samchain/econo-pairs-v1 huggingface dataset:
We must not forget that these negative shocks are taking place while many of these vulnerable groups and firms have not yet fully recovered from the adverse effects of the health crisis. Selective fiscal policy support is also warranted by the need to minimise the impact on budgetary imbalances, which have increased very significantly during the crisis. It is thus important that the measures be temporary so as not to further increase the structural deficit. Moreover, the current high inflation also makes an argument for support to be selective and for avoiding an across-the-board fiscal impulse. Such an impulse could lead to an exacerbation of existing bottlenecks in the most stressed sectors that could eventually filter through to prices. It is also especially important to avoid the widespread use of automatic indexation clauses in the expenditure items that might further fuel the current inflationary process. This deindexation must be part of the incomes agreement to which I will refer later. It is also important for fiscal policy to provide certainty about the commitment to budgetary stability in the current context of heightened uncertainty, which could result, for example, in financial market tension. Thus, it is particularly necessary to design a fiscal consolidation programme that will allow the high government debt and budget deficit levels to be gradually reduced, to be implemented once the recovery has taken root. As I have already noted, this recovery may be affected by the conflict in Ukraine.

In this context, it is vital to prevent these near-term inflationary pressures from passing through to the medium-term through second-round effects and, in particular, through an inflationary wage-price spiral. Avoiding this spiral is not in the least bit easy; nor, of course, is it rewarding in the shortterm. An incomes agreement is needed between workers and employers that will ensure gains for everyone in the medium-term, although in the near term everyone will have to 10  assume a loss. As in similar situations on previous occasions, I would like to emphasise the need for consensus to confront the scenario before us effectively. Employment in Spain and the competitiveness of the economy over the coming years will largely depend on our ability to reach these difficult compromises. In the past we have reached agreements of this importance and they have borne fruit. Given this evidence, and the magnitude of the current challenge, I am optimistic that we will manage to do so once again. 11
The challenge, now, is to calibrate and phase in the new framework in a way that does not impede the recovery and does not contradict our macroeconomic objectives. In the long run, we want stronger balance sheets in the banking system but too high capital requirements could have negative effects, reducing loan supply and, paradoxically, fostering risk-taking in order to keep a high return on equity. In the immediate future, disorderly deleveraging is one of the main downside risks to the recovery process. A macroeconomic assessment of the reforms is underway and will help us strike the optimal balance. The broader point here is that the proposed reforms may have significant macroeconomic consequences and these should be factored in when designing and implementing them. A critical issue put forward relates to the behavior of banks with respect to the capital buffers that they retain on top of the existing minimum. If banks target buffers above the regulatory minimum, which is an endogenous market outcome, they may need to raise even larger amounts of equity than what can be expected by just looking at the current package. We know from empirical studies that weaker capitalized banks typically exhibit weak loan growth compared to other better-capitalized banks. We also know that banks may find it less costly to adjust loan volumes and loan pricing than capital, as frictions in the market for bank capital make the latter option more expensive.

To reap the benefits of financial innovation and reduce its risks, we need robust and resilient financial systems and infrastructures. In this respect, concentrating systemic risks in central clearing counterparties for the most important markets (such as interbank and derivatives markets) may bring us a long way towards reducing them, provided these CCPs are properly regulated. In this respect, I think that locating these infrastructures in the same area as that of the currency they deal in and allowing them access to central bank money are key factors. A last option which is currently gaining some international momentum concerns the possible taxation of financial institutions and activities. In principle, this idea seems quite appealing. However, the diversity of objectives that may be given to such a tax shows that the policy  BIS Review 57/2010  3  debate must be clarified. In a financial crisis prevention perspective, it is aimed at changing incentives and at forcing financial intermediaries to internalize the risks that their activities generate for the whole system. In a crisis management perspective, it should enable governments to recoup the costs of financial bailouts in a systemic crisis. My main concerns regarding this issue are twofold. My first point concerns the articulation with regulation. The added value of a tax over prudential regulation still remains to be demonstrated for countries, such as France, that have taken advantage of an effective regulatory and supervisory framework and in which public interventions in the financial sector have entailed no net costs to the government.
Two basic macroeconomic policies, monetary policy and fiscal policy, have contributed toward the economic activity stabilization, without exerting increasing pressures on the inflation rate. The budget expenses during 2004 have been relatively uniform throughout the year, without jeopardizing the rise of inflationary pressures in the economy in given periods. The domestic borrowing of Government has been 2.0 percent of GDP over 2004, compared to 2.9 percent in 2003. Monetary policy The monetary policy followed during 2004 maintained the easing trend of the policy being followed during 2003. Bank of Albania has cut 5 times the core interest rate over 2004, with a total effect of 1.25 percentage points. The core interest rate reached new minimum historical levels through every cut occurred during 2004, remaining by the end of the year 5.25 percent. The easing monetary policy  4  BIS Review 38/2005  has been in compliance with the inflation developments during 2004 and the positive expectations on this indicator in the future. These developments seem to have been perceived by the public, who is increasingly anchoring the inflationary expectations to the inflation target announced by the Bank of Albania. This is reflected in the increase of public interest in depositing their savings in Lek, generating also appreciation pressures on the exchange rate in Lek. The appreciation of exchange rate in Lek, accompanied by stable inflation values in the largest trade partners of Albania, has impacted the decrease of inflation value imported during 2004.

Licensing and regulatory framework During 2004 the banking system in Albania was characterized by dynamic developments, either in terms of increasing the number of banks operating in the market or in terms of extending the banking network in various areas of the country. At end of 2004 the number of banks in Albania was 16, from which 2 banks are totally with domestic capital and 14 other banks have foreign capital. On April 2004 the banking system was further consolidated with the approval on the ownership transfer of 100 percent of the Savings Banks’ stock to Raiffeisen Zentralbank, as a crowning of the privatization process of this bank. Also, the Popular Bank Jnt. Stk., the second bank with totally Albanian capital entered into Albanian market. An application for establishing a new bank with wholly Albanian capital was also submitted. This application has recently received the preliminary approval for licence, pursuant to requirements of the Law “On Banking System in the Republic of Albania”. Parallel to development and extension of the banking system and the products it offers, further improvements and amendments have taken place in the regulatory packet of banking supervision. During 2004, the Guideline “On bank regulatory capital, the Regulation “On capital adequacy”, the Regulation “On credit risk management” were revised, and the Regulation “On money laundering prevention” was adopted. Also, during 2004 work was done for making improvements in the existing Law “On Banking System in the Republic of Albania”, with the goal to realize its adoption by the Albanian Parliament within 2005.
Overall, this is akin to writing deeply out-of-the-money options, exposing the banking system to tail risk. That should not be too surprising given that commercial banks’ liabilities are money, and so they are in the business of providing liquidity insurance. But it does make it difficult for market participants to assess, and price for, how much risk there is, albeit contingently, in the system as a whole. Conclusion Many of the developments I have reviewed are, of course, good news. Most obviously, longer life expectancy! Greater macro economic stability; financial innovation distributing risk more efficiently – these are pretty good things too, including for you as corporate treasurers. As a result, some risks have been reduced or are now easier to manage. But risk management challenges do unquestionably remain for you as corporate treasurers. Some, such as those arising from pension provision, essentially boil down to your appetite for risk and the mix of business/financial risk you want. Others stem from a range of uncertainties in capital markets. When and how global imbalances will be resolved. Whether risk is underpriced. How still-new structured finance markets would withstand a marked pick up in defaults. You will each have your own list. Those uncertainties and risks have to be identified, priced and managed. The official sector cannot make them go away. But it is our mission to reduce uncertainties stemming from monetary policy and its implementation. Some important sources of uncertainty in the past were, in fact, avoidable.

Singapore’s financial system has, by and large, weathered the crisis well. However, we must not be complacent and we need to prepare ourselves to respond to any future challenges. There are three areas which MAS has been working on and which we will continue to focus on in the coming year: first, sustaining macroeconomic stability in the postcrisis period; second, strengthening the financial system; and third, maintaining the growth of Singapore’s financial services sector. Sustaining macroeconomic stability in the post-crisis period 4. The strong pace of growth seen in the first half of this year is not expected to be sustained. Growth is likely to have peaked at the middle of this year, and will moderate to a more sustainable rate, as external demand slows after the post-crisis bounce from stimulus measures and inventory effects wane worldwide. For 2010 as a whole, the Singapore economy is expected to expand by 13 to 15%. 5. After two quarters in negative territory, headline inflation turned positive in Q1 this year and reached 3.1% in Q2. For the rest of the year, headline CPI inflation is expected to rise, reflecting higher car and commodity prices on a year-ago basis. However, the outlook for underlying price pressures remains largely unchanged from MAS’ monetary policy review in April. Despite stronger-than-expected GDP growth, the pass-through of domestic business costs to retail prices due to tightening factor markets is expected to be moderate, alongside the slowing in the economy.
In the UK, we adopted a target for inflation as long ago as 1992 and the whole framework for taking decisions about interest rates was overhauled after the 1997 election. I am sometimes asked how different British economic history would have been if we had adopted the present approach to monetary policy at various landmark dates – such as 1976 or 1979. This is a hard one. Tolstoy famously said that all happy families are alike, but unhappy families are each unhappy in their own way. It is rather the same with monetary policy. There are very many ways of getting it wrong – the UK has some experience here - but the hallmark of all good monetary policy is what Hans Dietrich Tietmeyer (President of the Bundesbank in the 1990s) used to call ‘the three Cs’: credibility, consistency, and continuity. BIS Review 116/2006  3  My own view, for what it is worth, is that there has been a virtuous circle over the past 10-15 years when central banks have taken advantage of relatively benign global conditions to embed the three Cs, by successfully implementing better policy-making frameworks and establishing strong reputations for competence on the back of excellent track records. The Bank of England would have faced a tougher challenge in doing this in the economic circumstances of the 1980s, and certainly the 1970s – even if the political consensus had existed to support such an experiment (which it didn’t).

The global forest acreage has reduced by 40% in the last 300 years. In many countries around the continents, hectares of forests are lost annually, resulting in severe deforestation issues that will leave adverse consequences to future generations. Sustainable development is hence paramount, necessitating financial support, strong political will and fundamental cultural changes to create the necessary enabling environment. Increased awareness for sustainable development is beginning to profoundly change the behaviour of consumers, who are beginning to demand for more green solutions. This trend and awareness has begun to shape preferences for goods and services, as evident from a survey of young adults conducted by the Boston Consulting Group where 73% of respondents stated that green factors are amongst the key considerations in making purchasing decisions. More households and businesses are adopting green lifestyles – a trend that is already well-entrenched in many advanced countries and gaining rapid momentum in several developing economies, including in the ASEAN region. The environmental products and services market globally is estimated to be worth USD1.4 trillion. The growth potential of this market is tremendous. On the financing side, the United Nations Environment Programme Finance Initiative has made important strides, working closely with the financial sector to develop and promote linkages between sustainability and financial performance, and in developing models for best practices including risk management. Financial institutions themselves have taken the initiative to adopt the Equator Principles, where financial institutions commit to channel financing to projects which are both economically viable and environmentally sustainable.
Less clear principles for policy in combination with reduced transparency regarding, for example, the reasons for making decisions, will hardly lead to a policy which will be more successful in the future. Many years' experience in the vicinity of economic policymakers suggests to me that the opposite is  4  BIS Review 38/2001  more probable. Among the most important things one can do in this type of work is to try to build up clear processes which contribute to decision data, based on good economic analyses, being produced in a systematic way. And that this decision data is subjected to as wide an examination as possible. I am convinced that our ambition to be as clear and open as possible has served us well. Starting with a numerical, symmetric objective and a guiding rule, in the way that we have done, we have been forced to think through every question with which we have been confronted in a more precise manner. This has resulted in our gradually increasing our understanding in a way which I think would hardly have been possible otherwise. Certainly it is not yet over, and in this context, future developments will place new demands on us and impose further intensification and exactitudes. There is also a connection between transparency in relation to the outside world on the one hand, and internal work on the other. In getting rid of secrecy we were able to introduce a more realistic debate on monetary policy.

If so, presumably this should be supported by other central inflation indicators, such as the overall utilisation of resources in the economy. If one is sufficiently convinced about this, there is, as I see it, an argument for taking action. But precisely as with the previous case involving deregulations, it is necessary to make a good case for deviating from the normal rule. It is also necessary to make clear what one stands to gain by acting now. This leads me to the question of what approach central banks should take to developments in asset prices which are not thought to immediately endanger price stability, but which risk leading to financial  2  BIS Review 38/2001  imbalances or real imbalances. There is no consensus on this in the academic literature. The prospect of intervening immediately poses the next question: how can we know if an asset is over-valued or not? If one does decide to act, a third question is raised: how can one burst the "bubble" in an organised way? Listing these problems is usually sufficient to make many of my colleagues in the central bank world come to the conclusion that monetary policy should not be used to try to stabilise asset prices. My own opinion on this question is, however, somewhat different. In any case, it is reasonable to put the argument in a larger perspective. Apart from price stability, the Riksbank has the objective of promoting an efficient and stable payment system.
So the question then is – should Islamic banking be the conduit for this sort of financing model? When the business climate is good then the answer is yes – but in an environment where certain sectors decline significantly such as the property market, it could adversely  4  BIS Review 49/2010  impact Islamic finance institutions, that could that suddenly finds itself saddled with assets that it cannot sell. There are ways to minimize such inventory risk – but we are making a big assumption here that ALL Islamic banks will behave rationally at all times. Although clearly Mudharaba and Musharaka should be in the Islamic Bank’s toolbox, in taking a wholesale view to move towards asset based financing – it is imperative to look at the overall implication of such a shift. For the purpose of discussion, let’s consider for the moment that the entire economy is premised on asset based financing. We must ask ourselves, in that scenario – would a financial system purely based on profit from equity based financing be necessarily more efficient than one based on asset financing or debt? Does it benefit the entire Ummah? Consider this possibility – who would have better information on business climate – the Entrepreneur, the Bank or the Client? Remember the asymmetry of information? A shift from the debt based financing to equity based financial system does not, necessarily lead to a better equitable outcome to society; instead, if not properly implemented it could cause uneven benefits to various stakeholders.

Or is it a natural phenomena? Are players in the industry not aware of the benefits? Or are they aware of the benefits, weighed it against the potential risks and decided not to pursue this strategy because of business and operational reasons? First let’s analyze the potential benefit. For example, a Bank enters into a joint venture with a housing developer. The financing of the project in the form of equity can yield a lucrative return when the development is completed and then sold. Margin for profit upon sale can be high, as Bank enters into the development at the earliest chain of production. The Bank can still provide financing for the home purchasers, the difference this time – the homes are the Bank’s own asset. Those are direct impact; there are positive impacts in other key areas as well. What happens to the profit from sales and financing? It gets channeled back to Depositors (giving them higher returns on the deposits). This concept would, completely, according to equity-based financing proponent, move Islamic banks away from mimicking conventional products and would truly operate as the shariah had wanted it. Is this true, are there any other factors to be considered? In terms of risk assessment, such a transaction will necessarily inject greater market discipline among industry players. This business model is premise on a few fundamental assumptions.
4 June 2021  Remarks for the panel discussion at the BIS-BdF-IMF-NGFS Green Swan 2021 Global Virtual Conference  Many thanks, Morgan, and thank you also to the BIS, Banque de France, IMF and NGFS for the invitation to take part in this panel. As you perfectly know in both my capacity as Governor of the Bank of Spain and member of the Governing Council of the ECB, and as Chair of the Basel Committee I can say that the topic of climate-related financial risks is one of the top priorities over the coming years. In both cases, I think the right way to frame the issue is to take our mandates as the starting point. In the case of the Basel Committee, as the primary global standard setter for banks, our mandate is to strengthen the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability. If we combine this mandate with the fact that, as has been discussed in various sessions during this conference, climate change poses risks to the financial sector (physical and transition risks) that can be significant in magnitude and therefore can impact financial stability at the global level, one should conclude there is a need for supervisors, regulators and, of course, the Basel Committee to act. In particular, we need to guarantee that individual banks and the banking system as a whole are adequately prepared to identify, measure and mitigate climate-related financial risks. This is the approach we are following at the Basel Committee level.

But the inflation target remains our primary objective and we will have to be careful not to allow pressures to build up from excess demand. It would be a relief, probably for both you as investors and for us as policy makers, to get back to more normal policy conditions, but my own judgement is that we are still some way off the point where it is appropriate to start raising Bank Rate and that when it is time, it would be appropriate to do so only gradually. BIS central bankers’ speeches  5