samchain/econo-pairs-v1 huggingface dataset:
It came care of fixing the exchange rate – first to gold under the Gold Standard and latterly in the post war period to the dollar. With the demise of the dollar standard in the early 1970s, however, the exchange rate anchor had been tossed overboard. At the Bank of England, as elsewhere, the search was on for a new nominal anchor. Into this vacuum stepped Andrew Duncan Crockett. Crockett joined the Bank in 1966 as a graduate entrant, just before the break-up of the Bretton Woods dollar standard. He set to work on the biggest problem of the day, locating a new nominal anchor. In so doing, he began working alongside another young(ish) new Bank entrant, Charles Goodhart. The result was a joint paper published in the Bank’s Quarterly Bulletin in June 1970. It was titled “The Importance of Money”.11 Re-reading it now, it was a prophetic piece of work. In the UK, it laid some of the analytical foundations for what, during the late 1970s and 1980s, became monetarism. More than that, the paper placed commercial bank money and credit at the centre of the macro-economy. It could as well have been titled “The Importance of Credit” or indeed “The Importance of Banks”. After a successful spell at the IMF, Crockett returned to the Bank of England in 1989. In 1994, he then became General Manager of the Bank for International Settlements, the central banks’ central bank. In central bank circles, change was in the air.

This came not a moment too soon. In the immediate post-war period, the UK faced pressing financial infrastructure problems – the so-called “Macmillan gaps”. These gaps referred the inability of small firms to finance themselves with long-term loans. If these gaps sound strangely familiar, then they should. The post-war Bank set about closing these Macmillan gaps with gusto. In 1945 it set up two new financing entities – the Finance Corporation for Industry (FCI) and the Industrial and Commercial Finance Corporation (ICFC). These were financially supported by banks and institutional investors, providing a platform for the supply of longer term funding and venture capital finance to small firms. In 1973, the two corporations combined to form Finance for Industry (FFI). During the early 1980s, the company was rebranded as Investors in Industry, commonly known as 3i. In 1987, the entity went public as 3i Group. This was not a flop. Arguably, 3i and its predecessors were one of the largest feathers in the Bank’s post-war cap, helping support generations of new businesses and start-ups. And those MacMillan gaps? Regrettably, the crisis has re-opened them. Today, small firms are once more starved of finance, including many here in Northern Ireland. Once again, the quest is on for a new financial infrastructure to help close these gaps. Through the 1980s and 1990s, there were further examples of the Bank stepping in to close structural financial gaps. When the UK’s high-value payment system started creaking in the early 1980s, the Bank designed and built a new, bullet-proof system.
Former Bank of England Governor Mervyn King recently launched a more drastic idea, that a bank must hold more assets that can be used as collateral in the central bank than it has liabilities (including deposits) that can suddenly flow outwards.10 In this way, central banks could always intervene and have sufficient access to liquid funds. Admati et al. note in a response that the consequence of this would be that the authorities also supported bad banks, which would reinforce moral hazard problems and lead to banks that should be wound up not being wound up.11 There is a risk that we would then have so-called Zombie banks, and this would have negative effects on growth and efficiency. In any case, I believe that the instability of deposits is an issue that legislators and regulators around the world need to analyse more closely. The resolution framework also needs to be reviewed The second question concerns the resolution framework. This was introduced after the global financial crisis and the explicit purpose is to make it possible to resolve a systemically important bank in an orderly manner. The idea is that losses should be borne primarily by shareholders and secondarily by bondholders. Public funds should not need to be used. Allowing bondholders to bear potential losses also reduces the problems of moral hazard. So if you can use an effective resolution framework as intended, you reduce the problems created by the deposit guarantee. 10  See King (2023). 11 See Admati, Hellwig and Portes (2023).

It was therefore understandable that the so-called inflation targeting policy introduced by many countries in the 1990s had a focus on price stability and that risks in the financial system disappeared into the background. This also applied to Sweden, despite the fact that we had had a serious financial crisis in the early 1990s. Another reason why the risks in the financial system were overlooked may have been that the deregulation of the financial markets was new and that the risks of financial imbalances building up were underestimated. 13 See Board of Governors of the Federal Reserve (2023) and FDIC System (2023). 12 [30]  The global financial crisis highlighted the importance of financial stability. Inflation targeting policy seemed to be working well for a long time. Inflation was low and stable while growth was good. US economists James Stock and Mark Watson even coined the expression ‘the great moderation' in the early 2000s, suggesting that the economy had entered a calm and stable era.14 This era came to an abrupt end with the global financial crisis. Much of the deregulation and innovation that had laid the foundations for the favourable economic development had at the same time contributed to the build-up of new risks and imbalances in the financial system.15 An important lesson from the financial crisis was that financial imbalances could be built up even in an environment with low and stable prices. However, this knowledge was not entirely new.
Ajith Nivard Cabraal: Developments in the evolution of central banking and challenges faced by central bankers Inaugural speech by Mr Ajith Nivard Cabraal, Governor of the Central Bank of Sri Lanka, at the International Course on Central Banking organized by the Centre for Banking Studies, Colombo, 22-23 May 2007. *  *  *  Ladies and Gentlemen, I am pleased to be here to address you at the opening ceremony of this international course on Central Banking. Let me also welcome all the participants to the course and extend to the participants from overseas countries and Prof. Sinclair, a very warm welcome to our country. The Centre for Banking Studies(CBS) has provided training opportunities for officers in the financial sector in Sri Lanka over the last 26 years. It also has past experience in coordinating a number of international programmes of the SEACEN Centre, APRACA and World Bank held in Sri Lanka. Also several officers of central banks in SARRC countries have participated in the scheduled programmes of the Centre, though they were not specially designed for an international audience. This Central Banking course in fact is the very first international programme designed and conducted by CBS. I am glad that there are 14 overseas participants at this first programme. I congratulate CBS for successfully organizing it. I am sure that there will be more overseas participants in the forthcoming international programmes. Our plan is to invite eminent resource persons to conduct these international programmes.

Banks will need to further build on this significant progress in order to meet the challenges going forward. These include macroeconomic challenges, growing pressure from increasing competition, and the changing regulatory environment. Obviously, the ability to meet these challenges varies among banks. But we, as regulators, are well prepared to steer a steady course for the banking system as a whole. As you know, the first phase of the Financial Sector Master Plan has been completed. We have already seen significant consolidation and increased efficiency of the banking sector. We are moving onto the second phase of the Master Plan, which will further step up the pace of reform. This will increase the efficiency of the system and ensure that it can meet intensified competition that will come with globalization. BIS Review 20/2007  3  Let me emphasize that globalization is a pervasive process. Given financial innovations, it can transcend national borders even without an explicit market opening. Our liberalization strategy is to ensure strengthening of the domestic system, and allow gradual opening of the banking sector. This will mean new entries into the system, as well as more intensified competition between existing players. The phasing of this process will be consistent with continued economic and financial stability. The banking system must be prepared for greater competition. Improved risk management framework will be the critical success factor for banks' ability to meet future challenges. These include the adoption of IAS 39, currently underway, and the new Basel Capital Accord at the end of next year.
Zeti Akhtar Aziz: 10th year anniversary of the establishment of the Islamic Financial Services Board Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Islamic Financial Services Board (IFSB) 10th Anniversary Dinner, Kuala Lumpur, 16 May 2013. *  *  *  It is my great pleasure to welcome Your Excellencies and distinguished guests to this IFSB 10th Anniversary Dinner, organised in conjunction with the 10th IFSB Summit. Tonight is a landmark celebration of the 10th year anniversary of the establishment of the Islamic Financial Services Board (IFSB), as we commemorate a decade of milestones and achievements of the IFSB and pay tribute to its members and industry stakeholders that have provided undivided support to the Board. Bank Negara Malaysia is indeed honoured to have the opportunity to host this 10th IFSB Summit, which is exactly ten years since we hosted the IFSB inauguration in November 2002. We are also very pleased to welcome back the Founding Members and many of the industry leaders that witnessed the inauguration of the IFSB. We are very honoured to have your presence at this Anniversary Dinner. It was in the year 2000 that the discussion began on the merits of establishing a dedicated organisation to develop a separate and distinct regulatory framework for the global Islamic finance industry.

The Small Ponds are the relatively modest financial markets of capital-importing emerging countries. Past experience suggests that as big fish enter the small pond, this can cause ripples right across the international monetary system, never more so than in today’s financially interconnected world. This paper considers the BFSP problem. It plots the evolution of the international financial network over the past quarter-century. And, within that, it assesses recent shifts in portfolio  BIS central bankers’ speeches  1  choice by international investors which may have accentuated today’s BFSP problem (Section 2). More speculatively, it then considers potential future trends in portfolio choice and assesses their implications for tomorrow’s BFSP problem (Section 3). If recent trends are continued, the BFSP problem may become more acute over time. In the race between capital market deepening in emerging markets and capital diversification in advanced economies, the latter may gain the upper hand (or foot). The BFSP problem during 2010 may have been the thin end of a sizable wedge. That, in turn, may intensify the debate on appropriate policy responses, such as the pace of capital liberalisation and the case for capital restrictions (Section 4). 2. Today’s BFSP problem  A useful panorama on financial globalisation is provided by mapping the evolution of the global financial network over time. The topology of this network provides a simple, graphical visualisation of liberalisation patterns.
The Riksbank’s picture of what this could mean for inflation is partly based on empirical studies that have been presented in earlier Inflation Reports. These results likewise suggest that the economy is somewhat less inflation prone, though the picture should not be over-interpreted. In a world with low and stable inflation, it is conceivable that wage demands may be formulated differently. A given level of real wages can be attained with considerably smaller nominal wage increases and perhaps with greater precision. Another factor that is often mentioned in the discussion is the concept of a new economy, that is to say, how the trade-off between growth and inflation may have been modified by increased global competition and information technology. This theme has been stimulated not least by the example of the United States, where high growth has been achieved year after year without boosting inflation; but that is a topic for a separate address. Today I shall simply make two points. One is that effects of this type can enable the economy to cope with higher resource utilisation without an acceleration of inflation, that they can raise potential growth or they can lower the inflation propensity. Thus, the so-called new economy can conceivably affect the inflation assessment in the ways I discussed earlier. The other point is that demonstrating effects of this type on inflation empirically is presumably even more difficult in Sweden than it is in the United States.

2) In recent months, as a prior step to the SSM taking over supervisory competences, an assessment has been made of significant institutions, the aim of which is to enhance transparency in respect of their position and to reinforce their solvency. The outcome of this exercise will help the SSM to assume its functions with accurate knowledge of the actual situation of the banks it will directly supervise. The exercise is now close to completion and its results will be made known before the end of this month. It comprises two phases: an asset quality review and a stress test, on which the Banco de España has been working intensely for several months in cooperation with the ECB. The first phase, namely the assessment of the quality of the assets associated with credit and market risk, consisted of verifying the accuracy of the figures and of reviewing asset and collateral values, along with the related provisions (with the collaboration of audit firms). On the basis of the results obtained, exposures have been classified as standard or nonperforming, based on the level of risk, with the ECB imposing painstaking quality control of the results of the review. A stress test is an analysis of credit institutions‘ capacity to absorb losses, evaluating their resilience in different scenarios. The exercise indicates how much capital might be needed were risks to materialise, and it helps highlight areas where supervisory action might be necessary.
In late summer the international financial crisis escalated and the krone depreciated. High wage growth cannot be attributed to flaws in wage and income determination. On the contrary, the flexible wage and income system can probably be cited as the main factor behind the high level of employment and low unemployment in Norway. In periods of strong labour market pressures, particularly in 1974–1976, 1986–1987 and last year, wage growth accelerates sharply. Such periods are normally followed by a slacker labour market and higher unemployment. The positive feature of income determination in Norway has been that wage growth returns to normal relatively quickly,  BIS Review 20/1999  10  which has allowed Norway to avoid the persistently high levels of unemployment experienced by most West European countries. Even though some increase in unemployment must be expected, we should be able to avoid a rise in unemployment to European levels or to the level prevailing in the period 1989–1992 if wage and cost inflation is rapidly reduced also during this business cycle. Fiscal policy failed in 1996, 1997 and 1998. Developments illustrate that budget discipline must be exercised down to the last billion. The economy overheated because fiscal policy was not sufficiently tight when the economy was faring well. This brought the krone under pressure and external conditions intensified this pressure, making it impossible to keep the krone on track. It is only this year that fiscal policy is again well adapted to the economic situation.

The government therefore controls banks that account for about 50% of bank lending in Norway. The stake in the two largest commercial banks is to be reduced to a third. State ownership of banks constitutes, in my opinion, a structural weakness in the Norwegian financial system. There is a risk that the ownership function is not exercised actively enough. A lack of control on the part of active owners may give the board and management excessive influence in these banks. In the long run this could lead to less efficient operations and lower profitability. Private owners with lower capital stakes may also wield a disproportionately high level of influence if the state as owner is too passive. The political parties widely disagree on the issue of government bank ownership. This may be a disadvantage when decisions on mergers and other structural measures are to be taken. When there is a profitable basis for growth, which requires increases in capital, the state-owned banks must pose the following question: is it possible to gain political support? They cannot merely ask: will investors find this profitable? It is important to reach political consensus on the question of state ownership. One example of a case where the political parties reached agreement on structure and ownership in the 1980s is the petroleum sector.
Thus, in this way central banking for the first time really became a cornerstone of the building of world prosperity and world peace. Of course the single reserves might be sufficient under normal circumstances but when things get out of hand, it may not be sufficient, and banks do shut down. The government and the central banks thereupon undertook that most important function of building world peace, which is looking after the poor and the disadvantaged, by putting up deposit insurance schemes, the first being in New York in 1829 but the first nationwide schemes being in Czechoslovakia in 1920 whereby at least the smallest and the least knowledgeable depositors are protected. Of course, a better alternative would be to try and make banks less liable to failure. Since banks are often in an oligopolistic system or at the very least, they are leveraged by the ratio of debt to equity of around 12:1, being the inverse of the capital adequacy ratio now defined by the Bank for International Settlements to be at least 8%, and using other people’s money in a way that normal companies cannot 1  BIS Review 111/2000  do - the central bank then underpins the viability of commercial banks by supervising and examining them so that sensible decisions are made and fraudulent activities are minimised. Surprisingly, that may not even be the biggest way central banks contribute to world peace. For nations taken individually, the biggest function deemed to be of the central banking is monetary policy.

The long-term downward trend in interest rates globally and expansionary monetary policy occasioned by cyclical factors have therefore combined to produce historically low interest rates. Transmission channels of negative interest rates in Switzerland Irrespective of the equilibrium rate, questions arise regarding the transmission mechanism of monetary policy below the zero lower bound. Specifically, how does monetary policy using negative interest rates effect a rise in inflation? As you will probably remember from your student days, monetary policy usually operates through a variety of transmission channels. For a small open economy like Switzerland, the exchange rate channel is the most important. Lower interest rates, other things being equal, make the Swiss franc less attractive as an investment currency. The franc loses value, which makes Swiss goods cheaper abroad, and leads to a rise in net exports. This in turn raises GDP and inflation in Switzerland. Depreciation of the Swiss franc also has a direct impact on inflation because import prices rise. A reduction in interest rates also operates via the credit channel. Put simply, if the SNB reduces the short-term interest rate, longer-term market rates also fall. Loans become cheaper and this stimulates consumption and investment. These factors boost the economy and inflation rises. Page 4/16  Is the negative interest rate in Switzerland having the anticipated effect? Let me first look at transmission via the exchange rate channel. Historically, Switzerland has always had lower interest rates than most other countries, particularly euro area countries.
This does not mean we cannot do better, nor does it mean we need not do more. There is no cause for arrogance. I hope the worst will soon be behind us. Honoured guests: One repercussion of the past year's swift rise in inflation is the plunge in households' and businesses' real interest rates. Unfortunately, the Central Bank's brisk rate hikes have not sufficed to correct the course. Yes, real rates on new non-indexed, variablerate mortgages were 3 - 4% before the pandemic, fell to zero during the pandemic, and are now negative by 2%. Real rates on older fixed-rate loans are even more negative. Real rates on new non-indexed, variable-rate business loans were 3-5% before the pandemic. They fell to zero in 2021 and are still there. At the same time, real rates on deposits range between -5% and -10%. So in a way, history has repeated itself. Inflation and negative real rates have subsidised business investment and home purchases, and transferred wealth from depositors to leveraged households and businesses. Such a situation is unsustainable in the long run. The Central Bank has pushed against household debt collection with all its might. The Bank's financial stability measures have entailed tightening mortgage requirements by capping loan-to-value ratios and debt service-to-income ratios. These measures have helped cool the housing market and temper household demand for credit. They have supported monetary policy and reduced the likelihood that borrowers will end up in financial distress when conditions grow tighter.

The stage was therefore set for the floodgates to open and private consumption to come gushing back as soon as public health measures were lifted early in 2022 and consumers had an opportunity to exercise their purchasing power. The objective of all economic policy is to maintain equilibrium in the domestic economy, to ensure that there is "neither too little nor too much", to paraphrase Thorbjørn Egner's When the Robbers Came to Cardamom Town. During the pandemic, economic policy leaders had to take on the biggest contraction in output since the end of World War II, followed by an abrupt turnaround and a torrent of demand together with an unexpected jump in import prices. The first half of the job keeping the economy up and running during a deep downturn - went well. But the second half - restoring equilibrium after the pandemic - is turning out far trickier. The surge in inflation that followed the pandemic took the world's central banks by surprise. Early on, there was talk of a temporary adjustment - inflation would evaporate, and quickly, too. That proved to be wishful thinking. On that front, Russia's invasion of Ukraine - with the associated surge in commodity, fuel, and food prices and disruption of supply chains - had a serious impact. The unfortunate fact is that inflation has hit double-digit levels in many parts of Europe. Every central bank on the continent is still in a monetary tightening phase.