samchain/econo-pairs-v1 huggingface dataset:
We are watching closely to see whether there is a shift in relative pricing between them that could produce a flow from one to the other and thereby have implications for the structure of financial intermediation. 49  Assets under management in government-only funds could grow two ways: Prime funds could convert into government-only funds, or prime fund investors could transfer their money into government funds. Most prime funds have announced their intentions at this point, and among those that have converted to government funds, take-up has not markedly increased, so therefore we are less concerned about such conversions, but we continue to pay close attention to them, as we do to investor behavior. 14  BIS central bankers’ speeches

This is not only exemplary, it is an important lesson we can learn from the crisis for use in the future, and it holds true not only for households but for companies and public entities as well. There are many ways to express this message, but allow me to refer to French classical literature and recall for you Jean de la Fontaine’s celebrated fable about the cricket and the ant: “La cigale et la fourmi”. In the fable, the cricket who had not accumulated surpluses during the plenteous summer days preceding the crisis, found herself “fort dépourvue quand la bise fut venue”, that is, she “found when the winter winds blew free, her cupboard bare as bare could be”. The fact that, in this situation, the ant of the fable was not eager to lend to the singing cricket lends further realism to the analogy. II. Current environment and short-term prospects  What now? We are not yet ashore and the relatively positive assessment of the previous paragraph does not reflect a definitive evaluation. First, private consumption could be less robust should conditions on the labour market improve less than currently anticipated or even deteriorate again. Here the main worry is the ability of the Swiss economy to quickly reabsorb the 60,000 individuals working on a short-time basis. Recently, developments have been encouraging. In turn, the situation of the labour market depends on the continued recovery of the 60% share of the economy that is geared to international markets.
In fact, legislation might be necessary in order to ensure that the NCB can always obtain the information it needs to fulfil its responsibilities on financial stability, extraordinary liquidity assistance in a crisis, and monetary policy. In Sweden, the central bank concluded an MoU with our bank supervisors but we also have the legal power to ask the banks directly for information. It is difficult to sum up all the arguments for and against. If you are contemplating change in your country, I would say that a broad and objective assessment of the present strengths and weaknesses will give good guidance as to which way to go. The optimal solution for the near term may not be the same as for the long term. The aspects of cross-border supervision Financial institutions increasingly operate across national borders. They establish branches and subsidiaries in other countries and they have business linkages with institutions in other countries. Is there any structure of the domestic regulatory authorities that is particularly suited to the efficient supervision of international financial operations? I do not think so. What matters is that there are arrangements between home and host supervisors which ensure information-sharing and close cooperation in particular in crisis situations. Such arrangements can be agreed on whether bank supervision is in a central bank or combined with securities and insurance supervision in a separate authority.

There are arguments against changing the supervisory structures in the near term. The first one is the flip-side of the argument above. Also the banks are getting larger and more complex. In many countries they still dominate the financial sector and the payments system. Hence, society has a clear interest in strong banking supervision to avoid costly bank failures. We should take into account that banking supervision in many countries functions quite well, while supervision of the other financial sectors is much weaker. Major structural changes involving bank supervision will therefore hamper the conduct of such supervision for a long time due to the focus on the transition rather than on the operations. There is also an obvious risk that qualified staff will leave bank supervision due to the less attractive work prospects outside the NCB. For instance, government salaries and other benefits are usually not as good and it is less prestigious to work outside the NCB. The result would be weaker bank supervision without compensating improvements in other sectors. There are other ways of meeting the challenge. Many countries have instituted arrangements for closer cooperation between the supervisors. Memorandas of Understanding have been drafted so that information may be shared without legal or other impediments. Joint forums have been established where representatives from the different supervisory authorities meet regularly. Cross directorships imply that high level supervisors sit on each others’ Boards and can inform themselves of developments.
The changes that we have seen include action under both Pillars I and II of the Basel framework. The numbers I gave for minimum capital requirements (the change from £ to £ represent Pillar I. I mentioned earlier that Pillar II was not consistently or rigorously applied before the crisis. Between 2008 and today the Pillar IIA capital requirements for the major UK banks have risen from £ to £ This increase in capital required is additional to the impact of Basel III and the resulting increase in core capital requirements of around 7 times I set out above. The PRA’s approach to supervision emphasises the use of judgement on a forward-looking basis, and the use of Pillar II is evidence of that. A further important element of the new framework of supervision is so-called Asset Quality Reviews (AQRs), undertaken either by or at the request of supervisors like the PRA. AQRs are designed to assess the more structural features of loan books as well as their performance, including whether forbearance is being applied by the lender. The granularity with which AQRs are undertaken can vary with their purpose, but there is always a fairly high level of intensity in terms of the closeness of the inspection. In the best of all worlds, supervisory initiated AQRs should not reveal anything that isn’t already known. I will just say that experience shows that we are not there yet. Basel III requires more and better quality capital in banks.

Ardian Fullani: Economic and financial developments in Albania Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the presentation of the Bank of Albania’s Annual Report 2009 to the Albanian Parliament on 29 April 2010, published on 30 April 2010. *  *  *  Honourable Ms. Chairwoman, Dear deputies, It is a privilege to present to you today the Bank of Albania’s Annual Report for 2009. This Report, the key conclusions of which will be briefly reviewed in my speech today, makes a thorough and transparent analysis of economic and financial developments in Albania, and provides an overview of the Bank of Albania’s work to meet its legal obligations and institutional commitments. The year 2009 was a challenging year for the Albanian economy in all its dimensions. In response to the global economic and financial crisis, the following were put to the test during this year:   The country’s macroeconomic balances;    Our financial system’s stability;    The business models and the private sector’s financial sustainability; and    The analytical and responsive capacities of macroeconomic policies. In a broader setting, the shock that hit the Albanian economy in 2009 put the flexibility of Albania’s economic development model and its capacity to respond to a thoroughly transformed global environment to test. The global crisis provided a quick impact on the economic activity at home.
Monetary policy must be conducted with caution as to not contribute to further build-up of financial vulnerabilities. Furthermore, amidst the prolonged period of low interest rate and the increasing search-for-yield behaviors, it is our view that supervisory coordination is increasingly imperative for effective risk monitoring to make sure that the regulations across different regulators are broadly aligned and that financial 4  activities cannot simply move from a regulated to an unregulated umbrella. This is reflected through our close collaborations with other regulatory bodies such as the Securities and Exchange Commission (SEC) and the Office of Insurance Commission (OIC). Ladies and gentlemen, While we have adequate external buffers to withstand short-term vulnerability in the global market, what would ensure the economy’s stability and resilience in the longer-run are productivity-enhancing infrastructures and ecosystem. This is crucial for the country’s competitiveness in the years to come. I am delighted to say that we are on the path of productivity improvement. With the limited time I have, it is difficult to do justice to all the projects that have been initiated. Some of the most notable examples are the Eastern Economic Corridor (EEC) and transportation and digital infrastructure projects that have been long-overdue. On our side, the Bank of Thailand is doing its part to develop infrastructure and ecosystem needed for the ongoing transition towards the digital economy. Under the e-Payment Masterplan, we, together with the Ministry of Finance and the Thai Bankers’ Association, launched PromptPay, which has allowed real-time fund transfers among individuals and businesses.

Very soon we will reach out to stakeholders to join us in this most meaningful project. 13. Thank you. 2/2  BIS central bankers' speeches
Different firms can assess risk by different methods and models, using different data sets or applying different judgements: assessments undertaken by the BCBS1 have shown firms can generate quite different RWA calculations for an identical hypothetical portfolio. And firms may choose to optimise both their choice of assets and the weights attached to them to minimise capital requirements. It has been shown that differences in capital ratios calculated on an RWA basis have historically had little or no correlation with whether firms were able to survive a 1  4  Basel Committee on Banking Supervision July, 2013. “RCAP – Analysis of risk-weighted assets for credit risk in the banking book”. BIS central bankers’ speeches  stress2. A leverage ratio offers an alternative approach, which is not risk sensitive but simply calculates total capital in relation to total assets. The degree of leverage has historically been a much better indicator of likely firm failure (although we can’t be sure that correlation will survive if firms start to manage to a constraint!). As alternatives, the RWA and leverage approaches would generate different incentives for firms to be capital efficient. Under RWAs the incentive can be to expand the balance sheet with assets that carry low risk weights. Under a leverage ratio, the incentive can be to limit balance sheet size but choose riskier assets. Ideally, the two measures would work in tandem to ensure sufficient capital to support both balance sheet size and risk taking.

In this lecture I will try to bring together in an accessible, structured way, summaries of the most important reform initiatives that are in train – at least those that affect prudential supervision – I will try to set out what they are aiming to achieve and how much further there is to go. I will then reflect on how the regulatory jigsaw fits together and the key questions that are being asked of it. Alongside the statutory Financial Policy Committee in the Bank of England (the FPC) and the Financial Conduct Authority (the FCA), the PRA was brought into life on 1 April 2013, as part of a reshaping of the UK’s financial regulation landscape. The PRA is the prudential regulator for deposit takers (banks, building societies and credit unions), insurers and major investment firms. It started with two objectives: (i) promoting the safety and soundness of its authorised firms and (ii) specifically for insurers, to contribute to the securing of an appropriate degree of protection for those who are or may become policyholders. A year later, an additional secondary objective was added: to, so far as is reasonably possible, act in a way which facilitates effective competition in the markets for services provided by PRAauthorised persons in carrying on regulated activities. The PRA’s strategy is to deliver a resilient financial sector by seeking: an appropriate quantity and quality of capital; effective risk management; robust business models and sound governance, including clear accountability of a firm’s management.
Massive speculation on that day led to the announcement in the morning of a 2 percentage points rise in interest rates and, when that failed to dampen the pressure on sterling, of a further 3 percentage points rise in rates. That second announcement, far from bolstering the exchange rate, merely convinced financial markets that Britain’s membership of the ERM could no longer be sustained politically. The strong political commitment to joining European monetary union, which was the effective support for other currencies in the ERM, was absent in the United Kingdom. Following its departure from the ERM, the UK introduced an inflation target regime for monetary policy. It succeeded in bringing inflation down to around 2½ percent (see chart 2). 6  BIS Review 5/2004  Chart 2: UK inflation and inflation expectations, Oct 1991-Oct 2003 Per cent 7  Implied inflation (a ) from IGs RPIX inflation rate  6 5 4 3 2 1 0 Oct-91  Inflation target announced  Bank independence  Oct-93  Oct-95  Oct-97  Oct-99  Oct-01  Oct-03  (a )  Implied average inflation expectations from 5 to 10 years ahead, derived from index-linked gilts. Source: Bank of England, ONS  But long-term inflation expectations did not fall as quickly. Only after the announcement in May 1997 by the new Labour government that the Bank of England would be made independent did inflation expectations fall quickly to the target level, as can be seen from chart 2.

However, I would like to underline that the attractiveness exerted by advanced countries on our graduates and our specialized profiles is making our task even more complex, especially in recent years. At Bank Al-Maghrib, for example, we lost about 20 computer engineers in just 18 months. I think that this point also deserves to be discussed and debated at meetings such as this one. Thank you! 7
Beyond the yearly shadow banking monitoring exercises, policy makers intended to make sure that no part of the financial system would be left unregulated and that a similar set of rules should apply to a similar set of risks. For the sake of a better regulation of globally systemically important institutions, some progress remains possible in the monitoring, and the need for relevant data in particular as regards the better understanding of inter-linkages among G-SII. Cross-sectorial consistency was seen as a key factor to prevent any opportunity for regulatory arbitrage and preserve appropriate level playing field. The Financial Stability Board following the G20 recommendation has launched an ambitious regulatory program which aims at better controlling risks which are related the shadow banking sector. Indeed, the US have recently adopted a regulatory framework for Money Market Funds (July 2014). Other reviews are still ongoing, I am thinking of the assessment of risks and systemicity of asset managers whose assets under management have experienced a major growth these last few years, or the rapid development of ETFs providing real time liquidity on their liability while their matching assets have a lower liquidity. In Europe, this global initiative translated into a number of regulatory initiatives such as the Securities Financing Transactions Regulation (repos and SFTRs) or the Regulation of Money Market Funds. The final objective was to turn the shadow banking sector into a safer and regulated “market-based financing”. 2.

Let me develop the first point: The 2008 crisis illustrated that the so called « shadow banking sector » played an important role in propagating and amplifying financial instability throughout the financial system. Shedding some light on these entities and regulating them to prevent contagion and regulatory  BIS central bankers’ speeches  1  arbitrage has been therefore a key milestone of the G20 Financial regulation agenda ever since. The Banque de France has been involved in this policy work from the outset. A first part of the work consisted in defining what the “shadow banking sector” is about. It does embody a wide variety of institutions worldwide which accomplish credit intermediation along with maturity transformation outside of the “traditional” banking sector. As an output, it transforms illiquid assets into liquid ones. The approach of shadow banking has progressively expanded to a variety of actors and activities: Money Markets Funds; Securitization, Repos and Securities Financing Transactions. The work dedicated to preventing the financial risks arising from the shadow banking system became intertwined with the work aiming at ending “too big to fail”. In the wake of the Globally Systemically Important Banks, the Financial Stability Board started working on identifying and defining a regulatory regime applicable to Globally Systemically Important Insurers (GSIIs), Non-Bank-Non Insurance SIFIs (NBNIs), Critical Market Infrastructures/CCPs. The focus of the work also shifted from monitoring/statistical reporting to rule making.
The persistence due to inflation's dependence on its past trends is often called “intrinsic persistence”, while the persistence produced by the expectation of inflation is called “expectation-based”. See Altissimo, F., M. Ehrmann and F. Smets (2006), Inflation Persistence and Price-Setting Behaviour in the Euro Area, ECB Occasional Paper No 46. 10  Regarding the importance of a commitment to pursuing the primary goal of price stability and transparency in connection with the quantitative definition of price stability, see Orphanides, A. and J. C. Williams (2006), Inflation Targeting Under Imperfect Knowledge, Chilean Central Bank Working Paper No 398. 11  See Sahuc and Smets (op. cit.) as well as Christiano, Motto and Ristagno (op. cit.). BIS Review 135/2008  5  However, we should not overstate the differences in the conduct of monetary policy between the euro area and the United States. On the one hand, the US central bank, too, assigns primary importance to price stability, as has been stressed on more than one occasion by the Federal Reserve’s most recent chairmen. For instance, the current Federal Reserve chairman himself argued (and I quote): “ Experience shows that low and stable inflation and inflation expectations are also associated with greater short-term stability in output and employment, perhaps in part because they give the central bank greater latitude to counter transitory disturbances to the economy.

From the start of Economic and Monetary Union in 1999 to the present day the ECB has altered its official interest rate 25 times, including yesterday (see Figure 1). In that same time frame, the US monetary policy rate has been altered fully 45 times, almost twice as often. And we can see the difference also in terms of accumulated variations. For instance, the monetary tightening – or rather the abolition of accommodating monetary policy after the bursting of the dot.com bubble – which began in the United States in 2004 and in the euro area in 2005, was clearly different in intensity. The accumulated rise in the official rate through August 2007 was equal to 200 basis points in the euro area and to 425 basis points in the United States; from August 2007 to today the accumulated cut in reference rates was equal to 100 basis points in the euro area and to 425 basis points in the United States. How should we explain these differences in the degree of activism in monetary policy? We may consider three potential factors. The first concerns the macroeconomic shocks that have struck the two areas during this period. If the shocks have been different, then that may explain different monetary policy responses. The second criterion concerns the underlying economic structure in each area.
However, there are limits to what the Riksbank alone can do to prevent bubbles arising in the financial markets. Swedish authorities can only influence the markets’ risk premiums to a limited extent. The risk premiums on Swedish financial instruments are also largely determined by international factors. To avoid suffering deep crises in the future we therefore need more international cooperation, better supervision of the financial markets, better regulation and increased transparency in the financial system. 8  BIS Review 162/2009  BIS Review 162/2009  9  10  BIS Review 162/2009  BIS Review 162/2009  11  References Bean, Charles R. (2009), “The Great Moderation, the Great Panic and the Great Contraction”, Schumpeter Lecture, Annual Congress of the European Economic Association, Bank of England, August 2009, page 1 and page 16. BIS (2008), Bank for International Settlements, Annual Report 2008, page 138. Borio C., Lowe P. (2004), “Securing sustainable price stability: should credit come back from the wilderness?” Bank for International Settlements, Working Paper No 157, page 19. ECB (2009), Alessi, L, Detken C., “Real Time Early Warning Indicators for Costly Asset Price Boom/Bust Cycles, a Role for Global Liquidity”, European Central Bank Working Paper Series no 1039, March 2009, page 6. Giavazzi, F. and F. Mishkin (2006), “An evaluation of Swedish monetary policy between 1995 and 2005”, Reports from the Riksdag 2006/07:RFR 55 page 55, Committee on Finance. Greenspan, A. (2002), “Economic Volatility”, Federal Reserve Bank of Kansas City Jackson Hole Symposium 2002, page 4.

M R Chatu Mongol Sonakul: Thoughts and reflections on the development of the domestic bond market in Thailand  Speech by Mr M R Chatu Mongol Sonakul, Governor of the Bank of Thailand, at the ADB Conference on Government Bond Market and Financial Sector Development in Developing Asian Economies, held in Manila, 28-30 March 2000. *  *  *  Mr Chairman, distinguished Guests, Ladies and Gentlemen, I am honored for the opportunity to share with you some of my thoughts and reflections on the development of the domestic bond market in Thailand. The Asian economic crisis, which started in Thailand in 1997, posed the most severe challenges to policymakers - how to contain the crisis, how to ease the burden of the poor and how to ensure a sustained recovery. But the biggest challenge to us all must be how the crisis could have been avoided in the first place. If I can turn back the clock and have a wish, my list may be long. But high in its ranking would be a well functioning Thai baht bond market. Benefits of bond markets A bond market provides a basic infrastructure for the development of the financial system and the overall economy. The bond market is an important alternative to bank lending. During a crisis, banks themselves often come under liquidity pressure, from both domestic and foreign withdrawals. Not only do they cease to lend, they also recall loan from their best debtors.