samchain/econo-pairs-v1 huggingface dataset:
In this respect, the world we live in is the outcome of how we have handled, reacted to, faced and resolved each of the crises we have experienced as a society. It’s no big revelation to state that the financial sector has recently undergone one of the biggest crises in its history. The crisis was deep-seated, lasting and, most regrettably, it had severe consequences for groups that had little or nothing to do with it arising. As banks and supervisors, we share a responsibility for what happened. We should learn from our mistakes. But, above all, we should correct whatever is needed to prevent anything like this happening again. Much has changed since the global financial crisis broke in the summer of 2007. It is widely acknowledged that the banking sector has undergone far-reaching change, but supervision has also been enormously affected. The old institutional framework has been replaced. In this process, we have sought to draw on the lessons from the crisis, equipping supervision with a set of tools that allow us to act in a coordinated and, we hope, preventive manner. Further, we have moved decidedly towards a truly European-based supervision. This is an essential step towards a Banking Union that will make the overall European financial system safer, thereby promoting sustainable growth in the economy. 3/13  Much still has to be done to complete the Banking Union. In particular, we are still lacking a pan-European and adequately funded deposit guarantee scheme and a recapitalisation fund.

However, this poses a new challenge for users with little prior experience with digital tools, or with little financial knowledge, as they will not be given personalised advice when engaging services. Mirroring what I have said, concern over citizens’ level of financial knowledge has been increasing in recent years. In developed and emerging countries financial education is viewed today as an essential element of stability and balanced economic development in society. On OECD recommendations, many countries have developed national financial education strategies. In Spain, since 2008, the Financial Education Plan has been rolled out by means of a collaboration agreement between the CNMV (National Securities Market Commission) and the Banco de España, subsequently entered into also by the Ministry of the Economy and Enterprise. We consider these efforts to be essential and wish to boost them further in the future. 4  It is widely known that the engagement of banking services is through standard form contracts, which hamper or prevent negotiation between the two parties. 11/13  In addition, it has been opted to integrate financial education into the compulsory secondary education system, and specific subjects address these matters in greater detail in higher secondary education. Notwithstanding these efforts, much clearly remains to be done.
4  BIS Review 3/2007  V.  Involvement of boards, senior management and governance issues  Basel II requires the involvement of the senior management in the process of identification, evaluating and mitigating risks. Does this mean that the senior management and the board members should use some supervisory and monitoring powers to ensure that the technical and other officers continue to engage in risk mitigation activities and that the board is satisfied with action taken by them? When there are several layers of supervision, you might need a liaison officer to communicate with the management and the board. The bank management should address this issue early and avoid serious governance issues. VI. Capturing new risks  When financial market innovation takes place globally, new products such as derivatives, securitization will be introduced and they are likely to bring in new risks including operational risks. How do we balance these new risks with other internal risks, systems, processes and also with supervisory prudence? It is evident that Basel II enables banking to be based on more market driven systems which is conducive to financial innovation and it requires setting aside risk mitigation processes to deal with ever increasing financial innovation. VII. Handling of operational risks  Should banks use stress testing or best practices in handling operational risk? Stress testing is merely a tool which gives results on a reliable set of data.

The Accord in full is meant for the internationally active banks but other banks are expected to follow suit. Although international institutions such as the IMF and the World Bank have announced that the adoption of Basel II will not be a yardstick for measuring compliance with the international best practice, sooner than later it will be the international norm and they will start monitoring the progress. So, there is no point in debating whether or not we should implement Basel II. The debate, if at all, should be how best to implement it and, where possible, be ahead of others. Overall, the benefits to the industry in terms of improvements in risk management and corporate governance and the supervisory action embedded in the Accord cannot be ignored. Basel II has three mutually reinforcing pillars, namely, the Minimum Capital Requirement under Pillar I, the Supervisory Review Process which is Pillar II and Market Discipline or Pillar III. The whole purpose of this exercise is to make capital the key shock absorber in banking operations. For that, simple risk mitigation measures in Basel I were not considered adequate. Therefore, a risk sensitive capital requirement and risk mitigation practices were combined in a more meaningful manner. Banking is a highly leveraged and risky operation and it is imperative to mitigate risks. With or without the Basel Capital Accord, banks and financial institutions must find ways and means to identify risks, assess them and put in processes and procedures to deal with such risks.
BIS central bankers’ speeches  3  To understand our prospects a bit better, we need to look at the likely behaviors of business and household sectors separately. Circumstances for the business sector are mixed with larger corporations generally in much better shape than smaller businesses. Many large corporations entered the recession with healthy balance sheets. While leverage1 did increase sharply in the recession, it has subsequently come back down to levels similar to the 1990s. Record profit margins have enabled large corporations to build substantial buffers of highly liquid assets. Large businesses are cautious because of concerns about the sustainability of growth and demand, political dysfunction, the health of the financial system and their ability to retain their access to credit throughout the business cycle. For smaller firms, the situation is generally more difficult. Because this sector has a higher exposure to real estate, falling real estate values pushed up leverage for this group and it remains well above previous historical highs. Although small businesses identify weak demand as their major problem, the availability of credit is also an issue. An improvement in their ability to obtain credit would seem to require some stabilization of real estate prices and a substantial increase in demand for their products and services. Turning now to the household sector, Chart 4 shows that a combination of the fall in interest rates, paying down of debt and debt write-offs has substantially lowered the share of income required for households to service their debt.

Without financial stability we cannot achieve good economic outcomes, as the experience of the past few years so painfully demonstrates. I will talk today about our nation’s economy and the challenges that we face. As you know, the state of our economy is important not just for the well-being of our people, but also for the national security of our country. We need a strong economy so that we have the fiscal capacity and technological, industrial and educational dynamism to sustain a military capable of defending America’s global interests. Today I will focus on why it has proven so difficult to generate a strong economic recovery. I will then lay out some prescriptions as to what we can do to put growth on a firmer footing. This is not just about what the Federal Reserve can do on the monetary policy front, but also about what other steps can be taken elsewhere – in areas such as financial stability, housing policy, fiscal policy, and structural adjustment to facilitate domestic and global economic rebalancing. Before I continue, let me remind you that the views I offer today are my own and do not necessarily represent those of my colleagues on the FOMC or the Federal Reserve System. Recent developments and the outlook for the U.S. economy We stand here today several years after the onset of the worst financial crisis in modern times.
Monetary policy As I mentioned, the work of constructing a new policy with a flexible exchange rate had to start from scratch in the fall of 1992. But in a matter of months the Riksbank had prepared a new target for monetary policy. The annual rate of CPI inflation was to be held at 2%, with a tolerance interval of  1  Procedures to handle the same kind of problems exist in e g USA, England and Norway. BIS Review 85/2000  2  one percentage point up or down. The 2% target roughly matched the prevailing rate and was also considered to be well in line with the ambitions in other countries in Europe. Since 1993 the way the Riksbank works has been developed quite a bit. This applies to our internal procedures, the intellectual policy framework and our external communication. Since this has been my primary task during the last five years, I could go on speaking about it for ages but I shall confine myself to a set of issues related to the role of the inflation forecasts and policy rules. In my opinion, the focus on the combination of a specific, symmetric target and published forecasts set by the policymakers has been important for monetary policy’s credibility. By consistently presenting our forecasts and acting accordingly, we have created greater freedom of action than would otherwise have been feasible. It has been a short-cut to credibility. My favourite example is the autumn of 1998.

Now we have in place a framework for the recovery and resolution of banks, something that we did not have two years ago. Serious steps forward have been made on all technical issues that are of key importance for the integration into the European financial infrastructure. I wish to point out something in the BNB’s work, something that may be difficult to see – it is the huge amount of experts’ work and the intensive technical consultations that we are having about our joining the Exchange Rate Mechanism II and the euro area. I’ve already had a suitable occasion to thank my colleagues in the central bank. Now it is a pleasure to thank you, too, for the very good results achieved in this sector. All the items on our agenda are not yet completed and we still have a lot to do. I will not go into details or numbers, but let me mention some of our today’s priorities. I will begin with the amendments to the Law on Credit Institutions which take effect from today. They create an appropriate legal framework for further consolidation of the BNB’s supervision model. You probably know that from today onwards all the most important decisions and administrative acts will have to be approved and issued by the Governing Council. The second group of most important issues relates to lending to so-called ‘related parties’. A legal framework has been created for better definition of this subject and for managing the relevant supervisory practices.
Liquidity ratios among global banks have also risen, with sterling liquid assets relative to total asset holdings more than trebling among UK banks. On the back of this positive news, the authorities in some countries have begun withdrawing extraordinary levels of support. More than half of the capital provided to the US banking 2  BIS Review 10/2010  system was repaid in 2009. The US authorities have also announced their intention to wind down several special liquidity facilities, as has the European Central Bank. This exit is far sooner than might have been expected six months ago. Stability, if not normality, is beginning to return. Debt overhangs and debt hangovers If that were the end of the story, it would be a happy ending. But there are good reasons for believing this story has some way to run. For while the flow of news over the past year has been positive, some of the stock problems which were the root cause of the crisis remain intact. The lasting legacy of this crisis is too much debt held by too many sectors against too little capital. Economists have a special word for this type of problem – a debt overhang. Its economic effects are fairly well understood. Debt operates rather like a tax. Debt servicing costs, like a tax, reduce the disposable income of the borrower. Too much debt means a higher debt “tax” and a greater drag on activity – lower lending by banks and spending by households and companies.

For example, Robert Shiller has also suggested governments should  18  Bernanke, B and Gertler, M (1989), “Agency costs, net worth and business fluctuations”, American Economic Review, 14–31. 19  Shiller, R J (1993), Macro Markets, Oxford University Press. 8  BIS Review 10/2010  issue GDP bonds, with coupons which vary with GDP. These would lower the public debt servicing burden at the point in the cycle when public deficits are likely to be largest. In this way, they would help smooth public expenditure and taxation over time. To date, GDP bonds have only been issued by some emerging markets. But in principle, they could serve as a quasi-automatic stabiliser for any country whose public debt experiences cyclical or crisisrelated fluctuations. 20 Given recent events, perhaps their day is nearing. Conclusion It is said that the longest journey begins with a single step. Events of the past twelve months have been a first step – and a big one. But they are just the start of the journey for the financial system and economy as balance sheets are repaired. This adjustment needs to be fast enough to repair balance sheets, but not so fast as to risk a setback for the financial system or real economy. What a hangover requires is neither a day in bed nor a night on the tiles. Having taken one big step forward, we should guard against taking two steps back.
Evidently the supervisor’s aim must be to ensure that the banking sector is a fortress against the storm and not an added problem that we have to face at the worst time imaginable. 1  Recently, it has been frequently said that the banking sector is in much better shape than it was before the previous crisis. This will allow it to become part of the solution. In any event, crises are, by definition, periods of transition and COVID-19, despite its specific features, will be no exception. I believe this crisis will serve as a catalyst which will speed up many of the trends that we have already seen and discussed on many occasions at our meetings. First, as regards the importance of digitalisation. Second, in respect of the need to gain in efficiency and cut costs. Also, naturally, as regards the criticality of good governance and risk control, underpinned by the best international practices which will allow institutions to react appropriately to such changing circumstances. And, above all, regarding having a sound and sustainable business model for the medium and long term. We do not know what the future holds for us, but what we do know is that the better prepared we are, the better we will fare. Before I conclude, let me apologise for not having made the most of this address to introduce a supervisory “wedge”.

To do so, you have undoubtedly used your strengths, which I believe most notably include your close relationship with your customers, your extensive knowledge of the local economic situation and your down-to-earth management (far removed from speculative business models and focused on harnessing your knowledge of those customers and their needs). Furthermore, on a day like today, I feel that it is fair to highlight as one of your strengths your ability to support one another when necessary. You know better than I do that mutual support is one of the basic principles of the cooperative movement, and over these 50 years you have demonstrated that solidarity is an essential means for overcoming problems and difficult situations. Indeed, if we look back in time we see that today’s society – and economy – are very different from those of 50 years ago. So another key to your success lies in your ability to adapt to that changing reality. The crisis triggered by COVID-19 is clearly a dramatic test of how changeable things can be. It is obvious that, for once, the origin of the crisis is not financial and is not linked to macroeconomic imbalances. Nevertheless, although this crisis is unrelated to previous ones, there is something that still holds true in this type of situation: the strengths that we have built up when the crisis hits will be the strengths that enable us to weather the storm.
This presupposes gradual decrease in the use of elements with lower degree of security, such as static passwords, and limiting the use of older technologies and communication channels that are prone to attacks (such as SMS text messages); - Prevention of new types of fraud, particularly in the context of instant payments, as well as strengthening payer’s protection and regulating a chargeback procedure in specific cases (e.g. an error), which would make instant payments come close to card transactions; - Review of the possible exceptions from applying strong customer authentication, such as contactless card payments, also exploring the possibilities for introduction of an individual limit set by the customer, for which no PIN entry is required; - Potential measures to reduce the risk of fraud due to ‘social engineering’ or ‘targeted phishing’, with a possible requirement for a match between the names of the payee to the payment transaction and the account holder, and the implementation of technological solutions for validation of the e-mail correspondence sender; - Possibility for additional standardisation in terms of the information provided to users in their account statements, particularly for card payments. The sophisticated business models using multiple intermediaries result in users’ confusion, e.g.

Overall, however, looking to the extent possible through this volatility, the rate of broad money growth continues to moderate in line with the trend established over the past 18 months, with the intensification of financial tensions since September leading to significant substitution among the components of M3, rather than, at least so far, sharp changes in the trend of M3 itself. Turning to the evolution of bank loans, the tightening of financing conditions resulting from the intensification of the financial tensions has contributed to a slowdown in the flow of monetary financial institution (MFI) loans to the non-financial private sector in recent months. 2  BIS Review 5/2009  More data and further analysis are necessary to form a robust judgement about the severity and scope of credit constraints and their possible implications for economic activity. To sum up, we decided to reduce the interest rate on the main refinancing operations of the Eurosystem by a further 50 basis points, bringing the total reduction since 8 October 2008 to 225 basis points. Today’s decision takes into account that inflationary pressures have continued to diminish, owing in particular to the further weakening in the economic outlook. The Governing Council recalls its operational decision, taken on 18 December 2008, to widen again the corridor formed by the rates on the Eurosystem’s standing facilities as of 21 January 2009.
Likewise, the iTraxx Sovereign Western Europe Index, consisting of 15 sovereign CDS across Europe, rose by approximately 70% in the same period. 2  This is an approximation of the real effective exchange rate, assuming constant weights and inflation differentials. 3  Annualised volatility computed over one calendar month on the basis of daily movements. BIS central bankers’ speeches  1  rate on 6 September, EUR/CHF volatility has fallen below 10%, though it remains high from a historical perspective. The introduction of the minimum exchange rate also had an impact on some of the dynamic properties of the Swiss franc. As the red bar on the left side of chart 2 suggests, there was previously a positive correlation between the movements of the Swiss franc and those of risk indicators such as the VIX Index, i.e. investors tend to buy Swiss francs when perceived risk increases. In the same vein, the blue bar on the left of the chart shows that the correlation between the movements of the Swiss franc and those of risky assets, such as the equity shares on the MSCI World Index, has historically been negative. In other words, negative market developments have often been accompanied by a rising Swiss franc. Intriguingly, as the right side of chart 2 shows, the introduction of the minimum exchange rate appears to have had a significant impact on these correlations. The SNB’s implementation of monetary policy: liquidity measures On 3 August, the SNB started to implement liquidity measures against the massively overvalued Swiss franc.

1 The depreciation of the euro is another factor contributing to high inflation. All in all, as I mentioned, the inflation spike is proving highly persistent and has also broadened. High inflation is causing a rapid loss of purchasing power and deteriorating consumer confidence in the euro area. Both households and businesses are facing a highly uncertain 1  Fo r further details, see the ECB press release “Mo netary po licy decisio ns” of 27 Octo ber 2022. 1  environment due to the consequences of the war in Ukraine and, in particular, the energy crisis. These factors, and the progressive tightening of financial conditions as a result of the monetary policy response from the main central banks around the world, are weakening economic activity quite rapidly. Indeed, euro area GDP growth moderated significantly in the third quarter of the year, and recent data point to a possible contraction of economic activity in the fourth quarter. Nevertheless, the labour market continued to perform well in the third quarter, and the unemployment rate remained at a historically low level. Moreover, energy commodity prices in wholesale markets have moderated recently, mainly reflecting the worse economic prospects at the global level. In Europe, the extraordinary spike observed in natural gas prices over the summer has significantly corrected. This reflects a reduction in demand, mild weather, high storage levels and the European Commission’s recent proposals to address high gas prices in the European Union and to ensure the security of supply during the winter.