samchain/econo-pairs-v2 huggingface dataset:
not. it is a fundamental weakness of the risk based approach. mathematical modelling is a hugely useful tool. models are probably the best way we have of forecasting what will happen. but in the end, a model – as the bank of england economic forecasters will tell you with a wry smile – is only a crude and simplified representation of the real world. models have to be built and calibrated on past experience. when events occur that have no clear historical precedent – such as large falls in house prices across us states – models based on past data will struggle to accurately predict what may follow. in the early days of the crisis, an investment bank cfo is reported to have said, following hitherto unprecedented moves in market prices : “ we were seeing things that were 25 standard deviation moves, several days in a row ”. well, a 25 standard deviation event would not be expected to occur more than once in the history of the universe let alone several days in a row – the lesson was that the models that the bank was using were simply wrong. and even if it is possible to model credit risk for, say, a bank ’ s mortgage book, it is much more difficult to model the complex and often obscure relationships between parts of the financial sector – the interconnectedness – that give rise to risk in periods of stress. moreover, allowing banks to use their own models to calculate the riskiness of their portfolio for regulatory capital requirements opens the door to the risk of gaming. deliberately or otherwise, banks opt for less conservative modelling assumptions that lead to less onerous capital requirements. though the supervisory model review process provides some protection against this risk, in practice, it can be difficult to keep track of what can amount to, for a large international bank, thousands of internal risk models. the underlying principle of the basel 3 risk - weighted capital standards – that a bank ’ s capital should take account of the riskiness of its assets – remains valid. but it is not enough. concerns about the vulnerability of risk - weights to “ model risk ” call for an alternative, simpler lens for measuring bank capital adequacy – one that is not reliant on large numbers of models. this is the rationale behind the so - called “ leverage ratio ” – a simple unweighted ratio of bank ’ s equity to a measure of their total un - risk - weighted exposures. by itself, of course, such a measure would mean banks ’ capital was insensitive to

coming to completion this year – it did not currently see a case for recommending changes to the uk regulatory framework. i am afraid, for financial stability, that is as good as it gets. the financial sector evolves at a phenomenal speed. risks can change and build very quickly. so the fpc will have to repeat its assessment of risks from the non - bank financial sector at least annually. in this area, as in the banking sector, it has to keep risk under close and regular review. and it has to be prepared to act. but that, of course, is the nature of preserving financial stability and preventing a reoccurrence of the illusions i described earlier. bis central bankers ’ speeches
increased market uncertainty in the euro area and worldwide continue to present challenges to accurate loan - loss forecasting. furthermore, the continuing dislocation – to date – in the transmission of monetary policy throughout the euro area presents banks in stressed countries like ireland with profitability challenges, especially in respect of tracker mortgages ( whose running yield is tied to the ecb policy rate ). since march 2011, economic conditions ( both in ireland and in ireland ’ s main international trading partners ) have generally been worse than the base case employed in pcar2011, but rather better than the stress case. of course in the coming years the implementation of basel 3 will also lead to higher capital ratios. the aim must be to have the banks return to sufficient profitability in a stable overall the deleveraging losses are the highest component. partly this reflects the unavoidable discount that would be incurred by a seller of opaque loan contracts ( even if “ firesale ” conditions do not prevail ), partly reflecting the informational disadvantage of likely purchasers. note, however, that this figure should be interpreted with caution inasmuch as prospective hold - to - maturity losses on the assets to be deleveraged were not separately evaluated. as such the loss shown on deleverage overstates the cost actually incurred by having to dispose of assets rather than holding to maturity. bis central bankers ’ speeches environment so that additional needed capital in future years can come from investors other than the state. instruments used just as with the previous capital increases, the going concern banks worked to reach the objectives as far as they could by liability management exercises and the sale of non - core assets. in the case of bank of ireland, some new cash was raised from issuance of equity. when a government recapitalises a bank, it generally provides an asset to the bank in return for the acquisition of a capital claim on the bank. as things have worked out, to a first approximation, the irish government ’ s practice has been to inject cash into going concern banks ( aib, bank of ireland, ilp ), and non - marketable promissory notes into the entities now being wound down ( ibrc, formed from the former anglo and inbs ). the cash was sourced either from the national pension reserve fund, a sovereign wealth fund established by the irish government in the late 1990s at a time of fiscal strength, or directly from the exchequer. the promissory notes represented a besp

the government of the day to include these two failed entities in its blanket guarantee. bis central bankers ’ speeches table 1 increasing recapitalisation requirements for irish banks, 2009 – 11 figure 1 components of phase 3 ( pcar2011 ) recapitalisation ( € billion ) figure 2 cumulative recapitalisation requirements on irish - owned banks by announcements date 2009 – 11 ( € billion ) bis central bankers ’ speeches
##rimonious budget dispute in congress was taking its toll and the us dollar was showing signs of weakening. this situation was compounded by weak economic data in the first half of 2011, which pointed to the risk of another global recession. swiss franc appreciation accelerated in response to these developments, with the currency reaching historic highs against the euro and the us dollar and threatening to plunge switzerland into a deep recession ( cf. chart 3 ). the discontinuation of the minimum exchange rate in january 2015 the minimum exchange rate – which was to remain in place for almost three and a half years – halted the appreciation of the swiss franc and helped to ease tensions. when we discontinued the measure in january 2015, the decision was criticised in some quarters. this is understandable, as the scale of the minimum exchange rate ’ s negative side effects was not yet fully apparent. however, the discontinuation of the minimum exchange rate was bis central bankers ’ speeches unavoidable ; conditions had changed and an analysis of the risks clearly favoured the decision to remove the floor. the overall situation had improved significantly since the introduction of the minimum exchange rate. the economy had regained momentum, confidence in the us dollar had been restored and uncertainty had decreased considerably. then there was the issue of divergence : the monetary policies of the us federal reserve and the ecb were moving in opposite directions. as the markets were expecting the americans to tighten and the europeans to substantially loosen monetary policy, the euro had been weakening against the us dollar since mid - 2014. not just the euro, but the swiss franc, too, had been losing ground against the us dollar. in contrast to summer 2011, when the swiss franc had been significantly overvalued against all other currencies, by the time of the discontinuation, swiss franc strength had given way to euro weakness. the increasingly divergent monetary policy stances of the federal reserve and ecb were also putting pressure on the minimum exchange rate against the euro. the snb was forced to intervene in the foreign exchange market on an ever larger scale. this was reflected in the monetary base ( the volume of liquidity created by the snb ), which had expanded in several surges since 2009 and was now rising sharply again ( cf. chart 4 ). given the changed international environment, the minimum exchange rate of chf 1. 20 per euro was no longer sustainable. the snb could only have enforced it through ongoing foreign currency

bankers ’ speeches chart 5 interest and exchange rates from 2012 to the present day bis central bankers ’ speeches
##ulatory posture, see daniel k. tarullo, “ financial regulation : still unsettled a decade after the crisis, ” journal of economic perspectives, 33 ( 1 ), 2019 winter, 61 – 80. 6 / 7 bis central bankers'speeches 15 board of governors of the federal reserve system, supervision and regulation report, november 2018. 7 / 7 bis central bankers'speeches

msar reserve fund, the balance was mop11. 6 billion. as far as monetary policy is concerned, the msar continues to adhere to a policy which maintains free flow of capital, free currency convertibility, market driven interest rate and the link of the mop to the hkd. in the past year, we ensured the sufficient and timely circulation as well as the stability and convertibility of the mop through the flexible use of different kinds of monetary policy instruments. simultaneously, effort has also been made to strengthen our supervision to cope with the changing market situation. to protect the stability and healthy development of the local financial system, we have coordinated and cooperated with other government departments to combat illicit financial activities. as ever, we abide by the framework of applicable laws and regulations to carry out routine supervision on financial institutions through onsite inspection, offsite surveillance and other measures. in the past year, we did onsite inspection on 7 banks, 5 money changers, 2 exchange counters and 2 cash remittance companies. furthermore, we strengthen and perfect formulation of relevant supervisory policies. in the area of banking supervision, guideline on anti - money laundering was revised and put into force on november 12 last year. besides, consultation on the draft “ guidelines on the management of country risks ” has been completed and is ready for promulgation and implementation this year. “ guidelines on the risk management of electronic banking ” has been revised and is ready for second consultation. “ licensing - review and approval procedures ” for financial institutions such as banks has been finalized. it is expected that through the use of these procedures, the approval process can be made more systematic, effective and transparent. internally, “ onsite inspection manual ” has been revised with an aim to achieve higher degree of standardization and better efficiency in daily operation. a survey was conducted last year to assess market risk. the related findings will be used as a base to establish market risk supervision capital requirement. basel ii is planned to be implemented in macao in stages to cope with the actual market situation. under pillar i, capital charge for credit risk will be appropriately adjusted and capital charge for operational risk will be introduced. implementation will be made by taking into consideration the development of the credit market and credit risk management technique. for pillar ii, supervisory process will be enhanced. supervision and capital requirement will apply based on the nature of risk, risk management techniques, measures and standard adopted by the financial institutions. under pillar iii, banks
many open questions remain on the subject of treasury market liquidity. 2 at the same time, the agenda for this conference makes it clear that there are many other important questions beyond market liquidity worthy of consideration and debate. the breadth and expertise of the attendees at this conference make this forum an excellent opportunity to advance our collective thinking on this range of important subjects. while the recent joint staff report on the events of october 15 certainly revealed that much has changed, it is also important to recognize that both private and official sector efforts to ensure a healthy and efficient treasury market have been ongoing for some time. 3 one obvious example is the treasury market practices group, or the tmpg. set up in february 2007, the what i have to say today represents my own views and not necessarily those of the federal open market committee or the federal reserve system. see regulation and liquidity provision, remarks at the sifma liquidity forum, september 30, 2015. joint staff report : the u. s. treasury market on october 15, 2014. bis central bankers ’ speeches tmpg is a group of market professionals committed to supporting the integrity and efficiency of the treasury market. 4 a core purpose of the tmpg is to develop and update a set of best practices related to trading, settlement and risk management, thereby establishing a set of behavioral norms to which market participants are expected to adhere. most recently, the tmpg updated its best practice guidance to address automated trading, and published a companion white paper on the subject. and no discussion of the tmpg can go without mention of the “ fails charge. ” instituted in may 2009, this practice provides a standard procedure for market participants to assess – or pay – a fee for settlement failures, and this has proven to be a highly effective remedy for curbing the volume of fails in the treasury market. 5 i want to thank the entire tmpg for their leadership in supporting the efficiency and integrity of the treasury market. i ’ d like to single out tom wipf with a personal thank you. tom has served with distinction as the tmpg ’ s chair since its inception, providing credible, balanced and independent leadership to the group. i would be remiss if i did not also mention the ongoing work of the inter - agency working group on treasury market surveillance, or the iawg. after the salomon auction bidding scandal in january 1992, the official sector established the iawg. since that time, it has been a

##goff ( 2009 ). “ this time is different : eight centuries of financial folly ”. princeton, nj : princeton university press. azahin, ayayegul ; joseph song ; giorgio topa ; and giovanni l. violante ( 2012 ). “ mismatch unemployment ”. federal reserve bank of new york staff report number 566, august. woodford, michael ( 2012 ). “ methods of policy accommodation at the interest - rate lower bound ”. paper presented at the federal reserve bank of kansas city economic policy symposium, jackson hole, wy. august. bis central bankers ’ speeches
: “ that ’ s odd. every time i see a numerical example, i have to turn it into a formula to be able to understand it. ” 12 i wish you good luck with your studies. you have made a good choice. thank you for your attention. ragnar frisch ( 1995 ) : “ troen pa nøkken ( a collection of essays, lectures and articles ) ”, universitetsforlaget. robert e. lucas, jr. ( 2003 ) : “ macroeconomic priorities ”, the american economic review, vol. 93, no. 1, p. 1. dagens næringsliv ( 1989 ) : “ sky nobelpris - vinner ( shy nobel prize laureate ) ”, 12 october 1989.

of the restructured accounts, providing evidence that this action has been taken as a last resort as required under the ccma. approximately two thirds of these were surrendered or voluntarily sold, with the remainder repossessed through the courts. the majority of those in the legal process now have been deemed non - cooperating before the legal process was initiated. 87 % are in arrears over 720 days with an average arrears balance of over €53, 00023. recognising the individual distress these numbers represent, i would again urge anyone in arrears to engage with their lenders and / or the supports that are available. the central bank, as part of the ssm, continues to require banks to reduce non - performing loans in a sustainable way. there are multiple tools available, including : re - engaging with borrowers, restructures, accounting write downs, mortgage to rent, engaging through the insolvency service, sales and securitisations and the legal process. it is in this context that the irish retail banks have submitted updated npl reduction strategies. these strategies include both planned workout and potential sales24. in the three years to december 2017, about one quarter of the €45bn of npl reduction in the irish retail banks was achieved through portfolio sales. the remainder was due to on - going restructuring, workouts and write - offs. similar proportions could be expected for the next three years. portfolio sales are a legitimate and necessary approach for banks to use to address non - performing mortgage loans. sales have proved to be controversial, particularly for pdh loans, in part due to a perception that the non - banks will seek to foreclose more aggressively than banks. to date, this has not been the case. there has been no material difference in the number of legal proceedings issued between banks and non - banks, as a percentage of the total number of pdh accounts in arrears25. it is also important to emphasise that the central bank has, with the support of the oireachtas, ensured that the protections of our codes of conduct, including the ccma, travel with the loans – it is the activity of credit servicing that is regulated, not the ownership of credit. a credit servicing firm cannot take an action on behalf of or on the instruction of an unregulated loan owner, which would be a prescribed contravention of the code or the ccma. this approach already being taken in ireland
often much more risky than lending to the services and construction sectors, but that should not be an insurmountable obstacle if banks can upgrade the skills they need to evaluate borrowers and develop innovative products to help mitigate the risks. the need to channel more credit to the traded goods sectors also underlines the urgency of reducing real lending rates in uganda. industries which sell their products and services on competitive global markets cannot normally expect to earn very high rates of return to capital ; this inevitably limits their capacity to borrow at real lending rates in the region of 20 percent, as is currently the case in uganda. i would also like to signal a note of caution about the rapid build up of foreign currency lending by the banks, which stands in sharp contrast to the stagnation of shilling denominated lending. the ratio of foreign currency denominated loans to total outstanding loans has risen sharply since mid 2011, from 25 percent to the current level of 38 percent. most of this increase is not attributable to the depreciation of the exchange rate which has occurred in the last few months because the dollar value of these loans has itself risen by 27 percent over the last 12 months and by over 60 percent in the last 18 months. i am not worried about the foreign exchange market risk carried by the banks, because their net foreign exchange exposure is very small, but i am concerned about the liability dollarization of the real sector, which could translate into future credit risk if real exchange rate depreciation raises its real debt burden. the sector which has experienced the fastest growth in foreign exchange borrowing over the last two years is construction, mortgages and real estate ; this sector now accounts for a quarter of all foreign exchange borrowing from the banking system. it is a sector where the underlying demand for the services provided is derived from domestic residents rather than export markets and hence the ability to generate revenues to pay for these services must be bis central bankers ’ speeches affected by changes in the real exchange rate. similar considerations are relevant to foreign exchange borrowing by other sectors, such as most of the trade sector and telecommunications which account for a further quarter of foreign exchange borrowing. i hope that banks will be very careful about extending foreign currency loans to borrowers who do not have a strong foreign currency revenue stream from which to service their debt and which might, therefore, be vulnerable to adverse shifts in the real exchange rate. to conclude i would like us to take pride in the achievements of the banking industry over the last

decade ; it has become one of the most dynamic sectors of our economy. but i also want you to think about how the industry needs to evolve in the years ahead so that it can best meet the needs of its customers and the ugandan economy. thank you for listening. bis central bankers ’ speeches
##economic policy aiming at stability, where monetary policy is oriented towards price stability and fiscal policy, within the framework of the so called pact for stability and growth, towards sound public finances. these objectives are crucial for the confidence of economic agents and sustainable economic growth. the single currency is also a major step forward in terms of more efficiency, by lowering transaction costs and increasing price transparency and competition, which will be even more evident once the notes and coins will have been introduced. monetary union also intensifies the integration of european financial markets, which improves financing possibilities for companies. the single currency should also help speed up other necessary structural reforms in europe. finally, the introduction of euro banknotes and coins will provide not only the new currency but europe itself with more visibility all over the world. and within europe, the use of the same notes and coins from helsinki to lisbon and athens via brussels will give the european citizens, much more than is now the case, the feeling of belonging to a community sharing the same destiny.

##ing risk. i have also made it clear to the financial institutions that use of danmarks nationalbank ’ s lending facilities is not an acceptable solution for managing refinancing risk. i take this opportunity to repeat that message. securities should only be pledged as collateral to danmarks nationalbank in connection with ordinary monetary - policy operations. if we find bis central bankers ’ speeches that the system is being misused to support the housing market, we will take action and perhaps have a friendly talk with the institution in question. we have done that before. eligibility as collateral must not be a precondition for a given mortgage - credit product. * * * today i have presented a number of proposals for regulating various issues in relation to mortgage credit in order to make the system more resilient to future developments. the financial crisis has demonstrated that rare misfortunes do actually strike from time to time. this should be taken into account in financial regulation. this applies not only to banks – but also to mortgage banks. finally, i would like to thank the federation for our good cooperation during the past year and for inviting me to speak at today ’ s meeting. thank you for your attention. bis central bankers ’ speeches