all parties. That deal included a new, more precise guaranty from JPMorgan, which lifted the cloud of default risk that had been hanging over the transaction. Bear stockholders were to receive a higher share price. In addition to fixing the guaranty, JPMorgan gained assurance that its merger with Bear would take place. And the New York Fed obtained significant downside protection on the loan and a tighter guaranty on its exposure. The new Fed financing facility will be in place for a maximum of ten years, though it could be repaid earlier, at the discretion of the Fed. This is an important feature: the assets that are being pledged as collateral can be managed on a long-term basis so as to minimize the risks to the market and the risk of loss. They can be held or disposed of at any time over the next decade. A summary of Terms and Conditions is attached as Annex III.

They influence the effectiveness of the bank’s internal governance, the soundness of its risk management, and therefore the very sustainability of its business. But structure and design are not the only elements that determine how robust a bank’s governance framework is. The behavioural patterns exhibited by management and staff, as well as the drivers that underpin that behaviour, are no less important. A bank can have all the risk controls in place, avail itself of the most advanced tools to manage risks, and rely on data of the highest quality, but still become mired in a scandal it has brought upon itself, which badly affects its reputation owing to weaknesses in its internal culture. It is one thing that someone decides to take on too much risk, to put the immediate interests of the bank before its longer-term interests, or even to break the law. It is another thing if such unwarranted behaviour is not adequately addressed. If such acts have no apparent consequence, that will be noticed by a colleague. And then by another, and then by ever more colleagues. And soon enough, a new group norm is established. Misguided decisions are often rooted in each person’s values and beliefs, as well as their perception of what behaviour is valued within the structure around them. The overriding behaviour and culture within an organisation are thus the product of both individual behaviour and the underlying culture that acts as a breeding ground for that behaviour.
Gent Sejko: The economy and banks, present and future challenges Speech by Mr Gent Sejko, Governor of the Bank of Albania, at the round table on “The economy and banks, present and future challenges”, organised by the Bank of Albania and Government of Albania with the banking system, Tirana, 16 September 2015. *  *  *  Your Excellency Prime Minister, Honoured representatives of international institutions, Dear bank executives and representatives, This meeting seeks to once again draw the attention on non-performing loans, an issue that has been discussed extensively over the recent years. It aims at fostering the shared and concrete commitment to reduce the stock of non-performing loans, increase the financial intermediation by the banking sector and underpin Albania’s economic growth. Following, I would like to list some facts. The high level of non-performing loans has not affected the banking sector’s stability. Liquidity and capitalisation indicators remain adequate and the financial performance has been positive and improving. But, the still-high percentage of non-performing loans has contributed to a higher perception of risk by banks; in turn, they have adopted a more conservative approach to lending. Our survey data point to tightened lending standards; meanwhile, the lending volume, albeit positive, is still considered as low. The credit quality has improved during this year. The non-performing loans ratio, after peaking 25%, fell to around 21% in July 2015.

We believe this improvement reflects the measures taken in the last 2–3 years, of which I would like to single out: a)  Amendments to the law “On income tax” at the end of 2013, to facilitate the loan loss write off from the balance sheet;  b)  Amendments to the Code of Civil Procedures in September 2013, to improve the collateral execution process;  c)  Entry into force of a regulation of the Bank of Albania, which renders obligatory the write off of loans classified by banks as “loss” for a period longer than 3 years;  d)  the work accomplished in cooperation with the commercial banks to restructure loans when the borrowers are exposed to more than one bank;  Albeit the number of non-performing loans subject to the execution process has been significantly up, the improvement of the credit quality reflects mainly the loan loss write offs from banks’ balance sheet. For the first half of 2015, its value amounted to around ALL 11 billion.
Central banks' response to the crisis History taught us that banking crises degenerate into deep and lasting depressions unless they are dealt with quickly and forcefully. Those lessons were not lost on both fiscal and monetary authorities and the policy response worldwide has, indeed, been exceptional by any historical standard. I would like to focus here on three characteristics of central banks interventions •  First, they have been fast and decisive. Indeed, the start of the crisis can be dated back to August 9 2007, when the Eurosystem provided up to 95 billion euros in exceptional liquidity support to the interbank market. As the crisis developed, those interventions multiplied and evolved, a point to which I will return shortly. The deterioration of the real economy and subsequent easing of inflationary pressures opened room for a substantial relaxation of the monetary policy stance. In the euro area, seven reductions in policy rates brought the interest rate on our main refinancing operations from 4.25% in October 2008 to 1% today. •  Second, those interventions have been flexible and highly innovative. Central banks saw as their mission to avoid the paralysis of financial intermediation and keep the monetary transmission mechanisms working efficiently. To achieve those objectives, they considerably expanded and diversified their tools and instruments. In countries where markets play an important role in the allocation of credit, they created numerous new facilities to provide financing and to lower spreads through the purchase of private and public debt securities.

Monetary conditions are almost identical: three and six months Libor and Euribor rates do not differ by more than 50 basis points. I strongly believe that those three features – speed, innovation and cooperation – allowed central banks to play a decisive part in containing the crisis and limiting its impact. Has the crisis changed our vision of central banking? The credit bubble has already extracted heavy costs on our economies and the welfare of our citizens. All must be done to avoid the repetition of such developments. Bubbles are however complex phenomena: hard to detect, hard to prevent, hard to fight. Can we do better in the future and what contribution can central banks bring ? The crisis has revived the old, but ongoing, debate on whether monetary policy should aim, or not, at ensuring financial stability in parallel to its main objective of price stability. The arguments are well known, on both sides. New ideas are being brought, regarding, in particular, the impact of monetary policy on overall maturity transformation and leverage inside the financial system. It is desirable and healthy that this discussion takes place. Let me give you my own reflexion, at this stage: •  The primary and dominant objective of monetary policy should remain price stability. Any dilution of this fundamental mandate would be take us back three decades and be extremely detrimental to our welfare and prosperity in the long run. •  Without prejudice to this primary objective, all mandates allow for consideration of other objectives.
However, there is no clear reflection of the Riksbank’s responsibility in the systemic risk field in the current Sveriges Riksbank Act, although this could certainly be included in the task of “promoting a safe and efficient payment system”. It would be desirable for this to be explained when the Riksbank's responsibility for financial stability is clarified in a new Sveriges Riksbank Act. As I mentioned earlier, however, the Riksbank is not the only authority that has a task that is central to financial stability. Both Finansinspektionen (the Swedish Financial Supervisory Authority) and the Swedish National Debt Office also have such tasks. They also conduct financial stability analysis based on their respective areas of responsibility. This necessarily means that there will be some overlapping of the authorities’ analyses and communication of systemic risks. I do not see this as a problem, as different authorities have somewhat different points of departure, purposes and comparative advantages in the work. On the contrary, it is valuable to receive different perspectives in this work, as it has historically been very difficult to identify systemic risks and to counteract them in time. Moreover, the costs of a financial crisis are, as we know, extremely high, which means we should do all we can to reduce these risks. Of course, we will never be able to prevent future crises entirely, but having different angles of approach in the analytical work increases the probability that we can detect systemic risks in time.

History has shown that it is socioeconomically efficient that the government authorities have a monopoly on issuing cash, as this then becomes a risk-free asset that can be used both as an arithmetical unit and for saving and for making transactions. Almost all countries now have central banks that issue banknotes and coins. In Sweden, we are now facing a historical milestone with regard to cash. The use of banknotes and coins has declined at a very rapid pace in recent years and the general public are increasingly using digital means of payment instead. However, there still remains a fundamental requirement for a safe instrument that can be used as an arithmetical unit and to make payments and as a store of value. A critical issue, in light of this development, is what the role of the state should be on the payment market. This is an important issue to society that contains many dimensions, including consumer issues, financial stability perspectives, contingency planning and competition aspects. The Riksbank is therefore investigating whether we should issue a digital krona, or e-krona, so that there will continue to be a means of payment issued by the Riksbank. In addition, the position of cash in the economy and the Riksbank's responsibility for the handling of cash need to be investigated further and specified. Responsibility for RIX – the Riksbank's system for largevalue payments The Riksbank can already be said to issue digital money, but this can only be held by banks and some other financial institutions.