samchain/econo-pairs-v1 huggingface dataset:
Parliament has enacted legislation to ensure there will be no doubt about the separation of retail activity in the major UK banking groups at the point of failure. The PRA now has the task of implementing that legislation to complete the work of making ring-fenced banks separable ex ante. Similar developments in the restructuring space are underway in other jurisdictions. The splitting off of domestic retail banks in Swiss G-SIBs and the requirement for large foreign banks in the United States to form Intermediary Holding Companies (IHCs) are examples. Another aspect being explored in resolution plans is the scope for orderly, solvent wind-down of trading books in investment banks in recovery or resolution. This goes to the general principle that it is important for us as resolution authorities to understand the options  7  6  Financial Stability Board (2015) ‘Guiding principles on the temporary funding needed to support the orderly resolution of a global systemically important bank (“G-SIB”)’. BIS central bankers’ speeches  we have to restructure critical functions if we need to in resolution. I can imagine that in time via planning in CMGs we will see more convergence in approaches in this area across jurisdictions. In conclusion, much has been done to achieve what is necessary to make G-SIB resolution work. TLAC is symptomatic of the distance travelled and represents a true game-changer.

But before turning to resolvability of firms let me say something first about the FSB Key Attributes (KAs) of Effective Resolution Regimes for Financial Institutions 2 and the process of resolution planning, both of which are driving the building out of the new resolution paradigm. The KAs, which were agreed by the FSB and endorsed by G20 Leaders at their summit in Cannes 2011, are the foundation on which all else has been built: a. The KAs set out our shared objective as authorities – to be able to manage the failure of a G-SIB without adverse impact on system stability, and without recourse to taxpayer funds. b. They list the minimum elements needed for a statutory resolution regime to be effective. As countries have implemented the KAs at national level, this has provided a convergent framework of resolution regimes internationally, smoothing the way for resolution to work consistently cross-border. c.  Finally, the KAs instituted a process of resolution planning for global systemically important banks (G-SIBs) in crisis management groups (CMGs). The power of this should not be underestimated. The status quo pre-crisis was built on the belief moral hazard was better managed through constructive ambiguity. It is fair to say that this did not work out so well. The new paradigm is for authorities to be clear ex ante as to how resolution will work and to ensure it can. Clear with the market, so shareholders and creditors are under no illusion as to the risks they are taking.
MONETARY POLICY REPORT PRESENTATION BEFORE THE FINANCE COMMISSION OF THE HONORABLE SENATE OF THE REPUBLIC  Mario Marcel Governor Central Bank of Chile 5 December 2018    The December 2018 Monetary Policy Report can be found at http://www.bcentral.cl. Introduction Mr President of the Senate’s Finance Commission, Senator Juan Pablo Letelier, senators members of this Commission, ladies, gentlemen, I am grateful for your invitation to present the vision of the Board of the Central Bank of Chile (BCCh) on the recent macroeconomic developments, prospects, and implications for monetary policy. This vision is contained in detail in our December 2018 Monetary Policy Report published this morning. Its contents provide the background for the decision adopted by the Board at yesterday’s Monetary Policy Meeting, and consider the October Imacec1 that was released today. At yesterday’s meeting, the Board decided unanimously to keep the Monetary Policy Rate (MPR) unchanged at 2.75 percent. At the same time, we reiterated that the evolution of macroeconomic conditions make it possible and necessary to gradually reduce the monetary stimulus. This decision is consistent with the analysis and baseline projection scenario I will be sharing with you now. This analysis begins noting that annual inflation has risen throughout the year. After being under 2% almost the entire second half of 2017, today annual inflation is around 3%.

Shortly after we joined the EU it was almost a shared view among the prevailing part of the elite in our country that the sooner we join the better and that the euro was the best club imaginable and a sure-fire recipe for success. The public never accepted this view. However, it was still very difficult to argue against it, like I and some others did ten years ago. The lesson learned is: no worries, the media and politicians can change their minds. If you believe in your case, do not change yours. They will change theirs. Ladies and gentlemen, I very much believe in reasonable European cooperation. But I also believe in reasonable competition among countries and their economic models. So I do not take it lightly when some integration projects divide us rather than unite us. I think that next time around we should be much more careful when some start selling us a project as indisputable and irrefutable. At that moment we should all be far more circumspect and far less credulous. Thank you for your attention. 3/3  BIS central bankers' speeches
Tony Latter: Just another financial centre – or is Hong Kong special? Address by Mr Tony Latter, Deputy Chief Executive of the Hong Kong Monetary Authority, at the Foreign Correspondents Club, Hong Kong, 25 April 2001. *  *  *  A quarter of a century ago many people in Hong Kong were seriously worried about the shrinkage of our manufacturing industry. Other locations in the region were showing signs of becoming increasingly competitive, and there was the emerging prospect of activity migrating across the Mainland border. In retrospect, should we have been worried at all? Hong Kong's economy was performing well enough overall, and the service sector was growing at the expense of manufacturing as part of what proved to be a progressive and relatively painless process. Today people express concern about loss of competitiveness in those very services which have been ensuring our continuing prosperity in the intervening years. Back-office functions, which first migrated from Central to Quarry Bay or Kowloon, are now moving to Guangdong - or maybe India or wherever. Should we worry? What will fill the gap? Is Hong Kong so expensive a place that it has priced itself out of range of any prospective business growth? At the microeconomic level there will always be understandable and, especially in the social context, justifiable concern for the individuals who face uncertainties or job losses as a result of restructuring within the economy. But at the macro level this is part of evolution. The economy cannot progress without it.

BIS Review 33/2001  3
By the way, for those of you who are not familiar with Professor Goodhart, he is a renowned British economist with an economic law named after him, the “Goodhart’s Law”. He had had special ties with Hong Kong, as he served on the Exchange Fund Advisory Committee of the HKMA in the 1990’s. Professor Goodhart was also a long-time advisor to Bank of England, and a member of its Monetary Policy Committee from 1997 to 2000. In his recent article “Has regulatory reform been misdirected?”1, he points out that it is individuals in banks, rather than banks as institutions, that take decisions and exhibit bad behaviour. Following this logic, he advocates that financial regulation challenges should be addressed through governance reforms, rather than a focus on just capital and liquidity management. Regulators should apply fines to the people responsible at the time of an offence, whether or not they have subsequently left the bank. In Professor Goodhart’s words, “if a bank CEO knew his own family’s fortune would remain at risk throughout his subsequent lifetime…, it would do more to improve banking ‘culture’ than any set of sermons and required oaths of good behaviour.” Harsh as it may seem, I do see considerable merit in his argument as that would help tackle the root cause of problems, i.e. the lack of accountability for individuals incentivised by short-term objectives.

So it is natural and indeed understandable that bankers harbour grievances and misgivings towards bank regulation and supervisors. And this is why the topic I am going to talk about is a very attractive theme to them. They would like to hear from a supervisor speaking on a subject that they can normally only discuss privately amongst themselves. 4. First of all, let me give you the good news! As I see it, there are two ways to get rid of bank supervisors, one fast track and the other a slow track. Let me start with the fast track! 5. If you can find a clock or time machine that would allow you to dial back time to 100 years or so ago, then you would find yourself in a happy world where there was little or even no banking supervision. Contrary to common belief, banking supervision as a profession or industry (or, as some bankers would no doubt have it, a “black art”) does not have a very long history. Until the Roosevelt New Deal era 1933 Banking Act in the USA, no depositor in an American bank could have been assured of clear supervisory oversight, following a century of uncertainty about state and national authority over banks and the issue of bank notes. In the UK, the first statutorily-backed regulatory regime was put in place only in 1979. Prior to that time, the Bank of England had exerted only informal authority, including through the venerable “Governor’s eyebrow”.
8  BIS central bankers’ speeches  To summarize, I am very uncomfortable with calls to raise our policy rate sooner than later. I favor delaying liftoff until I am more certain that we have sufficient momentum in place toward our policy goals. And I think we should plan for our path of policy rate increases to be shallow in order to be sure that the economy’s momentum is sustainable in the presence of less accommodative financial conditions. I look forward to the day when we can return to business-as-usual monetary policy, but that time has not yet arrived. References Aaronson, Daniel, Luojia Hu, Arian Seifoddini and Daniel G. Sullivan, 2014, “Estimating and forecasting trend labor force participation,” Economic Perspectives, Federal Reserve Bank of Chicago, Vol. 38, forthcoming. Aaronson, Daniel, and Andrew Jordan, 2014, “Understanding the relationship between real wage growth and labor market conditions(pdf),” Chicago Fed Letter, Federal Reserve Bank of Chicago, No. 327, October. Aaronson, Daniel, and Daniel G. Sullivan, 2001, “Growth in worker quality(pdf),” Economic Perspectives, Federal Reserve Bank of Chicago, Vol. 25, Fourth Quarter, pp. 53–74. Acemoglu, Daron, and David H. Autor, 2011, “Skills, tasks and technologies: Implications for employment and earnings,” in Handbook of Labor Economics, Orley Ashenfelter and David Card (eds. ), Vol. 4B, Amsterdam: Elsevier / North-Holland, pp. 1043–1171. Autor, David H., 2011, “The unsustainable rise of the disability rolls in the United States: Causes, consequences, and policy options,” National Bureau of Economic Research, working paper, No. 17697, December.

Despite the headwinds from continuing debt-overhang and recent financial distress, European authorities in 2011 judged that the eurozone economy was emerging from recession and headline inflation was at risk to rise persistently above target. The European Central Bank (ECB) responded by raising policy rates in 2011. The ECB soon had to backtrack as output in the eurozone fell again and inflation began to march down below target. Today, the eurozone faces continued economic weakness and an inflation rate that is just about 1/2 percent. As a result, the ECB recently lowered policy rates to the ZLB, has started undertaking additional unconventional monetary policies, and is now encouraging fiscal expansion among eurozone countries that are able to do so. These lessons from monetary history strongly suggest that there are great risks to premature liftoff from the ZLB or near-ZLB conditions. Unless economic conditions are fundamentally strong and the previous impediments to growth have receded sufficiently, the odds remain high that monetary authorities will need to retreat right back into the ZLB. And the costs of being mired in the ZLB are simply very large. The ZLB prevents using our very best policy tools to address negative shocks. The ZLB means that interest rates cannot fall low enough to equate the supply of saving with the demand for investment, which, of course, significantly impedes capital formation, future economic growth, and the health of labor markets.
The real effective exchange rate has also oscillated substantially, reacting to shifts in fundamentals such as the terms of trade, risk aversion and underlying capital flows. Compared with a long-term average of 100, the real effective exchange rate (measured in terms of BRL) has moved within 58, on October 2002, when the BRL was particularly weak, to 125 in August 2008, when it was stronger than the mediumterm norm. Regarding the balance of payments, the current account balance has averaged -1.0% of GDP, compared with a long-term average (since 1970) of -2.1%. Net FDI inflows have also performed relatively well, with an average of 3.0% of GDP, compared with 1.5% since 1970. Thanks to the improvement in the balance of payments the Central Bank has been able to accumulate sizeable foreign exchange reserves, which stand at about $ billion currently. The process of reserve accumulation did not impinge on the functioning of the floating exchange rate regime, as the Central Bank strove to buy foreign currency always through publicly announced auctions at the going market price. At inception of the floating exchange rate regime, the foreign sovereign credit rating was B+ (according to S&P) and Brazil had an active stand-by program with the IMF. Brazil is now investment grade, the sovereign credit rating stands at BBB- and the Central Bank has a currency swap agreement, as yet not drawn, with the US Federal Reserve. Of course, a floating exchange rate regime is a pre-condition for inflation targeting.

2  BIS Review 138/2009  With regard to the labour market, we are assuming that it will remain weak and that unemployment will continue rising until the end of next year. Employment will not increase until the beginning of 2011. Historically, it is usually the case that employment recovers with some time lag after production has picked up. The weak labour market is expected to hold back wage increases in the central wage bargaining rounds during 2010, which should contribute to lower cost and inflationary pressures. And even if economic prospects look better than we anticipated in our earlier forecast in September, we will have more spare capacity than normal in the Swedish economy throughout the forecast period. Repo rate low until autumn 2010 The Riksbank has cut the repo rate very substantially over a fairly short period of time, from 4.75 per cent last autumn down to 0.25 per cent in July this year. The largest cuts were made mainly during last autumn and winter. Since February the repo rate has been lower than ever before during the period we have conducted inflation targeting (Figure 3). Figure 3.
The second element of the strategy is a comprehensive analysis of the risks to the outlook for price stability, according to two perspectives: economic analysis and monetary analysis. These two perspectives offer complementary analytical frameworks to support the Governing Council’s overall assessment of risks to price stability. The economic analysis aims at identifying those factors that have a bearing on risks at short- to medium-term horizons. It includes, inter alia, projections of key macroeconomic variables and an analysis of shocks hitting the euro area economy. In turn, the monetary analysis – which has been broadened and deepened over time – draws on a wide range of tools, techniques, models and frameworks, complemented by the use of informed judgment, in order to identify risks at longer horizons. After the evaluation of the strategy in 2003, the Governing Council of the ECB explained that the monetary analysis mainly serves as a means of cross-checking the short to medium-term indications coming from the economic analysis. When compared to the strategy of inflation targeting, the Eurosystem’s Monetary Policy Strategy shares the essentials: that is, the importance of price stability and the need for monetary policy to act pre-emptively and make comprehensive use of all available information. The strong belief that institutional independence must necessarily be supplemented by high standards of accountability and transparency is also shared by both camps. This is reflected in the growing weight that central banks, in industrial countries and beyond, place on the importance of communication.

This should not come as a surprise, since it is much easier to sustain a high level of employment protection in an industry if competitors are kept out of its market. Therefore, amendments to employment protection legislation should be considered in relation to the implementation of product market reforms to promote competition. Fostering, promoting competition in product markets will facilitate the implementation of labour market reforms. These arguments suggest that the envisaged policy actions in line with the Lisbon strategy aimed at improving the functioning of labour and product markets – and the review of the institutions that determine their organisation which this reform agenda entails – can be expected to have mutually reinforcing beneficial effects on the performance of the economy. The improvement in labour utilisation in the euro area witnessed in recent years partly reflects the favourable effects of past labour market reforms. However, when looking at the levels of unemployment and labour force participation rates, it is clear that, despite the progress made, further improvements on both of these labour market fronts are possible and urgently needed. 2  See, inter alia, Nicoletti et al. (2000) and Nickell and Nunziata (2001). 3  See Bassanini and Duval (2006). BIS Review 43/2007  5  IV.2. Values, preferences and economic culture  Institutions that are inappropriately designed are thus at least partly responsible for the unsatisfactory performance of the European economy.
But as time went on, their speed and size – running to hundreds of billions of dollars – began to overwhelm dealers’ intermediation capacity, which was itself shrinking as the result of rising volatility and the operational challenges of remote working. Rising transaction costs and the breakdown in arbitrage relationships began feeding on themselves: a classic ‘doom loop’ (Chart 2). What was unique about this process, and potentially disastrous for the financial system, was that even the highest quality government assets were not good enough. Just like high street companies facing  1  Leverage rates of 40-60 times were common, but anecdotal reports suggest some ran much higher. 3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  evaporating revenues, market participants needed cash. In the days that followed, this so-called ‘dash for cash’ would spread to every corner of the global financial system.

of ops Covid Corporate Financing Facility (CCFF) per week US dollar swaplines  Audio/video calls bank wide (RHS) Attendance in Threadneedle Street office (LHS)  3000  40 2500  30  Calls per day  Attendance 11 Mar: Bank rate cut 19 Mar: Bank rate cut 23 Mar: Lockdown begins  14000 12000 10000  2000 8000  20  1500 6000 1000 4000  10 500  2000  0 28 Feb  13 Mar 27 Mar  10 Apr  24 Apr  08 May 22 May  0 Mar.20  0 Apr.20  May.20  Source: Bank of England Source: Bank of England  What have we learned? Some (very) tentative lessons  The Covid-19 crisis is very far from over. The medical and economic challenges we face are huge and potentially persistent – and many are not for central banks to resolve. Against that backdrop, I have covered only one aspect of our actions during the crisis: the steps we took to prevent the initial shock, and the uncertainty that came with it, from threatening monetary and financial stability. Let’s take the good news first. The central banking response was bigger, faster, and more comprehensively co-ordinated with domestic and international partners than ever before. We deployed the tools developed since the GFC – extending the dollar swap lines, the CTRF, the TFSME and asset purchases.
The cuts we have already made to the MPR have helped to smooth the business cycle, and, as we have mentioned before and now again in the Report I am presenting, a still stronger monetary impulse will likely be necessary in order to ensure compliance with the inflation target. In particular, given the present conditions, and barring a big change in the economic scenario, we believe that the monetary policy adjustments the market expects, which are implicit in the various expectations indicators at the closing of this Report – end of August – , will suffice to achieve the inflation target and help revive our economy. Monetary policy is an important and significant tool to tone down the cyclical fluctuations of the economy. Its countercyclical use is a privilege that we have earned after years of policy conduct that has strengthened the credibility of the Central Bank. But it is also important to note that powerful does not mean almighty. It allows to mitigate, but not fully offset, the natural fluctuations of a small, open economy like Chile. More importantly, if we wish the Chilean economy to attain higher growth rates in the medium term, it will be necessary to implement measures to encourage investment in both physical and human capital and promote productivity growth, all elements which, incidentally, are beyond the scope of monetary policy. This Monetary Policy Report contains a revision by the Board to its medium-term growth assumption for Chile over the coming years.

The recommendation exceptionally has adopted a “one-size-fits-all” approach owing to the current economic uncertainty banks are experiencing, leaving them quite simply unable to forecast their medium-term capital needs accurately. We will review this recommendation in December, and unless we conclude that the banks’ capital projections remain clouded by exceptionally high uncertainty, we should revert to our usual supervisory practice of assessing the planned distribution of dividends on a bank-by-bank basis, taking into account the safety and resilience of the banking system as well as the preservation of its intermediation function at a time of deteriorating asset quality and increased capital consumption. Another new development concerns the leverage ratio. On the basis of the amendments to the Capital Requirements Regulation, ECB Banking Supervision has allowed significant credit institutions to exclude central bank exposures from the calculation of their leverage ratios until July 2021. ECB Banking Supervision has cooperated with and sought the views of the ECB’s central bank function in order to tailor the scope of this temporary exemption so that it covers only those claims on the central bank that are related to the implementation of monetary policy. The measures in relation to dividends and the leverage ratio, as well as the other measures providing temporary capital, liquidity and operational relief to banks, are exceptional measures which are justified as long as the impact of the COVID-19 crisis continues to be felt. We may also decide to discontinue some of these measures, as we did for some of the operational relief measures in July.