samchain/econo-pairs-v1 huggingface dataset:
Under the living will process today, firms must approach their bankruptcy using tools geared toward corporate restructuring. Any changes to the regimes under which financial institutions can and will fail should be carefully considered before enactment, particularly to the extent they retain, or not, a credible source of liquidity going forward. This isn’t abstract financial theory. This concerns the ability of people on Main Street—employees, retirees, small business owners—to persevere in times of severe financial stress. Returning to the human element of the crisis, these are the same people who suffered during the Great Recession and who expect us all to do better during the next period of stress. 1 Lisa Kraidin and Ben Snodgrass assisted in the preparation of these remarks. 2 See Mariacristina De Nardi et al., Consumption and the Great Recession, Economic Perspectives, 1st Quarter  2012, at 1, 1. 3 See Jesse Bricker et al., Changes in U.S. Family Finances from 2013 to 2016: Evidence from the Survey of  Consumer Finances, Federal Reserve Bulletin, Sept. 2017, at 1, 10. 4 See Thomas C. Baxter, Jr. & David Gross, The Federal Reserve’s Response to the Crisis, i n International  Monetary and Financial Law: The Global Crisis 293, 298–99 (Mario Giovanoli & Diego Devos eds., 2010). Use of 13(3) had been authorized during the 1960s, but no loans were made. See id. 5 These facilities included, among others, the PDCF (the Primary Dealer Credit Facility), the TALF (the Term  Asset-Backed Securities Loan Facility), and the CPFF (the Commercial Paper Funding Facility).

6 The US Bankruptcy Code refers to Title 11 of the United States Code, as amended. 7 See, e.g., S. Rep. No. 111–176, at 6 (2010) (“The Federal Reserve’s emergency lending authority, under section  13(3) of the Federal Reserve Act, in the past allowed the Federal Reserve to make loans to individual entities like AIG. While such lending played an important role in ending the recent financial crisis, it also created potential moral hazard.”). 8 Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111–203 (2010). 9 See 12 U.S.C. §§ 5365 & 5383. 10 See 12 U.S.C. § 5384; H.R. Rep. No. 111–517, at 865 (2010) (Conf. Rep.) (“When the authority is used, the FDIC  is appointed receiver and must liquidate the company in a manner that mitigates significant risks to financial stability and minimizes moral hazard.”). 11 See Joint Report to Congress: Economic Growth and Regulatory Paperwork Reduction Act of 1996, 82 Fed. Reg. 15900 (March 30, 2017). 12 See Simplifications to the Capital Rule Pursuant to the Economic Growth and Regulatory Paperwork Reduction  Act of 1996, 82 Fed. Reg. 49984 (proposed Oct. 27, 2017). 13 See H.R. 10, 115th Cong. (as passed by House, June 8, 2017); H.R. 1667, 115th Cong. (as passed by House,  Apr, 5, 2017). 6/6  BIS central bankers' speeches
These effects can be achieved at the zero lower bound8 and in conditions of a debt overhang9. The key issue is therefore which set of forces dominates. And what matters here is not whether structural reforms are implemented, but how. This is where two further lessons of the crisis come in, which relate to our experience in Europe during the crisis: both the pace and the composition of reforms matter crucially for achieving positive effects in the shortterm. Why the pace of reforms matters Before the crisis there was an active debate about the appropriate pace of reform implementation, which had its origins in the liberalisation of Central and Eastern European economies in the 1990s. Some argued that reform was best conducted through a “big bang” approach, while others argued for more gradual reform implementation.10 More recently, studies of reform implementation had suggested that outcomes might be better if reforms were sequenced, with product market reforms preceding labour market reforms, so that lower mark-ups can support the purchasing power of households.11 There was also a political economy argument in favour of gradualism: as governments have a fixed amount of political capital, they would be most effective if they allocated their scarce resources to one set of reforms at a time. These arguments were however not always applicable to the euro area as, again, they lacked our specific context.

This would mean taking the pain but missing out on the gain. And it would only make getting out the crisis harder. 24  8  See Eggertsson, G., and P. Krugman (2012), Debt, deleveraging and the liquidity trap: A Fisher-Minsky-Koo approach, Quarterly Journal of Economics, Vol. 127, No. 3 (August), 1469–1513. BIS central bankers’ speeches
Jean-Pierre Roth: Recent economic and financial developments in Switzerland Introductory remarks by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the end-of-year media news conference, Zurich, 11 December 2008. *  *  *  Our assessment of the economic and monetary situation has changed considerably since our last assessment of 18 September 2008. Already back then, we had emphasised that there were substantial risks attached to developments in the global economy, in financial markets and in energy prices. We had also stressed that our forecasts for economic activity and inflation in Switzerland involved considerable uncertainties. We had announced our intention to monitor developments closely, in order to react swiftly should the need arise. As you know, this eventuality did indeed materialise. This led us to relax monetary policy decisively as the uncertainties faded and the deterioration in the economic situation became more concrete. We first lowered the Libor target range on 8 October, by 25 basis points; then on 6 November, by 50 points; and a third time on 20 November, by 100 points. With the new cut announced today, the Libor target range now lies between 0% and 1%, reflecting a firmly expansionary monetary policy. Today’s press conference gives me the opportunity to explain in detail the rationale behind our actions. Since our assessment of 18 September, the situation has changed in three key areas.

In the light of economic developments, it will continue to decline until the end of the third quarter of 2009, and will then rise slightly over the next two quarters as a result of the base effect caused by oil price movements. Inflation will subsequently fall even further, to lie around 0.5% in 2010, before increasing somewhat over the course of 2011. This slight uptick in inflation at the end of 2011 is explained by the fact that a Libor of 0.5% does not represent an equilibrium level capable of guaranteeing price stability in the long term.
Miguel Fernández Ordóñez: Turbulence in the world markets – a Spanish view (five lessons and some homework) Address by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, at the “Círculo Financiero”, Barcelona, 14 May 2008. *  *  *  Let me begin by thanking you for the invitation to deliver this speech. I shall not be going into details today on either the sequence of events that have triggered the turbulence in international financial markets, or on the various suggestions for reform that may prevent a similar situation from arising in the future. We currently have several reports by various institutions addressing these matters in depth, including, for example, the most thoroughgoing report by the Financial Stability Forum. The scope of my speech this evening will be more modest: to examine the Spanish banking system in the context of this turbulence. The central idea I wish to convey is as follows. Spanish banks and savings banks have not contributed to any extent either to the generation or to the subsequent propagation of the turbulence, which in principle puts them in a sound position to withstand it. However, and as recent events have clearly reminded us, we live in an increasingly global world. Accordingly, the Spanish financial system cannot remain immune to the consequences of the current problems, which affect not only those who originated them but all of us.

Combining the three core businesses of retail banking, specialised financial services and corporate and investment banking helps to open up opportunities for cross-selling, and reduces banks’ sensitivity to the interest rate cycle by giving them access to more diverse sources of financing. Even in retail banking, profitability has been better preserved thanks to the increase in fees on activities that are not linked to interest rates: payment services, asset management and insurance investments. For the six largest French banks, net interest margin thus accounts for 44% of net income compared with 57% for their euro area peers. The challenge of bank profitability also raises another imperative: cross-border consolidation, which would allow genuine pan-European banking groups to carry out their activities more efficiently and better withstand the international competition. Compared with the US market, the European banking sector remains fragmented: the 5 main European banks have a market share of just 20% compared with more than 40% for their US peers. Meeting this target is in part the responsibility of public authorities: concrete progress finally needs to be made on the Capital Markets Union, and the Banking Union needs to be completed in a true single banking market. It is particularly important to prevent geographical ring-fencing practices, which stop groups from managing liquidity and capital on a consolidated basis. These policies could prove dangerous in the event of a crisis as they would make it harder for entities within cross-border groups to support each other.
These gilt purchases - equivalent to nearly a tenth of UK GDP - increased the supply of ‘cash’, reducing market interest rates, and improving liquidity in the gilt market. In the US, the Fed initially announced it would purchase $ billion in Treasuries, then removed the cap, moving to an open-ended purchase programme.1 In the euro area, the ECB launched a € billion Pandemic Emergency Purchase Programme in March. Over the past decade, asset purchases by central banks have become an established monetary policy tool to support demand. But in this instance, central banks were clear that their actions were aimed primarily at stabilising markets and preventing financial conditions tightening at the very time that economies needed the exact opposite. As a result of these central bank interventions, and as fiscal authorities began to provide support to economies entering lockdown, conditions stabilised. Non-financial investment-grade corporate bond spreads are now over 90 basis point lower than their peak in mid-March (but still around 40 basis points higher than their end-2019 levels).2  The COVID crisis is very far from over. The depth and length of its economic impact remain very uncertain: it is clear that there is likely to be a great deal of pain for the financial sector. Given the economic hit – a very deep synchronised hit to the global economy – we can expect very significant losses on credit to firms and households.

In reality, the capital drawdown banks would have faced, had the COVID shock happened in 2007, would have been a function of their 2007 balance sheets – so the loan losses may well have been higher than those we pencilled in for banks as part of the illustrative scenario. 6 In the first quarter of the year, major UK banks expanded their net lending to businesses by £ (compared to a reduction in net lending of £ by these banks in 2019 as a whole. 6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  outweighed by the losses they would suffer from the broader economic damage that would result from a widespread withdrawal of credit. No financial system of course can be infinitely resilient. Given its function of providing credit and risk mitigation to firms and households, the banking system is exposed to the real economy. There is inevitably some level of damage to the economy that the banking system cannot weather. Over the coming months we will learn more about how well the post crisis reforms work under stress. One particular area of attention will be the usability of the capital and liquidity buffers intended to absorb a tail event shock. The results of the FPC’s desktop stress test reinforces the message that the clue, as they say, is in the name: the buffers exist precisely to buffer a shock like this. All elements of the buffers banks now have are intended to be usable in stress.
Anecdotal information as well as more structured studies point in that direction. Perhaps it is the case that the inflation process is being influenced by the lowinflation environment that now prevails in Sweden. Many studies have found that low inflation is 3  BIS Review 106/1999  associated with a low variability in the rate of inflation. What we do not yet know is whether this lower sensitivity to demand variations is completely symmetric. It could, of course, be bound up with low resource utilisation, so that the situation is different when GDP is closer to the potential growth rate. What is the level of unutilised resources? While the downward shift in inflation expectations seems to have predominated, another factor behind the reduction of inflation has been the low level of resource utilisation after the crisis in the early 1990s. Demand growth is now above the rate that is sustainable in the longer run. This naturally brings the level of unutilised resources into the centre of the inflation analysis. In an economy that is expanding rapidly, problems with bottlenecks may occur temporarily because new production facilities are not always available just when they are needed to cope with increased demand. However, experience in the 1990s suggests that firms are more flexible than before, both in the utilisation of existing capital stocks and in the procurement of new technology, machinery and plant when demand rises. So, if anything, it is not the level of unutilised capital resources that is critical at present.

But this does not mean that the international economy has been inoculated against new, unexpected shocks. Remember that noone predicted the extent and course of the Asian crisis. Neither were the risks that led to last autumn’s international financial turbulence highlighted in advance. Our knowledge of phenomena of this kind is limited. It may be asked whether it will ever be possible to predict such matters accurately. The models with leading indicators that are being tested at present  1  BIS Review 106/1999  tend to be too blunt. They are liable to sound the alarm about things that never occur and miss those that do happen. The picture is bright at present but we know that some countries are in a vulnerable position that can suddenly deteriorate. Stock market prices are notably high, not least in the United States. The existing imbalances in the US economy may have effects in the future. But as the course of such events is genuinely difficult to foresee, central banks have little option but to deal with a new situation if and when it arises. Repo rate too low in a longer perspective After the series of reductions, the repo rate is currently 2.90%. Over a complete business cycle, such a level would probably be too low, even in an economy where inflation expectations have settled down around the targeted rate of 2%. So the present monetary stance can be said to be relatively expansionary.
There must be a decision at some high managerial level which balances the interests of monetary policy and financial stability as well as other central bank responsibilities. The organisation and processes of the central bank must also be structured so that they facilitate the analysis preceding the decision leading to a balanced view, based on both monetary and financial stability considerations. For instance, there should be inter-departmental working groups. Financial stability lies within the Riksbank’s mandate The importance of having a well-structured framework for monitoring overarching financial system stability and identifying potential weaknesses is relatively new compared to the structures for conducting monetary policy. In Sweden (probably also in Norway), it started as a result of the banking crisis in the early 1990s. The Riksbank sees system stability as being in our remit. The Riksbank Act states that we shall “promote a safe and efficient payment system” and we interpret “payment system” in a broad sense including not only the narrow payment infrastructure but also major banks and other institutions and markets that are necessary for the intermediation of payments. BIS central bankers’ speeches  5  Should the responsibility for financial stability rest with the central bank? Yes, I think so. The supervisory agencies are structured to focus on the microprudential aspects, but the central banks are organised and staffed for macroprudential analysis, which is also needed for the conduct of monetary policy.

Interest rate signals from the central banks were sometimes dwarfed by contradictory events in the markets. Conversely, financial stability is dependent on a smooth and predictable monetary policy. Hence, in the long run, the interests of monetary policy and financial stability coincide. However, in the short term we may need new tools, which are better focussed on the specific situation. To sum up: Central banks need to adapt their work processes, organisation and governance to achieve an optimal balance between monetary policy, financial stability and microprudential goals. There is not yet any internationally-agreed best practice on these issues but the debate is vivid. Everybody realises that these issues must be solved before there is another system-wide crisis. External evaluation also of financial stability work Before ending, I would like to mention the present external analysis of the Riksbank on the lessons from the financial crisis in relation to our monetary policy and financial stability work. This will reveal if we are – indeed – a useful central bank. BIS central bankers’ speeches  7  Each year, since the Riksbank was granted autonomous status in 1999, the Committee on Finance has carried out its own evaluation of monetary policy. In 2006, the Committee commissioned an external independent evaluation of Swedish monetary policy covering the period 2000–2005. In 2007, a year after the first external independent evaluation was published, the Committee on Finance decided to repeat this exercise every four years.
You may recall that in the movie Wall Street, Michael Douglas kept on saying: “Greed is good!” When this kind of mindset, which puts the individuals’ interests above the firm’s and the firm’s interests ahead of the client’s, becomes prevalent, it will inevitably lead to highly undesirable if not disastrous outcomes not just for the users but for the financial system as a whole. So while greed is probably an inherent part of human nature, a successful financial firm or an IFC must ensure that it can develop and cherish a culture and values that will restrain excessive greed in the interests of giving customers a fair deal. Only in doing that will an IFC be able to sustain its position and competitive edge over a long period of time. We all understand that an IFC also represents a brand, a quality that customers trust in terms of efficiency, reliability and integrity. It takes  BIS central bankers’ speeches  3  decades or even centuries to build a brand, but only days to destroy it if any of the qualities of competence, control or culture are eroded. Ladies and gentlemen, I have talked about the qualities or power of the 3Cs and I hope you will agree with me that, if Hong Kong wishes to remain competitive as the region’s premier IFC, we will have to do everything we can to strengthen our “soft power”.

Zamani Abdul Ghani: Reinventing retirement strategies in the new world of risks Keynote address by Mr Zamani Abdul Ghani, Deputy Governor of the Central Bank of Malaysia, at the 4th Asian Conference on Pensions & Retirement Planning: "Reinventing Retirement Strategies in the New World of Risks", Kuala Lumpur, 26 November 2007. *  *  *  Introduction It is my great pleasure to be here today at the 4th Asian Conference on Pensions and Retirement Planning. Let me first extend a warm welcome and Selamat Datang to all the participants from abroad and fellow Malaysians here today. During this "Visit Malaysia Year", which is also the year Malaysia celebrates its 50th year of independence, I do hope our foreign participants will make time to enjoy Malaysia's diverse culture, and experience the many unique sights, sounds and flavours, as well as discover why Malaysia is “truly Asia”. I am indeed very pleased to be invited by the Asia Insurance Review to address this major Conference. This Conference brings together both experts and learners who all share deep interests in the development of the pension and retirement planning. I was told that we have amongst us today distinguished market practitioners and participants from the insurance and banking industry, regulators, pension providers, consultants, and investment managers from 17 countries. I wish to congratulate the Asia Insurance Review for bringing together such a gathering here in Kuala Lumpur , and organizing this Conference for the fourth consecutive year.
The idea behind the fixed exchange rate policy was to ensure that inflation in Sweden would be in line with our most important trading partners’ inflation rates and that the fixed exchange rate would function as a nominal anchor. Instead, price and wage developments repeatedly came on a collision course with the fixed exchange rate and Sweden suffered cost crises. To rectify this situation, the krona was  BIS Review 111/2006  1  devalued a total of five times during a period of seven years. However, the trend increase in domestic prices and wages continued to rise, so the fundamental problem was still there in the background. The result was modest economic growth, poor productivity growth and more or less stagnant real wages. This performance was markedly weak both compared with earlier periods and in relation to other countries. During the crisis years at the beginning of the 1990s the situation deteriorated even further. Unemployment increased fourfold in the course of a few years and the central government finances deteriorated dramatically. Long-term interest rates rose and the interest rate differential vis-àvis Germany, for example, occasionally came to several percentage points. The fixed exchange rate lost credibility and had to finally be abandoned in November 1992, following large currency outflows and extreme interest rate hikes in an attempt to defend the krona. The nominal anchor that was to hold down inflation and inflation expectations in the economy had loosened. To pin it down again and bring the Swedish economy onto a better track required drastic measures.

On the former, recent experience suggests five lessons for emerging markets: (1)  Create a do-it-yourself (DIY) LOLR, with the aim of providing self-insurance against a liquidity crisis. There are several ways of providing such insurance. One is to build up large foreign currency reserves. This has already been taken to heart by emerging markets. China has substantial foreign exchange reserves $ billion at the end of June). And Korea, perhaps the best example of a country suffering a liquidity run on its banking system in terms of foreign currency, has raised its reserves from a low point of $ billion in November 1997 to a current high of $ billion in August. It is unfortunate that the absence of more efficient solutions to the risk of crises means that scarce capital might be deployed in this inefficient way. Building up net reserves – via current account surpluses – will reduce world demand at a time when the  5  BIS Review 95/1999  US economy is unlikely to provide as large a stimulus as over the past five years. An alternative is to create gross reserves by borrowing from abroad and investing the proceeds in liquid international securities. Both methods involve costs.