samchain/econo-pairs-v1 huggingface dataset:
The air of political insecurity bred all sorts of populist acts, including irrational legislative proposals with regard to both the banks and the BNB. Could it be, however, that in 2015 we would witness a radical change in the thinking and actions of the political representatives and media circles towards more prudence and better awareness of the key role the banking sector has for the financial stability, economic growth and welfare of society? I don’t know. But I do hope very much it would be so. Dear Colleagues, Outside the issues related to the national specifics of the environment the banks operate in, I would take the opportunity to note some forthcoming amendments in the regulatory framework in 2015 relating to the introduction of new uniform European norms and practices with a direct impact on the work of credit institutions in Bulgaria. In 2015 the Bank Recovery and Resolution Directive in the EU will come into effect, aiming to introduce EU-wide rules and tools for the Member States to deal with banks in trouble and to take timely and adequate measures to rescue viable institutions. This directive is going to be transposed in the Bulgarian law by means of new legal provisions and amendments to the existing legal framework (e.g. the Law on Credit Institutions, the Law on Bank Bankruptcy, and the Law on the BNB).

BIS central bankers’ speeches  5  roubles, and instead the BNB was obliged to pay out to the Soviet armed forces passing through our country “the amounts they needed at their request” and those amounts were to be accounted for as a debt of the country.3 We do hope such times would never again return in Bulgaria. Bolshevik enthusiasm and decisions made under street pressure are the most dangerous approach when it comes to public policies regarding the monetary regime, banking supervision or financial stability. Today, once again we are called to stand up for the professionalism and independence of the central bank – with responsibility and concrete actions. The public interest requires that the reputation of the central bank be respected and its institutional independence and continuity in its work be safeguarded. The strength of institutions in a country is a pre-condition for stability and economic growth, while the weakness of institutions is the first sign of forthcoming economic or financial failure of a country. It is not a coincidence that in the countries which usually serve us as an example of democracy and prosperity, the strong public institutions by rule outlive the individuals and the political parties too. Dear Colleagues, Finally, please allow me to convey the best wishes on behalf of the BNB Governing Council and me for success of the banks run by you and for professional and personal achievements of all of you in the coming year of 2015. Happy Banker’s Day, dear colleagues! Thank you for your attention!
Prior to the introduction of inflation targeting in 1992, the UK had searched – in vain – to find a credible anchor for monetary policy and inflation expectations. The simplicity and clarity provided by a numerical target for inflation helped to establish the credibility of monetary policy and was instrumental in fostering the period of stable growth and low inflation enjoyed in the decade or so prior to the financial crisis. But in the aftermath of the crisis and faced with five years of almost no growth, it is natural for people to ask what monetary policy is doing to help get the economy going. The control of inflation is important but so too is supporting the creation of jobs as unemployment rose to its highest level for almost twenty years. There was a real risk that this would start to erode the trust and support of inflation targeting; to damage its democratic legitimacy. This was arguably evident earlier this year in the discussions in the media and amongst some commentators as to whether the framework of monetary policy should be altered, say to adopt a nominal GDP target or for the MPC to have an explicit objective for growth. A subtext of that discussion was that the inflation target was in some way acting as a constraint on the support that monetary policy could provide to the faltering recovery. To repeat: such criticism is misplaced.

Indeed, a noteworthy addition to the MPC’s remit when it was renewed by the Chancellor earlier this year was a request that “… the Committee should promote understanding of the trade-offs in setting monetary policy to meet a forward-looking inflation target while giving due considerations to output volatility.” The forward guidance announced by the Committee clarifies its view of the appropriate trade-off. The primacy of the inflation target makes clear that the long-run objective for monetary policy hasn’t changed, and the inflation forecast knockout provides information about the minimum speed at which the Committee judges it acceptable to bring inflation back to target. At the same time, the unemployment threshold provides guidance about what the MPC is trying to achieve in terms of real activity as the economy gradually normalises. Moreover, by making clear its view of the desired trade-off, the MPC helps to make our monetary policy more predictable. This enables financial markets, companies and families alike to make more informed decisions and so improve the effectiveness of policy. Let me summarise where we have got to so far. The inflation target served us well during the financial crisis. Straight A’s for preserving credibility and for anchoring inflation expectations. But the aftermath of the crisis has posed particular challenges of communication and accountability that, on its own, an inflation target is ill equipped to address. The MPC’s forward guidance is designed to help us to meet those challenges head on.
But in view of persistently low external interest rates, such a policy would likely have resulted in a sharp appreciation of the Norwegian krone, and inflation and activity in the Norwegian economy would have fallen to too low a level. The weak external environment is thereby also contributing to keeping Norwegian interest rates low. With firmly anchored inflation expectations, Norges Bank can today give weight to stabilising economic developments when setting the interest rate. Inflation targeting has become more flexible. We have chosen to take a long-term approach to bringing inflation back up. But we will not lose sight of the inflation target. Should the outlook for inflation or growth weaken considerably, there will still be room for manoeuvre to counteract such developments through monetary policy. Monetary policy in the light of new banking sector regulation The financial crisis taught us some important lessons. First, the crisis illustrated that low and stable inflation is not sufficient to ensure financial stability. Second, the crisis clearly revealed shortcomings in the regulatory framework for banks. As a result, banking and financial regulation is now undergoing change worldwide. Regulation and supervision are the authorities’ most important instruments to prevent financial instability. In March, the Government presented a legislative proposal on new capital adequacy requirements for banks. The proposal is in line with the EU’s new regulatory framework. A key element in the new framework is capital buffers that banks will be required to hold in addition to the minimum requirement. This will increase banks’ loss-absorbing capacity.

Moreover, our last system of explicit coordination – the system of fixed exchange rates under Bretton Woods – broke down for a reason. Monetary policy meant to suit everybody is likely in the end to suit nobody. Similar considerations underlie the widespread move in the emerging world away from fixed exchange rate regimes. Policymakers worldwide have learned that a framework capable of responding in a disciplined but flexible manner to changing domestic conditions works best over the long run. While explicit coordination looks neither feasible nor desirable, there is more that central banks in general, and the Fed in particular, could do to be better global stewards. One thing recent events demonstrate is the importance of effective Fed communication. It is clear in retrospect that our attempts last spring to provide guidance about the potential timing and pace of tapering confused market participants. In particular, markets seemed to conflate tapering with monetary policy tightening and raised their expected paths for policy rates. Lately, we seem to have done better: markets now seem to understand that policy rates will likely remain exceptionally low for a considerable period of time even after tapering is completed. As you know, we’ve taken a number of steps in recent years to increase transparency and improve our communications.
The Financial Stability Board’s Official Sector Steering Group (OSSG) has indicated its support for ISDA to include such a trigger to avoid fragmentation between cleared and uncleared derivatives.10 Derivatives contracts account for 95 percent of the exposure to U.S. dollar LIBOR, so universal changes to these contracts would be a significant leap forward. If the market signs up to the ISDA protocol when it’s published, it will be a considerable milestone and will go a long way toward reducing risks to firms, markets, and the financial system. In addition, the ARRC has released four sets of recommended fallback language for different types of cash products and has published potential paths forward for adjustable-rate mortgages (ARMs).11 While mortgages are a small part of the overall exposure, it’s vitally important that consumers understand what the changes being made mean in real terms. Last week, the Federal Reserve Board, the FDIC, the OCC, and other agencies released a proposal on adjusting margin requirements for covered swap entities that, among other things, are meant to remove unintended hurdles to signing the ISDA protocol and moving away from LIBOR.12 The Financial Accounting Standards Board has similarly released an exposure draft with proposals to smooth the transition from an accounting perspective.13 Finally, earlier this year, the SEC staff issued a statement highlighting risks and disclosures for market participants to evaluate proactively as they transition away from LIBOR.14  The Challenges Ahead 3/5  BIS central bankers' speeches  Progress has been made, but there’s still much to do.

Engage with the official sector about how LIBOR affects your firm and your challenges in this transition. And note that just last week, the ARRC published a checklist designed to support market participants with the adoption of SOFR.16 Implementation will be complex: financial contracts need to be scrutinized, operations need to be evaluated, and technology needs to be updated. The work involves numerous jurisdictions and multiple asset classes, and will require changes from how business is conducted to how systems are built. These things take time, and time is running out. Conclusion The LIBOR transition is a serious issue the industry needs to address. Both the official sector and market participants have made enormous progress, but we need to see much broader and consistent preparation for the transition. If your firm is one of those hoping the problem will go away, or feeling nostalgic and counting on an extension to the deadline, take this message back: The clock is ticking, LIBOR’s days are numbered, and we all need to play our part in preparing the industry for January 1, 2022. Thank you, and I hope you enjoy today’s conference. 1 Federal Reserve Bank of New York, Statement Regarding Repurchase Operations, September 20, 2019 2 For recent statements regarding the FOMC’s longer-run monetary policy implementation framework and  balance sheet normalization, see FOMC Communications Related to Policy Normalization. 3 John C. Williams, 901 Days, Remarks at the Securities Industry and Financial Markets Association, New York,  July 15, 2019.
Or, if emergency liquidity assistance was provided at some point during the course of the crisis (on the erroneous assumption that the bank was basically solvent), a loan loss may be incurred on the national central bank that acted as a lender of last resort. And, of course, when giving liquidity support to a bank with cross-border operations in many countries, you can never be entirely sure in what jurisdiction your money ends up. In the case of a branch structure, it may end up in any country in which the bank operates, and ring-fencing a subsidiary may prove equally difficult in practice. Furthermore, in some situations it may be socially optimal to spend public money in order to reconstruct a failed bank. If the reconstruction is successful, the money spent may eventually be recovered by the public. But it could take a considerable amount of time before this happens, and a precondition is that you are not betting on the wrong horse. The taxpayers in one country may not be so keen to take on such risks in another country. In addition to fiscal costs, there may of course be substantial indirect social costs in the form of a dipping GDP that may occur when the financial system is suffering efficiency losses or is being temporarily disabled as a result of a financial crisis. These indirect costs are basically a function of the systemic relevance of the financial institution(s) in question.

Second, I’m guessing you are looking for some insight into what the Federal Open Market Committee (FOMC) is going to do next, insight Chairman Bernanke, as leader of our pack, wisely avoided imparting in his recent comments. The Texas economy On the Texas front, my colleagues and I at the Dallas Fed have lately been deluged with requests for data on all aspects of the Texas economy – which accounts for 95 percent of the Eleventh District’s output and the economic activity of some 25 million of the 27 million people living in our district. If you are interested, you can go to our website (www.dallasfed.org) to receive a factual, nonpoliticized brief on the Texas economy, including the job creation figures that get bandied about in debates among presidential  BIS central bankers’ speeches  1  aspirants. We update these numbers monthly – the data for the August employment figures will be tabulated on our website on Sept. 19 – and we will keep updating them so that analysts can parse the data. At a minimum, I am hopeful our web postings will help you separate spin from reality and fact from fiction, as well as dispel some of the stereotypes of Texas. For example, we are blessed with abundant natural resources here, and we most definitely do benefit on net from high commodity prices; oil and gas extraction contributes about 9.5 percent to state output.
Notwithstanding our sometimes old-fashioned image, we have been at the forefront of financial innovation for decades. Our achievements however often remain unknown to the public: our state-of-the art settlement systems are aimed at banks, not end-users. How can we find our rightful place in this emerging DLT world? Benign neglect, or on the contrary prohibition, are no longer options. While keeping our eyes and minds open, we have to at once regulate and innovate. First, regulate and supervise all players that issue, value, deal, settle, offer custody and related services regarding these new assets. The initial bitcoin ideology of a full disintermediation – or even disembodiment – turned out unsuited to real life: most users do not directly intervene on the blockchain, they use platforms and new intermediaries. “Decentralised finance” could be a misnomer while leading to concentration of some private players that are not regulated for the time being. The sound supervisory principle “same activity, same risks, same rules” should apply and be expressed as a “square of guarantees”: (1) equal security; (2) equal compliance; (3) equal responsibility; and (4) equal accessibility. Regulation has to be built consistently across jurisdictions, and is especially important as links between the real world and the crypto world are growing stronger. Against this backdrop, and in accordance with the G20 agenda that was initiated two years ago, most jurisdictions are considering legislative changes to deal with crypto-assets. For instance, the European Union must adopt shortly a regulation called Markets in Crypto-Assets  Page 3 sur 3 (MiCA).

It is a great satisfaction to see the BIS Innovation Hub pushing ahead with several wholesale CBDC projects such as Jura and Dunbar, in which the Banque de France is an active participant. And more broadly, it also a satisfaction to see that more and more central banks, notably some from Asia, show an interest for wholesale CBDC. I will conclude by quoting Zaha Hadid, the Iraq born architect who was the first woman to receive the Pritzker prize in 2004. Her iconic buildings, all swooping curves and flowing space, never featured any right angle. “There are 360 degrees, so why stick to one?” Zaha Hadid used to say. What an inspiring thought for us today. I thank you for your attention.
The companies apparently trusted that the SNB would be able to prevent a sustained decline in the level of prices through its decisive use of unconventional measures. The SNB was able to preserve its monetary policy credibility, even in this difficult environment. The second point relates to the adjustment processes following the sudden upward surges in the value of the Swiss franc. The negative or very low inflation in Switzerland was in fact part of these adjustment processes, since it contributed to reducing the overvaluation of the Swiss franc over time. Thus, the real exchange rate appreciated considerably less than the nominal exchange rate (cf. Chart 3). This helped to cushion the impact of the nominal appreciation on  Page 3/16  the real economy. The economy’s ability to adapt to an environment with low – and in some instances negative – inflation has been better than many expected. The Swiss economy has fared relatively well over the past 15 years. The labour market has remained robust overall, and GDP growth has been good by international comparison (cf. Chart 4). Like most other countries, Switzerland was unable to avoid significant declines in GDP amid the global financial crisis and during the pandemic, but each time our economy quickly returned to a growth trajectory. The SNB was able to ensure price stability in the phase marked by deflationary risks, and thus contributed to a comparatively robust development of the economy.

Of course, besides the influence of monetary policy, this development of the real economy also reflects structural factors such as the strong resilience of the well-diversified Swiss economy and the flexible labour market. Companies had to make considerable efforts to adapt to the difficult conditions after each appreciation surge, which may have enhanced the flexibility and efficiency of the Swiss economy even further. The increase in the population as a result of immigration made a positive contribution to growth as well. Furthermore, during the pandemic in particular, there was also a rapid and targeted fiscal policy response. II. New constraints The pandemic and the war in Ukraine have fundamentally changed the constraints on central banks. In particular, inflation has risen strongly in many countries over the past year, and uncertainty has also increased markedly in many respects. The SNB, too, is at present confronted with an inflation rate that is significantly above the range we equate with price stability. As in recent years, inflation in Switzerland is currently lower than in many other countries. Besides the strong Swiss franc, the energy mix in Switzerland has thus far also helped to keep inflation comparatively low. Nevertheless, the current level of 3.4% is still the highest inflation our country has seen since the 1990s. Furthermore, there are signs that inflation is increasingly spreading to goods and services that are not directly affected by the pandemic or the war in Ukraine.
While some progress has been made to address some of these weaknesses, there is still quite a bit more work needed in firms to achieve a robust risk reporting infrastructure. From a host supervisor’s point of view, significant improvements in MIS are necessary to demonstrate that firms have clarity about their businesses and risks and have the tools necessary to manage the risks both here and abroad. At the same time, the challenges in implementing effective MIS across a global firm are made more daunting by the complex legal and organizational structures of most firms today. As the financial crisis highlighted, risk reporting by business line alone isn’t sufficient to effectively manage a global firm. Firms need to be able to segment  2  BIS central bankers’ speeches  data not just by business line, but also by legal entity. Firms with simpler legal entity structures tend to be able to do this more readily on both an as-needed basis, but also on a more routine basis. Simplifying your organizational structure in the U.S. – and globally – would facilitate enhancements in MIS and risk reporting, while at the same time facilitating our understanding of your organization. •  Third, encourage and provide better access to key executives and directors. As I indicated at the outset, one of the enhancements we’ve made to our broader supervisory program is deepening our engagement and interactions with senior leaders and directors of the firms we supervise.

To be clearer in our communication, though, we also need to better understand the businesses you are in and how your businesses operate. As I indicated earlier, we need more context to understand your operations – and your sharing more global information with us does provide that necessary context. •  Second, improve collaboration and communications with other supervisors – both U.S. and foreign. For true consolidated supervision to work, information has to flow  BIS central bankers’ speeches  3  freely among supervisors. We need to eliminate the legal impediments for supervisors on the ground to be able to share information in a more routine and natural way. There are many efforts underway, through such venues as the FSB and the Senior Supervisors Group, to promote enhanced information sharing and collaboration among supervisors. We also need to work more collaboratively together. This means sharing concerns about issues and agreeing on work necessary across the global firm to address the issues. This means jointly conducting examinations, as well as concurrently conducting work with similar scopes so that the full picture of the firm can be drawn, and we can capture all the relevant insights of these globally managed businesses. Finally, it also means leveraging the results of work from other supervisors and not undertaking duplicative work.