samchain/econo-pairs-v1 huggingface dataset:
However, I would like to say nevertheless that the principles which guide monetary policy in modern central banks, and which I have described here, are so general that they should be able to act as guiding stars for monetary policy reform work anywhere in the world. Essentially it is a question of giving the central bank carefully specified – and realistic – objectives, granting it independence in its endeavours to meet the objectives and ensuring that it carries out its work in a transparent manner and is accountable for its actions. It is my conviction that reforms based on these principles will be beneficial to Vietnam, too. Thank you. 8  It can be noted, for instance, that Camen, U. and H. Genberg, (2005), ”An Inflation Targeting Regime for Vietnam”, paper prepared for the VERCON First Annual Conference, Hanoi, May 24, draw the conclusion that the conditions for introducing ”full fledged inflation targeting” have not yet been fulfilled in Vietnam. BIS Review 21/2006  7

The issue is also of interest to the authorities responsible for financial stability. As standardised risk-transfer instruments develop, they are likely to come into wider use. So far, market participants have not properly identified or analysed the likely knock-on effects, whether direct or indirect. For this reason, there is a vital need for improvements in the prudential reporting and market transparency of these transactions; there is also a need for greater harmonisation of the rules and regulations applicable to institutions in different countries and to different types of company. The aim should be to record the risk where it is actually borne, both economically and financially. In addition, the authorities responsible for different financial sectors must coordinate their efforts to jointly identify where risks lie and to measure their extent. The Banque de France and the Commission Bancaire are working to that end with their counterparts in the insurance industry and the securities markets. 3.2  The future solvency ratio will better reflect the economic realities of banking risk  The finishing touches are being put to the solvency ratio, due to come into force in 2006. The new ratio will cover a broad spectrum of activities and risks, based on an approach tailored to the degree of sophistication of financial market participants, both in the G10 and beyond. From a prudential standpoint, the ratio will capitalise on the progress already made in improving risk supervision and control, while making it easier to compare methods at the international level.
However, you may have noticed that there was a split vote amongst the Committee last month, and that I voted to maintain the scale of the asset purchase programme at £ billion. 4  BIS Review 159/2009  It is important not to make too much of this difference. I fully recognised the potential benefits of a more expansionary policy given the downside risks to the economy. However, I was also wary of the potential risks of such a policy. My main concern reflected the considerable uncertainty about the degree of spare capacity in the economy and the behaviour of inflation when output is growing at above trend rates. These uncertainties are always present, but come to the fore in situations like the current environment in which there is a very substantial degree of economic slack. In order to keep inflation on track to hit the inflation target this slack needs to be eliminated. However, given the uncertainties about the precise margin of spare capacity and the behaviour of inflation as this spare capacity is being closed, my preference was to aim to grow the economy a little less rapidly. I was also concerned that further substantial injections of liquidity might result in unwarranted increases in some asset prices. I should stress that I do not think there is any strong evidence to suggest that any of the increases in asset prices seen to date are out of line with the improving economic outlook and the desired impact of our asset purchase programme.

There are encouraging signs that these policy actions have been successful and the risk of a severe adverse feedback loop – as households, companies and banks simultaneously try to retrench – has been avoided. The banking system has stabilised. Measures of business and household confidence have recovered significantly. And the most recent ONS estimates for the third quarter suggest that the contraction in consumer and business spending may be beginning to abate. Corporate liquidations and unemployment: better than feared The prompt and large policy actions are likely to be one reason why corporate failures have, to date, not increased by as much as might have been feared. Although output has fallen by more than in either the 1980s or 1990s recessions, liquidations have risen by less than at the same stage of those downturns. Companies have benefited from the fall in debt servicing costs associated with the sharp reduction in Bank Rate and by the Government scheme allowing them to defer tax payments. And by supporting corporate credit markets, the Bank’s asset purchase programme has also helped some firms to bypass banks and access capital markets directly. I fully recognise that the asset purchase programme has not been as of much help to many small and medium-sized enterprises – many of whom are represented here today – who are not able to access capital markets and are largely reliant on bank credit.
As the Governor wrote in his letter to the Chancellor last week, echoing the MPC remit: “price stability is a precondition for high and stable levels of growth and employment”. Confidence  13  For example, the average forecast for 1994 real GDP growth made by the Treasury “Panel of Wise Men” in October 1993 was 2.7%, over 1.5% below the out-turn of 4.3%. BIS Review 158/2010  11  in a world of stable prices in the UK has been hard-won in recent years and we need to safeguard it carefully. I worry that monetary discipline and confidence in the inflation target risks being eroded by keeping emergency settings for monetary policy in place for too long, when the growth and inflation outlook points in a different direction. That is why I have argued for a gradual withdrawal of monetary stimulus and why I will continue to do so, in the absence of material and significant changes in the economic outlook relative to the picture I have described today. 12  BIS Review 158/2010

During the so-called Great Moderation in the15 years or so prior to the financial crisis, there was a close relationship between changes in Bank Rate and the growth of GDP. Indeed, my colleague Ben Broadbent, in his former life as a city commentator, used to draw attention to the startling correlation between the behaviour of the MPC and movements in growth implied by business surveys.7 The self-same surveys that are currently pointing to quarterly GDP growth of around 1%, a rate which in the past would have signalled the MPC was likely to tighten policy. That type of relationship during the Great Moderation is perhaps not that surprising. During much of that period, the economy was close to balance and the job for monetary policy – absent worrying longer-term trends or significant cost or price shocks – often boiled down to keeping GDP growth close to trend. But this time is different. We start with significant slack in the economy: the level of GDP is still below its pre-crisis level; there are almost one million more people unemployed. We need to see a sustained period of robust growth before the economy moves back into anything resembling balance. Linking the future path of monetary  6  The Committee can’t remain entirely agnostic since its forecast for inflation will be affected by its judgement of the degree of economic slack and the speed with which that slack is likely to close as the economy grows.
From this point of view, as you know Banque de France has paid particular attention to the continuation of the BACH database, since we were chosen to run it, two years ago, for the common interest of the ECCBSO members and beyond. We are committed to keeping it functioning properly, and encourage all initiatives to exploit all those interesting series of aggregated ratios. Among the numerous researches that have been made with these data, I would like to refer to the paper published by two economists from the ECB, Andra Buca and Philip Vermeulen, last February, concerning “corporate investment and bankdependant borrowers during the recent financial crisis”. Here also at the Banque de France, we publish several articles in our Bulletin extracting valuable piece of information in the BACH data base. Concerning your so-called WG 3, which focuses on IASB methodology and more generally monitoring of listed groups, Banque de France is interested in the new cooperation started last year with Eurostat. It will help to identify more precisely European groups’ structure and especially cross-border groups. But I understand that this TF is involved in many other topics, of which works on a dedicated data base (ERICA) which can deliver interesting results. There is a lot of work behind this and we can only hope to see those valuable contributions to be well promoted.

Barba Navaretti G. and Venables A. (2004), Multinational Firms in the World Economy Chapter 3, Princeton University Press. Bank for International Settlements, Consolidated banking statistics, End September 2009. Banking Supervision Committee at the European Central Bank (2010), “Mapping of large European banking groups with a significant cross-border banking activity for the year 2008”, Restricted edition. Buch, C. (2000), “Information or Regulation: What is Driving the International Activities of Commercial Banks?” Kiel Working Paper No. 1011. Brevoort P. and Wolken J. (2008), “Does distance matter in banking?”, Finance and Economics Discussion Series 2008–34, Federal Reserve Board, Washington, D.C. Dunning J. H. (1977), “Trade, location of economic activity and the multinational enterprise: a search for an eclectic approach”, in B. Ohlin, P. O. Hesselborn and P. M. Wijkman (eds. ), The Allocation of Economic Activity, London: Macmillan. Distance Between Cities Places On Map, provided by Google, http://www.distancefromto.net. Goldberg, L. (2002), “When is Foreign Bank Lending to Emerging Markets Volatile?” in Preventing Currency Crises in Emerging Markets, ed. by S. Edwards and J. Frankel, National Bureau of Economic Research and University of Chicago Press, pp. 171–96. BIS Review 82/2010  23  Goldberg L. (2004), “Financial Sector FDI and Host Countries: New and Old Lessons”, Economic Policy Review, Federal Reserve Bank of New York, pp. 1–17. Goldberg L. (2008), Understanding Banking Sector Globalisation, IMF Staff Papers, 2009, vol. 56, issue 1, pp. 171–197. González-Páramo J.M.
Also, the calendar for further price liberalisation, which has an impact on inflationary developments, is often set by each government and is thus difficult for a central bank to predict. From an ECB perspective, financial sector reform is also of the utmost importance. The reasons for this are mainly twofold. First, sound financial sectors are key to delivering “stable money”. Weak financial systems tend to blur the monetary transmission mechanism and the capacity of monetary policy to influence inflation and growth outcomes, putting the maintenance of price stability and the credibility of the central bank at risk. Second, financial sector reform is needed because it ensures that structural reforms, particularly in the goods and labour markets, become fully effective. Indeed, despite recent structural reforms and positive growth, the catching-up of per capita income with the euro area has remained limited, and in many countries output growth remains below potential. Efficiently functioning financial markets are an important precondition for an efficient allocation of capital, thereby contributing to an economy's growth potential. In many ways, the prospect of EU accession has been instrumental in triggering reform in accession countries, and structural reforms have advanced far enough in these economies to achieve macroeconomic stability. However, there is much that remains to be done. I am confident that the policy-makers in the region will “hear and listen” and remain committed to continuing along the path of reform on which they have already embarked.

Nevertheless, a recovering tourism industry, decreasing unemployment, and EU funding payments all help to boost activity and limit, to some extent, output loss. More specifically the Euro area quarterly economic growth reached 0.8 percent in the second quarter, following a 0.7 percent rise in the first quarter. Even though these growth rates are below the rates expected before the start of the war, the 0.8%, growth is still the strongest performance in three quarters, prompted by the easing of Covid restrictions and the good summer tourism season in southern countries. The impact from war developments is expected to be shown in the data of the fourth quarter of 2022 and the first half of 2023. This outlook is reflected in the latest ECB projections for economic growth, which have been revised down markedly for the remainder of the current year and throughout 2023. The euro area economy is now expected to grow by 3.1 percent in 2022, 0.9 percent in 2023 and 1.9 percent in 2024, compared to the December 2021 projections of 4,2 percent, 2,9 percent and 1,6 percent respectively. Harmonized inflation rose to a high of 9.1 percent in August, up from 8.9 percent in July. For the period January-August as a whole, inflation stood at 7,6  1/6  BIS - Central bankers' speeches  percent.
In the wake of the financial crisis, the arsenal of macroprudential tools has expanded significantly. Apart from the countercyclical capital buffer we have the systemic risk buffer, the buffers for globally and domestically systemic banks, the possibility to limit large exposures, increase capital or revise risk-weighted assets to residential and commercial real estate exposures. This is a significant improvement that will allow us to develop macroprudential policies that interact with microprudential ones as well as with monetary policy. But it is not enough to create macroprudential tools. They must be properly allocated institutionally in order to avoid inaction bias by policy-makers and counteract misalignment of incentives with the financial sector, in particular at certain points in the lending/financial cycle where taming is needed. In a sense, the dilemmas and incentives that policy-makers will face regarding macroprudential policy decisions will not be far different from those encountered in the past when setting monetary policy (i.e. interest rates). For the latter, the optimal institutional design is to enshrine monetary policy in an independent central bank. For the former, a very similar solution, intuitively, should prevail, although the theoretical framework and the empirical research to support it is much less advanced than in the monetary field. Needless to say, macroprudential policy is particularly relevant for a country like Spain, part of a monetary and banking union where, as seen in the past, the financial and business cycles of the member countries may be in different positions.

Among the G7 economies, external balance sheet ratios are broadly flat at around twice nominal GDP. This flatness is driven in large part by assumption, as it is assumed the highest-income countries maintain a flat ratio of external assets to GDP. This is almost certainly too extreme an assumption. Although smaller than in the past, there remain strong home biases in the investment portfolios of developed countries’ institutional investors (Obstfeld and Rogoff (2000) and IMF (2010)). As liberalisation progresses, these biases would be expected to unwind, boosting gross external assets in relation to GDP in developed countries. For that reason, the calibration here can be thought of as a limiting case of the likely adjustments in the pattern of global capital flows. Subject to that important caveat, the growth in the non-G7 economies’ contribution to global capital markets is still striking. Among the BRICs, external balance sheets as a fraction of GDP exceed G7 levels by around 2035. By 2050, they are around 2.5 times nominal GDP. These patterns are even more striking when expressed as a share of global external assets. By 2050, over half of all G20 external assets are associated with the BRICs, up from around 9% currently (Chart 18). Among the non-G7, non-BRIC G20 countries, their share trebles from 5% to around 15%. Within this, some countries’ share of global assets sky-rocket. China’s share of global finance rises to around 30% by 2050, roughly that of the entire G7. India rises to almost 20%, from less than 0.5% currently (Chart 19).
This trend is particularly pronounced in the APEC economies in which the economic activities are now more diversified – with the growing importance of the services sector, with the agricultural sector becoming more advanced and the industrial sector being supported by a supply chain of small and medium scale businesses. In the APEC region, SMEs account for 90% of the total business establishments and 60% of total employment. In Malaysia, SMEs constitute 99% of all businesses and 57% of total employment. In terms of output, the SME sector in Malaysia accounts for 35% of gross domestic product and 20% of total exports. The SMEs have the advantage of having greater flexibility and the ability to adjust more quickly to changes in the market. The SMEs also have the potential to meet the new challenges to raise productivity and performance. There is therefore enormous potential for SMEs to create significant positive value for the economy, and thus contribute towards sustainable and balanced economic growth, employment and social stability. This morning allow me to take this opportunity to share with you some reflections on SMEs in the more globalised economy, and the role of financial institutions and Governments in supporting the SME sector in the future environment. Prospects for SMEs in a more globalised economy Globalisation has been described as one of the defining changes of the 21st century. More importantly perhaps, is the dramatic change in the nature of the globalization process.

The initial wave of globalization was in the form of trade, and this was followed by the globalization of corporations. More recently the globalization of financial flows and in the flow of talent that follow increase in capital and labour mobility across borders. Indeed there has been a shift from the domestic sphere to a greater global orientation. This is evident in the stronger trends in international trade, foreign direct investment, international capital flows, and movement in labour across borders. Greater connectivity enabled by technological advancements have also significantly increased the pace of globalisation to an extent that was previously not possible. BIS Review 98/2010  1  For SMEs, gaining access to the expanding global market is a strategic step forward that would bring tremendous business opportunities. It would enhance the possibilities to exploit economies of scale and scope of the business, and the potential for enhanced technological capabilities and greater risk diversification. The globalised economy will, however, challenge existing comparative advantages and thus drive the search for new business models to sustain competitiveness. The SMEs in this new environment need to evaluate new markets, move to higher value-added products and services, and develop new synergies by forging new business alliances, acquisitions or partnerships. Given the important socio-economic contribution of SMEs to national economies, promoting an increased participation of SMEs in both domestic economy and international markets has become an important agenda in most emerging economies as part of the efforts to enhance the overall economic growth potential.
These developments have continued to sustain our external balance with the current account of the balance of payments likely to continue to record large surpluses. Going forward, in the next 12 to 18 months, several external and domestic developments need to be taken into account in the assessment of our economic outlook. First, the slowdown experienced in a number of the major economies is likely to extend into 2009. This more prolonged period of slowdown is likely to have spill over effects on other economies including emerging economies. Global financial markets are also expected to remain volatile as the financial stress experienced by financial institutions in these economies continue to have an impact on credit conditions, the housing market and their overall economy. These developments have resulted in a number of institutions scaling back their global operations. The disruptions in the credit markets have already exerted some restraint in economic  BIS Review 71/2008  1  activity. While the adjustments are still taking place, there remains uncertainty about the full magnitude of the losses and its consequent impact on financial stability and thus on their overall economy. Despite these developments, indications are that growth remains resilient here in the Asian region, benefiting from the strengthened domestic demand and the increased trade activity within the region and with the non-traditional markets.

The survey revealed that 90% of the respondents recognize the need for digital innovation in the financial sector and 72% are already in the process of implementing some form of  2/3  BIS - Central bankers' speeches  digital transformation. There is an agreement among respondents that regulation can sometimes be a barrier for a swifter innovation. To eliminate regulatory barriers, a new Law on Payment Systems has been prepared and is currently undergoing a parliamentary procedure. We have already drafted the First National FinTech Strategy, which will soon be shared with other stakeholders. Tomorrow, under our initiative, all financial regulators will sign a Memorandum for setting up a FinTech Committee with a view of promoting digitalization in the financial sector. To recap, there are no doubts that faster and inclusive income convergence calls for strengthened efforts to lift the growth potential, and perhaps even more importantly to lift the quality of growth. In this context, we would like to express our gratitude to EBRD for supporting us for almost three decades with more than EUR 2 billion total investment to date aimed at supporting competitiveness, trade integration and green transition. Despite the current headwinds which put economic growth at risk and require immediate policy focus, we should not lose sight of a longer term structural agenda, including digitalization. As Andy Rooney said, "Everyone wants to live on top of the mountain, but all the happiness and growth occurs while you're climbing it." So, let us keep climbing. Thank you.