samchain/econo-pairs-v1 huggingface dataset:
Progress in corporate governance, the enhancement of the legal and supervisory frameworks that support the banking sector, and an efficient fight against money laundering, are also crucial. They are conducive to achieving the macroeconomic objectives of the accession countries. •  Fourthly, central bank independence is of the essence. It is an integral part of the acquis communautaire, which is laid down not only in national legislation but above all in the Maastricht Treaty. The effective implementation of the acquis communautaire is a prerequisite for accession to the EU, as stressed in the recent Commission report on  4  BIS Review 60/2002  enlargement. But effective implementation is also needed because it implies the effective transformation of accession countries’ economic framework, which should facilitate their integration into the EU and, later, the euro area. In this context, it should be ensured that there is no discrepancy between the central banks’ formal status in the legislation and the implementation of that legislation. It is of utmost importance that all present and future Member States respect this economic and institutional ground rule of the European framework. •  Fifthly, let us not forget the present and future contribution of Central and Eastern European countries to the economic prosperity of Europe at large. It seems that this contribution might be sometimes underestimated, while the relative influence of the US economy, for instance, might be sometimes overestimated.

I would only like to mention, as an example of fruitful co-operation, that the Committee of European Securities Regulators (CESR), set up last year as a follow-up to the Lamfalussy report, recently embarked with the European System of Central Banks on considering standards to be applied to the European securities settlement and clearing systems. In the field of financial regulation and supervision, the Council of Economic and Finance ministers (ECOFIN) had mandated, last May, the Economic and Financial Committee (EFC) to make proposals concerning the structures for financial regulation supervision and stability at the European level. The framework currently under consideration has the objective of extending the arrangements that are already in place for securities regulation to the other financial sectors, based on existing interinstitutional agreements. Of course, the sectoral specificities are recognized, and especially those of the banking sector, through the appropriate participation of all national central banks in the arrangements concerning the banking supervision. Indeed, one of the statutory tasks of the Eurosystem is to contribute to the smooth conduct of prudential supervision policies and the stability of the financial system. I am therefore convinced that the involvement of central banks in this issue is absolutely crucial. Economic reform is an ongoing process in Europe, in view of the considerable efforts that still have to be made in order to promote sustainable growth and enduring job creation. At the same time, the European Union has to face another important challenge in the near future : the enlargement process. 2.
On the one hand, private salaried employment is increasing at annual rates above 1%, something not seen for several quarters, and shows some dynamism in important sectors, such as construction and trade. On the other hand, evidence has been emerging that suggests that the effective growth of employment would be somewhat greater, since the labor market has been able to absorb a significant influx of immigrant workers. This figure is not yet captured by the employment surveys, which are based on population projections that have not yet been updated according to the 2017 Census. This leads us to evaluate that the lag we observed between employment and activity is beginning to dissipate (Figure 2). At the same time that private salaried employment has increased, the unemployment rate has increased too, as exemplified by the figures from the National Statistics Institute (INE) employment survey for the May-July moving quarter. This is so because during the phase of low growth of 2015-2017 many people became self-employed, others worked fewer hours than desired and others simply quit the labor market because they could not find what they were looking for. In recent months, this process has been reversed, with the workforce growing around 2.5%, more than the 1.5% of the period 2015-2017. It is important that in the next few months the speed of job creation, especially salaried jobs, match and hopefully surpass the workforce’s growth. Every September, the CBC revises its potential growth estimates.

The latter in particular is defined as “being a reliable institution because of its technical nature and excellence in achieving the mandated objectives.” This expresses the need for the CBC to be prepared to respond to the opportunities and challenges that are presented to it at the macroeconomic and institutional level, in the understanding that in today’s world and society the citizens’ and markets’ confidence have to be earned day by day, beyond our past achievements. Based on these definitions, the plan identifies five areas of priority:  Maintain intellectual leadership in the areas related to the institutional mandates of the CBC;  Strengthen the understanding and dialogue of the organization with its environment;  Strengthen its corporate governance to balance out risk tolerance and the efficiency of its business processes;  Improve ability to understand and incorporate technological changes into its tasks; and  Consolidate the CBC as an employer of excellence, capable of attracting and engaging the best talent. Accordingly, twenty-one lines of action were defined that will be developed over this fiveyear period, all of them described in the document in your hands. Below I summarize those that may be of greatest interest for you honorable senators, with their corresponding progress status. Intellectual leadership. Since last January, we apply a new monetary policy communication scheme. To date, we have held six monetary policy meeting under this scheme, three of them accompanied by the respective publications of the Monetary Policy Report and subsequent presentation to the Senate.
What prevented the ensuing international dollar shortage from triggering a widespread failure of internationally active non-US banks to deliver on their foreign currency payments were major LOLR operations in foreign currency, using countries’ reserves and, more importantly, US dollar swap lines granted to central banks around the globe on a large scale. Strictly speaking, a currency swap between two central banks is a symmetric agreement. In most cases, however, it is the central bank providing the reserve currency in excess demand at the time that is the party putting real money on the table. When the swap is used to lend to banks in the receiving country, that country’s central bank bears the counterparty risk. But from a liquidity standpoint, the foreign central banks were intermediaries of the Federal Reserve’s global liquidity operations. And so the LOLR function at the national level was replicated at the global level.5 Does this mean that we have a solution to the problem of mitigating the extra risks in crossborder banking compared to national banking? Unfortunately not. First of all, there are big question marks over central bank swaps as permanent and widespread tools of crisis prevention and management, as I will come back to later in my speech. Second, the failures  3  This case is described in Ingo Fender and Patrick McGuire, “European banks’ U.S. dollar funding pressures”. BIS Quarterly Review (June 2010): 57–64. 4  Guðmundsson and Thorgeirsson describe the case of the Icelandic banks and draw lessons for cross-border banking: Már Guðmundsson and Thorsteinn Thorgeirsson.

It will be interesting to see how this story plays out in coming years. Thank you very much! 10  I have discussed the potential implications of the foreign currency surplus for the international monetary system in: “The implications of cross-border banking and foreign currency swap lines for the international monetary system”, in O. Blanchard, D. Romer, M. Spence and J. Stiglitz (eds), In the Wake of the Crisis, MIT Press, 2012. 11  See Flemming and Klagges (2010), op. cit. BIS central bankers’ speeches  5
Thus it became an official unit, called Head Office for the National Republic of Macedonia, supposed to perform part of the central banking activities. Therefore, we have decided this year to commemorate those 60 years dedicated to central banking, i.e. 60 years dedicated service to the state. From a historical viewpoint, it is not a long period. For us, however, it is fundamental, since it de facto means fulfillment of the centuries-long endeavors of our people to have their own state with all attributes - in this case also with accomplishment of full financial sovereignty. Why is the role of central banking important for an economy? Because it is responsible for maintaining the purchasing power of the currency aimed at the general stability of the economy, as the main prerequisite for its sustainable growth and development. Such responsibility is not always easy to fulfill, since the response to this challenge surely lies in the multitude of social and cultural factors, in the extent to which they support the idea that price stability is an indispensable, yet insufficient factor for achieving those objectives. It would have been nice had we found only successful stories in the history of central banking in the Republic of Macedonia. However, in the largest part of the past 60 years, facts are different. Both successes and failures are evident.

It is successful as we copy the institutional setup of the central banks of the developed countries, where the independence of central banking is recognized as one of the main preconditions for efficient conduct of the monetary policy and the exchange rate. Fortunately, political institutions in the country understood that, too, and therefore it is general assessment that today NBRM enjoys a significant level of independence, both formal and actual. However, it is most important that we are aware where and how much we lag behind the central banks of developed countries, how much we must work in order to reduce the gap and where we should arrive at. We should improve a number of contemporary analytical and research models and practices. We should expand our knowledge in the area of economic modeling and econometric techniques. As a matter of fact, in a month or two we start with regular training of the NBRM employees in this area, in a systematic and permanent manner. We are already preparing for outlining and implementing other monetary strategies, as it is imposed by the processes of globalization and integration of markets, the forthcoming very close full liberalization of the capital account, justifiably anticipated larger inflows of capital, which create new environment for our economy, together with the risks from instability and speculative pressures.
The gold reserve is a remnant of the days when banknotes and coins could be redeemed for gold at the Riksbank. This link no longer exists and gold is now regarded purely as a financial asset. The foreign currency reserve should primarily be used to allow the Riksbank to carry out its tasks with regard to monetary policy and financial stability. It consists of securities in foreign currency that are easy to sell and have a low risk. During the financial crisis the Riksbank has increased its lending to the banks to a great extent. As a result, the size of the Riksbank’s balance sheet has increased dramatically. Lending to the banks prior to the crisis was negligible, but during the crisis it has grown into the most prominent item on the assets side. The increased lending in turn results wholly in increased deposits in the Riksbank by the bank system as a whole, to which I will return later. This has meant that deposits from the banks have become the dominant item on the liabilities side. The Riksbank’s balance sheet increased in autumn 2008 within the space of three months from around SEK 200 billion to around SEK 700 billion (Figure 2).

22.06.18  “The financial education challenge” Closing session of the seminar “La economía ante el blockchain. Lo que está por venir”, UIMP – APIE (Santander) Javier Alonso Deputy Governor  Good afternoon. It is a pleasure to be here again in Santander and to have the opportunity to close this seminar, successfully organised year after year by the Menéndez Pelayo International University and the APIE (the Spanish Association of Economics Journalists). As always, I much appreciate their kind invitation to be a part of this traditional event on the calendar. Last year, the seminar turned on how the digital agenda affects the economy and industry. This year, it is structured around one technological development in particular, the blockchain. The interest in new technologies is thus clearly apparent. Undoubtedly, new technologies are one of the challenges facing the economy in general, and the banking industry in particular. I have repeatedly addressed this challenge in recent interventions, in which I highlighted the fact, moreover, that at the Banco España we have recently created an Associate Directorate General for Financial Innovation and Market Infrastructures, with the aim of building up our knowledge on the challenges the provision of financial services is going to face in this setting of technological developments, and on the consequences for the financial system in general, and for banks in particular.
Preconditions for Lender of Last Resort Support The basic precondition for lender of last resort support is the systemic risk that would, in the judgement of the HKMA, arise from the failure of a troubled institution if it were deprived of liquidity assistance. This is the basic precondition, but not the only precondition. The institution in question would also need to satisfy a number of further conditions designed to demonstrate that lender of last resort support is genuinely being sought as a last resort, and that such support would not amount to throwing good money after bad. To be specific, the additional preconditions are: •  First, the institution would need to have a sufficient margin of solvency. As a measure of sufficiency, we would generally require the institution to demonstrate that it maintains a capital adequacy ratio of at least 6% after making adjustment for any additional provisions that might be necessary. •  Secondly, the liquidity support extended to the institution would need to be adequately collateralised. •  Thirdly, the institution should have sought other reasonably available sources of funding before seeking lender of last resort assistance. •  Fourthly, the shareholder controllers of the institution should have made all reasonable efforts to provide liquidity or capital support as a demonstration of their own commitment to the institution. •  Fifthly, there must be no prima facie evidence that the management is not fit and proper, or that the liquidity problem is due to fraud.

The idea behind deposit protection is to set a level below which the assurance of value holds, and above which it does not. Practice, I would suggest, points to the difficulty of this principle. In seeking to solve too big to fail we have tackled this problem by requesting an additional slice of subordinated liabilities which can explicitly bear losses by being converted into equity in the event of a resolution. I'm not talking here about AT1 securities, but what comes further up the hierarchy – what in Europe we call 'Eligible Liabilities'. The point is that for large banks we have reinforced the assurance of deposits by requiring a bigger cushion of loss absorbing liabilities. But smaller banks find it harder to issue marketable long-term debt securities that can count as Eligible Liabilities. I think the answer here lies in the world of deposit insurance. 3/6  BIS - Central bankers' speeches  The US authorities have announced a review of their deposit insurance system. In the UK, the Bank is also considering improvements to our approach to depositor pay-outs for smaller banks which do not have Eligible Liabilities. Our work has thus far focused on the speed of pay-outs. Going further and considering increasing deposit protection limits could have cost implications for the banking sector as a whole. As with all things relating to bank resolution, there is no free lunch. Two issue areas to go.
When it comes to the payment market, I think the ambition should be for the Riksbank to promote harmonisation and competition on equal terms by offering attractive platforms for banks and others to make their final payments. This also increases security in that the liquidity risks in the system decline. One could of course imagine that the banks would have their own system to regulate payments with each other. But if a private player were to run such a system, all participating banks would have large claims on that player, just as they have on the Riksbank at present. And if such a private player were to go bankrupt, this money would be lost if a payment had not gone through. That risk does not exist when the central bank runs the settlement system. Moreover, there could be large volumes of payments so that costs become low, especially if a lot of countries collaborate, as is now the case on the ECB's TIPS platform 12. By ensuring that there is transactional efficiency in Swedish krona, we also reduce the risk of any other type of currency taking over parts of the economy. New payment methods emerging Changes in the payment market are not only about new companies coming in to compete for business. The way that households and companies make their payments is also changing. For instance, they more often make direct payments to other countries, as online trade is increasing. The central banks need to ensure that these flows are also stable and efficient.

Only a highly professional and independent institution can successfully deal with the hart times, which are not rare here. The latest example of this is the COVID-19 pandemic, which although a struggle for human health and life, is also a struggle for policymakers to maintain macroeconomic stability and reduce the impact on the economy. Therefore, I would like to express my gratitude to all current and former colleagues and collaborators, who with their contribution have contributed to what we are today – a modern central bank that operates in accordance with the latest and highest international standards and best international practices and stands out as a positive example in the central banking community. 1/2  BIS central bankers' speeches  Congratulations on the 29th anniversary of the monetary independence! 2/2  BIS central bankers' speeches
And third, and this would not only affect credit risk but might also have implications for the trading portfolio, there is a possibility that floors to the results of the internal models may be established, floors or minimum points that would be based on standardised approaches. Hence, the final result of a model could not stand below the threshold calculated using a certain percentage of the result that were to be obtained from applying the standardised approach. In our opinion, this review of the use of internal models pursues a reasonable objective, namely to reduce the unwarranted variability of risk-weighted assets that is manifest among banks from different jurisdictions, conditional – as I stated – upon this not giving rise to significant increases in capital requirements. We should further bear in mind that the greater regulatory requirements are not confined to prudential regulation. In this connection, allow me to refer to one of the key questions of the moment, namely the new requirement for own funds and eligible liabilities (MREL), which should allow for the bail-in of losses arising from bank crises, transferring the cost to private agents instead of the public coffers. The current European regulation approved in 2014, i.e. the Recovery and Resolution Directive, is very demanding. Generally, this regulation prevents the use of public funds if there has previously been no burden-sharing by shareholders and creditors for an amount, at least, of 8% of the total balance sheet.

In the opinion of the Banco de España, the standardised operational risk approach that the Basel Committee has submitted to public consultation should be improved in various respects The review of the standardised approach seeks to provide greater sensitivity to credit risk in the calculation of RWAs and, in turn, to prevent the approach from residing excessively and automatically on the ratings given by external rating agencies. The Basel Committee is striving to design a standardised approach that redresses these shortcomings, and is adjusting certain elements and deciding on their calibration. The position of the Banco de España, like that of other national supervisors, is that this review should not give rise to capital increases, or in any event increases that may prove significant for the banking sector. The use of internal models is also under review, with the internal credit and operational risk models pending finalisation this year. The aim is to reduce the excessive variability of RWAs, and in this connection work is under way in several directions, which may be summarised as follows. First, not all risks are deemed subject to modelling. Such is the case of operational risk. The current proposal is to cease to model this risk. Second, under credit risk, not all portfolios will be equally subject to modelling. Specifically, “low-default portfolios” would be a case in point, as would, for instance, that of banks, or certain segments of that of corporations.