samchain/econo-pairs-v1 huggingface dataset:
The Fed is in the process of implementing a framework that will embed compensation practices more deeply into the supervisory process. We have made it clear to the major banks and dealers that 2009 compensation should be consistent with the recently developed Financial Stability Board principles on compensation, which emphasize the importance of appropriate incentives. Finally, there is considerable work underway on the “too big to fail” problem. On this front, there are two main strands of work. First, we must improve the resolution mechanisms for large complex bank holding companies and nonbank financial firms that become troubled, and to complement that initiative with efforts to strengthen the financial market infrastructure. If regulators had at their disposal an effective resolution mechanism for large financial firms and the financial system was made more resilient to shocks, then the number of firms that were indeed “too big to fail” would be significantly reduced. Second, after building such a resolution mechanism, we must still act to ensure that no special advantage persists from being perceived by creditors, counterparties and investors as “too big to fail.” After all, it will be hard to build a resolution mechanism that credibly ensures that any firm will be allowed to fail under any circumstance. If there is a chance that a firm may be too big to fail, then there  3  For more on liquidity issues see “More Lessons from the Crisis,” Remarks by William C. Dudley at the Center for Economic Policy Studies (CEPS) Symposium, Princeton University, November 13, 2009.

We should think about how market participants will react to the potential politicization of the monetary policy process. Knowing that a decision to raise interest rates today might be criticized by the GAO six months later, market participants could begin to worry about the Fed’s willingness to make tough choices in terms of tightening monetary policy. If that were the case, inflation expectations could become less well anchored. This, in turn, would make it more difficult to keep inflation under control, even if the fears of market participants about the Fed ultimately turned out to be unwarranted. Our monetary policy decisions are already public and a wide range of Fed officials explain the rationale for our actions. It has been well established around the world that monetary policy independence leads to better outcomes in terms of unemployment and inflation. In my view, any legislation that would cast doubts about the Fed’s independence in the conduct of monetary policy would not be beneficial to this country. Thank you for your kind attention. I would be happy to take a few questions. 8  BIS Review 161/2009
  JPM has made material contributions to Singapore’s financial markets with developments such as the launch of the Singapore Kilobar Gold Contract with the SGX in October this year. 2  BIS central bankers’ speeches    JPM was one of the lead managers in Singapore’s first RMB corporate bond issuance earlier this year, which helped to broaden the range of RMB product offerings in the market. On this note, let me congratulate JP Morgan on 50 years of growth in and with Singapore. MAS looks forward to deeper partnership with JP Morgan in further developing Singapore’s financial sector. I am confident that your strong presence in Singapore will serve you well as you extend your footprint in Asia. Thank you for being part of the Singapore growth story. BIS central bankers’ speeches  3

Economic outlook and credit conditions Let me turn to the first of those areas, the current outlook for households and businesses, and what that means for your lending portfolios. Here the backdrop is clear. Over the past few years, the UK economy has faced a series of events which our Governor, Andrew Bailey, summarised in recent remarks4, including the Covid pandemic and the interruptions to economic activity that caused; and the rise in energy prices caused by Russia’s invasion of Ukraine. Andrew also outlined the challenging economic conditions we now face including through inflation, which at 10.1% 5 remains well above the 2% target and continues to outstrip wage growth, and a growth rate which the latest Monetary Policy Committee report6 estimates is around 1% per annum compared to a typical rate of nearly 2.75% in the decade leading up to the 2008 financial crisis. In response to inflation, the MPC has raised interest rates 11 times to 4.25%. Whilst inflation is expected to fall sharply by the end of this year and growth to pick up, the impact on the finances of the households and businesses that you serve has been significant. We have seen this through indicators showing consumer confidence at its lowest levels since the 1970s7, households increasingly focusing on value and cost savings in their spending habits, decreased demand for mortgage borrowing in the first quarter of this year8, and subdued demand for credit from corporates who remain under pressure from the impact of higher interest rates9.
The result of which was the remarkable speed of adoption of QR code for payment; in less than one year since its launch, QR code payment is accepted by over 2 million merchants all over Thailand. More importantly, financial institutions within the region have already taken advantage of the interoperability of the QR code by applying the common standard in their applications for cross-border transactions with their partners. We are certain there will be many similar partnerships in the future. Second, we must establish basic and open digital financial infrastructure so that further innovation can emerge to serve a wider range of consumers. Open infrastructure enables service providers to build value-added services on top at low cost. For instance, e-payment services were created based on our PromptPay infrastructure, such as bill payment and request-to-pay features. These, in turn, have helped facilitate e-payments for merchants and consumers and improved the overall e-commerce business landscape. Even charitable organizations are able to take advantage of the open-platform with e-donation. Meanwhile, the adoption of electronic payment through a common infrastructure can further create the data essential for information-based lending or for banks to improve on their risk models. Third, we must facilitate greater convergence of rules and regulations within our region to make sure that existing regulations do not impede advancement of financial connectivity. Efforts are being made in this area. ASEAN central banks are working on initiatives under the ASEAN Banking Integration Framework to make banking regulations more cohesive, aiming at achieving greater consistency with international best practice.

1/5  Ladies and gentlemen, Policymakers must take on the challenges of developing our financial systems with a great sense of urgency. Thus far we have seen integration of the ACMECS economies on various fronts—through economic connectivity in trade and investment and through people-to-people connectivity in migration of labor and tourism. Yet, financial connectivity in our region lags behind developments in other sectors and should be prioritized so that it does not hinder further economic integration. Fortunately, today we have the opportunity to leapfrog development in our financial systems and regional financial connectivity because of rapid advancement in technology. Not at any point in history have powerful technologies been so affordable and accessible. For instance, the costs of industrial robots and smartphones are now 30 times and 50 times cheaper than those with similar features just ten years ago. Moreover, there are a diverse and extensive number of software applications as well as know-hows available to satisfy businesses and consumers; many of which can be accessed online and obtained free-of-charge. All of these have allowed for greater adoption of mobile devices as well as emergence of new financial technology platforms. Looking around our region, there are many exciting developments taking place that can enhance our financial systems and strengthen their productivity, inclusivity, and immunity. For instance: a.
One way of illustrating this is to look at the Economic Tendency Survey of the National Institute of Economic Research, which shows the households’ and companies’ aggregated expectations for the period immediately ahead. All in all, this survey has been at a low level throughout the year, which indicates that Swedish companies and households are now less confident about the future (see Figure 8). 2  BIS central bankers’ speeches  The Swedish economy has coped relatively well… Over the last 12 months, growth in Sweden has thus been much more subdued than during the strong recovery in 2010 and early 2011. Sweden has nevertheless withstood the problems abroad relatively well, and the Swedish economy continued to grow at a good rate during the first six months of this year. 1 This is partly because the development of domestic demand has been relatively stable. There are several reasons why Sweden has coped so well. Sweden’s stable public finances, for example, have meant that fiscal-policy consolidation, which has otherwise dominated the economic-policy agenda in several other countries, has not been necessary in Sweden. Competitiveness has also developed well. This can be seen very clearly if we look again at Figure 6. There are also a number of explanations for this positive development. We have had a period in which productivity grew very strongly in Sweden for several consecutive years, inflation has been low and stable and pay formation has improved significantly compared with the period prior to the introduction of the inflation target.

Financial stability is a precondition for monetary policy being able to work as intended, while monetary policy can affect financial stability. It is therefore rather natural to take the risk of financial imbalances into account in monetary policy. However, there must be a reasonable connection between alternative regulations and monetary policy. Regulations can be described as an indirectly-targeted means of raising or lowering interest rates in a certain social sector. If the regulations deviate significantly from the monetary policy that is being conducted, distortions and contradictory messages will arise after a while in the financial sector. New control problems will emerge, for example through the appearance of shadow banks or through excessive borrowing abroad. As is so often the case, it is a question of finding the right balance. A low repo rate is justified, but how low? The economic situation over the last 12 months, that is the weak development of economic activity abroad and the low inflationary pressures, has made it necessary to gradually lower the repo rate in order to enable inflation to rise towards the target of 2 per cent and to normalise resource utilisation (see Figure 1). This means that we have a very low repo rate today, which is also reflected in lower interest rates for households and companies (see Figure 10). Determining how low the repo rate should be entails balancing many different factors against each other.
The uncertainty bands are based on the Riksbank’s historical forecasting errors for these variables.6 The uncertainty increases as the forecast horizon lengthens. When one evaluates forecasts, one usually compares the current forecasts with a naïve forecast. Here I shall use the average of the series as a naive forecast. The forecasting error is measured as the standard deviation between outcomes and forecasts and the forecasting error for the naïve forecast is measured as the standard deviation for the outcomes themselves. The forecasting performance can then be expressed as how much smaller the actual forecasting error is than the forecasting error of the naive forecast. This measure of the forecasting performance is 1.0 if our forecasts are perfect and 0.0 if our forecasts are no better than the historical average. Figure 6 shows the forecasting performance for GDP growth and CPI inflation at 1–12 quarters ahead.7 As the figure refers to annual percentage changes, the first quarters are mixtures of known outcomes and forecasts. It is only four quarters after the most recent known outcome that we have pure forecasts. The figure shows that the forecasting error with regard to forecasts one year ahead is just over 20 per cent less than the forecasting error for the intended naïve forecast and not at all less two and three years ahead.

I think that monetary policy can best be understood in terms of the yield curve. The Riksbank implements its monetary policy by determining the repo rate, the interest rate the banks face when depositing money in accounts with the Riksbank overnight, or when borrowing money overnight. Thus, the Riksbank determines the short end of the yield curve. But the market determines the long end. Everything in between is a combination of the Riksbank’s influence and market forces. The long end is affected by many factors, not merely expectations of the repo rate. It may, as recently, be a question of a flight to safety, which has pushed up, for instance, Greek interest rates and pushed down American, German and Swedish interest rates. The Swedish yield curve is currently much lower than is consistent with the Riksbank’s repo-rate path (see Figure 14). Moreover, the banks’ lending rates are affected by other factors than the repo rate, which has led to increased spreads between the repo rate and the banks’ lending rates. This means that what is known as the transmission mechanism – how the Riksbank’s repo rate affects economic developments – has probably changed. But it is difficult to say how it has changed. On the whole, we should develop the financial part of our macroeconomic models to give greater consideration to the financial markets.
That is achievable for relatively simple commercial banks operating in a single jurisdiction, and all of whose contracts are under the law of that jurisdiction. It is harder for so-called Systemically Important Financial Institutions (SIFIs), spanning many markets, jurisdictions, and currencies, with complex counterparty relationships. As one international colleague put it, the standard toolkit would face an “exponentially greater challenge”. Top-down capital restructuring: bail-in That is why resolution authorities in a number of countries are exploring how to execute “top-down” resolutions of complex groups, employing bail-in of debt issued by the holding company or top-level operating company. The US and UK have been working together very constructively in planning how to operationalise that strategy; and if we continue to make progress I hope that we will be able to say more about it over the next few months. Imagine that a large, complex, global firm – just one legal entity for the moment – has 20 lines of business, each the same size, which is to say using the same amount of balance sheet and capital. Imagine it is 50 times levered. Now imagine that one of those lines of business is completely toxic, worthless. The firm is insolvent, bankrupt. Unless it can be resolved, it must cease trading and go into insolvent liquidation. But, in this stylized example, only a single line of business is toxic; the other 19 are fine. In other words, the franchise has value. In the non-financial corporate sector, there are established tools for this.

To all of this, the EU Directive will be crucial in giving us all the tools we need. I really do believe that, with Dodd Frank already in place, it will help set the tone for the world. BIS central bankers’ speeches  5
While MAS will intensify its supervision, the first responsibility for soundness and prudence lies with the Board and management of the bank itself. Bank management must ensure that they have in place robust, group-wide risk management systems adequate to the new scale and risk profile of the combined entity. This again underlines the importance of top quality institutionalised, professional management for the banks. Competition We should not allow an enlarged bank, or a few banks in a consolidated banking industry, to use their market power to engage in monopolistic or other anti-competitive practices that raise prices, diminish consumer choice, or erect barriers to entry by other players. MAS does not think this will happen. It is unlikely that the largest bank in the system will have an over-dominant share. For example, if OUB merges with one of the larger banks, their combined market share of non-bank deposits will be at most about 30%. This will still be significantly less than the share of the largest banks in other small countries, like the Netherlands and Hong Kong. BIS Review 61/2001  3  Secondly, the competition will not just be among the remaining local players. The banking liberalisation programme will continue to introduce greater competition from foreign banks, in the range and pricing of products they offer and quality of service. Thirdly, the Government will be vigilant against any abuse of market power. The Competition Act that MTI is now considering will help us to do that.

Small depositors Given the prospect of mergers and rationalisations, it is natural that many bank customers are apprehensive and worried about how they will be affected. A merger will result in rationalisation of branch and ATM networks, which will inconvenience some customers. But overall, customers should have access to more branches and ATMs after the merger, even though not every existing branch and ATM can necessarily be retained. And because a larger merged bank can operate more efficiently and realise revenue synergies, it should be able to provide better service and greater choice to customers. Of course the bank will have to handle the implementation carefully and sensitively, giving customers adequate notice of changes and helping them to adjust. It is in the bank’s own interest to do this, and I am sure they will make every effort to do it well. Unfortunately this does not mean that as a result of a merger, every bank service will become cheaper or free. This is not possible, not because of mergers, but because of competition. Competition will force banks to watch their bottom lines more closely, and to make each service and product break even. It will become harder for banks to continue cross-subsidising services that they used to provide for free or below cost. That was a luxury that they could only afford in a protected and languid market where profits came easily, a state of affairs which was unsustainable in the long run.
As growth in the developed world slows, weighed down by structural factors, will the global environment of increasing interdependence then dampen the prospects for the Asian emerging economies? Asia comprises highly diverse economies. South East Asia, with a population of more than 500 million people is strategically located south of China and east of India, has been since the 13th century an important trading hub connecting Asia to the West. Being the most open economies in Asia, and perhaps in the world, we, therefore stand to be the most vulnerable to global developments. While economic stimulus is vital for crisis containment, it will not, however, be sufficient to produce a self-sustaining recovery. The challenge is essentially the economic restructuring and transformation, the reform and rebuilding of the institutional capacity so as to remain effective in the new environment and to be well positioned to manage future shocks. As emerging economies in Asia transition into this post crisis era, three important structural shifts are transforming the region. The first is the economic restructuring and the strategy to pursue more balanced sources of growth. This has involved significant shifts to new areas of comparative advantage and new areas of growth, and the greater emphasis on domestic demand as a driver of growth. While the export sector continues to be important, the pattern of trade has changed significantly with the growing importance of trade with emerging economies, in general, and with Asia, in particular.

Distinguished speakers, dear friends, collaborators and guests, let me once more, as a host, to thank you for the precious time you dedicated, joining us in the celebration of the 60-th anniversary of central banking in the Republic of Macedonia, as well as for your participation in the today's conference. I wish you pleasant work and fruitful discussion, beneficial for all of us. Thank you. 4  BIS Review 100/2006
Rodrigo Vergara: The Monetary Policy Report and the Financial Stability Report Presentation by Mr Rodrigo Vergara, Governor of the Central Bank of Chile, before the Finance Commission of the Honorable Senate of the Republic, Santiago de Chile, 6 June 2016. *  *  *  Both the Monetary Policy Report of June 2016 and the Financial Stability Report of the first half of 2016 can be found at http://www.bcentral.cl. Introduction Mr. President of the Senate’s Finance Commission, Senator Andrés Zaldívar, senators members of this Commission, ladies and gentlemen, Thank you for your invitation to present the Central Bank of Chile’s vision on the recent macroeconomic and financial developments, prospects and implications for monetary and financial policy making. This vision is contained in detail in our Monetary Policy Report of June 2016 and our Financial Stability Report of the first half 2016. Over the last few months, the economy evolved in line with estimates in our March Report. Inflation declined to 4.2 percent annually and our new baseline projections – which I will share with you in a moment – indicate that it will return to the tolerance range within a few months. On economic activity, first-quarter GDP growth outperformed our March forecast. However, this year’s outlook foresees that it will remain below potential still for some quarters.

The aggregate financial burden stands at 15 percent of the sector’s disposable income (figure 15). Although non-performing indicators for bank consumer credits remain low, lately there has been some increase in the case of smaller amount loans. Here the risk arises of a more drastic deterioration of the labor market that could hinder the households’ repayment capacity. Any developments on this front will need to be closely monitored over the coming quarters. As for the banks’ lending activity, it is evolving in line with the state of the business cycle. Real growth in commercial loans is in line with lower demand for credit by firms, consistently  BIS central bankers’ speeches  5  with the reduction in investment and the results of our Bank Lending Survey. Consumer credit growth recovered slightly and mortgage loans are still growing strongly, around 10 percent in real annual terms. Thus, the real annual growth rate of total banking credit is around 5 percent. At the same time, aggregate default indicators are stable, despite some deterioration in commercial loans. As we pointed out in the last Financial Stability Report, our banking system’s capitalization levels have decreased in recent years. At the closing of 2015, the capital adequacy ratio (CAR) was 12.6 percent. Although the announced capitalizations and accounting changes will push this indicator slightly above 13 percent, a declining dynamic has been observed in the past five years. This contrasts with the international trend, where banks have increased capitalization in several jurisdictions.