samchain/econo-pairs-v1 huggingface dataset:
We do not know to what extent the present course of events is affecting how households and firms appraise both their own and their country’s economy. A good many people and businesses will no doubt become more cautious about buying a car or making investments for the future, for example. Here we have a potentially larger effect that must be monitored very carefully. Some guidance is to be had from various countries’ survey data. A number of the results point to a fall in consumer confidence. Neither can one draw any precise conclusions about the magnitude of the effect that may come from increased prudence in banking around the world. The global unrest has left its mark. No one foresaw that Malaysia would introduce foreign exchange controls. Nor did any banker believe that Russia would go so far as to suspend payments on debt denominated in roubles. People BIS Review 83/1998  -3-  seem to be thinking that if such things could happen in Malaysia and Russia, perhaps they can happen elsewhere. The problems with the hedge fund Long-Term Capital is another matter that has made international bankers more wary. Although their loans to this fund were secured, the total stock of loans from all banks and the total amount of collateral were too large for direct disposal in the market; that would have caused prices to fall, leading to losses for the banks. Under such circumstances it is hardly surprising that international banks also review their lending commitments to other funds.

The problems showed up first in Thailand but soon spread to South Korea, Malaysia and Indonesia. While the deterioration in these countries was partly a consequence of the economic stagnation in Japan, perhaps the main cause of the acute crisis was that a strong capital inflow from the West, above all from the United States, suddenly turned into an outflow. For various reasons, political as well as economic, assessments of the development potential in the countries in question had been gradually revised. More recently the problems have spread to Russia, where the economic situation - as in Japan - was already troublesome. The situation became so precarious that the Russian government suspended payments on government debt denominated in the domestic currency. That was a very far-reaching decision. Since then, capital outflows have also hit Latin America. For a long time it seemed that the Asian crisis would not have sizeable repercussions in industrialised countries in the West. The direct real economic impact was judged to be small and at first it looked as though the main effect would be a tendency to keep inflation down, while growth would remain good. As Russia also encountered increasing problems, however, there was growing concern and the crisis BIS Review 83/1998  -2-  accordingly began to spread even to financial markets in the West. During the summer, share prices began to fall. Credit risks rose. Investors and banks started to become increasingly cautious, partly on account of some losses.
Christian Noyer: Financial Stability Review “OTC derivatives: new rules, new actors, new risks” Speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the launch of the latest issue of Bank of France’s Financial Stability Review on “OTC derivatives: new rules, new actors, new risks”, New York, 22 April 2013. *  *  *  I am very happy to be with you today to launch the latest issue of Banque de France's Financial Stability Review on “OTC derivatives, new rules, new actors, new risks”. As you know, every year since 2002, our Review has brought together contributions from prominent academics, practitioners and policy-makers from all over the world on a topical issue. I warmly thank all the contributors who have enabled us to produce a Review, of great interest, thanks to their papers of exceptional quality and density. I cannot mention all of them and only some authors are with me today; [but you can find all articles in the online and paper versions of the Review, copies of which are available on tables at the back]. Those contributions are very diverse, or even divergent, in their analysis and proposals. That’s how we want it. It is clear we don’t necessarily share the views expressed in the articles but we all believe in the exchange of ideas.

Instead of seeing social housing as a passive benefit, we can eventually develop projects which become to an extent self-financing, through a combination of social housing provision and programmes to enhance the employability of individuals, enabling them to eventually pay market rents. The financial sector could play a role here. We have already seen how some banks have partnered with government to offer social loans, which are beginning to decrease reliance on the social housing stock. Going forward, we can see the possibility of other innovative initiatives where the Housing Authority partners with financial institutions to develop social housing projects. Page 5 of 10  At this point, I take this opportunity to inform you that the Central Bank of Malta has set up a lean but highly competent and proactive Social Research Unit to study amongst other issues, access to credit by the lower income groups. Another area where we need to register progress is home equity release. We have a situation where many elderly persons are asset rich but cash poor. They live on relatively modest pensions, while residing in large and relatively expensive homes. This creates issues for financing long-term care, as many find it difficult to sell their homes outright in order to go into a private home.
The ECB’s current forward guidance on interest rates states that they will remain at their current level until three state-contingent criteria are met, but with one calendar element due to sequencing. I will come back to them in my second part. For comparison, in the United States, the Fed has currently two calendar-based forms of guidance: it will “soon be appropriate to raise the target range” for the federal funds rate and “bringing them to an end in early March” for net asset purchases. 3. Degree of commitment However, no central bank can define in advance all the states under which policy rates will remain fixed. In this sense, we cannot totally bind our hands with rules, and should keep some element of discretion facing unexpected data or events. Forward guidance is never setting policy on auto-pilot. There will always be an element of judgement, including about the distribution of risks around the staff projections. Central banks should be predictable, but not precommitted. Forward guidance in uncertain times Let me fine tune this general discussion in uncertain times, because we are certainly living through such an unexpected period: the unprecedented “covid economy”, geo-political tensions including Ukraine, the energy crisis, and the two great transformations ahead – digital and ecological. Forward guidance is a trade-off between the benefits of signalling intentions in advance and the constraints this places on future actions. In periods of high uncertainty, these effects accrue to both sides. On the one hand, indicative policy paths can help reduce unnecessary volatility and clarify ambiguity.

More generally, maintaining our high stock of assets until the third step of our sequence gives us through our reinvestments more leeway on the markets. Conclusion As of 2006, Olivier Blanchard said : “Monetary policy can pretend to be close to science if it can be conducted using simple and robust rules […] Monetary policy must be closer to art if it is frequently confronted to new, poorly anticipated and poorly understood, contingencies.” This mix of science and art is something I like in monetary policy. Therefore, I have cherished our discussions in the Governing Council, for my past seven years as Governor: if it wasn’t for discussion, why should we have meetings? But as I suggested in my remarks today, you can trust us around President Christine Lagarde to make pragmatically the right decisions in the right order and timing, in order to reach our course: bringing inflation back firmly and durably to around our 2% target. I thank you for your attention. 5/5  BIS central bankers' speeches
This is necessary, of course, because a series of regulatory regimes that appear best for each individual country would likely be distinctly second-best or even worse when considered collectively. The recent crisis underscores the fact that the regulatory regime needs to be harmonized and global in nature. My second concern on the regulatory reform front is that reform may be too focused on the traditional banking sector and not enough on other financial intermediation activities. Of course, it is clear that we need to make the traditional banking system more resilient and robust. 2 But make no mistake, we also need to ensure that regulatory reform fully encompasses the full range of financial intermediation activity, including capital markets and insurance, over-the-counter (OTC) trading of securities and derivatives, wholesale collateralized funding markets, and payments and settlements. This is necessary for two reasons. First, too much focus on raising the requirements on banks runs the risk of just forcing activity into the non-banking sector. Second, many of the problems of the financial crisis originated outside of the banking sector.

Macroprudential supervision, which I characterize as the top-down assessment of risks throughout the financial system, is essential because it addresses the problem of gaps in the regulatory regime and the regulatory arbitrage that such gaps can encourage. In addition, macroprudential supervision is needed because the financial system is interconnected. As amply demonstrated during the crisis, siloed regulatory oversight is problematic. Supervisory practices must be revamped so that supervision is also horizontal – looking broadly across banks, nonbanks, capital markets, payment and settlement systems and geographies. In the United States, the Federal Reserve is well suited to play a major role in such oversight because it alone has the expertise in three major aspects of the financial system – banking, capital markets, and payments and settlement systems. It also currently has oversight responsibility for most of the firms that one would view as systemically important. In evaluating what the Federal Reserve should do, it is important to recognize that the Federal Reserve’s three primary roles – monetary policy, the lender of last resort function, and supervision – are closely interlinked. Each one of these activities helps the Federal Reserve perform the others. For example, the information we collect as part of the supervisory process gives us a frontline, real-time view of the state of the financial industry and broader economy. Monetary policy is more informed as a result. Only with this knowledge can a central bank understand how the monetary policy impulse will be propagated through the financial system and affect the real economy.
After the crisis occurs, the policy has to be conducted according to the separation principle that allows a central bank to separate the decision on the appropriate monetary policy stance and the decision on the support of the financial system. We clearly demonstrated this in April when we decided to leave the non-standard measures unchanged, but at the same time decided to increase our key policy interest rates. In the future we will continue to live up to our mandate. We will do whatever is necessary to deliver price stability in the medium term,  6  BIS central bankers’ speeches  using our policy interest rates, and continue to contribute to the stability of the financial system, using our non-standard measures. Conclusions To sum up, significant progress is being made in Europe to produce a more comprehensive and encompassing concept of economic governance. Looking forward, I believe however that it is crucial that the euro area dimension of economic governance is further reinforced in order to be commensurate with the wide range of sources and channels of financial instability, which has been made evident by the financial crisis. This reinforcement should involve two main institutional moves:   Closing the gap between the economic and financial aspects of euro area governance by fully integrating financial supervision within the concept of economic governance; and, consequently    Significantly strengthening the arrangements for financial supervision within the euro area, which could be supported by the establishment of a pan-euro area resolution fund.

The sources of systemic risk that may originate from the interplay between the financial sector and real economy imply that safeguarding financial stability is essential for ensuring fiscal sustainability and co-ordinating economic policies, and also in the context of any potential financial assistance by the ESM. Accordingly, it is essential in my view to also enhance the supervisory framework within the euro area. This could be achieved through several institutional steps. One possibility would be to grant the EBA specific powers for the euro area, including wider possibilities to take mandatory decisions in certain fields addressed to national supervisors and financial institutions. Nevertheless, it is worth remembering that in 12 out of the 17 members of the euro area, the respective Central Banks have full responsibilities in banking supervision. After the crisis, the trend in several countries has been to change the system of banking supervision by giving that responsibility to the respective Central Banks. Regarding macro-prudential policies the Eurosystem (the ECB plus the National Central Banks) was already given a special role in supporting the mission of the European Systemic Risk Board. All this opens the opportunity to an alternative future development in the direction of giving a more significant role to the Eurosystem in the supervision of banks, in particular of large cross-border banking groups An enhancement of the role of the Eurosystem would not need to represent a major overhaul of the institutional setting.
Although the decoupling of countries seems highly difficult in a global environment where all countries get increasingly interpenetrated via capital flows and financial integration, it is a fact that developing countries have ended up in a much better position in the recent global crisis in comparison to their economic performance in the past crises. It would not be wrong to assert that the main reasons underlying this transformation are the increased commercial, financial and economic relationships among developing countries, accompanied  BIS central bankers’ speeches  1  by strong economic and institutional governance practices formulated in view of lessons learnt from past crises. The increase in the volume of trade among developing countries has reduced the adverse effects of the weak course of external demand from advanced economies. Therefore, production and employment levels in developing countries have assumed a more rapid pace of recovery. At this point, by using Turkey’s export data, I would like to exemplify the importance of diversification of export markets driven by improving relations with countries in the region. As it is known, the European Union countries have the largest share in Turkey’s exports. Nevertheless, the share of member states of the Organization of the Islamic Conference (OIC) in Turkey’s exports is rapidly growing. During the period between end-2000 and end2010, while the share of the European Union countries in total exports of Turkey declined from 56% to 46%, that of OIC member states rose from 13% to 29%.

With further reduction in NPLs and higher interest rates, there are better prospects for banks’ profitability. We see demons of the past in our region today and we wish to avoid any doubting of our European and Transatlantic engagements. In order to go further we must prevent the demons of the past from questioning the virtues of opening our economy to foreign investment. The only way to preserve this fine moment for Romania is to steer and balance the economic growth, to advance on our European path and grasp the benefits of this historical process. I will now give the floor to Mr. Jeffrey Franks who will deliver an in-depth presentation on the first chapter of the report – “Europe Hitting Its Stride”, accompanied by his discussant, Deputy Governor Liviu Voinea. I wish you all a fruitful debate today! 2/2  BIS central bankers' speeches
We began discussing whether this would be an appropriate direction to take as early as last spring. The Governor of the Riksbank also signalled in several speeches made in spring 2006 that there was reason to look more closely into this possibility. It is my hope that with this change we will become more open and clear in our communication and that it will make it even easier for the general public to understand how we reason when making our monetary policy decisions. Let me describe the background to the changes we are now making in the monetary policy analysis and our communication. Modern monetary policy is based on openness and clarity Monetary policy today is largely concerned with influencing the economy through expectations. There is therefore good reason for the central bank to be clear about how it views future developments in inflation and also the real economy. Modern academic research into monetary policy also indicates that monetary policy functions better the clearer and more open the central bank is with regard to its forecasts and monetary policy considerations. One question that has been much discussed in recent years both in academic circles and the central banking world is how clear central banks with a price stability target should be with regard to their own view of future developments in the policy rate. This discussion is also connected with which assumption for the policy rate the central bank should use when making forecasts of inflation and the real economy.

This should not come as a surprise, since it is much easier to sustain a high level of employment protection in an industry if competitors are kept out of its market. Therefore, amendments to employment protection legislation should be considered in relation to the implementation of product market reforms to promote competition. Fostering, promoting competition in product markets will facilitate the implementation of labour market reforms. These arguments suggest that the envisaged policy actions in line with the Lisbon strategy aimed at improving the functioning of labour and product markets – and the review of the institutions that determine their organisation which this reform agenda entails – can be expected to have mutually reinforcing beneficial effects on the performance of the economy. The improvement in labour utilisation in the euro area witnessed in recent years partly reflects the favourable effects of past labour market reforms. However, when looking at the levels of unemployment and labour force participation rates, it is clear that, despite the progress made, further improvements on both of these labour market fronts are possible and urgently needed. 2  See, inter alia, Nicoletti et al. (2000) and Nickell and Nunziata (2001). 3  See Bassanini and Duval (2006). BIS Review 43/2007  5  IV.2. Values, preferences and economic culture  Institutions that are inappropriately designed are thus at least partly responsible for the unsatisfactory performance of the European economy.
Our external debt to GDP ratio has hit an all-time low since 1980, recording 29.4 per cent last year. Our foreign reserves have doubled within three years, increasing from 50 billion US Dollars by the end of 2005 to more than 100 billion US Dollars at present day. The amount of foreign reserves is more than four times higher than short-term external debt. This gives us an ample room to safeguard against instability from volatile capital flow and exchange rate movements which are deemed out of line with the economic fundamentals if necessary. 4  BIS Review 98/2008  Second, the government’s fiscal position continues to improve as reflected by the falling trend of the public debt to GDP. Indeed, these improvements were the backbone of mediumterm economic stability and provide much cushion against various economic shocks in the short term. They give the government the financial flexibility to execute policies that temporarily alleviate the public’s inflation burden. It is no coincidence that over the past few years, credit rating companies have affirmed their ratings on Thailand, pointing at the strength of our fiscal and external position despite the economic downturn. Notwithstanding the difficult political climate in 2006, credit rating companies did not downgrade Thailand’s sovereign rating. Although a few agencies put Thailand on a negative watch list but those were removed a few months afterward. Third, the labor market shows no sign of rising unemployment rate, something that would be expected in a worsening business environment.

Ladies and Gentlemen, At this moment, high oil prices have put both advanced and developing economies alike in a very tough spot. Unfortunately, for Thailand, when it comes to oil shocks, we are not as resilient as many other economies as our economy depends heavily on oil. In fact, Thailand’s oil dependency ratio, although has been falling, remained among the highest in the world since our logistic system has been neglected for sometime. Prior to the recent hike in oil prices, Thailand was on the path to recovery. Indeed, economic growth picked up since the third quarter of last year with an expansion from 4.7 percent to 5.7 percent and 6.0 percent in the subsequent quarters, respectively. Domestic demand strengthened; consumption, investment and imports, all accelerated while exports performed rather well. This was a clear recovery pattern. Up to the end of the first quarter, the sentiment was lifted to a better prospect for Thailand, with many expecting average 6 percent growth for this year. Unfortunately, the story did not end there. Oil prices soared again, passing the 120USD mark in May. Despite some correction last week, oil prices remain much higher than where they were the beginning of this year. Compounding this negative external shock was the return of street protests.