samchain/econo-pairs-v1 huggingface dataset:
One disadvantage of this index, however, is that some of its components have not yet been finalised. As an aid in the analysis of price trends, the Riksbank’s inflation reports include various indicators of underlying inflation. The tolerance interval of ±1 percentage point serves, among other things, to accommodate the various transitory price movements that normally occur. Experience has shown, however, that in periods when the transitory price effects are extensive, inflation may move outside the interval without this by itself having consequences that should be considered in monetary policy. Thus, the tolerance interval represents the range that is normally expected for fluctuations in CPI inflation. It serves to indicate that the target variable, the CPI, cannot be controlled exactly. Still, I am convinced that people’s awareness and understanding of these factors will gradually grow as time passes. This will happen not least as a result of the efforts of all those knowledgeable analysts and business journalists who follow monetary policy closely and mostly do their utmost to explain these complex details to a broader public. Exchange rate of indirect importance for monetary policy Now I should like to say something about the role of the exchange rate. Our monetary policy strategy is premised on a flexible exchange rate. In other words, the Riksbank does not explicitly target the exchange rate and, given Sweden’s position on ERM, it seems today that the rate will continue to be flexible at least until a new political decision is taken on the issue of EMU.

The central banks also cooperate on matters of this type in the framework of the Bank for International Settlements in Basle, Switzerland, where representatives of central banks throughout the world meet regularly once a month. Conclusion To sum up, the financial system is undergoing a rapid transformation and development. The middle of the 19th century is commonly associated with the industrial revolution. Perhaps future historians will see the late 20th century as the era of the financial revolution. Europe’s move towards a single currency will accelerate the trend. The transformation and development of the financial system will ultimately contribute to future prosperity. But experience has taught us that it is a development which needs to be monitored very closely and presupposes a high degree of discipline in economic policy. It requires a great deal from decision-makers in the political system and the supervisory authorities, as well as from those of us who work in central banks. BIS Review 81/1998  -6-  Developments in the financial field are creating large opportunities. But it is also important to bear in mind that major, far-reaching changes normally entail risks. In view of these risks, every agent in the financial system needs to act wisely and discerningly. Only in this way can the full benefits be drawn from the opportunities that financial developments are providing. BIS Review 81/1998
This will be positive as long as we can avoid the defaults we saw at the beginning of the crisis, which were created by vehicles that were opaque and complex and impossible for investors to understand. EUROWEEK: At the same time, presumably French banks should not be discouraged from using the skills of their derivatives technicians, which are recognised throughout the world? Noyer: I agree completely. That is why I have been reticent about the idea of separating investment banking and retail operations. I don’t think that is an appropriate concept. We live in a world where medium-sized and large corporates require access to bank lending for a large number of banking activities but also for market operations. Exporters, for example, also use the markets to hedge their risks – so they’re re-shaping the risk on their balance sheet by changing the structure of their liabilities or their assets if they have claims arising from trade. For all these activities and risks, giving corporates access to banks which are able to respond to their entire commercial and investment banking needs is crucial for the development of the economy. On the other hand, what we don’t want to see is banks embarking on proprietary trading which is totally disconnected from their banking activities. The ideal approach is to have a clear separation between what we in France call "purely speculative activities" – in America they would call it "prop trading" – and what is useful for the financing of the economy.

We may not have the entire panoply of banking strengths, but we have a number of very strong niches which will continue to make Paris a strong hub, which can and should continue to play an important role in the European financial services sector. EUROWEEK: At the same time, would you like to see the big French banks continue to be active on the global stage, where their experience has been mixed? They didn’t do very well in southern Europe, did they? Noyer: There was a time when there was a feeling in the market that we were going to move towards a return to more national banking system, which meant that international diversification was basically a weakness. Things have changed quite a lot and I don’t think anyone would argue that the move by BNP Paribas to acquire Fortis during the crisis was not a clever one. The French banks weren’t alone in believing that because we were supposed to have a single market in Europe, it was natural for banks to expand to neighbouring countries – just as it is natural for banks originally set up in Scotland to expand to England. So it was natural for French banks to see the eurozone and future euro area members in central and eastern Europe as their backyard. Yes, we had the Greek problem, which was painful and costly for Crédit Agricole. But this was really an extreme case and hopefully we’ll never see similar accidents again in our banking industry.
In the following years the starting point for the monetary programme was the expected development of both real GDP and the inflation rate with the corrections for the envisaged changes in income velocity of money (in the Czech terminology the relevant aggregate M2 consists of currency and demand deposits, time and savings deposits and deposits in foreign currency). To be up-to-date, in 1997 we are targeting the increase of money supply by 8-12 per cent. The philosophy behind money supply targeting is well known. Without a deep reflection upon this theme I recall the message of famous equation of exchange: Total monetary expenditures have to increase proportionally, if the velocity is constant, to nominally expressed GDP. Nothing more and nothing less is required from monetary policy. Monetary policy should serve one goal only: to repress high inflation and provide for a stable currency. As a rule of thumb this reasoning is both understandable and acceptable but a more profound discussion must draw our attention to several points: Neglecting at this moment the different versions of the equation of exchange what can we understand under the heading “total physical volume of transactions” on the right side of this equation? For the economies in transition the difference between the total volume of transactions and transactions counted in national income accounting is important. A part of the transactions is used for intermediate-good or inter-business expenditures and is not counted in the GDP accounts.

Jointly with several countries in the region, we were positioned in the group of efficiency enhancers, meaning that reforms must be intensified to increase the growth efficiency and quality. Increasing the technological readiness was one of the identified priorities. Thus, in the last decade, the Macedonian productivity level has been staggering to around 40% of the level of advanced economies, such as German economy. This clearly points that if we want to grow at stronger pace and in a more sustainable, green and inclusive way, we need to continue intensively addressing the structural hurdles for the key long-term determinants of the growth: labour, capital and productivity. Let me focus on productivity. At this point, I think I can bring in the highlight of the latest Transition Report, i.e., innovation and digitalisation of the economies. The adoption of digital technologies can unleash productivity revival and possibly counteract some forces that act as drag on growth, such as adverse demographic and emigration trends that dampen the labour supply. What is the pace of digitalization of the Macedonian Economy? The new EBRD digitalization index points to a progress in both segments that are captured by the index – first, the preconditions for the use of digital technologies (digital infrastructure, skills, regulation, provision of government services), and second, the actual use of digital technologies by individuals and companies. The progress is particularly visible in the area of regulation and provision of government services, where score has more than doubled.
But this is also a time when central banks, international organisations, and leaders generally must work with optimism and resolution towards improving the international financial system. Crisis can provide the stimulus to reform, the determination to change, and the spirit to co-operate. There is no better illustration of this spirit than Bank Negara Malaysia. Nor is there a more happy example of a central bank working in partnership with the people it serves to the benefit of the country. It is therefore with the greatest of pleasure and respect that I join you all in congratulating Bank Negara on its 50 years of achievements and in wishing the Bank and all who are associated with it continued success and happiness in the next 50 years and beyond. Tahniah kepada Bank Negara Malaysia di atas Ulangtahun ke lima puluh!2  2  4  Congratulations to Bank Negara Malaysia on its 50th anniversary. BIS Review 12/2009

Such a process is undeniably messier, less predictable and possibly harder to explain in a consistent way. But it is also precisely these very characteristics that make it much more relevant in the world that we live in today. 3/5  BIS central bankers' speeches  At the Bank, our work on proportionate regulation and risk culture aims to support this evolution. For example, the innovation sandbox allows financial institutions greater regulatory room to test innovations within a controlled environment and learn from emerging experience. We are also examining options to better tailor the regulatory framework to the size and complexity of financial institutions. And we are directing greater supervisory focus on an institution’s prevailing risk culture to determine the degree of supervisory intensity that we apply to individual institutions. We expect these developments to pave the way for more constructive dialogue with institutions to achieve regulatory frameworks that will deliver a sensible balance and greater synergies between risk and innovation. Building resilience The third important shift that I want to mention concerns a stronger focus of innovative risk management approaches on building resilience, in addition to simply averting or reducing risks. In the area of network security, organisations are increasingly adopting an “assume breach” paradigm where they operate on the assumption that a risk event has already occurred. In the financial world, reverse stress testing is being incorporated into risk management approaches to identify the scenarios that would break an institution.
Although far from clear at the time, the later decision to remove from the Bank of England the power to regulate banks would return to haunt us. Over the next decade, the new Monetary Policy Committee established a track record of low and remarkably stable inflation. In my first speech as Governor in 2003, I warned that this stability was unlikely to continue. And it didn’t. Within a few years, and despite low inflation, the advanced economies of the world were plunged into a financial crisis which led to the sharpest decline in world trade since the 1930s, recessions across the world, rising unemployment and the near collapse of our banking system. BIS central bankers’ speeches  1  So tonight I want to try to answer three questions. First, what went wrong? Second, what are the lessons? Third, what needs to change? Let me start by pointing out what did not go wrong. In the five years before the onset of the crisis, across the industrialised world growth was steady and both unemployment and inflation were low and stable. Whether in this country, the United States or Europe, there was no unsustainable boom like that seen in the 1980s; this was a bust without a boom. So what was the problem? In a nutshell, our banking and financial system overextended itself. That left it fragile and vulnerable to a sudden loss of confidence. The most obvious symptom was that banks were lending too much.

Last autumn, the Independent Commission on Banking, chaired by Sir John Vickers and comprising some of our most brilliant bankers and economists, published recommendations on how to do this. It’s vital that Parliament legislates to enact these proposals sooner rather than later. Regulation, resolution and restructuring of the banks are the three Rs of a new approach to make banking, and so our economy, safer. The three Rs will be central to the work of the Bank of England. And all of that will come on top of our responsibility for monetary policy to reduce inflation while supporting a gradual recovery of our battered economy. It’s the biggest challenge the Bank has faced for decades. 4  BIS central bankers’ speeches  We are up to the task. Already we see vested interests rise up to defend their bonuses and profits. But, as an independent central bank with over three centuries of history, we can resist those short-term pressures and take the longer view needed to prevent another crisis. Independence is, however, not the discretion to do as you wish, but the exercise of specific powers delegated to us by Parliament to meet a remit set by Parliament. So with independence come the responsibilities of transparency and accountability. Back in 1997, with independence to set interest rates, we revolutionised the openness of monetary policy. Our decisions, deliberations and even the disagreements within the Monetary Policy Committee are open to public scrutiny.
It is of course possible to constantly register whether a crisis has occurred or not, but if a crisis has not occurred it is difficult to determine whether the measures taken have been well-designed or not. As it is a case of unpopular measures, one might think that it would be an advantage if the decisions were made by people who in practice cannot be dismissed. But this this may not be a particularly good solution from a democratic point of view. At the same time, macroprudential policy may address the issue of macroeconomic stability in such a way that it comes close to what monetary policy aims to achieve. The historicallyhigh level of household indebtedness in Sweden does not perhaps in the first instance pose a risk of financial crisis but to macroeconomic development in the longer term. A fall in housing prices in connection with an economic slowdown with increased unemployment could lead to a severe downturn if the households reacted by significantly increasing their saving to compensate for declining wealth.21 This risk relates to financial and macroeconomic  18  Similar criticism was expressed by my colleague Kerstin af Jochnick in the speech “Monetary policy and macroprudential policy”, 25 January 2013. 19  The European Systemic Risk Board (ESRB) highlights the role of the central bank in its recommendations on institutional frameworks for national macroprudential policy (see the Recommendation of the European Systemic Risk Board of 22 December 2011 on the macroprudential mandate of national authorities).

As a complement to a good corporate governance structure, credit institutions should be equipped with a sound risk culture. Such a culture should infuse the design and workings of the organisation and its management criteria, systems and methods; it should be founded on control procedures whose reliability has been duly tested; and its application should be overseen by departments possessing sufficient power and independence. All this should be substantiated by internal and external auditors and be highly visible to the market. Finally, I would like to stress the need for all types of financial institutions to apply due diligence. They should know their clients and systematically monitor their operations so they might prevent, and where necessary curb, not only money laundering and the funding of terrorism but also any other attempt to use the financial system for illegal or unethical purposes. Beyond the obligation all individuals and corporations have to observe and comply with the law, good practices in this area have an important supervisory dimension, as they play a decisive role when preventing or curbing such serious risks as those pertaining to reputation, legal risk, and so on. Despite the unquestionable importance of market discipline and good corporate governance, these are complements to banking supervision and, therefore, cannot replace it in respect of its essential task, namely "to promote the sound functioning and stability of the financial system", as stipulated in article 7 of our Law of Autonomy.
•  Greece is preparing for a historic election that may well decide its future in the Eurozone. •  Spain is experiencing severe strains in its banking system against a backdrop of a sharp reduction in GDP, high unemployment, and a deteriorating real estate sector. •  Italy and Spain are facing higher sovereign borrowing costs that threaten fiscal sustainability. To be fair, Eurozone governments have been taking extraordinary measures to help stabilise the situation, reduce fiscal deficits, and restore growth. But they have reached a turning point where bolder, decisive actions will be needed to reverse the tide. The next few weeks and months will be critical. Islamic finance: challenges to overcome Let me turn now to the subject of our conference. Islamic finance has shown remarkable resilience during the last five years – perhaps the most challenging economic environment in the post-war era. The industry has grown by an estimated 20% annually in the last five years to reach $ trillion in total assets in 2011. Islamic banks have grown both in number and in scope. BIS central bankers’ speeches  1  But the sustained growth of Islamic finance is in no way guaranteed. For Islamic finance to continue thriving, the industry has to overcome a few key challenges. But in every challenge, there is also opportunity. Let me highlight three of them this morning.

Against this background, it is timely that SEACEN Centre has initiated this course to explore the nature of financial intermediation, the role of financial markets in the allocation of resources and the need for appropriate regulatory framework. As regulators, we need to understand the concepts and the basics of the working, the pricing and trading strategies of the derivatives markets and instruments, how financial entities use them in risk management, as well as their potential impact on financial system stability. But more importantly, in these two weeks, we will benefit from the presence of a number of distinguished speakers that have kindly given up their time to be with us. I hope we will use this opportunity fully. On this note, I would like to thank Mr. Sunil Sharma, Chief, Asian Division, IMF Institute, for his efforts to coordinate this course with the SEACEN Centre and the Bank of Thailand. I trust that this course will be most fruitful and rewarding for all the participants, but above all that the interaction among yourselves will provide an opportunity for you to learn from one another, and strengthen the bonds of friendship that bind the works of our institutions for many years to come.
That action alone may serve as the most eloquent statement that all is not well with the investment climate in the country thus risking existing investment and keeping at bay prospective investment. The general findings of the report fortunately are positive. Political stability and governance, economic and regulatory reforms some of which have led to improvements in the business environment, macroeconomic gains reflected in robust GDP growth, low inflation, reduction in budget deficits and relatively stable exchange rate are some of the elements making up the improved investment climate. In contrast to past perceptions which focused on the  BIS central bankers’ speeches  1  volatility of the investment climate, high levels of poverty, absence of institutional governance coupled with corruption, the report paints a changed picture. Investors are seeing Zambia as offering a stable and predictable environment with an elected government and functional democracy. It is this positive environment which is seen as explaining why Zambia remained resilient through the financial crisis of 2009 and enabled the country to rebound strongly in 2010. It is noted in the report that foreign private capital inflows into Zambia posted a strong recovery to over US $ billion from a slump of below US $ billion recorded in 2009. But as we review this report, it is important not to gloss over some of the challenges that must be addressed in order to consolidate this positive environment.

The Zambia Development Agency will incorporate the recommendations submitted from this exercise into its policy recommendations on how to improve the investment climate in the country. With these few remarks, I wish you good deliberations. I thank you…  2  BIS central bankers’ speeches
This reflects the systemic impact CCPs can have in situations of extreme stress, by disrupting repo markets or channelling liquidity strains to banks – which are also monetary policy counterparties – thus affecting the circulation of liquidity in payment systems. Ultimately, CCPs may need to rely on central banks as lenders of last resort. Central banks therefore have an important role to play in the regulation of central clearing – a notion which is largely recognised but often misunderstood. In this context, let me say a few words about recent developments in the area of CCP regulation, and in particular the outcome of the legislative process regarding the revision of the supervisory framework for CCPs, the European Market Infrastructure Regulation (EMIR II), and the recommendation to amend Article 22 of the Statute of the ESCB and the ECB. The ECB recommended to EU legislators that its Statute be amended to clarify that the ECB had legal competence over CCPs, which would have allowed it to perform its statutory monetary policy role under EMIR II. We made the case that the ECB needed explicit general competence to monitor and address risks relating to our mandate, including broad discretion to take necessary measures in exceptional situations where the stability of the euro is at stake.

(2018), “ Euro Clearing – the open race”, keynote speech at the Frankfurt Finance Summit, Frankfurt,  29 May. 5 Bursian, D. and Faia, E. (2018), “Trust in the monetary authority”, Journal of Monetary Economics, Vol. 98, pp. 66–79. 3/3  BIS central bankers' speeches