samchain/econo-pairs-v1 huggingface dataset:
15 The debate about the plans to split up some very large European banks demonstrates the difficulty of measures aimed at size. At the same time, the debate illustrates that such measures are not impossible. The extent to which we are required to travel down this difficult path will depend a great deal on how much genuine progress we are able to make on the reforms I have tried to outline this evening. Competitiveness All the measures to improve financial regulation which I have discussed tonight raise the delicate issue of banks’ competitiveness. Of course, it is not the intention of any regulator to hurt banks. However, somebody has to bear the costs of preserving financial stability. Up to now, through the implicit and now explicit government guarantees, taxpayers were bearing a considerable part of these costs. By strengthening regulation, these costs are to be shifted to the banks. In economic terms, the new regulatory framework endeavours to internalise the externalities caused by banks. 13  See, for instance, Group of Thirty, Financial Reform: A Framework for Financial Stability, p. 59: “To guard against excessive concentration in national banking systems, with implications for effective official oversight, management control, and effective competition, nationwide limits on deposit concentration should be considered at a level appropriate to individual countries”. 14  Cf. for example, Y. Altunbas et al., “Efficiency in European banking”, European Economic Review 45, 2001, pp. 1931-1955. 15  Cf.

I am sure there will be very interesting and fruitful exchange of views and ideas on the major financial stability issues, including those that I have mentioned earlier. Once again, thank you all for being with us today. BIS central bankers’ speeches  1
Facilitating the integration of fintechs into the regulatory framework As regards the fostering of innovation, I would first like to recall a founding principle. As supervisors, we need to promote a regulatory framework that is innovation-friendly, but technology-neutral, in order to encourage the appropriate and uniform treatment of risks: the same activity, same risk, same rule principle. Last year, I drew a parallel with the invention of the railway, which was a major innovation in the 19th century but not devoid of risks. Our role is to prevent the train from going off the tracks and to ensure that passengers are happy to get on board without being afraid. In other words, we need to promote innovation but also confidence in 1/3  BIS central bankers' speeches  innovation. At the European level, the balance between innovation and security is embodied in the first draft texts of the digital finance package, presented by the European Commission in September 2020. The draft Markets in Crypto-Assets Regulation (MiCA) constitutes a first step forward. I would like to stress two key points: it must be adopted quickly, and it must be consolidated. Indeed, technology is advancing rapidly, and decentralised finance, which is an even more crucial area than in September 2020, must be taken into account to avoid leaving any blind spots or allowing alternative circuits to develop without regulation. The draft DORA Act focuses on the key issue of operational resilience, which is vital, notably to address cyber risk.

A significant development relating to the Zambian financial sector was the decision to relocate the function of the Registrar of Banks and Financial Institutions to the Bank of Zambia from the Ministry of Finance and National Planning where it was previously located. This decision was taken in an effort to enhance regulatory oversight of banks and financial institutions starting from the licensing stage. Currently, all applicants have to be evaluated in line with relevant provisions of the Banking and Financial Services Act (BFSA) and international best practice such as the Basel Core Principles on Effective Banking Supervision. The intention is to ensure that only applicants who meet these stringent criteria enter the financial system in Zambia. This is crucial for fostering confidence and stability in the financial system. Mr Chairman, you may be aware that in the early stages of the reforms, a number of commercial banks faced serious problems and were subsequently liquidated. The closures were in part a consequence of the reforms. The reforms also highlighted some weaknesses in corporate governance arrangements at most failed banks. However, following improvements in the regulatory and supervisory frameworks, no bank closure has been recorded since 2002 and the banking sector has recorded significant growth. The growth in the sector can also be attributed to prudent fiscal and monetary policies aimed at achieving sustainable macroeconomic stability. This has been accomplished under a stable political environment and liberalised market conditions.
Three factors of uncertainty come into the picture: -  first, there is by essence a high degree of uncertainty surrounding the assessment of misalignments, related to their equilibrium prices and the channels of transmission to the real economy;  -  second, central banks have to keep in mind the balance of risks facing the economy: a monetary policy action that would reduce the risk of a large loss in the future might be very costly for the economy in the short run;  -  third, the effects of monetary policy decisions on asset prices are very uncertain. •  The announcement of a systematic reaction could therefore lead to moral hazard and undermine the central bank’s anti-inflationist credibility, which is its most precious asset. Moreover, the single interest rate policy cannot be geared simultaneously towards two potentially conflicting objectives. c.  Be aggressive or experiment  There may be two cases where gradualism is not the systematic guideline. •  Worst-case outcomes may best be prevented by following policy rules that are rather aggressive in responding to inflation deviations from target. •  A more aggressive policy rule may generate more information, which would improve the learning of the central bank and thereby future policy performance. But the learning process might be costly since it could generate increased volatility. 2. Some approaches to address uncertainty  a. Rely on monetary policy rules  •  Simple monetary policy rules (like the Taylor rule) may perform well in many different models.

2)  The Eurosystem faces general but also specific sources of uncertainty  •  As regards the general sources of uncertainty, one can mention uncertainties related to:  •  II  -  macroeconomic data, which may be unobservable (output gap) or subject to revisions (GDP);  -  the nature and the persistence of shocks: e.g. oil and commodities shocks, the degree of pass-through to prices, etc. ;  -  the transmission of monetary policy to the real economy, since Milton Friedman showed that “monetary policy works with long and variable lags”;  -  the potential asset prices misalignments and wealth effects. But uncertainty may be more pronounced in the case of the euro area: -  the available time series are short;  -  the euro area has potentially experienced a regime shift à la Lucas;  -  the euro is a catalyst for structural changes. How to deal with uncertainty? The economic literature has proposed some monetary policy guidelines (II/1) and approaches (II/2) to address uncertainty. BIS Review 63/2006  1  1)  Monetary policy guidelines  a. Disregard uncertainty  •  If the uncertainty is related to data or shocks (the so called “additive” uncertainty), it may be optimal to take decisions as if there were no uncertainty at all.
Ownership MAS will require all the financial activities in each banking group to be grouped together, either under the bank or under a non-operating financial holding company (FHC). The non-financial activities must be segregated from the banking group and divested. They can be sold to third parties, or alternatively to the principal shareholders of the bank, so that the principal shareholders own them directly, and not through any of the entities in the financial arm of the group. MAS will regulate the bank or FHC, but it will not regulate the non-financial activities. Currently, all the local banks are listed, and so are many of the non-banks in the groups. The banks and non-banks already have separate sets of shareholders. In fact, the minority shareholders, i.e. the shareholders other than the principal shareholder, typically account for about 70% of the ownership of the bank. MAS will require this separation of ownership to be retained. The bank or FHC in the existing banking groups must continue to be listed on its own. For example,, it cannot be subsumed as a 100%-owned subsidiary of a listed top-level holding company, which owns both the bank as well as the nonfinancial entities. Having distinct groups of shareholders for the financial and non-financial activities will strengthen market discipline on the bank, and facilitate clearer accountability of its performance to minority shareholders. It will help to ensure that the separation of the financial and non-financial activities is substantive and not just pro-forma.

Money market risk premia rose sharply, from below 10 basis points to over 50 basis points, and even exceeding 100 basis points for some currencies. In this phase, we reacted flexibly to the volatile bank demand by providing generous amounts of liquidity at our repo auctions, and by increasing the frequency of finetuning operations. In October, there was a period of calm and risk premia retreated. In this phase, our patient – the market – was prescribed the usual remedies, although in higher doses and several times a day if necessary. The second wave arose out of concerns about refinancing shortages around the year-end, and reached its peak in December. To reduce uncertainty on the part of market participants, the Swiss National Bank increased its repo transactions at maturities of several weeks, or even several months, instead of the usual weekly maturity. These measures made it easier for banks to manage liquidity around the end of the year. During this second wave, European banks found it increasingly difficult to refinance in US dollars, and dollar rates were regularly higher in Europe than in the US. One reason for this was the structural dollar short position of the European banks and their concern that they would not have sufficient dollar liquidity at close of business as a result of poorly functioning money markets. For this reason, the Federal Reserve, ECB and SNB decided to take concerted action.
Vittorio Corbo: Monetary policy and international financial markets Presentation by Mr Vittorio Corbo, Governor of the Central Bank of Chile, in the Conference “Economic Projections – Chile: Economic Growth with Social Inclusion” organized by the Americas Society/Council of the Americas, Amcham Chile, and El Mercurio newspaper, Santiago, 28 August 2007. *  *  *  First and foremost, I want to thank the Council of the Americas, Amcham Chile, and El Mercurio newspaper for inviting me to participate in this event. I will begin my presentation by discussing the recent performance of the Chilean economy, to then address the developments of world financial markets over the last weeks and close with a review of the way the monetary policy framework operates in Chile and what can be expected from it at a time like this. Performance of the Chilean economy After unexpected slowdown of the third quarter of last year, the Chilean economy resumed strong expansion. Annual (year-on-year) GDP growth was 6.1% in the second quarter, outperforming the first quarter’s 5.8% and above projections in the latest Monetary Policy Report. This expansion has relied on good external conditions, a stronger fiscal impulse – associated to the more permanent portion of the copper price increase – and favorable financial conditions that partly reflect an stimulating monetary policy. Regarding domestic demand, it is worth highlighting investment’s renewed dynamism, with annual growth rate of 13.9% in the second quarter of this year, in contrast with the meager 2.6% of the second half of 2006.

Christine Lagarde: Hearing of the Committee on Economic and Monetary Affairs of the European Parliament Introductory statement by Ms Christine Lagarde, President of the European Central Bank, at the ECON committee of the European Parliament, Brussels, 2 December 2019. * * * Madam Chair, Honourable members of the Economic and Monetary Affairs Committee, Ladies and gentlemen, I am very happy to be back before this Committee for my first regular hearing as ECB President. I want to express my personal and sincere gratitude to this house for the support I received during the appointment process. And I look forward to a constructive and positive relationship between our two institutions going forward. The connection between the ECB and the European Parliament is especially valuable today as a means to reinforce trust in European institutions. In the euro area, support for the single currency has grown steadily in recent years, rising from a low of 62% in 2013 during the crisis to an all-time high of 76% today. Trust in the ECB has grown in that time as well – but its recovery after the crisis has been less dynamic.1 My predecessors at the ECB were alert to this and already acted to address the challenge. The ECB’s accountability practices have evolved2, as has its communication strategy.
The country’s improved economic fundamentals and the resilient financial system have enabled the gradual pace of liberalisation of the FEA rules since 2003. A fact that is often over looked is that, during the recent crisis, contrary to actions undertaken by many, Malaysia had further liberalized the FEA rules to promote greater efficiency in the conduct of international trade, promote a conducive business environment and to allow the use of domestic currency in the settlement of trade with the country’s major trading partners. This is a timely measure, given the country’s strong linkages with the global and regional economies in particular, the Asian economies. The various measures put in place by the authorities have enabled Malaysia to be ranked as the Top 10 most competitive nation in the World Economic Report by IMD, Switzerland. On ease of doing business, FEA’s ranking had also improved significantly from 13th (which is one of the most problematic) in 2005/2006 to 2nd place (easiest for doing business) in 2009/2010 reflecting partly the stakeholders’ positive assessment on FEA to support the conduct of business in Malaysia. The country’s easy and facilitative regulatory environment including FEA rules, had also contributed to Malaysia’s recent upgrading from a “Secondary Emerging Market” to a “Advanced Emerging Market” status in the FTSE’s Country Classification Index, hence the potential increase in non-residents’ investments in Malaysia following the increase in Malaysia’s weightage in the index from the current level of 2.41% by June 2011.

This is a commendable achievement but we still have a lot to do. As Malaysia moves forward with the economic transformation programme, the demands for the financial sector as enabler, catalyst and driver of growth will increase. The financial sector as a whole is expected to grow in size, from 4.6 times GDP now to 5–6 times GDP by 2020. The significance of financial markets, relative to funds raised through financial intermediaries such as banks, will continue to rise. In meeting the needs of the new high value added economy, our financial sector needs to be developed further and innovative in its approach in order to facilitate higher levels of domestic and international trade and investments. One such innovative approach is the development of a comprehensive and vibrant Islamic financial industry. It is our aspiration to transform Malaysia as the Islamic Financial Hub. Crucial to the transformation is intensifying of our efforts to further develop the foreign currency markets in Malaysia. In particular, we should seek to capitalise on our competitive advantage in Islamic financial markets and move beyond our previous focus of advisory and promoting primary market issuances and move up to build an end-to-end value chain capability – where we should also focus on secondary market trading, settlement and custody services. But this aspiration of ours could only be achieved if there is a collaborative effort between the industry and the authorities.
Ladies and gentlemen, We forecast Thailand to grow at around 4.8% next year, a rate that means steady recovery to normal levels of economic activity. As the economy returns to full capacity, inflation and financial risks may surface. To ensure sustainability, the process of growth must not create imbalances in the economy that will draw down future growth. This brings us to the two other aspects of stability: price and financial stability. The Bank of Thailand has had much success in anchoring inflation expectation through our Inflation Targeting framework, adopted since 2000. Many times during this period, well-anchored inflation expectation has allowed flexibility for the Bank of Thailand, when needed, to actively support growth and ensure financial stability. As you well know from the Subprime Crisis, an economy with growth stability and price stability can still fall into contraction due to financial causes. The Bank of Thailand has learned from our own experience with a financial crisis as well as others’ and has been vigilantly monitoring indicators of risk to financial stability in the economy, and has policies developed especially to ensure financial stability. Conducting policy through the use of interest rate alone may not be sufficient to take care of financial imbalance. In addition to monetary policy, which sometimes is too blunt to optimally take care of financial stability, we have adopted macroprudential tools since 2002 and employed them to help us cover and specifically target areas of the financial system.

Yves Mersch: Medium to long-term priorities of Capital Markets Union (CMU) for the ECB/Eurosystem Panel remarks by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the Eurofi conference, Luxembourg, 10 September 2015. *  *  *  While the Green Paper has set the right overall objectives of CMU and identified priorities for early action and the measures for the medium- to long-term, CMU needs to be pursued through a higher level of ambition to achieve greater capital markets development and deeper financial integration. 1. To bring about its expected benefits, the CMU should foster and result in a high level of financial integration in capital markets across the EU based on an adequate legal and regulatory framework. This would imply more steps towards greater harmonization of 1.  bankruptcy law,  2.  company law and  3.  taxation of financial products  that pose great political challenges. The aim is to ensure that investors have the same costs and equal access to finance irrespective of where they are located in the EU. Ultimately, the supervisory architecture will also warrant revision. The final destination in the path towards CMU will need to include the development of a single rulebook. These elements are key if we are to attain what has been ambitiously coined as CMU. 2. A schedule with clear milestones and deadlines in the upcoming action plan would facilitate implementation. 3. Market-led initiatives to promote capital markets are important but insufficient.
A study of Swedish data shows that such changes have raised productivity growth by 0.2 percentage points a year during the second half of the 1990s. 6  2  ITPS (2007). 3  Conway, Nicoletti, de Rosa and Steiner (2006). 4  See, for instance, Crépon, Duguet and Mairesse (1998). 5  Esser, Villalba and Tarantola (2007). 6  Forsling & Lindström (2004). BIS Review 12/2008  3  Organisation important for productivity growth IT is available all around the world at roughly the same price, but the differences are substantial with regard to how different countries and sectors use this technology to make their production more efficient (see Figure 5). The United States and Europe have experienced a similar productivity growth in the IT-producing sectors, but the Americans have had stronger growth in sectors with intensive use of IT. This includes, for instance, the wholesale and retail trade sectors and financial services. Studies indicate that one of the explanations for the United States’ relative productivity advantage over Europe is that the US companies have been quicker and better at adapting their organisations to the new technology. 7 One factor that might contribute to this difference is that the stricter regulations in the labour market in Europe mean that it takes longer time and costs more money to reorganise. Sweden is an exception in this context. We have seen a strong growth in productivity in the sectors using IT at the same time as we have a relatively regulated labour market.

Svante Öberg: Monetary policy and productivity Speech by Mr Svante Öberg, Deputy Governor of the Sveriges Riksbank, at a meeting arranged by Danske Bank, Stockholm, 29 January 2008. *  *  *  Productivity is an important part of the equation when analysing the economy. In the long run, productivity determines most of a country's GDP growth and welfare. In the short term it is an important factor for how inflation develops. It is therefore important for the Riksbank to assess how productivity will develop in future. To create a better picture of productivity and its driving forces the Bank regularly works on further developing and deepening our analysis. For instance, we arranged two conferences on the theme of productivity last year, where the most recent analysis and research in the field was discussed. I intend to take up some of the insights from the conferences in my speech today. Productivity has gone from surprisingly strong to surprisingly weak Over the past 10-15 years inflation has been lower and more stable than before. This is a pattern that can be seen around the world and probably has several explanations. One explanation is that monetary policy has gained greater credibility. Inflation expectations have thus stabilised at a low level, which in turn has contributed to keeping down inflation. Another explanation is that globalisation, that is, increased trade and economic integration, has subdued inflation.