samchain/econo-pairs-v1 huggingface dataset:
The revision of the 2003 banking law through the Ordinance on Money and Credit of August 2010 extended the missions of the central bank to include an explicit objective of financial stability in addition to the price stability mandate. The 2010 banking law emphasized the role of the Bank of Algeria in ensuring banking system stability, safety and soundness. In this regard, it has been endowed with larger prerogatives to carry out any investigation at the level of banks or financial institutions, thereby enabling greater capacity for early detection of vulnerabilities in the system. Accordingly, the Bank of Algeria intensified micro-prudential controls, including with regard banks’ anti money laundering and financing of terrorism mechanisms. Improved efficiency of these controls enables an orderly development of the banking system. For a comprehensive monitoring of the banking sector stability, the Bank of Algeria periodically assesses its  BIS central bankers’ speeches  3  soundness, based on stress tests which have been developed since 2007 and strengthened in 2013–2014. In addition, existing micro-prudential regulation tools – such as loan to value ratios, minimum reserve requirement (also a monetary policy instrument), and the ratio of debt service to revenue – have been revisited and could be adjusted as needed to face potential systemic risks. Furthermore, a strengthening of macro-prudential tools is underway since early 2013, especially through the introduction of new tools enabling horizontal analysis of risks and the introduction of resilience tests.

I remember that the last thing I did in this respect, before I went to the Bank for International Settlements in Basel to focus on other things, was to try to sell the system to a Russian audience that was considering pension reform in their own country. 2 On what was this view based? In order to answer that, I must first remind us of the attributes of a good pension system. Of course it is obvious that it must be a mechanism for saving for retirement. But in order to be an efficient such mechanism, it must take due account of the lifetime risks facing individuals, as well as the economic and financial risks facing society as a whole. These are, for instance, risks related to life expectancy, ability to work, demographics, the productivity of labour, and the rate of return on financial assets. Furthermore, some at least would make the demand that the system have a certain degree of income equalisation built into it, and most would accept that it should at least not be regressive. Then we would want the pension system to have some degree of flexibility and to provide scope for individual choice. Finally, we want the pension system to be designed so as to promote economic performance; that is, saving, growth, and financial sector development. This is a tall order, of course, and in practice there are bound to be trade-offs between these goals.
Charles L Evans: Patience is a virtue when normalizing monetary policy Speech by Mr Charles L Evans, President of the Federal Reserve Bank of Chicago, at the Peterson Institute’s Conference on Labor Market Slack, Washington DC, 24 September 2014. *  *  *  Thank you. I would like to thank the Peterson Institute and Adam Posen for organizing this conference focusing on labor market issues. The functioning of the labor market is always of great interest to both academics and policymakers. But today, with the collapse of labor demand during the Great Recession and ongoing structural changes, judging the health and future of labor markets is both especially challenging and important. The work presented at this conference and others like it offers an opportunity to integrate the most recent research with the thinking of policymakers. In keeping with this theme, I will first offer my views on the labor market and how the issues raised here influence my thinking on monetary policy, and I will then discuss my more general strategy for considering when and how we should begin to normalize monetary policy. Before I begin, let me note that the views I express are my own and do not necessarily represent those of my colleagues on the Federal Open Market Committee (FOMC) or within the Federal Reserve System. Introduction and summary Five long years have passed since the trough of the Great Recession, in mid-2009. Late that year the unemployment rate stood at an astonishing 10.0 percent.

What was new over recent decades was the scale of its activities, which is closely related to the rapid expansion of securitisation. The securitisation of previously illiquid items in banks’ balance sheets gave perhaps the strongest boost to the financial sector. Securitisation allows traditional banking assets to be transformed into tradable instruments, thus creating tradable assets. It acts as a multiplier of negotiable financial claims or, more simply, a multiplier of finance. BIS Review 83/2010  1  Why was securitisation so essential to the expansion of shadow banks? The short answer to this question is that shadow banking serves as an intermediary for wholesale finance. In this segment of the financial system, lenders have large – and lumpy – financial resources to place with intermediaries for short periods of time, with no protection from formal deposit insurance mechanisms. This lack of formal insurance – since deposits are too large to be eligible for protection under national laws – calls for an informal or – I should rather say – market-based system of protection. This is precisely what the securitisation of assets can do: it can give financial intermediaries enough tradable securities to pledge as collateral for the large – lumpy – loans that they receive in the wholesale shadow-banking segment of their activities. The run-up to the crisis clearly showed that shadow banking and securitisation are not only interrelated but also that they interact.
Low policy rates as a result of low real interest rates Policy rates and inflation-linked bond yields in per cent 10 Sweden  8  Euro area United Kingdom  6  10  6  6  8  4  4  6  2  2  4  0  United States 4  0 Sweden  2  2  0 -2 1995  2000  2005  2010  2015  2020  -2  0  -4  -2  -6 1995  -2  Euro area United Kingdom  -4  United States  -6 2000  2005  2010  2015  2020  Sources: Macrobond, national central banks and the Riksbank  Figure 2. Falling trend in the repo rate and the debt ratio The repo rate in per cent and the Maastricht debt as percentage of GDP 10  10  80  80  Maastricht debt 8  8  6  6  4  4  2  2  0  0  SNDO  60  -2 1995  -2 2000  2005  2010  2015  2020  60  ESV 40  40  20  20  0 1995  0 2000  2005  2010  2015  2020  Note. Broken lines refer to forecasts of the Maastricht debt by the Swedish National Debt Office (SNDO) and Swedish National Financial Management Authority (ESV).

In the justification for its new strategy, the Federal Reserve notes that the level of the policy rate that is compatible with maximum employment and 4 For a more detailed account, see for example, Jansson (2020). 5 It is difficult to know exactly where this bound lies, but my guess is that, in Sweden, it is slightly lower than –0.5  per cent, as the Riksbank’s repo rate was for a period, and it probably also depends on how long the repo rate remains at negative levels. 4 [17]  long-term price stability has fallen relative to its historical average. The policy rate will therefore be limited by its lower bound more often than has been the case in previous periods. In order to anchor long-term inflation expectations at 2 per cent and prevent them from falling below this level – which would make the lower limit binding even more often – it has chosen to specify the target as an average of 2 per cent. This makes it clear that ‘bygones’ are not ‘bygones’: if inflation has been below the target for a period, this must be compensated for by inflation then being above target for a period.6 In turn, as I have just mentioned, the ECB has moved on to a symmetrical target of 2 per cent in the medium term. In practice, this means that the target has been raised slightly, as previously inflation should have been “below, but close to, 2 per cent”.
Liquidity dried up across markets, including in U.S. Treasuries, the benchmark upon which virtually every other asset is priced or hedged, the foundation for the dollar’s primacy as a reserve currency, and the source of funding for our federal government. As uncertainty rose and liquidity deteriorated, demand for cash and safe assets rose and demand for assets with any form of credit or liquidity risk plummeted. For a few weeks in March, even Treasury yields began to rise, especially in longer maturities, and so did the cost for almost all forms of household and corporate borrowing. Access to financing beyond overnight tenors became severely impaired, causing acute dislocation across short-term funding markets and triggering outflows across prime money market funds. In the race to safety, dollars became increasingly scarce, intensifying the stress across global markets. Emerging market economies experienced an unprecedented outflow of capital from non-residents. Sovereign yields surged in the most indebted European countries. The ominous reality was that a synchronized global selloff had taken on a life of its own, with little prospect for self-correction. Moving with Maximum Speed Against this backdrop, policymakers at the Federal Reserve acted swiftly and unreservedly in an effort to break the damaging psychology that was taking hold. The series of policy actions announced over the past month – both conventional and unconventional – reflected a full recognition that the current shock is qualitatively different from the financial crisis of 2008, without a culprit other than the virus itself.

With backing from the U.S. Treasury, the Federal Reserve established the commercial paper funding facility as a funding vehicle that can purchase new issuance of commercial paper from highly rated businesses and municipalities, and certain issuers that were downgraded after the virus shock. By providing assurances to issuers and investors that retiring commercial paper can be replaced with new issuance, the facility will promote confidence in the market and support the flow of credit to businesses and municipalities. Corporate Credit Facilities (CCFs) At the same time that short-term commercial paper markets were nearly frozen, so too were markets for longer-term corporate borrowing – at precisely the moment when companies most needed a financing buffer. Borrowing rates for investment-grade corporate issuers relative to Treasury securities increased by about 2.5 percentage points in the first half of March, while issuance for companies rated below investment grade came to a halt. In this context, the primary market corporate credit facility (PMCCF) was designed to provide funding for highly rated companies that need access to financing in order to maintain business operations during this period of dislocation. Again with backing from the U.S. Treasury, the Federal Reserve will create a funding vehicle to backstop eligible corporate borrowers for up to four years, at an interest rate that is better aligned with corporates’ underlying credit risk than was available through market-based financing during March.
Ranee Jayamaha: Promoting credit culture and expediting the process of debt recovery Speech by Dr Ranee Jayamaha, Deputy Governor of the Central Bank of Sri Lanka, at a workshop on proposed law on restructuring of sick industries and other legal issues at the Centre for Banking Studies, Rajagiriya, 1 February 2005. *  *  *  Honourable Mr K C Kamalasabayson, Attorney General, Mr Sumant Batra the Guest Speaker from India, distinguish guests, Ladies and Gentlemen. I am happy to be associated with this Workshop aimed at deliberating on vital issues relating to the proposed law on Restructuring of Sick Industries, and other legal and financial system issues on debt recovery by financial institutions. As you are aware, the two core objectives of the Central Bank are: to secure economic and price stability and financial system stability with a view to encouraging and promoting the development of productive resources of the Country. Debt recovery is one of the core elements of financial system stability and it depends on the performance of economic sectors, the industrial sector being one of the important areas. This is why the Central Bank has been interested in promoting credit culture and expediting the process of debt recovery. In recognition of this, in the year 1990, the Central Bank was associated in the enactment of a package of fourteen Debt Recovery Related laws.

But even if all organisations that were in trouble had been rescued, it would have remained necessary for central banks and governments on both sides of the Atlantic to take extremely bold measures in order to be prepared for systemic liquidity and insolvency risks. Question: How do you explain the fact that, despite the ongoing banking crisis, the ECB’s statistics do not yet indicate the existence of a credit crunch in the euro area? Answer: What is true is that we see a certain weakening in the dynamics of loans to enterprises. But the rate of growth of outstanding loans to non-financial corporations has remained robust in double-digit figures. However, since bank lending standards have been tightening significantly for some time and the financial crisis entered a new phase only in mid-September, we must observe all developments very closely and remain attentive to new facts and figures. Question: The major investor Warren Buffett once described credit derivatives as “financial weapons of mass destruction”. Do you share this view? Answer: I wouldn’t necessarily use that formulation myself. But the level of complexity and lack of transparency reached in the production, marketing and selling of these financial market instruments indeed proved to be destructive and contributed substantially to the fragility of financial markets. 2  BIS Review 1/2009  Question: The reputation of the ECB has been strengthened by the crisis. Has it also profited financially from the brisk demand for the greater amount of liquidity made available?
This allowed a certain country to run deficits over 3% of GDP every year it was in EMU and never face corrective action. Moreover, the euro area surveillance framework was “blind in one eye”, with no formal framework for monitoring macroeconomic and financial imbalances. The Lisbon Strategy focused on the structural level, but on policy implementation rather than imbalances. Eurogroup discussions on imbalances had no enforcement mechanism. The Lamfalussy framework for financial supervision did not use the concept of systemic risk. Thus a situation prevailed where countries could be congratulated for strong headline fiscal numbers when these data in fact reflected substantial imbalances that were building up in the private sector. To a certain extent, the weakness of these governance procedures was linked to a misplaced faith in market discipline. The institutional design of EMU gave market discipline a central role in economic governance. The absence of a transfer mechanism between Member States was supposed to encourage markets to actively discriminate between euro area issuers. This was based on the assumption that financial markets would always have perfect incentives to enforce the “rules of the game”. This assumption, in retrospect, looks somewhat naïve. It is well established in the academic literature that markets have complex incentives and dynamics. Market psychology tends towards pro-cyclicality. Perceptions converge around certain information sources, such as ratings, or certain benchmarks, such as indices, which creates herd behaviour.

Twenty years of low and stable inflation had provided confidence in central banks’ ability to control inflation, which in turn had paved the way for a sharp reduction in real interest rates without compromising the overall monetary policy target. This contrasts with the downturn in the late 80s, as illustrated in the case of Norway, as well as during the Depression, when real interest rates were kept high due to faltering credibility. Fiscal policy has also been used everywhere, and has prevented an even sharper fall in output. After two years of extensive fiscal measures, many governments are facing the wall. They are unable to finance further deficit spending and have to cut spending and increase taxes now. The graph shows the increasing government deficit in the UK. The government has no choice but to tighten policy. The Swedish government, on the other hand, in spite of expansionary policies in the aftermath of the crisis, had maintained a surplus in the years before, and the Swedish economy has thus fared well. Although countries were hit by the crisis in a fairly similar way, they emerged from it very differently. Some countries have experienced good growth rates and falling unemployment. Others are struggling to keep their head above water. Production is still far below the precrisis level, with unemployment hovering at record levels. Are these differences predictable? As a participant in OECD meetings for many years, I have sometimes been among the backbenchers, trying to check the pulse of the economy in various countries.
FTD: To cope with the crisis the European Central Bank used non-standard measures. The Securities Markets Programme, special treatment for government bonds of Greece, Ireland and Portugal, the liquidity provision for banks. How far does the ECB go with its special rules? Trichet: We can not accept to put in questions our role as the anchor of stability and confidence in the euro area and in Europe. If a country defaults, we can no longer accept as normal eligible collateral defaulted bonds issued by the government of that country. Because, in the eyes of the Governing Council, this would impair our ability to be an anchor of confidence and stability. FTD: What does the ECB say to the fact that, in the context of the second package for Greece, governments have nonetheless been talking about solutions such as a debt rollover or a partial debt buyback, which could lead to default? Trichet: The responsibility for this lies with the governments. The governments have been warned, in no uncertain terms and using all possible means. I have said so publicly. I have explained in detail to the Heads of State and Government and to the finance ministers, on several occasions, that, if a country defaults, we will no longer be able to accept its defaulted government bonds as normal eligible collateral. The governments would then have to step in themselves to put things right. That would then be their duty. FTD: What does that mean in concrete terms?

And finally, I do worry about diluting overly the focus of the prudential regulator, which was I’m sure one element of what led to the financial crisis. The same logic applies to a competitiveness objective, which surprisingly often gets confused with our competition mandate. 4  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  4  Seventh, five years on, I am slightly worried about a looming political economy problem. We have I think taken quite an expansive view of our secondary competition objective, by which I mean that we have been vigorously prowling all parts of the PRA’s terrain actively looking for things we can do to advance the objective. But our terrain is not limitless, so the flow of new initiatives will I think slow, and we will have to spend more time tangling with more difficult questions of the sort I have discussed today. I am worried that people may infer from a lower volume of announcements a reduced commitment to our secondary competition objective. There is no such reduction in commitment – we are simply implementing our commitments thoroughly. Those taking an interest should hold us to account for that, and press us on what we can do in the next five years about the more awkward questions which now confront us. So to sum up: in my view the competition objective has had quite a profound impact on the PRA’s activities and approach over the last five years.
Niklaus Blattner: The task of overseeing payment and securities settlement systems Introductory remarks by Mr Niklaus Blattner, Vice-Chairman of the Governing Board of the Swiss National Bank, at the end-of-year media news conference, Zurich, 12 December 2003. *  *  *  With the revised National Bank Law, the National Bank receives an explicit mandate to contribute to the stability of the financial system. This is, in particular, laid down specifically in the Law in the task of overseeing payment and securities settlement systems. Why does the National Bank oversee payment and securities settlement systems? By overseeing payment and securities settlement systems, the National Bank is supporting the security and efficiency of financial market infrastructures in Switzerland. In doing so, it is helping to ensure the stability of the financial system as a whole. This stability is essential to successful monetary policy in particular, and to the economic efficiency of Switzerland in general. The importance of a market economy’s financial system derives from the function that it fulfils. The financial system is responsible for the allocation of financial resources and risks, as well as intermediation between savers and investors. A financial system can be described as stable if it performs these tasks efficiently and its markets and institutions prove themselves to be shock-resistant. Another part of a stable financial system are secure financial market infrastructures. These include, specifically, payment systems and systems for the clearing and settlement of financial instruments (securities settlement systems).

I would now like briefly to address three central points connected with oversight: which systems should be overseen by the National Bank? What minimum requirements should the operators of these systems fulfil? And finally: how will collaboration with other regulatory and supervisory authorities especially the Swiss Federal Banking Commission (FBC) - be structured? Oversight focuses on systems which might constitute a threat to the stability of the Swiss financial system. The question of the systems to which this applies cannot be answered in precise terms. The ordinance lists a number of criteria that we will consider when assessing the systemic importance of an infrastructure. In addition to the type, number and monetary volume of the transactions that are cleared or settled via a system, the outcome of the assessment will depend, for example, on the other financial market infrastructures with which a system is linked, and whether or not the clearing and settlement of transactions can be diverted temporarily to another system in the event of a failure in the first system. The latter option alleviates the problem somewhat. Given these and other criteria, it can be assumed that the group of systems overseen by the National Bank will be composed first and foremost of those payment and securities settlement systems that are part of what is known as the Swiss value chain. These are the interbank payment system Swiss Interbank Clearing (SIC), the SECOM securities settlement system and x-clear, the central counterparty.