samchain/econo-pairs-v1 huggingface dataset:
Even so, in 2020 as a whole, GDP in Latin America contracted by an unprecedented 7.4% according to the International Monetary Fund (IMF). The adverse effects of the pandemic have been uneven across the region’s economies, largely reflecting the stringency of the restrictions adopted by the authorities in each country. Likewise, the characteristics of the productive structure in the region, broadly  3  speaking, and in the different countries, in particular, have shaped the pandemic’s impact.5 For instance, some economies have strong trade links with China (e.g. Chile and Peru) or the United States (Mexico); their recovery in external demand therefore differs as a result of the distinct recovery trajectories followed by those global economies. Exports of transport and tourism services, two of the sectors hardest hit by the health situation, account for a notably large share of the region’s trade (13% in the case of tourism). Furthermore, the price dynamics of commodities, which make up a considerable portion of exports, are influencing the recovery in some countries. Economic policy support has been crucial in mitigating the impact of the health crisis. The authorities very swiftly and forcefully adopted highly expansionary fiscal and monetary policies thanks to the institutional credibility gains made in recent decades. For instance, the governments of Brazil, Chile, Colombia and Peru introduced fiscal measures aligned with those adopted by the advanced economies.

The negative interest rate and our willingness to intervene in the foreign exchange market are intended to make Swiss franc investments less attractive, thereby easing pressure on the currency. The Swiss franc is still significantly overvalued. Compared to September, the new conditional inflation forecast has been revised slightly downwards in the short term. This mainly reflects the fact that inflation in October and  Page 1/5  Berne, 15 December 2016 Thomas Jordan  News conference  November was somewhat lower than expected. However, our expectations for the mediumterm development of inflation remain essentially unchanged. We continue to anticipate an inflation rate of –0.4% for the current year. For 2017, the inflation forecast is down to 0.1%, from 0.2% in the previous quarter. For 2018, we now expect inflation of 0.5%, compared to 0.6% in the third quarter. The conditional inflation forecast is based on the assumption that the three-month Libor remains at –0.75% over the entire forecast horizon. Global economic outlook  I would now like to turn to economic developments abroad, as these have a considerable bearing on the inflation and economic outlook in Switzerland. Since the last monetary policy assessment in September, the global economy has developed in line with our expectations. It has continued to recover and capacity utilisation in many countries is improving gradually. This is especially evident in the labour market, where job numbers are on the rise and unemployment is declining. However, global economic growth is moderate and not yet broad-based.
As this has been the system for a very extended length of time, one ends up with a lot of people being paid a lot and doing very little. As such, people don’t move on in jobs or move out of jobs if they are not competent as might happen with a proper pay system. However, a problem identified is halfway solved as the saying goes. And I am happy to note that outsiders and stakeholders who have had to work with the Bank of Thailand lately are very receptive to the change and are saying much nicer things about us and our work. I also sense that the staff are seeing that things are better and will probably give enough support to the restructure. BIS Review 86/2000  4  Ladies and gentlemen, To get back to the topic of the economy: two years ago I said that we would reduce interest rates as the basic strategy for saving the country. This we have done and now the 14-day RP, the monetary instrument we use to transmit monetary policy to the general economy, is at only 1.5%. The lowest lending rate is 7.5% - what a difference from when I talked to you two years ago. The currency is now at around 42 baht to the dollar, which some people consider weak. Yet when compared to the 22 competitor countries, it has not much depreciated in the last two years.

Economic activity and inflation expectations Now for the assessment in our latest inflation report. First let me say something about the Riksbank’s appraisal of the economic situation. Demand and supply The statistics from recent months clearly point to an upswing in the greater part of the economy. This largely confirms the Riksbank’s assessments last spring. Developments to date in 1997 have been more balanced than before. Demand growth is now coming not only from exports and investment, but to an increasing extent from private consumption as well. The growth of household income has been held back for some years by the programme for fiscal consolidation. Activity has been further depressed by the need to cut spending on public activities. The fiscal withdrawal of household purchasing power is continuing both this year and next, so disposable income is largely unchanged in 1997, but will rise in 1998. After that, when the consolidation programme has been completed, fiscal policy is not expected to be as restrictive on households. Some increase in public activities can also be expected in the coming two years. After rising for some years at a rather modest rate, private consumption has picked up in the past year. Households’ expectations concerning their own as well as the national economy improved in September after a minor setback in August. Households are also more optimistic about the outlook in the labour market.
My impression is that the fundamental causes of the current crisis were the same market failures that have played key roles in many previous financial or banking crises, which we all know well from our previous experience in emerging markets. The first of these are the distortions in financial intermediaries’ behavior introduced by implicit or explicit bailout expectations. The second are the intrinsic vulnerabilities of financial intermediaries that finance long term (or illiquid) assets with short term debt. BIS Review 97/2009  1  What differs in the current crisis is the way in which these components showed up. As for excessive risk taking, the mechanism to deal with it was the securitization of high risk loans, which allowed banks to sidestep capital regulations by either creating off-balance-sheet agents or by bringing back loans packaged into highly rated assets, with low capital requirements. As for short term funding of long term (or illiquid) assets in the current crisis, this was prevalent in investment banks, SIVs and conduits. Hence, the lessons to be learned from the current crisis fall into two categories. The first are broad reforms that seek to align incentives and reduce the vulnerabilities of financial intermediaries. Higher capital requirements, a broader regulatory scope, and reforms to management incentive schemes are all in this category. These are all important aspects. However, the devil is on the details, and the exact way they should be implemented is yet to be defined.

In spite of this, most of the attention in banking regulation has been focused on solvency (Rochet, 2008). However, some steps have been taken in this direction by the BIS in terms of contingent liquidity demand and related triggers associated with off-balance-sheet positions (BIS, 2008). The literature has identified several elements that could generate externalities related to liquidity, and therefore could justify some degree of regulation, where the main arguments are linked to asymmetric information and market incompleteness. 1 Moreover, policies put in place by central banks after September 2008 have made moral hazard concerns for liquidity management more pressing. Nonetheless, there are still open questions as to the kind of regulation to reduce the potential consequences of the imperfections in this area. There are no straightforward answers on this matter. Some pending questions are: Should a capital charge be put in place for liquidity  1  2  Allen and Gale (2000), Freixas and Rochet (2000), and Morgan, (2002). BIS Review 97/2009  risk? Is it necessary to impose an additional liquidity requirement to intra-day liquidity needs? Should central banks act as the lender of last resort in this market? Credit rating agencies The role played by risk rating in the subprime crisis is also an important corollary to the current crisis.
Second, banks' increasing uncertainty about their own risks in the structured credit market and the creditworthiness of their counterparties turned out to be a handicap. Even the affected banks themselves did not know which contingent liabilities should be recorded on their balance sheets. Moreover, they had a lot of difficulty gauging the creditworthiness of their counterparties quickly and with sufficient accuracy. This confidence problem was particularly apparent in the interbank market. The risk premium for unsecured interbank loans has more than tripled since the onset of the US mortgage crisis. And, third, it has become clear that risk management has its limitations. In the area of market risk, events have occurred that – according to the models used – should not even have been possible, or at least would have been considered extremely unlikely. In the case of liquidity risks, it has become clear that assumptions and precautions based on normal times are not appropriate in extraordinary market situations. Possible risks: contagion effects in related markets and deterioration of environment What comes next? Is the worst already past? Unfortunately, there is no clear answer to this question. A risk analysis reveals that, ultimately, the future course of the crisis is likely to be determined by two major risks. First, it is not impossible that problems which have so far been limited to a few partial markets could spill over to additional markets. Such a danger of contagion mainly exists for related credit markets that have so far been largely unaffected by the turmoil.

In this respect, the measures announced by UBS, which are aimed at strengthening its capital base, are to be welcomed. The fact that UBS has been able to attract a large and internationally recognised Asian investor for this purpose serves  4  BIS Review 150/2007  as an illustration of one of the ways in which globalisation of financial markets has been to our advantage. BIS Review 150/2007  5
The two instruments in question were the countercyclical provisions, which were established by equipping the general provisions already in place with a component linked not to non-performance but to credit growth; and the requirement that structured 5/14  investment vehicles be included within the scope of prudential consolidation of the credit institutions creating them, thereby preventing the transformation and securitisation of poorquality loans from proliferating, which was one of the sources of the international banking crisis. In 2008 the countercyclical provisions accounted for a sizeable volume of funds, of over € billion; the stricter treatment in Spain than in other countries of special-purpose investment vehicles deterred our banks from using this artificial risk-reduction mechanism, which contributed to the impact of the first crisis on our banks being relatively lighter. The main lesson of this process has been the importance of what we call “macroprudential” instruments, which did not exist at the time and which have now been set in place in all developed countries following the work of the Financial Stability Board created by the G20 in 2009, and of the European Systemic Risk Board, linked to the European System of Central Banks, created in 2011. As highlighted in the Report (pp.

The role of the FROB was adapted, enabling it to acquire ordinary shares temporarily (up to 5 years), which was known as FROB II. The FROB covered shortcomings in the pre-existing arrangements on two main fronts: the insufficiency of the deposit guarantee schemes’ funds, as their capacity was not calculated to tackle systemic crises, with potential contagion arising in the event of their members being demanded to make extraordinary contributions; and to provide swift capital contributions for ailing banks, obviating the problems posed by mercantile regulations and, in particular, the need to obtain the approval of banks’ General Meetings. As detailed in Table 2.8 of the Report, the contributions from FROB I and FROB II totalled € million, assigned in their entirety to savings banks and conditional upon restructuring and the enhanced efficiency and governance of the recipient institutions. In April 2010 the regulations governing IPSs – dating from 2007 –were amended to afford them greater stability, reinforcing banks’ commitment to permanence, requiring that the central institution should take the form of a public limited company and that it should be at least 50%-held by the savings banks. The IPSs offered a flexible formula for integration analogous to mergers for practical purposes, but retaining the institutions’ individual legal personality and thereby facilitating integration processes principally between savings banks which, given their nature, did not have the same flexibility as banks to conclude merger agreements.
But this will above all be a question of afterwards clarifying and explaining personal deliberations made in connection with the monetary policy meetings. Differences of opinion within the Executive Board will also be clear from the minutes, possibly even more so than before. These changes will in my opinion help us to better live up to the requirements for making decisions in the correct manner as required of us as a public authority. The purpose is also to attain more efficient communication with the financial markets and the general public. 6  BIS Review 62/2007  Conclusion When the inflation target was introduced, after the Riksbank had been forced to abandon the fixed exchange rate at the beginning of the 1990s, under great drama, many people probably doubted that the policy would succeed. But confidence in the Riksbank’s ability to maintain low and stable inflation in the long-term gradually increased. And there are several factors that have been decisive so that we could achieve the credibility of monetary policy that we currently enjoy. The change of regime implemented after the severe economic crisis at the beginning of the 1990s – with an explicit inflation target for monetary policy and clear regulations for fiscal policy – has given economic policy as a whole a more long-term character and greater stability. Closely linked to this is our independent position as written into the law in 1999 and the shaping of our role as public authority.

It is fairly uncomplicated to observe business profitability and cost efficiency in a bank with the aid of measures such as return on equity and the C/I ratio. But a high return on equity and low C/I ratio is not necessarily a sign of an efficient banking sector, but can just as easily indicate weak competition and high margins. Similarly, from an economic point of view it is hazardous to place too much trust in the equity market’s valuation or a rating agency’s credit rating since these partly represent a different perspective. For example, for investors it is only positive if a bank – all other things being equal – operates in a market where competition is low and margins are high. Against this background, it is important to supplement the business analysis with an assessment of the quality and the price of the financial services provided by banks. I suppose the best indicator of the quality of a bank’s service range is how well the bank’s services fare in the competition from other banks and financial institutions. If the barriers to entry are high and there are few alternative suppliers, a high market share can hardly be taken as a sign that the bank’s service offering is particularly high quality or worth its price, even though that can of course be the case.
Figure 12  Real commercial loans and non-mining Imacec (annual change, percent)  20  Commercial loans  15  20 15  10  10  5  5  0  0  -5  -5 Non-mining Imacec  -10  -10  -15  -15  -20  -20  97  01  05  09  Source: Central Bank of Chile. 18  13  17  Figure 13  Commercial loans during recession episodes (1) (2)  (difference with respect to annual change in period 0, percent)  8  8  Covid-19  6  6  4  4  2  2  0  0  -2 -4 -6 -8  -2  Global financial crisis  -4 -6  Asian crisis  0  1  2  3  4  -8  5  (1) Horizontal axis shows months. Period 1 is first month with negative Imacec. (2) Real data based on CPI splicing with 2018 anual base. Source: Central Bank of Chile using data from the Financial Markets Commission and the National Statistics Institute (INE).

However, the closing of the capacity gaps that widened in this period and the convergence of inflation to the target will only be completed by 2022. Moreover, this scenario is still surrounded by high levels of uncertainty and significant risks. Let me now turn to the details of the macroeconomic scenario. II.1. Macroeconomic scenario The behavior of the pandemic continues to be the driving factor in the evolution of the macroeconomic scenario. Several months after it first appeared, the Covid-19 has affected all the countries of the world over the course of this year, but its current dynamic is varied. While some countries have seen a more favorable evolution, others have had outbreaks or increases in infections that have yet to be brought under control. In some countries with good sanitary responses to the pandemic, it has been possible to avoid reinstating tougher restrictions in the face  1  of new epidemic outbreaks. The Latin American region overall currently accounts for the largest number of new infections, but they differ from one country to another in terms of their trajectories (Figure 1). In Chile, health indicators have improved, and the authorities have implemented a plan for gradual deconfinement nationwide. Thus, the percentage of the national population subject to quarantine has dropped from its peak of 54% in July to 40% this week. Particularly marked have been the changes in the Metropolitan Region, where the percentage of the population in quarantine has fallen from 98% in July to 46% today.
While the two services are not perfect substitutes, these preparations include, for example, ensuring that the Fedwire Funds Service has sufficient capacity to accommodate the full complement of Chips activity, even on peak volume days, and that CHIPS can support all CHIPS-eligible Fedwire Funds traffic. Arguably we have made greater progress advancing this body of work than in prior iterations, for which policy makers and supervisors deserve great credit. The application of critical thinking related to protracted outage has also yielded rich dividends in greater understanding of the endto-end transaction flow and identification of potential points of vulnerability. These benefits are not to be dismissed. But let us not delude ourselves: no matter how mature our framework for responding to protracted outage scenarios, no matter how sound our procedures, no matter how tested our protocol, we never want to rely on these measures from a contingency perspective. The ultimate lesson for any market infrastructure (and for their directors, governing bodies, and supervisors), is to so invest in resiliency and security in the core of its operation that it never finds itself in such a state. The unintended consequences of a systemic infrastructure invoking protracted outage procedures in the event of a severe disruption are unknowable, and potentially raise reasonable questions as to whether the remedy may prove more toxic than the disease.

Alternatively, could it encourage an FMI to endeavor to return to normal operations prior to assurance of complete confidence in and sanitization of a production environment? To put it plainly: could the 2-Hour RTO unwittingly exacerbate rather than assuage the impact of a severe 2/5  BIS central bankers' speeches  disruption and/or impede prospects for recovery? Reflecting upon these important questions, allow me to offer the following practitioner’s interpretation, which I hope maximizes the value of the intent of the 2-Hour RTO while minimizing the downside risks of its mis-application. Rather than spending valuable time and industry resources re-litigating established supervisory guidance, we should consider the 2-Hour RTO as a vital organizing objective for planning purposes in peacetime, an aspiration to mobilize our best critical thinking to achieve, rather than an inviolable requirement that must be met in all circumstances recognizing the fog of war. A common understanding of this nuance across policy makers, supervisors, and operators strikes me as an important step forward both to focus our resiliency preparations in advance of an extreme event and to promote sound decision making in its remediation. Provocative Question Number 2: To what extent does the proliferation of risk management and information security frameworks to which FMIs must comply risk creating a “check the box” mentality to security and resilience that diverts resources and management attention from other critical initiatives?