samchain/econo-pairs-v1 huggingface dataset:
Maintaining price stability, which is the central bank’s primary objective, means that overall prices should be stable. That task is made more difficult if some markets are not working properly, for instance if there are “bubbles”, or misalignments, in asset prices. I think that we can never fully protect ourselves against this happening. But a first step is to ensure that the market has an incentive to assess risks properly. This can only be achieved if it is clear to the agents that they are always responsible for their investment decisions. To ensure this, you need well designed and credible insolvency frameworks. So, what is the problem? Well, the situation varies between countries of course. But in many cases, quite frankly, I do not think that our present regimes for dealing with weak banks are adequate. In particular, I doubt that they will be of much use in a situation where the payment system is at risk. And moreover, I fear that our attempts to deal with the situation in the heat of the moment may require us to take action that will solve the immediate problem, but which may in the end reduce the long term market discipline. What I call for is a special insolvency and resolution framework for banks and other deposit taking institutions. A system that works not only when there are minor banking problems, but also when the payment system is at risk. Such a regime does not presently exist in Sweden – in fact, many countries lack such a regime.

I think that there are two characteristics of these kinds of systems which merit particular attention. First, the ability to take swift measures and to write down claims quickly. It is important to restore access to the liquidity held in the bank accounts as quickly as possible not only for the insured depositors, but also more generally. Second, the system is constructed such that the principle that owners take the first loss, and after this the creditors in any order of priority that might exist, cannot be circumvented. The swift intervention means that there is no point in running to the bank to “get first in line”. The fact that the possibility of a profit reflects a risk of a loss is fundamental in a market economy, and the system thus ensures that this principle is maintained. …with robust financing of the deposit guarantee A related issue refers to the need to set up a deposit guarantee scheme in such a way that the responsibility for the small depositors is fully internalised by the banking sector not only on paper but also in practice. In addition to the need for a quick pay-out to depositors to avoid the risk of a run, it is also important that the financing of the scheme is robust.
Second, we look to normalisation in the accumulation of foreign assets, which has quickened considerably since the middle of the past year in the context of strengthened external, including geopolitical risks. Our medium-term economic growth outlook is essentially the same. 1-1.5% GDP growth in the current year is expected to accelerate gradually to 2-3% in 2021. Having said that, our forecast will largely depend on the timeframes and successful implementation of the national projects along with other fiscal policy decisions. Discussions are currently underway about possible options of spending the liquid part of the National Wealth Fund in excess of the 7% of GDP cap. As we look into such options, it is imperative that we remember the key objective of the fiscal rule, which is to reduce the reliance of the economy, of the real exchange rate and of public finances on a volatile energy price environment so that they all become stabilised in a state equivalent to the oil price cut-off. We have largely delivered on this objective, with the impact of oil price fluctuations on the Russian economy having considerably weakened. Current suggestions are essentially focused on changes to the rule. They could result in either direct or indirect change in the cut-off price, entailing a strengthening of the real ruble exchange rate and undermining competitiveness of our products. Alternatively, the stabilising mechanism of the fiscal rule could be undermined, yet again adding to the vulnerability of the Russian economy to fluctuations in external environment.

Jean-Pierre Roth: Rising oil prices – a challenge for monetary policy? Speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, Déjeuners de la Finance, Geneva, 2 November 2005. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  Despite oil prices being at a historically high level, inflation has increased only slightly in recent quarters and growth appears to be robust. Are we to assume, therefore, that oil no longer plays an important role in today’s economic environment? What challenges does the current situation pose for monetary policy? For the first time, the steady rise in energy prices is not the result of a political boycott by oil-producing countries, but of an increase in energy demand, coming in particular from the newly industrialised countries in Asia. In other words, the rise in crude oil prices this time can be attributed to the strong growth in global economic activity. This does not mean, however, that the role of monetary policy has changed. Although core inflation currently appears to be under control in most countries, a persistent and continuous rise in energy costs could have an effect on all prices and wages in the long run, thereby jeopardising monetary stability. Notwithstanding the low level of inflation (excluding energy prices), it is vital that the monetary authorities maintain a forward-looking stance so as not to put their credibility on the line and to ensure long-term price stability. 1/1
A particular problem could arise if losses were large enough to exhaust any high-trigger CoCos, leaving the bank undercapitalised, but not so severe that solvency was in the balance. By limping on and deleveraging, the bank’s supply of credit to the economy would be impaired. An option to force a recapitalisation in such circumstances might be CoCos with low triggers. But the bank might suffer a run, becoming unviable and requiring resolution, before its measured capital ratio fell through the instruments’ trigger point. Any such bonds must, therefore, convert into equity and take “first loss” upon entry into resolution. That is, I think, the best way of thinking about so-called Point-Of-Non-Viability (PONV) instruments counted towards “total capital” in the current Bank Capital Accord.10  8  The capital ratio in the trigger would need to be based on the Basel 3 definitions applying at the end of the transition period. 9  See Myers (1977), “Determinants of Corporate Borrowing”, Journal of Financial Economics, 5, 147–75. 10  Total capital is in quotation marks here because this is not capital in the same sense as equity. 4  BIS central bankers’ speeches  A Capital Accord for the future In summary, the system cannot be relied upon to recapitalise itself as the probability of failure rises. There is, therefore, a premium on getting micro-prudential rules for minimum capital broadly right rather than, as happened in the past, badly wrong.

One way of overcoming this is for the prudential regulator to make a firm raise the required equity capital once the deficit is identified. Another way might be for banks to issue so-called hightrigger contingent capital instruments (CoCos), ie bonds that convert into equity if a bank’s capital ratio falls below a prescribed but reasonably high level. In steady state, for a bank with a minimum equity ratio of 10%, that trigger might be, say, 8%: sufficiently below the required level for the insurance provided by these CoCos not to be prohibitively expensive, but sufficiently high that the bonds would convert to equity while the bank was still able to fund itself in the market.8 The second, and in some ways bigger, issue relates to the problem of a debt-overhang.9 Suppose, due to a marked deterioration in the macroeconomic environment, a bank’s equity base, even after the conversion of high-trigger CoCos, is revealed to be too thin to cover the risks in the business. Debt spreads rise and, in consequence, the value of bonds in issue falls. An injection of fresh equity would increase the value of the business, by reducing the probability of bankruptcy. But since bond-holders ultimately pay the bankruptcy costs, they and other creditors would be the main beneficiaries of recapitalisation: there would be a transfer of resources from equity holders to bond holders. Shareholders in a poorly capitalised firm have an incentive, therefore, to keep their hands in their pockets and gamble that the economy, and with it their bank, improves.
Nicolai Tangen took up the position of CEO on 1 September, and I would now like to give the floor to Nicolai. 2/2  BIS central bankers' speeches

One point that is particularly relevant to banks that finance companies or projects in countries like China is that the rules of the environmental game can change very quickly. The authorities in China are getting serious about cutting emissions and pollution, as the requirement by the Beijing Municipal Government on the Shougang Steel Group to cut back its output has shown. The problem in China is that regulations are not always strictly enforced. But this can change overnight, resulting in major compliance problems for the companies concerned and increased risk for the banks that have lent to them. Hong Kong banks which lend into China would therefore be well advised to keep this in mind. Finally, banks should pay close regard to their own “corporate ecology”. Banks can contribute to environmental protection by the way in which they manage their use of resources in their own operations. In this way banks can be responsible corporate citizens while at the same time reducing business costs. The type of measures that can be adopted include saving on energy consumption, recycling of paper, waste management, purchasing environmentally friendly products and use of video conferencing to cut down on unnecessary travel. Use of office automation such as email can also help to reduce the consumption of paper, provided of course that staff can be encouraged not to print out the messages.
The Rt Hon Sir Edward George: Shafts of light amidst the general gloom of the global economy Speech by The Rt Hon Sir Edward George, Governor of the Bank of England, at the Bankers Club/Guild Banquet, London, 4 February 2002. *  *  *  President, My Lord Mayor - locum tenens, Excellencies, My Lords, Aldermen, Sheriff, Ladies and Gentlemen I'm sure you've noticed that time passes more quickly as you get older. I explain it with my own pet theory of relativity based on the fact that each year that passes is a smaller proportion of what's gone before. But I must confess I'm beginning to have my doubts. It seems much more than 12 months ago that we last came together for this great annual gathering. The fact is, it's been a very long, hard, year, not just for policy-makers around the world but also for many of you in the financial services industry - particularly the international financial services industry. We've had to cope with the synchronised global economic slowdown; the extension of the fall in equity prices - with dotcoms spreading to telecoms and beyond - even now to Enron; with increasing credit risks; and then with the vicious terrorist attacks of 11th September and their aftermath, and, finally around the turn of the year with the very sad climax to Argentina's long drawn out crisis. I could easily go on. It really has been a long, hard, year.

On the demand side, the  2  BIS Review 50/2004  dampened consumer confidence has moderated the momentum of private consumption in the first half of the year, but private investment and exports have expanded well and have been the key drivers of growth so far this year. On this point, it is comforting to note that domestic demand expansion has benefited increasingly more from the pick-up in credit extension, driven by ample liquidity in the system. Private credit growth was a high 9 percent at end-June. Turning to economic stability, with continued growth, pressure on resources has become more visible this year with output gap continuing to close, inflation rising, the trade surplus narrowing and some tightening in the labour market reported. Overall external stability, on the other hand, remains strong with continued current account surpluses, falling external debt, and higher international reserves. But the higher oil prices and the rebound in investment have evidently put greater pressure on imports and the trade balance. One thing that we have been monitoring more closely this year is financial stability. Some indicators of financial fragilities are rising. These include rising household indebtedness and a very active real estate sector. Although there are no signs of overheating as yet in these two sectors, their developments need to be monitored closely especially with the credit cycle now turning. This is because they have the potential to become a source of financial fragility if their growths are left unchecked.
We will provide guidance to central banks and supervisors on how they could potentially address these barriers. The NGFS is working on two blended finance deliverables by COP28. First, a handbook on blended finance. It will draw on key lessons from past case studies on blended finance projects and provide practical guidance on how such projects can be scaled up. Second, demonstrative blended finance projects. The aim is to spotlight projects that have incorporated mechanisms to promote the scaling of blended finance. We will also categorise the key pain points in some of these projects and draw lessons on how they could be addressed. 3/5  BIS - Central bankers' speeches  Transition planning Across the financial industry, the focus is gradually shifting from commitment to action. This means going beyond high-level net zero commitments to designing credible transition plans that will get us there by 2050. Drawing up a credible transition plan requires financial firms to do several things:  baseline their financed emissions; set interim targets based on appropriate science-based sectoral pathways; engage clients on their own corporate transition plans; and monitor portfolio and client progress over time. Transition plans need to be adaptive to changing circumstances while maintaining ambition. There is uncertainty over the path of various decarbonisation technologies as well as climate-related policies such as carbon taxes and emission standards. The assumptions used in transition plans would need to be continually monitored and adjusted as necessary.

Mr. Chairman, before I outline how the Bank of Zambia has engaged both the media and the legislature and the positive results that we believe we have reaped, allow me to state very quickly how a strong relationship between the media, the legislature and the central bank is a modern feature of central banking. Mr Chairman, the role of modern central banks revolves around three key functions: price stability; financial system stability; and the maintenance of the payment system. Price stability has the greatest weight in the goals of most central banks. Advances in economic theory and computing power as well as the developments in financial markets have greatly enhanced our understanding of the economy and our ability to understand and forecast inflation. Central banks act to influence inflation some periods into the future – a period determined by the individual characteristics of the economy in question. Today we understand this process as targeting inflation expectations of households and firms – either implicitly or explicitly. Central to the success of such a strategy is the extent to which central banks have credible monetary policy frameworks and key pillars in such a framework are the ability to communicate policy in a predictable and intelligible way to the public – with the  2  BIS Review 95/2009  media playing an important role in this process – and the notion of accountability to an appropriate body whether this is the Minister of Finance, the legislature or both bodies.
In other words, depositors believe that they need very high nominal interest rates in Denars, in order to have a real return on savings, which leads to high interest rates on loans. This phenomenon was not and is not a result of the mistrust in the banking system. Mistrust of depositors comes from the fear that due to possible devaluation followed by inflationary transmission effects, saving in Denars would be insufficiently compensated if interest rates on savings deposits in Denars come too close to the interest rates on deposits in Euros. The stability of the exchange rate which established the idea that price stability is a public good one cannot live without, is the reason why depositors are no longer so much under the  2  BIS central bankers’ speeches  influence of this phenomenon. The latest data on the increased saving in Denars, compared to saving in Euros, point to this conclusion. The expectation that the stable exchange rate level will be maintained simultaneously indicates that the difference between real interest rates in Denars and real interest rates in Euros continues to decrease gradually, certainly without any of them remaining on negative territory for a longer time. The National Bank will continue not to hesitate to intervene in the foreign exchange market and increase the interest rate on the main instrument which represents an operational signal. Through these policies the National Bank confirms its capacity and institutional determination.

•  And when subsequently questioned by their superiors or regulators, they offered an array of self-justifications, chief of which is “everybody does it”. But everybody does not do it. I believe the vast majority of people working in the financial industry are committed to serving their clients or customers fairly and with integrity. But the unethical actions of a few have undermined trust and created instability. Reform of the financial industry will not be complete until this issue of trust and ethics is addressed. This requires “getting the culture right”. And by culture, I mean the shared values, attitudes and norms that guide actions. There is increasing international regulatory guidance to improve risk governance and align compensation schemes with long-term sustainability and customer interests. This is necessary but not sufficient. There are limits to what externally imposed rules can do to promote the right values in financial firms. •  Because culture develops from within a firm, it invites a certain resonance from the members of that firm – in a way that will be difficult for an externally imposed set of rules to achieve. •  For the same reason, the behavioural norms that a firm’s culture and value system promotes are more amenable to internal governance and self-policing than rules that rely on external enforcement. In short, rules tell us what we can do, but values tell us what we should do.
In the last few years we have changed our minds and become more optimistic when it comes to capacity utilization. The potential rate of economic growth may also have increased somewhat. The slightly higher rates of investment and productivity suggest that a somewhat higher rate of growth may be possible. Nowadays, the Riksbank assumes a potential rate of growth of between 2 and 2.5%, which is a slight upwards adjustment compared with the 1980s. However, uncertainty about these factors makes it necessary for the Riksbank to keep a close watch on developments and revise conventional wisdom where necessary. 5  BIS Review 39/2000  One of the most important variables when it comes to assessing future inflationary pressures is wage trends. This is perfectly natural, since wage costs represent almost 70% of the total value added in the economy and are therefore crucial to the development of costs and prices. Historically, rising wage costs have covaried with inflation, even though substantial deviations can occur in some years since inflation is also influenced by external factors, such as changes in oil prices. Diagram 7.

The stress test in the face of an adverse macroeconomic scenario also showed satisfactory results for the Spanish banking sector. On average, the adverse scenario would have involved a reduction of 144 pp in Spanish banks’ CET1 ratio, without the minimum established capital ratio having failed to be met in any case. In the case of European banks, this average impact would have amounted to 300 bp. These results confirm that the financial reform undertaken in Spain has managed to satisfactorily correct the shortcomings in our banking system, thus placing it in a favourable starting position as the SSM has commenced operating. The latest profitability figures confirm the ongoing normalisation of the sector. Following the losses posted in 2012, against the background of the strong increase in provisions for asset impairment, deposit institutions, which had restored positive results in 2013, recorded profits after tax of almost € billion in 2014. Profitability in terms of equity, ROE, stood at 6.6% at December 2014, having increased by almost 1.5 pp on the previous year (5.2%). That said, profits in the industry, which are still modest in historical terms, are largely based on lower provisioning as a result of the cyclical improvement in the economy and also on the gains and losses on financial assets and liabilities.