samchain/econo-pairs-v1 huggingface dataset:
Faced with such a dramatic situation, governments and central banks across the world found themselves having to swiftly implement innovative support and rescue measures on an unprecedented scale, in a bid to stabilise the global financial system and limit the economic downturn. The decisive economic policy intervention was a key contributor in calming the markets, halting the downward spiral and clearing the way for economic recovery. As a small open economy, Switzerland could not avoid being drawn into the global recession. The sharp fall in economic activity, which had begun in the second half of 2008, continued in the first half of 2009. Around the middle of the year, the trough was reached and the economy began to grow again. Over the year 2009 as a whole, GDP dropped by 1.5%, the largest decline since 1975. Nevertheless, Switzerland has so far weathered the effects of the financial crisis better than most industrialised economies. This may come as a surprise, given the importance of our financial centre. A deciding factor behind the comparative mildness of the recession in Switzerland was private consumption, which proved to be an important buttress of growth. Moreover, no major distortion was observed in the property market, and banks did not restrict access to lending. Last but not least, the rapid and decisive expansion of monetary policy also played a supporting role. Despite this positive bill of health compared to other countries, the crisis has clearly left its mark on Switzerland too.

In addition, it has discontinued its purchases of Swiss franc bonds issued by private sector borrowers. Indeed, movements in the Swiss franc against the euro over the past few months have caused monetary conditions to tighten somewhat. Yet, overall, monetary policy is still expansionary. The three-month Libor remains at a low-water mark of 0.25%, and we continue to supply the banks with generous amounts of liquidity. Let me now turn to the outlook for 2010 and the monetary policy challenges ahead. IV. Outlook for 2010  The global economy has been in a phase of recovery since mid-2009. The SNB expects that this will continue, although the recovery is still exposed to risks and will vary greatly from region to region. BIS Review 59/2010  3  The greatest expansion will be seen in emerging Asia. The entire region will, in particular, benefit from the strong growth in Chinese domestic demand. In the industrialised economies, the recovery is still being driven by the expansionary monetary and fiscal policy measures adopted at the start of the crisis. At the same time, there are a number of factors weighing on growth prospects. High unemployment, growing sovereign debt and the deterioration in household wealth are likely to dampen private consumer spending in many economies. In addition, given the underutilisation of capacity and the tighter lending conditions, corporate investment seems unlikely to stage a strong recovery. Moreover, in a number of countries the situation in the real estate market, and hence the outlook for the construction industry, will remain difficult.
4  BIS Review 29/2006  course, if the forecast indicates that inflation is below target. However, the exact rate at which the interest rate should be adjusted will be affected by the entire inflation path and by developments in the real economy. Let me tie in this reasoning to the situation at our most recent monetary policy meeting. The fact that inflation was low and was expected to remain low over a fairly long period of time could have indicated slightly more expansionary monetary policy than the market was expecting, even though inflation was expected to be close to target two years ahead. However, at the same time we needed to consider that growth in the economy was expected to be robust and that a continued expansionary monetary policy risked leading to overheating in the economy. The overall assessment was that the best alternative was to raise the interest rate. Some current monetary policy issues I now intend to take up a couple of current issues that have recently arisen in the debate on monetary policy. The purpose of this is to discuss how they can be regarded in the light of the general reasoning on monetary policy that I have just explained. Problems in determining the level of capacity utilisation The first issue concerns how monetary policy’s endeavour to contribute to stable real economic growth can be explained in more concrete terms.

When we introduced the highlevel booking principles in SS 1/18, firms undertook a self-assessment and indeed many indicated that they did not - at the time - meet them all. We have since worked with these firms bilaterally to close any gaps, and I expect we will ask firms to repeat this self-assessment exercise in the near future. Conclusion  I started this speech, describing my excitement at the prospect of becoming the Executive Director for International Banks Supervision. I do hope in 2021 I can meet many of you in person, but for now video conferencing will have to do. The context we are operating in may have changed since I started in my role, but we continue to have stability and consistency in our approach to supervision which is grounded in responsible openness. The UK is and will continue to be an open international financial centre. We benefit enormously from international trade and openness but that comes with responsibility for both firms and us. Therefore, in allowing firms to operate here we expect them to meet the appropriate prudential standards and we need appropriate visibility and influence on their activities. So what does this mean for you?   For most existing third country subsidiaries and branches this should all be familiar in what you see from supervisory practice, though it has not all been written down in this way before.
In the absence of more detailed information on the effect that may be dominant, it does not seem unreasonable to assume that the effects of a reduction of the repo rate path will be of a normal scale. These figures and the estimated effects of a repo rate reduction are not the final word. Of course the future will bring further developments of Ramses and other models, more empirical estimates and new experience, which will lead to the revision of these figures. However, I would claim that these figures are the latest and best word on the basis of the information and knowledge currently available, and therefore provide the best basis for a decision right now. Similarly, the mean squared gaps are perhaps not the last word when it comes to measuring the Riksbank’s target achievement. However, it is fair to claim that is the best way we have found so far of me assuring target achievement, that is, the extent to which the Riksbank has succeeded stabilising both inflation around the inflation target and resource utilisation around a normal level. I consider Figure 1 very clarifying.

Let me touch on five broad areas, though these cover only part of the landscape of the financial stability agenda. First, it is important that the standards applied to the largest financial institutions at the core of our financial system are calibrated to reflect their systemic relevance. Relative to the standards appropriate for a smaller financial institution with a similar risk profile, capital should be targeted to achieve a greater proportional ability to absorb shocks and thereby attain a lower ex ante probability of failure. This makes it important that management of these large firms maintain an ample capital cushion over and above the high regulatory thresholds. Similarly, the funding and liquidity management framework needs to provide a larger buffer against potential shocks. The internal risk management regime - for credit and market risk, operational risk, compliance risk - needs to meet a more exacting standard. The requirements for operational resilience for technology systems are necessarily more demanding. Because of the broader implications of a failure for the financial system and for the economy as a whole, the supervisory framework for the largest systemically significant banking organizations, as well as the firms themselves, needs to produce a higher level of financial soundness than might be indicated by measures of economic capital or expected by shareholders and creditors of the institution. This is important for banks and financial institutions built around banks because of their access to the safety net and their special role in the payments system.
And stretching it or infringing it until it is no longer credible would undermine confidence and, in the end, be counterproductive for growth. In other words, flexibility without damaging the credibility of the rules. Q: Germany does not seem to share this need for fiscal stimulus. A: Our measures will be much more effective if we see structural reforms and a fiscal position appropriate for the euro area. This should be discussed and evaluated at the euro area level. It is normal for the ECB to say this because it monitors the situation across the euro area and is interested in its stability and growth. Q: Its measures have flooded the market with liquidity. But it will be difficult to have a demand for credit if there are no jobs or if employment is at wage levels of the 1980s. A: People will end up getting work if companies manufacture good products and provide good services and there are customers to buy them. Monetary policy can help by providing sufficient liquidity and by steering that liquidity to where it is most needed. This is what the targeted longer-term refinancing operations adopted in June and the measures announced last Thursday, namely the programme to purchase asset-backed securities from the private sector, are aimed at. We want there to be sufficiently ample liquidity and for the ECB’s balance sheet to move back towards previous levels [note from the editor: to go up to € billion from the current € billion].

There is agreement, however, that these payments have increased compared with last year's survey and that this trend is likely to continue in future. Wage and salary payments in euros are still not an issue. Employees would not accept wage and salary payments in euros. Furthermore, such a practice would result in substantial administrative complications (social security deductions and taxes in Swiss francs). The selective use of euros in place of the Swiss franc does not create any difficulty with regard to monetary policy. On the one hand, the bulk of payments in Switzerland will probably continue to be effected in Swiss francs also in future. On the other hand, under the current monetary policy strategy, a possible euro-induced decline in the demand for money will not lead to any problems either. Contrary to the previous policy of targeting the money supply, the steering of the interest rate the National Bank pursues today is not dependent on a stable demand for money. The National Bank realises, however, that, as invoicing in euros becomes more widespread, our export industry must bear higher exchange rate risks. BIS Review 73/2002  3
Making market discipline work We have embarked over the last three years on a shift in our approach to regulating the markets from what is loosely called a merit-based regime, under which the regulator judged the appropriateness of securities being made available to the public, toward to a market-driven, disclosure-based regime of regulation. It is aimed at allowing market participants greater choice and the free play to take calculated risks. We have made it clear that the shift in approach will not compromise our reputation internationally as one of the most open, transparent and well-regulated markets in Asia. Market-based regulation will indeed raise standards of business conduct, as is necessary for a more open, competitive and innovative market environment. Market discipline will not simply be a matter of 'caveat emptor'. The buyer cannot be expected to beware if he is not provided with accurate and accessible information so as to make a reasonable judgement of prospective risks and returns. Neither can he do so if the market is rigged without his knowledge. It follows that market discipline requires a system of laws, rules and standards to discriminate in favour of companies with high standards of corporate governance and disclosure, and to exact penalties on those who manipulate the market. Making market discipline work is therefore the responsibility of all participants in the system.

Such surveillance efforts could also lead to discovery of parties trading on privileged insider information. SGX has the power to suspend or de-list a counter if conditions for orderly trading are found to be absent. •  MAS will carry out independent surveillance on a selective basis, to ensure that SGX is performing its responsibilities effectively. •  The MAS will have the power under the proposed SFA to pursue civil prosecution of listed companies which fail to make timely disclosure of material information, and of any participants suspected of market misconduct. The recently introduced civil remedy regime for insider trading will be extended to cover other forms of market misconduct such as market manipulation, or the employment of fraud and deceit in dealing. Civil remedy, which lowers the burden of proof against offenders, will complement the present framework of criminal remedy for offences under securities law. d.  Supervision of brokers  •  SGX supervises and inspects brokers to ensure that they comply with SGX's rules, are prudentially sound, and uphold high standards of market integrity. SGX has to act swiftly and firmly to deal with any unprofessional conduct by brokers and their representatives. •  MAS conducts continuous off-site review of brokers' operations to check if they comply with statutory licensing requirements. Such off-site reviews will be complemented by MAS' selective, on-site inspection of brokers to assure itself of the competence and effectiveness of SGX's supervision.
Generating an expansion in net exports in order to counterbalance the necessary increase in savings and to offset any reduction in the demand for financial services exports then requires a real depreciation of the currency. This was achieved by a fall of a quarter in the trade-weighted value of the nominal sterling exchange rate between the start of the crisis and the end of 20081. Although the impact of this depreciation on net exports initially seemed rather disappointing, recent revised data from the ONS now suggest that the impact on net exports has been roughly in line with that seen after previous large movements in the exchange rate (Chart 4). The third force is the loss in output and income associated with the financial crisis. Output presently lies almost 15 per cent below where it would have been if it had continued to grow in line with its pre-crisis trend. Even if that shortfall does not prove to be permanent, the  1  It is worth emphasising that the bulk of this fall occurred before the MPC cut Bank Rate sharply in the wake of the collapse of Lehman Brothers and subsequently embarked on quantitative easing. It cannot therefore be attributed to lax monetary policy. Sterling has been broadly stable since the beginning of 2009.

Although the degree of aggression may have somewhat subsided in the aftermath of this crisis, banks are still extending loans to persons they assess as creditworthy. Outside the banking system, credit availability by non-bank financial institutions has also increased in many forms with annual growth in direct loans disbursed by microfinance institutions and leasing finance institutions showing a significant rise. Chairperson, although these developments are encouraging and commendable, I do not think we should be fully satisfied with them. It is not enough to merely increase the number of financial institutions, nor is it enough to concentrate on building consumer loan portfolios to salaried workers only. In my view, the real gains should arise not only from increased accessibility to financial services by more of our people, but also the cost at which such accessibility is made possible. I am sure you will readily concur with me that access to finance in Zambia is still relatively low at 37.3% as at end July 2009. This is hampered in part by the continued high cost of finance and the limited financing options available to the larger part of the Zambian business sector, particularly the small and medium enterprises (SMEs). One can attribute this state of affairs to several factors which broadly are influenced by the macroeconomic environment as well as micro-structure and practices of our financial system.
Economic and Monetary Union (EMU) remains the world’s foremost economic integration project of recent times. And after 20 years, there can be no question that the euro is perceived by the public as a success. In the latest Eurobarometer surveys, euro area citizens have declared the highest level of support for the euro yet recorded. Europe has proved itself to be innovative and decisive, although sometimes the necessary steps have only been taken under the pressure of extreme circumstances, such as the ones we experienced during the last sovereign debt crisis. That said, some bold advances have been made towards the completion of EMU over the past decade. Let me highlight two of these. First, the two main pillars of the Banking Union that are now in place and operational: the Single Supervisory Mechanism and the Single Resolution Mechanism. Second, the creation of the European Stability Mechanism, which played a significant role in the solution of the crisis, and the ongoing reform of which is expected to strengthen this institution’s capacity not only to combat but also to prevent crises. It is further envisaged that it will act as a common backstop for the Single Resolution Fund (SRF), filling a fundamental gap in the euro area’s institutional architecture. Despite these, and other, significant achievements, it is fair to acknowledge that the framework still lacks some fundamental pieces. In particular, as regards its ability to withstand a severe crisis. Let me flag some institutional elements that, in my view, rank highest among those needed.

Third, there is also an urgent need to improve the functioning of the current fiscal policy framework, so that it delivers an aggregate stance that is consistent with national constraints and the needs of the euro area as a whole. On the one hand, the current fiscal policy coordination device, the Stability and Growth Pact, has not stood the test of time very well. Our fiscal rules have proven to be hard to enforce in a timely manner, not least because of their complexity, and have also been unable to avoid procyclical fiscal policies at the national level. On the other hand, and more importantly, the past decade has shown us that lacking a centralised fiscal tool to target an appropriate euro area macroeconomic policy stance is a serious limitation for the functioning of our monetary area. I strongly believe that a central fiscal capacity at euro area level could contribute, in particular, not only to tackling asymmetric, country specific shocks, but also to macroeconomic stabilisation. In this respect, monetary policy would not become overburdened, as it might be in the current economic juncture. Finally, let me advocate the need to explore the introduction of a common safe asset for the euro area. In my view, a well-designed safe asset would contribute significantly to addressing some of the root causes of the euro area’s institutional weaknesses. In particular, it could increase the effectiveness of monetary policy, improve financial integration and complete the Banking and Capital Markets Union, by breaking the banksovereign doom loop and facilitating diversification.
Beyond their impact on the financing conditions for households, firms and Governments, we should assess whether all these measures have achieved their ultimate goal. This is none other than supporting euro area economic growth and, thereby, helping inflation adjust towards its medium-term objective, in keeping with the ECB’s price stability mandate, namely inflation below, but close to, 2%. Preliminary Banco de España estimates suggest that the PEPP would have an impact of the highest order on inflation and on the GDP growth rate, in both the euro area as a whole and in Spain. Indeed, the cumulative impact on GDP growth is expected to be somewhat greater in the case of the Spanish economy. However, it is difficult to quantify the financial and economic damage there would have been had the PEPP not been implemented. One of the main effects of monetary policy decisions, in a setting as complex as that which was in place at the outset of this crisis, is to prevent financial market disruption that may ultimately lead to deeper and more persistent economic crises.1  1  For an analysis of the effects of the PEPP on financial markets, see Box 3.3 of the Banco de España Annual Report 2019. For an analysis of how the corporate sector purchase programme affects the financing of non-financial corporations, see Arce et al. (2017). 6  Where are we at present? Evidently, it is too soon to say the COVID-19 economic crisis is over.

This was the only way to avoid a sharp tightening in capital markets which, with all certainty, would have fuelled a greater economic contraction and, possibly, a deflationary scenario. A specific additional problem of the euro area was the so-called “fragmentation” in the transmission of the common monetary policy. This means that the financing conditions of governments, and also of firms and financial institutions, vary significantly across countries, as a result, among other factors, of the different sovereign risk premia in the euro area. In fact, the cost of government debt in each country usually acts as a “floor” or “baseline” for 2  corporate and bank debt. Consequently, in those countries whose governments have a better outlook for the repayment of their debt and, consequently, which have more favourable financing conditions, the borrowing costs of firms and households, through bank credit, will be lower. The initial phase of the COVID-19 crisis had an asymmetrical effect on euro area countries. This meant that certain countries, such as Italy and Spain, which already had substantially high levels of public debt, were hit harder by the first wave of the virus both epidemiologically and in terms of their reliance on more vulnerable industries such as tourism and hospitality. Borrowing costs duly rose much more markedly in these countries. Faced with this situation, the ECB Governing Council decided to announce new monetary policy measures with the dual n objective of reducing fragmentation and increasing the accommodative stance of monetary policy. For this reason, we adopted two types of measures.