samchain/econo-pairs-v1 huggingface dataset:
News conference  Berne, 14 December 2017 Fritz Zurbrügg  Introductory remarks by Fritz Zurbrügg  In my remarks today, I would like to address some of the developments currently taking place in the field of financial stability. I shall look at the big banks first before turning to the domestically focused banks. I will conclude with a few words on the new banknote series. Big banks  As Thomas Jordan has already noted, the international economic environment has continued to improve since the last news conference in June. Conditions on the financial markets have remained stable. Premia for bank credit default swaps, for instance, have barely changed since June. Premia have thus settled at lower levels again following the turbulence in 2016. Against this positive backdrop, both of Switzerland’s big banks remain on track to meet the requirements of the ‘too big to fail’ regulations with respect to resilience. This first pillar of the regulations covers requirements pertaining to the going-concern loss-absorbing capacity of systemically important banks. Both Credit Suisse and UBS already comply fully with the final 1, risk-weighted requirements. However, further improvement is needed with respect to the leverage ratio. Both of the big banks have also made progress on the second pillar of the regulations, ‘resolution’, which covers the orderly restructuring and wind-down of a bank that can no longer function as a going concern and is thus deemed to have become a gone concern.

With a view to managing such a crisis scenario, Credit Suisse as well as UBS have increased their gone-concern loss-absorbing capacity by issuing further bail-in instruments, which can be converted into equity in the event of impending insolvency. As we explained in our Financial Stability Report published in June, since the ‘too big to fail’ regulations came into force, 1 Final requirements refer to the requirements that will apply after expiry of all transitional provisions, and in particular to the qualitative requirements for going-concern capital. Page 1/3  Berne, 14 December 2017 Fritz Zurbrügg  News conference  Credit Suisse and UBS have also taken important organisational steps to improve their resolvability. Despite these positive developments, the two big banks still need to make further progress if they are to fully comply with the second-pillar requirements. This applies both to their gone-concern loss-absorbing capacity and their resolution planning. Full compliance with all of the ‘too big to fail’ requirements will further strengthen the big banks’ going and gone-concern loss-absorbing capacity as well as improve their resolvability in a crisis. Both of these sets of requirements must be addressed if Switzerland’s ‘too big to fail’ problem is to be solved. Domestically focused banks  I would now like to turn to the domestically focused banks. These institutions’ biggest risks continue to stem from the mortgage and real estate markets. I will make three points in this regard. First, imbalances on the mortgage and real estate markets persist.
There have been members of the MPC on both sides of this argument. Second, there has been an acceleration in the pace of globalisation. The entry into the global market economy of China, India and Eastern Europe is effectively doubling the world economy’s supply of workers – from 1.5bn to 3bn. This is having pervasive effects on wages, prices and, potentially, economic relationships in developed countries in ways we need to understand in order to set interest rates. Third, the last few years have seen the largest recorded entry of foreign workers to the UK. This has increased the supply capacity of the economy, as well as boosting demand, but the precise scale and likely duration of these effects are very hard to judge. How is migration changing the ground rules by which we set policy? If labour shortages were to cause more migration, rather than higher wages, we would be in a rather different world from the one we are used to. Finally, there has been a major surge in energy prices in the past three years – first a doubling in global oil prices, and then an even larger rise in natural gas prices which was specific to the UK. Up until now at least, the UK and the global economy appear to have weathered the impact of these major cost shocks remarkably well.

6  BIS Review 20/2007  Remembering the earlier discussion of constrained discretion, a temporary spike in inflation, as a result of a large cost shock like the recent rise in energy prices, is exactly the sort of shock to which policy-makers should be able to react flexibly within an inflation targeting framework. That enables them to avoid excessive volatility in output and employment, as long as public expectations of inflation over the medium term remain pegged to the inflation target. On the other hand, the MPC can never afford to ignore evidence that medium-term inflation expectations are becoming dislodged: anchoring these expectations is fundamental to the success of the framework. But direct evidence of inflation expectations is very hard to come by; the measures we have are patchy and poor. So there is a difficult dilemma here, which the MPC has been grappling with over the past few months. And it has left me with a nagging worry. My concern is this. If the price of maintaining the public’s confidence is that we have to try to keep inflation within a whisker of the target at all times – even in the face very large shocks – the flexibility that is such an important feature of our present arrangements may get significantly eroded 7 . That is why the Open Letter procedure remains important – and why it is a great pity that it has been widely misrepresented as a punishment, rather than as an opportunity for the MPC to explain itself.
Green Swan 2021 Global Virtual Conference – 2 June 2021 Never too much and never too many: how to transform global discussion into global action against climate change  Speech by François Villeroy de Galhau, Governor of the Banque de France  Ladies and Gentlemen, This “Green Swan 2021 Global Virtual Conference” co-sponsored by the Banque de France, the BIS, the IMF and the NGFS should have taken place in Paris, birthplace of the Climate agreement and of the NGFS, but it is my pleasure to welcome you online. Central banks’ commitment to the climate cause may seem obvious today. But few issues have seen such a rapid and massive change. My generation changed its mind, I changed my mind. Many of us now share the imperative of Hans Jonas: “In your present choices, include the future wholeness of Man among the objects of your willi”. In Amsterdam three years ago, for the inaugural Conference of the NGFS, I referred to greening finance as our “new frontier for the 21st century”. Today, the challenge could almost look inverted: we have gone from the risk of “doing too little, too late” to the criticism by some of “too many doing too much”. No: we are not doing too much (I), and we are never too many (II). But before starting, I would like to draw two useful and cautious lessons from the above-mentioned criticisms. First, we, central bankers and supervisors, cannot do everything by ourselves; we are not the only green game in town.

Eddie Yue: Why challenges reinforce Hong Kong’s value as an international financial centre Keynote speech by Mr Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, at the Asian Academy of International Law Conference “Why challenges reinforce Hong Kong’s value as an international financial centre”, 26 February 2021. * * *  Opening 1. Good afternoon. I am delighted to be your keynote at this important event today. I thank the Secretary of Justice, Tony (Neoh) and Stephen (Phillips) for inviting me. 2. This conference is titled ‘Why Hong Kong is irreplaceable’. And in the context of international finance, I think it’d be fair to start this session with a question rather than a statement and ask: why is Hong Kong irreplaceable? 3. The answer is that no city is totally irreplaceable as a financial centre. For decades, London has been established as one of the leading global financial hubs. But even with this entrenched position, we have been hearing questions whether London can maintain this dominance in Europe after Brexit. 4. Or look further back in time. Modern banking was probably pioneered in Genoa in the 15th century. But no-one sees this picturesque Italian city as a financial centre today. In China, Pingyao in Shanxi was once the cradle of banking during the Qing dynasty; it is now more of an open-air museum for tourists. 5. The truth is that what financial centres do is irreplaceable, not where they are.
Because mutual funds are not natural providers of intraday liquidity, 5 their rapid growth may have contributed to the decline in secondary market trading activity. Fixed-income market liquidity may also be declining for cyclical reasons. Dealer inventories have historically been sensitive to changes in the size of credit risk-premia and term-premia (Exhibit 10). Finally, the effects of unconventional monetary policy on rate expectations and corporate bond issuance may also be affecting market liquidity. This is an area in need of further study. To reiterate, the evidence that market liquidity has diminished is mixed. But even if one agrees with the position that market liquidity has diminished, concluding that tougher regulatory requirements are the most important factor would be premature at this stage. The available evidence and common sense suggest that the changes in the regulatory regime are likely important, but we need to do considerably more work before we reach a definitive conclusion on their relative contribution. Furthermore, even if additional evidence supported the conclusion that market liquidity has declined due to the increase in the regulatory burden on the major securities firms, this decline would still need to be weighed against the benefits of a more resilient and robust financial system. During the last cycle, market liquidity was plentiful prior to the financial crisis. But, as the financial system became stressed and several large systemic firms teetered on the brink of failure, market liquidity quickly dried up.

Similarly, dealers apparently are unwilling to provide the funding and the balance sheet capacity necessary for their leveraged clients to arbitrage away this dislocation. The degree to which this shift in the yield spread between Treasury and interest rate swap yields is due to the differential capital requirements imposed on cash versus derivative instruments warrants more investigation. Just as market and funding liquidity are interlinked, so are funding liquidity and capital requirements. All else equal, stronger capital requirements reduce firms’ vulnerability to runs. This suggests that funding liquidity risk can be addressed in many different ways. First, capital requirements can be bolstered to reduce the risk that a firm will become insolvent in particularly bad states of the world. Second, improved reporting and transparency can reduce the degree of uncertainty about whether a firm is solvent, thus reducing the risk that  6  Brunnermeier and Pedersen (2009) “Market Liquidity and Funding Liquidity” Review of Financial Studies 22(6) pp. 2201–2238 provide a theory that features strong correlation between market and funding liquidity during crises. 7  Hu, Pan, Wang (2013) “Noise as Information for Illiquidity” Journal of Finance 68(6), pp.2341–2382 provide further evidence on the relationship between yield curve fitting errors and alternative funding liquidity metrics. 4  BIS central bankers’ speeches  investors might wrongly perceive that a firm is insolvent, when, in fact, it still has adequate capital.
As said, it’s very probably our duty to issue a CBDC, but it’s our will to issue it with you, commercial banks, and not against you. Developing a scheme of shared benefits for all stakeholders More generally, I would like to insist that there can be benefits for every stakeholder along the chain. The ‘economic equation’ can be worked out so that each and every one – including banks and merchants – has a direct interest in being part of it, like for cash issuance today. We are well aware that, to quote the words of our host, payments have gone from being a simple convenience to a central element of banks’ relationships with their customers, and we strongly desire that this will continue to be the case. The European payment ecosystem as a whole will also benefit from the digital euro, rather than giving ground to so called ‘stablecoins’ probably issued by nonEuropean players. vii The scheme we are currently developing will enable the emergence of open acceptance standards on a pan-European scale, fostering convergence and enabling all players to build further innovations on common ground. In short, a digital euro will act as a ‘platform for innovation’ viii – including for solutions in commercial bank money, which will benefit from the acceptance  Page 6 of 6 standards of the digital euro.

We need the skills of both sides: the agility, innovations, customer relations of commercial banks; and the trust and stability guaranteed by Central banks. Yes, digital commercial bank money already exists, and is usually regarded as safe as central bank money; it will remain very significant in payment amounts, and you may possibly develop tokenised deposits. But the trust commercial bank money inspires is not only due to each bank’s private signature; it’s anchored by its full equivalence and permanent convertibility, 1:1, to the public money issued by the  Page 5 of 6 Central bank. Loosing this public anchor – in a world of digital payments without CBDC – would sooner or later mean undermining this private trust; think of the 19th century in the United States, before the Fed, where there were regularly confidence crises. To make it crystal-clear, a digital euro will not lead to disintermediation. It will be distributed through banks: we central banks have absolutely no intention to open private accounts. In response to some other worries, there will be no financial stability risks, due to possible significant outflows from commercial bank money to central bank money: a holding limit will apply to digital euro accounts, and it will ensure that the digital euro serves as a payment means, more than as a store of value. So commercial banks can and should get on board with full confidence. We are, in this 21st century as in the two previous ones, complementary and not competitors on money and payments.
That said, there are measures that should be studied to reactivate credit for the entire economy and, in particular, to SMEs and to the exporting sector. The European Investment  4  BIS central bankers’ speeches  Bank has the means to stimulate loans to SMEs through an increase in its funding to European public-sector banks operating in this area. New arrangements could also be studied for risk-sharing using European funds, for example structural funds, a possibility that is already under discussion. And specific schemes to boost export credit could be studied. Within the Eurosystem, the Banco de España has always been in favour of initiatives geared to supporting more and cheaper credit, through unconventional monetary policy measures that help restore the monetary policy transmission mechanisms. But we know that the normalisation of credit will not come about, or will be slower and difficult, if we do not complete the clean-up and reinforcement of the solvency of our banking system. This is why it is important to clearly understand what has been done in 2012 to overcome the crisis and to evaluate the current state of affairs. Clean-up, recapitalisation and restructuring of the banking system and financial reform I shall focus on the six issues that afford us an overview of the situation: the clean-up efforts in 2012, the strengthening of solvency, the improved liquidity position, developments in nonperforming loans, expectations for results in the current year, and, finally, regulatory changes approved in 2012. Clean-up Firstly, balance sheet write-downs.

The main macroeconomic and financial figures for 2012 speak for themselves as regards the intensity of the adjustments made in an attempt to overcome the serious imbalances that emerged during the last upturn. The fall in household income, prompted above all by the heavy decline in employment, along with high household debt, continued to exert a contractionary effect on spending capacity against an overall background of uncertainty. Once again in 2012, companies, many of which are immersed in deleveraging and financial restructuring processes, cut their investment, while the adjustment in the construction sector continued. Meanwhile, the general government sector tailored its spending plans to the need to reduce the budget deficit, following the serious budgetary slippage evidenced at the close of 2011. All these factors combined to bring about a strong decline in national demand, which was only partly offset by the positive contribution of the external sector. Imports fell forcefully, mirroring the weakness of final demand, while exports expanded despite the poor performance of the euro area markets, to which Spain still directs half of its foreign sales. However, developments to date in 2013 appear to confirm that the worst of this second recession is behind us. The biggest declines in output were at the end of 2012, and the latest data suggest the contraction in GDP is easing. Indeed, in the final stretch of the year, and even from the third quarter onwards, positive growth rates might be recorded.
Today, we central bankers are responsible for trust: we “produce” it, and we stand accountable for it. Such a responsibility entails a strong personal component: our behaviour has to be flawless, and driven by real functional requirements and high ethical  Page 3 sur 10 standards. But let me today focus on the institutional and collective foundations of trust. II. The golden triangle of trust Trust relies on three key elements, which together form the golden triangle of trust: independence, mandate and accountability of central banks. They cover different notions but they closely intertwine. Some may take them for granted, but they are actually the result of a long historical progress, and each of them is being challenged today. Independence  Mandate  Accountability  1. The long quest for the independence of the issuer, and its current calling into question As early as in the 4th century B.C., Aristotle famously identified the three functions fulfilled by money: medium of exchange, unit of account, and store of value. He complemented this brilliant theoretical approach with ethical guidelines,i opposing “unnatural” chrematistics – or personal enrichment – and virtuous economics – oikonomia, literally household management, to the benefit of the entire community. Aristotle had a strong influence on the European Middle Ages, but his ethics of currency progressively faded into the background.

This means that, we will be able to take care of systemically important financial firms outside current regulatory purview if the situation warrants. Ladies and Gentleman, Lastly, let me share with you what I see as major challenges for the maintenance of financial stability in Thailand. While we may have a head start over many countries, we are not in anyway complacent. In particular, three important challenges loom on the horizon. First, the global economy, while doing much better than a year ago, still have many vulnerabilities which could give rise to the next round of global financial instability. Most importantly, the public debt problems in certain European countries constitute a major risk factor. At the other end of the spectrum, the growth and interest rate disparity between Asia and advanced economies amidst the still abundant global liquidity from the unprecedented monetary policy stimulus around the world could attract de-stabilizing capital inflows that will put pressure on exchange rate, encourage a buildup of financial institutions’ short-term debt, and fuel bubbles in various sectors. Second, in light of the possible buildups of financial imbalances, there is a need to further enhance the ability to identify potential threats early on. For example, at least in its early phase, bubbles are almost always associated with favourable economic fundamentals. Effective monitoring of bubbles therefore calls for better data collection, market intelligence, and risk analysis. While timely bubble identification remains very difficult, the good news is that better identification techniques are being developed and will continue to improve.
Moreover, an enabling environment for the effective use of local currencies will bring about greater cost efficiency and stability for businesses and increase demand for local currency financial products. That will, in turn, be the impetus to strengthen regional financial markets’ development. 1/2  BIS central bankers' speeches  I am pleased that the event today is made possible by all three central banks, mutually agreeing to grant regulatory flexibilities to the appointed banks under these Frameworks, enabling them to provide a wider range of financial services under their respective jurisdictions. Taking this opportunity, I wish to introduce the appointed banks in Malaysia for these Frameworks, namely, Maybank Berhad, CIMB Berhad, RHB Berhad, Public Bank Berhad, Hong Leong Bank Berhad, Bangkok Bank Berhad, United Overseas Bank (UOB) Berhad and Bank of Tokyo-Mitsubishi (BTMU) Berhad. The implementation of these Frameworks will complement our existing close partnership and cooperation as neighbors, with common objectives and shared aspirations. On this note, I look forward to witness the growth in the use Indonesian rupiah, Thai baht and Malaysian ringgit for cross-border settlement of trade between Indonesia and Malaysia, and Thailand and Malaysia, respectively. 2/2  BIS central bankers' speeches

This pan-European solution would be a major step forward that would help European banks withstand the challenges posed by the BigTechs. There is also another important area where we need to make headway: reducing the cost and speeding up the execution of cross-border payments by identifying concrete and useful solutions. Our aim should notably be to harmonise the technical standards used for transfers of funds, and to enhance the interoperability of payment systems and solutions. Between now and the autumn, the FSB, under the aegis of the G20, will propose concrete measures to make cross-border, extra-European payments significantly cheaper and faster. I shall turn now to a topic that is a major challenge for the future of the international monetary and financial system: the possible creation of a central bank digital currency (CBDC). The creation of a new form of currency by central banks goes beyond the challenges I have just mentioned: it is neither a precondition for nor a guarantee of more efficient payments. However, we as central banks must and want to take up this call for innovation at a time when private initiatives – especially payments between financial players – and technologies are accelerating, and public and political demand is increasing. Other countries have paved the way; it is now up to us to play our part, both ambitiously and methodically. To this end, the Banque de France is to be reorganised.