samchain/econo-pairs-v1 huggingface dataset:
The buffer rate will be increased when financial imbalances are building up or have built up, thus bolstering resilience when we need it most. The countercyclical capital buffer can thereby have an impact on both the probability and the costs of a crisis. The buffer may thus also reduce fluctuations in the economy. We are now in a phase where banks are facing a number of new capital requirements. Banks can choose to adapt to the higher capital requirements by, for example, increasing lending margins or by tightening lending. Thus, higher capital requirements could curb economic activity in the short term. As the new requirements are phased in, the buffer will have to be adjusted to the economic situation and other requirements applying to banks. This does not mean that the countercyclical capital buffer should be changed frequently in pace with normal cyclical fluctuations. Once the buffer has been built up, the costs of maintaining capital levels will probably be low. The buffer rate should not be reduced automatically even if there are signs that financial imbalances are receding. This is in line with the international guidelines for the countercyclical buffer. The countercyclical capital buffer is only one of the elements in the new international regulatory framework for banks. The European Systemic Risk Board (ESRB) provides, among other things, for sector-specific capital requirements and limits on loan-to-income and loan-to-value ratios. 3 In New Zealand, the authorities have introduced limits on banks’ share of high LVR residential mortgage lending.

If the costs associated with a crisis are sufficiently large, systemic risk can be considerable even if the probability of a crisis seems small. As underlined in the theoretical literature, the economy can be vulnerable to substantial deleveraging when debt is at a high level. Previous economic downturns provide confirmation of this. The costs of a crisis may then be substantial. The empirical models can provide support when we assess financial imbalances and whether a crisis is emerging. At the same time, humility is required and we must recognise that our ability to provide a precise estimate of systemic risk is limited. No two financial crises are alike, and the financial system is constantly evolving. There are many sources of systemic risk and new ones may emerge – not least when new regulations are introduced. We must be prepared for possible changes in the predictive power of the indicators. Norges Bank will therefore always have to exercise professional judgment in its assessment of systemic risk. The aim of macroprudential regulation is to strengthen the resilience of the financial system and dampen the build-up of financial imbalances. The purpose of the countercyclical capital buffer is primarily to increase banks’ resilience to loan losses in a future downturn. If the BIS central bankers’ speeches  3  buffer functions as intended, banks will tighten lending to a lesser extent in a downturn than would otherwise be the case. In addition, the buffer may to some extent dampen high credit growth during an upturn.
Ensuring adequate provision of a means of payment that is credit-risk free and fully and efficiently available and accessible to any potential user group is extremely important. To date, cash has been the only asset that enjoys legal tender status and has played this role. Yet, the way cash is fathomed and embraced nowadays is heavily influenced by the increasing digitalisation of society, and by technological change more generally. For example, the behaviour, preferences and expectations of users are changing rapidly, as their experience with digital technologies grows. Novel payment alternatives, provided  1  either by private players (both traditional and non-traditional ones) or by public authorities in various jurisdictions, may also surface and/or expand, presenting greater appeal than traditional banknotes and coins. Moreover, new features of existing payment instruments or services, such as programmability, are now becoming possible thanks to emerging technologies. Therefore, besides ensuring the availability of cash, we also need to consider new ways of improving the efficiency of retail payments by leveraging digital technology more extensively. All of this could signal the need to broaden the approach and explore new opportunities, aiming to better address modern society’s unmet demands. In this process, the notion of a universally accessible CBDC stands out, that is, a new type of central bank digital liability that could be made widely available.

2  This certainly requires a strong commitment from us, placing a special emphasis on drawing conclusions based on sound research and analysis. In addition, and also importantly, it calls for our proactive engagement in a practical experimentation phase that can shed light on the nature and scale of the pain points, problems and underlying threats, and also on potential solutions. That is why while the issuance of a digital euro is not foreseen in the immediate future, the Eurosystem has a keen interest to tackle the challenges arising from possible future scenarios. As you may know, many other central banks2 are already analysing this possibility. Along these lines, you may have already heard about the tests that the People’s Bank of China is currently carrying out in a number of provinces, or the extensive work that preceded the well-publicised e-krona pilot in Sweden. You may also be aware of the Fed’s recent announcement of its intention to remain on the frontier of research and policy development regarding CBDCs.3. As ECB President Lagarde mentioned a few weeks ago,4 earlier this year the Eurosystem decided to set up a taskforce to explore the benefits, risks and operational challenges of introducing a digital euro. The results of this work will soon be shared publicly. However, this is only the first step in a more profound reflection that still has to take place.
Michael Gondwe: Encouraging local content and business linkages – role of the financial sector Opening remarks by Dr Michael Gondwe, Governor of the Bank of Zambia, at the 2013 SME Local Content and Business Linkage Forum, Lusaka, 28 November 2013. *  *  *  •  The Guest of Honour, Minister of Finance, Honourable Alexander B. Chikwanda, MP;  •  The World Bank Country Director, Ms Kundhavi Kadiresan;  •  Senior Government Officials and Development Partners present;  •  Heads and Representatives of Financial Institutions;  •  Business Industry and Associations represented;  •  Distinguished Invited Guests;  •  Members of the Press;  •  Ladies and Gentlemen. On behalf of the Bank of Zambia and indeed on my own behalf, I wish to extend a very warm welcome to you all to this very important Forum. Some of you may recall that in June last year, together with the World Bank, we organised a strategic forum for small and medium enterprises (SME) on the “role of finance for unleashing the potential of local Zambian businesses”. The objective of that Forum was to facilitate strategic policy dialogue between the Government, Bank of Zambia, the financial sector and the private sector on issues central to facilitating access to finance by Zambian businesses including SMEs. As Bank of Zambia, we believe that it is important to sustain this dialogue to facilitate an inclusive strategy in the financial sector development.

A legal framework for consumer protection as well as possible incentives have already been taken account of through adequate provisions in the revised Banking and Financial Services Act which is under Government consideration for possible legislation in 2014. Guest of Honour We all agree that one of the major barriers to growth of the SME sector in Zambia is the shortage of financing despite its high potential to catalyze growth and employment creation. It therefore makes business sense that the financial sector should start to look at the financing problems for SMEs in a holistic manner which takes into consideration other developmental constraints which may impede sustainable growth and render the financing ineffective. In line with Government’s desire to enhance local content through SMEs and use of locallymanufactured inputs in the Zambian mining industry, a study in the mining sector is being under taken by the Zambia Local Content Initiative (ZMLCI) facilitated by the World Bank and co-financed by DFID. The goal is to build sustainable collaboration between SMEs and the mining industry. It is our hope that the above initiative will be extended to non-mining related SMEs such as those in agribusiness, tourism and retail. Honourable Minister You may wish to note the following topics that will be discussed during this forum: i.  SME Financing and Business Linkages, IFC Experiences in Africa;  ii. SME Financing and Experiences and Lessons Learned – AfDB;  iii. Promoting Business Linkages in Zambia – DFID Zambia; and  iv.
During the seventies the French labour market was characterized by a high degree of wage indexation on consumer prices, and the burden of the external oil tax was full born by the business sector. Firms then experienced a sharp fall in their profit margins, undoubtedly to the detriment of employment and investment in the following years. What’s happening at the current juncture? The distribution seems to be more balanced between firms and households than after the shocks of the 70’s. The distribution of primary income between firms and households is shown in the bottom left charts of these two last slides. Corporate profits are today a bit higher than their pre Covid level although this masks a lot of heterogeneity across sectors, with the energy sector being the only one recording currently an improvement. Page 12 of 14  The bottom right charts shows household and corporate gross disposable income that includes tax and transfer measures to overcome the two crisis episodes. Overall the income distribution between firms and households has so far remained much more balanced today than it was in the aftermath of the two oil crisis. In our current macroeconomic projections, household purchasing power, starting from a current level in 22q3 about 1.5% higher than its pre-Covid crisis level, should decline moderately in 2022 and 2023 while remaining above its pre-Covid level, before significantly rebounding in 2024 and 2025.

Øystein Olsen: Economic perspectives Annual address by Mr Øystein Olsen, Governor of the Norges Bank (Central Bank of Norway), to the Supervisory Council of Norges Bank and invited guests, Oslo, 12 February 2015. *  *  *  Accompanying charts can be found at the end of the speech. An oil-driven economy It is no coincidence that the walls in this hall cover the monetary history of modern Norway. The exhibit begins with the speciedaler from 1817 and continues up to the current banknote series. Money is at the core of central banking. The central bank’s task is to ensure the availability of means of payment and to preserve trust in the value of money. Low and stable inflation is the primary objective of monetary policy. People must also be assured that banknotes are genuine. It has become increasingly difficult to prevent the counterfeiting of banknotes. The current banknote series is due for replacement and work on a new series is well underway. The new banknotes are intended to function as a calling card for Norway. The choice of the sea as the theme embraces both our past and present. We have always made good use of the opportunities the sea has provided. It has been our lifeblood, and it has been a main artery. Fishing, shipping and trade have been a source of livelihood for many. With its changing face and magical power, it has also inspired artists.
Collateral should be required, but good collateral can never outweigh a borrower with a poor credit rating or an uncertain project. The bank must also make a realistic assessment of the value of collateral. For example, it is common to provide the borrower’s own premises as collateral. However, when a borrower goes bankrupt the value of the premises often declines substantially, as it is difficult and costly to adapt them to another user. The banks accepted high concentrations, not merely in lending to individual borrowers, but also credit granting to individual sectors and geographical areas. For example, the banks’ loans to the property sector, or with property as collateral, accounted for more than 60 per cent of all loan losses. This is a concentration risk that contravenes all sound risk management and is currently prohibited. However, it is easy to say all this with the benefit of hindsight. At the end of the 1980s, the banks had substantial profitability and low loan losses. Economic activity was strong. I believe that all of us active in the financial system then would have found it hard to believe that a crisis was impending. Nevertheless, the Swedish banks had one important piece of the puzzle already in place prior to the crisis. They were well capitalised and had built up capital reserves that corresponded to, or exceeded, the statutory level of 8 per cent. This created some resilience and to a great extent reduced society’s direct costs when the crisis occurred, as the bank owners’ money was lost first.

And second, because prudential supervision was not sufficiently active in detecting and preventing this type of instrument. None of these elements has been present in the Spanish banking system, which explains why Spanish banks have no exposure to these vehicles. Spanish banks have obtained sufficient profits pursuing their traditional and typically retail activity, meaning they have had no great interest in developing either the structures or products that are at the root of the current problems. The Banco de España has been categorical regarding its requirement that these vehicles be consolidated for accounting and capital purposes. Today, following the application of International Financial Reporting Standards in 2005, this requirement to consolidate conduits and SIVs is now very clear. But even before the IFRSs came into force, Spanish banks had no incentive to develop these off-balance sheet vehicles, because the Banco de España always analysed the risks assumed by banks from a consolidated perspective. Fourth lesson: on the procyclicality of banking regulation The fourth lesson to be drawn from the turbulence is related to the debate that has reopened on international markets about the way in which financial regulation should address so-called procyclicality. In particular, concern has been raised about Basel II and international accounting standards. We should perhaps begin by acknowledging that financial market participants themselves behave in a procyclical way, as they tend at favourable times in the cycle to forget about the consequences of an excessive build-up in risks.
In addition, short-term figures known since the publication of our last Report point at milder short-term inflationary prospects. The latest output indicators have been more negative than we foresaw in May. Although for the moment this does not alter our forecast of a recovery of activity and demand in the second half of this year, it does present a scenario where output gaps are wider than estimated and, therefore, inflationary pressures are reduced. The labor market also continues to reflect deteriorated macroeconomic conditions, with steadily increasing unemployment although with a marginally moderated drop in employment. May’s inflation was negative beyond expectations, especially its underlying components. Year-on-year CPI inflation, after many months, returned to the tolerance range of the inflation target (figure 2), but is expected to continue to fall and even cross into negative territory in the latter part of the year. Inflation expectations derived from various surveys also show some declines in the last few months. Recent public discussions have centered on parity movements. The real exchange rate is, without any doubt, a key variable in resource allocation and in the balance between saving and investment. Unlike conjunctures of past decades, in particular those of the mid-1980s, the Chilean economy has dealt with the complex global financial situation from a much sounder standpoint. The sudden global collapse of late last year found us with no big currentaccount or fiscal deficit, nor with a high external debt requiring strong fiscal adjustments with substantial real depreciation that would place the economy in a sustainable medium-term path.

The much more flexible monetary and fiscal policies of today have also avoided the intrusion of protectionist distorting measures that so prolonged the crisis of the 1930s, amplifying its costs and deeply hurting the later economic development in several regions of the world, including our country. Still, it is likely that returning to domestic demand levels like the ones we had before the crisis takes a while, especially in the United States. Active fiscal policy actions have taken up the room left by the shrinkage of private spending. However, it cannot be sustained for long. The natural, sustainable solution will come via net exports from the US and, to a lesser extent, from Europe. How it will happen is an open question, because it is also yet to be seen which economies will, as counterparts, have to reduce their own net exports to create the  2  BIS Review 93/2009  necessary space for such an adjustment. Furthermore, this may call for major parity adjustments in the main economic areas. Beyond this last point, currently floating foreign exchange regimes have played a stabilizing role, providing every degree of freedom needed by monetary policy and by liquidity provision measures to tackle the cycle and the financial stability objective. This element was nowhere to be seen in the 1930s, when the main central banks struggled hard, but ineffectively, to defend the gold standard, severely magnifying tensions in the banking systems.
This is the approach  20  https://www.bankofengland.co.uk/-/media/boe/files/report/2019/response-to-the-future-of-finance-report.pdf 12  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  12  adopted by the US Federal Open Markets Committee (FOMC).21 The assets of the Federal Reserve have fallen by over $ since US QT began in autumn 2017 – and US reserves are now more than 40% below their 2014 peak (Chart 11).22  Chart 11: QE and QT in the United States  Source: FRED, Federal Reserve Bank of St Louis  We know from our own experience that this ample reserves floor system can be an effective way to deliver unconventional monetary policy whilst also maintaining control of interest rates. It is particularly suited to the US context, where the supply of reserves is subject to relatively large day-to-day variation as government deposits with the central bank and other items fluctuate. But a key implication of this approach is the need to maintain an estimate of when reserves will become scarce, in order to keep reserves supply well above that level. As we have seen, this estimate is intrinsically uncertain. The market impact of the early stages of US QT was extremely smooth, assisted by clear communications in advance about the way in which the Federal Reserve’s assets would run off progressively over time. But risky asset prices began moving more sharply in the later part of 2018 and into 2019, and there was persistent upward pressure on some short-term money market rates relative to official rates (Chart 12).

MiFID 2 and EMIR are causing many changes in the financial market infrastructure, but changes are also happening as a result of other regulations such as the Central Securities Depositories Regulation and Target 2 Securities project. Some of them will change market practices as well, not only financial infrastructure. To conclude, excessive risk taking and leveraging have been one of the main causes of the financial crisis. As we are all aware, various policy initiatives are on the policy agenda to enable effective financial services reform. A sound, stable and resilient financial sector capable of providing funding to the real economy is of major importance for growth in the medium and long term. Both the financial reform agenda (internationally coordinated by G20) and the unique project of creating a Banking Union with Single Supervisory and Resolution Mechanisms (SSM, SRM) and a single rulebook will change the set-up of financial markets. The implementation of the financial sector reforms will also necessitate a vast amount of secondary legislation that may have a sizeable impact on the funding of the real economy. 2  BIS central bankers’ speeches  I hope that you will enjoy the workshop and that we will all learn much from the very impressive array of speakers. Thank you. BIS central bankers’ speeches  3
As past experience shows, it is difficult to push inflation back up to the central bank’s objective if inflation expectations fall meaningfully below that objective. Japan’s experience is cautionary in this regard. Recent evidence on inflation expectations suggests some firming, but there is still cause for concern. Although both measures of longer-term inflation compensation based on nominal and inflation-indexed Treasury securities as well as some survey measures of inflation expectations have risen modestly since mid-February, the levels of many of these measures remain quite low. 2  BIS central bankers’ speeches  Now, as I have noted, the low level of market-based inflation compensation probably reflects factors besides inflation expectations, in particular lower term premiums. Still, it would be prudent to consider the possibility that longer-term inflation expectations of market participants may have declined somewhat. Even after a rise in its most recent reading, the median of the three-year inflation expectations from the New York Fed’s Survey of Consumer Expectations remains near its lowest reading over its short history. Renewed declines in survey measures would be worrisome. However, at this point, my conclusion is that inflation expectations have not become unanchored. In sum, I anticipate that the combination of decreasing resource slack and anchored longerterm inflation expectations will help push inflation up to our 2 percent objective over the medium term.

The very accommodative monetary policy that we implemented in response was aimed at helping to heal the labor market and promote price stability. Slowly, the economy began to respond and to recover. In October 2014, the FOMC announced the end of its latest asset purchase program citing that “there has been substantial improvement in the outlook for the labor market since the inception of its current asset purchase program.” In March 2015, the BIS central bankers’ speeches  3  FOMC set out conditions for the decision to begin to normalize monetary policy, stating “The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.” The FOMC judged at its December 2015 meeting that those conditions had been met. The improvement that we have seen in the labor market is very welcome. It took until May 2014 for the labor market to recover the jobs lost in the recession, but now there are 5.3 million jobs beyond the prior cyclical peak. The unemployment rate has declined to 5.0 percent. With this improvement, the number of long-term unemployed has been reduced to 2.2 million. Despite these gains, it is important to emphasize that more needs to be done to improve the labor market.