samchain/econo-pairs-v1 huggingface dataset:
But even if we accept that little can be done to avoid economic cycles, this should not be an excuse for us, central bankers and supervisors. Our responsibility is to develop macro-prudential approaches and the appropriate regulatory measures to help banks reduce the impact of future economic cycles and diminish their procyclical behaviour. This should be achieved for the sake of financial stability with the minimum economic and social costs, which is the main objective of supervisory authorities In fact, banking behaviour can be not only cyclical but procyclical, that is, it can exacerbate the cyclical behaviour of the real economy. As it has been said many times, there is nothing more procyclical than a badly managed bank. In good times it incurs in more risks than it reasonably should through, for example, excessive lending with poor standards. In bad times it changes its lending policies reducing drastically the loans to the economy and exacerbating the downturn. There are several causes that explain this procyclical behaviour but I will focus on the one that affects us most and towards which all of our work should be devoted: banking regulation and supervision. Basel II was seen as a major step towards a better alignment between credit risk incurred by banks and regulatory minimum capital requirements. This link between risk and capital has forced supervisors to better understand the main drivers behind credit risk and the idiosyncrasy of banks’ credit models, their risk pricing and general portfolio management.

In this case, one of the many additional possibilities currently under discussion to reduce the potential undesirable effects of Basel II is to scale the capital requirements obtained through the IRB function by using a countercyclical multiplier. In order to make this multiplier countercyclical, it would be built as a function of a reliable economic activity variable (for instance GDP growth rate). As it happens with other alternatives, its main pros and cons should be carefully assessed. The multiplier is easy to obtain, transparent (as depends on a reliable macro variable), it has a low implementation cost and, finally, it would be of a uniform and wide applicability. Among its drawbacks we found that, first, it implies undertaking an external modification on the capital requirement figure and, second, that the multiplier is built using a domestic variable, which may make international comparison very difficult. No matter what the result of the previous debate is, either the use of counter-cyclical risk estimations or the use of a capital multiplier, we should explore the use of complementary measures to attain our final goal of financial stability and to minimise the social costs of procyclicality; for example, dynamic provisions. As most of you already know, this type of provision uses historical information on credit losses to estimate a general provision for homogenous loan portfolios. It reflects a collective assessment of credit losses at the balance sheet date (i.e. it covers incurred losses not yet identified in specific individual loans).
9 For maturing Treasury securities, the monthly cap is initially $ billion and will increase in steps of $ billion at  three-month intervals over twelve months until it reaches $ billion per month. For agency MBS and agency debt, the initial monthly cap is $ billion and will increase in steps of $ billion at three-month intervals over twelve months until it reaches $ billion per month. The Committee anticipates that the caps will remain in place once they reach their respective maximums. 10 See Transcript of Chair Yellen’s Press Conference, September 20, 2017. 11 The gradually rising caps allow market participants to incrementally absorb additional supply and its attendant  duration and prepayment risk. Leaving the caps in place over the course of the normalization process helps ensure a gradual pace of the portfolio’s runoff, particularly in light of the lumpiness in the Treasury maturity profile and the risk of an increase in pay-downs on agency MBS. I explore these issues in more detail in “Gradual and Predictable: Reducing the Size of the Federal Reserve’s Balance Sheet,” remarks presented at SUERF, the European Money and Finance Forum, New York City, October 11, 2017. 12 Federal Reserve Board staff estimate paths for the term premium effect associated with different balance sheet  scenarios in Brian Bonis, Jane Ihrig, and Min Wei, “Projected Evolution of the SOMA Portfolio and the 10-year Treasury Term Premium Effect,” Board of Governors of the Federal Reserve System FEDS Notes, September 22, 2017.

I think the gradual and predictable approach the FOMC has adopted has been successful so far, but we will learn more as we proceed and as other central banks reach those milestones as well. 1 My discussion here focuses on the Federal Reserve’s actions to adjust the stance and conduct of monetary  policy in pursuit of its statutory mandate of full employment and price stability. However, the Fed’s response to the crisis also included numerous temporary programs and facilities aimed at supporting the liquidity of financial institutions and fostering improved conditions in key financial markets. 2 The Fed’s outright purchases of securities did not raise any credit risk exposure. 3 The FOMC also undertook a program to extend the maturity profile of its Treasury holdings. This Maturity  Extension Program (MEP) did not affect the portfolio’s overall size, yet still increased the portfolio’s duration risk —an important characteristic of all asset purchase programs. A common metric for communicating about the dollar value of duration risk held in the portfolio is in terms of ten-year Treasury equivalents. 4 9 / 13  BIS central bankers' speeches  4 Even before asset purchases were launched, the reserve-adding effects of the Fed’s crisis-related lending  programs highlighted shortcomings of its pre-crisis monetary policy implementation framework.
However, in the intervening period, they have continued to play this role. This state of affairs is not without risks. Ultimately, monetary policy alone cannot remedy all economic ills, especially those of a structural nature. It is therefore important that all the powers involved play their part in solving the problems we face. Ladies and gentlemen, today’s topic focused on the challenges for Swiss monetary policy with regard to the euro. Anything that affects the EU or the euro also affects our country. Consequently, it is very much in our interest that solutions for the structural problems in the EU be found and that economic recovery continue. Having said this, Switzerland should not simply stand idly by and rely on Europe. As a small open economy, we must ‘do our homework’ and adapt to a changing landscape. It is important for companies to continue operating with a high degree of flexibility, and for economic policymakers in all fields – in this country, too – to ensure good business conditions. The SNB will continue to make the most of the latitude afforded by its monetary sovereignty to respond pragmatically to the challenges ahead.

In September 2020 we proposed in response two possible and complementary expectations on the level of modelled residential mortgage riskweights: (i) a risk-weight of at least 7% for individual mortgages; and (ii) an exposure-weighted average of at least 10% for the whole portfolio.5 We’ve now received the responses to our consultation, including some very helpful and detailed data submissions. As we speak, the PRA team is forensically considering all this information to assess the likely impact of our proposals against our original assessment – including whether both floors are needed, the exact calibration, and the timing of any implementation. Four points stand out so far. First, there is a strong prudential case for some minimum expectations on model risk-weights. Given the capital held on modelled mortgages that stems from risk-weights has decreased by more than a third in the last decade, you should not be surprised to hear me say this. Second, in addition to the prudential benefits, such floors should in my view benefit competition between larger firms on modelled and smaller firms on nonmodelled approaches, an issue our competition team has been alert to for some time. Third, however, it is not yet clear whether both floors are needed, or what exactly the right calibration is, as it is not the intention of the policy to significantly increase capital across all mortgage providers; the new data we’ve received will help us expand our assessment on this point.
Following the deepening of the global financial crisis, we focused on policies to contain the adverse effects of the crisis on economic activity and financial stability, while also overseeing price stability. Accordingly, our Bank slashed policy rates and kept them at low levels for quite some time in addition to deploying supportive liquidity measures. 38. In view of the normalization in money and credit markets amid waning effects of the global crisis on financial markets, we announced our exit strategy on April 14, 2010, which encompasses the withdrawal of crisis measures and the normalization process of the monetary policy. Unlike other emerging economies, Turkey entered the global crisis with a strong and well-regulated banking system as well as a flexible and efficient liquidity management tailored to previous crisis experience. Hence, our balance sheet deteriorated only slightly due to anti-crisis measures and we were not forced to adopt radical measures during the crisis. Thus, our exit strategy was simple compared to those of many other central banks. 39. As part of the exit strategy and also considering the favorable developments in credit markets and the recovery in economic activity, the CBRT started to withdraw the temporary liquidity measures introduced during the crisis. Hence, the excess liquidity provided to the market was gradually drained in tandem with the normalization process. Moreover, as the first step of the technical rate adjustment process, the 1-week repo rate was adopted as the key policy rate in May. 40.

However, what should be highlighted is that despite the volatile course of risk sentiment across emerging economies, Turkey’s risk premium indicators performed better than many other countries and remained below pre-crisis levels. This positive development is attributable to country-specific favorable conditions such as upgrades by credit rating agencies, reduced political uncertainty in the aftermath of the referendum period and the revised Medium Term Program (MTP) signaling further fiscal discipline. BIS central bankers’ speeches  5  19. On the other hand, risk premiums have recently increased due to current unrest in the Middle East. Fear of spillover to peripheral countries and the expectations of persistence in oil price hikes deteriorated the risk sentiment. Accordingly, Turkey’s risk premium has also increased. Esteemed Guests, 20. In 2010, fiscal and monetary policies had growingly expansionary effects on domestic demand. Although the weak recovery in advanced economies continued to curb domestic economic activity, Gross Domestic Product (GDP) registered an 8.9 percent increase amid the rapid recovery in domestic demand. Indeed, the main drivers of the GDP growth in this period were private demand for investment and consumption. 6  BIS central bankers’ speeches  21. The impact of the global financial crisis on the labor market has subsided and nonfarm employment has started to recover rapidly starting from the first quarter of 2009. In 2010, the rise in non-farm employment compensated the crisis driven job losses, and employment in all sectors surpassed the pre-crisis levels. 22.
6 The outflows of deposits and central bank money generated by account holders’ payment transactions are – just like the inflows – spread over time and normally represent only a fraction of total deposits. Accordingly, it is neither necessary nor legally required that a bank hold one franc in central bank money for each franc it holds in customer deposits. A part of the inflows of central bank money can be used for the granting of loans. This is what is known as a fractional reserve system, as only a fraction of customer deposits have to be covered by central bank money. The Swiss sovereign money initiative, which I will speak about later, aims to abolish this fractional reserve system. What limits the banking system’s credit and money creation? As we have seen, the banking system can increase the volume of customer deposits by granting loans. This certainly does not mean that banks are free to create unlimited amounts of credit and money, however. The reasons are to be found in the banks’ risk/return calculations and the SNB’s monetary policy. 6  There are a number of other transactions that change the volume of customer deposits at banks. When a bank purchases securities from a customer, the customer’s deposits at this bank increase. Customer deposits also rise whenever the SNB acquires foreign exchange or Swiss franc denominated securities from a non-bank seller.

The deposits created by the banking system belongs to the banks’ customers. It is the customers who can use it to procure goods or services, or to meet financial obligations, not the banks. 8 What also needs to be pointed out is that the impetus for credit and money creation comes not from the banks, but from their customers. A bank sets the conditions and must be able to transact the payments that its customers want to make with their deposits. But it is the customers who decide whether or not they want to take up the bank’s offer. The idea of ‘creating money out of thin air’ is more applicable to central banks. Since the demise of the gold standard, central bank money can no longer be exchanged for gold. This means that central banks really are in a position to simply ‘print money’, as the expression goes, which enables them to meet their obligations in their own currency anywhere and at any time. But even central banks face certain restrictions. Their tasks are defined by law, which in most countries requires them to ensure price stability. The instruments that allow them to create money thus serve the sole purpose of fulfilling a central bank’s legal mandate. Calls for broader access to central bank money In the second part of my speech I would like to address two proposals calling for broader access to central bank money. The first calls for the introduction of so-called ‘sovereign money’.
These strains have increased drastically in 2022 with the invasion of Ukraine by Russia and have spread to food. 7  Third, the recovery of supply has also been delayed by the emergence of bottlenecks. The speed with which demand has recovered, and higher goods consumption as a result of the pandemic, have put excessive strains on global production chains, which were still affected in 2021 by the pandemic restrictions. This has led to input supply problems in industries such as semi-conductors, plastics, wood and industrial metals, which have been compounded by serious disruptions in goods transport. In any event, despite the importance of global factors, the impact of the current inflationary episode on the main world economies has been uneven. The variation in the extent of the rise in inflation reflects various idiosyncratic factors that differ in nature, such as the differing speed of the recovery in demand in each region. It also reflects other factors related to the composition of the consumption basket, productive specialisation, positioning in global and regional production chains, labour market slack, the anchoring of expectations and exchange rate fluctuations. Indeed, demand has been particularly vigorous in the United States, which has resulted in more intense and earlier underlying inflationary pressures there. At the end of 2021 private consumption stood more than 4% above its end-2019 level, with a very significant contribution to this rise coming from consumer durables. In the euro area, meanwhile, it stood around 3% lower.

The headway made in the vaccination process allowed for a gradual easing of social distancing measures and for a recovery in demand, underpinned by the powerful economic policy response. However, the recovery was partially hampered by three factors. The first of these factors was the various waves of the pandemic, although the ensuing disruptions to economic activity became progressively less severe. Conversely, the other two – namely the sharp rises in the prices of certain goods and the global supply chain disruptions (bottlenecks) – have gradually become increasingly important constraining factors. These have proven more persistent and severe than expected and have become even more acute following the outbreak of war in Ukraine and the measures adopted in China to counter the latest outbreak of the pandemic. Although these three factors are global in nature, their impact has been very asymmetrical across countries, given the differences in productive systems, access to vaccines, economic policy response and degree of energy dependence. As a result, the recovery was particularly strong in the United States, where activity in 2021 H1 already exceeded its pre-pandemic levels. This higher buoyancy also led to inflationary pressures emerging sooner and more forcefully. By contrast, the euro area did not return to its pre-pandemic level of activity until late 2021. In 2022 Q1, GDP in the United States and the euro area stood 2.8 and 0.5 percentage points (pp), respectively, above their 2019 Q4 levels.
Eddie Yue: Developing local-currency bond markets in Asia Statement by Mr Eddie Yue, Deputy Chief Executive of the Hong Kong Monetary Authority and Head of the Delegation of Hong Kong, at the 45th Asian Development Bank Annual Meeting, Manila, 4 May 2012. *  *  *  I would like to thank the Government of the Philippines for hosting the 45th Annual Meeting of the Asian Development Bank (ADB). I would also like to congratulate ADB on the successful conclusion of the Tenth Replenishment of the Asian Development Fund (ADF XI), which would provide critical resources to ADB to further its work in poverty reduction in Asia. The global economy has shown signs of improvement in 2012 following a marked slowdown amid the intensification of the euro zone debt crisis in the latter part of last year. Nevertheless, significant downside risks remain, with the euro zone debt crisis yet to be fully resolved and rising oil prices adding further uncertainty to the recovery outlook. Asia has remained resilient so far, in large part attributable to the reforms taken by regional economies over the years to strengthen economic fundamentals, improve fiscal discipline and enhance the resilience of their financial systems since the Asia financial crisis. Nevertheless, the region is not immune from the lingering fragility in the global environment. To date, the deleveraging by European banks has not caused significant short-term credit tightening in Asia, with banks in the region and elsewhere having stepped in to fill the gap left by European banks.

Under the Initiative, a Credit Guarantee and Investment Facility has been set up as a Trust Fund of ADB to provide credit guarantee to allow investment-rated issuers to issue local currency bonds in ASEAN+3 markets. Another good example is the Asian Bond Fund project of the Executives’ Meeting of East Asia-Pacific Central Banks (EMEAP). The launch of the ABF funds introduced to the region’s bond markets a new low-cost and efficient product in the form of passively-managed index bond funds and helped catalyse infrastructure, tax and regulatory reforms at both the regional and domestic levels. The Hong Kong Monetary Authority took an active part in the design and implementation of the project. These efforts, along with the rapid economic growth and improved investment climate, have contributed to considerable growth in the local currency bond markets. According to ADB, the  BIS central bankers’ speeches  1  amount of local currency bonds outstanding in emerging East Asia increased by more than ten folds from $ billion prior to the Asian financial crisis in 1996 to $ billion in 2011. We have also seen the interesting development of offshore bond markets. In Hong Kong, the RMB bond market has grown substantially since the first issuance in 2007, with total issuance increased to over RMB 100 billion in 2011 from RMB 10 billion in 2007. The range of issuers has also diversified, from predominantly the sovereign and banks in China to multinational companies and international financial institutions.
Much like a “rising tide that lifts all boats”, the actions and choices that we make within the financial system do not just affect the provision of financial services, but have important implications for the well being of society and our economic prospects as a nation. We owe this not only to ourselves and others at this point in time, but especially to our future generations. With that in mind, this event provides a valuable opportunity for us to reflect on a broad range of issues that can help us move forward with greater confidence. Let me leave you with three questions to ponder as you do so: First, what are the barriers preventing the industry from working together more closely to unlock the true potential of finance? Second, have firms in the industry achieved the right balance in their adoption of technology in finance and capacity to manage the attendant risks? Third, how can we scale financial innovation to create greater value for society, including 4/5  BIS central bankers' speeches  advancing inclusive and responsible finance as well as the sustainability agenda? On that note, it gives me great pleasure to formally launch MyFintech Week and the Financial Industry Conference. I wish all of you an informative and productive week ahead. 5/5  BIS central bankers' speeches

And such a system is not sustainable for future bad times. I believe this is a concern shared by policy-makers not only in our country, but also in other EU countries (such as here in Poland) and I hope that the coalition of like-minded states has the potential to grow over time. So let me repeat: until we have a full-fledged EU federation we should not build a half-baked one in the area of EU banking. And I strongly advise paying attention to the rules being prepared by the European Commission (for instance the Crisis and Resolution Mechanisms), which have the potential to be out of line with this proposed approach. 2  BIS central bankers’ speeches