samchain/econo-pairs-v1 huggingface dataset:
For Treasury securities, when the caps are fully phased in, they will generally only be binding during the middle month of each quarter, when there is typically a spike in maturing Treasuries in the Fed’s portfolio. For agency MBS, as long as long-term interest rates are steady or rising, we expect that the fully-phased-in caps will not be binding. However, if long-term interest rates were to fall sharply—provoking a surge in refinancing and mortgage repayments—the caps would likely bind, limiting the amount of agency MBS that would have to be absorbed by the private market. As currently anticipated, once we start the balance sheet normalization program, we expect it to continue in the background until the FOMC judges that the Fed’s securities holdings are no larger than necessary to implement monetary policy efficiently and effectively. Adjustments to the target range of the federal funds rate will remain the primary tool of monetary policy. However, if economic circumstances were to change during the normalization process in a way that would warrant a sizable reduction in the target range for the federal funds rate, the FOMC would be prepared to resume reinvestment. The program has been designed to be implemented gradually and predictably so that market participants and the U.S. Treasury can anticipate when and at what pace the portfolio is likely to run off over the course of normalization. This should keep expectations more stable and reduce the risk that a sharp shift in expectations could generate undesirably large movements in interest rates and asset prices.

Instead, it is important to analyze the loan growth in broader economic policy context where due consideration should be paid to the credibility of macroeconomic policies and the impact other policies may have on the incentive structure in the financial markets. As I stated earlier, the presence of Nordic banks in the Baltic market is, of course, a hugely important positive factor. Parent banks are sometimes considered to have an implicit responsibility for the stability of the banking systems in the Baltic countries. It is said that the Baltic banks are too small to fail. International experience lends support to this view, although the evidence is not always in one way. Hence, there are also potential risks. If parent banks are active in many countries of the region, a shock affecting exposure in one country may lead to a reduction in their exposure across the region. Build-up of exposures to common risk factors in a region may also increase the potential for contagion - a reduction in lending to countries not affected by a crisis. The potential for contagion is naturally higher in highly integrated economies. Another potential risk factor is the smallness of the banks in the Baltics combined with their high profitability. While the Nordic banks have high profitability in all of their markets, profitability in the Baltic market is especially high. As a result, the share of banking groups' assets in the Baltics is significantly lower than the share of profits banks make in this region.
I am worried that households do not realise that the factors that previously justified a high level of indebtedness may change and that what was a rational behaviour before, may not be so in the coming period. Mortgage rates and the return on the equity market and mortgage market are not constant over time; they change. One conclusion of the results of this study is that it is important to create the right incentives via, for instance, the tax system. The current situation has advantages and disadvantages I have now painted a picture of how we arrived at our current situation, with a global and complex financial system and high level of household indebtedness. There is no doubt that the financial system we have now has created considerable welfare gains. Households have been able to invest their savings in mutual funds instead of traditional savings accounts and have in this way been able to spread the risk in their saving and thus gain a higher return. For the banks, the greater degree of market funding has similarly entailed greater opportunity to spread risk between different funding sources. The possibility to obtain funding on the international capital markets has also meant that access to capital has increased and that the banks have thus been able to fund Swedish mortgages more easily and more cheaply. This in turn has meant that a larger number of households have been able to borrow and probably also at a lower interest rate than would otherwise have been the case.

Last autumn, for instance, the then SFBC issued decrees imposing tighter capital adequacy requirements on the big banks. In future, the capital base at these institutions will have to exceed, in good times, the minimum risk-weighted capital requirements by 100%. As a complement to this, FINMA has also introduced a “leverage ratio”, i.e. a limit to the banks’ leverage. The SNB considers that leverage of over 20 in the banking sector is not prudent and thus is undesirable in good times. In other words, we consider that, in good times, the capital base should account for at least 5% of the balance sheet total. This is in line with FINMA’s requirements. FINMA expects the big banks’ “leverage ratio” to be well over 3% at group level and well over 4% for individual institutions in good times. To prevent the capital requirements from having a procyclical impact, two steps have been taken. First, there will be a long time delay before they are implemented. The new FINMA targets will apply as of 2013 at the earliest, and an extension would be an option for the big banks if compliance becomes impossible due to the situation on the capital markets or the big banks’ individual earnings position. Second, an anticyclical element is explicitly built into the new Swiss regulations. In bad times, the big banks will be allowed to fall short of the new targets. In other words, a capital cushion will be built up in good times to absorb losses in crises.
Boosting saving rates of the corporate sector in the region by enhancing incentives for reinvesting earnings, rather than distributing dividends, supporting household savings by putting stronger emphasis on Pilar II and III pension schemes. Enhancing productivity and hence return on investment has been heavily debated issue for the region for many years, as well. Many structural and institutional bottlenecks in the region have been frequently pinpointed as hurdles for higher productivity and investment. Those are institutions, governance, human capital, innovation, with the access to financing being mentioned as an important constraint, as well. 3  Central, Eastern, and Southeastern Europe - How to Get Back on the Fast Track?, Regional Economic Issues May 2016, International Monetary Fund. 5  Chart 6: National and domestic saving rates, averages for 2000-2017 period (% of GDP) 30.0 25.0  20.0 15.0 10.0 5.0 0.0  2000-08 2009-17 2000-17 2000-08 2009-17 2000-17 Gross domestic saving rates SEE  CEE  Gross national saving rates Baltics  CESEE  Source: Eurostat and NBRM calculations  When it comes to financing, a matter that we focus on more closely further in the note, important issues come to fore. First, what are the main segments where large investment needs are in place, thus requiring priority in allocating finance and alleviating access to it? To tackle this question we will discuss more thoroughly the investment structure.

The solid growth in general, including the inflows of foreign capital and rising investments, was a combined effect of the reform processes in these countries, and the extremely conducive global environment. Low interest rates, liquidity glut, expansion of global trade and global value chains were global features that supported investment growth in the region. Hence, the share of investment in GDP was rising prior to crisis (close to 10 p.p. in 2008 compared to 2000), reaching around 30% of GDP in 2008, well above the rule of thumb benchmark of 25%. Yet, according to the IMF (2016), given the easy pre-crisis funding conditions and low initial capital-labor ratio, “CESEE would have been expected to have much higher rates of capital accumulation than what they actually had”. One reason for this might be that the financial flows fueled consumption as well, thus precluding stronger growth of saving and investment. Chart 1: Share of investments in GDP, in % in constant terms)  Chart 2.
As a result, the likelihood of a return to the zero lower bound is, in Chair Yellen’s words, “uncomfortably high, even in the absence of a major financial or economic crisis.”18 Against this backdrop, Chair Yellen has expressed her views on the Fed’s monetary policy implementation tools. She suggests that whenever possible, influencing short-term interest rates should be the Fed’s primary policy lever, but that enhanced forward rate guidance and asset purchases should be considered again if that conventional tool reaches its limit, as would be the case if a future economic downturn drove short-term rates back to the zero lower bound. This view is consistent with her 2016 Jackson Hole remarks, where she presented analysis making the case that the Fed’s use of forward guidance and asset purchases could improve macroeconomic outcomes on average in zero lower bound episodes, and indicated that she expected these tools to remain “important components” of the Fed’s policy toolkit.19 The FOMC itself has not made any formal decisions about the Fed’s long-run monetary policy implementation framework. However, minutes from a November 2016 discussion about potential choices of policy rates, operating regimes, and balance sheet policies indicate that a number of policymakers viewed expansion of the balance sheet as an “important tool” to provide macroeconomic stimulus in situations in which overnight interest rates were at their effective lower bound.20 This approach is consistent with the balance sheet reaction function described in the June addendum to the FOMC’s Policy Normalization Principles and Plans.

Lessons learned Of course, whether and under what circumstances the FOMC would again activate large-scale asset purchases are ultimately decisions for future policymakers. But, to the extent they remain a possible tool for providing additional monetary easing when overnight interest rates fall to the zero lower bound, it is worth considering some lessons about their use. Some personal observations follow. Lesson 1: LSAPs had clear benefits at the zero lower bound Estimates of the magnitude and persistence of the effects of the Fed’s purchase programs vary, as do assessments of the relative importance of the possible channels through which such programs are believed to work. However, research largely provides evidence that the Fed’s asset purchases put downward pressure on longer-term interest rates and eased broader financial conditions, helping to improve macroeconomic outcomes.21 Studies of asset purchase programs conducted by other advanced economy central banks also show positive results.
Ardian Fullani: Achievements and challenges facing the Albanian banking sector Address by Mr Ardian Fullani, Governor of the Bank of Albania, at the year-end event with the Albanian Association of Banks, Tirana, 20 December 2012. *  *  *  Dear bank managers, At the end of this calendar and financial year, I take this opportunity to share with you some of the achievements and challenges facing the banking sector, confident that they will serve to guide our actions in the future. As expected, the year 2012 was a very challenging year for the financial and economic activity of the country and of various economic agents. Very likely, this year’s economic growth will remain positive, but significantly lower than last year. This economic performance is dictated by the weakening of the fiscal and monetary stimuli, as well as the slowdown of private investment and consumption. The slowdown in the latter is, however, accompanied by a reduction of imports. On the other hand, foreign demand has supported higher growth of exports, especially of energy products. This has led to an improved trade balance during 2012, hence marking a decrease in the deficit-to-GDP ratio. The impact of the global economic crisis continues to be present and its prospects to overcome it in 2013 remains our hope, which is not supported by the expectations of international financial institutions and public authorities, especially with regard to the economic situation in the euro area. During 2012, the banking sector marked a positive financial result, overall.

François Villeroy de Galhau: New Year wishes 2023 New Year wishes to the Paris financial centre by Mr François Villeroy de Galhau, Governor of the Bank of France and Chairman of the Autorité de contrôle prudentiel et de resolution (ACPR), Paris, 5 January 2023. *** Allow me to extend my warmest wishes for 2023 on behalf of the Banque de France and the ACPR. I don't know if I dare wish you, or wish us, a year free of shocks after those of 2020, 2021 and 2022. This past year has been marked by a climate of uncertainty, exacerbated by Russia's war in Ukraine and the energy crisis. It has also seen increased financial market volatility, compounded by the turmoil in the cryptoasset universe. In this unstable environment, I would like to make two double wishes for 2023: 1) Less inflation and more stabilisation. Activity has, until now, proved more resilient than expected, which is good news; however, inflation must not become entrenched. It is the number one concern for French people, and defeating it is our number one mission. It fell in December to 6.7%, which is encouraging but still not enough. It should peak in the first half, before declining towards 4% by the end of this year. But our forecast, and our commitment, is that inflation should be brought down towards 2% by end-2024 to end-2025.
I do not consider financial dominance to be a problem at present, but one cannot rule out the possibility of such a situation arising at some point in the future. We therefore need to continuously monitor developments and take measures to prevent this from happening. The Riksbank is responsible for inflation being stable, while responsibility for financial stability is shared between Finansinspektionen (the Swedish Financial Supervisory Authority), the Riksbank, the Swedish National Debt Office and the Ministry of Finance. The responsibility for macroprudential policy lies with Finansinspektionen. One of its aims is to limit financial imbalances, but monetary policy also has effects on financial imbalances. While macroprudential tools are particularly effective when one knows where risks in the financial system are building up, such as an excessive build-up of private debt. However, when interest rates are low for a long time, it can be difficult to know where in the system the main risks lie. In some situations it may therefore be reasonable to use the policy rate as a complement to macroprudential policy, as the policy rate has a broad impact on financial markets. There is an ongoing discussion in both academia and the central banking world about the extent to which monetary policy should counteract the build-up of risks in the financial system. This is an interesting and important discussion that I am following, but I do not want to belong to any particular camp in this discussion.

Banks in both the United States and Switzerland have suffered major problems, forcing authorities to make far-reaching interventions to avoid a financial crisis. Once again, we have seen confirmation of how dependent we are on the functioning of financial institutions, and how financial problems in one part of the world can easily spread to other parts. As a consequence, global standards for financial regulation are likely to require a number of changes. 1 Thank you to Magnus Jonsson and Jonas Niemeyer for help in preparing the speech and to Stefania Mammos  for help with data and figures. Thanks also to Björn Andersson, Mikael Apel, Hanna Armelius, Aino Bunge, Charlotta Edler, Mattias Erlandsson, Frida Fallan, Martin Flodén, Rebecka Hallerby, Iida Häkkinen Skans, Jens Iversen, Gustaf Lundgren, Marianne Nessén, Christina Nordh-Berntsson, Åsa Olli Segendorf, Marianne Sterner, Ulf Söderström and Anders Vredin for valuable comments and Elizabeth Nilsson for the translation. 1 [30]  Monetary policy and measures to promote financial stability are interdependent. If the financial system is not stable, price stability is threatened and without monetary stability, financial stability is threatened. When inflation is high at the same time as there are risks in the financial system – which in Sweden is mainly due to the large private debts of households and companies – this can increase the risk of "financial dominance", that is, that consideration of risks in the financial system limits the possibilities for monetary policy to combat inflation and that the credibility of the inflation target is thereby undermined.
This pattern was mirrored among other major global banks where returns rose from 8% to 22% (Chart 1). The only even broadly comparable period in banking history was in the early part of the 20th century when UK banks’ return on equity averaged 13% (Chart 2). Measures of executive compensation rose even more dramatically. UK bank CEO compensation rose by 13% per year on average between 1989 and 2007, from $ million to $ million. US bank CEO compensation rose from $ million to $ million, also by 13% per year (Chart 3). Over the same period, compensation in the non-financial sector rose by around 4% per year in the United States. As Thomas Phillipon and Ariell Reschef have shown, that Himalayan rise in bank executive salaries made the financial sector salary boom of even the 1920s look like a foothill.11 In 1980, a similarly-skilled individual earned about the same in investment banking as in the non-financial sector. By 2005, that same person would be benefitting from a salary four times that of their non-financial sector counterpart. What explains this extra-ordinary period of high returns in finance? Arithmetically, the answer is simple – leverage. The pre-crisis rise in returns on bank equity can be explained almost  10  Diamond and Dybvig (1983), Brunnermeier and Oehmke (2010). 11  Phillipon and Reschef (2009)  BIS central bankers’ speeches  3  fully by higher bank leverage.12 Equity returns inflated in line with bank balance sheets. So too did bank CEO salaries.

In so far as financial markets are concerned, these recent times have seen us avoid major and abrupt market movements or disruptions. Besides the 2016 measures that stabilised our markets, this growth is also the result of the many initiatives implemented since then. One key fundamental strategy has been our steps to enhance market transparency and visibility, which provides us with information and data for targeted development efforts. The operationalisation of the RENTAS Segregated Securities Account which enables us to observe the activity in the Malaysian bond market has also provided investors with improved efficiency and a reduced reporting burden, lowering the cost of investing in this area. On this topic, I am pleased to share that on Monday this week, Clearstream launched their revamped solution which will provide an internal settlement link to facilitate greater access to the Malaysian market. They now rejoin a host of International Central Securities Depositories and Global Custodians that provide such access. This is yet another positive development for our financial markets. With greater oversight capabilities, we were able to introduce the dynamic hedging programme in 2016, which successfully enabled institutional investors’ active management of their foreign 1/4  BIS central bankers' speeches  exchange exposures in the onshore market. The programme currently records participation of 104 registered institutional investors managing USD37 billion total asset under management, and has led to the migration of these investors’ former offshore strategies to the onshore market which has increased the level of transparency and orderliness of the ringgit market.
Article 173 requires institutional investors to include environmental objectives in their annual reports, in particular the exposure to climate risks, by measuring the carbon footprint of the assets that they finance and the "green” share of these assets relative to a set of targets. The implementing decree of the act, which is currently being drafted, will specify the information concerned and its presentation. From a broader perspective, we should aim at greater clarity: there are about 400 climaterelated information disclosure schemes. Imposing requirements or formulating recommendations in terms of information disclosure can be a powerful instrument for ensuring market discipline, as long as the information is targeted and pertinent, as evidenced by a number of successful examples. At the international level, under the aegis of the Financial Stability Board, a first task force known as the "Enhanced Disclosure Task Force" and composed of sector representatives had already issued recommendations in 2012 to improve, simplify and focus the communication of systemically important banks on the nature of their risks. At the national level, the guide on the relevance, consistency and readability of financial statements published by the French financial markets Authority in July 2015 is another positive example. Clarification is a challenge to be taken seriously. We have therefore decided, within the Financial Stability Board and with the support of the recent G20 in Antalya, to set up very shortly – by the beginning of 2016 – another dedicated task force (EDTF).

So this situation hardly constitutes a macroeconomic problem at present. In actual fact, one of the aims of the low interest rates has been exactly to create conditions for households to reduce their saving and maintain their consumption in the weaker economic climate. In spite of this, there is reason for the Riksbank to monitor developments carefully. There is also good reason for individual households to reflect on their debt situation. Interest rates are unusually low at present and will most probably change in the future. On the whole, there is no reason to make any marked adjustment to the overall outlook for demand in the Swedish economy in the coming years compared with in December or February. Most factors still indicate that growth in household consumption will continue to be stable around 2.5 per cent in the  2  BIS Review 16/2004  years ahead. The contribution to growth from exports will probably be somewhat higher than previously expected, but a large part of the effect on demand will be offset by the fact that this could also be the case for imports. Local government consumption appears to be somewhat weaker than we thought in December. Investment is a source of uncertainty and could probably pick up somewhat later than forecast. On the whole, therefore, GDP growth may be roughly as we expected in the December Inflation Report and when we took our decision in February, reaching around 2.5 per cent per year in the years ahead.