samchain/econo-pairs-v1 huggingface dataset:
Norges Bank submits extensive reports to the Ministry and Storting on the results and activities of the Fund. Our annual report is submitted as an appendix to the Ministry of Finance’s annual report to the Storting on the management of the Government Pension Fund. Norges Bank appears before the Standing Committee on Finance and Economic Affairs of the Storting at annual hearings. The Bank advises the Ministry on important issues related to the management of the Fund. Norges Bank’s Supervisory Council submits its own report to the Storting concerning its oversight activities. The Office of the Auditor General carries out – as our owner has expressed it – an important function through its responsibility for monitoring the Ministry’s exercise of authority in relation to Norges Bank and auditing the item in the government accounts that refers to the Government Pension Fund Global. The Fund’s accounts and notes to the accounts contain a growing body of information. As from the 2011 accounting year, Norges Bank will shift to International Financial Reporting Standards (IFRS). Transparency is important for the Fund’s foreign investments. Some authorities are sceptical of other countries’ sovereign wealth funds. This scepticism is reflected in an annual survey conducted by Edwin Truman, senior fellow at the highly renowned Peterson Institute of International Economics in Washington. His survey is by far the most thorough and systematic – the most authoritative – assessment.

In these two days, discussions will focus on monetary policy, financial stability, economic modelling and forecasting, risk assessment and management, which are all traditional instruments in the central bank toolkit and need to be improved constantly. It is very important to note that, in addition to these traditional topics, the workshop will discuss research in new and important areas such as: digitalization of financial services, structural reforms, healthcare and its implication for central bank objectives and national welfare. Technological developments disrupting traditional labour, financial products and markets, and demographic developments may impose some of the most important challenges to our societies and institutions. Therefore, it is important to study and adequately understand these phenomena. In addition, we are glad and eager to discuss research findings from a number of authors who come from academia, central banks and other research institutions. The ideas and methodologies that are embedded in their research will introduce our researchers and economists to new ideas, will help them extend their research agenda, and will reveal potential opportunities of cooperation in the future. I believe that research in these and other innovative areas, like green finance, will develop further and become traditional topics in central banks’ research agenda. For this reason, I challenge our researchers to consider these trends in their future research agenda. Continuous enhancement of research topics and methodologies is a must for a central bank.
These dynamics contrast with what we observed during the period preceding the great financial crisis, where the real estate boom was associated with deteriorating lending standards, and an increasing default risk of borrowers. In taking these decisions, the HCSF usefully adapted the measures already invoked in other European countries and took their efficiency as a benchmark. Ireland was obviously a source of inspiration, as, among others, an early adopter of borrower-based measures, for instance through binding borrower-based instruments such as limits on loan-to-value and loan-to-income ratios. This measure proved very effective.iv The tightening of our macroprudential stance has strengthened households’ resilience. However, the housing sector has proved particularly dynamic following the Covid crisis: annual house price growth in the euro area reached almost 10% in the beginning of 2022, following a little over 4% on average between 2016 and 2019. This doubling of an already high speed has also been observed in France and still more in Ireland. In the meantime, household income  Page 10 sur 11 only increased by 1.8% in France since the beginning of the pandemic, meaning households are more heavily indebted. Should we then worry about an increased possibility of a turn in the cycle?

So the democratically elected executive arm of government is accountable to Parliament for the policy regime; and the Bank is accountable to the government and to the Parliamentary Select Committee for its operation of that regime. Hence, “operational independence”, not goal independence. The goal was chosen to be a symmetric point inflation target, providing reassurance to the country that the Bank would not pursue a bias towards disinflation. And the credibility of the regime was underpinned by a framework for fiscal policy designed, amongst other things, to maintain a prudent debt/GDP ratio, and so avoid making inflation a tempting prospect down the road. There was one other, vital element of the system’s design, also addressing the problem of interest rates being decided by unelected officials at the Bank. As Eddie George and Mervyn King have now both disclosed, in the run up to the May 1997 election, the Bank pulled together its thoughts on a possible new monetary regime. 20 The Bank’s hope was that it might be granted independence if a Committee established to advise the Chancellor on interest rates, which had featured in the Labour Party Manifesto, was seen to do a good job. In the event, the incoming government did not need the intermediate stage of an advisory committee. It created the MPC. The appointment to the Committee of four outside experts ensured that daylight would be brought into the Bank, and underlined the architectural role of democratically elected ministers.
This calls for urgent adoption of the Bank Recovery and Resolution Directive that will provide a harmonised toolkit across the EU. The SRM should have control of and access to a European resolution fund for resolution financing. This fund should be funded by ex ante risk-based levies on the industry. The European resolution fund should have access to a temporary emergency facility that is fiscally neutral in the medium term, meaning that any temporary public support will be recouped by ex post levies on the industry. BIS central bankers’ speeches  5  Restoring financial integration will unburden monetary policy From a monetary policy standpoint, the banking union will alter neither our policy objective nor our policy strategy. The pursuit of price stability as our prime objective is set out in the EU Treaty. We have delivered on our mandate. However, the banking union will change the environment in which we conduct our policy for the better. A banking union has the potential to unburden monetary policy in two important dimensions. First, the banking union has important implications for the ECB as liquidity provider to the banking system. Sound supervisory assessments and access to a powerful resolution framework is paramount for ensuring liquidity provisions to sound and solvent counterparties. In its role as supervisor, the ECB will have strong incentives to make sure its supervision is rigorous in order to protect our balance sheet and to ensure tight control over the risks we assume.

Yves Mersch: The European banking union – first steps on a long march Speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the Finanzplatztag, Frankfurt am Main, 27 February 2013. *  *  *  Dear Mr Padberg, Ladies and Gentlemen, I am well aware that many of you are concerned that the European Central Bank’s assumption of the supervisory role might overburden monetary policy. However, if well designed, set-up and managed, the banking union will eventually ease the burden on monetary policy. This will not happen by itself, though. Numerous stumbling blocks need to be cleared in the preparatory phase. But let me start without further ado. The success of monetary policy rests on integrated financial markets that operate efficiently and smoothly. They are: 1.  the basis for the equal transmission of monetary policy across member states in a monetary union;  2.  a key channel for the proper transmission of the monetary policy stance to the real economy – and hence for the ability of monetary policy to deliver price stability. However, the crisis has brought the flip side of financial integration to the fore, namely interconnectedness and increased risks to financial stability. Indeed, an integrated financial and economic system is more prone to contagion from large adverse shocks. Financial turbulence can more easily spread across markets and regions. This is particularly true if no institutional safeguards – such as euro area-wide crisis management arrangements – are in place.
However, beyond these basic principles, what is the appropriate monetary policy stance for achieving both financial stability and the dual mandate of maximum employment and price stability? With inflation running well below our 2 percent longer-run target and the unemployment rate still well above its normal long-term level, appropriate monetary policy dictates that low real interest rates should prevail until the economy is further along a sustainable path to its potential level and inflation is closer to target. Nonetheless, it is common to hear the  1  Because of some differences in product coverage and statistical methodologies, total CPI inflation tends to average 1/4 to 1/2 percentage points higher than total PCE inflation. Hence, the FOMC’s 2 percent target on total PCE inflation would translate to a 2.3 percent to 2.5 percent target for total CPI inflation. 2  I recently discussed the costs of too-low inflation and the implications of having a 2 percent inflation target in a January 15 speech; see Evans (2014). BIS central bankers’ speeches  3  argument that these highly accommodative monetary policies might sow the seeds of financial instability. The fear is that excessive and persistently low interest rates would lead to excessive risktaking by some investors. For instance, some firms, such as life insurance companies and pension funds, are under pressure to meet a stream of fixed liabilities incurred when interest rates were higher.3 (And perhaps these liabilities were offered at somewhat generous terms to begin with.)

References Evans, Charles, 2014, “Recurring themes for the New Year,” speech, Corridor Economic Forecast Luncheon, Coralville, IA, January 15. Federal Open Market Committee, 2013, meeting minutes (external), December 17–18. Fitch Ratings, 2013, “Fitch: U.S. corporate pension plans underfunded status improves,” press release (external), New York, August 15. 6  BIS central bankers’ speeches
We must not again find ourselves in a position where the authorities in different countries are developing as they go along how capital support should be provided: what triggers it, its terms, and who pays. I have aired the possibility of eventual losses falling on the surviving banking system, as a way of avoiding burdening the general taxpayer and as an incentive for firms to recognise and act upon their interest in the health of the system as a whole. But the more important point is the need to have a plan. And of course the fiscal support comes after drawings in any private sector provision of contingent capital. Banking and the credit system: might there be macroprudential instruments? At this point, I should issue another caution: that however all those issues are resolved, the banking-structure debate is resolved, I doubt they could prove sufficient to rule out bouts of instability, even crises, in the future. That is because I am doubtful that the tendency to excess can be curbed solely by addressing the circumstances of individual firms. Booms are spurred by plausible illusions and collective-action problems. The current crisis has, in my view, been at root a crisis of liquidity – of an over abundance of liquidity in the upswing, succeeded by a drying up of liquidity during the crash. Usually, material rises in asset prices are initially triggered by reasonable perceptions of a favourable shift in fundamentals.

10 (d)  Leakage  From the outset of this debate, I have stressed the hazards in trying to steer credit growth in a world in which capital can flow freely across borders. Think of a case where the domestic authorities increased the risk weight on mortgage lending. The measure would apply only to banks headquartered here or operating out of a subsidiary. It would not apply to branches of foreign-headquartered banks, still less to pure cross border activity. But it is easy to imagine that, rather than borrowing from UK-domiciled banks, mortgage brokers could arrange for households to borrow from a lender based overseas, or at least with the loan booked overseas. In terms of the accumulation of debt in the sector concerned – in this hypothetical case, housing – there might, after a time, be little or no effect. That would obviously not be great for the risk of default by the borrowing sector concerned. But UK-based banks would have been required to build their defences. That might mean that, other things being equal, if and when the borrowing sector got into difficulty, UK-based banks would be less likely to collapse under the strain of losses. If so, the damage to financial stability would be reduced, and the eventual economic costs might plausibly be lower than otherwise; especially if those UK banks were able to take up some of the slack created by withdrawal of credit supply by foreign banks to sound UK borrowers. It might, though, just be possible to go further.
This is to supplement the central banks’ instruments in such a way that – alongside the maintenance of price stability – central banks can also make a greater contribution to financial stability than they have done in the past. The specific tools being referred to here are the macroprudential instruments that have attracted increasing interest in recent years, and that have been introduced in many countries. Such instruments can be used in a supplementary manner, as required. In the case of Switzerland, the SNB has a statutory mandate to pursue a monetary policy serving the interests of the country as a whole, to ensure price stability and in so doing, to take due account of the development of the economy. Within this primary framework, it also has the task of contributing to the stability of the financial system. There is no contradiction between these tasks if target hierarchy is observed. As far as financial stability is concerned, the SNB works closely together with the Swiss Financial Market Supervisory Authority and the Federal Department of Finance to create a regulatory environment that promotes stability. The SNB concentrates on the macroeconomic and macroprudential aspects of regulation. For the macroprudential tasks, a new instrument was created this year – the countercyclical capital buffer. According to the relevant regulation, this buffer can be activated by the Federal Council following a proposal by the SNB.

The reasons behind the setting of the minimum exchange rate in September 2011 retain their validity. The financial problems in many countries continue to provide a basis for potential safe haven capital flows. In addition, at its current rate, the Swiss franc remains high and is weighing on the Swiss economy. Consequently, at its most recent monetary policy assessment in September, the SNB confirmed that it would leave the minimum exchange rate unchanged and continue to enforce it with the utmost determination. 6  BIS central bankers’ speeches
In that case, the forced asset sales are likely to lead to losses, which deplete capital and raise concerns about insolvency.6 The second inherent source of instability stems from the fact that firms are typically worth much more as going concerns than in liquidation. This loss of value in liquidation helps to explain why liquidity crises can happen so suddenly. Initially, no one is worried about liquidation. The firm is well understood to be solvent as shown in Figure 1. But once counterparties start to worry about liquidation, the probability distribution can shift very quickly toward the insolvency line, as shown in Figure 2, because the liquidation value is lower than the firm’s value as a going concern. There are also a number of idiosyncratic sources of instability worthy of mention, some of which are unique to our particular system. One source of instability is the tri-party repo system that I discussed earlier. Another is the convention of tying collateral calls to credit ratings. In this case, if a firm’s credit rating is lowered, the firm may have to post additional collateral to its counterparties, eliminating this collateral as a potential source of funding. This phenomenon was a particularly important problem for AIG, which lost its access to the commercial paper market and was subject to increased collateral calls. Both factors caused the liquidity of the AIG parent company to be depleted very quickly. Finally, if asset volatility rises, haircuts can increase.

I will tackle this topic in four parts. I will begin by describing how funding dried up rapidly for firms such as Bear Stearns, Lehman Brothers, and AIG. I then will propose a conceptual framework that might prove helpful in better understanding what went wrong on the liquidity front. With this conceptual framework in hand, I will then suggest some concrete steps we might take toward making the financial system more resilient – cautioning that there are no magic bullets. Finally, I will talk about the major initiatives that are already underway to help reduce the risk of future liquidity crises. As always, my remarks reflect my own views and opinions and not necessarily those of the Federal Reserve System. At its most fundamental level, this crisis was caused by the rapid growth of the so-called shadow banking system over the past few decades and its remarkable collapse over the past two years. Let me give you some figures to illustrate the disparity between the growth of what I will call the “traditional” commercial banking system and the shadow banking system in recent years. At the end of 2006, the shadow banking system had grown so large that U.S. commercial banks’ share of credit market assets had fallen to only 17.7 percent, down from 27.3 percent in 1980. With this shift in the composition of activity also came an important change in the composition of funding, particularly in the middle part of this decade.
Kevin Stiroh: Climate change and risk management in bank supervision Remarks by Mr Kevin Stiroh, Executive Vice President of the Financial Institution Supervision Group of the Federal Reserve Bank of New York, at the conference on “Risks, Opportunities, and Investment in the Era of Climate Change”, Harvard Business School, Boston, Massachusetts, 4 March 2020. * * * As prepared for delivery  Introduction Good afternoon and thank you for the opportunity to participate in this conference on “Risks, Opportunities, and Investments in the Era of Climate Change,” a topic of critical importance for all of us. Climate change is already affecting economic and financial outcomes, and projections point to increasingly severe and unpredictable change.1 In recent years, we’ve seen a growing focus of central banks on the financial risks related to climate change. Some may argue that this shift was slow in coming, but the change is striking nevertheless. Beginning with Bank of England Governor Mark Carney’s speech in 20152 , climate change has emerged as a key issue globally. Within the Federal Reserve, Governor Brainard detailed how climate change impacts the Fed’s core objectives around monetary policy, financial stability, financial regulation and supervision, community and consumer affairs, and payments and describes efforts to build capacity to assess these risks.3 Today, I’m going to take a more narrow perspective and talk about climate change from the perspective of risk management.

Bandid Nijathaworn: Thailand’s economic outlook – an update Speech by Mr Bandid Nijathaworn, Member of the Board of the Bank of Thailand, at the Australian-Thai Chamber of Commerce dinner talk, Bangkok, 14 July 2010. *  *  *  First, let me thank the Australian-Thai Chamber of Commerce for the invitation. This year has been a particularly challenging year for Thailand, on account of both developments in the global economy and the political situations at home. So, what I want to do today is to give you an update on Thailand’s economic outlook, particularly to see what these challenges have meant for the Thai economy, as well as for the outlook going forward. A keyword this year is “uncertainty”. As you well know, the market does not like uncertainty because it raises risk and costs. For the global economy, this year has been an exceptionally “complicated” year because of the two major uncertainties that have contributed to an unusual degree of volatility in global financial markets. The first is uncertainty surrounding the strength of global economic recovery which has been weighed down by the high levels of unemployment and slow bank-lending growth in the advanced economies, as well as prospect for higher long-term interest rates in the major economies linked to the financing of public sector deficits. This is the first uncertainty. The second uncertainty is policy.