samchain/econo-pairs-v1 huggingface dataset:
This has afforded banking groups some discretion when deciding how to comply with ring-fencing requirements, reflecting their current operations and preferred business strategies. Some groups have restructured so that the vast majority of their business will sit within their ring-fence, with only a small amount of prohibited activity sitting outside (a ‘wide’ ring-fenced bank). Others have chosen to place as much activity outside their ring-fence as the legislative requirements allow (a ‘narrow’ ring-fenced bank). The PRA’s rules have been designed to ensure the objectives of ring-fencing can be achieved irrespective of the banks’ choices in this regard. A key aspect of ring-fencing is ensuring that ring-fenced banks have the ability to make decisions independent of their wider groups, and this forms a core part of the PRA’s ring-fencing rules and our supervisory agenda. The ring-fenced bank’s own interests must not be compromised for the sake of those of the wider group. Ring-fenced banks’ boards should have a majority of independent non-executive directors, one of which should be the chair. And no more than a third of the board should sit on the boards of other group entities. But the PRA’s approach is proportionate to the risks posed by the firm’s governance structure. If, for example, a firm has a very ‘wide’ ring-fenced bank, with just a small amount of prohibited activity remaining outside of its ring-fence, it is unlikely that entities outside the ring-fence could exert undue influence over the ring-fenced bank.

26.06.2018  Taking up of office by the Governor of the Banco de España  Pablo Hernández de Cos Governor  Honourable Ministers and Authorities, ladies and gentlemen, dear colleagues and friends, I believe today calls, above all, for a round of gratitude. First, I wish to thank Ministers Calviño and Montero for their presence here today. May they rest assured I am firmly committed to maintaining the close and loyal collaboration traditionally offered by the Banco de España to the Ministries for the Economy and Finance. I also wish to thank the previous minister, Román Escolano, for his presence at this ceremony, and for his proposal and defence of my appointment before the Parliamentary Committee for the Economy and Competitiveness. And my gratitude extends to the representatives of the Committee accompanying us today. I undertake to make every effort to improve the capacity of the Banco de España to face the challenges addressed during the Parliamentary Committee hearing. Ministers, as I am surrounded above all by colleagues, I trust you will allow me to continue in a more informal tone. As you know, including a three-year tour at the European Central Bank, I now have two decades behind me at the Banco de España. Professionally speaking, this is, then, my home. It is a real honour for me to have been appointed governor.
But a general increase in risk weights is of a more structural nature.8 On the other hand, if the risk weights are allowed to vary over time, they can be used as a specific macroprudential instrument with the aim of counteracting risks in the mortgage market: the banks must hold more capital during the good times for their mortgage lending, but not for all forms of lending; rather like a countercyclical capital buffer, but just for mortgage lending. A further example of more specific macroprudential instruments are the different limits as to how much households may borrow. This can be done by setting a limit for how large a mortgage can be in relation to the collateral, also known as a mortgage cap or LTV (loan-tovalue) requirement. This was introduced in Sweden as a general recommendation from Finansinspektionen in the autumn of 2010. In simple terms, it imposes a maximum loan-to-  6  Of course, there are also macroprudential tools with other purposes than to reduce the risks linked to household debt and the housing market, for instance, limiting the risks arising from the links between the banks, what are known as structural risks. See, for instance, C. Nordh-Berntsson and J. Molin (2012), “Creating a Swedish toolbox for macroprudential policy,” Riksbank study, Sveriges Riksbank, and my colleague Karolina Ekholm’s speech “How can financial crises be avoided in Sweden?”, published on 27 September 2012.

It has the potential to spur the generation of new economic strengths through the promotion of entrepreneurship and job creation while also promoting greater financial inclusion and thus enhanced prospects for balanced growth. The IAP enables investors to directly finance a broad range of economic activity of their choice, therefore diversifying their investment portfolio with exposures to various types of projects and industries that yield potential returns that are based on the performance of the underlying chosen ventures. For businesses, the IAP provides a new source of funding for activities, with more competitive financing terms in a range of financing structures. Ventures and entities of varying types, size and industries, including SMEs, listed firms and multinational companies can raise funds on this platform. Given its greater visibility, the IAP will also provide access to a broader range of individuals and institutional investors. For Islamic banks, the IAP creates a differentiated product that presents a new source of income and funding profile. There is also the potential for institutions with specific mandates including Government agencies to strategically collaborate with the IAP and Islamic banks to form public-private partnerships to facilitate the efficient channelling of grants or funding and to facilitate financing opportunities for identified strategic ventures. The role of the IAP that is launched today is envisaged to transcend beyond our domestic borders to become an effective channel to further enhance financial interlinkages in the regional and global economy.
Second, the models assume that these disturbances are serially uncorrelated, which is at odds with the sequence of shutdowns and reopenings associated with COVID-19. The highly unusual nature of the effects of COVID-19 is illustrated by the model auxiliary residuals for the output gap, shown for the United States and the Euro Area, in Figure 2. These residuals are related to the difference between the data and the model's prediction for the data. The dashed lines in the figure indicate two standard deviations. For the United States, these residuals are as large as 15 standard deviations, and for the Euro Area, they exceed 20 standard deviations in some periods. In a purely statistical sense, the probability of such an event occurring even once, much less twice, is infinitesimally small. After the onset of the pandemic, we suspended publication of r-star estimates due to this extreme economic volatility and the elevated uncertainty about how the pandemic would evolve. The Relaunch I am pleased to report that starting today, we are relaunching regular publication of the LW and HLW estimates of r-star. The estimates, along with model documentation, are available on the New York Fed website and will be updated each quarter.11 To address the two violations of the original model assumptions caused by the pandemic, we made two modifications to the estimation of both models.

I should note that this is described in detail in the paper, "Measuring the Natural Rate of Interest After COVID-19," that was posted this morning on the New York Fed's r-star web page. First, we incorporated an additional persistent supply shock related to the effects of the pandemic that directly reduce the economy's potential. We measure this shock using the Oxford COVID-19 Government Response Stringency Index for each economy.12 This index aggregates measures of government containment and shutdown policies. Because the index is no longer being produced, we assume that in each case, it declines smoothly to zero over 2023-24. Second, we use a statistical procedure that accounts for outliers in the model's estimation. Specifically, from the second quarter of 2020 to the fourth quarter of 2022, we estimate a time-varying process for the variance of the shocks hitting the economy. This procedure places a lower weight on periods when there are very large outliers. Our results show that outliers are particularly large in 2020, as seen in Figure 2. By comparison, the estimated magnitude of outliers is relatively modest in 2021 and 2022. Starting in 2023, we assume that the distribution of shocks is no longer affected by the pandemic. Letting the Data Speak  Estimation of the modified model reveals three key findings. First, the modified estimation procedure yields results that are overall quite similar to those from the original model during the pre-pandemic period. Second, the current estimates of r-star are similar to those estimated directly before the pandemic.
In the future, given the weaker cyclical behavior of developed economies, these differentials will probably increase, providing renewed incentives for capital flows to emerging economies. In this case, the appearance of short-term interest rate differentials would be a symptom of cyclical divergence between developed and emerging economies. Furthermore, in the coming years, the fundamentals of economic growth across economic zones, together with the deleveraging process in the developed world, could also encourage more capital flows into emerging economies, even if short-term turbulences in financial markets delay or push back its occurrence. The fact that capitals are flowing into emerging economies with renewed vigor does not mean that all such flows are being absorbed in net terms. If inflows are counteracted by comparable outflows, no significant impact should be felt either by output or the exchange BIS Review 72/2010  1  rate. Thus, for the purposes of analyzing the exchange rate, it is important to examine net capital flows. Given the balance of payments identity, net capital inflows must equal the current account deficit plus the hoarding of international reserves, the latter being equivalent to capital outflows conducted by the central bank. In any case, the prices of assets in the economy may be affected by gross flows depending on their composition, which matters from a financial stability point of view. More complex scenarios are those where capital inflows trigger a credit and a domestic spending boom by financing the leveraging of households, firms or government.

José De Gregorio: Tackling the capital inflow challenge Speech by Mr José De Gregorio, Governor of the Central Bank of Chile, at the Bank of Spain, the IE Business School in Madrid, and CEMLA’s Meeting of Central Bank Governors of Latin America and Spain in Buenos Aires, the three of them in May 2010. *  *  *  I thank the valuable comments of Kevin Cowan, Pablo García and Enrique Orellana. The last few years have brought unprecedented challenges to macroeconomic management in small, open economies. The severe inflationary shock that began in 2007 was followed by the worst financial crisis since the Great Depression and a worldwide economic recession with no match in the postwar period. Today, a while after the immediate resolution of the crisis, we face new challenges. On the one hand, some developed economies, whose public finances were severely damaged by the great recession, now face a period of drastic macroeconomic adjustments and, in some cases, uncertainty about how their debts will be restructured. On the other hand, a substantial segment of emerging economies, which suffered no permanent damages in the balance sheets of their households, firms, or governments, is currently experiencing what can be an incipient start of a credit and economic rebound. The new momentum of capital inflows mirrors this phenomenon. The current status of these inflows and how to deal with them are a substantial part of the challenges we face today and the substance of this document.
This is why I think it’s misleading to say that real incomes have fallen “because of inflation”. The phrase “cost of living crisis” is closer to the truth. Closer still is this: the war and pandemic have directly and inescapably depressed real incomes; they have also, for a time, raised domestic inflation; the MPC will ensure the phenomenon is temporary; but the real-income consequences of these shocks exist either way (unless and until they’re reversed). Second-round effects: how hits to real income can result in domestic inflation and how monetary policy responds Having discussed the real consequences of these big shocks I’ll now say a word about their nominal effects (the higher of the two dotted lines in Chart 5). How is it that a rise in import prices can create upward pressure on domestic inflation and what do we know about the scale of these “second-round effects”? This has been a critical judgement for monetary policy. Prices of tradable goods are volatile and their direct contribution to overall inflation tends not to last that long – a shorter  Bank of England  Page 11  time, in particular, than it takes for monetary policy to have a significant effect of its own on inflation. The classic example is a change in oil prices. The direct effects on the CPI, most directly on petrol prices, come through quite quickly. Equally (and unless the price of oil keeps rising) that also means they drop out of the annual rate of inflation after a year or so.

Mario Draghi: Response on receipt of an Honorary Doctorate from Tel Aviv University Speech by Mr Mario Draghi, President of the European Central Bank, on the receipt of an Honorary Doctorate from Tel Aviv University, Tel Aviv, 18 May 2017. * * * Ladies and gentlemen, It is my privilege to speak to you tonight, on behalf of all those whom you distinguished by awarding an honorary doctorate of the University of Tel Aviv. We come from different fields of human endeavour. Politics, policy, business, history and of course fundamental research. Our achievements are diverse. But they are all based on careful accumulation, experimentation and exploitation of knowledge. Knowledge created and fostered by universities such as yours. And I cannot but detect the profound influence of this search for knowledge in my memory of recent events. The eruption of the global financial crisis in 2008, and the subsequent sovereign debt crisis in Europe, caused a deep recession worldwide, a sharp increase in unemployment and exposed the incompleteness of some parts of the EU institutional architecture. Fertile conditions to give voice to populist and nationalistic rhetoric. But that period of crisis was also conducive to improving our understanding of economic and political forces, and to translating this new knowledge into action. The crisis has thus resulted in a form of creative destruction, where established paradigms have been critically revisited, where flawed practices have been exposed and replaced by sounder ones and where new research addressed previously neglected aspects of our societies.
Simon M Potter: Money markets and monetary policy implementation Dinner address by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, for the Bank of England-Federal Reserve Bank of New York Conference on Money Markets and Monetary Policy Implementation, London, 16 November 2015. *  *  *  I would like to thank Deborah Leonard and Antoine Martin for their excellent assistance in the preparation of these remarks and colleagues in the Federal Reserve System and global central bank community for their insightful comments and suggestions. Introduction It is a pleasure to have the opportunity to give the address at tonight’s dinner. I would like to start by thanking the Bank of England for hosting this conference on money markets and monetary policy implementation. It’s hard to think of a better place to discuss these topics than just steps away from the historic Lombard Street, described in Bagehot’s classic book on money markets.1 I also want to thank all of you for actively participating in today’s discussions. One thing I particularly enjoyed about the event was the interaction among market practitioners, central bankers, and researchers. I think the diversity of perspectives that these groups bring contributes to a fruitful dialogue that can help lead to more informed choices and decisions. I will come back to this point.

But before I go on, let me remind you that the views I express are my own and may not reflect the views of the Federal Reserve Bank of New York or the Federal Reserve System. The topic of this conference may not appear particularly glamorous. It is natural to view monetary policy implementation as a technical and humble exercise next to the flashiness of policy formulation, which has policymakers determining the appropriate level of interest rates. However, for those of us charged with carrying out policymakers’ decisions, there is keen interest in the mechanics. We have the task of designing and executing operations that ensure that policymakers’ instructions are implemented effectively and efficiently, so that their intentions can affect inflation and the real economy. But while monetary policy implementation is just a means to an end, there is no obvious single “right” way to do it, and every central bank’s operating framework reflects history, unique institutional constraints and the market environment, which may change over time. So even though the topic of today’s conference may seem to lack glamour, it is significant, particularly now, since monetary policy implementation and the market landscape have undergone profound changes in recent years. Many advanced economy central banks have adopted a number of new tools to implement monetary policy or used traditional tools in new ways or in unprecedented size, in part because economic conditions have necessitated historically low interest rates that have bumped up against the zero bound for almost seven years.
I would like now to move to the latest performance of the banking system, with both its good sides and the risks associated with them. The Albanian banking system is going through a phase of swift development and promotion of new products. I believe you have noticed that many banks have been engaged in aggressive marketing strategies which promote different types of household loans and terms and attractive interest rates for deposits collection. In addition, banks’ branches and agencies have constantly expanded. Only during the present year, 73 new branches and agencies have been opened and 15 others are in the process of being opened. The same characteristics more or less apply to the District of Kukës as well. Currently, six private banks perform their banking business in Kukës, while two other banks are in the process of commencing to operate. As of end June 2008, the banking system has extended a total of about 1.2 billion leks of new credit (around 15 million USD) of which 66% to households and the rest to the businesses in the area. It is nice to notice that this figure accounts for about 66% of deposits collected in this region, providing evidence for a relatively high financial intermediation level. The rapid development of the banking system, the high competition in the banking market and banks’ eagerness to win their market shares requires greater prudence. The Bank of Albania has taken a number of measures to increase prudence in view of attaining the banking system stability.

Jean-Paul Redouin: Risks may be transferred, but they do not disappear! Address by Mr Jean-Paul Redouin, Deputy Governor of the Bank of France, at the Paris Europlace, Financial Forum, Stockholm, 29 March 2007. *  *  *  The international financial system is going through an extraordinarily benign phase. The world is enjoying stable inflation and strong and broad-based GDP growth. At the macrofinancial level, corporate profits have been sustained, risk premia have been very thin for a broad set of asset classes, and volatilities remain unusually low. Based on these market signals, risks appear very low. Do risk premia correctly reflect the risks currently facing the financial system? Or is their low level the result of excessive risk appetite on financial markets? Indeed, some recent warning signals have reminded us how fragile the current pricing of risk is, and how much it relies on the expectation that an “ideal scenario” of strong growth and contained inflation will prevail. In this context, I would like to focus my remarks on a very important structural development: credit risk transfer. Basically, the transfer of risks helps to spread them, according to a process I shall call the “atomisation of risk" (namely risk being split into elementary particles and then re-packaged). But do these techniques mean that risks disappear? The breakthrough of CRT has gone hand in hand with constant innovation and the emergence of powerful non-bank players.
Banks lost the capacity to move riskier assets off their balance sheets, at the same time they had to fund, or to prepare to fund, a range of contingent commitments over an uncertain time horizon. The combined effect of these factors was a financial system vulnerable to self-reinforcing asset price and credit cycles. The system appeared to be more stable across a broader range of circumstances and better able to withstand the effects of moderate stress, but it had become more vulnerable to more extreme events. And the change in the structure of the system made the crisis more difficult to manage with the traditional mix of instruments available to central banks and governments. First repair, then reform What should be done to reduce these vulnerabilities? Our first and most immediate priority remains to help the economy and the financial system get through this crisis. A range of different measures of liquidity premia and credit risk premia have eased somewhat relative to the adverse peaks of mid-March. Part of this improvement – this modest and tentative improvement – is the result of the range of policy actions by the Federal Reserve System, the U.S. Treasury and other central banks. Part is the consequence of the substantial adjustments already undertaken by financial institutions to reduce risk, raise capital and build liquidity. These actions by institutions and by the official sector have helped to reduce the risk of a deeper downturn in economic activity and of a systemic financial crisis.

Stronger initial cushions against stress reduces the need to hedge risk dynamically in a crisis, reducing the broader risk of a self-reinforcing, pro-cyclical margin spiral, such as we have seen in this crisis. 4  BIS Review 74/2008  How should we decide where to set these constraints on risk-taking? This is hard, but the objective should be to offset the benefits and the moral hazard risk that come from access to central bank liquidity in crises, without setting the constraint at a level that will only result in pushing more capital to the unregulated part of the financial system. Risk management and oversight now focuses too much on the idiosyncratic risk that affects an individual firm and too little on the systematic issues that could affect market liquidity as a whole. To put it somewhat differently, the conventional risk-management framework today focuses too much on the threat to a firm from its own mistakes and too little on the potential for mistakes to be correlated across firms. It is too confident that a firm can adjust to protect itself from its own mistakes without adding to downward pressure on markets and takes too little account of the risk of a flight to safety – a broad-based, marketwide rush for the exits as the financial system as a whole de-leverages and tries collectively to move into more liquid and lower risk assets of government obligations.