samchain/econo-pairs-v1 huggingface dataset:
It ties up resources without providing the extra capacity in stress that regulators wanted them to provide, and had assumed they would when determining how to prepare the system to absorb shocks. If a regulatory buffer is instead perceived as similar to a minimum requirement and firms take actions to avoid dipping into it, these actions might be harmful to the real economy and, as last year’s Bank analysis showed, to the banking system. Thus it is essential to have a well-designed regulatory buffer framework which can make fresh resources available when they are most needed. The early Covid stress gives us an opportunity to investigate how the current framework behaves and how practically usable regulatory buffers may be. Given the effectiveness of the fire-fighting I mentioned at the outset, bank capital ratios did not approach their Capital Conservation Buffers, so we cannot probe directly how banks would have behaved had capital ratios fallen inside that regulatory buffer. However, there are at least three approaches we can look at. Approaches to analysing capital buffer usage Approach 1 – What do banks and investors say about buffers? The first approach involves asking banks what constraints they face in practice in dipping into buffers and how they manage their capital positions. In broad terms, they told us that expectations of capital instrument and debt investors and concerns about the actions of credit ratings agencies are a major constraint.

François Villeroy de Galhau: Ensuring confidence in the currency Introduction by Mr François Villeroy de Galhau, Governor of the Bank of France, at the conference on "Recent monetary policy developments", Paris, 4 May 2017. * * * Our currency, the euro, is at the centre of debates that are particularly important to French citizens. The Banque de France is independent from politics, but in keeping with our mandate within the French Republic to ensure confidence in the currency, it is my role to provide certain clarifications. I hear proposals for a dual currency with the return of a national currency in parallel to a European currency. I must say that such suggestions would put confidence in the currency in danger. No advanced economy has this type of parallel circulation. Where two currencies exist (or have existed) and can be used to make payments, one always inspires less confidence than the other. Generally, it is the “national” currency that suffers – the only one accessible to households, particularly poorer households, and to SMEs. The currency therefore quickly loses its value, leading to excessive price increases and a negative impact on purchasing power. If we were to consider returning to the ECU, it is important to remember that it has not existed for 18 years and was not a real currency: the ECU was a unit of account that could not be used by either individuals or companies to make payments.
This, of course, seeking to preserve the conditions that will foster economic growth and the welfare of the population. Thank you. 6  BIS central bankers’ speeches  Figure 1 Banks' average CDS (1) (basis points)  Liquidity conditions (4) (basis points)  500  500 100  100  400  400  80  80  300  300  60  60  200  200  40  40  100  100  20  20  0  0  0  0  08  09  10  U.S. (2)  10 Jul. 11 Jul. ene.10jul.10ene.11jul.11  11 Europe (3)  U.S.  Japan  Eurozone  (1) Simple average of 5-year CDS premiums. Dotted line marks statistical cutoff date of previous Report. (2) U.S. includes Citigroup, Goldman Sachs, Merrill Lynch, JP Morgan Chase and Bank of America. (3) Europe includes Société Générale, Deutsche Bank, UBS AG, Santander, BBVA and UniCredit. (4) Difference between the Libo rate and the overnight indexed swap (OIS), both at three months. For the Eurozone, difference between Euribo rate and respective OIS. Source: Bloomberg.

For the moment, the signs of output deceleration in the emerging world are moderate and consistent with September’s forecasts. Manufacturing production is down in some economies, and distrust has increased. Worth noting is the slowdown in Brazil and, to a lesser extent, in China (figure 2). Considering forecasts of slower global growth and its effects on the inflationary outlook, a number of central banks at both developed and emerging economies have begun to increase the monetary impulse. 2  BIS central bankers’ speeches  In Chile, these events have had limited effects. The financial market is showing somewhat tighter conditions echoing the situation in the global markets, which can be seen also in other emerging economies (figure 3). In recent months, Chile’s sovereign and corporate long-term debt premiums increased 50 and 70 basis points, respectively, mainly from August and coinciding with a reduction in investments in local bonds by international investors. After being stable for a long period, the cost of short-term bank credit rose to spreads around 110 basis points lately – 45 basis points more than in September. It is worth noting, however, that the local banking system has a diversified credit base. It recently reduced its funding from European banks, but compensated with increased funds from the United States, Canada and Asia. The higher volatility has also affected stock, fixed-income and currency markets, a phenomenon that is also present elsewhere (figure 4).
Note that the number of policyholders estimated in this way may not precisely match the number of individuals: there will be cases where one contract covers multiple individuals, or where the same individual has multiple policies. The ABI, which covers most but not all of the sector, estimates 6.1 million annuities from its members. 4. Particularly where credit losses have been mitigated by significant government intervention in the past, which may or  Page 12 may not be available in future crises. 5. The only way in which the EU’s FS formulation includes any further allowance beyond expected losses is via an allpurpose floor that is unsatisfactory because it is not explicitly additive, as it should be if it were intending to allow for costs of transfer beyond expected losses. Indeed it does not bite for some rating and duration combinations, meaning that for those the FS is equal to expected losses. In fact, it is used specifically as a catch-all for when there isn’t enough default data (e.g. for government bonds). 6. Specifically this is the calibration of the Solvency Capital Requirement (SCR). 7. There are more technical reasons why the SCR does not substitute for a robust MA. The SCR only covers stressed outcomes over a 1 year time horizon.

Third of all, we had to continue fulfilling the traditional central bank’s functions – ensuring currency circulation, maintaining payment systems, contributing to ensuring financial stability, collecting statistical data and analysing the Estonian economy and financial system. 2. For a small nation, the transition to the euro can be considered high recognition. However, it was also a challenge. The smooth changeover required the joint effort of the entire nation. Residents and retail traders, entrepreneurs and banks – we all managed very well. [EURO AREA ECONOMY AND MONETARY POLICY IN 2011] 1. Monetary policy-making proved quite a challenge in the euro area in 2011. The second half of the year bore no resemblance to the first. The beginning of the year witnessed a continued, albeit slower, economic recovery, both on the global scale and in the euro area. Liquidity was plentiful and oil and other commodity prices soared, exerting price pressures in the euro area. To maintain price stability, the Governing Council of the European Central Bank decided to raise the monetary policy rates. This was done in April and in July. 2. The tide turned in the second half of the year, when waning confidence and growing uncertainties in the financial markets started curbing global growth. This was brought about by market participants’ concerns about the public finances development in several euro area countries. Changes in the economic environment were accompanied by a sharp decline in consumer and corporate confidence in August.
We should recall that credit in the private sector has not ceased to decline since the financial crisis. Firms only began to increase credit further to the health crisis and to the subsequent shutdown in activity. Indeed, the paradox is that it was after the outbreak of the pandemic that this variable began to indicate that the buffer should be activated, naturally, due to the growth of publicly backed credit and the simultaneous slump in GDP, not because of a real alert. The credit-to-GDP gap is known to emit erroneous signals in circumstances such as those currently prevailing. Consequently, as well as monitoring a series of indicators, the Banco de España has decided to use two specifications for this gap: (i) the standard one defined by the BCBS and (ii) an alternative, tailored to the characteristics of the Spanish economy’s credit cycle. However, the activation of this buffer has recently been justified in some jurisdictions with the aim of creating room for manoeuvre in good times that can then be used in periods of stress. The logic behind the activation of the buffer for this reason is similar to that which was applied in our now-extinct countercyclical provision. Finally, new responsibilities have been assigned to the three sectoral supervisory authorities in Spain, as a result of the implementation of this new policy, including to the Directorate General for Insurance and the National Securities Market Commission (CNMV), which have been given tools similar to those I have just described.

The change in name is due to the fact that we have incorporated an additional perspective: the macroprudential supervision, whose ambitious aim is to prevent the formation of a crisis or, at least, to contribute to alleviating its effect, should it be unleashed. Clearly, the application of any pre-emptive policy calls for the identification and correction of potential macrofinancial imbalances before they reach worrying levels. The logic underlying this approach is conceptually straightforward: future crises are the consequence of our current actions. In other words, crises are endogenous and, therefore, avoidable phenomena. It is then rather ironic that, now that we have a framework aimed at correcting imbalances before they cause future crises, we have been caught unaware by an eminently exogenous crisis. In any event, we should be aware that macroprudential policy is a recent development. Its theoretical framework was approved in Basel in late 2010, just a decade ago. It has arisen as a complement to microprudential supervision, and its aim is to boost financial stability through the prevention and mitigation of so-called systemic risks and vulnerabilities, thereby fostering the sustainable contribution by the financial system to economic growth. To achieve this, risks are evaluated in an aggregate fashion system-wide, but considering also the potential interactions between individual institutions and financial sub-sectors. Since 2014, the Banco de España has had the possibility of introducing countercyclical capital buffers (CCyB).
BIS central bankers’ speeches  13  These positive moves have prompted new proposals. Some are not so innovative, including the use of role-based allowances as part of fixed pay, to link more explicitly reward to responsibility. But others are more pioneering – for instance the proposals being pursued by some banks to pay certain staff in “performance bonds”, which they would forfeit in the case of the bank receiving a large fine. These could include Contingent Convertible bonds (CoCos), which either get wiped out when a bank runs into trouble or get exchanged into equity. All of these measures align personal incentives with the interests of creditors, and the longer-term wellbeing of the firm. 25 A final area where progress has been made is shareholder control of remuneration policies. Since 2013, shareholders have had a “Say on Pay” in both the UK and US. Remuneration policies now need explicitly to be approved by a majority of shareholders (in the UK) or advised on (in the US). And in Europe, a Shareholder Rights Directive granting a “Say on Pay” is moving through European Parliament. It is too early to tell whether these initiatives will signal a “Shareholder Spring”. Taking pay issues together, progress on restructuring executive compensation has been made, particularly in the EU and particularly for banks. Elsewhere, however, progress has been relatively piecemeal and modest.

I do think that there is too great a tendency to rely unthinkingly on the rating agencies in this area. 2  BIS Review 15/2001  Regulators have signalled their intent in this area in the new Basel Consultative package. Not only will banks need to demonstrate a clean break to earn a reduction in their capital requirements, but they will also need to consider the operational and reputational risks involved in securitisations and derivative deals. My third question is whether we collectively yet have a proper understanding of the way the credit transfer business is bridging the lending, securities and insurance markets. Contracts in banking, on the one hand, and insurance markets, on the other, are in some respects different animals. In securities markets, timing of payments is of the essence. An insurance contract, by contrast, is not typically a commitment to timely payment. If insurance companies are participating in this market, in part using reinsurance-type agreements and in part using derivative agreements, there may be imperfect hedges or liquidity risks. The relationship a borrower has with its lending banks has also traditionally been different to that with its bondholders. Any problems the borrower may have in servicing the debt are typically addressed in different ways by lenders and bondholders. This problem has surfaced recently with the debate about whether restructuring should be included within the definition of a credit event. ISDA is addressing the question and it is clearly desirable that a market standard agreement and set of defnitions should exist.
King (2013) “Flow and stock effects of large-scale treasury purchases: Evidence on the importance of local supply” Journal of Financial Economics Volume 108, Issue 2, Pages 425-448 for evidence associated with programmes conducted in the US and Joyce et al. (2010) in the UK. vii See speeches of August 2016 (Handelsblatt conference), September 2016 (annual CERS conference) and April 2017 (conference at Columbia University). viii Stefan Zweig, Visiting the billions (Besuch bei den Milliarden), 1932. ix Stefan Zweig, The World of Yesterday, Memories of a European, 1944.

BIS Review 138/2008  05  06  07  08  09  10  11  12  Sources: Intercontinental Exchange and the Riksbank  15  Falling commodity prices USD, index (2000 = 100)  350  350 Food M etals Other agricultural products Total  300  300  250  250  200  200  150  150  100  100 04  05  06  07  08  Source: The Economist  Weaker krona Trade-weighted exchange rate (TCW), index, 18 November 1992 = 100  138  138 TCW-index  136  136 TCW-forecast M PR 2008:3 TCW-forecast M PR 2008:3  134 132  134 132  130  130  128  128  126  126  124  124  122  122  120  120 04  05  06  07  08  09  10  Note. Broken lines refer to the Riksbank’s forecasts (quarterly data). 16  11  12  Source: The Riksbank  BIS Review 138/2008  Lower growth in the world and in Sweden Annual percentage change, calendar-adjusted data 6  6  Sweden World  5  5  4  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2 -3  -3 1980  1985  1990  1995  2000  2005  2010  Note.
Together with IOSCO and the IAIS, we should work to strengthen internal financial firm management, supervision and market discipline, no matter what the nature of the financial firm or market. As a final point, let me stress that while we continue to elaborate the roadmap of the Core Principles, we must also press on in understanding the frontiers of financial developments. This makes for a difficult and ambitious agenda, but we must be and we are up to the challenge. The most important example of this broad effort is the work the Committee has begun on the future of capital. We know the value the Basle Accord has had in strengthening capital standards around the world. At the same time, we have recognized that advances in risk management and financial practices are beginning to erode the relevance of the Accord for the most technically sophisticated banks. That means that we must identify ways to ensure that the Accord will provide meaningful guidance for the maintenance of strong capital levels at those banks, while still providing the fundamental protection to the financial system that is needed in all countries. To that end, the Committee has formed a Steering Group on the Future of Capital, chaired by Claes Norgren of the Swedish Financial Supervisory Authority. It is my hope that the review conducted by the Steering Group will bring together new thinking on a minimum capital rule, a comprehensive look at the supervisory evaluation of capital adequacy, which I described earlier, and enhancements to market discipline.

Mr. McDonough’s address on the occasion of the 10th International Conference of Banking Supervisors Keynote address by Mr. William J. McDonough, President of the Federal Reserve Bank of New York and Chairman of the Basle Committee on Banking Supervision, on the occasion of the 10th International Conference of Banking Supervisors held in Sydney on 22/10/98. I am very honored to be here as Chairman of the Basle Committee on Banking Supervision and as the Chairman of this year’s International Conference of Banking Supervisors. These are unusually difficult and challenging times for bank supervisors around the globe. Turbulence in the financial markets has touched the banking system in virtually every country. To varying degrees and in many different contexts, bank supervisors are dealing with adjustments to their banking systems to assure their strength and vitality. At times like these, bank supervisors have a special role in maintaining financial stability. That role is to facilitate a resolution of banking problems so that the depository institutions will continue to provide the vital lifeline of credit to businesses and consumers. Past experience in many countries suggests that even severe problems can be overcome with decisive action by banks to identify problems quickly, recognize losses, strengthen the capital base, and execute a sound, forward-looking business strategy. Today, the supervisory community has the same challenge. We must identify the lessons to be learned from the current financial turmoil and address them.
It also shows the problems they face in deciding which transactions are indeed “appropriate” where the rules of the game in the various markets in which they operate may not be clearly defined, or where the rules are shifting in line with changing standards of what is right or wrong. The global reach of many businesses creates practical problems of control and of enforcement of compliance with regulatory and ethical standards, as the collapse of Barings Bank clearly showed. But these issues also arise in domestic markets as the banks diversify into fee-related businesses such as the sale of insurance and investment management and advice. Leaving aside the possible risks from rogue fund managers, these activities can raise conflicts of interest and the issue of whether particular products are suitable for the needs of their customers. The classic case of how things can go wrong is the recent pension mis-selling scandal in the UK. Hundreds of thousands of employees were persuaded by pension salesmen and the companies they represented (including major banks and insurance companies) to switch from occupational pension schemes provided by their employers into BIS Review 98/1999  2  personal plans provided by the companies. It turned out that in many cases, the employees were much worse off than if they had stayed in their original schemes. The banks and other pension providers stood accused of failing to give their customers suitable advice and sufficient information on the costs and benefits of making the switch.

Responsible investment is an integral part of the investment strategy and includes the exclusion of companies on an ethical basis. In 2016, the Ministry of Finance, at the request of the Storting, introduced two new criteria for ethics-based exclusions: a climate criterion and a coal criterion. Norges Bank has conducted extensive research to collect data and perform analyses to identify the companies that fall under the coal criterion. Based on the results, the Executive Board decided to exclude 69 companies and place 13 companies under observation in 2016. On the advice of the Council on Ethics, the Board also decided to exclude a further eight companies and place one company under observation, while the exclusion of one company was revoked. The exchange of information and division of responsibilities between Norges Bank and the Council on 1/2  BIS central bankers' speeches  Ethics functions smoothly. At the end of 2016, Norges Bank submitted a recommendation to the Ministry of Finance to increase the share of equities in the GPFG. Historically, equities have generated a higher return than bonds, but the return has also been more volatile. A lower return on bonds is the price we pay to dampen fluctuations in the fund’s value. In recent years, bonds have become a more efficient, but also more costly, hedge against security market volatility. Both factors suggest that the bond allocation should be somewhat lower. In addition, Norway’s petroleum wealth as a whole has become more diversified over the past ten years.