samchain/econo-pairs-v1 huggingface dataset:
This dynamic will test the ability of governments to sustain commitment to an open multilateral trading system, and the manner in which this plays out will have an important impact on future productivity gains. A fourth challenge involves prospective changes in the global exchange rate regime. The international monetary system now incorporates an uncomfortable disparity in the extent to which real effective exchange rates vary across regions. The monetary authorities of the United States and Europe allow considerable variability in their real exchange rates, though they are not indifferent to movements in exchange rates. Japan has somewhat less enthusiasm for flexibility and runs a regime in which it seeks to avoid large swings in the value of their currency. Emerging market economies run a mix of regimes from those that permit significant flexibility to those that run essentially fixed pegs or regimes that seek to contain variations to relatively small degrees around implicit targets for their currencies against the dollar or a basket of the currencies of their major trading partners. The world has lived with this system for some time. But this is not an ideal mix, either for the monetary system as a whole, or for those countries which permit very little variability in their real effective exchange rates, and it’s probably not sustainable over time. It also is not ideal because it limits the extent to which markets work to facilitate adjustment. It creates the risk of larger moves in the major currencies than might otherwise be the case.

Between 2009 and 2012, they doubled their lending to infrastructure projects globally from $ to $ However, is more lending the solution? Despite a doubling of their lending in the last three years, they only contributed 16% of project debt financing volumes globally in 2012. Conceptually, a more efficient way to utilise their financial resources may be in the form of risk mitigants such as credit or risk guarantees. The G30 Working Group on Long-Term Financing has in fact recommended that governments and MDBs should provide risk mitigation instruments to help lower the higher risks involved, especially during the early phases of long-term projects. 2  BIS central bankers’ speeches  This is definitely worth considering. Given their status, MDBs and export credit agencies are seen as very credible counterparties that can provide risk mitigants. It is probably harder for the private sector to play such a role, especially given the long tenor of project finance. I would add that MDBs and export credit agencies already have guarantee products that mitigate credit and political risks for project loans. The issue at hand is how to extend these products to say capital market instruments to “crowd in” participation by a broader group of institutional investors. For instance, the Credit Guarantee & Investment Facility or CGIF, established by the Asian Development Bank and ASEAN+3 nations, recently completed its first guarantee transaction on a 3-year Thai baht bond issuance by Noble Group.
With regard to the euro area as a whole, optimism among households and companies has been somewhat subdued in recent months, probably as a result of the crisis in Greece. However, the most recent survey in July indicates that optimism among companies is rising again, which may be due to the third loan programme for Greece appearing to be within reach. GDP growth in the euro area in the second quarter, compared with the same quarter last year, was 1.2 per cent according to our forecast. US developments still looking good We see continued signs of good economic growth in the United States. GDP rose by just over two per cent in the second quarter, compared with the same quarter last year, see Figure 7, entirely in line with our forecast. Household consumption remains strong. Exports also rose significantly in the second quarter despite the dollar appreciating for a period of time. The housing market is continuing to recover and this creates an increasing number of jobs. Unemployment fell to its lowest level since 2008. The US Federal Reserve signalled at the end of July that it still has plans to raise its policy rate this year. The labour market is expected to be able to develop better than was previously believed an only a “few” further improvements are needed before monetary policy may need to be tightened. However, although most signs are pointing in the right direction in the US economy, the recent statistics on wage developments have been at relatively low rates of increase.

Second, effective systemic risk oversight will require a broad range of expertise. This requires the right people, with experience operating in all the important areas of the financial system. In this regard, I believe that the Federal Reserve has an essential role to play. The Federal Reserve has experience and expertise in all three areas – it now oversees most of the largest U.S. financial institutions; it operates a major payments system and oversees several others; and it operates in the capital markets every day in managing its own portfolio and as an agent conducting Treasury securities auctions. Also, as the central bank, it backstops the financial system in its lender-of-last-resort role. Compared with where we were in late 2008 and early 2009, financial markets have stabilized, and the prospect of a collapse of the financial system and a second Great Depression now seems extremely remote. Even with this progress, however, credit remains tight, especially for small businesses and households. Economic growth has resumed, but unemployment has climbed to punishing levels. So while circumstances have improved, they are still very far from where we want them to be. We have no cause for celebration when the challenges facing so many businesses and households remain so daunting. Aggressive and extraordinary official interventions were imperative to bring about this nascent stabilization of our financial markets and economic recovery. The Federal Reserve has been at the center of many of these interventions.
The capital savings are even more dramatic for SME loans that qualify for retail treatment: participating banks from Basel Committee member countries reported that their capital requirements on SME exposures qualifying for retail treatment would decline by an average of 12-13% under the standardised approach and up to 31% under the IRB approach. Similar conclusions can be drawn for those European banks participating in this study. Actually, EU banks in general reduce their capital charges for loans to SMEs compared to the current rules, and this decline is slightly stronger than the average of all banks providing data. I should note that QIS 3 did not fully recognise the risk-mitigating effects of collateral and guarantees, so we expect that, in some cases, banks may experience even larger “savings” when the New Accord comes into force. Other studies concur. For example, researchers at my home institution, the Bank of Spain, combed through a database covering almost every loan made by a Spanish bank to evaluate the potential effects of the New Accord on SME lending. Their findings, which, if you are interested, I can share in written form with you, agree that the New Accord will not create tougher capital requirements for loans to Spanish SMEs and may, indeed, reduce them. We are extremely pleased now to have tangible evidence that the New Accord will not create burdens for banks that lend to SMEs.

They create new jobs at a faster pace than larger companies do. Their significance can furthermore be measured in the sizeable contributions they make to nearly all countries’ gross national products. Your workshop today reminds us that, if we are to promote growth by strengthening the banking sector, the Basel Committee must act in a manner that benefits banks and their ultimate customers as well. We must recognise that fair and reasonable access to credit matters, not just because credit helps small businesses to grow, but more importantly because small businesses help the economy to grow. So we have taken seriously the need to ensure SMEs of continued favourable access to credit under the New Basel Accord. This afternoon I would like to share with you some of my and the Committee’s views on why the New Accord is necessary. I shall then illustrate how the proposals will bear positively on small business lending. I’ll conclude with an update on the status of our work, after which I look forward to a discussion on issues you may wish to raise. The goals of the New Basel Accord Let me begin with some thoughts on why we need a new capital accord. From the supervisor’s perspective, capital is the last line of defence in a bank. When risk management is not enough, when provisions are exhausted, capital is a bank’s last hope. But when capital fails, the bank itself fails. The age-old question has been determining how much capital is enough.
Mr Carse discusses the importance of ethics in banking  Speech given by Mr David Carse, Deputy Chief Executive of the Hong Kong Monetary Authority, at the Banking Conference on Business Ethics in Hong Kong on 15 September 1999. *  *  *  Ladies and gentlemen, I am pleased to have the opportunity to speak today at this important conference on business ethics. This is an area that is becoming a growth industry, and it is one that it is particularly relevant to banks given the position of trust that they occupy. Indeed, this is one of the daunting things about giving a speech about the importance of ethics in banking. It all seems too obvious. After all, what do we mean by ethics in business? It means, I would suggest, trying to be a good corporate citizen; trying as an organisation to adhere to certain ethical values; and trying to do the right thing by all the various stakeholders – customers, employees, suppliers and shareholders – that any business organisation has. It means, as one writer has put it, “choosing the good over the bad, the right over the wrong, the fair over the unfair”. Put this way, is there any respectable bank that would claim not to attach high importance to core ethical values such as honesty, integrity, fairness, responsible citizenship and accountability? Is there any bank that would claim that it was right to accept bribes in return for loans, to lend to connected parties and to cheat customers?

Challenges for the next decade  I want to devote the remainder of this lecture to the challenges facing the Monetary Policy Committee over the next ten years. That is not because I see major fault lines in the present arrangements. On the contrary, the careful institutional design that lay behind the construction of the MPC has proved its worth. Nor is it because I share some commentators’ boredom with a system that has remained largely unchanged for a decade. After all, in the area of macroeconomic policy, boredom is a good thing. Rather, it is a conviction that to remain successful the MPC must always be engaged in a process of continuous improvement. The anchoring of inflation expectations has been central to the stability enjoyed by the UK economy over the past decade. The key lesson from economic theory is not to take those expectations for granted – they depend on the actions of the MPC. Inflation expectations have been anchored because the MPC has responded to events that have pushed the outlook for inflation away from target, and households, businesses and financial markets have understood and anticipated our responses. So the main challenge facing the MPC is to keep doing whatever is necessary to keep inflation on track to meet the target. In modern models of inflation, monetary policy is represented by a “reaction function” that is sufficient, in that model, to pin down inflation and, therefore, inflation expectations. But that just assumes away the challenge facing us.
In Australia, the Hayne Royal Commission has detailed a litany of wrong-doing in the country’s banking industry, including forging loan documents and pushing customers into bad investments to meet bonus targets. I take some comfort that financial institutions in Singapore have generally been better behaved and are better regarded. But we have had our problems too: the mis-selling of Minibonds and other structured products; the manipulation by traders of financial benchmarks; and more recently the laundering of 1MDB-related funds through our banking system. We too can do better. Let me briefly suggest three things the industry and regulators can do together to strengthen trust in finance, with a focus on what we are doing here in Singapore. First, we must ensure that the financial system is not abused for illicit purposes – be it money laundering, tax evasion, or terrorist financing. In Singapore, we had a rude awakening in 2015 when it came to light how 1MDB-related funds were laundered through our banking system. MAS and the industry have worked hard since then to strengthen systems and processes to detect and deter illicit fund flows. Financial institutions have made significant strides in managing money laundering risks. Boards and management are more focused on addressing issues related to illicit finance. They have made the detection of money laundering risk a responsibility of front-line, customer-facing staff, and not just the compliance function. Many financial institutions have strengthened their remuneration frameworks to include financial crime risk management as a key performance indicator.

Zeti Akhtar Aziz: Greater financial integration and financial stability Opening remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the SEACEN 30th Anniversary Conference “Greater financial integration and financial stability”, Kuala Lumpur, 20 October 2013. *  *  *  Bank Negara Malaysia is honoured to welcome you to the SEACEN 30th Anniversary Conference on “Greater Financial Integration and Financial Stability”. We are especially honoured by the presence of Governors and senior officials who are here today, despite the pressing demands on our institutions during this period of persistent uncertainties in the global financial and economic environment. We continue to face challenging and often testing times. Over the recent five years, we have been confronted with recurring episodes of turbulence, followed by phases of transitory recoveries. We have seen, and have been part of, extensive collaborative measures and reforms pursued at both the regional and global level. Yet, the calm after the storm continues to evade us. The SEACEN and Asian economies have seen significant structural adjustments and wide ranging financial reforms in this decade. During this period intra-regional trade activity has rapidly increased, signifying the deepening of economic ties within the region. Intra-regional trade in East Asia has expanded from an average of 44% of total trade in 1995, to 50% in 2012. Intra-regional investment activity has also been on an uptrend.
2  BIS Review 65/2002  What determines the real exchange rate in the longer run? Table 1. Nominal and real depreciation, and inflation differential against the euro area 1970- 2001 Percent, annual averages Period  Nominal depreciation  Inflation differential (Sweden – euro area)  Real depreciation  1970 – 1982  2,60  0,75  1,84  1983 – 1992  1,50  2,52  -1,02  1993 – 2001  1,88  -0,56  2,45  W hole period  2,05  0,94  1,11  Remark: Prior to 1999 the SEK/EUR rate is a geometric mean of the nominal exchange rates between the krona and each euro-country currency. The weights are relative TCW weights. Source: Sveriges Riksbank. I have already talked about the real exchange rate and tried to explain that it is this rate, rather than the nominal exchange rate, which is most pertinent for economic decisions and for resource allocation within and between economies. An understanding of the real exchange rate's development, above all in the somewhat longer term, is needed in order to appreciate why nominal exchange rates fluctuate as they do. Here I shall use the Swedish krona relative to the euro as a specific example. Since 1970 the krona has depreciated by about 90 per cent against the euro currencies. What lies behind this?

These trends have been particularly visible in Latin America. During 2012, annual gross capital inflows to the seven largest Latin American countries – as classified by the IMF – amounted to more than 250 billion dollars. Sovereign EMBI spreads shrank to around 150 basis points, and, with a few exceptions, stock market prices recovered or surpassed their pre‐crisis levels.1 After the large depreciation suffered at the peak of the crisis, the real exchange rates of these countries persistently appreciated, continuing with a trend coming from the mid‐2000s. House prices in the region also experienced high annual growth rates, in many cases reaching two‐ digit figures. Chile was no exception to these patterns, although they were a bit less pronounced than in the average emerging or Latin American country. Our real exchange rate appreciated by about 15 percent between the peak of the crisis and the end of 2012, real house prices grew about 20 percent between 2009 and 2012, and our current account moved from a surplus of 2 percent of GDP in the last quarter of 2009, to a deficit of 3.5 percent of GDP by the end of 2012. Sure enough, these patterns could be explained by pull factors. The faster recovery of growth rates in emerging markets, the quick rebound of their commodity prices after the crisis, and the sounder policies being implemented by several of them during the last decade could give reason to allocate more capital to this group of countries.
This shortcoming has clearly contributed to the situation we face today. Unwinding its consequences is the key challenges the euro area faces. So let me now discuss how we can address that challenge. Fixing EMU for the long-term Unwinding the euro area’s imbalances What is the way out of this situation for the euro area? First and foremost, the imbalances that accumulated in certain euro area countries have to be remedied by those countries themselves. Under present rules, other member states can only provide some interim financial assistance and have indeed done so via the EFSF/ESM. The indispensable national consolidation effort by the more indebted countries is the implication of a system where fiscal, economic and financial policies are basically decentralised. But despite a difficult start, a significant rebalancing is now happening within the euro area. Across the euro area, strong budgetary consolidation is taking place. The IMF forecasts that the euro area’s primary budgetary position will be almost in balance this year. This is quite an achievement in an international context: Japan, for example, will have a 9% of GDP primary deficit this year, the U.S. 6.5% and U.K. more than 5%. And the euro area is not only performing well on average: each individual member country will have this year a primary budget deficit lower than those three countries. 4  BIS central bankers’ speeches  Important improvements are also taking place in competitiveness. Member States have now started to undertake structural reforms to facilitate intra-euro area adjustment.

Some countries therefore ran persistent deficits in good times or maintained high levels of debt. But the greater imbalances in fact emerged in the private sector. Looking at the data for EMU’s first decade, imbalances in the private sector far exceeded those in the public sector. 5  Tobias Adrian, Paolo Colla and H. Song Shin (2012), “Which financial frictions? Parsing the evidence from the Financial Crisis of 2007–2009”, Federal Reserve of New York Staff Reports. 6  Schoenmaker, D. (2011): “The Financial Trilemma”, in Economics Letters, 111 pages 57–59. BIS central bankers’ speeches  3  Between 1999 and 2007, the ratio of public debt to GDP in EMU declined on average by 5.6 percentage points. But in the same period, the ratio of private sector debt to GDP increased by 26.8 percentage points. For the same period, in the stressed countries, the cumulative increase in the private debt ratio to GDP versus the public debt one, amounted respectively, to 49 and 24 per cent for Portugal, 75 and minus 35 per cent for Spain, 101 and minus 10 per cent for Ireland, 217 and 4 per cent for Greece. Private debt levels were able to increase so significantly because the integration of national markets allowed for higher borrowing from abroad and increased leverage. For instance, from 2001 to 2006 MFI holdings of cross-border securities issued by non-MFIs increased by almost 44%. And as we now know, these flows were not perfectly optimised by rational private agents.
Mr Yam: Risks and challenges in coping with international capital flows  Opening address by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, at the Sixth Manila Framework Group Meeting, held in Hong Kong on 20-21 March 2000. *  *  *  Ladies and Gentlemen, On behalf of the Hong Kong Monetary Authority, I would like to extend a very warm welcome to all of you to this Sixth Meeting of the Manila Framework Group.1 As you will no doubt recall, the Manila Framework Group was founded in the deep throes of the Asian financial crisis in November 1997 to develop a concerted approach to restoring financial stability in the region. With the worst clearly behind us, and with signs of a strong economic recovery in the region, the mission of this group has still not ended. This forum embodies a valuable spirit of cooperation, with wide participation of emerging market economies in the dialogue. The value of this forum lies in its quality dialogue on regional surveillance and on reform of the international financial architecture. There is no doubt that economic recovery in the region has gathered considerable momentum. Economic growth for most economies has been better than expected, external balances have improved remarkably, international funds have renewed interest in the region’s asset markets, and yield spreads of Asian sovereign bond issues over the US treasuries have narrowed notably.

Strict inflation targeting of this type would thus have resulted in more pronounced fluctuations in the interest rate and in aggregate demand and production. BIS Review 66/2002  3