samchain/econo-pairs-v1 huggingface dataset:
BIS central bankers’ speeches  5  Figure 1  World output (*) (index, second quarter 2007=100)  Unemployment rate (*) (percent)  120  120 10  10  110  110  8  8  6  6  4  4  2  2  100  100  90  90  07  08  09  10  08  Jul. 09  Jul. 10  Jul. Emerging economies  Developed economies  (1) Regions weighted at PPP. Developed economies include: Australia, Canada, the Eurozone, Japan, Sweden, Switzerland, the U.K. and the U.S. Emerging economies includes: Argentina, Brazil, Chile, China, Colombia, Hong Kong, India Indonesia, Israel, Malaysia, Mexico, the Philippines, Saudi Arabia, South Korea, Russia, Singapore, Taiwan, Thailand and Venezuela. (2) Regions weighted at PPP. Developed economies include: Canada, the Eurozone, Japan, the U.K. and the U.S. Emerging economies include: Brazil, Mexico, South Korea, Thailand and Taiwan. Sources: Central Bank of Chile based on Bloomberg, OECD and each country's statistics offices, and U.S. Federal Reserve.

I have a very simple mantra. Incentives drive behavior. Behavior sets social norms. And those social norms define culture. So if you have the wrong incentives, you’re probably going to have bad culture. If you have the right incentives, you’re probably going to have a much better culture. One thing that Preet Bharara said when he came to a conference we had at the New York Fed, he said one of the big challenges that he sees is that people don’t speak up early enough when they see something wrong going on. He said that if people spoke up early, a lot of these big 7 / 13  BIS central bankers' speeches  things would never have been big things. They would have been little things. And so, the important thing also is to really educate people that it’s okay if you see something that bothers you, that you’re not comfortable with, raise your hand. You’re not doing anybody a favor by keeping silent, hoping it will go away. You’re not doing anybody a favor by thinking, well, if I raise my hand, I’m sort of tattling on my colleagues. That is not the right way to think about it. Bad behavior is not good for you, it’s not good for the institution. And so, if you do see bad behavior, or something that you’re not really sure whether it’s bad behavior or not, raise your hand and raise it to your manager, and have a conversation about it.
“The Fault Lines in Cross-Border Banking: Lessons from the Icelandic Case”. SUERF Studies 05/2010, European Money and Finance Forum (2010). Baldursson and Portes give a recent assessment of the rise and fall of the Icelandic banks: Friðrik M Baldursson and Richard Portes (2013), “Gambling for resurrection in Iceland: the rise and fall of the banks”, CEPR Discussion Paper 9664, September. 5  Fleming and Klagge describe the Federal Reserve’s foreign exchange swap lines: Michael J. Fleming, and Nicholas J. Klagges. “The Federal Reserve’s Foreign Exchange Swap Lines. Federal Reserve Bank of New York: Current Issues in Economics and Finance”, 16, 4 (2010). Allen and Moessner analyse the important role of the US Dollar surplus in the policy response to the crisis and compare it to the policy response during the Great Depression: William A Allen and Richard Moessner (2010), “Options for meeting the demand for international liquidity during financial crises”, BIS Quarterly Review, September 2010, http://www.bis.org/. 2  BIS central bankers’ speeches  of the safety net and the associated moral hazard-mitigating mechanism in cross-border banking applied across the board to regulation, supervision, LOLR, deposit insurance, and crisis management and resolution. The adjustment that needs to take place after the crisis in order to make cross-border banking safer is clear in principle: the market action and the public framework in the form of the safety net and other arrangements has to be better aligned.

In essence, the adopted solution saved the domestic operations of the banking system by creating new banks, which was done by carving a big part of the domestic assets and liabilities out of the old, failing banks. The new banking system amounted to 1.7 times GDP. The rest – and much bigger part – went into a resolution process, where it largely remains, pending a solution that would make it possible for Iceland to lift its comprehensive controls on capital outflows, but that is another story. In order to reverse the ongoing run on domestic deposits, a declaration was made that all deposits in Iceland were safe and all deposits in Icelandic-headquartered banks were given priority over other unsecured claims. This distinction made between domestic deposits and foreign currency deposits in the banks’ foreign branches added fuel to the fire of the socalled Icesave dispute about the settlement of deposit guarantees in the Dutch and British branches of one of the banks. But guaranteeing those deposits would never have been credible and might have bankrupted the Government had it been attempted. The deposits in question were in foreign currencies and amounted to 11½ billion euros – far in excess of Iceland’s FX reserves, which amounted to 2½ billion euros. And the sovereign was completely closed off from foreign capital markets at that point.
The financial system is safer, simpler, and fairer. The financial system is safer A central achievement has been the transformation of banking. A decade ago, banks were woefully undercapitalised (some were levered over 50 times), with complex business models that relied on the goodwill of markets and, ultimately, taxpayers. Large global banks are now considerably stronger. They can stand on their own. With capital requirements for the largest that are ten times higher, banks have raised more than $ trillion of capital. And they are disciplined by a new leverage ratio that guards against risks that seem low but prove not. 3  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  3  Banks are also more robust because they have changed their funding models, not least due to new global liquidity standards. The financial system is simpler The system is simpler in part because, a decade on, banks are less complex and more focused. They lend more to households and businesses, and less to each other. Business strategies that relied on high leverage, risky trading activities and wholesale funding are disappearing, as intended. Trading assets have been cut in half, and interbank lending is down by twothirds. In parallel, the system is simpler because a series of measures are eliminating the fragile forms of shadow banking while reinforcing the best of resilient market-based finance. A decade ago, off-balance-sheet vehicles masked enormous leverage. Monoline insurers supported unsustainable debts, and banks became overly reliant on fragile short-term funding from money markets.

By the 2018 G20 Summit in Argentina, the FSB will report whether any additional financial resources are required to resolve safely CCPs. The financial system is fairer The system is fairer because of reforms that are ending the era of “too big to fail” banks and addressing the root causes of a torrent of misconduct. A decade ago, large complex banks operated in a “heads I win tails you lose” bubble. They privatised profits in the run-up to the crisis before socialising the losses when the music stopped. The loss of confidence in private finance that crystallised in the autumn of 2008 could only be arrested by public support over the following year that totalled $ trillion in bail-outs, government guarantees of bank liabilities and special central bank liquidity schemes. 9  To bring back the discipline of the market and end reliance on public funds, FSB members have agreed standards to ensure that major banks can fail safely in future. 7  Such collective investment vehicles with run risk now account for almost two-thirds of identified shadow banking up from about 40% prior to the crisis. 8 Work on liquidity mismatches in open-ended funds is scheduled to be completed by end-2017 and development of consistent leverage measures by the end-2018. The FSB has now completed its work under the Shadow Banking Roadmap. It has not identified new shadow banking risks that require additional regulatory action at global level.
Mario Draghi: ECB press conference – introductory statement Introductory statement by Mr Mario Draghi, President of the European Central Bank, and Mr Vítor Constâncio, Vice-President of the European Central Bank, Frankfurt am Main, 2 August 2012. *  *  *  Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting of the Governing Council, which was also attended by the Commission Vice-President, Mr Rehn. Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged, following the decrease of 25 basis points in July. As we said a month ago, inflation should decline further in the course of 2012 and be below 2% again in 2013. Consistent with this picture, the underlying pace of monetary expansion remains subdued. Inflation expectations for the euro area economy continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term. At the same time, economic growth in the euro area remains weak, with the ongoing tensions in financial markets and heightened uncertainty weighing on confidence and sentiment. A further intensification of financial market tensions has the potential to affect the balance of risks for both growth and inflation on the downside. The Governing Council extensively discussed the policy options to address the severe malfunctioning in the price formation process in the bond markets of euro area countries.

Likewise, if banks incorporate the risks arising from the ecological transition into their analysis, they will become an engine for change: they will help financing reach those activities which, in addition to being economically profitable, contribute to the sustainable transformation of the economy. In turn, as a central bank we are also in the process of incorporating the environmental factor into the internal ratings used to evaluate the eligibility of banks’ collateral, and into the criteria used for taking own-portfolio investment decisions. Conclusions That brings me to the end of my address. The crisis has been severe and has had consequences at all levels. We have overcome its acute phase, but its legacy remains present. In response, regulation and supervision have changed radically, taking on board lessons we must never forget and equipping supervision with a set of tools necessary for preventing future crises. Society has also changed. Specific values, such as growing awareness about climate and inclusion, have become more important. The demands made of financial institutions, supervisors and the public authorities have increased, along with society’s financial knowledge. However, we must continue to boost education, as a tool for fomenting stability and balanced economic development in society. We must all take note of these changes and rise to the demands being made of us. What we do today will determine the type of future we will have. As Woody Allen said, the future is where we will be spending the rest of our lives, so we should all take an interest in it.
But to restrain household indebtedness, we would actually need an “extra policy rate”, aimed at households and able to be set at a higher level than the usual policy rate. However, as the Riksbank can only steer the general level of interest rates and a part of the transmission is that households borrow more when interest rates are low, we now have to turn to other policy areas to manage household indebtedness. 5  For a more in-depth description of the development of housing prices in Sweden, see, for example, Financial Stability Report 2015:1, pp. 11–12. BIS central bankers’ speeches  5  ... but assumes measures will be taken on the housing market for success in the longer term One condition for our monetary policy trade-offs to be successful is for measures against indebtedness to be taken elsewhere. If this does not happen, we may encounter major problems later on, both for the economy in general and for monetary policy. Let us assume that no measures are taken. The housing rally could then potentially continue. In the worst case, international confidence in the Swedish housing market would start to collapse. As covered bonds are largely held by foreign investors, we would risk having these investors remove a large part of the banks’ funding, which could have effects not only on financial stability but also on inflation. In that case we could describe a very bad scenario: The banks would encounter funding problems, which in turn would lead to higher lending rates and lower demand.

On the fiscal front, cuts in wage and corporate income taxes differentiated across regions have been put in place last week to support the economy that is already growing at a moderate pace. 1  On March 15, 2009 Special Consumption Tax (SCT) rates were decreased on vehicles to %18 from %37, and on durable goods and other electrical household appliances to %0 from %6.7. These rates were increased on vehicles to %28, on durable goods to %2 and on other electrical household appliances to %6.7 on 16 June, 2009. By October 1, 2009, SCT rates were brought back to the levels before March 2009. Similarly, Value Added Tax (VAT) rates on furniture and IT products were slashed to %8 on March 30, 2009, before being raised back to the initial rate of %18 on October 1, 2009. BIS central bankers’ speeches  3  Dear Participants, So far I have touched on the impacts of movements in commodity prices on inflation and economic growth. Now I will talk about the impact of fluctuations in commodity prices on foreign trade balances. The dependency of the Turkish economy on energy imports makes the current accounts balance more sensitive to changes in commodity prices. Uncertainties regarding the global economy in recent years and the exceptionally loose monetary policies adopted by advanced economies, such as the United States, Japan and the Euro Area, foreshadow the high probability of continued excess volatility in commodity prices.
Perhaps this will become the new paradigm approach to monetary and financial stability in Asia, but elsewhere I have chosen to call this a “band aid” approach. Coming from Hong Kong, the freest economy in the world, where by law we are not allowed to impose any foreign exchange control policies and our currency must be freely convertible, I am reluctant to accept ad hoc limitations to financial openness. But I can quite understand the plight of other emerging markets in Asia. When the undesirable elements of international finance assume a predatory character and look us fiercely in the eye there is simply a need for self-defence, and temporary or discreet changes in the rules of the game are at times effective. Let me turn to the sixth characteristic of Asian finance that I wish to draw your attention to, and this concerns exchange rate policy. You are, no doubt, aware of the fact that the exchange rates of currencies in Asia have become more flexible, as an outcome of the financial crisis of 1997-98. Whether or not this is a desirable outcome remains to be seen, although my view probably represents the exception rather than the mainstream opinion. I say this not for the purpose of justifying the maintenance of a fixed exchange rate for the Hong Kong dollar. I shouldn’t have to. The fixed exchange rate has served Hong Kong very well and, with currency board arrangements and a very flexible economy, I do not see any insurmountable difficulty in sustaining it.

The income settlements in 1974/75 and 1986 in particular, but also the settlements in 1998 and 2000, contributed to higher cost inflation and weaker demand for labour. We have seen that income formation is affected by labour market conditions and profit trends in the business sector. This is also true of wage and income developments among managers, salaried employees and the liberal professions. The structural changes that now seem to have occurred in income determination for these groups has probably also been important for the outcome of the ordinary wage settlements. Through the last part of the 1990s, factor income rose as a share of labour costs. Over time, a balance will probably be reached between labour costs and the portion of income that goes to servicing capital. To some extent the process will be self-regulating. High profits tend to lead to stronger growth in wages. Lower earnings prompt companies to cut costs. This may take the form of increased work effort, or possibly workforce reductions, in order to increase productivity. Companies may also reduce growth in business fixed investment. Since 1997, price inflation has been higher in Norway than among our trading partners. The most important reason for higher price inflation in Norway is that we have had a tight labour market for many years. This has also led to high growth in wages and labour costs.
Unlike any of the ratios we are used to handling, there is no minimum level of governance that banks should reach. Governance is a means of doing things and a culture. And attaining it is an objective that takes some time to be implemented. All this makes it difficult to transmit a sense of urgency. Yet without proper governance, the conflicts of interests that arise daily at banks cannot be managed. When a conflict of interest arises, the bank must create a control function. Evidently, the control function will only work if it is independent and strong; otherwise, it will be neutralised or absorbed by the pressure of daily business. We have seen how, without proper governance, control functions are lacking in weight and effective power. This gives business units excessive influence and even, occasionally, exclusive influence over day-to-day bank management. Ultimately, then, it is governance that allows banks to manage the conflict in question which arises between the search for short-term profit and the bank’s sustainability and viability in the long-run. 9/13  Regrettably, we have seen how, as the crisis was brewing, a good number of banks behaved just as Keynes had predicted they would. Others, in contrast, decided not to emulate their competitors or to do so to a much lesser extent. I believe the quality of governance structures had much to do with this uneven behaviour. But there is always room for improvement.

The problem, of course, is one of terms: the long-term business sustainability objective clashes with other short-term objectives, in particular the search for swift profit, under the pressure occasionally of shareholders. Changes in bank regulation, management and supervision Keynes once criticised those unprofessional bankers who imitate the short-term strategies of their rivals only to hide behind the behaviour of the sector as a whole as justification for their own mistaken decisions.2 Unfortunately, the crisis suggests Keynes may have been right. Though not so in all instances, the search for short-term profit may lead to the pursuit of risky strategies, despite the fact that this may compromise the bank’s future in the medium and long term. We have also seen that, if a large number of banks coincides in a mistaken strategy, entailing future problems, the problem ceases to be an individual one and become systemic, and individual responsibility is diluted. I appreciate that the question we must ask ourselves here is what we have changed in attempting to correct this type of behaviour. Or, expressed otherwise, why should this time be different? Regulatory changes Firstly, deep-seated changes have been made to the regulations applicable to banks. The biggest revolution is in the Basel capital framework, which has been reformulated in its virtual entirety so as to incorporate the lessons from the crisis. The changes are far-reaching, and describing them would alone take up the rest of my address today.
On the other hand, the results also show the effectiveness of the measures implemented to date to mitigate the impact of the crisis. Such measures include most notably the guarantee  7  programmes, the ECB’s extraordinary refinancing measures and the recommendation to banks not to pay out dividends, thereby strengthening their resilience. Under the harsher scenario in which the cumulative decline in euro area GDP mounts to 6% by 2022, the 5.8 pp reduction in the solvency ratio is much bigger, leaving average CET1 at 8.8% of risk-weighted assets. Moreover, under this scenario a significant proportion of banks would remain below the minimum prudential requirements. As you know, the probability of this scenario materialising is low but not negligible; should it do so, it might possibly be necessary to adopt additional measures to those already implemented. I shall return to this issue later. The latest developments in Spain’s public finances reflect the impact of the pandemic, which has been particularly severe in our country, and of the measures adopted to contain it. All of which has translated into a significant increase in the budget deficit and public debt, and also in the contingent obligations assumed by the different tiers of government. Specifically, general government debt stood at 110% of GDP in June (14.6 pp more than in December 2019). The Banco de España’s macroeconomic projections forecast a very marked deterioration in the general government balance for the whole of 2020 and a partial correction in the following two years.

Meanwhile, aiming to enhance connectivity, since June of last year the Bank of Thailand has undertaken Foreign Exchange Regulation Reform to relax 4/5  rules on foreign exchange controls and make foreign exchange-related transactions more digital, flexible, and accessible. To give a few examples, foreign exchange transaction forms were completely abolished, which should reduce document-related burden for the private sector; the working scopes of money changers and money transfer agents are expanded so that they can better facilitate retail cross-border transactions; and commercial banks can now provide direct Thai Baht loan to non-resident companies established in the Greater Mekong Sub-region (GMS). These efforts will improve connectivity as well as ease of doing business in our region. Fourth, we must foster greater cooperation on cyber security to ensure resilience of our financial systems. Arising with new forms of financial technology is our increased reliance on data transmitting devices and data usage; these come with greater risks of cyber threat. And, globally the number of threat incidents have been rising. Cyber security should be one, if not, the top priority for catalysts like us going forward. Ladies and gentlemen, The Bank of Thailand looks forward to working closely with other central banks, government agencies and, very importantly, private sector participants in the ACMECS region to support adoption of financial technology to promote economic and financial developments.