samchain/econo-pairs-v1 huggingface dataset:
4  See the BIS publication “Consultative Document -Reducing variation in credit risk-weighted assets – constraints on the use of internal model approaches”, http://www.bis.org/bcbs/publ/d362.pdf  9 [12]  Time to start a review of Sweden's special national requirements Some of the special Swedish requirements have arisen over the years following the financial crisis, as Finansinspektionen and other Swedish authorities have assessed that Swedish banks need more capital than the current minimum requirement supplies. These special Swedish requirements are thus not the result of international agreements. It is therefore reasonable that we should review our current special national requirements when Basel III will be introduced in full in Sweden, especially in the perspective that Basel III will imply higher minimum requirements of the major Swedish banks than before. Although no decision has yet been made on when Basel III shall be fully implemented in Sweden, my assessment is that we will have plenty of time to review our special national requirements and assess what level they should be at when Basel III is introduced in Sweden. One conclusion of this analysis may be that today’s CET 1 capital requirement of 18 per cent of risk-weighted assets for the major Swedish banks in total needs to be changed in future. Under these circumstances it is too early to make any precise analysis of how, for instance, Swedish GDP will develop or how borrowers’ interest rates will be affected by the coming changes in the regulations.

And in some countries, the process of catching-up in real incomes has been slower than expected at the start of transition. For acceding countries as a whole, per capita income today is less than half of the average of the EU. Given the low starting point for most countries, increasing prosperity and living standards will be a major policy objective for quite some time. In view of that strategic objective, one has to underline that prudent macroeconomic policies are key to support and facilitate progress towards higher GDP-per-capita levels. Accession to the EU is expected to have positive effects on the countries' prospects for convergence. The full integration into the internal market will increase growth prospects and thus foster the catching-up process, mainly through trade and investment (FDI), together with lower interest rates. New Member States will have to implement and enforce the “acquis communautaire” of the European Union, which they have adopted in the course of recent years (excluding, for the time being, those areas where transitional arrangements apply). The EU has also been preparing intensively to make enlargement work. Within the realm of central banking, the Eurosystem has been engaged since 1999 in a constructive and ever more intensive dialogue with the central banks of the new Member States. Already since the signing of the EU Accession Treaty in 2003, the Governors of the national central banks of acceding countries have been taking part as observers in the General Council of the ECB.
We were aware that discontinuing the minimum exchange rate would have significant effects on the outlook for the economy and inflation. However, as the Governing Board, we must be prepared to make decisions that may have negative effects in the short term. We are convinced that postponing a decision which was ultimately unavoidable would have caused far higher costs in the long term. Review and appraisal of the minimum exchange rate As mentioned before, the minimum exchange rate of CHF 1.20 per euro was the SNB’s key monetary policy instrument for almost three and a half years. I will therefore begin my brief appraisal of this instrument in the summer of 2011, shortly before it was introduced. That summer saw a renewed deterioration in the outlook for the global economy, which was only hesitantly recovering from the worst recession since the 1930s. In addition, at that time, the European debt crisis was escalating again. In the US Congress, a protracted battle about raising the debt ceiling was under way. Given these developments, uncertainty on the financial markets was increasing very rapidly, and demand for Swiss francs soared. The Swiss franc appreciated very sharply against all major currencies, including the US dollar. In August 2011, the Swiss franc was, by any measure, massively overvalued. The SNB began by expanding liquidity on the money market to an extent that was historically unprecedented. However, the effect of this liquidity expansion on the exchange rate was only temporary.

I will begin by talking about the prominent issues related to the discontinuation of the minimum exchange rate. This will be followed by our present assessment of the Swiss economy and price developments and an explanation of our current monetary policy. Alongside our willingness to intervene on the foreign exchange market as necessary, negative interest on SNB sight deposits plays an important role in monetary policy. I would therefore like to look at this subject in greater detail today. Rationale for discontinuing the minimum exchange rate Let us begin with the reasons for discontinuing the minimum exchange rate. In the course of 2014, there were growing signs that a US exit from a highly expansionary monetary policy was drawing closer. In the euro area, by contrast, there was increasing evidence that monetary policy would be eased further. Against this backdrop, the euro depreciated considerably against the US dollar. These diverging monetary policy stances in the major currency areas affected the Swiss franc in two different ways. Like the euro, the Swiss franc weakened against the US dollar. Against the euro, however, it gradually approached the minimum exchange rate of CHF 1.20. At that time, the weakening of the euro had not yet cast doubt on the sustainability of the minimum exchange rate. Consequently, at the monetary policy decision in mid-December, we made the decision to leave monetary policy unchanged. Shortly after our monetary policy decision, the economic crisis in Russia escalated.
I shall in two examples illustrate how the slope of the Phillips curve is affected by two different exogenous changes. 16 The two examples aim to illustrate how the slope can be negative or positive, depending on which exogenous changes are driving economic developments. My hypothesis is thus that the flatter Phillips 15 An example of a true exogenous change that is sometimes mentioned is the weather, but weather is of course of less significance in today’s developed economies than it was during the days of the agricultural society. 16 For a description of the theory I have used, see Jonsson and Theobald (2019). This study also contains other examples than the ones I show here, which illustrate other possible causes of the flatter Phillips curve. 10 [24]  curve may be due to the economy being exposed to different types of exogenous changes after the financial crisis than before it, which has changed the slope of the Phillips curve in a flatter direction. It is of course difficult to verify this hypothesis in practice, just as it is difficult to verify other possible hypotheses, and this cannot be done today. It would require a more in-depth analysis, where one tries to identify in more detail which exogenous changes have been important prior to and after the financial crisis. In the first example, the exogenous changes are in labour force participation. To illustrate the economic intuition, let unemployment increase as a result of more people entering the labour force.

The Bank of Thailand has been proactive in this aspect. We have already upgraded our cheque clearing system from paper-based to image-based system, namely ICAS in Bangkok and the Metropolitan areas and we will launch the ICAS for the entire country within next year, and the new version of BAHTNET system will also be launched next year. In addition, a policy to set up a system for local switching (i.e. a system for switching, clearing, and settlement of domestic payment transactions via local debit card) has been prescribed, and will come into force within 2013. •  In Long Term (beyond 2015), ASEAN payment and settlement linkage should be explored. Currently, the Bank of Thailand is exploring the potential of linking our payment and settlement systems with that of other countries, such as the linkage with Hong Kong USD CHATS which aims to reduce FX settlement risk. The second consideration is new channel of payment and new technology Advanced development in Information and Communication Technology (ICT) has made it possible for money to move faster and more safely. Important development nowadays is ATM ASEANPay, operated by National ITMX, which already connects ATM system between Thailand and Malaysia. More connections will be made in the future, which will help facilitate retail payment and money remittance across ASEAN countries. Moreover, other payment channels and instruments such as e-banking, e-payment, and mobile payment will play an important role in enhancing efficiency and inclusiveness of financial services.
On the other hand, the postpandemic recovery in aggregate demand has been much stronger in the US, with a much tighter labour market. At the opposite end of the spectrum is what I would call the “academist approach” – although it comes from Lars Svensson, a one-time practitioner who was, among others, Deputy Governor of the Swedish Riksbank between 2007 and 2013. It would be to look purely forward and do inflation forecast targeting. The central bank then works out an interest rate path that is compatible with bringing inflation back to the target over the forecast horizon (and staying there). Simple models, such as the original Svensson’s one (1997)ii, can be inverted to find a single policy interest rate – “the target-compatible rate”. With more complex models, target-compatible paths can be found through interest rate scenarios. This approach is appealing in theory but raises several practical problems. First, it relies heavily on having a very accurate model and clear identification of the shocks hitting the economy, including how persistent these will be. The substantial forecast revisions over recent quarters underline quite how difficult it is to calibrate policy based on forecast targeting. A second, and more subtle, problem is the “stationarity” of most macroeconomic models. This is either true by assumption in standard New-Keynesian models or implicit in empirical forecasting models. For either reason, forecast inflation has a tendency to revert to the target or the historical mean under almost any scenario.

More than once, they brought on political tension, between those in the government who believed in it and those in the opposition, or even the military, who thought otherwise. In one incident, it even caused a change in the central bank governor. Finally, we had to float our currency in 1997. Since then, we have adopted Inflation Targeting as our monetary policy framework. A core inflation target was announced at between 0 and 3.5 % per annum. The central bank will regularly monitor economic changes and make forecasts. If we see that the rate of inflation has a tendency to exceed the range, we will adopt a tighter monetary policy stance by increasing the policy interest rate, and vice versa if we see it going under the range. The policy rate that we use is the 14 day repurchase rate. BIS Review 48/2002  1  This is completely different, of course, compared to the days of fixed currency regime when interest rates in Thailand would move mostly in tandem with the US rates. The change in the monetary policy framework therefore affects the financial environment and your businesses a great deal. Development of the bond market What other change also happened? One very important change that has occurred in Thailand is the rapid development of the bond market, which took off after the 1997 crisis. The bond market is an important tool for safety and soundness of the financial institution system.
However, each board collectively should understand the key strengths, limitations, and judgements within their model. Over-reliance on a single measure can be misleading. Therefore, we want non-executives to have the right tools and sufficient knowledge to be able to challenge model outputs, rather than follow them slavishly. Benefits to be gained through the implementation of a harmonised regime I have discussed the increased flexibility to be afforded firms in business and investment decisions and the expectations placed upon insurers in their knowledge and understanding of the risk exposures and their models. But I would also like to consider the benefits to be gained through the implementation of a harmonised regime. The benefits of Solvency II do not come from the improved prudential regime alone. Insurance markets across the EU have been fragmented. The move towards a more cooperative framework will widen existing opportunities and help create new ones. The new framework seeks to introduce a level playing field across the EU, with risk-based capital standards and robust valuation practices that, together with enhanced disclosure rules, encourage the effective exercise of market discipline through the increased provision of information. From a systemic point of view, a more coherent and understandable regime should enhance confidence in the European insurance industry. This is particularly important at a time where weak real growth is leading to low levels of inflation and interest rates. BIS central bankers’ speeches  3  Financial markets have become increasingly interconnected and that trend has only been slowed temporarily by the global financial crisis.

Until 1826, the number of partners in a note-issuing bank in England was limited to six. The six-partner rule for English banks was relaxed in 1826. But it was not until 1858 that English banks were allowed to limit their liability, three years after non-financial institutions. This was recognition that the risks posed by banks were on an altogether greater scale. Even after legislation was passed, the initial response by banks was lukewarm. Their directors fretted about the signal that limited liability sent to depositors. That concern was reinforced when Overend and Gurney failed in 1866; it had adopted limited liability just months before its failure. For the eleven British banks with unlimited liability that failed between 1836 and 1878, every depositor had been paid out in full (Turner (2014)). 6  6  Turner (2014) Table 5.6. BIS central bankers’ speeches  3  Shareholders’ willingness to do so was helped by them vetting share transfers to exclude owners without sufficient funds. Indeed, banks’ shareholders remained liable even after they had sold their shares: in Scotland, former shareholders were liable for debts incurred when they had been a shareholder, while in England and Ireland a shareholder remained liable for three years after they had sold their shares (Button et al (2015)). But critics of unlimited liability for banks were becoming increasingly vocal.
The mobile app serves as a powerful tool to further promote transparency and competition in the money services business industry, by providing consumers with the information and facilities that will help them make smarter remittance choices. Kota Kinabalu will be an important testbed for these initiatives, serving as a model for envisioning an end-to-end digital remittance landscape in Malaysia. Given Sabah’s aspirations to develop a digital ecosystem, we could not have picked a better city or time to launch our next Greenback journey. As we look forward to the journey ahead, I cannot help but recall how far the MSB industry has come. In 2017, the MSB industry facilitated RM20 billion in worker remittances and a further RM400 million in business remittances. This represents a 43% and 300% increase respectively over values transacted in 2013 when significant reforms were introduced to strengthen standards and shore up trust and confidence in the industry. Today, an industry represented by progressive and credible principal MSB companies and a wide network of agents has not only improved access to services, but also raised the quality of service. With better knowledge, tools and resources, the industry has also worked hard to strengthen safeguards against its use for criminal and other illicit activities. The industry is already leading the way in the financial sector by certifying all compliance officers to equip them to be more effective in implementing AML/CFT measures.

This, coupled with the higher remittance cost of 4.5% in Kota Kinabalu compared to other parts of Malaysia presents a unique opportunity to leverage on the Greenback project, to support the financial needs and goals of foreign workers here in Sabah; to increase the development impact of remittances to our neighbouring countries; and importantly, to make remittances generally more efficient for businesses and the population of Sabah itself. Even though this is the second champion city in Malaysia, we are not only looking to replicate our experience in Johor Bahru. Indeed, we acknowledge the different challenges and opportunities presented in Sabah, which is why an important and distinct focus for Greenback Kota Kinabalu will be the wider use of technology to deliver remittance solutions in Sabah. Here in Sabah, people still often need to travel a great distance to send money home. This is 1/3  BIS central bankers' speeches  costly, cumbersome and at times, risky – made even more challenging by Sabah’s geography and remoteness of some parts of the state. Technology offers new possibilities to overcome these difficulties, while significantly improving user convenience. Although remittances through electronic channels is not new, the take-up rate of electronic remittances has been relatively slow. In 2017, the share of electronic remittances accounted for only 12% of total remittances. This in turn has limited the potential to make remittance services much more efficient and accessible to our communities, including here in Sabah.
Jean-Claude Trichet: First of all, we are on the record as having always asked for full and decisive implementation of the governance measures that already exist. We combated very fiercely the position of the heads of government of the three major countries in the euro area when they wanted to weaken formidably the stability and growth pact, back in 2004 and 2005. It was a very, very fierce battle. They wanted to really unravel the pact. What I would sum up as our position today is very simple. We call for “a quantum leap” in the reinforcement of fiscal surveillance, with, in particular, what I would call the reversal of the  2  BIS Review 115/2010  burden of the proof. We have called for the “quasi-automaticity” of procedures and sanctions. We have called for a reinforced independent way of assessing the fiscal situation and we have also called for a quantum leap as regard the surveillance of competitiveness and imbalances in euro area member countries. And, finally, we have called for decisive measures to enhance the quality of statistics. As regards the methodology, we consider that a change of the treaty would be appropriate, but we accept that this would involve a long or very long procedure at the level of 27 EU countries. That’s why we have called for the maximum use of secondary legislation as a first step, to exploit all the possibilities that secondary legislation can offer to go in the direction of the necessary goals. That’s the idea.

Birgir Ísleifur Gunnarsson: Current trends and prospects of the Icelandic economy in a global setting Address by Mr Birgir Ísleifur Gunnarsson, Chairman of the Board of Governors of the Central Bank of Iceland, at the “Wirtschaftstag Island”, Berlin, 30 April 2003 *  *  *  Mr. Chairman, Ladies and Gentlemen. It has been said that Iceland is an extreme case of a small open economy. It has a population of just under 300,000, a GDP of around 10 billion USD and a stock market capitalization that is roughly one-tenth the market value of a moderate sized U.S. company. The small size, along with fluctuations in fish stocks and the terms of trade, make Iceland in many ways more vulnerable to external changes than larger countries. But by exploiting its abundant natural resources and a highly educated labour force, Iceland has been able to utilise its comparative advantage in the international division of labour, making its GDP per capita among the very highest in the world. Over the past two decades, significant structural reforms have taken place in the Icelandic economy and financial markets. The objective of these reforms has been to achieve a market-based framework open to external influences. This process was accelerated by the need to better align the Icelandic economy with those of its European partners when Iceland became one of the founding members of the European Economic Area (EEA) in 1994 and thereby integrated into the internal market of the EU.
In our monetary policy assignment of maintaining price stability in Swedish kronor, specified as inflation of around 2 per cent, we need to understand not only cyclical developments but also structural transformations in the economy. This knowledge forms a precondition if we are to be able to make good forecasts and calibrate a well-balanced monetary policy, thereby fulfilling our mandatory task. To make good forecasts, we need models, and models assume that economic relationships are stable. It therefore becomes complicated when structural changes delay or even transform old relationships. If important structural changes have occurred, they turn up as so-called shocks in the models. For example, new and better working methods should entail a positive shock in productivity. Another structural change, for example increased e-commerce, means that competition increases, putting pressure on companies’ profit margins. However, when data on productivity and companies’ profit margins is studied, it is difficult to observe larger changes. Productivity growth in recent years cannot be described as remarkably high. 1 In turn, this has an effect on wage development, which I shall return to. My point, however, is that technological shifts do not necessarily change the way the economy works. But it is nevertheless clear that technological breakthroughs can push forward changes in what have historically been fairly stable operations and open them up for new participants. For example, technological developments in society have contributed to the use of cash, the money the Riksbank offers society, going into decline.

The internal combustion engine enabled transportation independently of the rail network in the form of motor vehicles and aircraft, and electricity has given us light, warmth and the power of movement. Now, at the start of the 21st century, we have to deal with all the opportunities, but also challenges, brought by the Internet, digitalisation, robotics, biotechnology and artificial intelligence. Experts often disagree over how revolutionary these technologies will turn out to be for the economy in the long run, but we can see how they affect us in our daily lives. * I would like to thank Åsa Olli Segendorf, Anders Vredin, Marianne Sterner, Charlotta Edler och Ann-Leena Mikiver for useful suggestions for this speech  1 [5]  Take, for example, digitalisation, which is impacting sector after sector. How many record shops are there these days? Where’s the nearest video rental store? How often do you find yourself keeping an eye on the time so as not to miss a certain TV or radio programme? Increasing numbers of us subscribe to streaming music and film services, read the news on the Internet instead of in paper newspapers, listen to podcasts and use catch-up TV services and YouTube channels. It’s quite fun being a consumer these days. Also on the other side of the economy, the producing side, can we see markets being reshaped and both the number and nature of jobs being changed. My sector, the financial system, and my workplace, the Riksbank, are also being affected by these changes.