samchain/econo-pairs-v1 huggingface dataset:
All in all, it can be said that the financial crisis is now behind us and that the situation is in the process of normalisation. This also requires a normalisation of monetary policy in the form of rising repo rates in the years ahead. In this context, allow me to clarify an important issue linked with the forecast for Sweden’s economy. As I have mentioned, our assessment is that growth in the Swedish economy – following its very bumpy journey during the financial crisis – will gradually decrease (see Slide 2). Whether the forecast for Sweden’s GDP growth “levels off” at 2, 2.5 or 3 per cent will be determined by the workings of the economy, by the development of output and more. Monetary policy cannot influence long-term growth rates or the long-term level of unemployment. The inflation target and monetary policy are thus, in themselves, no guarantee of high growth, but they create the right conditions for consumption and investment decisions and reduce uncertainty over future price changes. And this is a strong foundation. BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13

The turbulence was initially transmitted to other international financial markets through sharp corrections in the credit quality of certain complex structured financial products which, at least apparently, were relatively concentrated in the financial systems of a number of developed economies. The Spanish economy is not one of them. Although I will pass quickly over this point, which I addressed in depth in my recent appearances before Congress and the Senate, I do wish to remind you of the safety buffer afforded by the Spanish financial system’s non-exposure to practices and products of this type and by the soundness of our credit institutions in terms of profitability, solvency and ample provisions. In the economies most directly affected, credit institutions active in originating and distributing these complex structured products have prompted tensions in the interbank markets in which the liquidity provided by central banks to the financial system is redistributed. The rapid response of the central banks, led by the US Federal Reserve and the European Central Bank, prevented these tensions from acting as a channel through which the instability was further amplified. We must acknowledge, however, that there are still uncertainties hindering the normalisation of these markets and that dissipating them will require an additional effort by institutions to increase the transparency of their operations. The euro area stands ready to face these shocks from a solid position and, therefore, with significant resilience.
As we noted in the presentations we made before this Commission and the Senate in full last December, the world economy is undergoing a process of recovery in two speeds, generating significant foreign exchange tensions. In early January the Board announced a program of foreign-currency purchases to alleviate these tensions and increase Chile’s international reserves to match those of other emerging economies. Such program involves the purchase of 12 billion US dollars over a period that ends in December this year. Three months into the process, the Bank has bought a little over 3 billion dollars. The peso/dollar parity is now around 3 percent above the level that prevailed before the purchase announcement, fluctuating in the range of 465 to 500 pesos per dollar. The overall trends that have determined an appreciation of the currencies of most emerging economies – including the Chilean peso – are still present. We believe that without the intervention the peso would have appreciated even more. The resolution of growth imbalances around the world will probably take some time, but sooner or later the differences between emerging and developed economies will narrow, mitigating pressures on our currency. Beyond these fluctuations, the gains in competitiveness that our country needs in order to remain on the path to development will be achieved not with actions that artificially increase the level of the nominal exchange rate, but rather with structural reforms that will improve productivity and, therefore, the competitive stance of our exports.

This study, which we expect to be completed by the end of 2017, will include various original aspects to address the special characteristics of the Spanish case. First, educational skills are decentralised. Given the nature of financial competence, which varies significantly according to the level of education of the individual concerned, the project will use representative samples of the different levels in the various regions. Second, the financial knowledge of each individual may not reflect that of the persons who actually take household decisions. For example, in Spain, important financial decisions regarding house purchase and mortgage borrowing are taken at different ages than they are in other European countries, as a high proportion of young people live with their parents. As a result, information is sometimes needed on the financial competence of those members of the household who take saving and borrowing decisions affecting the whole household. 4/5  Apart from its financial knowledge, we have little evidence regarding the general economic knowledge of the Spanish population. Given this situation, questions have been included in the financial competence survey that aim to measure, inter-alia, knowledge of certain key concepts, such as inflation and money. In 2018 we will have the results of the survey, which will enable us to analyse on a sound basis the financial knowledge of the adult population in Spain and to identify those areas on which the Financial Education Plan needs to focus. Future activities will be based on this information.
If China’s economy has a hard landing, there really aren’t many sources of strength left in the global economy. Let me move now to what this all means for Fed policy. As I noted earlier, our statutory mandate is to achieve maximum employment and price stability.5 We are far short of maximum employment. And I expect inflation to fall this year below the 2 percent level that we view as consistent with our mandate. This is clearly a situation in which we have to keep applying monetary policy stimulus vigorously. The Fed’s monetary policy body is called the Federal Open Market Committee, or FOMC. As you know, the Fed influences the economy through its ability to affect interest rates. In December 2008, when the recession was hitting with full force, the FOMC lowered the federal funds rate, the rate banks pay to borrow from each other on overnight loans, close to zero. It’s been there ever since. Given the weakness in the economy, standard monetary policy guidelines indicate that the federal funds rate should have gone deep into negative territory. But, of course, it’s not possible for interest rates to go much below zero. So the Fed has had to look for alternative ways to stimulate the economy. For example, we’ve purchased over one-and-three-quarters trillion dollars of longer-term securities issued by the U.S. government and mortgage agencies. This raises the prices on these securities, which lowers their yields. And lower yields on longer-term Treasury securities tend to push down other longer-term interest rates.

The policy actions the Fed takes will depend on how economic conditions develop. If circumstances change, our policies will adapt. No matter the circumstances, I assure you that we at the Fed are doing everything we can to achieve the goals of maximum employment and stable prices. Thank you very much. References Board of Governors of the Federal Reserve System. 2011. “Minutes of the Federal Open Market Committee”, June 21–22. Board of Governors of the Federal Reserve System. 2012. “Press Release”, January 25. Federal Reserve Bank of New York. 2010. “Quarterly Report on Household Debt and Credit”, August. Feroli, Michael E., Ethan S. Harris, Amir Sufi, and Kenneth D. West. 2012. “Housing, Monetary Policy, and the Recovery”. Presentation to the 2012 U.S. Monetary Policy Forum, New York, February 24. Jordà, Òscar , Moritz Schularick, and Alan M. Taylor. 2011. “When Credit Bites Back: Leverage, Business Cycles, and Crises”. NBER Working Paper 17621. Mian, Atif, Kamalesh Rao, and Amir Sufi. 2011. “Household Balance Sheets, Consumption, and the Economic Slump”. Presentation at American Economics Association meetings, Atlanta, GA, January 8, 2012. Reinhart, Carmen M., and Kenneth S. Rogoff. 2009. This Time Is Different: Eight Centuries of Financial Folly. Princeton, NJ: Princeton University Press. 7  For more information, see Board of Governors (2012). BIS central bankers’ speeches  5  Williams, John C. 2012. “The Federal Reserve’s Mandate and Best Practice Monetary Policy”. Presentation to the Marian Miner Cook Athenaeum, Claremont McKenna College, February 13. 6  BIS central bankers’ speeches
With that being said, please let me start with supervision superstructure and the relevant changes in the post-crisis financial landscape, on the first place. Since the beginning of the global financial crisis, there have been significant changes in the financial landscape. These changes have been driven by a combination of: 1)  pre-crisis excesses;  2)  restructuring measures;  3)  international financial regulatory reforms;  Pre-crisis excesses were due to: •  increasing financial integration and innovation;  •  misalignments between incentives for risk-taking and risk-provision;  •  weaknesses in monitoring and supervision (especially lack of monitoring and assessment of systemic risk development, as well as cross-border interaction issues);  Such pre-crisis excesses led to risks coming from: •  higher (and often, hidden) concentration of exposures and interconnection, especially on a cross-border level;  •  over-indebtedness (both in private and public sectors);  •  unrealistic increase in both, financial and real asset prices;  Hence, restructuring measures were necessary to address inherent risks in the financial institutions, which were coming from:  BIS central bankers’ speeches  1  •  high leverage;  •  falling asset quality;  •  funding constraints;  •  insufficient capitalization;  •  fragmentation and conflicts of interest in supervision;  Such measures were associated with public intervention in the financial system (mostly banks), increasing further the linkage between “banks and sovereigns” and creating more “moral hazard”.

Some old habits in explaining FX rates no longer make much sense. For example, the concept of fundamental factors that determine the current account, whose balance is then equilibrated by capital flows. This vantage point usually rests on the implicit assumption that trade flows are the "real" and causative side of the coin, while capital flows are a flexible gap filler, a sort of second round financial mechanism set off to match any given trade imbalance. In a world of integrated capital markets one may also have good reason to argue the other way round. Why are long-term capital flows, driven by perceived rates of capital productivity, less "real and fundamental" than trade flows? Would it not also be possible to argue - based on recent experience - that capital flows to the United States were, for a long time, the fundamental causative change which effected - as a consequence - the deterioration in the current account? Be that as it may, traders, investors and central bankers would be well advised to accept the fact, and be prepared for it, that in the short- and medium-term surprises are always possible in the Forex markets. This was so in the past and will continue to be so in the future. Smallness and connectedness: some facts Let me now talk about the SFR, about its main features as a currency which is traded and held in international portfolios.
BIS recommendations  • In the work on retail payments, central banks should focus on four important areas: - Ensure that the legal and regulatory framework is not an obstacle to innovation and development  - Monitor market structure, market developments and the market performance, and ensure that conditions are conducive to competition - Monitor the development of safety and operational standards and evaluate the effect of such standards on competition in the market - Provide settlement services in a way that contributes to efficient and safe solutions in the rest of payment system  The report considers how central banks should work in order to achieve the goal of efficient retail payment systems and it identifies four areas in which central banks can become involved. •  Ensure that the legal and regulatory framework is no obstacle to innovation and development. •  Monitor the market structure, market developments and market performance and ensure that conditions are conducive to competition. •  Monitor the development of safety and operational standards and evaluate the impact of these standards on competition. •  Provide settlement services in a way that contributes to efficient and safe solutions in the rest of the payment system. We will place emphasis on these recommendations in our future work on retail payment systems. The ECB has recently reviewed a proposal that key retail payment systems should also comply with six of the core principles for systemically important payment systems established by the BIS/CPSS.

In gross settlement in Norges Bank, banks have coordinated their transaction exchange and there is a built-in anti-gridlock function which becomes operative if a transaction lacks cover. So far, queues have not been a problem in NBO. Settlement risk is therefore not considered a threat to financial stability. The fourth type of risk is operational risk. Operational risk arises as a result of failure or downtime in computer systems or communication lines between systems or inadequate routines. After one of the major operators experienced a system breakdown that lasted several days in the summer of 2001, all the key operators in the settlement system have initiated measures to increase operational reliability and to have better back-up solutions in the event of any disturbances at the ordinary operations site. The problems during the summer of 2001 had no impact on financial stability, but reduced the efficiency of the Norwegian payment system until the operators had restored normal operations. The operational reliability of Norges Bank’s Settlement System has been very high the last year. In the period from 8 October 2001 to 5 June 2002, Norges Bank has not been responsible for any settlement errors, i.e. 239 days without errors. On 5 June 2002, an error that was classified as a small error by BBS gave us one error point. Since 5 June, operations have run smoothly, i.e. 162 days without errors.
2  BIS central bankers’ speeches  This mechanism, as the first piece of the banking union project, is essential for contributing to doing away fully with the financial fragmentation that threatened the continuity of the euro and to deactivating the vicious feedback loop between banking and sovereign risk, which caused so much harm to economies such as Spain in terms of greater funding costs, difficulty of access to credit and, in sum, lower employment and growth. The single supervisory mechanism As you are aware, the start-up of the single supervisory mechanism, the first pillar of the banking union, is at a very advanced stage following the entry into force, just a few days back, of the Community Regulation creating it. Currently, intense preparatory work is under way, and I can assure you this poses a significant organisational challenge. A key element is to establish an appropriate governance structure combining the leadership of the ECB in the supervisory function with the involvement of the national authorities, all the while ensuring that the assumption of prudential functions by the ECB does not clash with its monetary policy responsibilities. Supervisory powers will mainly be channelled through the Supervisory Board, whose chairperson and vice-chairperson, along with the representatives of the national authorities, have already been appointed. The Board will convene for the first time this very week.

It is thus not unusual that the studies available should question the fact that banks with the same risk profile are actually subject in practice to comparable capital requirements when they operate in different jurisdictions. The dissatisfaction arising from the difficulties in achieving an appropriate estimation of asset risk weightings should not lead to conventional solvency ratios being discarded or to their BIS central bankers’ speeches  1  role as essential indicators of the financial strength of banks being questioned. Nor is it easy to justify renouncing the use of the specific information at hand at banks – through the advanced approach – to improve the measurement of the risk of exposures. Indeed, I believe any effective regulatory reform should continue to aspire to have capital requirements discriminate between different types of exposures on the basis of their risk and to avoid excessively simplistic approaches that prevent capital requirements being adapted to each bank’s business model. What’s more, the calculation of the solvency ratios and, in particular, the use of advanced models should be subject to more demanding tests. In this respect, various options – which are not mutually exclusive – have emerged in the ongoing debate to refine the calculation of regulatory capital, and these merit in-depth study. The first approach involves developing more accurate guidelines for the design and parameterisation of acceptable models.
Zeti Akhtar Aziz: Three trends and their post-crisis implications Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Inaugural Official Monetary and Financial Institutions Forum (OMFIF) Global Lecture, Frankfurt, 1 March 2010. *  *  *  It is my great pleasure to be here in Frankfurt to participate in this inaugural OMFIF meeting, and to speak at this evening’s inaugural lecture at the Goethe University. These are significant times for policymakers and the financial industry. As we come out of the worst international financial crisis in decades, there still remain some unresolved issues that need to be addressed. The recovery has prompted focus on exit strategies and on the search for more permanent solutions that will put the financial system on a more solid foundation. These issues are however being considered during a period of exceptional conditions. Of concern, is that this might significantly influence the direction of the reform agenda with its medium and long term implications which could be counter to solutions that would lead us to a path of stability and sustainable growth. My remarks this evening will focus on three trends that are gaining significance in the global economy and the international financial system and their implications as we progress forward in this post crisis era.

a)  Minimum thresholds of common equity tier 1 (CET1) capital were set, as defined under the Basel III Accord, that have to be exceeded both in the comprehensive assessment, and in the baseline scenario of the stress test (8%); and another minimum threshold that has to be exceeded in the adverse scenario of the stress test (5.5%). b)  The banks falling short have to submit, within two weeks, a recapitalisation plan to be implemented within six months (if the capital shortfall arises from the asset  2  BIS central bankers’ speeches  review or from the baseline scenario in the stress test) or nine months (if the capital shortfall arises from the adverse scenario). 6. Results at the European level  The results just disclosed show that, according to the methodology used, in the banking systems as a whole that are to be supervised by the Single Supervisory Mechanism – the ECB and the National Supervisory Authorities – 25 banks have a capital shortfall, assessed against the three thresholds set (in the AQR and in the baseline and adverse scenarios of the stress test). Of these 25 banks, 12 have already increased capital in 2014 to make good the shortfall, meaning there are only 13 banks that have to submit their plans to redress capital inadequacy. In total, the shortfall of these 25 banks amounted to € billion, but bearing in mind the capital increases already made, the shortfall currently stands at only € billion. 7.
As the financial system froze up and demand contracted, central banks around the world had to respond. They did so by slashing interest rates and later launching massive bond buying programmes (QE). Along with large-scale government support to the banking system, these actions helped to shore up the global economy, avoiding a rerun of the Great Depression. And while central bank actions were taken for monetary policy reasons, they supported financial stability. Initially expected to be temporary, low interest rates stayed with us. Between March 2009 and December 2021 Bank Rate averaged less than 0.5%, a tenth of the 1998-2008 average, and the  Page 6  10 year government bond yield fell from 3.7% in 2011 to 0.1% in July 2020. Low interest rates did not just happen in the UK – interest rates across much of the developed world were very low over this period. And while policy rates moved sharply in response to the GFC, long-term trends – a fall in what is known as ‘equilibrium interest rates’ driven by structural factors such as ageing populations and low productivity growth[19] – helped to keep rates low for a long period. While low short-term interest rates were necessary to support the economy and meet monetary objectives, they also created conditions that could affect financial stability. This is where the FPC comes in. Having learned lessons from the GFC, we knew that price stability wasn’t a sufficient condition for financial stability.

Something worked: the IMF, G20 and WTO The IMF is an organisation for international cooperation based on a system of mutual assistance among member countries. The IMF provides loans to countries experiencing balance of payments problems. The loans are financed by member countries. If the problems stem from economic policy mismanagement, the loan will be subject to specific requirements such as measures to correct policy. When the crisis occurred, the IMF reacted swiftly to accommodate the increased need for IMF services. The IMF’s role as lender and interlocutor with the authorities in crisis-hit countries probably helped to limit the crisis. The IMF provided support and assistance to countries that were directly affected by the crisis and countries that were innocent bystanders. The sharp increase in IMF lending reduced the financial resources of the organization. Member countries have now increased their contributions to the IMF. During the financial crisis, the G20 has played a prominent role in the international coordination of economic policy. The group launched several important initiatives during the crisis, which were subsequently placed under the responsibility of the IMF. All countries stand to benefit from the establishment of international meeting places that the major economies consider to be of interest. However, unlike the IMF, the G20 is not a representative body for all countries. Even if the G20 account for a large share of global output, most countries are not included, such as low-income countries and regions like most of Africa, the Middle East and the Nordic countries.