samchain/econo-pairs-v1 huggingface dataset:
Macroprudential tools such as the countercyclical capital buffer are an additional means of strengthening our financial system. But a liberal economic system entirely devoid of crises is an illusion. To prevent crises altogether would ultimately mean to constrain the economy to such an extent that our prosperity would be significantly impaired in the longer term. However, it is possible to limit macroeconomic risks to an acceptable level using appropriate regulatory measures. This is where we have directed our efforts since the financial crisis and we are continuing to work closely on this with other parties at national and international level. ‘Debt-free’ payments to the Confederation, cantons or citizens  The initiative is likewise not able to deliver on its second promise to reduce the burden on citizens through ‘debt-free’ payments by the SNB to the Confederation, the cantons or the people. Although ‘debt-free’ payments seem attractive at first glance, they will not bring any financial benefit to the people in the long term, despite what the initiative’s authors would have us believe. A sovereign money system will not turn the SNB into a cash cow. Page 4/8  Switzerland’s prosperity is determined not by the way money is created but by the output the country generates. What is meant by ‘debt-free’ payments? In the current system, the SNB creates money by purchasing foreign currency and investing it, or by granting banks loans. Every franc of central bank money which enters circulation in the economy in this way therefore has a countervalue that yields profit over time.

Peter Praet: The role of the central bank and euro area governments in times of crisis Speech by Mr Peter Praet, Member of the Executive Board of the European Central Bank, at the German Federal Ministry of Finance, Berlin, 19 April 2012. *  *  *  I would like to thank Maximilian Freier and Gianluigi Ferrucci for their contribution in the preparation of this speech. Introduction Since 2007, we have constantly been confronted with exceptionally tense financial and economic conditions. When the tensions in the financial markets first emerged in the summer of 2007, they were perceived as a liquidity shock. However, the collapse of Lehman Brothers in September 2008 – the first climax of the crisis – revealed more fundamental fragilities in the global financial system. The accumulated credit excesses, paired with the complex cross-country linkages in the financial markets, quickly exacerbated the financial market tensions on the other side of the Atlantic, transforming them into a crisis of global dimensions. The resulting Great Recession of 2009 affected virtually all industrialised countries and caused other weaknesses in the economic and financial system to be crystallised. Specifically, the severe economic contraction worsened the fiscal positions in many countries around the world, particularly in those that already had sustained public or private debt imbalances before the crisis. The subsequent tensions in some sovereign debt markets have spilled back into the financial markets. As safe assets, sovereign bonds play a key role in financial systems.
As you can see, the Committee is engaged in a variety of projects that require us to combine the efforts and input of regulators and supervisors across a large number of countries. This is a challenging task. An even greater challenge, however, is prioritising among competing projects to achieve our most pressing objectives. The Committee’s response to the financial crisis has been strong, but there is still much to accomplish. So we have recently spent some time identifying our key strategic priorities, to make sure we have a good means of deciding what we really must do. As you may have seen, these priorities were endorsed by the Group of Governors and Heads of Supervision (GHOS) at the same time they endorsed and announced the revisions to the LCR. The Committee’s primary focus in the short and medium term is completing and embedding the full suite of responses to issues that emerged from the financial crisis. With that in mind, foremost consideration will be given to five priority areas: 1.  completing the crisis-initiated reforms of the policy framework;  2.  monitoring and reinforcing the implementation of Basel regulatory standards;  3.  assessing the impact of, and industry response to, implementation of the regulatory reforms;  4.  examining the comparability of model-based internal risk weightings and considering the appropriate balance between the simplicity, comparability and risk sensitivity of the regulatory framework; and  5.  enhancing the effectiveness of both micro- and macroprudential supervision.

•  Use of microprudential tools for macroprudential purposes: The Committee will oversee preparations for the countercyclical buffer, as well as exchange information on the wider range of microprudential tools that have been used for macroprudential purposes (eg sectoral adjustments to risk weights, stress testing requirements, loanto-value limits or varying margin requirements). Concluding remarks Since the financial crisis, the Basel Committee has accomplished a great deal. But we still have work to do to complete the overhaul of the regulatory framework and fully factor in all of the lessons learned. We also need to see whether we have the balance right when it comes to simplicity and risk sensitivity. That work is going to keep the Committee busy for at least the next two years. But that is far from the end of it, because, as I have noted a number of times today, our policy work will not generate its full benefits if not implemented in a full, timely and consistent manner. So our implementation monitoring work is equally important. And then even when  6  BIS central bankers’ speeches  the new standards are implemented, we will need effective supervisors to ensure that they are adhered to. This is an area where the Committee has the potential to do much more, particularly once the policy pipeline begins to slow. In other words, the Basel Committee will continue to provide you with much to talk about – at this meeting and those in the future! BIS central bankers’ speeches  7
A financial meltdown was avoided and the effects on the real economy seem to have been negligible. In the 1990s, the global monetary policy picture has in many countries been very different compared to the 1980s. Low inflation seems to have become the norm rather than the exception. If monetary policy is successful in providing price stability, does that mean that the risk of financial instability will be smaller? In order for a financial crisis to have severe effects on the real economy, substantial financial imbalances must have been allowed to build up during the preceding period. In other words, monetary policy makers must have seen no reason or been unable to prevent these imbalances from building up. Thus, an important question is whether a monetary policy for price stability will indirectly prevent excessive debt accumulation in the economy? In other words, how likely is it that large imbalances will have time to build up before the central bank judges that its inflation target is threatened and therefore raises interest rates? Can large imbalances materialise without inflationary pressure building up? BIS Review 50/2000  2  A related question is whether the choice of monetary policy strategy has a bearing on the risk of financial imbalances and financial crises? For example, will a monetary policy based on a simple policy rule lead to a lower or higher risk of financial imbalances building up compared to a more discretionary policy?

As I conclude, Ladies and Gentlemen, I would be remiss if I did not acknowledge the support of other institutions during the preparation of this workshop. To this effect, I wish to thank Standard Chartered Bank, PriceWaterhouseCoopers, KPMG, Deloitte and Touché, Grant Thornton, the Zambia Centre for Accountancy Studies and ZICAB Tuition Centre, for having agreed to provide resource persons for this workshop. With these few remarks, it is now my honour and privilege to declare this workshop officially open. I thank you. 2  BIS Review 13/2005
I have mentioned two approaches, that of enhanced counterparty risk management and improved transparency and disclosure, which will hopefully help to address the concerns on excessive leverage and on opaqueness of HLIs. There remains the issue of aggressive trading practices, such as taking extreme measures to manipulate prices and to precipitate herding or panic selling by other market participants. Such practices undermine market stability. I therefore call upon the private sector market participants to review matters and devise a code of conduct to improve the standard of market behaviour and practices. For such a code to be effective, I believe it needs to be market specific and applicable to all market participants in that market. Conclusion Ladies and gentlemen, it has often been said that history, especially financial crisis, tends to repeat itself. In the last ten years alone, we have had the ERM crisis in 1992, the Mexican peso crisis in 1994/95 and the latest Asian crisis in 1997/98. Notwithstanding the disturbingly frequent occurrence of seemingly similar financial crises, I am inclined to believe that even though no two crises are exactly the same, if people do not learn from past mistakes, the market will continue to repeat its punishment. The only difference between the major financial crises in recent years is that the punishment is getting more and more severe, if not violent. I have cited three major challenges to learn from the mistakes in the last financial crises. First, domestic structural reforms. Secondly, monitoring and surveillance of capital flows.

Today, on the basis of a Progress Report, we have reviewed the advances of the banking industry against the objectives set by the Eurosystem and we have identified the outstanding issues that need quickly to be addressed. A press release on this topic will be issued later on today. The Progress Report will be available on the ECB’s website shortly. 3  BIS Review 74/2000
Andrew G Haldane: Fair value in foul weather Remarks by Mr Andrew G Haldane, Executive Director, Financial Stability, Bank of England, based on a previous speech to the Royal Institution of Chartered Surveyors, London, in November 2009 on 10 March 2010. *  *  *  Based on a speech given at the Royal Institution of Chartered Surveyors, 10 November 2009. I am grateful to Dele Adeleye, Alan Ball, Paul Doran, Kemal Ercevik, Andrew Hauser, Florence Hubert, Salina Ladha, Vas Madouros, Colin Miles, Alastair Morley, Paul Tucker and Nick Vause for comments and contributions. Shakespeare’s Macbeth opens amid a thunderstorm, with the three witches cackling: “Fair is foul, and foul is fair Hover through the fog and filthy air” Macbeth [Act 1.1.11–12] Recently, the global financial system has experienced its own dramatic thunderstorm. Financial markets have been thick with fog and filthy air. At times, lightening strikes have threatened seizure in some financial markets and institutions. Two years on, the rumbles of thunder are still discernable. The debate on the causes and consequences of this perfect storm will swirl around for many years to come. At the centre of this storm is, on the face of it, a rather basic question: how should the instruments that make up the financial system be valued? So basic a question ought not to be a matter of life and death. But for a great many financial institutions during this crisis, it would have been precisely that. The fundamental concept on which this debate hinges is fair value.

Elsewhere, it followed adoption of the IASC’s International Accounting Standard 39 (IAS 39) in January 2001. The banking crisis of the past two years has brought that evolution to a halt. As pressures on banks’ balance sheets have intensified, subdued lending growth has raised concerns that recovery may be retarded. A debate has begun internationally on rolling back fair value to arrest this downward trajectory. Once again, central bank governors, politicians, regulators and countries have been prominent in their criticism of fair value. Some fear that fair value is poised to enter the third dip on its rollercoaster journey. Fair values and market prices What have been the underlying forces leading fair value to be at first lauded, then questioned and periodically abandoned? At the heart of this is the vexed question of whether market prices are a true and fair assessment of value. In theory, market prices ought to be a full and fair reflection of the present value of future cashflows on an asset. This is the fulcrum of the Efficient Markets Hypothesis (EMH). Market prices, if not perfect, are at least efficient aggregators of information – a one-stop shop for appraising value. This simplicity makes EMH powerful theory. But its real power is its widespread application in practice. EMH has not just monopolised the finance textbooks; it has also dominated the dealing rooms. If the EMH were to hold strictly, the fair value debate would be uncontentious. Marking of assets to market would be proper recognition of their economic value.
A central factor in determining aggregate growth in the economy is the labour supply. The growth rate in the number of hours worked slackened from 2.5 per cent in 1999 to approximately 0.5 per cent in 2001, while employment rose by approximately 2 per cent each year. The weak development in the number of hours worked during the period 1999 to 2001 is mainly connected to an increase in absence due to illness and a decline in the average working hours. The growth in sick leave has brought down the number of hours worked over several years. The number of persons absent due to their own illness increased by an average of 13.6 per cent per year during the period 1999 to 2001. There has also been an increase at the beginning of this year. During the first quarter, the number of persons absent due to illness rose by an average of 2.8 per cent. The rate of increase has thus declined. The question is whether the increase in sick leave is due to cyclical or structural factors. Historically, sick leave has increased, with some time lag, when the Swedish economy has been operating at high pressure (see diagram 1). If the upswing in the number of absences is due to economic reasons, it is possible that the current high level is a repercussion of the economic boom during 1999-2000. In other words, we could expect the absences due to illness to fall when the economic slowdown makes its mark on the labour market.

The first formal interest rate decision date next year will be Thursday, January 26. Icelandic economic conditions at any given time broadly correspond to what is going on elsewhere in the world. However, occasional tasks can differ and call for specific measures. This is what we see from the Central Bank of Iceland’s policy rate at the moment. It is not reflected anywhere else. The explanation is that the picture in Iceland is unique, and maintaining a low and stable inflation rate in the current climate would widely be thought an ambitious aim. First, the largest single investment programme in Iceland’s history is now under way, and Landsvirkjun and its foreign business partners are by no means the only investors planning major projects. Second, we are simultaneously experiencing the largest-ever overseas expansion of the Icelandic banking system, which has accumulated foreign debt on an unprecedented scale with accompanying capital inflows. Third, the Icelandic credit market has been sharply transformed, with an open invitation for everyone to join in. Fourth, tax cuts have been implemented or announced for the coming months. And to add the icing to the cake, wage earners are compensated for the inflation caused by the broad rise in their house prices which has taken place at no cost to them. This is the climate in which we aim to ensure that medium-term inflation will obey the principles set for it in the Central Bank Act and the joint declaration by the Central Bank and Government of Iceland.
The draft Budget and the Stability Programme Update have introduced measures to increase pensions above the level established by the Revaluation Index, in 2018 and 2019, and to delay the entry into force of the Sustainability Factor, from 2019 to 2023. Allow me to reiterate what I have said in various addresses regarding this matter: it is a priority that we define, in accordance with social preferences, the substitution rates for the pension system that it is sought to ensure; and then, that we adjust revenue accordingly, so that sustainability is ensured. I believe this is a structural issue, requiring a debate not confined to the habitual discussions of an annual budget. Conclusions To conclude, I wish to highlight the fact that the Spanish economy is in its fifth consecutive year of growth, with the prospect that this trend will continue in the coming years, albeit at progressively more moderate rates. Set against this baseline scenario are a series of risks, which might shorten or moderate the current upturn. Accordingly, efforts to continue improving the Spanish general government budgetary position should not be delayed, so as to be able to effectively withstand potentially negative future developments. In this respect, fulfilment of the objectives set in the draft State Budget for 2018 and in the recent Stability Programme Update is crucial. Success will require strict implementation of spending policies and the continuous monitoring of revenue.

15 The degree of interconnectedness in the system may be determined by common exposures to specific asset classes, such as specific sectors in the economy, for example, commercial property, or to specific regions such as emerging Europe, via granted loans or securities holdings. Inter-linkages may also derive from intra-bank and intra-group exposure, as well as from trading and other correlated positions in the financial markets, such as in the credit derivatives market, which may lead to crowded trades, should they need to be unwound simultaneously. They may derive from cross-ownerships and capital participations among institutions, from similarities in business models, or from reliance on the same external sources for funding, for example. While it is unrealistic to think that it would be possible to characterise the degree of interconnectedness of the financial system by taking into account all possible channels for contagion, a great deal of invaluable information exists in a scattered form (at the disposal of supervisors, trading platforms or the institutions themselves). At present, these information gaps imply that most modelling techniques for risk assessment, including macro stress-testing and contagion models, are highly dependent on market-  14  See, for instance, Aikman, Alessandri, Eklund, Gai, Kapadia, Martin, Mora, Sterne and Willison (2009), “Funding liquidity risk in a quantitative model of systemic stability”, Bank of England WP No. 372, June.
With the experience gained together, we can deliver positive and significant changes that will improve the welfare of individuals and businesses, not just in these two cities but across Malaysia and in countries that are dependent on remittance flows. Thank you. 4/4  BIS central bankers' speeches

Hence, it is not surprising that both factors played a major role in bank loan availability, not only according to the assessment of banks in the bank lending survey, but also according to the assessment of firms in the new survey. However, in addition to such demand-related factors, firms are of the view that factors related to the supply of credit also played some role in the deterioration of bank loan availability. In their view, banks’ willingness to lend decreased, which may suggest that lending restrictions were in place. The situation in the largest euro area countries Let me now touch on some of the main results for the largest euro area countries. While overall developments are most important for the ECB’s monetary policy, it is also worth examining the considerable heterogeneity across different countries in the access to finance of SMEs in the first half of 2009. Regarding turnover and profit, SMEs in Germany and France were above the euro area average, in the sense that fewer SMEs reported a net deterioration. SMEs in Italy were around the euro area average, but those in Spain were far below the average. The economic situation is clearly reflected in SMEs’ assessment regarding the deterioration in the availability of external financing. Again, SMEs in Germany and France reported a smaller deterioration in the availability of bank loans than the euro area average.
So boring in fact that when I gave an inordinately long speech on this topic I went all the way to Switzerland so that I could inflict it on their bankers rather than all of you – had I done otherwise I am sure the Lord Mayor would finally have banned me from speaking at this event. But this is a very, very important issue for financial services in the UK because it is the fundamental bedrock of increased dynamism in our  4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  regulation. I am delighted therefore that this is the approach the government has proposed in its consultation on the Future Regulatory Framework, and I hope that it will be taken forward as the wider regime develops. Graduation  At this point I fear that the chair whom I annoyed so much last year is becoming restive again, fearing a long lecture on regulatory plumbing. So let me stick with dynamism, but move us on to something a little more tasty that we have been cooking up in the PRA kitchen. We made changes to simplify the credit union regime last year both because it is a good idea and because we are not constrained by EU regulation in that area.

The “Large banks” panel shows results for all banks with total assets of £ or above, and separately calculated results for all banks with total assets of £ or above. For both of these definitions of “Large”, results are separately calculated using six definitions of distress: 1) Distress defined as receiving worst possible supervisory rating between July 2007 and December 2008; 2) receiving worst possible supervisory rating between July 2007 and December 2009; 3) any instance of default, receipt of state aid, or merger with or acquisition by another bank under stressed conditions between July 2007 and December 2008; 4) any instance of default, receipt of state aid, or merger with or acquisition by another bank under stressed conditions between July 2007 and December 2009; 5) meets definition 1 or 3; 6) meets definition 2 or 4. Similarly, the “Small banks” panel shows results for all banks with total assets of less than £ and results for all banks with total assets of less than £ in each case using all six definitions of distress. 10  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  10  Figure 2: Illustration of a graduated prudential framework Under a graduated prudential framework, the regulatory rules a firm faces would widen and become more complex as a firm grows larger and/or undertakes a wider range of activities that are more complex, converging eventually on the Basel standards, as illustrated by the following diagrams.