samchain/econo-pairs-v1 huggingface dataset:
The third point in developments in the Turkish economy is that tight fiscal policy and sound debt management brought substantial improvement to the debt dynamics, which was in the centre of concerns together with inflation four years ago. So, the gross public debt declined from 107.5 percent in 2001 to 74.6 percent by the second quarter of 2005. The Maastricht criterion on gross public debt may be met in the near future. These achievements on the macroeconomic front, the improvement in the debt dynamics and the positive outlook for growth have brought more resilience to shocks and contributed to financial stability. Volatility in the financial markets has decreased; maturities are now longer; derivatives markets finally begin to develop. 5  The World Bank. Own calculations. 3/8  6  Though it is essentially a political decision, the negotiations between the EU and Turkey would not have started at all if we had not made all these achievements. Distinguished participants, Turkey’s membership implies an expansion of the EU market. The Turkish economy is among the biggest 20 economies in the world. It is the largest economy in Eastern Europe, the Balkans and the Middle East, second in the Black Sea Basin and sixth among emerging market economies. Unlike most of the new member states at the start of negotiations, Turkey already has a functioning market economy, which is far advanced in meeting the economic chapters of the acquis communautaire.

First of all, although the unemployment rate in the Turkish economy is quite high compared to the EU members, we observe that the total increase in employment throughout the year 2004 was much higher than that of the EU members and acceding countries. Another notable issue about the structure of our labour market is that Turkey s economy is moving from a labour intensive structure toward a capital intensive one. And it is a natural consequence that during this period some sectors are expanding while others are contracting. What this implies is that the structure of employment has also been changing. In fact, even though it is still  15  Under-Secretariat of State Planning Organization. 16  http://www.europa.eu.int/comm/eurostat. 17  International Labour Organization. 18  Böttcher, B. (2004). "Turkish Accession to the EU- The Way is the Goal". Deutche Bank Research. 19  International Labour Organization. 20  www.un.org. 6/8  high compared to the EU members, the share of the agricultural sector in total employment has been falling while that of services sector has been on the rise. And I believe that Turkey s young and dynamic demographic structure supports easier transfers between sectors and facilitates improvement in the sectoral dispersion of employment. Having mentioned all these demographic and labour market conditions of the EU and Turkey, I need to emphasize the importance of making further progress on educational reforms in Turkey.
In addition, the euro area addressed risks in banks’ balance sheets with an unprecedented project in 2014 – the comprehensive assessment. Not only did that exercise lead to a common definition of non-performing loans for the first time, it also led to a significant increase in provisioning. Altogether, the banking system is much more resilient today than it was in 2008 – not least thanks to an improved regulatory and supervisory framework. Still, in more general terms, we cannot deny the existence of risks. This is particularly true for the financial market, whose core function is to allocate risks. Each and every financial institution must therefore cope with risks. Alas, this is more difficult than it sounds. BIS central bankers’ speeches  1  Acknowledging risks – there is no such thing as a free lunch For a start, there are those risks that cannot be foreseen, the famous black swans. Such risks cannot be managed in any meaningful way. In fact, the only option is to increase resilience. For banks, the universal buffer against all kinds of unexpected shocks is capital. And, on the capital front, much has been done over the past few years. As I already mentioned, banks around the world have increased their capital ratios since 2008. In terms of capital, banks in Europe are therefore much better prepared for those risks that cannot yet be foreseen. But then there are those risks that can be foreseen – they can be measured and managed.

It is these risks that are particularly relevant for risk management in banks, following an economic dictum that has been attributed to several people over the years, including an author of science fiction novels and an American General. The general was Leonard Porter Ayres, who also worked as a statistician and economist. When asked by a group of reporters to impart some words of wisdom gathered from his long years of economic study, Ayres replied: “It is an immutable economic fact that there is no such thing as a free lunch.” I am pretty sure that everyone in this room has used that phrase at least once. Translated into the language of finance, it reads: whoever wants to make a profit has to take a risk. The returns, however, are mostly generated right away, whereas the risk might only materialise in the future. This is where good risk management comes into play. Banks and the entire banking system have indeed become much more resilient to shocks. Nevertheless, good risk management is still necessary. It should enrich decision-making by providing a medium and long-term view, and it should highlight the downside to every upside. In a way, risk managers have to be the spoilsports. The same is, of course, true for banking supervisors. One of the tasks of banking supervisors is to ask questions when things are going well, and to intervene when they are not. Therefore, risk managers, as well as banking supervisors, explicitly advocate a forwardlooking, risk-based approach.
We also need a pool of knowledgeable analysts and journalists who will shine the spotlight on any obscure fine print that the lay investor fails to notice. A more informed and sophisticated investor base will reinforce market discipline and form the basis for a more vibrant and mature financial sector. In all these respects, we have a long way to go. Market discipline also requires an effective enforcement regime. To preserve investor confidence, penalties for transgressions must be swift and appropriate. MAS now has the power to investigate and bring a court action for market misconduct under the new civil penalty regime. This will complement the existing criminal penalty regime administered by CAD. Liberalising the financial sector We began to open the financial sector to greater competition while the region was reeling from the Asian Crisis. This went against conventional wisdom. Opening up during such a time seemed like throwing away the life-jackets as the flood waters rose. We thought otherwise. We could see the flood approaching – not just the storm we were then in, but the greater climatic challenge posed in the longer-term by the worldwide changes in the financial  BIS Review 62/2002  3  industry. We decided that we had better learn to swim before the deluge overwhelmed us. Furthermore, our actions to liberalise in the midst of the crisis would send a clear signal that Singapore’s financial centre would always be open for business. Banking The two major areas of liberalisation have been in banking and the capital markets.

We offer political and economic stability, the rule of law, efficient infrastructure and a highly-skilled professional workforce. These are exceptional attributes, which lend themselves well to activities like wealth management. We need to find new ways to market them and bring in business. Enhancing monetary policy effectiveness Our decision to progressively relax restrictions on the use of the Singapore dollar was a calculated risk. At a time of heightened volatility in currency markets, it stood in stark contrast to our regional neighbours. However, the liberalisation has yielded dividends. Our capital markets have grown and deepened without adversely affecting our ability to manage the exchange rate. In practical terms, we have now gone as far as we can to relax the restrictions while still maintaining the principle of not-internationalising the Singapore dollar. All but two restrictions have been lifted – thou shalt not borrow Singapore dollars to speculate in the currency, and if thou shouldst borrow for offshore purposes, then thou shalt either swap or convert the Singapore dollars before taking them out. These remaining commandments are an important signal that we have not changed our fundamental stand against outright speculation on the Singapore dollar, even though we have permitted nearly all activities of legitimate investors. 3  Today outstanding SGS is about $ billion, compared to just over $ billion in 1997. 4  From 1998 to 2001, corporate debt issuance in Singapore has increased eightfold to $ billion.
The models used to assess risk in the more novel areas of finance are, by definition, less grounded in experience and less valuable in anticipating how prices and correlations change in conditions of stress. Consensus on the appropriate accounting treatment is less well established. With the dramatic increase in the scope of operations of the major financial institutions, the challenge of pulling together an integrated risk management framework that captures exposures across the entirety of the firm is much greater. The potential for conflicts of interest and opportunities for fraud are greater, placing significant burdens on internal compliance regimes. The changes in regulation and technology that have increased the opportunities for risk transfer mean that more risk may end up in parts of the financial system where supervision and disclosure is weaker and in parts of the economy less well able to manage it. And finally, we have seen substantial growth in the integration of national financial systems. Indeed, a number of foreign and foreign-owned banking organizations are among the largest financial institutions in the U.S., with operations here that run into the hundreds of billions of dollars, and in some cases representing the majority of their global assets. The major U.S. banks and investment banks are more global in the scope of their operations, and their affiliates are a major presence in many of the countries in which they operate, in some cases with a larger share of financial activity than they have in the U.S. market.

For money to be truly one, it has to be truly fungible independent of its form and independent of its location. In particular, deposits, which are the most widespread form of money, have to inspire the same level of confidence wherever they are located. To ensure that deposits are truly as safe everywhere across the euro area, the likelihood that a bank fails has to be independent of the jurisdiction where it is established. Resolution has to follow the same process in the event that a bank fails. And, when push comes to shove, depositors must be afforded similar protection wherever they are located. Fundamentally, this was and remains the agenda of Banking Union. And it is why Banking Union was conceived with three pillars: a single supervisory mechanism, a single resolution mechanism, and a uniform deposit insurance scheme, which remains to be specified. For money to be truly one, we need all three. Supervision had to come first, not because it was the easiest to establish, but because it was the necessary condition to proceed with the other pillars of Banking Union. That the SSM was established at the ECB owes much to circumstances. There are benefits in the current set-up, but that was not of vital importance. What was of absolutely vital importance, however, is that the SSM was established. In a fiat money system with fractional reserves, sound and uniform supervision is essential to there being a sound and single money.
If confidence in public finances begins to loosen, many who would normally be willing to lend to the government, that is, buy government securities, will be reluctant to do so due to concerns about not getting their money back. When fewer people are willing to lend and those who do demand a higher return for the risk they take, interest rates rise. In turn, this means that government expenditure increases, the situation worsens and there is a risk of entering a negative spiral with increasing expenditure and rising deficits and interest rates. In a worst case scenario, fiscal tightening may be required in an already poor economic situation in order to restore confidence. To succeed with this is, of course, very difficult, as the austerity measures mean that the economy will shrink further in the short term. This, in turn, reduces the tax base and simultaneously increases the need for support for vulnerable groups. Given that there is confidence in the sustainability of public finances, there is also room to use fiscal policy to counter recessions and address structural problems in the economy. To a large extent, fiscal policy stabilisation of economic activity takes place via so-called automatic stabilisers, without any political decisions having to be made.3 However, if there is confidence in public finances, it is also possible to make decisions about expenditure increases or tax cuts, so-called discretionary fiscal policy, without this giving rise to doubts about the sustainability of the finances.

And while the deficits are running, the policy is continuously evaluated with regard to how it relates to the target path and how effective it appears to be.22 Although a time contingent strategy may be somewhat less attractive to economists than a state contingent one, it could have some advantages: it would probably be easier to implement and manage politically, as it has a predefined clear sunset clause. As long-term sustainable public finances are, of course, still a basic precondition, once the period is over, or once the set goal has been achieved, a switch is made to keeping the debt stable in relation to GDP again. Of course, even if a time contingent rather than state contingent strategy is chosen, the risk exists that politicians will start to consider, over time, that the floodgates have been opened or that it will be too difficult to end the expansionary policy. However, if the rules are set out in advance in a formal and clear framework, these risks should be manageable. After all, in Sweden, we have shown for many years now that we are quite good at continuously evaluating and debating our economic policy and sticking to frameworks that we have set up to fulfil long-term economic objectives.23  21 Such a policy would have some similarities with automatic stabilisers. These are also state contingent in the  sense that they start to work when something special occurs, for example when unemployment starts to rise.
With the Financial Advisory Team in imSME, unmatched or unsuccessful applicants will be further motivated to enhance their capacity and capability with relevant trainings aimed at improving their chances to secure financings or loans in the future. The imSME complements existing initiatives in the SME financing ecosystem, such as BNM’s Fund for SMEs, alternative financing channels such as equity crowdfunding and P2P lending, and the Small Debt Resolution Scheme. BNM’s Role to Encourage Financial Inclusion & SME Financing SMEs is a pertinent component of Malaysia’s economy. To reap their full potential, SMEs must be continuously nurtured, guided and developed to become more competitive. The financial services industry needs to play its role in continuously innovating, adapting to the digital disruption and be the frontier in driving the national SME agenda, by ensuring adequate access to financing. Technology has the potential to transform financial services. Most notably it dramatically reduces the costs of providing access to financial services, particularly in remote locations and to small borrowers; transforms credit decision-making ability by enabling lenders to tap into alternative data sources. This has made it possible for people without collateral or credit histories to borrow; and simplifies finance and enabling providers to significantly improve the quality of customer interactions. There is a need to advance new ways to deliver financial services to the underserved, beyond the provision of access points. In particular, the potential to effectively integrate the delivery of financial services with the day-to-day activities of underserved segments remains largely untapped.

My view has been that the further appreciation of the Swedish krona has risked leading to impaired target fulfilment, and this has been the motivation behind my stance in favour of a lower repo rate path than that decided upon. Am I not concerned that a lower repo rate path would lead to excessive inflation, considering how inflation has increased recently due to higher energy and commodity prices? It remains to be seen how permanent these increases will be. In our most recent forecast, which assumed the stabilisation of these prices, underlying inflation, even in the main scenario, was estimated at less than 2 per cent for most of the forecast period (see Figure 2). On the basis of this forecast, there is thus scope for a more expansionary monetary policy. One matter that I intend to address at the next monetary policy decision is the wide gap between CPI inflation and CPIF inflation that we saw in January and February. This gap is partly due to a detail, related to mortgage costs, in the calculation method used, which also results in higher CPI inflation over the rest of the year than was forecast in the monetary policy report in February. However, in my opinion, the underlying inflationary pressure in the economy is still low, which, for example, is reflected by the low outcome for CPIF inflation. 2  BIS central bankers’ speeches  Monetary policy has to be forward-looking, as its influence on the economy is subject to a time-lag.
In a second-best situation, without appropriate supervision and regulation, if the policy rate is the only available tool and there is a trade-off between its effect on the monetary-policy objectives and financial stability, that trade-off should be taken into account. Normally, however, the policy rate is not the only available tool, and much better instruments are available for affecting financial stability. Monetary policy should be the last line of defence of financial stability, not the first line.4 In discussions of monetary policy and financial stability, there have been many references to the “risk-taking channel” (Borio and Zhu 2008), according to which leverage and risk in the financial sector increase with lower policy rates. However, the general discussion on and the existing models for policy rates, the risk-taking channel, and so on consistently seem to suffer from confusion between nominal policy rates and the general level of real interest rates. Models such as those of Adrian and Shin (2011) and Diamond and Rajan (2011) include a short real rate but no nominal policy rate and no explicit monetary policy. Furthermore, there is no distinction between the short real rate and the neutral real rate. What monetary policy in the real world can do by setting a short nominal policy rate is only to temporarily make the short real interest rate deviate from the neutral real interest rate, which in turn is beyond the control of monetary policy.

I do not agree with that conclusion. It seems to me that the problems for the emerging-markets concerned to a large extent depend on the decision of these countries to stabilise their dollar exchange rate or even peg to the dollar. Countries that choose to peg to the dollar will tend to import U.S. expansionary monetary policy into to their own country. This monetary policy may in many cases be too expansionary for the countries concerned, creating an overheated economy with risks for bubbles and other negative consequences. A flexible exchange rate would give the countries the option of conducting an independent monetary policy appropriate for the country in question. If countries nevertheless choose a peg to the dollar, with capital inflows, bubbles, and other negative effects, they are themselves responsible for those effects. More expansionary monetary policy, for instance, in the U.S. in the form of lower long rates due to LSAPs, tends to depreciate the dollar, all else equal. This does not mean that the U.S. is conducting a beggar-thy-neighbour policy that hurts other countries. A weaker currency is a normal consequence of more expansionary monetary policy in an open economy. Other countries can adjust their policy in response. All countries cannot depreciate their currency against each other, but all countries can conduct more expansionary policy if they prefer, using conventional or unconventional policy tools. This will increase real activity and both exports and imports, which in a situation with underutilised world resources is to the benefit of all.
According to the government bill, the monetary policy instruments should only be used to maintain price stability and they should only be used to prevent a financial crisis if this threatens the objective of price stability. 8  A further motive [for a clear objective] is that a far-reaching delegation of monetary policy should be combined with follow-ups and controls. The Riksdag as the Riksbank’s principal must therefore have the possibility to evaluate its activities on the basis of an objective that is set for the activities.” (Government bill 1997/98:40 p. 52) 8  “The Riksbank shall also promote a safe and efficient payment system. This is a fundamental task for the Riksbank and not an actual objective for its activities. The corresponding task applies to the ESCB. It could be claimed that this task could come into conflict with the Riksbank’s objective of price stability, as the Riksbank could in certain situations use the policy rate to avoid a crisis in the banking system. However, the monetary policy instruments shall, in accordance with the government’s proposal, only be used to maintain price stability. The Riksbank has at its disposal other instruments for managing such situations, for instance, the possibility to grant liquidity assistance, as lender of last resort. At the same time, there may be situations in which a crisis in the payment system threatens to jeopardise the price stability target.

One argument that has been put forward for trying to slow down an increase in housing prices is that future falls in housing prices would have negative effects on future inflation and the real economy. However, Claussen, Jonsson and Lagerwall show that the macroeconomic effects of a 20 per cent fall in housing prices would be relatively limited and possible to counteract by adopting a more expansionary monetary policy. This is shown in more detail in the minutes of the monetary policy meeting held in June 2010, when I presented simulations of how expansionary monetary policy can stabilise CPIF inflation and GDP growth following such a fall in housing prices (Sveriges Riksbank 2010). According to Finansinspektionen’s (the Swedish financial supervisory authority) report on the Swedish mortgage market (Finansinspektionen 2012), Swedish mortgages do not constitute any threat to financial stability at present. Mortgage borrowers have a good debt-servicing ability and pass stringent stress tests, credit assessments are thorough, the loan-to-value ratio for new mortgages is declining and the loan-to-value ceiling appears to be effective. If the growth in mortgages or the loan-to-value ratio were to develop in a problematic way further ahead, it is possible to lower the mortgage cap. This is a better means of influencing growth in mortgages and loan-to-value ratios than using the policy rate.