samchain/econo-pairs-v1 huggingface dataset:
At 125 grams per capita, Switzerland has the largest gold reserves per head of population of any country – triple those of Germany and quintuple those of the US (left-hand side of slide 8). The SNB’s gold reserves have remained constant in recent years and it has no plans to sell its holdings. The value of our gold reserves has thus moved in line with the gold price in recent years (right-hand side of slide 8). However, given the substantial increase in the SNB’s foreign exchange reserves since 2009, the share of gold as a percentage of total currency reserves has indeed changed, recently falling to just below 8%. Now let us turn to the gold initiative, which goes to the vote in just a few days. The supporters of this initiative are demanding that the SNB hold at least 20% of its assets in gold and at the same time requiring a ban on ever selling gold again. Moreover, the initiative demands that the gold must be stored exclusively in Switzerland. In order to achieve the share of 20%, the SNB would have to almost triple its gold holdings within five years. In practice, given today’s balance sheet total and gold price, the SNB would have to purchase 4  BIS central bankers’ speeches  around CHF 70 billion worth of gold – around two-thirds of the world’s total annual gold production. The SNB considers the initiative to be unnecessary and harmful. Its legal mandate is to ensure price stability.

Foreign investors still enjoy only very limited access to the onshore Chinese bond market, however, as the renminbi is not freely convertible and capital flows are still subject to controls. Notwithstanding this, the Chinese government has been working towards a gradual opening-up of its domestic capital market for several years now. As part of this, China’s central bank, the People’s Bank of China (PBC), launched a so-called Interbank Market Programme in 2010, enabling central banks, sovereign wealth funds and insurance companies to request an investment quota for the onshore Chinese interbank bond market from the PBC. Provided they do not exceed this quota, these entities may invest freely in the (onshore) Chinese government bond market. More than 20 central banks – including those of France, Austria, Japan, Australia and Singapore – have now received a renminbi investment quota. In July this year, the SNB signed a renminbi investment quota agreement with the PBC. The SNB’s investment quota amounts to CNY 15 billion (in excess of CHF 2 billion). While this quota represents a very  4  Swiss National Bank. 2013. 106th Annual Report. 5  Measured against a standard market index. 6  IMF. 2014. Fiscal Monitor October 2014. Includes central and local government debt as well as governmentbacked debt. BIS central bankers’ speeches  3  small proportion of our foreign exchange reserves, it allows the SNB to gather some experience of this market. We intend to make use of this quota in the foreseeable future.
29  28  and is now being applied to several of the post-crisis  The Basel Committee has started a programme of evaluating the reforms to banking regulation. 30  The Bank is playing an active part in these exercises. An evaluation is a rigorous assessment of the effects a regulation is having on the financial system and wider economy. An evaluation should consider whether a regulation is achieving its aims and whether it is having any unintended effects. To do a proper evaluation a policy needs to be in force so one can observe the policy’s effects. As the post-crisis reforms are still being implemented, evaluation is going to be a multi-year project. One evaluation that is underway already relates to the G20’s reforms to over-the-counter (OTC) derivatives markets. This is examining whether or not the post-crisis reforms are supporting incentives to clear OTC derivatives via a central counterparty, a G20 aim. For instance, it is considering whether the leverage ratio requirement on banks is weakening incentives to provide clearing services. Bank staff have researched the effect the leverage ratio is having on client clearing (Acosta-Smith, Ferrara, Rodriguez-Tous (2018)). The results suggest that the leverage ratio may be deterring banks that are most affected by this regulation from clearing OTC derivatives trades on behalf of clients. Box 1 discusses this  28  http://www.fsb.org/wp-content/uploads/P030717-4.pdf. See the letter from the Financial Stability Board chair to G20 Finance Ministers and Central Bank Governors, 18 March 2018, http://www.fsb.org/wp-content/uploads/P180318.pdf.

1 ASEAN-4 (Malaysia, Indonesia, Philippines, Thailand)  4/4  BIS central bankers' speeches
The big banks’ published plans on strategy and capital-building envisage a further improvement in their capital situation. According to these plans, and measured in terms of loss-absorbing capital, by the end of 2014, Credit Suisse and UBS are likely to have already met the risk-weighted capital requirement of 13% which will apply from 2019. Moreover, these plans will lead to a substantial increase in their leverage ratios by the end of 2014. The SNB acknowledges the big banks’ progress to date and recommends that they consistently and fully implement their plans, in order to further strengthen their resilience and, in particular, to improve their leverage ratios. Improving the leverage ratio is all the more crucial given the growing importance of this indicator as a measure of banks’ resilience. Credibility of model-based risk-weighted assets The risk weighting of assets plays a key role in determining the capital requirement for a bank. All of the bank’s on and off-balance-sheet positions are multiplied by a risk weight. The riskier the position, the higher the weight. The figure for risk-weighted assets (RWA) represents the sum of these risk-weighted positions. Required capital, in turn, is defined as a percentage of RWA. There are two different approaches for setting risk weights. Under the standardised approach, risk weights are prescribed for broad asset classes. Under the model-based approach, by contrast, banks can use their own internal models to determine the risk weights for different assets.

Fadilj Bajrami: Continued cooperation with central banks of the Western Balkans Address by Mr Fadilj Bajrami, Vice Governor of the National Bank of the Republic of Macedonia, on the occasion of the first Programme Steering Committee Meeting of the ECB Regional Cooperation Programme with central banks in the Western Balkans, Tirana, 17 April 2014. *  *  *  Honorable Governor Fullani, Honorable Governor Hamza, Dear Mr. Sturm, Dear Mr. Rumbold, Representatives of central banks, Ladies and Gentlemen, It is my honor and pleasure to be here with you in Tirana on the occasion of the first meeting of the Steering Committee for the joint cooperation project between the European Central Bank and the national central banks of the Eurosystem, and the central banks of the Western Balkans. As my colleagues have already noted, most of the activities of the project will be devoted to identifying the needs of the central banks of Albania and Kosovo in the process of their joining the European System of Central Banks, by strengthening their capacities and compliance with the standards of the central banking in the EU. Last year, the National Bank of the Republic of Macedonia successfully implemented such a project in cooperation with the ECB and the Eurosystem. The project implementation has clearly identified the changes that the NBRM should focus on during its preparations for accession to the European System of Central Banks.
the Ministry of Finance) will not willingly accept that it has to pay for the costs of banking crisis resolution. Second, the management of the banks will try to change the banking problem resolution and not shoulder the costs of their actions. They have clear vested interests in the bank as it is (their high salaries, their influence through credit allocation, the wish to hide previous decisions, etc). Third, depositors (households and companies) will make every effort to minimize their losses and get someone else to bear the costs of the problem. Fourth, the owners of banks will try to put political pressure on the government to bail them out. Fifth, there is the personnel of the bank, because they know that either all or part of them will lose their jobs. Sixth, politicians will try to minimize the problem in the hope that it will not hurt their “image”. Every decision on the bank resolution problem is a redistribution problem. There are always welfare losses for some interest groups, so we should be aware that such decisions will create very strong lobbying, corruption, ruthless behaviour, a fight to preserve vested interests, etc. Needless to say, all such behavioral patterns mean using scarce resources to influence the outcome in a redistributive way, and not use them to produce new wealth. To overcome this problem policymakers must make sure that they have the “incentives right” and have a clear set of rules to diminish the scope of discretionary decision-making which always gives room for rent-seeking.

But let me be very clear about one thing – banks are not saved because they in themselves deserve to be saved. On the contrary, their managers and shareholders have usually played a decisive role in getting the bank into trouble in the first place. Some banks are saved because they are necessary for the real economy to operate. Actually, governments do not save banks, but rather the functions that banks provide to society. But you can never be entirely sure in advance how the financial system (and ultimately the real economy) will be affected by a bank failure. In other words, knowing which banks to save and which ones to let go is complicated. You need to weight the costs of unsettling the financial system in relation to the costs of saving the bank. This is not an easy task. But despite the substantial uncertainty, you can be sure of one thing – whether you let a large bank fail or rescue it, either way you will incur substantial costs and I am not only talking about financial costs but also about social dislocations! BIS Review 50/2010  5  However, deciding to save a bank does not imply being spendthrift. On the contrary, being economically savvy is my third – and perhaps most important – principle of crisis management. So how does that principle manifest itself in practical actions? Thankfully, history offers us a number of both good and bad examples from which several useful lessons can be drawn.
Moving the fed funds rate into the target range During normalization, the Fed intends to move the fed funds rate into the target range established by the FOMC primarily by adjusting the IOER rate. A key development in the conduct of monetary policy in recent years was the introduction of the Fed’s ability to pay interest on reserve balances held by depository institutions. In the environment of elevated reserve balances that resulted from the Fed’s asset purchases, the payment of IOER – currently at a rate of ¼ percent – has helped to keep the fed funds rate within its target range. 5 The IOER rate is the rate of return on a riskless overnight deposit held at the Fed. As such, it may be thought of as the opportunity cost of making an alternative investment, such as a loan or the purchase of a security. Accordingly, if all money market participants were eligible to earn interest on reserves, money market rates would likely be at least as high as the IOER rate; no institution would want to lend to a private entity at a lower rate. Even without universal access to IOER, in the absence of frictions, competition would be expected to lift money market rates up to the level of the IOER rate, since banks would make an arbitrage profit on any funds they borrow at a lower rate and deposit at the Fed.

Given the array of tools at our disposal, I am confident that the FOMC can adjust and control short-term interest rates as needed to foster its objectives of maximum employment and price stability. The configuration of rates during normalization The Committee’s normalization principles and plans do not detail the manner in which IOER as a primary tool would be combined with supplementary tools such as ON RRPs to move the fed funds rate into the target range. However, as reflected in the minutes to the July FOMC meeting, most Committee participants anticipate that, at least initially, the IOER rate could be set at the top of the target range for the funds rate, and the ON RRP rate could be set at the bottom of that range. This is also consistent with the views of many market participants as reflected in surveys conducted by the Desk. 12 I’d like to take a moment to explain why I believe such a regime would be a sensible way to implement policy during the first stages of normalization, when reserve balances will be in such ample supply. Most importantly, it’s a regime in which the Desk should achieve the target for the fed funds rate set by the FOMC. As IOER is raised, its magnetic force will pull the fed funds rate higher. At the same time, the high level of reserve balances in the system should lead the effective rate to print below the IOER rate, at least initially during normalization.
Every month I may have a fairly well developed view not just about this month’s interest rates, but about where interest rates are likely to need to go in the future, to achieve the inflation target. But that view may - indeed should - change in the light of new information, better research, another set of forecasts, perhaps a different view of the risks. In that sense every month is a fresh decision. What doesn’t change is what we are trying to achieve. This clarity about aims is what gives us the flexibility to learn, so important if we are to avoid major error. (ii)  Effective communication  Maintaining this clarity through effective communication is critical. The MPC aims to be as open and straightforward as possible. Sometimes this involves lengthy explanations of rather arcane issues. A recent example is the change in the inflation target. As you probably know, in January the Chancellor replaced the target of 2.5% as measured by the RPIX by a 2% target as measured by the new CPI. We have used speeches, Parliamentary appearances and short articles to set out as clearly as possible the nature of this worthwhile but essentially technical change, in order to underline one simple message: that the change in target in no way weakens the commitment to price stability, and indeed has no material implications for monetary policy.

Bank capital is inherently somewhat procyclical. In an economic downturn, banks will increase provisions and tighten loan standards. In some  BIS Review 83/2001  3  circumstances, this could reduce the supply of credit, intensifying the decline in activity. But the introduction of a regime in which regulatory capital is linked to ratings could amplify that effect to the extent that those ratings themselves deteriorate rapidly in a downturn. There are various ways round these problems of procyclicality, but they will need to be resolved before the new Accord can be finalised. I have talked a lot about the structure of public regulation. But it is also important to remember the powerful role that effective market discipline can play in maintaining financial stability. Both the new Accord, and a number of other, broader international initiatives, put substantial emphasis on improving the disclosure of information by financial firms. Disclosure of an appropriate kind should help the market distinguish clearly between well-managed and adequately capitalised banks on the one hand, and their less sound counterparts on the other. This should act as a spur to the weaker firms to improve their performance. Disclosure should also help to reduce uncertainties, which may mitigate the tendency of financial markets to lurch into periodic self-fulfilling crises. It is certainly arguable that greater, and earlier, disclosure of the exposures of Long-Term Capital Management, for example, could have avoided the problems seen in world financial markets following its collapse in the autumn of 1998.
As I noted earlier, we are open to hosting cross-border business in the UK – but only if it 5  https://www.bankofengland.co.uk/prudential-regulation/publication/2020/statement-regarding-supervisory-cooperation-on-operationalresilience 5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  is appropriately controlled and governed, and if we have sufficient visibility of and influence over the necessary supervisory outcomes. Firms must meet our Threshold Conditions, which make specific mention of us being able to effectively supervise the risks which arise from being part of a group (including any impact of a parent being subject to regulation overseas)— which is particularly relevant to international groups. Those firms who have been supervised by us for a long time should recognise the substance of what is set out in the consultation. And EEA branches, who have until recently passported into the UK, will recognise our supervisory expectations from their extensive engagement with us as part of the branch authorisation process. The substance of our expectations is stable and consistent; by making them transparent it will make it easier for firms to identify any gaps and plot their course to meeting those standards. In particular, I’d like to highlight three areas: o  Information sharing;  o  Governance; and  o  Booking models. Information sharing  The statement sets out the types of information we expect to receive from firms on their group operations.

All branches must have the Senior Manager Function called Head of Overseas Branch (called SMF19): a. For systemic wholesale branches, the person exercising the function is expected to be a senior figure within the branch, who is credible and influential at the group executive level. This person should be in a position to ensure that the PRA receives the information it needs (where this information can be provided by the firm). b. In addition to the Head of the Branch, wholesale branches should consider whether they need to assign senior manager functions to a Chief Risk Officer, Chief Finance Officer, and Chief Operating Officer. The PRA may also expect or require the firm to have these positions in respect of the branch. c.  Finally it may be appropriate for the branch, especially systemic wholesale branches, to have a group senior manager or executive assigned with a senior manager function (this one is called SMF7). Such a group executive could be responsible for directing key parts of the branch’s business or for firm-wide systems or operations upon which the branch relies (for example, in custody which is often run as a globally integrated activity). Booking arrangements for trading activity  We published some high-level principles on booking arrangements in SS 1/18. We have now expanded on these to provide more guidance on our expectations. Our overall approach remains stable and consistent. We are open to global booking models, recognising that they underpin global business models, provided they are managed responsibly.
Risks to financial stability will be minimised if the transition begins early and follows a predictable path, thereby helping the market anticipate the transition to a 2 degree world. To draw out these crucial points consider the Bank of England’s current approach to the insurance sector. As regulator of the world’s third largest insurance industry, the PRA is responsible for protecting policyholders and ensuring the safety and soundness of insurers. Our supervision is forward-looking and judgement-based. It is risk-based and proportionate – tailored to different business models around the sector – and considers both business-asusual and whether a firm can fail safely – recognising that “zero failure” is neither desirable nor realistic. Our supervisors take a view of your business plans, risk management, governance, and capital models. Where the PRA judges that it is necessary to intervene it does so sooner rather than later. While our mandate is to protect policyholders – many of whom are local – we are conscious that international competition needs robust and internationally-consistent regulatory standards. Solvency II is a good example. It is a prudent but proportionate Directive, that embodies the core principles of our domestic standards and embeds them more consistently across Europe while replacing a patchwork of local regimes. Another example of how best practice is converging globally is the FSB agreement last week on HLA for global systemic insurers, as well as its support for the IASB completing its new insurance contracts standard. The UK insurance industry is well-prepared for such developments.

For further details see: www.bankofengland.co.uk/about/Documents/smr.pdf 10 11  5  All speeches are available online at www.bankofengland.co.uk/speeches  5  Now consider the Bank’s response to Charlotte Hogg’s case:   She was formally warned in the strongest – and most public – of terms.   There were consequences for her compensation. While she couldn’t forfeit a bonus as Bank of England Governors cannot receive one, she waived her salary increase this year.   Court reassigned her COO responsibilities.   Court reconfigured reporting lines and internal structures in order to improve governance, compliance and disciplinary processes, including reassigning the SMR responsibility for implementing our Code.   And, on the basis of this one incident, the independent directors of Court have initiated a widespread review that will draw on the expertise of the Independent Evaluation Office, Internal Audit and the National Audit Office. Its results will be made public. In other words, consistent with our higher standards, the Bank planned a tougher response than we would expect in the private sector, but one that, in our judgement, was still proportionate to an honest mistake that was freely and transparently admitted. The Treasury Select Committee (TSC) reached its own judgement, which in turn triggered Charlotte Hogg’s decision to resign. 12  I fully respect both the TSC’s judgement and her decision.
In this sense, the use of IRB imposes a dramatic change in the supervisory approach. The judgemental capacity of supervisors will play an increasingly important role in examinations, which is why adequate training to carry out the validation of models and capital adequacy assessments will be of fundamental significance. Supervisors still have a lot of work to be done in order to implement Basel II. We understand that it is important to disclose, as soon as possible, an overview of our implementation plans to the industry while we internally make all the studies necessary to support the numerous decisions to be made. The next steps include, for example, the evaluation of simpler alternatives for smaller institutions (non-bank and small banking institutions, the definition and disclosure of aspects of national discretion, the definition of eligibility criteria for IRB, and, finally, the release of an “Advanced regulation notice” - open to public/industry comments, and a Country Quantitative Impact Study considering revised aspects of national discretion.

However, the revision will work only if necessary policy stance is adopted. For this reason, the second pillar of monetary policy comprises the implementation of a monetary tightening that is consistent with the new inflation targets. Newly set targets are references that would help decision makers in the economy understand the reasoning behind the policy stance, i.e. the factors that have led to monetary tightening and the extent of monetary tightening if and when necessary. In other words, the Central Bank has announced, via the target revision, the limits of its tolerance to the first round impacts of supply side shocks. While concluding my speech, I would like to extend my thanks to the Central Bank of Argentina, and all other institutions and individuals who contributed to the organization of this significant event. Thank you. 4  BIS Review 109/2008