samchain/econo-pairs-v1 huggingface dataset:
In Japan, the impact of the first arrow of monetary stimulus is at risk of being blunted by the recent consumption tax hike. •  The Bank of Japan has just announced a further expansion in stimulus – an openended asset purchase at a rate of about 15% of GDP a year until the inflation target of 2% is met. •  Meanwhile, the third arrow remains largely in its quiver. In China, the challenge is to strike a delicate balance between implementing the reforms necessary for long-term sustainability while supporting short-term growth and stabilising the property market. •  The reform agenda that emerged out of the Third Plenum offers a credible and comprehensive blueprint for the way forward. •  The leadership is keenly aware of what needs to be done and is committed. •  But significant execution risks remain. In India, there is a new government in place committed to improving the business environment for investment and building the infrastructure necessary for a strong manufacturing sector. •  But India needs to accomplish this while taming inflation and reducing its fiscal deficit, not to mention recalibrating the dynamic between the centre and the states that is critical for reforms to take root. BIS central bankers’ speeches  1  Reverting to mean or different this time? The weak and uneven global recovery post-Crisis has raised concerns about the pace of future economic growth and what it means for returns on investments.

As a recent paper by IMF staff stresses, a branch model for internationalization may be cheaper than one based on subsidiaries. However, it may also be riskier, both for the host and the home markets. Although nobody expects that these banks will need to be liquidated, we have seen sufficient black swans in recent years to show us that we need to hope for the best but be prepared for the worst. And if liquidation were needed, a stand-alone subsidiary model would have important advantages over a branch model, especially if there is substantial deposit taking activity at the local level. I am not saying that the liquidation of a global bank organized through subsidiaries would be an easy task. What I mean is that it would be much easier than for global banks which are deeply interconnected across countries through branches. 2  BIS central bankers’ speeches  The stand-alone subsidiaries model has an additional advantage, from the perspective of the supervisor. It is far more symmetric for the local supervisor than the alternative model, allowing them to really supervise the institution. And as a home supervisor, if a foreign bank has a significant share of a domestic market, I would rather have the domestic supervisor deeply involved in the monitoring of that bank. Our experience has taught us that local supervisors usually have a deeper knowledge and more accurate information on developments in their home banking sectors than distant parent company supervisors.
Even in Japan, where ownership of large corporations is not in the hands of families, long-term corporate relationships and cross-shareholdings have dictated business. This was how entrepreneurship evolved in East Asian societies, and among the overseas Chinese in South East Asia. Many of these family firms were hugely successful, driven by the business acumen and entrepreneurial drive of the founding patriarchs, and supported by a web of networks, or guanxi. But the world has changed. Family relationships may be an adequate basis for running a medium sized company, but not for an MNC employing tens of thousands of people. To be world-class, companies need to be led by the best man for the job, and this person is not likely to come from the same family, generation after generation. And business based on relationships rather than hard-headed commercial calculations is prone to abuse and under-performance, as was shown in the Asian crisis. It will not be easy for the families to relinquish control. The instinct to hand an heirloom down the generations is still strong. There are also real practical difficulties. If the families sell out, who will the buyers be? Who will take charge of the companies? Most Asian countries lack a group of institutional shareholders who can exert market discipline and defend minority shareholder interests, like the  3  Straits Times, 26 January 2000. BIS Review 76/2000  4  mutual and pension funds in the US.

For instance, the Economist magazine estimated that about USD 500 billion to USD 1.5 trillion is laundered through banks each year. Further, the Financial Action Task Force (FATF) - an intergovernmental organization under the auspices of the Organisation for Economic Co-operation and Development (OECD) also estimates money laundering to be in the ranges of USD 590 billion to US1.5 trillion. As a percentage of world economic output, money laundering accounts for about 2% to 5%. Obviously, given the secrecy and the illegal nature of this business, it is difficult to tell exactly the extent of money laundering. Nevertheless, these figures give us an indication of the magnitude of the problem. In this regard, financial institutions, in particular, banks provide a conduit through which money (including laundered money) flows. Because of this, the financial system is the focal point of antimoney laundering initiatives because dirty money is most visible when it is first introduced into the financial system. Ladies and Gentlemen, before I proceed in discussing the various aspects of money laundering including stages in money laundering, its effects on the economy, the global and local initiatives to fight money laundering and the role that banks can play in combating money laundering, allow me to define what money laundering is. For the purposes of my presentation today, I shall define money laundering as the method of hiding, mixing and disguising the proceeds of criminal activities through legally operating institutions for the purpose of destroying the origins of the proceeds.
Its third article states that “the Bank shall have as its purposes to look after the stability of the currency and the normal functioning of internal and external payments.” It then adds that “the authority of the Bank, for these purposes, shall include regulating the amount of currency and credit in circulation, the performance of credit transactions and foreign exchange, as well as the issuance of regulatory provisions regarding monetary, credit, financing and foreign exchange matters.” In addition, it establishes that “no public expenditure or credit of any nature may be financed either directly or indirectly with loans granted by the Bank.” Finally, article six states that “when passing its resolutions, the Board shall consider the general orientation of the Government’s economic policies.” This is a clear mandate for the Central Bank of Chile, by which it establishes instruments and mechanisms for the designation and removal of Board members, as well as vehicles for coordination with the Executive. In addition, its autonomy is further reinforced and legitimated through the achievement of said objectives and by the Bank’s communication and transparency policy, whose effects go far beyond the provisions in the law regarding the obligation to inform about its decisions. In this presentation I will address some of the main elements concerning the autonomy of central banks, as well as an evaluation of the principal accomplishments of the past twenty years. The reasons for pursuing autonomy High inflation is costly for society because it is associated with higher price volatility, which distorts resource allocation.

José De Gregorio: Autonomy of the Central Bank of Chile, 20 years on Presentation by Mr José De Gregorio, Governor of the Central Bank of Chile, at the commemoration of the 20 years of autonomy of the Central Bank of Chile, organised by ICARE, Santiago, 29 October 2009. I thank Luis Felipe Céspedes and Jorge Restrepo for valuable comments and ideas in preparing this presentation. *  *  *  The autonomy of the Central Bank of Chile is enshrined in the Constitution, specifically in the Basic Constitutional Act of the Central Bank of Chile enacted in October 1989 that constituted a fundamental change for the functioning of the Chilean economy. The Law stipulates that the Central Bank is an autonomous entity, of a technical nature, created in accordance with constitutional provisions, with full legal capacity, the full owner of its assets and of indefinite duration.
To sum up: the Spanish banking industry has proved resilient to the economic crisis triggered by the pandemic, maintaining the supply of credit to the private sector and an adequate solvency level. It has also been able to swiftly recover its profitability. The banking sector in the new macro-financial climate Despite these favourable circumstances, the recent macro-financial deterioration I described earlier calls for a prudent approach on the part of banks and for close monitoring of the risks associated with the Ukrainian conflict. Indeed, as noted above, these factors have led to a downward revision to the economic outlook published by the Banco de España for 2022 and 2023, as well as a significant upward revision to our inflation projections for 2022. Against this backdrop, our latest Financial Stability Report, published in May, included some simulation exercises on the impact of a potential rise in interest rates or energy prices on the economic and financial situation of Spanish firms, households and general government. I will now turn to the results of these exercises, updated to include the latest developments and market expectations of interest rate hikes. Thus, in the case of businesses, an interest rate hike could drive up the percentage of firms under financial pressure. Specifically, within corporate bank financing, short-term and variable-rate loans predominate, and changes in interest rates therefore pass through relatively swiftly.

7  quarters that the effect of nominal GDP growth is correctly interpreted, as it could have a less beneficial impact than in previous periods on the sustainability of private debt, given that it would be more closely related to higher production costs which drive down agents’ income. Likewise, the tightening of financial conditions would drive up the debt service ratio. Developments in the Spanish banking industry  As regards bank balance sheet credit quality, non-performing lending to the resident private sector fell by 5.4% in 2021, a drop which quickened to 7.1% year-on-year in 2022 Q1. This decline confirms the differential performance of non-performing loans (NPLs) in this crisis, with the economic policy measures proving crucial in maintaining households’ and firms’ ability to pay and their net lending. Thus, the NPL ratio for credit to the resident private sector stood at 4.1% at March 2022, compared with 4.8% at end2019. Despite this good NPL performance, there are potential latent impairments in some credit portfolios, particularly those linked with the most vulnerable segments of firms and households. Specifically, Stage 2 loans5 continued to rise at high rates at end-2021 (14% year-on-year), although notably below the growth rates of previous quarters. Meanwhile, Stage 2 loans accounted for 8% of all loans, up 2.2 pp on pre-pandemic levels. Forborne loans,6 the bulk of which are classified as Stage 2 or non-performing exposures, also rose by 14% in 2021, owing to a sharp rise among NFCs and sole proprietors.
Second, is to bring in successful innovation and expertise from all parts of the world. With operations in multiple economies, international banking is uniquely placed to realise this aspiration. However, it has yet to be utilised fully. All too often, while international banks have been genuinely innovative in some advanced countries, such innovation and expertise are not dynamically translated to the operations in developing economies, despite being part of the same bank. It is equally important that such innovation is accompanied by appropriate safeguards on the part of national authorities to preserve financial stability. Third – and this is where I would like to push the borders of conventional thinking – a new international banking model should also be one that intertwines itself into the very fabric of the local community, seeking to address social issues that concern the nation and its people. This should come as no surprise. In this way, international banking is no longer an outsider or an aloof bystander, but an integral part of the socio-economy in the country. One can imagine the strength and ethos of a banking sector that promotes issues of home ownership, urban poverty, social inequality, financial literacy and resilience of households to financial shocks. This would truly be “banking without borders”. This is a critical point given the increased expectations globally on multinational companies.

Around USD13 billion was invested by venture capital players in fintech startups in 2017, the third highest annual total this decade. Among these, the most impressive transformation is perhaps in cross-border payments. Allow me to share an anecdote highlighting the magnitude of the change that is happening. Earlier this year, eight Chinese tourists went on a six-day trip to Finland courtesy of a Chinese online payment platform company. This trip was significant for two reasons. First, payments for the entire journey was cashless and performed through a mobile app, from the payment of flight tickets to food, ground transportation and other retail purchases. Secondly, Finland, located as far as 6,000 km away from China, became the first country where this Chinese app can be used to make virtually all payments. This is just the beginning. As fintech companies expand to other markets and enable seamless cross-border payments for other users, one can already imagine a future where one can travel the world with just a smartphone in hand. Not only that, another related consequence of such a future is that essentially all we know of “international banking” today could be performed without an actual bank. Naturally, we ask ourselves what are the implications of these changing boundaries of international finance? For financial customers, it means adapting to a new banking paradigm. A more regional and digital banking ecosystem could lead to increasing localisation, personalisation and efficiency of financial products and services.
This, however, must be done in conformity with personal data protection regulations. We must not forget that customers trust a bank to observe the confidentiality of their transactions. Similarly, services known as “cloud computing” have been on the rise for some time now. They unquestionably offer big advantages for banks: they reduce processing and storage costs and provide great flexibility for adjusting information systems to current needs, and, moreover, they are an efficient means of big data analysis. However, this increased dynamism is not free from a risk of data loss which must be controlled. Much the same goes for automated advisory services, known as “robo advice”. It is increasingly common to see automatic tools which act through digital channels in the process of providing advice. These solutions may be useful, for example, in the purchase of a product, because they simplify communication between banks and customers, but this service must conform to marketing regulations. It is necessary to ensure that customers have unrestricted access to sufficient and relevant information that allows them to fully understand the product in question, and that the product is not purchased automatically without understanding the conditions and the risks involved. In short, technological innovations offer banks a way to reduce costs and better adapt their products to customers’ needs, but their implementation in banking operations requires close monitoring of the new risks introduced into the system.

Matters such as the privacy of personal information, security, the risk of cyberattacks or even the risk of exclusion, must 6/8  be monitored and, where appropriate, duly regulated. Regulation has to achieve a balance, protecting financial stability and confidence in the system, without unjustifiably hindering the exploitation of these technological innovations by industry and society in general. It is still too soon to gauge the impact of the technological revolution on the traditional banking sector. I believe that technological innovations will complement traditional banking activities, but to achieve this banks must be sufficiently flexible and dynamic to reap the benefits of technological innovation. There is no question that innovation is also favouring the proliferation of new fintech firms, of highly varying profiles and business models, which may conceivably compete with traditional banks in a specific part of the banking value chain, but are more likely to engage in new ancillary services. One example is joint financing through online platforms, known as “crowdfunding”. It is an alternative source of financing which may offer certain improvements over traditional banking in terms of convenience, speed and cost. But risks have also been identified, such as a potential increase in fraud or greater weaknesses in terms of investor confidence. There is a well-known case of a Swedish P2P platform which went bankrupt late last year after the detection of malpractices in credit extension, prompting a fall in the activity of the sector and closer regulatory attention.
22  The most affected sectors include some whose margins would be hardest hit, such as wholesale and retail trade and repair of motor vehicles, land transport, fishing and agriculture. The degree of financial vulnerability is also expected to rise by more than the average in some sectors in which the impact on sectoral margins is comparatively smaller, such as basic metals manufacturing, or publishing, cinema, television and radio. This is largely because some of the firms in such sectors were already hovering around the thresholds determining vulnerable status before the shock. 15  The results show that the greater adverse impact of these scenarios on the sector’s solvency would take the form of a worsening of the credit quality of loans to the private sector, leading to greater impairment losses on business in Spain and less capacity to generate net income from foreign business. Moreover, the simulated interest rate hike entails a slight reduction in the value of the bond holdings on banks’ balance sheets. At the same time, higher interest rates push up net interest income, by improving the net interest margin on loans to the private sector and making investing in debt securities more profitable, whereas the cost of deposits responds more moderately. Overall, the adverse scenario would have a negative impact of 1.8 pp on the aggregate CET1 ratio of Spanish banks as a whole, while the impact under the severe scenario would be as high as 3 pp.

Furthermore, the practical usability of crypto-assets relies to a great extent on identifiable intermediaries to act as “gateways” between the crypto-asset ecosystem on the one hand and the financial markets and the economy on the other. I have said before that we need to differentiate between “assets” such as bitcoin and the technology behind them, such as blockchain. Indeed, some of the technology is worth exploring 1/3  BIS central bankers' speeches  and could also be of interest to central banks. That said, our role is not to drive technological adoption by the industry and the general public, but to ensure that changing preferences can be satisfied in a secure way. While DLT is a necessary element of crypto-assets, it is not in itself their defining feature.3 The single distinguishing feature of crypto-assets such as bitcoin is the absence of an underlying claim, which makes it difficult for them to maintain price stability. Crucially, crypto-assets aren’t backed by any sovereign authority and, unlike financial instruments, they don’t give their holders ownership or contractual rights. Central banks provide confidence in money – as a store of value, unit of account and means of payment – by safeguarding the stability of the currency. By contrast with traditional currencies, bitcoin has been highly volatile over the past two years. Bitcoin’s average volatility in that period was close to 80 %, while many other crypto-assets showed even higher levels of volatility. This makes it impossible to use crypto-assets for anything but outright speculation.
Many of my friends in the real economy say that the Czech Republic is a country where everything is produced, from wings for Airbus and Embraer aircraft (we are also the biggest producer of ultralight planes in the world, for instance), through turbines, cars, buses, locomotives and guns to bearings, brushes and semtex. Whatever you need to produce you will always find at least one factory capable of making it, the anecdotic evidence seems to be suggesting. As exports obviously feed this country, and as we are so close to Germany and the Germanspeaking world, you won’t be surprised to learn that Germany is by far our biggest trading partner, with more than 30% of our exports going there and with the biggest proportion of foreign investment in the Czech Republic coming from Germany. (The UK is roughly the tenth or eleventh biggest source of investment for this country.) But you might be surprised when I tell you that the Czech Republic is one of the few countries in the world that has a trade surplus, not a trade deficit, with Germany. This is also quite unique. But it’s not all about the economy, so let me turn to a couple of small curiosities which might be of interest for this audience. I believe some of you use contact lenses, which were invented by the Czech scientist Otto Wichterle, as well as nylon, for instance. The Czech scientist Jan Jansky was the first to classify blood into four groups.

a)  Minimum thresholds of common equity tier 1 (CET1) capital were set, as defined under the Basel III Accord, that have to be exceeded both in the comprehensive assessment, and in the baseline scenario of the stress test (8%); and another minimum threshold that has to be exceeded in the adverse scenario of the stress test (5.5%). b)  The banks falling short have to submit, within two weeks, a recapitalisation plan to be implemented within six months (if the capital shortfall arises from the asset  2  BIS central bankers’ speeches  review or from the baseline scenario in the stress test) or nine months (if the capital shortfall arises from the adverse scenario). 6. Results at the European level  The results just disclosed show that, according to the methodology used, in the banking systems as a whole that are to be supervised by the Single Supervisory Mechanism – the ECB and the National Supervisory Authorities – 25 banks have a capital shortfall, assessed against the three thresholds set (in the AQR and in the baseline and adverse scenarios of the stress test). Of these 25 banks, 12 have already increased capital in 2014 to make good the shortfall, meaning there are only 13 banks that have to submit their plans to redress capital inadequacy. In total, the shortfall of these 25 banks amounted to € billion, but bearing in mind the capital increases already made, the shortfall currently stands at only € billion. 7.