samchain/econo-pairs-v1 huggingface dataset:
Caleb M Fundanga: Importance of entrepreneurship in Zambia’s economy Opening remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the PrizeGiving Ceremony for Intermarket Banking Corporation VentureComp 2010 Business Plan Competition, Lusaka, 28 July 2010. *           *  *  Mr Ackim Sinkala, Acting Managing Director – Intermarket Banking Corporation Zambia Limited and Intermarket Securities Limited; Mrs Beatrice Nkanza, General Manager Lusaka Stock Exchange; Dr. Maurice Jangulo, Board Chairman Zambezi Airlines; Dr. Patrick Nkanza, Director General TEVETA; Officials from the Ministry of Science, Technology and Vocational Training; Chief Executive Officers of Financial Institutions and Companies Present; Distinguished Invited Guests; Members of the Press; Ladies and Gentlemen. It is my honour and privilege to officiate at this Prize Giving Ceremony of the VentureComp 2010, K100 Million Business Plan Competition. I was honoured at the beginning of this year to have been given the opportunity to launch this Competition. I did not hesitate to accept the invitation to officiate at this event as the subject of entrepreneurship and the deserved recognition of the entrepreneurial efforts of young men and women is very close to my heart. Distinguished Guests, let me from the onset take this opportunity to commend the sponsors of this competition, Intermarket Banking Corporation Zambia Limited, Intermarket Securities Limited, and their partners, Lusaka Stock exchange (LuSE), Zambezi Airlines and TEVETA for coming up with this excellent and important initiative.

It is gratifying to note that applications were invited from all eligible students in various higher institutions of learning around the country. I have also been informed that although only four teams have been shortlisted, the response from the young entrepreneurs was overwhelming with about 75 total applications received. I am certain that the winning team will be worthy winners of the K100 Million Business Loan Sponsorship prize. Further, I have been reliably informed that the competition will become an annual event and prize money will be increased in future years, which indeed is commendable. I am certain that the award will provide a great incentive to our young men and women to be innovative and develop business ideas. The initiative will also improve the level of entrepreneurship in the country which is lacking at the moment. Mr Chairman I once again applaud you and your co-sponsors for this long term commitment to this award programme. Distinguished Ladies and Gentlemen, allow me at this moment to highlight the importance of entrepreneurship in our economy. Entrepreneurship involves developing innovative ideas, taking risk and managing the business in a sound manner. In these turbulent times and with an increasingly competitive global market, it is vital for a country like ours to have a good entrepreneurial base which should contribute to wealth creation and to the country’s economic development. The need for more Zambians to own successful businesses and compliment foreign investments in our country cannot be over-emphasised.
For instance, Norges Bank (2012) writes: “At the same time, interest rate setting should be robust and counter the buildup of financial imbalances in the economy.” The Reserve Bank of New Zealand (2012) has the following wording: “In addition, the PTA’s [Policy Targets Agreement] stronger focus on financial stability makes it clearer that it may be appropriate to use monetary policy to lean against the build-up of financial imbalances, if the Reserve Bank believes this could prevent a sharper economic cycle in the future.” The Bank of Canada (2012) makes it clear that these deliberations can imply that it takes longer for inflation to attain the target: “[A] tighter monetary policy that keeps inflation below target longer than usual could help to prevent excessive borrowing and a broader buildup of financial imbalances.”25 In countries where the housing market collapsed in connection with the financial crisis, and where housing prices have already fallen heavily, the deliberations have of course been somewhat different. There, the monetary policy discussion has mainly concerned ways to stimulate the economy and get out of the deep recession.

There could therefore be a point to following both these lines in the internal analyses. 13  Woodford (2012) illustrates this in a formal model analysis. 4  BIS central bankers’ speeches  imbalances – that leans against the wind – could be that it takes longer for inflation to attain the target than it would have if the central bank had not included financial imbalances in its deliberations. Although this policy can be justified in ensuring a good development in the longer-run perspective, in practice there are of course limits as to how much and for how long inflation can be allowed to deviate from the target. This has been a very important point in my own monetary policy deliberations and I will return to this at the end of my speech. The dividing line in the debate: how effective are the respective policy areas? Another important thing to note is that a monetary policy that leans against the wind is not intended to replace macroprudential policy measures. This could of course be necessary if there is no macroprudential policy in place or during a period when macroprudential policy is being organised. But once it is in place, macroprudential policy shall be the first line of defence against financial imbalances. This is definitely my opinion and as far as I can see it is shared by most of those participating in the debate, that is, even those who think that monetary policy should be able to lean against the wind.
All the major banks in Sweden are working actively on these issues, partly because they are expected to result in a smaller capital requirement. For the Riksbank, it is of course not a decreased capital requirement as such that is relevant so much as the fact that the new rules make better allowance for the actual risk in different credits. Finansinspektionen has a central role here in ensuring that financial companies honour not just the letter but the spirit of the Basel rules. This in turn should lead to a more adequate pricing of risk and thereby a more efficient financial system. BIS Review 53/2003  5  A problem that is being discussed in connection with recent methods for risk management and Basel II is the possibility of this development accentuating cyclical fluctuations in the economy. In that the basic idea behind Basel II is for the size of a bank’s capital to be dictated by the credit risk in its lending, it is possible that bank capital requirements and thereby the cost of credit will co-vary with the business cycle. The increased credit risk associated with an economic slowdown means that the banks need more capital. This, it is feared, might lead to a contraction of credit in downturns and an expansion in upward phases and thereby make cyclical fluctuations more pronounced. There are some grounds for this criticism. Experience of business cycles has taught us that the large credit risks tend to be taken as the business cycle approaches a peak.

Persson, Torsten (2001) “Currency Unions and Trade: How Large is the Treatment Effect?”, Economic Policy 33, 435-448. 23. Rose A.K. (2000): One Money, One Market? The Effect of Common Currencies on International Trade, „Economic Policy” No. 30, pp. 449-461. 24. Rose A.K., van Wincoop E. (2001): National Money as a Barrier to International Trade: the Real Case for Currency Union, „American Economic Review” Vol. 91, No. 2, s. 386-390. 25. Mundell R. (1961): A Theory of Optimum Currency Areas, „American Economic Review” Vol. 51, No. 4, s. 657-665. 26. Schadler, S., Drummond, P.F.N., Kuijs, L., Murgasova, Z., Elkan van, R. 2005. “Adopting the euro in Central Europe: Challenges of the Next Step in European Integration”, Occasional Paper No. 234, International Monetary Fund, Washington. 27. Wicksell, K. 1898. “Interest and Prices”, tłum. R.F.Kahn, MacMillan, New York, 1936. 28. Woodford, M. 2003. “Interest and Prices”, Princeton University Press, Princeton and Oxford. BIS Review 67/2007  5
The European Central Bank’s proposed ‘Single List’ will also include certain bank loans; indeed these are already eligible in some member countries. Similarly, the Fed has broadened the range of collateral accepted at the Discount Window. A working group commissioned by the Basel-based CPSS (Committee on Payment and Settlement Systems) in 2004 has examined whether existing arrangements would prove adequate in an emergency. It would appear that some of the infrastructure required to facilitate more extensive crossborder use of collateral is already in place: links between securities settlement systems, for example. Nevertheless, central banks may need to put in place more cooperative and coordinated policies, such as the establishment of a framework for information-sharing. When risks do crystallise it is imperative that central banks, along with regulators and ministries of finance, are well prepared so that they are able to respond in an effective manner. The CPSS working group looked at preparations that are needed in order to be able to make effective use of existing infrastructure in a crisis. But it is equally important that central banks and regulators be in a position to make the decisions necessary for resolution of a crisis, both individually and, when needed, collectively. This entails gathering data and intelligence on firms and markets, sharing it appropriately amongst all relevant public authorities, understanding the systemic conjuncture, and setting up national and international frameworks for coordination of decision making. I could give an entire speech about questions in these areas, and current and potential initiatives to address them1.

But one of the roles of, and indeed justifications for, regulation is to ensure that firms also take sufficient account of the interests of others who would be adversely affected by their failure: their own borrowers and depositors, for example, but also the customers of other banks that would suffer losses if a particular bank were to get into difficulties. In other words, one purpose of regulation is to align private choices with public welfare maximisation. Hitherto, public authorities have placed much emphasis on capital requirements as a way of achieving this reconciliation. Indeed, one reason for imposing capital requirements is to limit the risk of liquidity problems, by giving the market a level of assurance over the solvency of a firm. But this emphasis on capital has perhaps overshadowed the importance of direct liquidity requirements. Analytically, liquidity is a more difficult area. But arguably the case for prudential liquidity requirements in some form is just as strong as for capital. Liquidity cushions are a first line of defence: in times of stress they can buy time, and where organisations are solvent they can help to prevent liquidity problems turning into solvency ones. I will return to this later. But besides regulation, the public authorities—specifically central banks—have a crucial role as the ultimate providers of liquidity. They therefore need to ensure that they are properly equipped to carry out this function.
Companies may lift the shutters and start to take the types of risks and entrepreneurial activities necessary for our long-run prosperity.8 Such improvements in the supply performance of our economy would greatly enhance the durability of the recovery. Diminished uncertainty may also bolster the impact from the past easing in monetary policy. The MPC has loosened monetary policy aggressively since the financial crisis, both by cutting Bank Rate to historically low levels and by the use of more unconventional tools, such  6  The costs associated with bankruptcy means that, in times of high uncertainty, a firm may opt to adopt a strategy which is most robust to their view about the world being proved wrong, sometimes referred to as “robust satisficing” (See Ben Haim (2010) for an overview). 7  My colleague David Miles (2013) made a similar point in a recent speech. 8  Bloom et al (2001), Bond and Lombardi (2004) and Gilchrist et al (2010) all discuss the constraining impact uncertainty can have on business investment. Reduced uncertainty may also make companies more willing to enter new markets. Disney, Haskel and Heden (2003) provide evidence that such activities are an important source of productivity growth. Lazear and Spletzer (2011) show that reduced uncertainty can prompt greater “churn” in the labour market leading to more efficient matching of skills to jobs. 4  BIS central bankers’ speeches  as Quantitative Easing and the Funding for Lending scheme.

Petar Goshev: Promotion of the European Fund for Southeast Europe – EFSE in the Republic of Macedonia Welcoming speech by Mr Petar Goshev, Governor of the National Bank of the Republic of Macedonia, at the first official presentation of the European Fund for Southeast Europe in the Republic of Macedonia, Skopje, 1 March 2007. *  *  *  Distinguished ladies and gentlemen! Allow me to express my pleasure, more precisely the pleasure of all employees of the National Bank of the Republic of Macedonia for being hosts of the first official presentation of the European Fund for Southeast Europe in the Republic of Macedonia. Therefore, I greet the representatives of the European Fund for Southeast Europe, wishing them a warm welcome to our country, where, I sincerely assure them, they could fully, equally, safely and more ambitiously offer their financial services to the market of the highly open Macedonian economy, also encouraged, of course, from their previous positive experience they acquired through their cooperation with the Export and Credit Bank, AD Skopje. I would also like to especially welcome all of you that responded to the invitation by attending this presentation, thus de facto showing respect and interest in yet another new financial initiative in the Republic of Macedonia. Certainly, there is a deep reason for such respect and interests.
Today, I will first discuss the monetary policy measures that the ECB has taken to fulfil its mandate and what impact these have had on the real economy. I will then explain how steps to complete banking union and a capital markets union would not only support a strengthened EMU (along with fiscal and economic union, as well as democratic accountability) but also contribute to enhancing financial stability. As European developments need to be put into a wider perspective, I will also say a few words on ongoing discussions in international fora regarding global developments and international financial regulation. Monetary policy and its impact on the real economy 2015 was characterised by a modest economic recovery. However, inflation dynamics were weak and continued to deteriorate throughout the course of the year. Thus, after adopting our credit easing measures in the middle of 2014, we took further decisive action in 2015 to pursue our price stability mandate. Let me remind you that, in January last year, inflation in the euro area had moved into negative territory, the outlook on inflation had worsened significantly and market-based inflation expectations stood at historic lows. In this situation, we judged that our monetary policy measures had to be stepped up in view of our price stability mandate. Therefore, as of March 2015 we expanded our asset purchase programme (limited until then to covered bonds) to public sector securities.

In the past few months, a discussion has started about the need for a new risk reduction agenda. But, before discussing such further steps, it is worth recalling that we have already made significant progress – since the beginning of the crisis – in “de-risking” Europe’s financial system. We enhanced and implemented the single rulebook; defined a common resolution framework for banks to protect European taxpayers; established the Single Supervisory Mechanism and Single Resolution Mechanism, and conducted a Comprehensive Assessment of banks to deal with legacy issues before the start of Banking Union. The results are tangible. The Common Equity Tier 1 ratio has risen, on average, from around 9% to 13% since 2012 for significant institutions. Most European banks have managed to meet the fully-loaded capital requirements by now. While a lot has been achieved, there is no room for complacency: too many of our banks are still troubled by the ghosts of the past, legacy assets and NPLs. The ECB as supervisor is actively looking into this and has identified the issue as a priority. So, what is left to be done to mitigate the remaining risks and make the financial system more resilient? It is important to further improve and fine-tune what we have started. First, there is still room for improvement when it comes to establishing a truly level playing field, for example by creating a truly single rulebook.
An additional element threatening the stability of the global financial system was that virtually all of the leveraged Treasury bond investors had similar positions, including major financial institutions. Banks’ direct exposures may be an important aspect of financial instability in periods of financial market volatility. In addition, banks may hold significant exposures with non-bank financial institutions, which themselves suffer from direct market exposures. The Barings crisis in 1995 is an example of the first case, while the LTCM case is an example of the second. In my view, the eventual scale of a systemic crisis might depend on the magnitude of the deviation of asset prices from fundamentals. How, then, do asset price bubbles get created in the first place? They may be created or exacerbated by some form of herding and overly buoyant investor expectations, as groups of investors imitate leading institutions’ strategies. Bubbles may be further boosted by a lack of adequate disclosure, problems of conflicts of interest, and destabilising trading or investment strategies. Once bubbles burst, portfolio insurance strategies in the event of falling prices - or dynamic hedging might heighten the downward spiral. Particularly in earlier episodes of equity-driven financial instability, such as the 1987 stock exchange crash, the initial wave of the sale of equity futures appears to have resulted in an accelerated decline in stock prices. However, the jury is still out on the role of tools such as portfolio insurance or automatic trading rules in exacerbating aggregate financial risk.

When thinking about the major challenges for maintaining financial stability I find it useful to first look at the notion of how the “real world” deviates from the “frictionless” ideal world of academic textbooks. In order to organise my reasoning, this can serve as a useful starting point, since in the ideal world there is no such thing as financial instability. Indeed, most of the concerns over financial stability actually stem from the fact that our “real world” financial markets have frictions or - in other words market imperfections. A fundamental friction is that financial market participants very often have imperfect information. When information is not perfect - or when markets are not fully transparent - investors’ decisions may be constantly subject to reassessment, which can lead to inevitable volatility in market prices. This does not necessarily mean that there is an inherent threat to financial stability. On the contrary, the very existence of some level of volatility indicates that markets are serving the function they are supposed to deliver - that they are an efficient exchange mechanism among economic agents. Nevertheless, some recent episodes of extreme volatility have drawn our attention to more accurately delineating the boundary between “normal” and what could be called “harmful” volatility. The second source of friction is that we also fall short of the ideal of having complete markets.
Distinguished Ladies and Gentlemen, let me end by acknowledging all the institutions and individuals that have joined in the commemoration of this year’s World Savings Day. In particular, I wish to thank the Pensions and Insurance Authority; Securities and Exchange Commission; Bankers Association of Zambia; the Ministry of Finance; Rural Finance Expansion Programme; the German Savings Banks Foundation for International Cooperation; Financial Sector Deepening Zambia; NGOs and all the public as well as private sector organisations that have continued to support the stepped up national financial literacy campaigns since 2012. I THANK YOU AND GOD BLESS US ALL! 3

The other is to fix structural shortcomings in the euro area architecture that had allowed imbalances to build up in the first place. BIS central bankers’ speeches  1  On both counts, the euro area has made considerable progress. Despite strong recessionary headwinds, euro area governments have markedly improved their fiscal positions. Average government deficit ratios fell by more than a quarter over the last two years and, excluding interest payments, were approaching balance at the end of 2013. Simultaneously, most of the stressed euro area countries have made remarkable progress in gaining competitiveness. Over the past five years, the cumulative unit labour cost differential vis-à-vis the euro area have fallen by more than 20 percentage points in Ireland, around 15 percentage points in Greece and Spain, and almost 10 percentage points in Portugal. This was accompanied by substantial improvements in the export dynamics of these countries. Overall, we see the euro area’s economic recovery gradually taking hold, albeit at a slow and uneven pace. In parallel, the architecture of Economic and Monetary Union (EMU) has been strengthened in ways that many would have considered inconceivable two years ago. Perhaps most important for monetary policy, and certainly most topical for this conference, are the concrete and ambitious steps towards a banking union. By establishing the Single Supervisory Mechanism (SSM), European policy-makers have demonstrated a firm commitment to a stringent and uniform application of common supervisory standards.