samchain/econo-pairs-v1 huggingface dataset:
As another example, many of you have probably heard of the recently passed Volcker Rule, named after another former Fed Chairman Paul Volcker. The Volcker rule can be seen as a watered down version of the Glass-Steagall Act. Recognizing that it is difficult to separate investment banks and commercial banks entirely, the Volcker Rule prohibits commercial banks from short-term proprietary trading of securities, derivatives, futures, and options on these instruments. The goal is that eliminating these risky practices will make banks safer and at the same time force them to refocus on core banking businesses which in turn should benefit consumers. Basel III and the Volcker Rule are just two examples of re-regulation. There are several others, notably the U.S. Dodd-Frank Act, the OTC derivatives markets reform, and the proposed oversight and regulation of shadow banking. Taken all together, these make a comprehensive set of regulatory reforms that will busy both regulators and financial institutions over the next several years. I would like to stress however that, for financial institutions, the compliance with the new regulations is not a one-way process, but a two-way one that you can help shape through industry consultation and collaboration with regulators. The challenges for country regulators are whether and when to adopt certain parts of international standards that may be irrelevant, too stringent, or lead to new risks for the domestic industry.

In our view, the responsibility of the banker should prevail over an automatic reporting of transactions exceeding a certain amount. Tracking down criminal money is even more difficult than identifying money laundering operations. The financing of criminal activities does not require large amounts and the ex ante identity of a criminal is not a source of pertinent information. Furthermore, funds used in the financing of terrorism, unlike cases of money laundering, very often are legally acquired. It is therefore crucial that financial intermediaries in both the banking and the non-banking sectors thoroughly verify their client relationships in order to identify suspicious circumstances. In this connection, strict observation of the “know-your-customer” principle is again of key importance. Switzerland does not hesitate to offer international co-operation in judicial matters and to block incriminated assets. Following the decision of the United Nations to apply sanctions against the Taliban regime in 1999 and 2000, we blocked a certain number of Afghan bank accounts and froze the assets belonging to persons listed by the Sanction Committee of the United Nations. To date, 76 accounts are frozen with a total of 42 million Swiss francs. In the United Kingdom and in Switzerland, the authorities and the banks themselves are fully aware of the utmost importance of successfully warding off criminal funds. We all realise that money laundering is not only morally unacceptable, but that it also clearly undermines the public’s confidence in our financial centre.
Finally, in China, while the policy cycle has turned and the economy appears to have reaccelerated, the authorities there will need to continue to deal with new challenges, including rapid growth in non-bank finance, increased leverage across the economy, and maintaining equilibrium in the midst of rapid structural change and increasing complexity. BIS central bankers’ speeches  1  So, while global growth appears to be picking up (after a lackluster 2012 which saw Europe and Japan contracting in the second half of the year, and a second consecutive year of slowing growth in the emerging market economies) the pick-up is likely to be only moderate; and significant economic slack in the mature economies (high unemployment, large output gaps, etc.) seems likely to be with us for some time to come. Against this backdrop, developed economy central banks are continuing to take extraordinary measures to support growth. Policy interest rates are close to zero, and central bank balance sheets have grown to unprecedented proportions via asset purchases and lending. As you know, the Fed is in its third round of large scale asset purchases. The Bank of England and Bank of Japan (BoJ) have been expanding their balance sheets as well, and markets expect the BoJ to engage in stepped-up asset purchases in the months ahead.

Ranee Jayamaha: Moving from informal to formal in the provision of remittances Speech by Dr Ranee Jayamaha, Deputy Governor of the Central Bank of Sri Lanka, at the Global Payments Week, Sydney, 3-6 October 2006. *  *  *  Let me begin by thanking the World Bank, IMF and BIS officials for giving me this opportunity to speak on the Worker Remittances in Cross Border Payment Flows. Most of what has to be said on this topic has already been articulated by the previous speakers. Let me therefore be very brief. I intend to make this presentation in three parts. Part I deals with an overview of remittances. Part II elaborates the importance of remittances in the Sri Lankan economy and Part III discusses possible solutions to issues relating to remittances at macro and micro levels. Part I – Global overview In terms of magnitudes, worker remittance has become a significant component in foreign inflows and balance of payments in developing countries. The statistics presented here are largely estimates. According to the latest reporting, worldwide remittances during 2005 had been approximately $ 250 bn and it is likely to increase further. In 2005, developing countries appear to have received $ 167 bn from about 175 migrants. It is also estimated that around 500 mn of the world population is dependent on remittances. Formal institutional channels It is important to highlight some key points on the formal institutional mechanism/channels of remittance flows. Traditionally, the banks collected and disbursed remittances.
The Riksbank is one of the central banks that will need to take an active stance on whether or not to issue a digital currency first. We cannot wait any longer, and I shall now tell you what we intend to do in the coming years. We will need to work within three different areas at once. Firstly, we need to identify what technologies can be used. This includes investigating both decentralised and centralised alternatives. It is important not to exclude alternatives in advance and thus limit the room for manoeuvre. Perhaps what we need is a combination of centralisation and decentralisation? We also need to study what technical competence we have, and what we need. We need to investigate in what way payments in e-krona can be initiated: with smartphones, plastic cards or in other ways. The second area is what I call policy issues, where we study the potential effects on the Riksbank, the payment market, monetary policy, financial stability and so on. Here, we ask ourselves what properties an e-krona should have to best meet the needs we see in the economy. I discussed examples of these questions earlier. The third area concerns legal issues. Examples here are what opportunities and what flexibility the Riksbank’s current mandate allows us, how different laws affect the requirements we should make of an e-krona system and so on. Even if we intend to work within these different areas in parallel, there will be interdependencies that we must take into account.

These advocates say that this would make it easier for the central bank to implement an efficient monetary policy with a negative interest rate. 10 This reasoning is based on the central bank being prevented from setting a negative interest rate to the extent considered necessary to stimulate economic activity. Personally, I am not convinced that this problem would arise in Sweden and I would once again like to say that the Riksbank has a statutory requirement to issue banknotes and coins. I see e-krona primarily as a complement to cash. 10 The idea is as follows. If the central bank introduces a negative interest rate, economic agents will choose to  hold cash, which does not have an interest rate, instead of deposits with the banks. This means that the central bank's policy loses impact at the level where the agents begin to prefer cash. This is often referred to in academic research as the “zero lower bound” problem. 8 [10]  The issuing of e-krona together with a positive interest rate on e-krona could affect financial stability in the banking sector. Today, the banking sector functions as a system of communicating vessels. If a consumer or a company withdraws money from a bank, this money comes into another bank, either as a deposit or as payment for a product or service.
Low levels of production in Iraq have contributed to holding up oil prices. Strikes and production problems in Venezuela and Nigeria have also played a role. These developments may keep oil prices high until growth in the global economy returns to normal. The oil industry will then have come through this period of sluggish growth in the global economy since 2000 without a fall in revenues. This has, in isolation, curbed the effects of the international downturn on Norway. However, the situation, as a whole and with regard to oil prices, is still highly uncertain. Weak external developments have in particular had negative spillover effects on the Norwegian economy through the appreciation of the krone, the fall in equity prices last year and lower demand for Norwegian exports. The krone exchange rate is the price of our currency measured in terms of a foreign currency. Developments in other countries are just as important for the krone as developments in the Norwegian economy. The krone has been strong. As a result, prices for imported goods have fallen. This has contributed to low inflation despite strong wage growth over a period of several years. Our analyses indicate that the most important reason for the appreciation of the krone from May 2000 to the end of 2002 was the positive and widening interest rate differential. Combined with the interest rate differential, the fall in equity prices and reduced fluctuations, or volatility, in foreign exchange markets contributed to the appreciation of the krone last year.

In the following period and until the end of 2002, the krone appreciated, and the effect of high wage growth gradually came into evidence in overall corporate results. Results last year were affected by a particularly strong krone in the second half of the year. The krone exchange rate, measured in terms of the TWI, has now returned to the level of the mid-1990s, while the business sector is still grappling with the high level of costs that has built up since 1998. Changes in the krone exchange rate have proved to be reversible, but the loss of competitiveness and jobs caused by the relatively high level of domestic wage growth is more difficult to recoup. In recent years, labour costs have accounted for an increasing share of corporate earnings. In 2002, labour costs accounted for more than 90 per cent of total factor income in manufacturing. The increase in wage shares is affecting corporate behaviour. The demand for labour is declining. Credit demand and investment in the enterprise sector are low. At the same time, the commercial property market is weak. Vacancy rates for commercial premises are high and rents have fallen. This will have an impact on investment in the period ahead. Lower interest rates will normally result in higher inflation, partly because the krone depreciates, and partly because of a rise in demand. Enterprises will thus be able to increase their earnings. Business sector activity is stimulated most effectively by low interest rates and a weak krone.
Implicitly, this also raises the question of whether and to what extent the current state of the innovation cycle challenges our understanding of what has changed over the last decade. -  and secondly, how financial innovation challenges the role of monetary analysis in monetary policymaking. I shall then conclude by a few words on the difficult task of communicating about monetary policy in times of financial stress. This is a concern that does not feature formally in our programme today but lurks in the background and I am sure many of us will have it in mind throughout the day. Challenges for our understanding of the MP transmission process An appropriate knowledge of the mechanisms through which monetary policy affects the economy is of crucial importance for central banks. Financial innovation affects these mechanisms both by altering the channels through which monetary policy operates and by changing the overall impact of monetary policy decisions. But the magnitude of the changes and the exact impact of financial innovation at a time when other factors such as globalisation are at work are not well known. Financial innovation certainly contributes to enhancing wealth effects and thus probably also to strengthening the interest rate channel. First, financial innovation fosters faster dissemination of information and its more rapid incorporation into financial market prices. This is of course particularly true for monetary policy decisions and can therefore increase the effectiveness of monetary policy via the interest rate channel.

To sum up, financial innovation is on the whole expected to have facilitated the job of monetary policymakers by accelerating the transmission of monetary impulses to the economy. However, in times of stress, when financial sophistication may have gone further and quicker than risk-management practice, the confidence crunch that may ensue paves the way to non-linear responses of the economy that seriously challenge our common understanding of how monetary policy impulses are transmitted to the economy. Challenges for our reliance on monetary indicators As you know, the Eurosystem’s monetary policy strategy assigns an important role to money, which is based on the premise that monetary developments provide valuable information on future inflation in the longer run. I would like to ground this with two reasons, a well-known stylised fact and a conjecture. The stylised fact first: there is ample statistical evidence, in the euro area and elsewhere, that low frequency movements in money growth are closely correlated with trend inflation, e.g. for frequencies corresponding to cycles of eight to ten years. The conjecture, then, brings us to an issue that will be tackled this afternoon, namely the flattening of the Phillips curve: changing inflation dynamics, which can partly be viewed as a consequence of a successful anchoring by credible monetary policies, tend to reduce the sensitivity of inflation to incipient imbalances in the economy.
Conference Banque de France ”Opportunities and challenges of the tokenisation of finance: which role for central banks?”  Tuesday 27 September 2022  Concluding remarks by Denis Beau, First Deputy Governor  Let me first start by thanking you all for attending this conference, both online and in person. I believe this large audience speaks to the significance of the issues that we have discussed together today and the depth and quality of today’s exchanges, which covered a wide variety of topics, were impressive. It is a tall order to summarise such rich discussions in so little time. I will only try to highlight three lessons I take away from each of the roundtables and chart a possible way forward. The first lesson I take away from this conference is that we could be at a turning point in the development of the crypto-asset ecosystem. • Over the past few years, the crypto-asset landscape has experienced a significant growth, buoyed in part by the low interest rate environment. It has expanded its initial scope and started offering more sophisticated products, getting increasingly complex and interwoven with traditional finance, with the emergence of DeFi. • However, recent tensions in the crypto-asset ecosystem, amidst a normalisation of monetary policy, raise questions about (i) first, its correlation with other types of risky assets and (ii) second, their sensitivity to changes in the monetary policy stance. The ongoing stress in the crypto-asset market is also altering the dynamics of the ecosystem, sparking bankruptcies and leading toward greater concentration.

Page 1/3  • In addition, the development of crypto-asset and DeFi comes with significant policy challenges for public authorities, that were highlighted in our discussions today: o First, they raise the question of how to regulate market players, which are not easily captured by existing regulation as they either lack central authority or may require close coordination between several regulatory and supervisory agencies due to the variety of their activities. o Second, the rise of these new assets has led central banks to reflect on the appropriate balance between public money and private assets and the way in which access to public money could be ensured in the digital era through the issuance of Central Bank Digital Currency. The second takeaway is that private players identify substantial benefits associated with distributed ledger technologies and consider that an appropriate regulatory framework would help make the most of these technologies. •  But we know from experience that public authorities need to act quickly, while this ecosystem is still nascent, to guide its development in a way that suits our public policy objectives. We are now at a tipping point. If we do fail to act, there is a risk that inefficient, fragmented, monopolistic solutions could develop in a silo mode, harming financial stability. But if we act early, we can foster the development of an innovative ecosystem, which will improve the efficiency of post-trading processes and infrastructures.
The four major banks regularly monitored by the Riksbank have similar procedures with regard to granting corporate loans. The bank assesses the risk in a particular loan on the basis of two aspects: the customer’s ability to repay and the collateral that can be offered. The customer’s ability to repay is the more important of these two aspects. For obvious reasons, loans without collateral are assessed more stringently. The fact that the banks now focus more on the ability to repay than on the value of the collateral is a lesson learned from the bank crisis in the 1990s. Before a loan is granted, it is necessary to assess the risk of default in the form of a suspension of payments or bankruptcy. This means that the banks consider stable cash flows to be more interesting than whether a project can provide a higher yield than expected. On the basis of the bank’s assessment, the borrower is assigned a risk classification. This classification contains both quantitative and qualitative factors and the risk grade is reviewed annually. The quantitative analysis is based on the company’s profit and loss statements and balance sheets, while the qualitative analysis is based, for instance, on the company’s competitiveness and the quality of its management. When making the decision to grant a loan, the assessment of the customer’s ability to repay is supplemented with information on the specific loan, for instance, the amount of the loan and the collateral the borrower can offer against the loan.

Importance of sound advice Access to sound financial advice has become even more important today as households face the challenges of managing heavier debt loads, higher costs of healthcare and education, effects of natural calamities that are occurring with greater frequency, and longer life spans. We believe that the responsibility to provide sound advice falls on all insurance intermediaries, whether you are an agent, an insurance broker, a bancassurer, or a financial adviser. This is clear in our Guidelines on Proper Advice which states among other things, that if an intermediary cannot match the needs and requirements of a customer with a life or takaful product within the intermediary’s offerings, the intermediary should not recommend any product to the consumer. However, we are also mindful that sound advice can have different shades which depend on many factors, including the competence of those providing the advice, the solutions that they are permitted or equipped to advise on, and incentive effects which may, either in perception or reality, colour that advice. Financial advisers provide an alternative channel through which consumers can obtain insurance advice, taking into account individual perspectives on these factors. The fundamental principle remains the same – that whichever the channel, and acknowledging the advantages and limitations of different channels, consumers should receive advice that is in their best interests.
All the more, ad hoc policy meetings based on ad hoc policy documents should be minimized. This not only helps the central bank in its communication with the public, but also helps the decision-making body to maintain internal discipline. Separateness emphasizes that special attention should be paid to monetary policy in the central bank’s agenda. In order to avoid any attempt to displace the policy agenda by any other ‘extremely  1  For further details see Lombardelli, Proudman and Talbot’s article ‘Committees Versus Individuals: An Experimental Analysis of Monetary Policy Decision Making’, published in International Journal of Central Banking, Vol. 1, No. 1, May 2005. BIS Review 88/2005  1  important’ issue, separate meetings should be established for policy discussions. Indeed, a policy decision is worth a special ‘policy day’, split into: (i)  a staff presentation, when staff present the outcome of their analysis (based on a standard set of policy documents)  (ii)  a discussion of the analysis  (iii)  the policy decision  (iv)  communication of the decision to the public  Staff independence should protect the members of the decision-making body from the filtering of undesirable information which can occur whenever a particular decision maker directly manages the ‘Economic Department’. Although such behaviour is, with high probability, not intentional, this member can influence the interpretation of the ‘staff’ analysis in a way convenient to his own opinions. It could happen that the rest of the decision-making body members receive a biased analysis.

All this confirms my main contention that the current environment, per se, creates no reason for delay. Conclusion Let me conclude. The economic outlook for the euro area is brighter today than it has been for seven long years. Monetary policy is working its way through the economy. Growth is picking up. And inflation expectations have recovered from their trough. This is by no means the end of our challenges, and a cyclical recovery alone does not solve all of Europe’s problems. It does not eliminate the debt overhang that affects parts of the Union. It does not eliminate the high level of structural unemployment that haunts too many countries. And it does not eliminate the need for perfecting the institutional set-up of our monetary union. But what the cyclical recovery does achieve is to provide near perfect conditions for governments to engage more systematically in the structural reforms that will anchor the return to growth. Monetary policy can steer the economy back to its potential. Structural reform can raise that potential. And it is the combination of these demand and supply policies that will deliver lasting stability and prosperity. BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches