samchain/econo-pairs-v1 huggingface dataset:
The participation of banks in the debt guarantee schemes is voluntary, and the very limited use of these guarantees may reflect a decline in the demand for credit and/or the desire of the banks to continue deleveraging their balance sheets. It is, however, important to ensure that other constraining factors are addressed, for example that the disincentives associated with the provision or pricing of these debt guarantees are promptly addressed, so as to help banks finance additional lending to the private sector. Possible further measures A relevant question is whether the tight financing conditions and the continuing stresses on the banking system require further measures by governments and central banks in order to help revive the extension of bank credit to the economy. The answer regarding the need and the nature of potential further measures depends on the causes or determinants of the prevailing financing conditions and on the structure of the financial system. To the extent that (i) financial market stresses, (ii) the deleveraging process, (iii) uncertainty about the economic outlook and about potential further bank losses, and (iv) low confidence impair the functioning of the credit and bank funding markets and the transmission of the effects of monetary policy, “non-standard” measures aimed at reducing funding uncertainty and enhancing the functioning of the credit market and, consequently, the monetary policy transmission mechanism, may represent possible courses of action.

The prompt implementation of the proposed financial reforms will not only foster sustainable growth and financial stability in the long run, but it should also contribute to boosting confidence in the financial system in the short run, thus promoting economic recovery. Fiscal policy Last, and definitely not least, it is also essential for sustainable growth and prosperity that confidence in the long-term soundness of public finances is maintained. Government deficits and public debts are rising substantially in most countries as a result of the economic downturn, discretionary measures to stimulate the economy, and the funding of the bank support schemes. This is partly inevitable – due to the downturn – and partly necessary – to help stabilise the economy and the financial system – in the short run. But it is also imperative that fiscal policies are designed and implemented in a manner that strikes the right balance between the need to support the economy’s recovery and the need to preserve the confidence in the soundness and sustainability of public finances which is key for the long-term performance of the economy. III. Conclusion  I have used the word “confidence” several times. The severity and duration of the current economic and financial crisis is partly a consequence of the reduced confidence in the prospects of the economy and the soundness of the financial system.
Lars Nyberg: Financial reforms and financial crises - Swedish experiences Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at the Central Bank of Sri Lanka, Colombo, 28 March 2006. *  *  *  Let me begin by thanking you for the invitation to come hear and speak today. It is a great honour to be asked to give a speech within the framework of this prestigious lecture series. On many occasions I – and several of my colleagues at the Riksbank – have described the financial crisis in Sweden at the beginning of the 1990s, both here in Colombo and in other contexts. That is because this crisis made a considerable impression on the Swedish economy, resulting in low – and during a number of years negative – growth and high unemployment. However it also made an impression in terms of making us consider what basic conditions were necessary to ensure that a financial system functions smoothly. There were many interacting factors behind the crisis experienced in Sweden. Mistakes made by bank management, by the supervisory authority and by politicians made the situation worse for the real economy. These mistakes were probably due to some extent to the financial markets having been regulated for almost half a century and so this affected the financial agents' way of thinking and perception of reality.

Incentives for increased saving were not actually introduced until the crisis was actually upon us and then they only helped reinforce the decline. It may seem something of a paradox that international organisations, such as the Basel Committee, are now implementing a number of new regulations – such as Basel II – despite the fact that the old regulations had negative effects and were therefore abolished. However, these are a completely different type of regulation. The old regulations were aimed at prohibition and other strict controls, while modern regulations give the banks plenty of flexibility to offer their services as long as they meet certain fundamental conditions. For instance, Basel II allows the banks to determine their own risktaking to a great extent, as long as they have adequate risk management and capital reserves. The experiences of regulation and the crisis also show clearly how important it is that the central bank can make independent decisions regarding the interest rate according to objectives set by parliament, for instance, to maintain inflation or the exchange rate at a stable level. If there are no guidelines for the interest rate, or if the parties that determine the interest rate have differing interests, it will often be set too low for the purpose of benefiting borrowers, investment and central government consumption. This was the case in Sweden during the years of regulation. Apart from leading to higher inflation and pressure on the exchange rate, exaggeratedly low interest rates also have a negative effect on the financial sector.
Implementation of the New Accord  (a)  Overview  Today, the Committee is close to finalizing the new capital framework, and I know that many banks and supervisors in different countries have already begun to think about the practical implications  2  BIS Review 7/2003  surrounding implementation. This second stage of the Basel II effort is close on the horizon, and both banks and supervisors must give serious thought to what they need to do to get ready. I’d like to spend a few moments describing some of the efforts currently underway. It is no secret that implementation of the New Accord will require a substantial resource commitment on the part of banks and supervisors alike. I think it is important to emphasize that the efforts banks will need to undertake to comply with Basel II build on the efforts that some large and well-managed banks already had in train before the new framework was contemplated. I know that many banks are devoting more attention to enhance tracking and assessment of the quality of the loans they make. Further, banks have been looking to strengthen their credit assessments by employing experts who do not stand to gain from overly favorable reviews. Time and effort has also been invested in working to pull all of this together in a management information and control system that produces timely and accurate reports for senior management review.

BIS Review 7/2003  1  To respond to these challenges, the Committee has sought to develop a more flexible and forwardlooking capital adequacy framework - one that better reflects the risks facing banks and encourages them to make ongoing improvements in their risk assessment capabilities. The Committee believes that all banks should be subject to a capital adequacy framework comprising minimum capital requirements, supervisory review, and market discipline. As you know, these are the three "pillars" of the New Accord. Each is an essential element for ensuring the safety and soundness of banks worldwide. In contrast, the current Accord only has one pillar - minimum capital requirements. As we all agree, risk management is a dynamic process and one that will continue to evolve. Consequently, the New Accord is designed to accommodate future changes in the way banks measure and manage their risks by giving banks a range of options for calculating capital charges and incentives for using best practices. Banks will be expected to apply the option most appropriate to the complexity of their own operations and risk management capabilities. For credit risk, the range of options begins with the standardized approach and extends to the internal ratings based (IRB) approach. The standardized approach, as you know, is structurally similar to the 1988 Accord, where banks are required to differentiate their exposures into broad categories, such as loans they have made to corporate and sovereign borrowers or banks.
Faced with a pressing need to provide additional accommodation, we were forced to turn to innovative, but controversial, unconventional monetary policies. These policies have been extremely helpful. But there is no denying that they were second-best options; the ZLB had made lowering the fed funds rate, which is our first-best interest rate tool, infeasible. Everyone will welcome a return to more normal times and a reliance on the traditional policy framework of adjustments to the federal funds rate. But the decision about when to begin to raise rates shouldn’t be made prematurely. Rather, the decision for policy liftoff has to be made for the right reasons – that is, it should be dictated by economic conditions. I have said many times that I agree with Minneapolis Fed President Narayana Kocherlakota: Policy at all times must be goal-oriented. 16 Our experiences since the crisis began and current economic conditions are highly unusual. The FOMC should not simply set its policy instruments by mechanically aligning them with historical norms if those norms are not relevant harbingers for the attainment of both of our dual mandate goals. Rather, our policy instruments should be set to achieve our ultimate goals as efficaciously as possible given current and prospective economic conditions, all the while with an eye on managing against important risks to the outlook. What does that mean now? I believe that the biggest risk we face today is prematurely engineering restrictive monetary conditions.

In addition, they find that the rate of involuntary part-time employment, which is still very high, also has a substantial influence on wage growth. 13 Putting it all together, their estimates say that if labor market conditions were at their 2005–07 levels, average real wage growth would be roughly 1/2 to 1 percentage point higher over the past year – another sign of the cyclical shortfall in labor market health. To sum up, with many important measures of labor market activity still well short of our estimates of cyclical norms, I believe it is a bit premature to say that we are close to our full employment target – the labor market is not yet calling for business-as-usual monetary policy That said, while it has taken longer than anyone would like, our progress has been good. Indeed, there is good reason to anticipate that we will achieve full employment and price stability within the FOMC’s current forecast horizon. Notably, in the Committee’s Summary of Economic Projections released a week and a half ago, most participants anticipated that the unemployment rate would return to its long-run neutral level by the end of 2016 and that inflation then would be in the range of 1-3/4 to 2 percent. A balanced approach to monetary policy Now let me turn to my views on monetary policy. I can’t speak to my FOMC colleagues’ forecasts and how they interact with their views regarding appropriate policy.
By the 1970s, an era of supervision – as distinct from regulation – had begun in the UK. The more recent history of insurance regulation over the last century is a major topic in its own right, so I only propose to outline a few points. In 1923, the Industrial Assurance Act introduced a Commissioner to discharge statutory powers on behalf of the Board of Trade, with the idea of specific regulatory bodies introduced 21. By 1946, the regulatory framework had expanded to include motor, aviation and transit insurance and, significantly, the deposit system was replaced by a more sophisticated solvency margin which specified that a particular margin of assets over liabilities should be maintained. 22. A string of high-profile failures in the 1960s and 1970s – including the failure of Fire, Auto and Marine which left 400,000 (mostly motor) policyholders uninsured, and an even bigger failure in 1971 when Vehicle & General, with 1.2 million policyholders, collapsed – led to demands for further reform 23 at a time when a wave of consumer protection laws beyond the insurance sector had put regulation firmly on the agenda in any event. Relatively speaking, up until the 1970s, individuals running insurance companies attracted scarce regulatory attention. This all changed in the 1970s when conditions around the fitness and propriety of senior individuals were introduced.

Despite not being labelled as such, this arrangement seems in some way similar to a modern-day life insurance policy. And yet back then, perhaps unsurprisingly, the subscriptions paid by members were not subject to any protections or oversight – indeed, when a burial society did run out of money, it was commonplace simply to issue a notice to convey the demise of the society and the fact that funeral expenses would no longer be met. There is also evidence that soldiers in the Roman army were paid a lump sum at retirement, despite the fact that contributions were not made throughout the soldier’s lifetime. By medieval times, the Church had become one of the largest employers and had started occasionally to issue pensions to clergymen. One such example involved Nicholas Thorne, a former abbot of St Augustine’s monastery, who was living in difficult circumstances. Thorne had voluntarily retired, apparently stricken by a guilty conscience after he acquired some documentation on behalf of the abbey through bribery at the Court of Rome. The scandal led him to retire to an ordinary monastery in Yorkshire, but when his old comrades heard of his infirmity and weakness, they awarded him an ex gratia pension of 10 marks a year 4. It seems unlikely that the Church extended such gestures on a regular basis, but from this point onwards we can see evidence of pension provision via employers (the Church and King), particularly for notable individuals in society where reliance on charity alone would not suffice.
Still, this characterization is based on very crude generalizations; in reality, EMEs spread over a broad range of possibilities for each dimension and different combinations of them. The question is then to what extent does such variety of cases make a difference for the spillover from changes in global financial conditions and what role does the exchange rate (ER) play in it. How important are global financial and business cycles to EMEs compared to local ones? To address this issue from an EME’s perspective, a first question refers to the relative importance of externally-induced shocks as compared to purely domestic ones. Even if the Global Financial Cycle were a very powerful force, as long as countries can still get into troubles of their own, macro policy, including the ER regime, may make an important difference. A review of the last 40 years of economic history reveals many episodes during which cyclical turning points originated in domestic, rather than foreign, shocks. In Latin America in particular, many of the major shocks of the 1980s, 1990s, and early 2000s originated locally, usually from misconceived policies, private sector exuberance, or inadequate regulations. The fact that these shocks showed up as large current account deficits surely reflects the degree of dependence of governments and business on external funding, but that does not exempt local conditions from being the main source of the imbalances.

However, the idea had already been raised as an objective since the founding of the European Community in the 1957 Treaty of Rome. Moving, trading, and establishing a presence or providing services in any EU country appears as something evident today. Yet the single market did not come into force until 1993. Admittedly, we tend not to properly value most things that seem evident to us. But the free movement of goods, capital, services and persons is one of the EU’s major achievements. At the start of the process, in 1985, around 300 measures to achieve this goal were identified. A whole series of internal obstacles and borders progressively disappeared. Changes were made to key mechanisms to allow for progress, introducing the qualified majority as opposed to the unanimity required until that point. It was opted to pursue the minimal rather than full harmonisation of national regulations, which the EU partners acknowledged as equivalent. The history of the single market shows, as Voltaire asserted, that perfect is on many occasions the enemy of good. The lack of headway in achieving the single market before 1985 was no doubt due to competition-busting practices maintained by national authorities, but also to the difficulty of reaching unanimous agreements in the Council and to the pursuit of overly detailed legislative harmonisation. The situation was unlocked after opting for goals which, a priori, were less ambitious. In fact, certain administrative barriers remain, e.g.
2 General aspects of the European regulations  The European Union, as reflected in the FSB’s second Peer Review on Resolution Regimes published in 2016, is one of the jurisdictions where the Key Attributes have been most rigorously implemented. Allow me to highlight some of the main features. First, the regulations consider resolution as an alternative mechanism to ordinary insolvency procedures in the mercantile realm, applicable to banks only in specific circumstances pertaining to the public interest. In particular, resolution shall only be applicable to those banks whose failure may generate risks to financial stability, given that they perform critical functions. Second, the use of public funds to support vulnerable institutions is severely restricted. The contribution of any form of State aid – except that received in connection with a stress test – is understood to be a symptom of the institution’s non-viability and, therefore, it may precipitate resolution or, where appropriate, the liquidation in mercantile terms of the institution. Once the institution has been declared in resolution, the regulations require a bail-in for creditors. The ensuing assumption of losses must exceed a minimum amount equivalent to 8% of the bank’s liabilities as a prerequisite for attaining access to public funds, which includes the Single Resolution Fund. Lastly, so as to be able to carry out the bail-in, all institutions liable to be subject to resolution, i.e.

The recent “tech-stock bubble” provides us with an illustration of such a difficulty: while one was witnessing the “irrational exuberance” in 1996, the surge in capital spending associated with the development of new technologies resulted in a faster productivity growth, which in turn boosted equity prices. At that time, uncertainties about fundamentals (was there an American miracle?) made difficult a proper assessment of asset valuations, although the large movements in asset prices where a concern for central banks. However, when expectations reverse, for example due to the reassessment of expected profitability in the economy, and consequently asset prices decrease, the point is to determine whether the attitude of the central bank ought to be different in order to preserve monetary and financial stability. That is, some could argue that the central bank’s response should be asymmetric. In the booming phase, as long as price stability is not endangered, central banks do not react to the rise in asset prices. Conversely, in the recession phase or when a bubble bursts, central banks could consider reacting if they deem that monetary and financial stability is endangered. What could then restrain them from doing it?
It remains as strong as ever. Despite the difficult conditions and the unusual challenges that have characterized the last two years, all important monetary policy decisions have been reached by consensus, a consensus which emerged from in-depth and intensive analyses and discussions. The current course of Swiss monetary policy, particularly the decision to introduce a minimum exchange rate, is the result of a deep-rooted consensus of this kind. The SNB will thus continue to enforce the minimum rate with the utmost determination and remains prepared to buy foreign currency in unlimited quantities. The Swiss franc is still highly valued, but it should depreciate further in the future. Let me now return to my topic. I will start by presenting general pre-crisis assessments of the state of monetary policy and will then examine how central banks’ policies may have contributed to the financial crisis. After considering these issues, I will be in position to assess the alternative courses of action available to central banks in general, and the SNB in particular, to derive principles for a future in which financial and price stability are better reconciled with one another. I. The Great Moderation: a success of monetary policy? Let me start by considering the state of many developed economies, to include Switzerland, before the onset of the crisis. In contrast with the episodes of high inflation which prevailed in the 1970’s, rates of inflation were subsequently stable and low for some twenty years.

In spite of the fact that there has long been a significant surplus of liquidity in the Czech money market, this lack of confidence caused a deterioration of the proper functioning of the market. The Czech National Bank launched the liquidity-supplying facility in October 2008. Czech government bonds were made eligible as collateral in these operations. This technical measure was aimed at limiting the potential spreading of problems from foreign financial markets to the Czech financial sector. The situation calmed down at the end of 2008. Overall, the financial crisis itself has had only a limited primary impact on the Czech financial market due to its low exposure to toxic assets and focus on domestic business in local currency. Nevertheless, the country was affected by an increase in risk aversion to the whole of Central and Eastern Europe, due mainly to the problems of some countries which needed financing from abroad. The Czech Republic is among the countries that provide loans to some of them or participate in lending schemes organised by international institutions. The financial crisis has led to a significant decrease in global economic activity. As the Czech economy is very open and export-oriented, the loss of demand from major trading partners was reflected in weaker domestic economic activity and therefore banks became more cautious in providing credit to the business sector and subsequently to households. Weak foreign demand is thus probably the most severe factor stemming from the global financial crisis that is affecting the Czech economy.