samchain/econo-pairs-v1 huggingface dataset:
And perhaps in the same way, too, might forced asset sales into stressed financial markets have negative spillovers for all other users of that market. In the case of the core government bond market that could be significant. What is being done to address risks from non-bank leverage, and where is there further progress to be made? Having set out how leverage in non-bank financial institutions might create risks to financial stability, I’ll turn now to what needs to be done if we are to ensure those risks are reduced. Let me be clear. The onus for building resilience in the non-bank system sits first and foremost with the firms themselves. If firms use leverage, they must be able to manage the liquidity consequences of their risk exposures. As part of this, they need to learn from the decades of experience that show how leverage and liquidity risk creates rollover risks; volatility; operational challenges in accessing liquidity; and exposures to amplification mechanisms from the wider system. Firm stress testing and resilience must be set with reference to the system and to market dynamics and not just a firm’s own atomistic actions. Indeed this is where associations such as yourselves, ISDA and AIMA, can be hugely supportive in sharing best practices and industry standards. LDI funds have demonstrated the art of the possible here, by building resilience at speed when severe stress demonstrated the clear need for it. Regulators worked with LDI funds during the Bank’s operations to ensure greater resilience for future stresses.

Haga clic aquí para escribir texto. 01.03.2018  Developments in the economic situation Asociación Española de Directivos, Santa Cruz de Tenerife Luis M. Linde Governor  Introduction Let me begin by thanking the Tenerife Asociación Española de Directivos for their kind invitation to me to join you today. The European environment I shall devote my address to the current situation of the Spanish economy. I will begin by highlighting the favourable cyclical juncture at which the euro area – the economic environment closest to us – stands. The upturn in which the euro area economy is immersed may be classified as robust and dynamic, and extensive to all productive sectors and countries. The euro area economy began to show signs of strength in the closing months of 2016, and these stepped up in the second half of last year. As a result, GDP at the close of 2017 was growing at 2.7%, a rate not seen since the start of monetary union and one significantly above what was expected a year earlier. These figures comfortably exceed the potential GDP growth estimates for the area as a whole and thus contribute to erasing the negative output gap generated by the crisis. One of the characteristics of the current expansionary phase is its intensity in terms of job creation, meaning that the euro area as a whole has now exceeded pre-crisis occupation levels. Wage restraint and the reforms carried out in some countries have been conducive to the vigorous response by employment to economic growth.
Outright deflation, in turn, would be a dangerous development because it would drive up real debt burdens and make it much more difficult for households and businesses to deleverage. So what are the implications of all this for monetary policy? The first implication is that the federal funds rate target is likely to remain exceptionally low for “an extended period.” The desired policy outcome is a robust recovery in the context of price stability. The second implication is that the Federal Reserve needs to ensure that market participants and the public understand that the FOMC has the tools to exit smoothly from the very low federal funds rate, and that it stands ready to do so when the time comes. On this point, let me be perfectly clear: An enlarged balance sheet and the high level of excess reserves in the banking system will not delay or prevent a timely exit. The angst about the Fed’s ability to exit smoothly stems from the rapid growth of its balance sheet over the past year. In September 2008, on the eve of Lehman Brothers’ failure, the consolidated Federal Reserve balance sheet was about $ billion. Today it is about $ trillion, and it is likely to peak at around $ trillion early next year. Some observers are concerned that this expansion will ultimately prove to be inflationary. Proponents of this view say that the monetary base, the broad monetary aggregates, and total credit outstanding have historically tended to move together with inflation, at least over longer time periods.

Similarly, the forecasting system will have to be adjusted once the Czech Republic enters the euro area and policy is set by the ECB Governing Council. It is worth mentioning that the development of our forecasting system has been part of the wider evolutionary process that the Czech inflation targeting regime has gone through. The first years of the new regime were not easy, and included frequent numerical target misses. Nevertheless, the Czech Republic enjoys low inflation, and inflation expectations seem to be firmly anchored at low levels at present. Monetary policy decision-making is rule-based and transparent, thereby enhancing the credibility of the CNB. Let me conclude with the statement that a “forecast based” monetary policy framework seems to fully allow an independent central bank to commit credibly to its long-term goal of price stability. Therefore, any new developments in economic forecasting are highly appreciated and welcomed by monetary policy practitioners. BIS Review 40/2006  3
SPEECH DATE:  17 May 2022  SPEAKER:  Deputy Governor Henry Ohlsson  VENUE:  Department of Economic History, Uppsala University  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  Monetary policy and inflation in times of war* The 2020s could certainly have begun better. Following a pandemic, which we still haven’t quite seen the end of, another war has broken out in Europe. As information now spreads faster than ever before, via news channels and social media, and as it is a country quite close to us that has been affected, the war in Ukraine has shaken us more than usual in our safe Swedish everyday lives. That, at least, is how I feel. However horrific the war in Ukraine may be, it is not the war as such that I intended to talk about today, but its economic consequences – and those of war in general. After all, it is in the field of economics that I have my comparative advantages, and as policy-maker at a central bank, monitoring the economic consequences is, of course, something that is part of my job. I will focus on the effects on inflation, as they are particularly important for a central bank. When major and unusual events such as a war occur, there is no ‘manual’ for how to act as an economic policy decision-maker.

10.02.2023  Moving the economic governance framework of the EU: towards more efficient fiscal rules in a more complete monetary union Warwick Economics Summit 2023 University of Warwick – Coventry, United Kingdom Pablo Hernández de Cos Governor  Thank you to the Coordination Team for inviting me to speak at this 2023 edition of the Warwick Economics Summit. I would like to congratulate the University of Warwick’s Department of Economics on encouraging its students to run this initiative, which has benefited from the words of highly distinguished participants since 2002. I am honoured to join this group of speakers that have shared with you their views on various matters that are key not only to our present but also to our future. Allow me to add that I am particularly glad to be able to do so this year in person after the recent pandemic years. In my remarks today I will address what I consider to be the key role that the fiscal governance framework of the European Union (EU) plays, or ought to play, and the ongoing review for its reform. I will also touch upon the European Commission’s recent orientations for the reform of the fiscal rules that were published last November. Please note that my words today are merely one more voice in the ongoing debate involving academics and other policymakers on the reform of the EU’s fiscal governance framework. Introduction The current economic context is one in which economic activity, even if more resilient that initially expected, is losing steam.
In this regard, the BBA has recently published a report, and has invited comments from financial market participants. What is the SNB’s standpoint on this discussion? The SNB – like all market participants – has a strong interest in ensuring that the Libor reflects true market interest rate conditions. For the three-month Swiss franc Libor, there has so far been no evidence that this has not previously been, or is no longer, the case. The use of the three-month Libor as an operational target stems from its considerable economic significance as a reference rate for many financial and lending contracts. Here too, there is so far no evidence that the Libor has lost its significance in the Swiss franc market. Since not all reporting banks have been equally affected by the financial market turmoil, and since the extent and liquidity of Libor-based, unsecured money market trading in a crisis is automatically much lower than usual, the range of numbers reported will automatically be wider in such a situation. This can also give rise to random fluctuations. Moreover, in general the risk premium inherent in the Libor has become a lot more volatile since the start of the turmoil. This volatility makes it harder to steer the Libor. It should, however, be borne in mind that the SNB does not use a point target but a target range, which allows a certain amount of fluctuation in the Libor.

In December 2007, for the first time in its history, the SNB was able to provide its counterparties with US dollar liquidity against the usual SNB eligible collateral, thanks to a swap agreement with the Fed. In this context, it is important to point out that this dollar liquidity had no impact on either monetary policy or the SNB’s income statement. Yet it helped to facilitate refinancing by our counterparties, and thus made a positive contribution towards easing the tension on the Swiss franc money market. In this phase, the central banks supplemented their usual remedies with some booster treatments. The third wave of turbulence, in March this year, resulted from acute liquidity problems faced by individual international banks, combined with concerns that the money market problems might become chronic. In this third phase, the SNB did not provide any new instruments, preferring to make greater use of our existing tools. In particular, we resumed our US dollar auctions, at which we now offer USD 6 billion on a fortnightly basis. In this way, we are providing the market with a maximum of USD 12 billion. In addition, we are supplying the  BIS Review 80/2008  1  market with generous amounts of Swiss franc liquidity and actively engage in fine-tuning operations whenever necessary. Other central banks have opted for more wide-reaching measures over the past few months. For instance, the range of eligible participants and collateral for refinancing operations was expanded.
Had the APF done so, in addition to strong primary market private sector demand, it would undoubtedly have helped to drive down market spreads. But it would also have risked displacing that private sector demand, to little purpose in my view. In fact, a greater intervention in this market during this period could have made things worse – the problem was in the functioning of the market, not a lack of demand for the assets. It would be fair to say that the corporate bond scheme attracted some criticism in its early months. Many observers misunderstood the nature and purpose of the scheme and considered that the small amounts bought were a sign of failure. But, as I have stressed tonight, the objectives of the scheme were not based on buying a particular amount. In fact, over the past year, the corporate bond market overall has performed consistently strongly and in line with the original objectives of the scheme: There has been record issuance of sterling corporate bonds (Chart 5); spreads for eligible bonds have halved (Chart 6); bid-offer spreads have narrowed; and the bond-CDS basis 6 has also contracted significantly. These asset purchases do seem to have played their part in improving the access of investment grade corporates to bond market financing. The one disappointing feature of the sterling corporate bond market is the continuing problem of secondary market illiquidity.

Commercial paper Commercial paper (CP) is a common way for larger firms to manage their day-to-day cash needs. And insufficient cash flow is one of the key ingredients in corporate failures. At the start of 2009, commercial paper spreads were way above any estimate consistent with the risk involved: they implied default rates around 50% higher than witnessed in the Great Depression. This market seemed like a prime candidate in which the APF should intervene – and so facilitate otherwise credit-worthy firms in maintaining their access to short-term finance. In trying to catalyse a market, the Bank could not operate like a private investor or bank which would make purely discretionary judgements about whose CP to buy. Rather, a facility was set up which, in principle, any firm could access if they met fairly broad criteria. The APF offered to buy up to three-month CP at spreads which were significantly below those in the market at the time, but which were significantly above those expected to prevail in normal conditions. Initially this would help to drive market spreads down and the APF would then revert to providing a “backstop” offer. In this way the scheme was set up to be self-liquidating as normal market conditions returned. There were some important restrictions. Most notably, only broadly investment grade paper could be bought, consistent with the terms initially set out by the Chancellor and so limiting the degree of credit risk taken.
A third step succeeds later, and thus onward till a genius pieces the bits together and makes the decisive contribution.”16 Today, I have had the privilege of addressing such people – geniuses who have pieced the bits together and made decisive contributions. 1 Ricardo, D. (1817), On the Principles of Political Economy and Taxation, London: John Murray. 2 Sargent, T. & Wallace, N. (1976), “Rational Expectations and the Theory of Economic Policy", Journal of Monetary  Economics, 2(2): 169–83; Lucas, R., (1976), “Econometric policy evaluation: A critique”, Carnegie-Rochester Conference Series on Public Policy, 1: 19–46; Kydland, F. and Prescott, E. (1977), “Rules rather than discretion: the time inconsistency of optimal plans”, Journal of Political Economy, 85(3): 473–491. These models also provided the ground for structural econometrics, which allowed for policy analysis and the study of counterfactuals. See Hansen, L. P. (2013), “Uncertainty outside and inside models”, Lecture on receipt of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 8 December; and Sims, C. (1980), “Macroeconomics and Reality“, Econometrica, 48(1): 1–48. 3 Clarida, R., Gali, J. and Gertler, M. (1999), “The Science of Monetary Policy: A New Keynesian Perspective”,  Journal of Economic Literature, 37(4): 1661–1707. 4 6/7  BIS central bankers' speeches  4 Notably Kiyotaki, N. and Moore, J. (1997), “Credit Cycles”, Journal of Political Economy, 105(2):211–248 and  Bernanke, B., Gertler, M. and Gilchrist, S. (1999), “The Financial Accelerator in a Quantitative Business Cycle Framework”, Chapter 21, Handbook of Macroeconomics.

Such an adjustment, never easy, requires unprejudiced, honest assessment of the new realities with clear eyes, unencumbered by the defence of previously held paradigms that have lost any explanatory power. Fifth, we must be aware of the gaps that still remain in our knowledge. Our mainstream macroeconomic models still have little to say, for instance, about the non-linear propagation of shocks, the distributional impacts of policies, or how endogenous firm entry and exit can affect economic performance.15 Policy actions undertaken in the last ten years in monetary policy and in regulation and supervision have made the world more resilient. But we should continue preparing for new challenges. The changes that we have discussed, profound as they are, often hinge on one fundamental idea. A natural question to ask is whether such an idea sprang out as a response to a specific policy problem or was rather conceived previously in an entirely different, unrelated intellectual environment, perhaps addressing a different set of problems. It is a question that is especially relevant in economics, when previously held consensus views change. But it is a question that is unlikely to have a precise answer. Let me rather use the 1939 words of Abraham Flexner, the first director of the Princeton Institute for Advanced Study: “Almost every discovery has a long precarious history. Someone finds a bit here, another a bit there.
Also, in today’s environment, the fear of an event often is the event itself, because of the inherent tendency of markets to anticipate developments and overreact. BIS Review 61/2002  3  G  But on the positive side, financial recoveries can proceed more rapidly in today’s environment, particularly with the right policy responses from borrowers. In part, this reflects the fact that today’s market participants generally have the capacity - and many have little choice, under mark-to-market accounting - - to digest losses and move on. The broader sourcing of capital today also gives more scope to the possibility that, while some investors may withdraw, others may take their place. The caveat here is that the well not be poisoned through unnecessarily broad or heavy-handed approaches, a point I will return to later. •  What is the right way to deal with this changed and changing environment? In my view, the solution is neither a single piece of financial engineering nor a compact between the official lenders and private creditors. Rather, it is a process incorporating a number of elements. Essentially, I would suggest that our current case-by-case approach to crisis management needs to evolve in ways that are market-based and adaptive, yet strategic, creative, and principled. •  Being successful in today’s environment requires adapting to the particularities of the case at hand, as well as the global financial and economic context, and requires seeking, as far as possible, to work with the grain of a given situation.

Moreover, alignment of market expectations with the central bank’s own targets, through fluent and transparent communication, allows monetary policy to exert a stronger influence along the entire yield curve. Yet notice that this latter channel becomes most relevant if central bankers approach markets from the sort of leadership position emphasised by Professor Blinder. I agree with him on this important point: central bankers should continuously monitor markets and should extract from them as much information as possible. But they must not put themselves under the thumb of what is sometimes capricious and short-sighted market sentiment. In any event, one of the most robust lessons we can extract from the recent period of global monetary and output growth stability is that low inflation may well be consistent with episodes of high financial volatility. Cases of financial stress have been recorded both in industrialised and in emerging market economies over the last few years without noticeable inflationary pressure. Even in countries whose financial system has proved more resilient, financial cycles have become wider and more volatile. Indeed, a long period of monetary stability coupled with low interest rates, as has been the case for some years now, may arguably be conducive to certain types of imbalances in asset markets. In such an environment the poor returns on low-risk investments and the softening of lending standards may lead investors to take on increasingly riskier projects.
It should be stressed that the most important efforts to implement the Core Principles are occurring in individual countries and, with this in mind, I am pleased to say that approximately 120 countries have now endorsed the Core Principles. Without the support and backing of national authorities to follow through with the implementation of these principles, our broader efforts simply cannot be effective. In this connection, the Basel Committee has long recognized the need for effective training of participants in the global supervision community, and over the years has sponsored numerous programs which have been beneficial in allowing supervisors from different countries to share experiences and exchange ideas for improved practices. In 1998, the Basel Committee, along with the Bank for International Settlements, jointly established the Financial Stability Institute, which conducts leadership seminars for supervisors in emerging market countries and facilitates technical assistance. Effort to revise the Basel Accord Let me move on to the Basel Committee’s initiative to revise the 1988 Capital Accord. As you well know, capital has been, and continues to be, an important supervisory tool. Since 1988, capital regulation has evolved around a set of minimum ratios that were devised by the Basel Committee on Banking Supervision and set forth in a document known as the Basel Accord. The Accord was, without question, a milestone achievement – for the first time, supervisors were able to use a common yardstick for assessing banks’ capital adequacy.

I’d like to begin by addressing the profound impact of today’s technology on banking and the financial markets, then move on to the implications of that impact for effective supervision in the twenty-first century. On the subject of official supervision, I will discuss the Basel Committee’s Core Principles for Effective Supervision, and then conclude with an update on the Committee’s major initiative to revise and refine the 1988 Capital Accord. 1  BIS Review 75/2000  Technology changing the world, banking and supervision It’s been said that information is power. Whoever said that surely never had to deal with the flood of e-mail most of us receive each day. Indeed, with increasing frequency, the complaint nowadays is about “information overload.” With wireless communications enabling us to conduct business anytime, anywhere, I sometimes feel, as I’m sure many of you do, that no matter where I am in the world, I’m expected to be awake and working. For those who occasionally feel overwhelmed by technology’s marvels, it’s worth remembering that there was a time, and not so long ago, when reliable market information was decidedly scarce and concentrated in the hands of a privileged few. The Rothschilds built an international banking empire on the wings of carrier pigeons, whose messages enabled the brothers to buy and sell on information about investment opportunities or financial disasters in distant places long before their competitors heard the news.