samchain/econo-pairs-v1 huggingface dataset:
This has not yet become a significant issue because most depository institutions offering on-line services still have brick-and-mortar branches, on to which current definitions of a CRA community are based. Still, for exclusively on-line depository institutions, the CRA issue will become increasingly important as their market share grows. Some early discussions with the relevant compliance supervisors may be in order. I also note that this also raises interesting questions on the definition of the relevant geographic market in the analysis of bank mergers. Furthermore, considering the CRA issue brings forth another, broader issue: what is the role of nonbanks in the realm of Internet financial services, particularly payment services, which are still largely the province of banks and other regulated depository institutions? Because banks have been so intricately involved in the United States payments system, banks today face unique regulatory burdens: CRA, reserve requirements, deposit insurance premiums, and the costs of good supervision and good supervisors. If nonbanks begin to take significant market share away from banks because of an inherently lower cost structure, that raises real questions about a level playing field and whether or not banks can ever fairly compete. If nonbanks begin offering through the Internet many of the payment services, or alternatives to the payment services now offered exclusively by banks, that raises real concerns about the ultimate value of a bank charter, and what it really means to be a “bank.” Or is this “banking”?

We, as supervisor and central banker, will try to stay out of the way as much as possible, unless because of criminal activities or systemic risk concerns we have to jump in. The private sector seems to have done fairly well so far. To this end, I point out a recent creation of the Banker’s Roundtable, an organization composed of some of the largest United States banks, in organizing the Banking Industry Technology Secretariat (“BITS”). BIS Review 17/1997  -9-  BITS, as I understand it, is in the process of designing and implementing common technological standards for the inter-operability of systems linking banks and their customers, and is also hoping to act as a certification authority for its member banks for third-party system and software providers, to ensure that when an electronic or Internet banking transaction takes place, the bank’s name is the only name the customer ever sees. Similarly, a certified software or systems provider would agree that the customer’s payment information would stay with the bank and not the provider. I mention this not as an endorsement of BITS, but as an example of the type of innovation and cooperative or collaborative effort that can occur when the banking community realizes the enormous challenge and opportunity it has in the next few years. Central banks and bank supervisors must also be equal to these challenges. In order for us to fulfill our responsibilities, it will be necessary for the private sector financial institutions to keep educating and challenging us.
This is unlike various financial crises in the past 25 years or so – which tended to have certain recurring themes, and which tended to begin in emerging economies before their knock-on impact was felt internationally. The analytical tools and policy prescriptions for dealing with such crises became more tried and tested over time, even if applied in too dogmatic a fashion at times. Global institutions, whether it was the IMF, developed nations, or a consortium of strong international banks, had the wherewithal to bring sufficient resources to bear on the problem. Crisis resolution was never easy but did not quite look insurmountable. Not so this time. The epicenter of this crisis is the US – it is the world’s largest economy, holder of the international reserve currency, and home to the largest and most sophisticated financial system. So we are talking about the core of the global financial and economic system where severe problems arose and have since spread across borders. In the US, the “shadow” banking system grew rapidly but was quite opaque in the way it operated. Before long, problems built up and spread to engulf the “traditional” banking sector. Within a short time, commercial banking operations were severely impaired. Right now, we are dealing with the bursting of multiple, overlapping bubbles – the housing bubble, the household credit bubble and the consumption bubble. Cutting across all three bubbles was leverage – households overstretched themselves; the financial institutions which were extending this credit to households were themselves taking on excessive leverage.

The secular trend in the growth of Asian enterprises and corporations, growing intra-regional trade, and the demands for infrastructure financing will generate new opportunities for corporate and institutional businesses. Wealth creation and the rise of the Asian middle class, coupled with the low penetration of financial services will drive the growth of personal financial services. I am confident that when the dust settles, global financial institutions which rebuild their resilience and stay engaged in our region will increase the value of their Asian franchises. Asia will continue to provide strong growth opportunities and geographical diversification  BIS Review 30/2009  5  benefits. Some Asian financial institutions will also develop strong operations, brand names and a regional footprint. They will play their role in driving Asia’s continued growth. In Singapore, while we are working to cushion the impact of the crisis, we are also building capabilities in the economy and the financial sector for the upturn. I wish you all a fruitful two days of deliberations and interaction. Thank you. 6  BIS Review 30/2009
Different inflation developments than forecasters expected in January Annual percentage change 12 10  12 Range of other forecasters' estimates  10  MPR Feb 8  8  CPIF  6  6  4  4  2  2  0  0  -2 Jan-20  Jul-20  Jan-21  Jul-21  Jan-22  Jul-22  Jan-23  -2 Jul-23  Note. Refers to forecasts based on outcomes for the CPIF up to and including December 2021. The range shows the dispersion between highest and lowest estimates of other forecasters. Sources: Statistics Sweden, individual forecasters and the Riksbank. Figure 2. A broad rise in inflation – not just rising energy prices Sub-index in the CPIF  Measures of underlying inflation  Note. Annual percentage change. The range in the figure on the right shows the highest and lowest outcomes among seven different measures of underlying inflation. Sources: Statistics Sweden and the Riksbank. 12 [15]  Figure 3. Policy rates are eventually determined by the global real equilibrium interest rate  Source: The Riksbank. Figure 4. Inflation as high as in the 1970s and 1980s Annual percentage change 16  16 1970-1992 Average: 8.2  14  14 CPIF  12  12  10  10  8  8  1995-2022 October Average: 1.7  6  6  4  4  2  2  0  0  -2 1970  1980  1990  2000  2010  2020  -2 2030  Note.

Also contributing to this is that factors causing restrictions on supply, and temporarily pushing up commodity prices, are fading away, and that international inflation is being curbed by central banks raising their policy rates. The economic agents trust that the high inflation rate is temporary and will return to the target fairly soon. The longer-term inflation expectations will thus remain anchored at 2 per cent. Wage increases and the Industrial agreement benchmark are based on the assumption that the inflation target will continue to apply in the future, despite the temporary rise in inflation. Companies are refraining from excessive price increases, which risk giving rise to compensatory wage increases that increase their costs, and which force the Riksbank to raise the policy rate further, which will drive their costs up even more. In turn, fiscal policy focuses on targeted support to households and companies that suffer particularly badly in the poorer times that can hardly be avoided going forward. In such a scenario, the inflation target will be able to continue to provide a basis for a long-term favourable development in the Swedish economy, without very large policy rate hikes by the Riksbank (Figure 6). In a bad scenario, the opposite happens. Interest rate hikes will be insufficient and economic agents start to doubt that inflation can return to the target in the foreseeable future. This leads to the longer-term inflation expectations in the economy rising.
Prospective members of the euro area are in fact also required to satisfy the other four Maastricht criteria, which relate to inflation, the interest rate, the fiscal deficit and the public debt. I propose to focus on the ERM II criterion for two reasons. First, the timing of EMU membership is conditioned by the two-year period embedded in the exchange rate criterion. In Malta’s case, if it is part of the next enlargement in May 2004 and even if it fulfils the other Maastricht criteria, the earliest that it will be technically able to participate in EMU is mid-2006. Earlier adherence to the other criteria, therefore, becomes almost irrelevant. Second, the obligation to participate in ERM II has implications in terms of the preparations which a national central bank has to make in view of its eventual entry into EMU. This is because it impinges directly on some of the central bank’s main functions – such as the formulation of monetary and exchange rate policy and the management of external reserves – something which is not true, for example, of the fiscal criteria. ERM II is thus of particular interest to central bankers. Against this background, I will now review some issues which eventual participation in ERM II, and later in EMU, raises for policy makers in Malta. No significant change in the parameters governing monetary and exchange rate policy EMU entails the adoption of the euro and the surrender of autonomy in the area of monetary policy to the European Central Bank (ECB).

Such initiatives have prompted the IMF to conclude that ‘the Bank is one of the leaders worldwide in shaping reforms in this area’. Finally, efficient resilience is why the Bank of England, working with the Financial Conduct Authority, has been at the forefront of efforts to increase individual accountability in financial services. While the UK’s action plan to improve conduct includes stronger deterrents and reduced opportunities for bad behaviour, we recognise that ex post penalties are only part of the solution. 8  The FPC judges the appropriate Tier 1 capital requirement for the UK banking system, in aggregate, to be 13.5% of risk-weighted assets (RWAs), as currently measured. This compares with around 10.5% including capital conservation and SIFI surcharge buffers based on international standards. The Bank has also introduced a leverage ratio requirement in advance of international requirements that currently amounts to, in aggregate, 3.3%. If resolution arrangements were not in place, the FPC is likely to have judged that the appropriate baseline Tier 1 capital requirement for the UK banking system would be closer to 20% of RWAs than the current 13.5%. 9 Membership of the SMF has risen from 70 in 2008 to 190 today. Our Discount Window is open daily for those firms requiring a bespoke facility with lagged disclosure. We hold monthly repo auctions to provide predictable and regular access to reserves in exchange for a very broad range of collateral, including raw loans.
That is its lowest rate in a decade (Chart 3). 2  BIS central bankers’ speeches  •  These improvements in the labour market have also been reasonably well dispersed across the UK. Unemployment has fallen in every UK region since 2012, by at least 2 percentage points. •  Last, but by no means least, aggregate pay across the economy has begun to rise. A year ago, Mark Carney told the TUC that “Britain deserved a pay rise”. Today, I am delighted to say it has had one. Aggregate pay across the whole economy is growing at around 3% year-on-year, compared to less than 1% a year ago. •  In inflation-adjusted terms, the picture is even more heartening. Real pay is rising at over 3% year-on-year. A year ago, it was falling by around 0.4% (Chart 4). Real wages are rising at their highest rate for 8 years and, encouragingly, some of the fastest rates of real wage growth have been among the lowest paid. These developments have in large measure been driven by the recovery in the UK economy over the past few years. But let me now add some cross-currents to this fast-flowing employment stream. Many of these cross-currents will be familiar to the TUC’s membership. They pose some real challenges, economically and societally. •  Rates of unemployment still remain high among some cohorts and in some regions. Unemployment rates among those aged 18–24 is still over 13%, 8 percentage points above the national average.

Shaw-Taylor, L, and Wrigely, E A (2014) “Occupational structure and population change”, in Floud, Humphries and Johnson (eds) The Cambridge Economic History of Modern Britain, Volume 1 (Cambridge University Press, Cambridge, 2014). Stanislaw, U (1958) ‘Tribute to John von Neumann’, Bulletin of the American Mathematical Society. Ricardo, D (1821) “On the Principles of Political Economy and Taxation”, Library of Economics and Liberty Online. Trade Union Congress (2014) “UK workers suffering the most severe squeeze in real earnings since Victorian times”, Labour Market and Economic report, available at: http://www.tuc.org.uk/economic-issues/labour-market-and-economic-reports/economicanalysis/britain-needs-pay-rise/uk. Wallis, P (2014) “Labour markets and training”, in Floud, Humphries and Johnson (eds) The Cambridge Economic History of Modern Britain, Volume 1 (Cambridge University Press, Cambridge, 2014). Woirol, G R (1996), “The technological unemployment and structural unemployment debates” (No. 173), Greenwood Publishing Group.
Fritz Zurbrügg: Review of financial market developments, and various interest rate and foreign exchange benchmark reforms Introductory remarks by Mr Fritz Zurbrügg, Member of the Governing Board of the Swiss National Bank, at the Media News Conference of the Swiss National Bank, Berne, 1 December 2014. *  *  *  In my remarks, I will begin by talking about developments on financial markets since the middle of the year. Then I will speak about the various reform efforts in the area of interest rate and foreign exchange benchmarks. Developments on the financial markets After a lengthy period of calm, volatility has increased slightly on the financial markets since the middle of the year. In addition, investors’ appetite for risk has dipped at times, and the risk markets have suffered temporary setbacks. Thus we have observed two waves of selling on the stock markets over the past few months (cf. chart 1). At the end of July, the European stock markets, in particular, were affected, while those in the US and the emerging economies proved more resilient. The second, more serious wave of selling set in at the end of September, making a significant impact on the major non-European markets as well. The main trigger for both waves was unexpectedly weak economic data in the core economies of the euro area and Japan. To some extent, this negative effect was aggravated by geopolitical tensions. However, chart 1 also shows that these waves of selling were relatively short-lived.

Since the end of June, the trade-weighted US dollar has risen by nearly 10%. By contrast, the trade-weighted euro has lost over 3.5%, while the yen has lost almost 12% of its value. Chart 2 shows that, since the middle of the year, the strength of the US dollar has also made itself felt with respect to the Swiss franc. However, the chart also shows that the Swiss franc has become stronger against the euro over the past few months. It is likely that this is mainly due to two factors. On the one hand, the disappointing path of the euro area economy, and the further easing in monetary policy associated with this, have been responsible for a weakening in the euro. On the other, the pressure on the Swiss franc has reflected the strong demand for safe investments, particularly in periods of increased geopolitical tension. Since  BIS central bankers’ speeches  1  mid-year, the trade-weighted Swiss franc exchange rate has barely changed overall. Thus, the Swiss franc is still high. Reform efforts in the area of interest rate and foreign exchange benchmarks This brings me to the progress that has been made in reforming interest rate and foreign exchange benchmarks. In recent years, revelations of manipulations have undermined the credibility of these benchmarks. At international level, the Financial Stability Board (FSB) is coordinating the reform efforts. At the same time, country-specific reforms are being implemented at national level.
To supplement this backward-looking analysis the FPC layered on a forward-looking judgement that the new bank resolution framework, put in place following the crisis, would reduce the gross benefits of capital. Holders of bank debt and equity now expect to be bailed-in if a bank is resolved, and so exert greater market discipline on banks to prudently manage their risks. This reduces the probability and severity of future crises (GDP-at-risk), and reduces the additional benefits of also adding more capital. The ‘gross costs’ were based on estimates of the relative costs of equity and debt funding, as well as macroeconomic estimates of what a given increase in bank lending rates implies for growth. Both of these costs and benefits are estimated to be largely constant over time. 24 “Supplement to the December 2015 Financial Stability Report: The framework of capital requirements for UK banks”,  Bank of England (2015). The analysis underpinning this framework is published in Brooke, M et al. (2015), “Measuring the macroeconomic costs and benefits of higher UK bank capital requirements”, Bank of England Financial Stability Paper No. 35, December. 24  All speeches are available online at www.bankofengland.co.uk/news/speeches  24  The FPC’s analysis pointed to an optimal range for structural capital requirements and buffers totalling 1014% of risk-weighted assets (Chart 17). This range maximised the expected future level of GDP. The range reflects the considerable uncertainty around the estimation.

The more daunting problems we face of bringing our healthcare and social security commitments and resources into balance come later and are less acute than those facing most other large mature economies. These facts provide some perspective but they are not a compelling argument for deferring policy action to address them. Another argument for perspective is that our current account deficit reflects in part the relative attractiveness of the United States as a place for the world to invest its apparently ample present supply of savings. It is true that much of the cause of our imbalance seems to lie in optimism about future U.S. economic performance reflected in the willingness of non-Americans to put their savings to work here rather than in their own countries or in Europe or Japan. In this sense, our external deficit may reflect relative strength, rather than weakness. This argument would be more reassuring if we were facing a lower and more sustainable current account deficit. And it would be more powerful if the capital inflows that are the counterpart of our  2  BIS Review 25/2005  current account imbalance were going to finance private rather than public investment, and if a larger share of those flows were private rather than official. Another argument that is important to weighing the risk in running an external imbalance of this magnitude is the very large increase in the share of the world’s savings that now seem to move more comfortably across borders.
That build-up took place over a very short period in 2014-2016, when foreign currency inflows were at a peak. In my speech at last year’s Annual Meeting, I outlined the benefits of maintaining the reserves — benefits enjoyed by many — and I also discussed the costs, which fall mainly on the Central Bank. These costs derive from a negative interest rate differential, as the reserves are currently invested abroad at low interest rates, while the rates on the Bank’s króna-denominated debt are much higher. Extrapolations carried out last year indicated that because of this, the Bank’s operating results would be negative by roughly 18 b.kr. per year. New calculations indicate that this loss has shrunk to 15 b.kr. per year, mainly because the international reserves are smaller and the interest rate spread is narrower. Central banks do not become insolvent in the conventional sense, even if they have negative equity; indeed, many respected central banks have operated under such conditions for longer or shorter periods. This is because the purchasing power of the reserves is intact as regards the purpose they serve, and central banks themselves issue the currency they use to pay domestic costs. Even so, it could be detrimental if the Central Bank of Iceland has significantly negative equity, as this could undermine its independence and its ability to achieve the price stability objective.

Nevertheless, I cannot leave the topic of the financial system without mentioning the massive overhaul of financial market infrastructure that is currently underway and the germination of ideas in the area of payment intermediation, as the Central Bank is integrally involved with both. The renewal of the most important core infrastructure elements used for decades to operate the financial system began recently. The investment as a whole represents the financial system’s largest IT investment ever undertaken. The overhaul will move us away from “home-grown” solutions to standardised international systems. The systems being renewed are the banks’ internal payment systems, the Central Bank’s interbank payment systems, and the Nasdaq securities depository’s securities settlement system. A variety of benefits accompany new financial market infrastructure, but the implementation process can be risky, partly because the new systems must communicate with the old ones during the transition phase. Supervisory bodies monitor this risk. It is analysed at meetings of the Systemic Risk Committee and is identified as a risk factor in statements issued by the Financial Stability Council. Such a risk materialised to an extent last November and the cooperative forum on operational security of financial market infrastructure that I just mentioned was set up afterwards. In that forum and elsewhere, work will be done to minimise the operational risk accompanying the ongoing renewal process.