samchain/econo-pairs-v1 huggingface dataset:
However, through discussions with governors and other representatives from central banks abroad, the Board of Governors of the Central Bank of Iceland had become aware of growing opposition to the Icelandic banks’ accumulation of deposits. No doubt this opposition stemmed from many factors, among them the fact that banks in those same parts of Europe felt the pressure of the sudden competition and communicated their concerns to their authorities. Another cause was the fact that the accumulation of deposits in foreign subsidiaries increased the potential obligations of the deposit insurance schemes in the countries of operation. A third factor may have been concerns that the relatively high interest rates offered by the Icelandic banks might reflect underlying weakness. A fourth consideration was the concern about the Icelandic deposit insurance scheme with respect to deposits in foreign bank branches. It was clear, however, that the Icelandic system fulfilled the requirements set forth in European directives, which stipulate that the government must ensure that such a deposit insurance scheme is established but do not address the issue of government responsibility for the scheme’s commitments, and certainly not in the event of a system-wide shock. Official European documents corroborate this. Some declared outright that the Icelandic banks would be prevented from receiving deposits or that they would be forbidden to receive further deposits in the countries where they were already established.

Early in October, two Icelandic banks received sizeable margin calls from the ECB. The ECB demanded that they be met immediately, which would have driven the banks to collapse. The news of these margin calls spread widely. For reasons that were not explained, the ECB withdrew the margin calls at the last moment, in spite of the fact that the Central Bank of Iceland had been informed that such decisions by the ECB were irrevocable. In retrospect, perhaps the safest way to prevent the collapse of the Icelandic banks would have been, at the outset, to place more stringent limits on their operations than were placed on financial institutions in other EEA states; in other words, to deny them the rights conferred by the EEA Agreement. Had this been done, Iceland would not have been a full participant in the internal market of the European Union. I will leave it to others to answer the question of whether political support would have been forthcoming for the imposition of such restrictions on the banks at that time. On the other hand, in view of recent developments, it is obvious that the banks took advantage of extremely favourable conditions to expand more rapidly than was sustainable for the long term as things developed. Because of their relative size,  BIS Review 22/2009  7  the Icelandic banks were more vulnerable than many other businesses even to moderately adverse developments, not to mention the catastrophic events that have shaken the global financial environment in the past year.
He argues that monetary independence is still possible, but because of the impact of financial globalisation, monetary policy carries a much bigger burden in trying to achieve both financial stability and purely macro objectives. 26 Recent Asian experience is illustrative. The exuberance in Asian asset markets and consequent build-up of financial risk in recent years has been exacerbated by the global search for yield in a zero interest rate environment. Raising policy rates may not sufficiently alter the level of risk-taking in these economies. •  In fact, paradoxically, a central bank that tightens monetary policy to stem financial vulnerabilities could perversely attract more capital flows into the economy, resulting in stronger credit growth and rising asset prices. 27 Third, it is not clear that monetary policy can fill all the cracks. Monetary policy flows into all the cracks no doubt, but some cracks are just too big to fill. 28 Financial vulnerabilities are not evenly spread across the economy. They tend to be concentrated in specific sectors and segments, such as in real estate. So, even when monetary policy has configured overall liquidity and risk-taking settings appropriately, specific pockets of financial market vulnerabilities, e.g. a property bubble, could remain. 29 Monetary policy is too blunt an instrument for addressing such specific risks to financial stability, and it can cause significant collateral damage on the rest of the economy if it tries to do so.

Philipp Hildebrand: Key factors for the Swiss economy – financial market regulation in Switzerland Speech by Mr Philipp Hildebrand, Chairman of the Governing Board of the Swiss National Bank, Swiss Economic Forum, Interlaken, 4 June 2010. The complete speech can be found in German on the Swiss National Bank’s website. *  *  *  The financial system is the life blood of our economy. Key measures to increase the resilience of the financial system have already been implemented in Switzerland. However, they have not addressed the fundamental problem, which is that systemically important banks cannot at present be allowed to fail. The commission of experts set up by the government to examine ways of alleviating this problem published its interim report a few weeks ago. The report proposes measures in the areas of capital, liquidity and organisational structure. This approach is in line with the key points on the Financial Stability Board’s agenda. The interim report is an important milestone in the efforts to address the “too big to fail” issue. Naturally, we still face considerable challenges. Moreover, cross-border solutions are required for the “too big to fail” question. The commission’s proposals represent a constructive step towards global cooperation. If the key points on the Financial Stability Board’s agenda are not implemented in the major financial centres, we will ultimately be left empty handed. One of the few positive aspects of the financial crisis has been the unprecedented international collaboration to combat the crisis and the endeavours to cooperate internationally on regulatory reform.
As you know, the second line establishes the control standards and monitors adherence to them, encompassing risk and compliance functions. Nevertheless, other areas, such as legal, human resources or tax, may also be included, in order to ensure that their expertise in these areas is considered by management. There is no one-size-fits-all approach for the division of tasks between both lines; but the identification, assessment, validation and reporting of risks and controls should certainly be clearly assigned in every organisation. As I mentioned before, it is very hard to measure these kind of risks precisely; nevertheless, banks should include qualitative and quantitative key risk indicators in their integrated management information system. To achieve this integration, all parties must speak the same language, which implies applying common taxonomies with clear definitions and indicators per type of risk. Last, but certainly not least, I wanted to emphasise the importance of having an adequate internal audit as the third line of defense. The role of internal audit is key to challenging the adequacy of the first two lines, underpinning the whole framework. Let me conclude. The losses experienced during the crisis and its aftermath should act as a powerful reminder that we cannot relax or lower the bar. There is no room for complacency if we want to avoid repeating past mistakes. In this regard, I wanted to convey a few messages today.

15/11/2019  Opening remarks 11th edition of the European SSM Roundtable/International Bankers Forum Margarita Delgado Deputy Governor  Good Morning and welcome to Banco de España for this 11th edition of the European SSM Roundtable, organised by the International Bankers Forum (IBF). The topic for today’s roundtable is the management of non-financial risk. This is an issue which is always in the spotlight and, at the same time, is quite hard to tackle. The concept of risk is continuously used in banking regulation. A quick search in the CRR1 or CRR2 text will reveal that it is mentioned nearly 1,500 times in each. Banks are certainly familiar with the regulatory requests to understand, measure, hedge, control, assess, address or mitigate risk. I believe it is fair to say that any firm that has survived the crisis and its long aftermath, without public support, has been largely successful in fulfilling these risk-related tasks. Of course, supervisors are also permanently concerned about risk; to some extent, it is what we are paid for. Still, I believe both banks and supervisors tend to feel rather comfortable when we assess financial risk. Don’t misinterpret me. We are perfectly aware of the consequences that a mismanagement of financial risk can entail, but we tend to look at financial risk in a more natural and intuitive way. Things get a lot stickier when we look at non-financial risk. What is the nature of non-financial risk? And what makes it different from more traditional financial risk?
The overriding focus for Thailand this year is ensuring domestic recovery and restoration after the devastating floods in 2011, as well as putting in place short and long-term plans to prevent a repeat of these events. The damage from the floods was severe, with widespread disruptions in the agriculture and manufacturing industries in affected areas. As a result, economic activity contracted by 9 per cent year-on-year in the last quarter of 2011 and the economy barely grew over the year as a whole. BIS central bankers’ speeches  1  In the face of such dramatic numbers, it is important to remind ourselves of the nature of the shock that Thailand faced. Floods, like other natural disasters, are temporary one-off events. They hit you out of nowhere, but then disappear. This is very different from growth slowdowns due to inherent weaknesses in the economy, such as financial crises. As we are witnessing in many parts of the developed world, such retrenchment in economic activity tend to be long-lasting as previous excesses have to be worked out from the system. The aftermath of one-off shocks, on the other hand, is generally characterized by rapid resumption of economic activity as things get back on track. Thus there is no question that Thailand will recover quickly and strongly from the floods. We project that economic growth will rebound to 4.9 percent in 2012, boosted by private and public spending for post-flood restoration. In 2013, economic growth is projected to gather momentum, expanding by 5.6 percent.

21.10.2020  Opening remarks XIX Germán Bernácer Prize Ceremony at the Banco de España Pablo Hernández de Cos Governor  Ladies and Gentlemen, It is a great pleasure for me to welcome you all, and to introduce this Award Ceremony for the 19th Germán Bernácer Prize. I would like to start by thanking Luis de Guindos, Vice-President of the European Central Bank and Chairman of the Selection Committee of this award, for his contribution to this initiative. Luis, we are greatly honoured by your presence at this ceremony. Let me also thank The Observatory of the European Central Bank – chaired by Guillermo de la Dehesa – and the sponsors, represented here by Luis Isasi, President of Banco Santander España. As you know, the prize is named after Germán Bernácer, a prominent Spanish macroeconomist with deep knowledge of monetary theory, who became Head of the Servicio de Estudios of the Banco de España in 1930. The Bernácer prize recognises outstanding scientific research by young economists under 40 from the euro zone, and our institution has been a strong supporter of this award since its inception in 2001. On this occasion, I am glad to congratulate the winner of the 19th Prize edition, Mr. Loukas Karabarbounis. He is a Professor of Economics at the University of Minnesota, a Consultant at the Federal Reserve Bank of Minneapolis and a Research Associate at the National Bureau of Economic Research.
the CPI excluding foodstuffs and energy, CPIEFE, from 4.3 to 4.7 percent annually between November and February. However, the lower oil price in international markets and its pass-through to domestic prices helped to moderate annual growth in CPI inflation, which went from 5.5 percent in November to 4.4 percent in February (figure 1). Recent inflation figures have taken the market by surprise, as it had assumed a clearly downward position with respect to the behavior of prices, even below our predictions in the December Report. Thus, the market expectation for inflation at the end of 2015 has been revised to somewhat above 3 percent, as has been inflation one year out. Expectations two years out remain anchored in 3 percent (figure 2). On the contrary, output and expenditure have evolved as forecast in December. Again this time the baseline scenario I will be sharing with you in a moment foresees a gradual recovery that will gain strength towards the second half of this year. Consistently with this scenario and the Board’s statement, market expectations for the monetary policy rate (MPR) have ruled out new cuts and, in some cases, point at a cycle of increases beginning late this year. In what follows I will describe the macroeconomic scenario we believe to be the most likely for the coming quarters, and its associated risks. Macroeconomic scenario The external environment and related risks remain largely determined by the impending monetary normalization process in the United States.

By countries, the biggest correction goes to the Brazilian forecast, which the market expects to post a GDP drop of 0.7 in 2015, its worst in several years. The greater relative strength of the United States, plus the ever closer beginning of its monetary policy normalization, has prompted a substantial appreciation of the dollar in recent quarters. For sure, news about the situation of the US economy plus the Fed’s statement has caused important swings in the dollar price in the past few weeks. This has reflected in large movements in most currencies around the world. As for the Chilean peso, in the middle of March it was trading above 640 units to the dollar, to later drop to near 620 pesos per dollar at the statistical cutoff of this Report (figure 3). The peso depreciation cycle that began in 2013 stands out as the longest in the last decade and it occurs in the context of a gradual economic slowdown and not a sharp recession. This is one of the main reasons behind inflation remaining above 4 percent. The data indicate that the pass-through coefficient from the exchange rate to inflation has been in line with historic patterns, although in the upper part of available estimates. Besides, the peso depreciation has had different timing than most emerging or commodity exporting economies.
This also provides the foundation for a long-term trust-based relationship, and a clear interest for the financial institutions to undertake the appropriate due diligence to ensure that the returns are commensurate with the risks being assumed. Aspects of governance and risk management thus strongly underpin these contracts. In particular, such contracts demand higher standards of disclosure and transparency to be observed, which in turn act to strengthen market discipline. The legal, regulatory and supervisory framework will need to be adjusted to accord greater clarity to the appropriate legal and regulatory treatment in order to foster the sound and orderly growth of risk-sharing structures and activities, both in terms of the funding and the assets-side of Islamic banks. In Malaysia, steps are currently being taken to provide a conducive enabling environment for this next phase of development that will spur more risksharing transactions though the formulation of new legislation for Islamic banking and takaful. This legislation is now at the final stages of the process of its enactment. This new law for the industry is aimed at promoting certainty to the legal and regulatory treatment of Islamic financial transactions by providing legal recognition to the contractual requirements in accordance with the Shariah.

This framework must set out the functions of each component and level of governance in a manner to ensure accountability of each respective jurisdiction with appropriate division of powers to avoid possible conflict of interests. In this context, consideration may be given to four main ingredients important to the governance framework for Islamic financial institutions. (i)  Firstly, to ensure that the guidance, standards and core principles are able to translate the values consistent with the injunctions of Shariah. The core values of honesty and integrity are key ingredients of the governance framework of the Islamic financial transactions with heavy reliance on the trust relationship. The significance of these core values is clearly highlighted in the Qur'an, Sunnah and the "fiqh". The banking institutions, as user of public funds must act in good faith for the benefit of all stakeholders. If the relationship between the financier and entrepreneur can be built on honesty, efficiency and equity, a durable equilibrium can be established that will serve the mutual interest of both parties. (ii)  Secondly, the governance framework needs to take into account the multi-faceted role performed by the Islamic financial institutions and treat all the relevant stakeholders fairly, including minority shareholders and the investment account holders. It is an embodiment of the concept of justice in Islam as stated in Qur'an, which is nearest to righteousness (taqwa) in the Islamic faith.
In practice, of course, for accounting purposes many pension fund sponsors use an investment-grade corporate bond rate to discount their liabilities; an annex shows what things look like in this case. Chart 4 shows how the deficit of this fund evolves, decomposed into the cumulative contributions of the liabilities (green bars) and assets, comprising equities (red bars) and bonds (blue bars). Note that the deficit rises as high as 30% of initial liabilities in early 2009, reflecting the sharp fall in equity prices during the worst of the financial crisis and subsequent recession. The deficit then falls back as equity prices rally strongly. It then re-emerges in late 2011 and early 2012, reflecting the fall in gilt yields coupled with the more modest movements in equity prices during this episode. Now consider what the picture might have looked like if the MPC had not undertaken any QE. In constructing this counterfactual experiment, I take the estimates of the asset-price impact for QE1 from the work that I discussed earlier, namely that it reduced gilt yields by a percentage point and raised equity prices by 20%, and then simply pro-rate those effects for QE2. I emphasise again that these are only estimates of the effect of QE and are subject to considerable uncertainty, so the results of this exercise should be treated as illustrative rather than definitive. Chart 5 shows the result.

One way of doing that is by looking at the immediate movements in asset prices around announcements of purchases. As market participants are forward-looking, one might expect the bulk of the movement associated with QE to happen when the purchases are announced rather than when they take place. And indeed that approach seems to work reasonably well for identifying the impact of QE1 on the yields on gilts, and those on close substitutes such as corporate bonds. Analysis by Bank staff2 suggests that long-term gilt yields were around one percentage point lower than they would otherwise have been; that corresponds to a rise in long-term gilt prices of around 20%. Investment-grade corporate bond yields3 fell by about the same amount, while high-yield corporate bonds fell by somewhat more. This approach is less suited to analysing the impact of QE2. The deterioration in the economic situation, speeches by MPC members, and the minutes of the September policy meeting all encouraged market participants to expect a re-commencement of the purchase programme. As a result, the effects were already largely incorporated into the general level of bond prices prior to the MPC’s actual announcement of the new programme in October, so it becomes difficult to disentangle the effect of QE. Ahead of that announcement, however, UK sovereign bond yields did fall relative to those in Germany and the United States, consistent with an effect from QE. Moreover, in February we did make an unexpected announcement of a change in the maturity structure of our purchases.
With an equity cushion, even if the household were to experience a job loss during a future housing downturn, they would be able to sell their home, pay off the mortgage and avoid any damage to their credit. Homeowners’ desire to finance consumption by borrowing against housing equity might also be diminished by their desire to retain their ability to move easily. The decline in home prices during 3/5  BIS central bankers' speeches  the bust eliminated many households’ home equity, which is traditionally the source of down payments for households that wish to move and remain homeowners. This mobility might be associated with a change of labor markets or an upgrade of your home or residential location. It is possible that households have saved their newly recovered equity in order to rebuild the capacity to make future down payments and therefore restore this option to move. It is certainly the case that mobility has declined since the housing bust, a fact consistent with this hypothesis. Many homeowners also took advantage of the Federal Reserve’s accommodative monetary policy stance to refinance into very low fixed-rate mortgages. As mortgage rates rise, there is a higher financial cost to extracting housing equity through a cash-out refinancing. The pace of cash-out refinancing has indeed been very low even as housing equity has risen, consistent with this hypothesis. But, owners have other ways of tapping equity, like taking out a second mortgage or a home equity line of credit (HELOC).

As I noted earlier, housing debt during the boom was rising at essentially the same pace as home values, leaving household leverage ratios more or less constant. If housing debt had risen apace with home prices since 2012—rather than staying flat as it has—then we would once again be seeing housing debt producing cash flows available for consumption of about $ billion a year. Instead, households continue to divert about $ billion annually to paying down their housing debt. That’s a difference of roughly $ billion per year, or about 3 percent of total consumption. Relative to historical patterns the household saving rate currently seems quite high, given the ratio of household net worth to disposable income. So, why has household behavior with respect to housing debt apparently changed so much? As always, the data reflect the result of the interaction between the demand and supply sides of the credit market. One obvious demand-side candidate is that consumers may have become more cautious about housing’s value as a financial investment, or its value as collateral for borrowing to finance consumption. That is, households may have come to view housing wealth as more similar to financial wealth in that changes can be transitory rather than permanent. Consequently, it may be viewed as prudent not to spend too much out of increases in these sources of wealth. Additionally, the deep job losses that occurred during the Great Recession may have also impressed on households the need for precautionary savings against adverse income shocks.