samchain/econo-pairs-v1 huggingface dataset:
Moreover, institutions that received intermittent financial statements and had infrequent contacts with these counterparties were left to make periodic credit assessments using stale information in a rapidly changing market. This insufficient information impeded the setting of prudent credit limits and terms, including collateral requirements and contract covenants. Many risk managers also failed to account fully for the risks involved in new financial products. Non-traditional products, such as equity repos and credit derivatives, challenged existing credit BIS Review 8/1999  –2–  analysis systems and methodologies. In addition, relatively few financial institutions attempted to stress test credit exposures and even fewer anticipated a market environment as adverse as what we experienced in the third quarter. For these and most other institutions, the rush to mitigate and reduce their exposures, particularly to highly leveraged institutions such as hedge funds, quickly resulted in the widespread withdrawal of all lending activity to some troubled sectors, regardless of an individual counterparty’s financial condition. While these decisions undoubtedly were intended to reduce risk and avert losses, they also served to exacerbate already extraordinary financial market fragility. Given that the task of assessing and managing risk is not going to get any easier as we move into the 21st century, let me now turn to some of the issues that I believe will challenge financial institution managers in the coming year and beyond.

But we should not forget the importance of other major aspects such as a clearly defined legal system and a properly functioning technical and organisational infrastructure. I would also like to address another aspect that is of particular importance to a central bank: the stability of the system. Maintaining stability in the financial sphere should not be viewed in isolation, as it is closely interlinked with the human and economic factors discussed earlier. Political and economic stability, the quality of the human contribution, a clearly defined legal order and an efficient infrastructure are the keys to the success of a financial centre. To this, we should add a reputation which is founded upon a sound attitude and a good track record, going beyond the criteria we have enumerated. Stability of the financial system is a concern primarily for the market participants themselves. Furthermore, it comes within the remit both of the bank supervisors and of the central bank, which is responsible for monetary policy. As you know, responsibilities and powers are kept separate in my country, the task of supervising the banks being assigned to an independent body, the Federal Banking Commission. Discussion about whether it would be preferable to unite the two institutions under one roof has been going on for a long time. Both solutions clearly have their advantages and disadvantages, each of which may be weighted differently depending on the requirements of society. Consequently, the debate must be pragmatic and not dogmatic.
The possible need for speedy assistance necessitates that a central bank must have internal procedures for managing requests for liquidity support and doing so very rapidly. To accomplish this, central banks need to have a detailed crisis plan that can be put in place within very short notice. The crisis plan should include the following types of information: Organisational structure •  A division of responsibilities for analysis, information, decision-making, etc. •  Staffing requirements for different tasks, with substitutes. Analysis plan •  A description of the information necessary to make a decision about whether or not a systemic crisis may occur. •  Necessary information about systemically important individual banks. Information strategy •  A plan for informing and coordinating information and decisions with the other domestic agencies involved in the crisis. •  A plan for informing authorities in other countries about the situation. •  A plan for communicating with the financial markets. •  A plan for spreading information to the public and media (ex ante and ex post transparency). Plan for implementing ELA •  A clear description of the routines which must be followed and the legal requirements which must be met for ELA. Legal procedures, for example contracts, for lending against other collateral than what is normally eligible •  An inventory of the instruments available for implementing ELA. •  Guidelines for acceptable collateral and appropriate haircuts.

Andrew Bailey: Challenges of prudential regulation Speech by Mr Andrew Bailey, Deputy Governor of Prudential Regulation and Chief Executive Officer of the Prudential Regulation Authority at the Bank of England, at the Society of Business Economists Annual Dinner, London, 3 June 2013. *  *  *  Thank you for inviting me this evening – it is a great pleasure to have this opportunity and particularly at a time when we are embarking on major reforms to policymaking in the area of financial regulation. The financial crisis has provided hard lessons on what happens when the stability of the financial system is found wanting. It has reminded us how much we depend upon the supply of critical services from banks, insurers, investment firms, asset managers and other parts of the financial sector. If you take the banks as Exhibit One, there is good reason to curse them, but at the same time recent experiences have only served to emphasise how much we depend upon them, like it or not. The new legislation on financial regulation in the UK emphasises the importance of the continuity of supply of critical financial services. This is a permanent public policy objective, and rightly so. I use the term “permanent” deliberately to distinguish this objective from the support provided by Too Big / Important to Fail, which should not be permanent.
As well as providing transparency to commentators and the markets who are in the business of forming views about our future actions, the letter has proved a useful focus for public debate, which has almost universally underlined UK society’s continuing commitment to price stability. The “open letter” mechanism is important to the political economy of monetary policy in the UK. A one member/one vote committee The open letter was an instance of the MPC acting as a collective, represented by the Governor. Much of the time, most obviously when reaching our monthly decisions on Bank Rate, we are in one person/one vote mode. Although now well established, a committee that truly adheres to one person/one vote, and at the same time pursues its mandate with dedication and integrity, needs nurturing and skilful maintenance. After all, four of the MPC’s nine members also have executive duties for which they report to the Governor of the day. And the four other, “external” members expect to renew their careers outside central banking after a few years of service to the MPC, and so might be thought to have an interest in maintaining an appropriate profile. But – maybe alone amongst central banks, I’m not sure – no one doubts that the MPC does decide Bank Rate by a free vote. That this should be so owes a great deal to the culture of the Committee itself; a culture engendered by its first Chairman and his successor as Governor, but also by the rest of the membership.

I say once a month, but we meet more frequently than that when needed, as we have done for example over the past few weeks. What are some of those threats as I speak here today? We are, of course, still working our way through the implications of the dreadful events in the United States last month. Uncertainty about the near-term outlook increased quite markedly following the attack, and this - together with the  BIS Review 83/2001  1  possibilities of supply-chain and market disruption, particularly in the US - contributed to some sharp adjustments in equity values. A number of sectors most closely affected by the terrorist attacks - in particular air travel and insurance - were badly hit. More recently, equities have rallied somewhat, suggesting that some of the earlier concerns may have been overdone. But the market is still clearly lower than it was at the start of September. These factors have potentially important implications for the inflationary outlook, and therefore for monetary policy. The Bank of England's Monetary Policy Committee - in common with a number of other central banks around the world - reduced interest rates last month, citing in our press release the increased risks of a further slowdown in world growth. Interest rates were cut by a further quarter of a per cent following our meeting last week, and you will be able to read about our reasoning for this decision when the minutes are published on 17 October.
In this connection, I shall first briefly review the situation of the banking sector, focusing thereafter on the challenges banks will have to face in the short and medium term. I shall conclude with some brief thoughts on the ECB’s new supervisory framework. 1. Recent developments in the banking sector  In recent years, and in response to the financial crisis, banks have substantially improved their solvency levels, largely as a result of the new regulatory and supervisory requirements. At SSM-supervised banks, in the last year alone their highest-quality (i.e. CET1) capital increased on average by 70 bp, from 12.7% in 2014 to 13.4% in 20151. In the case of Spanish banks, whose starting levels were somewhat lower, the increase exceeded 80 bp, making for an average of 12.5% of CET1 at end-2015. The profitability of the banking business, however, remains at low levels and, in any event, far off the double-digit figures seen before the crisis. Among SSM banks as a whole, the return on equity (ROE) in 2015 was slightly below 5%, whereas in Spain, in consolidated terms, it was scarcely 5.6%. Admittedly, it is unusual for the return on capital to stand in most euro area countries at levels below the average cost of capital, on estimates made by the Banco de España. In the case of Spanish banks, estimates of the cost of capital stood at 6.8% in December 2015, drawing close to levels of 8% in early 2016, as a result of the period of instability observed in financial markets.

6  BIS central bankers’ speeches  Unquestionably, this scenario of new technologies and new emerging competitors poses a challenge to the traditional banking business. However, technical progress is also an opportunity for the more dynamic banks to generate efficiency and to extend the services provided to their customers. For instance, banks are proving very adept at developing instant payment services. And some of them might be well-positioned to develop direct lending facilities (P2P) competing with the new non-bank operators (e.g. crowdfunding). Banks retain advantages in terms of experience, market roots and the ability to offer a full range of transactional and intermediation services which should help them face competition which, nonetheless, will be increasingly intense. In our capacity as regulators and supervisors, we should seek to strike a balance between facilitating technical progress, supporting the development of new products and services, and properly safeguarding customers and financial stability. 3.3  Consolidation  Finally, orderly correction of the excess capacity in the banking industry will foreseeably require greater consolidation in the sector. I spoke to you about this exactly a year ago in this same forum and I believe that since then the view that such a process is becoming increasingly likely has become widespread. Ideally, consolidation should take place at the European level, in order to overcome the strictly domestic vocation of the overwhelming majority of banks.
The programme for development and renovation of our system of cash centres is well under way. The new cash centre in Plovdiv opened a bit more than a year ago, another cash centre is about to open in Pleven, and we have already initiated the project for acquiring a site and starting the construction of a new cash centre in Varna. The adaptation of the payment systems is also going as planned and in close cooperation with the European Central Bank. Of course, I can give numerous technical and logistic examples but I will leave it at that. The same applies to commercial banks' preparations, which are running relatively smoothly. We are monitoring and guiding this process. All banks have provided the required funds in their administrative budgets, including for setting up functional units to plan, coordinate and control their activities related to the entry in the euro area, along with the adaptation of the accounting and information systems. Thus, the Bulgarian National Bank and commercial banks will be highly prepared for the euro changeover during this year. The last group of tasks, of course not in importance, is related to the communication campaign. This campaign was very seriously delayed. I must say right away that this delay is not due to lack of readiness, but due to, let me put it this way, the peculiarities of the political process in our country in the last two years. By now, all the elements of a truly meaningful and good communication campaign are in place.

Third, it is necessary to implement the legislative program, which is not a matter of readiness with draft legal acts, but rather a matter of parliamentary procedures for discussion and adoption of the prepared legal acts. Next, in fourth place, are the tasks related to technical and logistical preparation. The banking sector has made relatively good progress and continues to work actively and systematically on this issue. The fifth group of tasks is related to the communication campaign, which must be launched without further delay and which will be an important factor in reaching both the messages and the answer to the specific questions to businesses and people. The success of the overall euro accession process will depend crucially on our ability to achieve political, institutional and fiscal consolidation. Thank you for your attention! 5/5  BIS - Central bankers' speeches
For these reasons, the euro area Member States are obliged to treat their economic policies as a matter of common concern and, to this end, a number of instruments and procedures have been developed to facilitate the monitoring and, if necessary, coordination of those policies that are still basically conducted at the national level. At the centre of this monitoring and coordination process lies the EU’s Broad Economic Policy Guidelines, which set out general orientations for the conduct of economic policies in the individual Member States, covering areas such as public finances and tax policy as well as structural reform and market regulation. While these Guidelines are not binding in themselves, their elaboration and discussion in European institutions and fora in which each of the Member States is represented usually creates sufficient peer pressure to galvanise governments into appropriate policy action. While monitoring and peer pressure are very effective tools for assuring that the various economic policies of the Member States move in the right direction, specifically in the area of budgetary policy, 3  BIS Review 4/2000  the EMU framework not only specifies commonly agreed targets, but also sets a binding upper limit for Member States’ budget deficits of 3% of the gross domestic product (GDP). The failure of any Member State to respect this upper limit automatically triggers an excessive deficit procedure under which, if the deficit is not corrected in time, sanctions can be imposed on the Member State concerned.

They are connected with, firstly, a faster reopening of borders. In this case, domestic demand may partly shift to imports of tourism services, easing domestic demand-side pressure on prices. Secondly, if the pandemic deteriorates, depending on the pace of vaccination and the spread of new coronavirus strains, the global economy will grow much more slowly. Thirdly, a bumper harvest may cause inflation to slow down. As far as monetary policy prospects are concerned, we are prepared to step up actions needed to bring inflation back to the target. As I have already mentioned, the Board of Directors sees the necessity of further increases in the key rate at upcoming meetings. We will determine the scope and pace of increasing the key rate based on our assessment of the level of sustained inflationary pressure, the timeframe for inflation expectations stabilisation, as well as the forecast 3/4  BIS central bankers' speeches  of further movements of aggregate demand and supply. Our monetary policy will ensure annual inflation to return to the near 4% target in the second half of 2022. Thank you for your attention! 4/4  BIS central bankers' speeches
Zeti Akhtar Aziz: Asia in the world – sustaining the region’s transformative momentum Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Wharton Global Alumni Forum: “Asia in the world – sustaining the region’s transformative momentum”, Jakarta, 22 June 2012. *  *  *  The global economy is experiencing a period of profound change. Asia is very much at the centre of this global change. Asia’s changing role in the global economy has not only been in terms of its growing size, but also in terms of its influence in global economic and financial developments. The issue before us is whether Asia will continue its transformative momentum over the medium to longer term, to become an increasingly important source of global growth and stability. It is my very great honour and pleasure to be here in Jakarta to speak at this Wharton Global Alumni Forum. Exactly a decade ago, I was actually invited to speak on the same subject on the state and future of Asia at the Wharton School in Philadelphia. Then, having just emerged from the Asian financial crisis, the region was again being challenged by a series of economic and financial shocks, in particular, the bursting of the dot com bubble in the United States in the year 2000. Observers had questioned the sustainability of the region’s medium and longer term growth prospects.

Experience has shown, even in the advanced economies, that when inequality is high and a significant proportion of the population is excluded from the opportunity to participate meaningfully in income and wealth generation, instability follows. To ensure that rapid economic growth and transformation does not further widen the social divide and disenfranchise those who remain excluded from its benefits, access to high-quality, healthcare, social security and financial inclusion is now an important focus of the region. The contour of the global economy is fundamentally changing amidst mounting challenges and continued uncertainties. In this environment, Asia has become an important source of stability. While the region is affected by the ongoing economic and financial crisis originating from Europe and the United States, the Asian region continues to remain on a growth trajectory, although at a more modest level. Greater regional cohesiveness and cooperation, however, has enhanced Asia’s potential to address these new challenges that are confronting the region. The success of the region is not only in the interest of the Asian economies, but the world. 4  BIS central bankers’ speeches
In contrast to the nominal exchange rate, which is the relative price of different currencies, the real exchange rate is the relative price of groups of goods. More specifically, the real exchange rate is defined as the amount of domestic goods that has to be provided in exchange for a given amount of goods from abroad. The value of the real exchange rate is calculated in practice as a quotient, the denominator being the product of the nominal exchange rate and an appropriate price index for foreign goods and the numerator the corresponding domestic price index. The real exchange rate is commonly regarded as a measure of a country's international competitiveness. The weaker the real exchange rate - the more domestic goods that are needed to balance a given amount of foreign goods - the cheaper it is for firms and consumers abroad to buy Swedish products: our competitiveness is stronger. It follows that the real exchange rate is a measure of purchasing power; the weaker the real exchange rate, the smaller the amount of foreign goods that can be bought for a given amount of domestic goods. This needs to be kept in mind when discussing what are appropriate central and conversion rates. A weak rate can admittedly confer competitive advantages but it also means that people in Sweden are poorer. Sweden's full participation in the monetary union locks only one of the components of the real exchange rate - the nominal exchange rate.

A question that is raised from time to time is whether a decision to join the monetary union should lead to the Riksbank's inflation target being replaced by the ECB's. As I see it, the grounds for doing so are weak in the time perspective of one to two years that we are now talking about. In this context there is little difference between our target and the ECB's. But there may be reasons for keeping a closer watch on the new common European price index, HICP, partly because it is on that basis that Sweden will be assessed in the event of EMU entry. Conclusion  Today I have considered some issues connected with the Swedish krona that are important if Sweden decides to participate fully in EMU. My main points are as follows. For Sweden the question of ERM2 participation is closely connected with the issue of full participation in the monetary union. Under the new legislation on exchange rate policy that was adopted some years ago, the exchange rate regime is decided by the Government. In a number of budget statements the Government has indicated that participation in the ERM2 can be on the agenda after a decision has been made to join EMU. Under the new legislation it is the Riksbank that is responsible for forming a Swedish position on the central rate. In practice, however, that is something we have strong reasons for arriving at together with the Government.