samchain/econo-pairs-v1 huggingface dataset:
These criteria – combined with an important role for the central bank, which I have argued in favour of today – are also largely reflected in a recommendation from the European Systemic Risk Board (ESRB). The European macroprudential supervisory body ESRB was created in response to the financial crisis and began operating in 2011.12 The purpose is to contribute to preventing or reducing systemic risks in the EU. The primary instrument for doing this is the ability to issue warnings or recommendations if significant risks are identified. The ESRB  11  See, for instance, the Executive Board’s consultation response to the report Evaluation of the Riksbank’s monetary policy and work on financial stability 2005–2010 (2010/11:RFR5), published on 30 November 2011. In addition to the four criteria, it is also emphasises there that the Riksbank should play a central role in macroprudential policy, which I have argued in favour of today. 12  It is headed by ECB Chairman Mario Draghi and consists mainly of the central banks and financial supervisory authorities within the EU, with the first-mentioned having the right to vote. 6  BIS central bankers’ speeches  does not have any binding instruments of its own at its disposal; instead it assumes that the EU member states themselves will establish systems for this. Thus, an important part of the discussion on how macroprudential policy should be organised is the ESRB’s recommendation to the EU member states’ governments in this field, which was published in January 2012.

To the extent that the real exchange rate also weakens, it contributes to an increase in net exports, as the relationship between export and import prices changes.3 Two of the three channels for monetary policy thus have an impact by affecting demand and supply with regard to credit in the economy. One sometimes also talks about a fourth channel; the risk-taking channel, which means that a lower interest rate contributes to the banks increasing their risk-taking when lending.4 All in all, it is clear that monetary policy has an effect on household debt and asset prices, although it can be difficult to determine exactly how large and how lasting this effect is. We have limited experience of low interest rates over longer periods of time. There is a clear risk that the current low interest rates will encourage greater indebtedness than is reasonable in a long-run perspective. But, at the same time, the interest rate is a blunt instrument to manage the risks linked to household debt and house prices. One reason for this is that an adjustment in the interest rate also affects the economy through the exchange rate channel, which has further effects on inflation and the real economy. But the impact of the interest rate can also be too broad in other ways, such as when one wishes to slow down household borrowing but not corporate investment.
Page 4/8  Zurich, 22 June 2023 Thomas Jordan, Martin Schlegel and Andréa M. Maechler  News conference  Globally active banks – observations on the crisis at Credit Suisse  As far as the globally active Swiss banks are concerned, this year’s Financial Stability Report focuses on the crisis at Credit Suisse and its acquisition by UBS. The SNB supported this acquisition, in particular, through the provision of ample liquidity assistance. In addition to its existing liquidity facilities, the SNB deployed two new instruments based on emergency law: ELA+ and the public liquidity backstop (PLB). Comprehensive lessons need to be drawn from the crisis at Credit Suisse. The goal must be to continue to strengthen banks’ resilience in order to prevent, wherever possible, a loss of confidence such as that seen in the case of Credit Suisse. If a crisis does still occur, a broad range of effective options must be available. From the SNB’s perspective, three observations are especially important here. First, compliance with capital requirements does not provide absolute protection against a loss of confidence. Credit Suisse was always fully compliant with all regulatory capital requirements, even at the peak of the crisis. Clients, market participants and rating agencies, however, were increasingly casting doubt on the bank’s fundamental resilience. They also questioned its ability to successfully implement the announced strategic transformation plan. Ultimately, Credit Suisse lost the confidence of the markets. Second, its AT1 capital instruments were written down when state support became unavoidable.

Monetary policy cannot fine-tune economic developments, but it can prevent the largest effects from occurring when the economy is exposed to disturbances. In some situations, it may be appropriate to hedge against particularly unfavourable developments. Norges Bank will continuously assess the effects of changes in interest rates and other new information concerning economic developments. Thank you for your attention. 6  BIS Review 80/2006  BIS Review 80/2006  7  8  BIS Review 80/2006  BIS Review 80/2006  9  10  BIS Review 80/2006  BIS Review 80/2006  11  12  BIS Review 80/2006  BIS Review 80/2006  13
Constantly upgrading human and physical capital and freeing markets are as important as keeping unit labour costs under control. Portugal’s apparent inability to compete as successfully as Ireland is indeed largely attributable to relatively rigid product and market regulation; insufficiently market-friendly policies; relatively low levels of educational attainment, of R&D expenditure and of information technology use; and not enough wage and price flexibility. These contrasting outcomes clearly demonstrate that joining the euro area does not on its own provide a guarantee of sustainable growth and that the full benefits of monetary union can only be enjoyed if a country adopts appropriate economic structures and policies. Bridging the income gap with the euro area In a Maltese context the pursuit of excellence implicit in the Irish model requires in the first place a change in mindsets and behaviour that would allow us to arrive first at a common diagnosis of the obstacles to faster growth, and then at an equally consensual identification  1  L. Bini-Smaghi, Real and nominal convergence: policy challenges, speech delivered at the Conference on European Economic Integration 2007 – Currency and Competitiveness, Oesterreichische Nationalbank, Vienna, 20 November 2007. BIS Review 143/2007  3  of the means to overcome them. The ability to achieve a social compact was incidentally another no less vital ingredient of the Irish success story.

Failure to understand under which conditions an economy works best in today’s world to make possible concrete improvements in welfare can be very costly. There is, therefore, a need to foster a greater public awareness of developments in our external environment and of the appropriate policy responses. There is also a need for a wider acceptance of some basic truths, for example that it is an illusion to believe that something can be had for nothing, or that governments can fix any problem or grievance. On the contrary, policy makers and opinion shapers alike have a responsibility to explain that the expectation of ever increasing entitlements and higher living standards must be balanced with the recognition that these expectations cannot be satisfied sustainably through the redistribution of national income. In the long run, the expected improvements can only be financed through productivity gains and economic growth. And since nobody owes Malta a living, the responsibility for shaking off our ambivalent attitude to change and for turning globalization from a threat into an opportunity is ours and ours alone. 4  BIS Review 143/2007
If we believe the above theories, and assume that regulations impose ultimately a cost on the consumer or taxpayer, it may be in the public interest to remove regulations and allow greater competition. This is the primary driving force behind current market deregulation policies prevalent in OECD markets. A recent example of the deregulation drive to “make markets work better” is the report of the Australian Financial System Inquiry (Wallis Report), whose recommendations seek to:create a flexible regulatory structure which will be more responsive to the forces for change operating on the financial system; clarify regulatory goals; increase the accountability of the agencies charged with meeting those goals; ensure that the regulation of similar financial products be more consistent and promote competition by improving comparability; introduce greater competitive neutrality across the financial system; establish more contestable, efficient and fair financial markets, resulting in reduced costs to consumers; provide more effective regulation for financial conglomerates which will also facilitate competition and efficiency; and facilitate the international competitiveness of the Australian financial system. On the other hand, a market without regulation also does not work. Free banking and frontier capitalism results in control by the Mafia, with huge losses inflicted on the innocent and unwary. The public interest theory argues that regulation is an attempt to correct for market failures, such as monopoly, externalities and lack of information. For example, the social cost of the failure of a financial institution may be much higher than the private cost to the institution itself.

from 4.5% to 3.6% of GDP, with the deficit being predominantly financed by foreign borrowing, would slow down government demand for domestic borrowing. The growth in government demand for credit could decrease from this year’s 32.7% to about 6%. However, even with this relatively low growth rate, there will be little room for the rechannelling of banks’ domestic credit potential towards the private sector. The situation can be further aggravated by shipbuilding, which is not included in these estimates, but can nevertheless affect the budget and its borrowing in 2010. BIS Review 2/2010  1  (X) Under such circumstances, monetary policy will have to balance between reducing the current account deficit and providing for the aggregate domestic credit growth accompanied by exchange rate (foreign exchange reserves) stability. Consequently, we expect to continue implementing the existing instruments (foreign exchange interventions and open market operations), for now, without changing the reserve requirements (because of the favourable liquidity situation in the banking sector), or relaxing the prudential measures, as well as without raising regulation costs. We anticipate that total liquid assets, money supply and bank placements will increase by about 7%, 4.5% and 4.4% respectively.
  On the demand side, the investor base has been and remains severely eroded and many earlier active investors, such as SIVs and money market funds, are not expected to return to the market anytime soon. Europe in particular suffers from a lack of a significant real-money investor base that could step in.   On the supply side, concomitantly, the profit generating potential of securitisation remains insufficient, since spreads for various ABS still exceed the break-even levels from the issuer’s perspective. At the current levels of spreads, securitisation does not make economic sense for originators in most cases. At the same time, it would appear that current yields, with some exceptions, are not attractive to compensate for the perceived risks in the view of many investors. Therefore, although there are some signs of improvement, the current situation in structured finance continues to impose market funding constraints on banks and to hamper banks in  1  See “The Euro Area Bank Lending Survey”, April 2010, ECB. BIS Review 84/2010  3  providing credit to the economy. In this sense, securitisation is still certainly unable to fulfil the objectives that I highlighted at the beginning of my speech. Going forward, the key question is therefore: how do we bring back investors to the securitisation markets? This is tantamount to asking: how can investor confidence in securitisation be restored?

Dear guests, At the end of my speech I would like to emphasise that, although the challenges ahead are serious, their successfully countering is within our possibilities, if we all will know to rise to these challenges. I invite you to have an open and fruitful discussion, aiming at identifying a common work agenda for the continuing period. Thank You! 4/4  BIS central bankers' speeches
On the other hand, I believe that it is worthwhile for a central bank to act with some caution in areas where it does not have any previous experience to draw on. This is why I feel that it was justified to reduce the repo rate in small stages when we were already at a record-low level in the initial position. BIS Review 111/2009  3  Measures when the interest rate is close to zero What then should a central bank do when the policy rate can not be lowered to the level justified by the state of the real economy? Many central banks have struggled with this question during this crisis. One possibility is to allow the policy rate to remain at the lowest possible level for a longer period than would otherwise have been required. The effects of such a decision can also be reinforced in several ways. The central bank can, for example, lend money to the banks at a fixed interest rate at a maturity that corresponds to the period during which the policy rate is expected to remain at this low level. This can increase the credibility of the forecast that the rate will remain unchanged in the year ahead. It should also push down some interest rates at longer maturities. We decided to implement both of these measures. Since the monetary policy meeting in February, our forecast has comprised a low repo rate during a relatively long period of time.

Nevertheless, although the positive signs of a recovery that we could already see in July have strengthened, there is still uncertainty about future developments. In the USA, which is suffering its most prolonged recession since the 1940s, there are signs of a light at the end of the tunnel. The housing market has improved and the statistics indicate that the fall in house prices has come to a halt (see Figure 4). After four quarters of falling GDP, growth in the third quarter is now expected to be positive (see Figure 5). The labour market is continuing to weaken, however, and unemployment has reached almost 10 per cent, which is an unusually high figure for the USA. Development in the euro area has been somewhat better than our assessment in early July. It appears that the fall in GDP has come to a halt. Several of the major economies have even reported positive GDP growth. However, the situation on the labour market has deteriorated further. Unemployment is almost at the same level as in the USA. The fall in Sweden's GDP is slowing down Development in a small open economy like Sweden is highly dependent on the development of economic activity abroad and Sweden has also been hit hard by the severe international downturn. GDP has fallen for five quarters in a row. However, since the beginning of the second quarter of this year this fall has slowed down and GDP even increased somewhat between the first and second quarters (see Figure 6).
Zeti Akhtar Aziz: Islamic finance – financial stability, economic growth and development Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Islamic Development Bank (IDB) Prize Lecture on “Islamic finance – financial stability, economic growth and development”, Jeddah, 27 November 2013. *  *  *  It is my honour to be invited to deliver this lecture on Islamic Finance: Financial Stability, Economic Growth and Development, here in Jeddah. I wish to thank the Islamic Development Bank for the invitation. The Islamic Development Bank has been pioneering and instrumental in the development of Islamic finance and has been an inspiration in driving its progress and evolution. It is indeed a privilege for me to be part of this journey, and to have witnessed the increasing dynamism of the Islamic financial industry amidst a highly challenging economic and financial international environment. Global financial and economic adjustments My remarks today will focus on the relevance of Islamic finance in modern market economies, taking into account the knowledge that we have today about the vulnerabilities of finance, its causes and its wider economic ramifications. Five years on after the global financial crisis erupted, the most pressing challenge confronting the world economy continues to be securing financial stability and generating growth and employment. While regulatory reforms both at the global and national levels have been extensive to strengthen financial systems, there has been less progress on the recovery in growth.

The current process of deleveraging in the private sector remains incomplete, while pressures on fiscal sustainability in these economies also continue to weigh on confidence and growth. Significant challenges continue to be faced in the implementation of the structural adjustments which in turn is affecting the process of fiscal consolidation. This has further restrained the policy flexibility to support growth. The extraordinary and exceptional monetary measures taken by central banks in these economies have provided support to their economies, but they have also come at a cost to savers with growing risks of market distortions and financial imbalances the longer these measures are held in place. BIS central bankers’ speeches  1  In efforts to build stronger defences against a repeat of the events that precipitated the 2008 global financial crisis, the global regulatory reform agenda has placed significant focus on addressing elements of the regulatory and supervisory systems that allowed the build-up of excessive leverage. These elements include the unfettered innovation by financial institutions and the prevailing incentive system. Financial engineering had led bankers and investors to lose focus on their risk exposures when they failed to understand the increasingly complex products that purported to reduce the risks. The weak regulatory regime and supervision also failed to rein in such unbridled innovation. Misaligned incentives then fuelled excessive risk taking both at the institutional and individual levels.
Following the monetary policy meeting on 21 September, the Executive Board stated that developments in output, demand and underlying inflation had been consistent with the projections in the June Inflation Report. The Executive Board also stated that its monetary policy strategy and assessments indicate that the interest rate should be gradually increased in the period ahead. One option was to increase the interest rate at this meeting, but the Executive Board found it appropriate to leave the interest rate unchanged. Household credit growth Monetary policy easing through 2003 and into 2004 has resulted in low real interest rates. Short-term real interest rates may now be considerably lower than the level that implies long-term balance in the economy – the neutral real interest rate. A low real interest rate, and expectations of a continued low real interest rate, will contribute to stimulating activity even after the effects of the interest rate fall unwind. Although the projections are based on rising real interest rates, the real interest rate will be lower than the neutral rate during the entire period. The monetary policy stance is therefore expansionary. So far, the effects do not appear to be stronger than expected, but we have little experience of such low interest rates. How quickly prices and wages will react when growth in output and employment picks up is uncertain. There is also a risk that an interest rate that is kept low for a longer period may lead to expectations of a persistently low interest rate.

So far, there is no indication that the US has problems in financing its deficit. If creditors begin to fear a fall in prices and withdraw from the market, substantial corrections may nevertheless be triggered. This may lead to higher interest rates and perhaps also a fall in US equity markets that spills over to other countries’ financial markets. In that case, the dollar will also depreciate. The household debt burden in the US may be another source of instability if households abruptly reduce both housing demand and consumption. Strong demand in the US has sustained growth in the world economy. We assume that growth will slow somewhat in the US in the period ahead. A more pronounced downturn cannot be ruled out, however. An abrupt and pronounced downturn might fairly rapidly lead to declining growth in the entire OECD area. The US is not the only source of trade imbalances. They also reflect very low growth in continental Europe and largely export-based growth in Asian countries. Therefore, countries other than the US must also contribute in order to prevent a decline in world economic growth. With limited domestic growth capacity and high unemployment, many industrial countries are poorly equipped to cope with a weaker dollar and lower demand from the US. The challenges are perhaps particularly demanding in  3/7  some large European countries, whereas it appears that the Japanese economy is becoming more self-driven.