samchain/econo-pairs-v1 huggingface dataset:
In addition, we have been open about our response pattern, our analyses of economic developments and our assessment of monetary policy performance. Others are bound to judge the Bank in a critical light, not least this assembly. I hope and believe that you will find that our words and actions are compatible, and that in retrospect it will not be difficult to see the rationality in what we do, although it may on occasion seem surprising then and there. If we manage this, confidence in monetary policy should take firm hold and strengthen ahead. The basis for interest-rate setting and the present economic situation  By way of conclusion, I would like to address the basis for interest-rate setting and the present economic environment. The projections and analyses in the Inflation Report, in conjunction with our continuous assessment of the inflation outlook and developments in the money and foreign exchange market, form the basis for our decisions concerning interest rates. In the last Inflation Report published on June 20, price inflation was projected at 2½ per cent in 2003 on the assumption that interest rates remain unchanged. Norges Bank's assessment of the economic outlook was last presented in  BIS Review 74/2001  11  connection with the Executive Board's monetary policy meeting on 8 August. Both the analysis in the Inflation Report and developments since its publication indicated that at today's interest rate level, it is likely that the inflation target will be reached in the course of two years.

Important to quantify the risks Normally, all risks that may have significance for the monetary policy decisions have been gone through by the Monetary Policy Department or the Financial Stability Department. But events may of course occur that are impossible to predict, or risks may arise at a later stage in the process that are very difficult to evaluate, such as the effects of the Lehman Brothers bankruptcy in autumn 2008. One central issue with regard to how the monetary policy decision-making process is set up is what stance the decision-makers, that is, the Executive Board, should take with regard to risks that for various reasons are not directly incorporated in the forecasts. If individual Executive Board members consider that there are observable risks and suspect that these may have significant consequences, the Riksbank will of course try to analyse these in depth. But it is not always easy to quantify such risks, and thus it may be difficult to include them in the actual forecast. The question then is how these risks should be taken into account in the monetary policy decisions. I consider it important to try to quantify as far as possible the risks deemed relevant to the monetary policy decisions. This is particularly so when it comes to risks with a low probability, but which would have substantial consequences for the way the economy develops, such as a burst housing bubble, so it is important to try to quantify how the risks are affected by the various alternative actions.
Where prices are concerned, 2004 was another year of stability despite the spectacular price rise of oil products. Inflation rose to 0.8% over the year as a whole, and peaked at 1.5% in November. The low inflation rate gave Swiss companies a further competitive advantage on the international marketplace. The dollar and the oil price as disruptive elements The foreign exchange and commodity markets experienced the most turbulence in 2004. The US dollar, which had been falling since 2001, accelerated towards the end of the year, when it hit a record low against the euro. Switzerland was affected in much the same way as the other European countries: the Swiss franc appreciated by about 7% against the US currency during the last three months of the year. This development has since improved somewhat. Despite the dollar's sharp drop over the last few months, its current exchange rate is still higher in real terms than it was in the mid-1990s. The current situation is particularly difficult, however, as a whole series of Asian currencies, including the Chinese renminbi, are pegged to the dollar. The greenback's fall has thus reinforced the competitiveness of numerous emerging markets versus the European economies. For us here in Switzerland it has been positive to note that the nose-diving dollar has not unleashed any speculation on the Swiss franc. The Swiss franc-euro exchange rate has remained remarkably stable at around CHF 1.55 per euro.

5  See also Siven, C-H. (1998) "Penningteori utan pengar – hundra år med Knut Wicksell", Ekonomisk Debatt 1998, year 26, no. 6. 6  Wicksell, 1898 [1936], p. 189. 7  See also Orphanides, A. (2207), "Taylor Rules", Board of Governors of the Federal Reserve System, January 2007. 16  BIS Review 41/2009  lending. In the same way as the policy rate can be expressed as a Taylor rule, it should be possible to express the banks’ capital adequacy requirement as a function of, for instance, the lending gap, or growth in lending in the economy and the output gap. Image 10: A ”Taylor rule” for capital adequacy  (  )  (  c t = c + α L Lt − L* + α Y Yt − Y  )  Here the capital adequacy requirement the banks are subject to depends on the development of total lending in relation to a long-term trend and economic activity. The idea is that the capital adequacy requirement will increase when lending increases too substantially, and will decrease when lending declines. In this way the banking system will be forced to build up capital reserves in good time, which can in turn be used to cover losses when times are hard. One creates a model that evens out cycles rather than reinforcing them. The current capital adequacy rules are sometimes accused of being procyclical.
Recent experience does not suggest that the interbank market is special or that keeping an abundance of excess reserves prevents effective monetary policy implementation. Further, we should be mindful of the fact that banks may not be as eager to trade as much with each other in the new regulatory environment because they now face costs of expanding their balance sheet. In the U.S., the leverage ratio has been increased and the Federal Deposit Insurance Corporation has modified the base for the insurance fee it assesses on banks, effectively making it a function of the bank’s liabilities or the size of its balance sheet in excess of capital. 8 To understand why interbank trades are costly in this environment, consider the following example. Suppose Bank A has too many reserves and Bank B too few. One way to transfer reserves from Bank A to Bank B is through an interbank loan. The size of the balance sheet of Bank A would not change as a result of such a loan because the reduction in reserves would be offset by the loan to Bank B. The balance sheet of Bank B would increase in size by the amount of reserves it receives, as shown in upper part of Figure 4. What this example  6  In theory, the discount window should reduce some of this volatility. In practice, stigma has prevented it from playing that role effectively, as I will discuss further. 7  Nonbank lenders’ use of counterparty credit limits suggests such monitoring indeed occurs.

•  Five of the top 10 primary growth markets will be in the Asia-Pacific; this includes China, India, and Indonesia. There are three structural factors driving demand for insurance in Emerging Asia. First, Asia is getting richer. Projections by the IMF show that Emerging Asia will remain the fastest growing region in the world over the next decade. As incomes rise in Asia, governments, corporates, and individuals will increasingly seek insurance to protect their growing economic assets. •  Burgeoning urbanisation, infrastructure development, and cross-border trade will drive demand for commercial and specialty insurance. •  A growing middle class and rising affluence will underpin a steady increase in life and health insurance penetration rates. Second, Asia is getting older. Asia is facing declining fertility rates, increasing life expectancy, and a rapidly ageing population. •  The United Nations projects that, by 2030, Asia’s old age dependency ratio will be 16%, up from today’s 11%. •  Against this demographic backdrop, public retirement and pension systems in Asia remain inadequate. The retirement gap between savings and retirement needs can be as high as 13 years. •  This will spur greater demand for private health insurance, annuity and other retirement security products. Third, Asia is becoming more aware of catastrophic risk. •  Over the last 30 years, Asia has borne the brunt of natural catastrophe losses, accounting for almost half of the world’s estimated economic losses from natural disasters. Yet less than 5% of the losses were insured, compared to 40% in advanced economies.
As stated in the World Bank Annual Report 2009 “targets that it would have been difficult to reach even before the crisis are now considered implausible, and a real risks exists that the financial and economic crisis that begun in United States may develop into a humanitarian, political, and security catastrophe in the world’s most vulnerable regions.” The ECA Region was the hardest hit region by the global crisis. The decline of external demand, unfavorable terms of trade, decline in capital flows, as well as spillover effects to the domestic demand resulted in a fall of region’s GDP in 2009 of about 6%. With the real sector of the economy contracting and financial flows being constrained, unemployment and poverty have risen. Although all countries in the region faced with challenges during this turbulent time, still the crisis has had a disproportionate impact on the vulnerable in the less developed countries calling for bigger assistance to mitigate social impact. The World Banks’ assistance was of a paramount importance in the past and will continue to be. It is not only about the financial support, but the support and guidance in implementing structural reforms. The mix of the World Bank programs aimed at creating broader based growth, efficient public sector and social protection, has yielded in decrease of the poor or vulnerable population in the region (18% of the total population has exited this group, since 1999).

Some parts of the subregion sometimes have problems with floods, but in many parts there is permanent lack of even drinking water. Macedonia’s track record within the relations with the World Bank, can be assessed as quite successful. The World Bank has been one of the most important partners in the process of designing and implementing important structural reforms. The strong focus of the World Bank programs on the financial and the enterprise sectors, public administration, and business environment, has proved to be an important trigger and contributor to the productivity gains and real convergence of the economy. Personally, I am deeply grateful to the World Bank and the IMF for the contribution they have made in overcoming our existential problems. It is my personal opinion, however, that our need for the cooperation with and support of the World Bank is more than necessary. We have made some progress, but we have also encountered a lot of problems. The global crisis emphasized a number of structural issues that are bottleneck for the growth of the Macedonian economy. A comparative analysis shows that Macedonia has pretty low level of investments (on average about 15% of GDP during 1997–2007). Thus, further support which will lead to higher investments and higher stock of capital will play an important role for the long-term growth. We substantially lag behind those we want to keep up with. The unemployment rate is still staggering (32.4%).
Ladies and gentlemen, It is against this background of economic recovery that the stance of monetary policy in the past two years has been accommodative, given the absence of inflationary pressure. Reflecting this, the policy interest rate has been cut gradually since late 2001 to help stimulate domestic demand, ease financial constraints of the corporate sector, and ensure an uninterrupted process of recovery. So far, the low interest rate environment has been instrumental in reinvigorating domestic demand and maintaining the momentum of recovery. Such an environment, I believe, would need to be maintained until the expansion in consumption and exports was sustained enough to have led to a firmer pick-up in private investment. This, for the most part, has been a rationale behind our decision to lower interest rates given our strong external position and the absence of inflation. Ladies and gentlemen, To recapture, the Thai economy has managed well both in terms of growth and stability amidst external uncertainties and shocks like SARS. The recent performance reflects to a large extent favorable ingredients for further prosperity, including resilient confidence, robust domestic demand, and export competitiveness. It is fair to say that we have done well, but the true test of success is still down the road. At this juncture, it is important that we do not turn the corner to complacency but rather face the challenge of how to sustain or even raise growth slightly without creating problems in the long run. I have three challenges for us to think about.

For example we are not certain that any leading bank today consistently adjusts the value of all of its assets based on each asset’s contribution to diversification. Consequently, for the time being we have decided instead to establish standard estimates of diversification that banks would apply. I know that many members of the industry have accepted that choice as prudent for now, but you have also stressed the need to move forward with an approach that is more consistent with the existing treatment of market risk and the emerging practices in operational risk management. We are ready to start this work as soon as it is possible. Still, portfolio theory suggests that an obvious next step to further enhance the risk-sensitivity of the capital framework would be to incorporate calculations of diversification benefits into  BIS Review 42/2003  5  the framework. In the coming years, and we can start very soon, we look forward to working with banks, with banking associations such as the BBA, and with academics and researchers to find ways to move Basel in the direction of full credit risk models. Likewise, the Committee must continue to monitor developments in the industry to be prepared to harness other improvements in risk measurement and management practices. It is at once exciting and perhaps a bit daunting to think about the work ahead for all of us, whether on a national, regional, or global level.
In this context senior management means only the very senior executives, and in the PRA’s proposals, only non-executives that are either: the chair; chair of a major board committees; or the senior independent director. There are differences between prudential and conduct in this respect, and our consultation poses the question of how substantial those differences should be. But, is it really unreasonable to expect the most senior figures to assume responsibility? Not in my view, and in my experience not in the view of those who take on these roles. Boards should challenge and this is the role of the NEDS. The executive should view this as a positive help to improving judgements the board is called upon to make and so should provide NEDs with the material to do that, and to do so as concisely as possible. The old saying for students that it is harder to write a good short essay than a long one is relevant here. And, as supervisors we too should follow that principle. In conclusion, whilst more capital and liquidity was a necessary condition for fixing the financial system, it wasn’t sufficient. Getting the incentives and governance right matters a lot. As supervisors our job requires good judgement – not easy but it has to be done – and it also requires a keen eye for structuring incentives to deliver our objectives. Rules alone will not get us there.

While this story I’m telling about the move to digital payments has been UK-focused – the trend is global. Many emerging market and developing countries have also seen a sharp rise in digital and in particular mobile payments. Some types of international payments – importantly including remittances – remain expensive and cumbersome. As domestic payments are evolving, the importance of international payments is rising. Cross-border e-commerce has risen. And remittances inflows have increased by 64% in the last decade to overtake foreign direct investment as the largest source of external financing for low and middle income countries. 2 But cross-border payments are often more expensive, slower, less transparent and harder to access than domestic ones. The average cost of remittances, for example, stood at around 7% in 2019, well above the UN sustainable development goal of 3% by 2030. 3 And the same frictions exist in other types of wholesale and retail cross-border payments. Work is underway at the international level to tackle these frictions. Enhancing cross-border payments is a G20 priority for 2020. The international Committee on Payments and Market Infrastructure has a task force looking at possible solutions. But there is no magic bullet. This will require international coordination on several fronts: with solution elements ranging from harmonised processes (AML checks), agreed targets, improvements to existing infrastructures (aligning opening hours) and even new infrastructures (for example to interlink domestic systems).
BIS Review 15/2003  5  Next Steps in finalizing the New Accord Most of my remarks today have been centered on implementation of the new framework. I’d like to conclude by spending a few moments discussing where we are in the process to finalize the New Accord. As I mentioned, the Committee has just finished gathering data from the industry through its third impact study. The aim of the study was to collect and to analyze information from banks worldwide regarding the capital impact of the new proposals on their existing portfolios. The results are under review and will help us to determine whether any adjustments will be needed prior to release of the final consultative package. That final consultative paper will be issued by early May. Our goal continues to be to have a final Accord agreed to by the fourth quarter of this year. In closing, I want to emphasize that effective supervision of modern banking organizations will necessarily entail a closer and more cooperative partnership between industry participants and official supervisors. The industry’s participation in the formulation of a more risk-sensitive capital adequacy framework is a good example of this kind of constructive interaction. Indeed, the three pillars of the proposed framework reflect the understanding that regulatory requirements alone are no longer sufficient to address the growing complexity of banks’ activities and the associated risks. Consistent with this notion is the need for effective corporate governance, which plays an increasingly important role in a rapidly evolving banking environment.

Rating system design  The first area concerns the design of a risk rating system, which is, of course, central to ensuring the effectiveness of the IRB approach. The Basel Committee believes that banks’ internal rating systems should accurately and consistently differentiate between degrees of risk. The minimum IRB standards in this area build on the strongest risk management practices observed in the industry. To illustrate the point, many organizations either already have, or are in the process of developing a ratings system that captures both the risk of borrower default, as well as transaction-specific factors that shed light on the amount of loss that would arise if default occurs. In other words, these banks’ systems are now oriented to capturing the several essential components in estimating credit risk under the IRB approach. Credit risk rating systems are clearly improving in various dimensions, including how finely they seek to distinguish differing degrees of borrower risk. To do so, banks typically look to expand the number of ratings categories into which they slot their exposures. However, just establishing more rating categories is not enough. The challenge is for banks to define clearly and objectively the criteria for these ratings categories in order to provide more meaningful assessments of both individual credit exposures and, ultimately, their overall risk profile. The clarity and transparency of the ratings criteria will be critical to ensuring that ratings are assigned in a disciplined and reliable manner. b.
The Board reaffirms its commitment with the inflation target and will take every action necessary to ensure that it will return to 3 percent annually within the policy horizon. It also reiterates the need for all financial system participants to properly assess their borrowing and lending conditions. We, as the Central Bank, will continue to contribute with what is our duty – that is, safeguarding the stability of our currency and the normal functioning of internal and external payments – to Chile’s development and welfare. Thank you. 6  BIS central bankers’ speeches  Figure 1 Inflation indicators (*) (annual change, percent) 5  5  4  4  3  3  2  2  1  1  0  0 11  Jul. 12  Jul. 13  Jul. CPI  CPIEFE  14  (*) Starting in January 2014, calculations are based on the new indices with base year 2013=100, so they may not be strictly comparable with earlier figures. Sources: Central Bank of Chile and National Statistics Institute (INE).

These increases underline our determination to ensure the timely return of inflation to our two per cent medium-term target. The elevated level of uncertainty reinforces the importance of a data-dependant approach to our policy rate decisions, which will be determined by our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission. The asset purchase programme portfolio has been declining at a measured and predictable pace since March 2023, as the Eurosystem is no longer reinvesting all of the principal payments from maturing securities. Regarding the pandemic emergency purchase programme, the Governing Council intends to reinvest all principal payments from maturing securities purchased under it until at least the end of 2024 and will continue applying flexibility in reinvesting redemptions. We are monitoring current market tensions closely and stand ready to respond as necessary to preserve price stability and financial stability in the euro area. The euro area banking sector is resilient, with strong capital and liquidity positions. In any case, our policy toolkit fully equips us to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy. Economic activity  1/4  BIS - Central bankers' speeches  Growth in euro area GDP slowed progressively over the course of last year and stagnated in the fourth quarter.