samchain/econo-pairs-v1 huggingface dataset:
That would be likely to add to the problem of potentially volatile capital inflows next time around. Not surprisingly, too, there is strong political BIS Review 36/1998  -5-  resistance in many countries, including notably the United States, to the idea that public, i.e., taxpayers’, money should be used to bail out private creditors, especially foreign creditors. External financing need not come solely from the public sector. Private finance would, in principle, serve the same purpose, and in many situations market price adjustments may be sufficient to stem the capital outflow. But, given the extent of the loss of confidence in the Asian case, organising private financial support meant in practice persuading existing creditors that their assets would be better protected if they were prepared to leave them in place, especially if other major creditors agreed to do the same and if official support was made available in parallel. But in this case, too, difficult judgements had to be made. There was a danger that, if private creditors had to be in effect coerced into staying put, they would immediately cut their positions elsewhere, while they still could, adding to the international contagion. In fact, in the critically important case of Korea, the promise of massive official support failed to restore market confidence.

Against that background the G7 surveillance discussion focused particularly on Japan, where financial fragility - in the wake of the bubble and subsequent collapse of asset prices continues, which is itself acting as a drag on the domestic economy and which is compounded by a loss of both consumer and industrial confidence. Both the financial fragility and the domestic economic weakness are now aggravated by the problems elsewhere in Asia. Everyone at the meeting welcomed the Japanese commitment of public funds to strengthen the financial system and the recent announcement of large fiscal stimulus to strengthen domestic demand led growth, which will help to reduce Japan’s external surplus and also to strengthen the Yen. BIS Review 36/1998  -7-  In relation to the other major industrial countries there was general puzzlement at the persistent strength of equity markets and about the implications if it were to continue - or even if it does not. Particular points made in relation to continental Europe were that it is important there, too, that the gathering recovery - hitherto driven largely by external demand - should increasingly be based on sustained growth of domestic demand; and that continuing structural reforms will be necessary to combat persistent high unemployment - especially now in the context of monetary union.
Karolina Ekholm: Monetary policy and the exchange rate Speech by Ms Karolina Ekholm, Deputy Governor of the Sveriges Riksbank, at a meeting, Stockolm, 12 January 2010. * * * I intend to begin today by talking about the background to the monetary policy decision made by the Executive Board of the Riksbank on 15 December last year and how I viewed the economic situation. The main part of my speech will focus on the Riksbank’s assessment of the krona exchange rate. I intend to discuss the role played by the exchange rate in a small, open economy like Sweden’s, and the difficulties in forecasting the exchange rate. The current situation and the monetary policy decision As you probably know, the Executive Board decided at our meeting on 15 December to hold both the repo rate and the forecast for the repo rate unchanged in relation to the previous monetary policy meeting in October. I shall not go into details regarding the forecasts on which our decision was based, but I will focus on some specific questions that have been important for the stance I took. The world economy has improved recently, and this benefits developments in the Swedish economy. Our most recent assessment contains an upward revision to the forecasts for GDP and employment, both in Sweden and abroad. However, I see a number of risks relating to international developments in the period ahead.

However, the importer must initially choose between raising the price in kronor to compensate for the higher purchase price and reducing the company’s own margins. Let us assume that the price Swedish cheese importer has to pay is set at 10 euro per kilo, and that the price set for customers in shops in Sweden is 120 kronor. The exchange rate is  2  BIS Review 3/2010  initially 10 kronor/euro. The purchase price thus corresponds to 100 kronor per kilo. The Swedish importer thus has a profit margin of 20 per cent of the purchase price. 1 If the krona depreciates by 15 per cent, to 11.5 kronor per euro, the import price in kronor is 15 per cent higher, or 115 kronor per kilo. To retain a profit margin of 20 per cent of the purchase price, the price offered to customers in Sweden also needs to be raised by 15 per cent, from 120 kronor to 138 kronor per kilo. In this case the pass-through of the exchange rate to the price of the cheese will be complete, as both the exchange rate and the price of the cheese change by 15 per cent. However, this can be expected to lead to lower sales, as consumers may choose to buy, for instance, Swedish cheese instead of French. It is therefore not necessarily the most profitable pricing strategy. Another alternative for the importer is to hold the price in kronor completely unchanged.
Here again, there is a nexus in the appropriate rhythm and interaction between the liberalisation of financial versus real markets. Once financial liberalisation has started, the process benefits from continuous innovation and from its own impetus. The same does not apply to reforms in the labour and good markets where rigidities and obstacles are often deeply rooted. BIS Review 64/2007  3  Lastly, better integration into the global economy requires an appropriate exchange rate strategy. An emerging economy with high productivity gains and potential growth in the tradable sector is prone to receive large capital inflows and have a real appreciation of its currency in the long term. The latter may come either or both from nominal appreciation or higher relative inflation. Arguably, exchange rate appreciation, which may result in an overvalued currency, is a risk for emerging economies that conduct export-led growth strategies. In order to stem appreciation and maintain their competitiveness, some emerging economies – like China – have accumulated ever larger amounts of foreign reserves. However, undervalued currencies also represent a significant risk, not only for inflation but also because it allows foreigners to buy cheaply national assets. In addition, undervalued currencies contribute to ballooning global imbalances. "En passant", I am pleased to note that both India and the Euro area post significant but not extravagant levels of reserves and that neither is responsible for the persistence of global imbalances.

In particular, I would like to mention: •  The historical links with the public sector, such as in India where public banks still dominate the banking sector and  •  Banking sector expertise both in a rural environment, especially relevant for India, and in large industrial groups, as indeed Indian industrial groups are active internationally. In this respect, I am very pleased to participate with the RBI in the launching of the first French-Indian Financial Forum on May 16, in Mumbai. Thank you for your attention. 4  BIS Review 64/2007
The flood of closures, almost amounting to a panic, caused a further widening of interest rate spreads. LTCM’s situation deteriorated rapidly; by the end of September the fund had lost almost 90 per cent of its capital in the course of nine months. The U.S. Federal Reserve had initiated a meeting with some of LTCM’s counterparties and on 23 September fourteen banks with claims on the fund agreed to take over LTCM as a joint venture and try to wind up the positions in a more orderly manner. The Federal Reserve’s motivation for initiating a solution to the problem was not the sizeable losses that might have been incurred by many of the banks concerned. Its concern instead was the financial system in general. If the banks that had provided loans were to close their large positions spontaneously in a market that was already illiquid and turbulent, other agents who were not directly involved would be hit. The steep price fall would probably have paralysed  BIS Review 23/1999  6  the financial markets for a time and this might have triggered a vicious circle of declining confidence and further closures—the Fed perceived a large systemic risk. The ultimate consideration was, of course, the potential hazard for the global economy. It is difficult to say what might have happened if the Federal Reserve had not acted. The banks that were involved had a strong interest in achieving a controlled settlement of their commitments and would probably have acted at some stage.

To begin with the strategy was notably successful; high profits were obtained with a low capital input. In 1995 and 1996 the annual profit was over 40 per cent. This performance and the confidence that the fund management enjoyed made many banks willing to provide loans or invest in the fund. In time, however, the financial markets moved in the opposite direction to what LTCM—and others—had expected. Russia’s debt moratorium on 17 August was followed by markedly increased financial turbulence as investors became more nervous and withdrew from other markets that could be perceived as risky. A uniform tendency developed, with falling share prices, widening interest rate spreads, growing unrest and decreased liquidity. There was a flight to quality of a kind that had not been observed before in the financial markets. Instead of narrowing, interest rate differentials became markedly wider. The diversity of risks on which LTCM had relied ceased to provide protection. The market movements were such that, if anything, it was a source of increased losses. The rumours of problems in LTCM contributed in turn to even greater turbulence in the financial markets. In that market prices would be depressed by a winding-up of positions, investors tried to close positions in those markets where they feared that LTCM was also involved. It can be mentioned, for example, that Risk Magazine estimated that LTCM’s positions in the interest swap market totalled 5 per cent of the global market, which says something about the size of the fund’s positions.
The projections published in June envisaged GDP growth of 4.1% in 2022, 2.8% in 2023 and 2.6% in 2024. Meanwhile, inflation of 7.2%, 2.6% and 1.8% was forecast for 2022, 2023 and 2024, respectively. In any event, the latest developments I referred to earlier point to a downward revision for economic growth in 2023 and an upward revision for inflation throughout the projection horizon, in line with those for the euro area. Thus, the latest Consensus Forecasts (relating to September) project 4.3% growth in Spain for 2022, holding stable relative to June, and 1.6% for 2023 (vs the 3.0% forecast in June). As for inflation, average rates of 8.8% and 4.1% are projected for 2022 and 2023, respectively, up 1.3 pp and 1.5 pp, respectively, on the June projections. The projections are surrounded by great uncertainty, with downside risks for activity and upside risks for inflation. In the near term, developments depend to a great extent on energy commodity prices. Possible interruptions in energy supplies and harsh winter weather could bring about further increases in energy prices and more severe production cuts than expected under the baseline scenario. Indeed, the ECB’s latest projections include a downside scenario that envisages slightly lower growth in 2022 and, in particular, a contraction in GDP of 0.9% in 2023, while maintaining the expected increase of 1.9% in 2024. Under this scenario, inflation will be even higher than under the baseline: 6.9% in 2023 and 2.7% in 2024.

The pattern is found throughout the animal world, in features as conspicuous as over-sized antlers and over-elaborate plumage.3 In many cases, these physiological features have evolved as a response to a competitive sexual race, a Darwinian tournament. Matthew Ridley calls this the Red Queen Race from the Alice in Wonderland scene in which “however fast they went, they never seemed to pass anything.4 As elephant seals, deer and peacocks can attest, it is a race in which, in their quest to win, the species as a whole may end up as loser. So nature can deliver an evolutionary equilibrium which is sub-optimal for its participants, a market failure. The more intense the competitive race, the greater this market failure or co-ordination problem. Elephant seals would prefer to co-ordinate on a lower-blubber equilibrium, deer on a shorter-antler equilibrium, peacocks on a smaller-tail equilibrium. Competition prevents them from doing so. If there were a benign, enlightened zoological planner, able to compel less-conspicuous features, this would benefit not only each animal but the species as a whole. Unfortunately, there is not. ************ These inefficient Darwinian equilibria are as common in social as in natural systems. Garrett Hardin’s 1968 classic Tragedy of the Commons uses the metaphor of individual herdsmen grazing their cattle on common land. “Each man is locked into a system that compels him to increase his herd without limit – in a world that is limited.
Market stabilisation Once investors absorbed the full implications of the pandemic crisis and sought to rebalance portfolios, market liquidity in securities markets dried up and investors looked for safe havens in the context of revisions to future prospects and intrinsically high uncertainty. A marked tightening of overall financial conditions in the euro area (and globally) took hold with the deepening of the coronavirus crisis (Chart 8, left panel). The fall in stock prices, the increase in market-based financing costs for firms and (to some extent) the appreciation of the euro contributed to the tightening that took place between mid-February and mid-March (Chart 8, right panel and Chart 9). This was also evident in the equity and corporate bond markets (Chart 10 and Chart 11). It was also reflected in an increase in the average spread of sovereign yields relative to the OIS curve (Chart 12). Chart 8 Financial conditions in the euro area  https://www.ecb.europa.eu/press/key/date/2020/html/ecb.sp200519~e5203d3520.en.html  6/14  5/19/2020  Pandemic central banking: the monetary stance, market stabilisation and liquidity  (index)  Source: ECB. Notes: Daily data. The financial conditions index (FCI) is constructed as a weighted average of the one-year OIS, the tenyear OIS, the euro area nominal effective exchange rate vis-à-vis 38 trading partners and the Euro Stoxx Broad Stock Exchange Index. All variables are in deviation from their long-term average.

Specifically, the Review identifies: –  Market structures which presented specific opportunities for abuse, such as poor benchmark design, and which more generally were vulnerable to conflicts of interest, collusion, and thin markets;  –  Standards of acceptable market practice that were usually poorly understood, often ignored and always lacked teeth;  –  Firms’ systems of internal governance and control that were incapable of asserting the interests of firms – let alone the wider market – over those of close-knit trading staff;  –  Individual incentives that were skewed, with pay packages stressing short-term returns overlong-term value and good conduct;  –  And personal accountability that was lacking, with a culture of impunity developing in parts of the market. All these factors contributed to an ethical drift. Unethical behaviour went unchecked, proliferated and eventually became the norm. Too many participants neither felt responsible for the system nor recognised the full impact of their actions. For too many, the City stopped at its gates, though its influence extended far beyond. A good start has been made in addressing these deficiencies. The design and regulation of key FICC benchmarks has been overhauled and transparency in FICC markets is being enhanced. Compensation rules have, in the main, been transformed to align better risk and reward. From next year, senior managers of banks and insurers will be held directly accountable for failures in their areas of responsibility. And the best firms are improving the “tone from the top”, launching conduct training and revamping control structures.
Arthur Yuen: Closing remarks on Regtech Closing remarks by Mr Arthur Yuen, Deputy Chief Executive of the Hong Kong Monetary Authority, at the HKMA's "Unlocking the Power of Regtech" Event, 30 June 2021. * * *  Introduction – The event puts the 4 actions into play 1. Ladies and Gentlemen, on behalf of the HKMA, thank you all for attending today’s event. 2. Let me first reiterate why this event is important to us. As Eddie mentioned earlier, the HKMA is taking a series of actions to realise our Regtech 2025 vision. Today’s flagship event is part of our journey towards that vision of developing Hong Kong into a leading Regtech hub. 3. Our guest speakers have shared how Regtech is currently being used in their organisations. They have also talked about how Regtech is helping them – particularly in challenging times like these. We are all working towards the same goal – to accelerate the adoption of Regtech in our respective organisations and jurisdictions. We have seen the adoption of technology rapidly speeding up around the globe. And this event is a timely platform for sharing different ways of facilitating Regtech adoption and expanding the Regtech ecosystem. Why the HKMA is prioritising Regtech 4. Why is the HKMA prioritising the promotion of Regtech adoption? It is because we fully believe Regtech has the potential to bring massive benefits to everyone. Let me try to summarise the three most important benefits. 5.

10. Many success stories have been showcased in today’s event. The Roundtable with Tech Giants session offered valuable insights into how to use Cloud and Artificial Intelligence to aid Regtech adoption. In the Pulse of Regtech and Masterclass sessions, our guest speakers shared real-life stories on practical drivers for Regtech adoption and factors in successful solution implementation. 11. We heard how organisations have successfully implemented Regtech solutions in a number of areas within their risk management and regulatory compliance functions. These areas included credit risk management, stress testing, sales practice and suitability, employee conduct and monitoring, regulatory reporting, and regulatory compliance obligations. It is therefore very clear that the use of Regtech goes far beyond anti-money laundering and financial crime compliance, although that area of use cases is certainly a very good place to start any Regtech adoption journey! 12. If you are like me, you would have noted down many practical tips offered by our speakers today. Let me share four key takeaways that I noted for overcoming the challenges connected with Regtech adoption: First, buy-in is crucial. A range of stakeholders from across financial institutions need to buy in to Regtech and collaborate fully in adopting it. We have heard how a supportive leadership can shape an organisation’s culture, and in turn drive Regtech-led transformations. Middle management and operational staff need to support this as well. Second, data is king. This point has been made repeatedly today.
The main downside risk - lower inflation than in the main scenario - lay in favourable surprises of the kind we have seen earlier in the relationship between growth and inflation. So how does this picture from October stand up today? Fairly well, in my opinion. BIS Review 107/2000  4  Price movements to date have been broadly in line with the forecast. And as we expected, there have been signs that international activity is slackening. This is most evident in the United States but even some slowing of growth in Europe seems likely in the coming years. In Sweden, too, there are indications that activity has become calmer. Growth still seems to be high but households as well as firms have become less optimistic about the future. Order books are not growing as drastically as before. In general, this is in line with what we foresaw in October. But of course we are keeping a close watch on developments. A more dramatic course cannot be ruled out, particularly in the United States. The oil price remains high and the krona has weakened. So in these respects, developments are more in line with the risk spectrum than with our main scenario. Share prices, as we all know, have been volatile in the past six months but the fall to date is not a major cause for concern.

Lars Heikensten: Monetary policy in Sweden  Speech by Mr Lars Heikensten, First Deputy Governor of the Sveriges Riksbank, at the Autumn Conference of the Centre for Business and Policy Studies, held in Stockholm on 17 November 2000. *  *  *  Thank you for the invitation to talk about monetary policy. If my memory serves me right, this is the fifth autumn conference I have addressed as deputy central bank governor. For me, the annual opportunity of discussing monetary policy with some of our country’s leading economists and economic observers has become a very enjoyable tradition. I shall begin, as usual, with a brief account of the past year, taking 1999’s October assessment as my starting point. Even though our appraisal of inflation at that time was relatively optimistic, the outcome has been better than we foresaw. Developments in the past year raise questions about the economy’s inflation propensity. That topic was already up for discussion at last year’s conference, though the reason then was that several leading observers considered the risks of inflation were being underestimated by the Riksbank. A third matter I shall be talking about is our monetary policy guidelines. In the past year we have been criticised for basing repo rate decisions on appraisals that are too narrow. Finally, I shall be looking ahead and commenting on our view of inflation in the coming years.