samchain/econo-pairs-v1 huggingface dataset:
It is not a case of rescuing banks and bank management for their own sake or that of the shareholders or of “giving away taxpayers’ money” as it is sometimes wrongly described in the debate. In the long term we need a well-developed system for managing insolvent institutions The Riksbank’s possibility to provide liquidity assistance to a financial institution when financial stability is threatened assumes that the institution is solvent and able to continue to pursue its operations. In the case of Carnegie, Finansinspektionen withdrew the institution’s licence to conduct banking operations on Monday this week. The Riksbank then withdrew its liquidity assistance to the bank, is it no longer met the criteria for being granted this type of credit. The Riksbank’s loan to Carnegie Investment Bank AB has been repaid by the Swedish National Debt Office, which has taken over the debt and now owns the company. The Debt Office can now take over a financial institution, as in Carnegie’s case. This applies in a situation where an institution that does not meet the requirements for liquidity assistance from the Riksbank has to default on its payments and this is assessed to threaten financial stability. This is made possible by the stability plan for the financial system decided by the Riksdag just over two weeks ago. The stability plan also means that the government can extend guarantees to individual institutions or to a group of institutions.

Yet efficient market forces “should” eliminate these disequilibria by having wages adjust to ensure full employment always and forever. Monetary Policy is not only a response to these rigidities; it is made effective by them. In capital markets, there is ‘momentum everywhere’. From bonds to equities to currencies and commodities, past winners seem to enjoy further winning streaks, while past losers persist in trailing behind. 4 Yet efficient market forces ‘should’ eliminate these predictable movements before they become apparent. *** The belief that markets always clear had two dangerous consequences. 5 First, if markets always clear, they can be assumed to be in equilibrium; or said differently “to be always right.” If the received wisdom is that the market is efficient, then bubbles can neither be identified nor their potential causes addressed. Such thinking dominated the (non)reaction to US subprime and housing booms. Consider that many market participants find it more profitable to anticipate each other’s behaviour than to divine the fundamentals. 3  For a review of this broader phenomenon, see Padoa-Schioppa, T (2010), “Markets and government before, during and after the 2007-20xx crisis”, The Per Jacobsson Lecture, June. 4  Asness, C, Moscowitz, T and Pedersen, L (2013), “Value and momentum everywhere”, Journal of Finance, LXVIII, No. 3, June. 5  See also Turner, A (2010), “Market efficiency and rationality: why financial markets are different”, Lionel Robbins Memorial Lectures, London School of Economics.
(2018), “How can euro area banks reach sustainable  profitability in the future?”, Special Feature, Financial Stability Review, ECB, November. 6/6  BIS central bankers' speeches

This may have limited the demand for new labour. This trend has now been reversed. Employment growth measured by number employed is strong. Our regional network reports that there are labour shortages in many sectors. The wage settlements concluded so far indicate that wage growth may, as expected, be somewhat stronger this year than in 2005. Historically, it has proven difficult in both local and central negotiations to keep down cost growth when unemployment is low. There is thus a risk of even higher wage growth further ahead. On the other hand, the threat of relocation of jobs, increased labour inflows and higher imports of services from low-cost countries will probably contribute to restraining wage growth. In the period 1998-2002, businesses and employees experienced that high wage growth resulted in high interest rates and wide fluctuations in the krone exchange rate. This insight is perhaps still marking wage negotiations. The phase with ample labour supply may be in the process of tapering off. The decline in sickness absence has been reversed, and is now increasing. As was the case earlier, the number of persons on disability benefits is rising. The supply of labour from other countries is important for many industries, but on the whole is no longer offsetting increased flows into benefit schemes. There is competition for highly skilled labour in the new EU accession countries. Labour flows into the UK and Ireland have been particularly high and labour barriers may be more restrictive in Norway than in the UK and Ireland.
Svein Gjedrem: Business cycles, crises and public finances – will governments be able to honour their debts? Speech by Mr Svein Gjedrem, Governor of the Norges Bank (Central Bank of Norway), at the Norwegian School of Economics and Business Administration, Bergen, 24 September 2010. The text below may differ from the actual presentation. This speech does not contain assessments of the economic situation or current interest rate setting. * 1. *  *  Imbalances and financial crisis  The financial crisis had its origins in an abundant supply of credit, market participants who took steadily higher risk and a lack of oversight on the part of banks, companies and authorities. The global economy entered a severe downturn. The acute crisis in financial markets has been succeeded by substantial labour market and fiscal imbalances in countries around us. Severe shortcomings in the management of public finances in several advanced economies have also been revealed. How public finances are managed in these countries will also be important to Norway. In the period from 1993 to 2008, global output expanded by more than 60 per cent, or an annual rate of just under 4 per cent. At the same time, inflation remained low. This period in the Norwegian economy could be described as two golden decades. But imbalances were building up in Europe and North America. With strong income growth and easy access to loans, the number and size of homes purchased by households grew. House prices surged in many countries.

askPRU is also expected to reduce 2/3  BIS central bankers' speeches  call volumes at its contact centre by 30 per cent, freeing up call centre staff to assist customers and consultants with more complex queries. Financial consultants are also equipped with PRUONE Express, a digital point-of-sale portal which uses fingerprint authentication by agents, and SmartData Capture and is able to generate a detailed quotation within three seconds, enabling agents to discuss and assess possible protection plans with their clients on the spot. Ultimately, the role of the insurance agent will continue to evolve: from selling standalone life or health insurance products, to more holistic wealth and risk management advice, and in essence to being a truly trusted advisor. Given the growing 13.  demand for risk management and compliance related roles in the industry, I also encourage insurers to consider reskilling some of their agents to take on such roles. 14. Prudential‘s new office, which is designed to promote maximum mobility, productivity, innovation and healthy living amongst its employees, echoes the aspirations of Asia’s insurance consumers. It will continue to play an important role in meeting the protection needs of the next generation of Asia’s consumers. Once again, my warmest congratulations to Prudential on the opening of its new office. 1 The global record for a fastest insurance claim was set in December last year by renter’s insurance start-up  Lemonade’s artificial intelligence Jim in the US, which settled a claim for the theft of a $ parka within 3 seconds.
The Riksbank has a crisis organisation to enable it to make rapid decisions in this type of situation. The banks' lending is important Another reason why the banks are particularly interesting in monetary policy terms is that lending from the banks plays an important role for the impact of monetary policy interest rate changes. If the Swedish banks for some reason reduce the supply of credit, companies and households cannot fully replace this loss with financing for consumption and investment elsewhere. Smaller companies are particularly dependent on the Swedish banks and the customer relations they have built up. Larger corporations, on the other hand, have access to other sources of financing, such as borrowing in the bond market, from foreign banks or via new share issues. The banks' supply of credit and their setting of interest rates can therefore influence how quickly and how much monetary policy affects activity in the economy and thus inflation. We can begin by stating that the repo rate is one important determining factor when the banks decide on their lending rates. When the lending rates are determined, the bank's own internal rate is crucial and it is normally determined by the repo rate. This is because the banks' financing of deficits and investment of surpluses arising at the end of the day can normally be done in the interbank market, where pricing depends on the repo rate. If a bank lends money to a company, the loan could be financed in the interbank market.

In addition, through what are known as fine-tuning operations, the Riksbank normally offers the banking system financing or investment of the deficits or surpluses that can arise in the daily payment flows between the banks and the Riksbank at a rate close to the repo rate. The Riksbank uses its advertisement of the repo rate to provide signals regarding monetary policy. The repo rate is now usually changed only after the monetary policy meetings held by the Executive Board of the Riksbank, which means that the rate remains the same for 6-8 weeks. To summarise, therefore, the interbank market rate is steered so that it closely follows the repo rate. The Riksbank's steering of interest rates – in common with that of many other modern central banks differs from the models described in most macroeconomic textbooks. There the starting point is often that the central bank affects the volume of money or liquidity in the economy by buying and selling bonds on the market. According to the simple textbook model, the banks maintain a liquidity buffer in the central bank in the form of a deposit with no interest compensation - known as reserves. When the central bank buys or sells bonds via the banks, the payments are made through the banks' deposit  2  BIS Review 80/2001  accounts in the central bank– the central bank can thus steer the size of the reserves the banks have invested in the central bank.
(c) From 2014 , the chart shows common equity Tier 1 capital ratios as reported by banks. Table 1 Average Tier 1 capital requirements across UK systemic banks Tier 1 Capital Requirements  %RWA  % Total Assets (leverage)  Minimum requirements (no less than 75% CET1)  8.5%  3%  Pillar 1  6%  Pillar 2a (reflecting shortcomings in risk measures)  2.5%  Baseline capital buffers (CET1)  10  5%  Capital conservation buffer  2.5%  Additional buffers for systemic importance  2.5%  0.75%  Total Tier 1 baseline requirements  13.5%  3.75%  + UK countercyclical buffer rate at standard risk level  1%  0.35%  BIS central bankers’ speeches  References Baker, M and Wurgler, J (2013), ‘Do strict capital requirements raise the cost of capital? Bank regulation and the low risk anomaly’, National Bureau of Economic Research Working Paper No. 19018, May. Bank of England (2015), ‘Supplement to the December 2015 Financial Stability Report: The framework of capital requirements for UK banks’, available at http://www.bankofengland.co.uk/publications/Documents/fsr/2015/fsrsupp.pdf Bank of England (2015), ‘Stress testing the UK banking system: 2015 results’ available at http://www.bankofengland.co.uk/publications/Documents/speeches/2016/ speech883.pdf. Bank of England Prudential Regulation Authority and Financial Conduct Authority, ‘The Failure of HBoS plc’ http://www.bankofengland.co.uk/pra/Documents/ publications/reports/hbos.pdf. Bank of England (2016), ‘Bank of England response to the European Commission Call for Evidence on the EU Regulatory Framework for Financial Services’, available at http://www.bankofengland.co.uk/financialstability/Documents/regframework/detail edanswers010216.pdf.

Alex Brazier: A macroprudential approach to bank capital – serving the real economy in good times and bad Speech by Mr Alex Brazier, Executive Director for Financial Stability Strategy and Risk of the Bank of England, at the 27th Annual Institute of International Bankers conference, Washington DC, 7 March 2016. *  *  *  I am grateful to Rob Edwards, Jas Ellis and Calum Mitchell for their assistance in preparing these remarks. Your industry has known better starts to a year. Bank stocks down, volatility up, earnings disappointing. All ghosts of crises past. But one ghost has not returned to haunt us. Questions about returns haven’t translated as they’ve done before into questions about resilience. Investors may have real questions about whether some banks can generate adequate return on equity in a difficult global economic and trading environment. They may also be more alert to the risks in and appropriate returns to contingent capital instruments. But when UK bank price-to-book ratios were this low in 2009, senior unsecured debt spreads were over 350bps. At the height of the euro crisis in 2011, they were 300bps. Today, they are just 73bps (chart 1). Underlying that is the transformation of bank capital. In the UK, major banks now have core tier 1 equity ratios averaging nearly 13%. Before the financial crisis they had – on Basel III definitions – just 4.5% (chart 2). Those new levels of resilience are seen in the results of stress tests.
In addition, the extensive use of adjustable-rate mortgages in Norway is probably the reason why movements in house prices are more pronounced here than in other countries. In recent months, there have been signs of an impending turnaround in the housing market in Norway. The rise in house prices has slowed. The housing supply has increased considerably this year and in September reached its highest level since November 2002. In the last three months, prices have fallen when the figures are adjusted for normal seasonal variations. There is none the less no definitive evidence that we are approaching a more long-term decline. Demand for housing in Norway has also been supported by strong economic growth and a marked rise in the number of households. 12  BIS Review 115/2007  Intensified competition for market shares has put pressure on banks’ lending margins. In recent years, mortgage borrowing rates have not always risen in pace with Norges Bank’s key policy rate. The introduction of new capital adequacy requirements (Basel II) has also influenced banks’ lending margins. Under Basel II, risk weights on lending are required to reflect differences in risk to a greater extent. Risk weights for mortgages, for example, have been sharply reduced. This will lead to a considerable reduction in capital adequacy requirements for Norwegian banks. The new rules were introduced in Norway in 2007, but it is likely that many banks began to adjust to the effects even before the rules were introduced. This has resulted in a fall in banks’ interest margins.

The Credit Guarantee Corporation is a key institutional arrangement in facilitating greater access to financing by the SMEs. By providing guarantee to loans obtained by SMEs, CGC addresses one of the main constraints of SMEs that is the lack of collateral. Bank Negara Malaysia, as the largest shareholder of CGC, is committed to ensure that CGC is in a position to have an effective role. Towards achieving this, RM1 billion was injected into CGC in 2000 to enhance its financial capacity to provide guarantees. In 2005, a process to transform CGC was initiated to enhance its role and to expand its range of products and services offered. The aim is to position CGC as not only a provider of credit guarantees, but as an important institution that enhances the ability of SMEs to obtain financing from the financial institutions, in particular, through the provision of wider credit enhancement products, advisory services on financial and business development and credit information services. In 2006, CGC has shown commendable progress in this transformation process. Indeed, the strategic partnership that is being entered today between CGC and Islamic financial institutions is part of the initiative for CGC to expand the outreach of its products. This strategic partnership between CGC and Islamic financial institutions is an important milestone as it brings together the two important objectives of the Government, namely enhancing SMEs' access to financing and promoting the growth of Islamic finance. Islamic finance has now not only experienced significant growth but is becoming more internationally integrated.
Overall, the reforms in these markets, along with the regulatory reforms to the oversight of financial institutions, should result in more robust system of credit intermediation, whether it is taking place through traditional intermediaries or through the markets more broadly. This reform process faces several important risks, though. First, there is a possibility that the process will stagnate or end up incomplete, given that the issues are complex, the stakeholders are numerous and the solutions are not always obvious. Second, there is a risk that, with so many efforts taking place in so many areas, the results will not fit together into an effective, cohesive solution. And third, there is the risk that the pursuit of reform will be overly zealous, resulting in a set of restrictions that will significantly undermine the functioning of financial markets during normal periods and thereby impede employment and growth. On this last point, it is worth making a few observations about the functioning of financial markets as we think about how to encourage a safe and yet efficient financial sector. These points may be obvious but are worth emphasizing. First, securitization is a powerful vehicle that should play an important role in the intermediation of credit in the economy. Securitization can be quite effective at transforming illiquid assets into negotiable securities and transferring risk to a more diversified set of holders. To be sure, the expansion of securitized credit was much too extensive, and its subsequent collapse was terribly disruptive, contributing significantly to the damage to the economy.

The broad intent of all of these facilities was the same – to keep an extreme increase in the demand for liquidity from significantly disrupting the functioning of financial markets and impairing the flow of credit to the economy. The facilities, along with other efforts from governments, helped to halt the downward spiral and to alleviate the pressure on global financial institutions and markets. In the absence of such effective actions, the implications of the crisis for real economic performance would have been much worse. The success of the programs has been apparent in a number of dimensions. Most clearly, the degree of counterparty concern and liquidity hoarding in the money markets has diminished, as reflected in the decline in term funding spreads. Moreover, issuance of both commercial paper and some types of asset-backed securities has rebounded, and it has done so increasingly without reliance on the Fed’s liquidity support. It is also worth noting that the exit from the Federal Reserve’s liquidity facilities has been quite smooth. At their peak, these facilities provided about $ trillion of short-term dollar credit. Today, the remaining balance across them is well under $ billion. This reduction was achieved without creating any significant problems for financial markets or institutions. That success largely reflects the effective design of those programs, as most were structured to provide credit under terms that would be less and less appealing as markets renormalized.
As supervisors we do not think in terms of countries, but of banks’ business and risk profiles. Each bank operates differently and therefore has to face different problems; it would be unwise not to see them individually. BIS central bankers’ speeches  3

By contrast, monetary tightening may be implemented at an earlier stage, should the recovery in economic activity turn out to be faster than expected. The weakness in the global economic outlook not only delays recovery in external demand but also leads to continuing expansionary monetary policies across developed economies, which in turn fuel domestic demand through an acceleration of capital inflows to emerging markets. Should capital inflows continue, the divergence in the growth rates between domestic and external demand is likely to intensify in the forthcoming period. Additional policy instruments, other than the short-term policy rates, would be needed to curb risks emanating from this channel. In this respect, should the disparity between domestic demand and external demand continue and be accompanied by rapid credit expansion and deterioration of the current account balance, all to lead to financial stability concerns, it would be necessary to utilize other monetary policy instruments such as reserve requirement ratios and liquidity management facilities more effectively. Food and commodity price inflation has accelerated recently. The aggregate demand is not yet at a level to exert inflationary pressures. Along with this, the strength of the Turkish lira limits the pass-through from food and commodity inflation to core goods and services inflation. However, the potential second-round effects continue to pose a risk, if increases in food and commodity prices persist.