samchain/econo-pairs-v1 huggingface dataset:
In the days following the revelation, long-term interest rates rose by around 100 basis points and the sterling depreciated by almost 5 per cent against the dollar. One of the consequences of the rise in interest rates was that it brought to light major liquidity problems in a number of occupational pension funds. This prompted the Bank of England to act and after five days it announced that it would temporarily purchase long-term government bonds to the extent necessary to provide the required liquidity and thus calm the financial markets. This example illustrates how fiscal dominance can affect the central bank. The fiscal policy measures triggered financial market turmoil, which meant that the Bank of England felt it had to act to maintain the smooth functioning of the financial system. In other words, the fiscal measures "forced" the Bank of England to act in a way that it would not have done otherwise. Of course, it could have chosen not to react to the fiscal policy measures because monetary policy is operationally independent of fiscal policy. But that would not have protected either the financial system or the inflation target. I do not want to use this example to suggest that we in Sweden are currently at risk of fiscal dominance. The design of the fiscal policy framework means that the risk is small and we have a relatively low national debt, see Figure 4.

This is happening particularly in the advanced world, but even in the emerging world there has been a slowdown in potential growth. No one can say for sure if this is a permanent state of affairs. There is some debate among economists as to whether the productivity slowdown is a short term or long term phenomenon. But certainly the demographics will still be with us, societies will get older and labour force growth weaker, and economic growth is going to be significantly slower in the next 10 to 20 years than it has been in the past. Investment is unlikely to pick up very significantly in this context, and it does mean taken together with the savings trend, a lower long term real rate of interest in the global economy. 13. So putting the two together – trends in ageing and in economic growth, I think we have to live with the fact of low real interest rates for many years to come. 14. It will pose a challenge for retirement security, and especially for pension funds and insurance funds. As you know, it hits you on both your assets and your liabilities. It means a lower return on your assets. And it pushes up the value of liabilities because the discount rates has gone down. 15. It is not a temporary challenge but a long term challenge. As life expectancy goes up, liabilities will be pushed out further, and the gap in maturity between your liabilities and your assets is likely to grow.
BIS Review 126/1999  6  These have not been easy times for banks. As a regulator, I cannot help but underscore the essential role banks play in the global marketplace. By intermediating credit between savers and investors and providing liquidity to the financial sector, banks are the essential link in well-functioning economies. Thus, while capital levels and risk management policies are without question important, they do not take precedence over the responsibilities of bankers to serve their purpose in a Schumpeterian world of creative destruction. This most fundamental of responsibilities involves the use of credit judgment. By this I mean that bankers must not lend to excess when times seem good and then lend too little when times appear more difficult. This is an ongoing obligation of banks and is no less so as we approach the century date change. With roughly six weeks to go before year-end, I believe it critical that banks approach the new year with these thoughts in mind and I call on them to be attentive to providing for their customers’ reasonable needs. By reasonable needs, I have in mind that banks should think twice about huge demands based on what seems to be customers’ excessive concern about Y2K, but grant appropriate credit for realistic needs, even if this involves somewhat greater use of their own balance sheets than would usually be the case.

Of course, to add value over and above the minimum capital standards, improved disclosure must go beyond the simple reporting of minimum capital ratios. When banks disclose timely and accurate information about their capital structure and risk exposures, market participants can better evaluate risks and act accordingly. The disclosure of timely and accurate information, in turn, is an incentive for banks to ensure that the market perceives them not only as effectively managing their risks, but also as being adequately capitalized. Market reactions to the public disclosures of banks can also play an important signaling role for supervisors in assessing the adequacy of a bank’s capital. A further reason to encourage disclosure beyond the reporting of regulatory capital ratios is that these ratios have become the primary focal point for investors and industry analysts. The result has been that bank managements have had an incentive to focus solely on improvements in these ratios, even when the ratios are not fully reflective of risks. More comprehensive disclosure could lessen this incentive. With these considerations in mind, the Basel Committee is seeking to design an expanded set of disclosure guidelines, taking into account the proprietary information needs of banks. I believe that fuller disclosure for all banks can take us a long way towards effective market discipline. We also encourage banks to include in their fuller disclosures information specific to their risk profile. The timeliness and the quality of disclosure are important. The frequency of disclosure should reflect the nature of the risks involved.
14 15  8  All speeches are available online at www.bankofengland.co.uk/news/speeches  8  In 2014, the FPC introduced the borrower-based tools to guard against an increase in the extent to which highly indebted households could amplify macroeconomic downturns. These tools could achieve this goal in a number of ways. By constraining the increase in the aggregate number of highly indebted households, the tools reduce the proportion of households that could have insufficient liquid assets or lose access to credit in the event of a shock. And by providing some check, in aggregate, on excessive credit growth relative to income, these tools could also provide benefits in the event of debt-financed overconsumption, if it were driven by highly indebted households or looser underwriting standards. Effectiveness of the policy  Turning to the effectiveness of the policies, a key question is whether the risk of sharp consumption cuts in a downturn due to high indebtedness is lower now than it would have been if the policies had not been in place? To answer that question, we need to examine how the distribution of indebtedness on the stock of mortgages has changed over time. There is no way to examine that directly in the UK – unlike some other countries, we do not have access to comprehensive data, such as current income and debt levels, for all UK households. Instead, we use two approaches to estimate this: surveys and models combined with regulatory data.

7  All speeches are available online at www.bankofengland.co.uk/news/speeches  7  For example, micro data studies from the UK, US, Denmark and Norway have all found statistically significant correlations between higher levels of household debt and the size of consumption cuts in a shock.13 And macro studies have also found correlation between rapid credit growth and the severity of downturns.14  But new studies have also sought to deepen the knowledge base. In particular, they have looked at why more highly indebted households cut consumption in response to shocks – the channels through which the observed association is working. For example, there could be debt financed ‘over-consumption’ prior to a downturn that is then cut back when expectations adjust to reality or credit becomes unavailable. This channel might work directly through unsecured consumer borrowing or through mortgage financed borrowing to consume. Alternatively, there are channels through which higher levels of debt constrain household budgets without appealing to ‘over-consumption’: some indebted households may be unable to consume as much as they would like in a downturn because they do not have a sufficient buffer of liquid savings and find themselves unable to access additional credit when they need it the most. This situation is more likely when falls in house prices reduce the value of the borrower’s collateral. The situation is also likely to be exacerbated if the downturn is accompanied by rising uncertainty. The combination of rising uncertainty and credit constraints would tend to lead to further reductions in spending as households build precautionary buffers.
As per the “Mahinda Chintana” development strategy, every endeavour is to be made to tap domestic resources for investment. At the same time, the Government clearly realizes that it is imperative to encourage large scale investment flows into the country to make a significant impact in the acceleration of the growth process. It is now an accepted norm that large infrastructure projects such as highways, railways, airports, ports and power projects not only add to the stock of investment in a country, but are also considered a better recipe for poverty alleviation rather than income support and subsidies. A large number of such investment opportunities now exists in Sri Lanka and no doubt in many other Commonwealth countries as well. In that context, we need to use the opportunities provided by events such as today’s meeting to establish bi-lateral relationships leading to the promotion of investments. While Governments attempt to achieve consensus for multi-lateral facilities and agreements, it may also be time for individuals to seriously consider B2B investment opportunities. Your Excellencies, Distinguished Guests, I am confident that the delegates present at this Forum will actively, seriously and diligently explore possible ways and means of promoting interactive growth that would generate livelihoods and reduce poverty in our respective countries. If we all do that successfully, we could look back and proclaim that we did our bit to fulfill the lofty outcomes as envisaged in the 1971 Singapore Declaration. Thank you. BIS Review 83/2006  3

These arrangements, including senior level groups for coordination in and out of crisis – Cross Market Business Continuity Group (CMBCG) and Cross Market Operational Resilience Group (CMORG) respectively, are tested periodically to work through how the system would function in the face of particular types of shock or the loss of key systems. By definition, crisis events are unpredictable but regular exercising helps to establish common reflexes that will manage the consequences of a major operational disruption, including aspects that may not have been foreseen. Having set out the context and described our interest in operational resilience, let me turn now to cyber. It is one shock among many that could result in operational disruption. But cyber has specific characteristics that differentiate it from other threats to operational resilience. First it is not a game against nature. There are groups out there that are motivated to attack the sector. For most, the motivation is economic; that accounts for the rise in fraud. But there are actors out there, sometimes state-sponsored, who may be motivated to bring systems down and cause harm to the sector. Second it is adaptive and changing. Attackers do not stand still. Attack types are constantly evolving and readily scalable. In the cyber arms race, costs are stacked in favour of the attacker, not the defender. Organisations cannot rely on building a hard perimeter. They too need to develop defensive capability that is adaptive and invest in threat intelligence to understand potential attackers and attack types. Third detection is not easy.
Additionally, the globalization of financial markets led to difficulties in auditing cross-border transactions mainly due to lack of cooperation between supervisory authorities. However, in recent years, care has been given to overcome inter-country problems and increase cooperation. Success of countries in integrating into the global financial system and in fulfilling the requirements of globalization will depend on deeper international cooperation between national and international agencies. At present, there exist several countries and nations that are not yet benefiting from the globalization. Many obstacles stand in their way towards integration into the global economy. In an increasingly globalized world economy, financial sector stability is most likely to be achieved when prudent international standards are met and when markets operate competitively, professionally and transparently, according to sound principles and practices. Strengthening the supervisory and regulatory framework towards achieving a sound and efficient global banking system should be a universal goal. In this sense, the works that have been  5  BIS Review 79/2000  accomplished by the Basel Committee, FSI, Financial Forum, etc so far should be regarded as innovative and constructive in the process of harmonization of rules and standards internationally. In my opinion, effective supervision combined with a multi-dimensional study of past experiences and all the micro and macro level indicators, will help us to find ways to handle what globalization brings us. I certainly believe that studies on platforms like the one we have here will help us to develop new ideas and ways for responding promptly and correctly to the challenges of globalization.

We have to look for solutions in the regulations that we impose on the financial sector and try hard to make them strict enough to prevent circumvention and excessive risk-taking. We must also make sure that our system is liberal enough to promote innovation and growth. I am sure that we will be able to confront the challenges brought by globalization in the new century if we clearly acknowledge the two issues: –  first, what globalization means for economies and particularly for financial systems; and  –  secondly, how we, as public and regulatory and supervisory authorities, should react to the challenge of globalization. I am of the opinion that only in this way can we extend the benefits of globalization to wider parties involved in the process. We must seize the opportunities to build a healthy global financial environment. The challenges are great, but the ways to confront them are quite clear. I would like to thank you for the invitation and your audience. BIS Review 79/2000  6
This has also been the case if we look at developments in Sweden compared to developments in the euro area since 2000. Wages  2  See for example L. Calmfors, ”Kris i det svenska avtalssystemet?”, Ekonomisk debatt no. 1, 2008 and P. Braunerhjelm et al., ”Krisstämpeln på det svenska avtalssystemet – en överdrift”, Ekonomisk debatt no. 5, 2008. BIS Review 154/2008  7  have increased more rapidly in Sweden than in the euro area, but the development of productivity has also been stronger in Sweden while inflation has been approximately the same (see Figure 12). For the manufacturing industry, the situation is largely the same in an exchange rate regime with a floating rate as in a regime with a fixed rate in the sense that the wage agreements must look to the future with regard to the development of costs abroad. Normally, it may be reasonable to assume that the exchange rate remains unchanged, which is illustrated by the stable development of the krona against the euro from 2002 until this autumn. A hypothesis of an unchanged exchange rate provides the same conditions under fixed and floating exchange rate regimes. The krona has weakened significantly in the course of the ongoing financial turbulence, although in the long term we expect it to return to roughly the same level it was at before the crisis. Hopefully, the krona will have stabilised at a higher level than the present level before the round of collective bargaining in 2010.

Difference between inflation in Sweden and Germany Percentage points 12  12  10  10  8  8  6  6  4  4  2  2  0  0  -2  -2  -4  -4  -6  -6 60  63  66  69  72  75  78  81  84  87  90  93  96  99  02  05  08  Note. Inflation is measured as the annual percentage change in the CPI. The series is equalised using a 3-month moving average. Sources: Statistics Sweden, Federala statistics agency in Germany and the Riksbank  Figure 2. Relative unit labour costs and nominal exchange rate: Sweden compared to Germany Index, 1960=100 225  225  Relative unit labour costs Nominal exchange rate: DEM / SEK  200  200  Relative unit labour costs converted to SEK  175  175  150  150  125  125  100  100  75  75  50  50  25  25  0  0 60  63  66  69  72  75  78  81  Note: Exchange rate is EUR/SEK from 2002. BIS Review 154/2008  84  87  90  93  96  99  02  05  08  Sources: Bureau of Labor Statistics and the Riksbank  9  Figure 3.
This is an effort that the Basle Committee plans to support not only through continued work on the Core Principles and the Compendium, but by providing expertise and supervisory resources to supplement and advise IMF and World Bank staff. The members of the Basle Committee in many cases have the staff with the deep expertise to help emerging markets supervisors with the application of the Principles in their national context and in light of various BIS Review 86/1998  -9-  obstacles. The IMF and World Bank have expressed their desire to bring more of that expertise to bear in their efforts, and we have begun discussions on how to accomplish that most effectively. In addition, we believe that first-hand observation of the practical issues in implementation will suggest what further elaboration and precision would be most useful to the Core Principles, and what additional research and papers, programs by the Institute for Financial Stability or specific technical assistance could supplement them. Our goal is to keep the Core Principles relevant, incisive and implemented by supervisors globally. In addition, we in the broader financial supervisory community must set thoughtful goals for ourselves as we manage our individual agendas. The problems that have beset many countries in Asia, Russia and other regions and countries are not confined to the banking sector, although that may be the largest part of the financial sector.

Realizing the value from these assets while winding down the less viable aspects of the business may be one way for the bank itself to manage its own market exit. As a second line of approach, banking supervisors had resolution procedures and the necessary statutory powers to take over failing banks and resolve them. This almost always involved the need for additional capital and funding. In many cases, the banking agency or deposit insurer could sell off deposits and other elements of the franchise in such a way that continuous service could be offered to customers. Since the banking agency or insurer often was left with the bad assets, workout expertise was required to realize value from them. Throughout these steps, supervisors need to work with troubled banks in a constructive manner, just as banks should deal with troubled customers. If the supervisory process is too harsh, the supervisor will exacerbate the stresses on credit and liquidity in the financial system. Bank supervisors must have the tools and the determination to make steady progress in terms of recovery or to seek resolution through merger, sale or the winddown of the bank. The process of workout may be deliberate and patient, but it must move forward as quickly as practicable and not be permitted to stall. Only then can the normal flow of credit and liquidity in the financial system be maintained.
The HKMA view But let me say here that, insofar as the perception of the euro within the Hong Kong Monetary Authority (HKMA) is concerned, it is clearly a supportive one. As I implied earlier, we have a keen interest in the euro and a quiet wish for its success. This should demonstrate to the world that a fixed exchange rate (in your case more than a fixed rate - a unified currency) vis-a-vis some or all of one’s trading partners is a viable option. There have been few other “fixers” since the Bretton Woods system broke down in the early 1970s. But Hong Kong since 1983 and other more recent currency board countries, such as Argentina, Bulgaria and Estonia, have shown that fixing is a viable strategy. It may indeed even be superior, given the discipline it imposes and the salutary attention it focuses at the national level on structural efficiency and flexibility. Of course it may not suit all, and the IMF, for instance, continues mostly to espouse free floating in its prescriptions for individual countries. But the IMF does acknowledge that options at the other extreme of the spectrum from free floating may be appropriate in some circumstances, and in its pronouncements the IMF has given unflinching support to Hong Kong’s peg - as indeed it has to the euro. The success of the euro has further implications for the Asian region.

A number of avenues need to be explored. • First, if this exercise is necessary per se, its full potential will be delivered only if all lessons are properly drawn. Some guiding key principles, or “Fundamental elements”, to be designed in the wake of the G7 exercise, will help achieve this objective. • Second, we must leverage on this G7 exercise: the regular practice of coordinated crisis management exercises should be encouraged in order to enhance the resilience of the financial system. • Third, an enlargement beyond the remit of G7 countries should be considered with some other jurisdictions and/or with BIS involvement, and possibly beyond the sole financial sector actors. In future exercises, the current format will require cooperation arrangements on a wider scale. ** Regulation and supervision, information, and preparation: these are the areas where we clearly need to improve our coordination. I would like to conclude with a last imperative: action. We all share the principles, but there was today in this conference a sense of urgency, of concrete urgency. This is where the French presidency of the G7 intends to be useful: • First, by giving greater visibility and support to the CEG work, which is going to deliver important papers on cross-sector coordination and on the assessment of vulnerabilities.