samchain/econo-pairs-v1 huggingface dataset:
Page 7  Towards an international effort – central banks, industry and public authorities rowing in unison In a highly connected and networked industry such as payments, we can only make a real difference if we work together in a coordinated way. We need to row together in unison to reach our destination of faster, cheaper, more transparent and more inclusive cross-border payment services. So what are the concrete actions that each of the groups – central banks, industry and public authorities - need to take? The role of central banks Central banks, both as operators and supervisors, of payment infrastructure, we have a key role to play. We build infrastructure, add new functionality and set standards and policies to underpin safe and efficient economic and social activity. Central banks need to start changing policies and enhancing core payment systems in line with the best practices, assessments and analysis that are developed as part of the work on the 19 building blocks. To do so effectively, we need to listen to and collaborate with industry, involving them in outreach and consultations and updating them on latest developments. And we also need to share our learnings and experiences with our peers, and beyond. This could be done through the establishment of communities of practice, through which central banks can discuss challenges and barriers with peers and find ways to overcome them. The role of industry The payments industry is another key, and wide range group including correspondent banks, FMIs and the non-bank FinTech.

The prices of other goods and services, on the other hand, have been posting quite modest growth rates. Therefore, the inflation expectations of entrepreneurs and consumers have remained close to the historical average. If the price hike of commodities stops, the increase in the euro area’s prices could remain below 2% already next year. However, looking at the data from another angle, we can find proof to arguments which insist that the current euro-area interest rate level is not suitable for guaranteeing the low inflation rate that corresponds to the price stability goal. Although the general public focuses on the debt crisis of certain European countries, the developments of the economy itself have, on the whole, exceeded expectations. Economic growth has remained above average and the utilisation of production capacity no longer resembles a crisis situation. Though unemployment is still high, it is decreasing and the indicators of the industrial and service sectors are posting quite high results from the historical perspective. If we add here the fact that global price rise pressures have been annoyingly enduring and do not show any signs of abatement, the risk of a persistently higher inflation rate in the euro area has increased. Therefore, at the press conference after the most recent meeting of the Governing Council of the European Central Bank it was pointed out that, to withstand this threat, the Eurosystem might increase the price of money in the markets earlier than expected, maybe already in April.
To conclude on this estimate of effectiveness, the IMF – regarded as an objective judge of the relevance of economic policies – was unequivocal in its assessment at the last G20 meeting in Shanghai at the end of February, saying, “The ECB’s asset purchase programme has supported the recovery by improving confidence and financial conditions [and] monetary policy should remain accommodative”. 3) What about the risks? I talked earlier about the risks of doing nothing: we need to take action in order to bring inflation back up towards 2%. That said, we also need to keep a close eye out for any possible negative side-effects of our monetary policy, notably for financial stability. We are actively monitoring the financial cycle, including in France where the task falls to the Haut Conseil de Stabilité Financière (High Council for Financial Stability), set up in 2013: I will be taking part in its 8th meeting at the Finance Ministry tomorrow. For the time being, there are no signs of any bubbles forming in the main financing markets: on the whole, developments in the equity markets appear in line with corporate profit forecasts, while evolutions in bond yields also seem consistent with the outlook for inflation and growth. Nor are there any signs of excessive credit growth in the financial system. Nevertheless, we remain vigilant over all aspects of the current macroeconomic and financial environment.

At European level, we need to move finally towards a true economic union, in addition to the monetary union embodied in the Eurosystem. Only by optimising the governance of the euro area can we optimise growth. The current extremely accommodative monetary policy stance creates the ideal conditions for carrying out much-needed reforms. It should not be used instead as an excuse for putting them off: Europe and France urgently need to make the most of this opportunity, right now. Thank you for your attention. 4  BIS central bankers’ speeches
This means that unless exempted:  4/6  BIS central bankers' speeches  issuers must comply with prospectus requirements prior to the offer of such tokens; intermediaries dealing in such tokens must meet licensing requirements; and platforms facilitating secondary trading of tokens must be approved or recognised by MAS. With respect to the investors, MAS’ priority has been to make them aware of the risks of putting their money in crypto tokens. We have advised the public to act with extreme caution should they wish to invest in crypto tokens. They could lose their shirts if prices plunge. And they have no regulatory protection if there is fraud. Market functioning There is also the issue of market integrity and functioning. Several cryptocurrency exchanges abroad have suffered cyber attacks and theft of their crypto tokens. There are also rumours and reports of rampant market manipulation and other fraudulent activities on crypto-exchanges. We are watching with interest developments in the US, where futures contracts based on crypto tokens have been introduced on regulated exchanges. There may be some advantages here from a market integrity perspective. These exchanges have clear rules governing trade and post-trade activities. Such products could also potentially have a stabilising influence on crypto token prices as they provide two-way hedging opportunities for investors. But regulation cannot address all the concerns around crypto tokens. The industry too has a part to play in strengthening the ecosystem, for instance, by adopting best practices around transparency, cybersecurity, and record-keeping.

Guarding against Gresham’s Law I have spoken about the good, bad, and ugly of crypto tokens. To be more exact, it is the uses of crypto tokens that assume these qualities. Like Money, crypto tokens can a force for good or bad. Lest we forget, money is not the root of all evil; it is the love of money that is so. The same applies to crypto tokens – it is the enchantment with these tokens as a way to make a quick buck and their abuse for illicit activities that are at the root of our concerns. There is an old axiom in economics called Gresham’s Law, which is loosely interpreted as “bad money drives out good”. We must work together – regulators and the crypto industry – to make sure that bad money does not take hold. And that a new generation of crypto tokens emerges, that harnesses the potential of blockchain technology for social good while mitigating the risks today’s tokens pose. This is a future worth securing and I hope that some of the talents gathered in this hall will help to make it happen. Thank you. 5/6  BIS central bankers' speeches  6/6  BIS central bankers' speeches
Here, we would have to look at the circumstances of each case – whether, for example, the offshore internet bank advertised its services in the local Hong Kong press or accepted Hong Kong dollar deposits or refused to take deposits from a number of specified jurisdictions, but did not include Hong Kong among these. If we come across such cases of illegal advertisements targeted at Hong Kong, how would we deal with them? The easiest case would be where the bank itself is respectable and is based in an overseas location which is properly supervised. We could then write to the bank itself and to its supervisors to notify them of the advertising rules in Hong Kong, and request the bank either to comply with these rules or to add Hong Kong to the list of the jurisdictions from which it was not prepared to take deposits. If necessary, we would seek the cooperation of the home supervisor to enforce this request. It might also be necessary to supplement this with a reminder to local Internet Service Providers about the advertising rules in the Banking Ordinance and to seek their cooperation to block offending websites. The problem with this, however, is that the website in question may not actually be posted on the local ISP’s server – in which case, there may be little that the ISP can do. If the bank concerned is not respectable and it is based in an uncooperative jurisdiction, the situation would be more difficult to handle.

As you know, the second line establishes the control standards and monitors adherence to them, encompassing risk and compliance functions. Nevertheless, other areas, such as legal, human resources or tax, may also be included, in order to ensure that their expertise in these areas is considered by management. There is no one-size-fits-all approach for the division of tasks between both lines; but the identification, assessment, validation and reporting of risks and controls should certainly be clearly assigned in every organisation. As I mentioned before, it is very hard to measure these kind of risks precisely; nevertheless, banks should include qualitative and quantitative key risk indicators in their integrated management information system. To achieve this integration, all parties must speak the same language, which implies applying common taxonomies with clear definitions and indicators per type of risk. Last, but certainly not least, I wanted to emphasise the importance of having an adequate internal audit as the third line of defense. The role of internal audit is key to challenging the adequacy of the first two lines, underpinning the whole framework. Let me conclude. The losses experienced during the crisis and its aftermath should act as a powerful reminder that we cannot relax or lower the bar. There is no room for complacency if we want to avoid repeating past mistakes. In this regard, I wanted to convey a few messages today.
To his last days he remained unconvinced that Europe had fixed its problems, often berating colleagues at the G20 for the lack of progress. That was typical. Jim Flaherty was always forthright. He wouldn’t avoid a problem, hoping it would get better. On current projections it will take the euro area eight years to achieve the recovery that Canada secured in two. Tonight I would like to draw on Jim’s legacy to reflect on how the euro area could act to avoid another lost decade. This matters for Ireland, Europe and the UK. The euro area is the world’s second largest economy. 1 With 27% of global banking assets it is a key determinant of global financial stability. It is the UK’s largest trading partner and the single largest destination for UK foreign direct investment. The euro area would do well to live up to the Flaherty motto because, although there was monetary boldness last week, the currency union has been relatively timid in putting in place the other policies and, crucially, the institutions necessary to deliver sustainable prosperity for its citizens. Now is not the time for half measures. In all advanced economies, private investment is still being held back by a combination of modest demand prospects and lingering concerns of another major adverse shock. Nowhere are these impediments more severe than in the euro area.

For example, if national central counterparty is not a viable and efficient model for a small economy, then the cost of hedging would increase with higher risk weight under Basel III. Meanwhile, if derivatives are cleared overseas, through regional or global central counterparties, we need to consider implication for cross-border supervisory coordination, financial stability, and development of local financial market and competition. On a related issue of Dodd-Frank Act, restriction on proprietary trading of US bank could impact the liquidity of US dollar markets abroad, as well as liquidity of foreign government bond markets which are the back-bone of their monetary policy operation. Another key issue going forward is the balance of authority between Home and Host regulators. There are concerns about the proposal of Financial Stability Board on cross-border resolution of Global Systemically Important Financial Institutions, or G-SIFIs. The concern is that some Host regulators may not be included by the Home regulator in the Crisis Management Group or resolution planning, even if the institution is systemically important in their jurisdictions. We are glad to see the FSB taking initiatives to identify potential problems. Now it is the time to work together on solutions in an inclusive manner. This is because the inclusiveness of the process assures acceptability and commitment, and reduces the uncertainty from unilateral action of individual countries. These international regulatory  2  BIS central bankers’ speeches  standards have no direct international enforcement power.
The question we need to ask is how those two characteristics relate to each other. In other words, what is the link between liquidity and risk? Here we could use a very simple framework. Investors have a perception that a market is liquid if they feel they can trade their assets (and positions) with no constraints and without moving prices by too wide a margin. BIS Review 128/2007  1  Liquidity exists when there are counterparties available to trade at any moment in time. It follows that liquidity is both an expression and a consequence of the ability of market participants to take risks on each other. For liquidity to exist, therefore, there must be a general sense, in the market, that each participant (or, at least, most of them) are suitably equipped to face the risks they are taking. This is what we call confidence. Looking at discussions on the current phase of market turmoil, two views have emerged as to what determines confidence. The first view emphasizes information and transparency. Crisis of confidence and drying up of liquidity occur when there is too much opacity in the system, when investors are unable to assess risks, or when market participants do not trust whatever information is available. One good example is valuation. Valuation of complex instruments is currently at the forefront of discussions between regulators, market participants and investors.

This clearly reflects the IMF’s commitment to reforming its assistance and solidarity framework to help the most vulnerable countries. Similarly, the adequacy of the resources of multilateral development banks was reviewed and, for example, the capital of the Asian Development Bank was tripled. In order to enhance the legitimacy and efficiency of key players in the international financial architecture, the bolstering of resources must go hand in hand with a reform of their governance. As a European, I am perhaps not the best person to give my views on the governance of financial institutions, and of the IMF in particular because, for emerging countries to be given a fair representation, it is most often the representation of European countries that is called into question. You may therefore be tempted to interpret my suggestions negatively. I would, however, first like to say that the representation of European countries should not be contested: Europe is a diverse continent that encompasses small, new, and even emerging countries alongside large and established developed nations. Overall, it is somewhat under-represented in a community that is still made up of sovereign states.
And this combination of events is likely to create an environment in which business investment spending will gather strength. Finally, I believe this tug-of-war analogy is useful in explaining the recent inflation dynamics. As is well known, total inflation, as measured by the personal consumption expenditures (PCE) deflator, has slowed sharply over the past year and is now running below the FOMC’s expressed goal of 2 percent. Much of the slowing of total inflation is due to declining energy prices resulting from the weakening of global growth mentioned earlier combined with increased energy production here in the U.S. However, it is also the case that core inflation, that is, excluding food and energy, has slowed sharply as well. A decomposition of the slowing in core inflation reveals that some of it is due to slowing in the rate of increase in prices of non-food and non-energy goods. This probably is due in large part to the softening of global demand for goods and the modest appreciation of the dollar that has occurred since mid-2011. In the service sector, the rate of increase in prices of medical services and “non-market” services – the latter includes some financial services – also has slowed notably recently. In contrast, the rate of increase in prices for other non-energy services has been relatively stable.

France has already said that it will take a few liberties with the European deficit limits. Shouldn’t the fiscal straightjacket on Member States be loosened? This has been a little bit overstated, because the security figures are quite low in the budgets, and it is not prohibitively expensive to strengthen security. Of course, it is relevant from a fiscal  2  BIS central bankers’ speeches  point of view, but the amounts are not very high. By contrast, if we include the cost of national defence under security, then the figures are potentially higher. However, it should be emphasised that this is not the source of France’s fiscal woes: it also has a well-known structural problem. How can we counter the surge in nationalist and populist currents in Europe from an economic perspective? By delivering the prosperity and economic security that was promised when we created the euro area. Today, we have the same level of economic output as we had eight years ago. The crisis caused significant economic and social pain, notably in the countries that experienced a drop in their living standards. Inequality has risen as a result of unemployment. This is unacceptable socially and has political consequences. There is no obvious willingness to integrate the euro area further. We are at a turning point. Integration at the financial level is progressing, but the European project as a whole needs to be further deepened.
If there are such gains to be made from a common currency in a reunified Europe, would it not be possible that such gains may also be attained on a global level? Should we continue on a path towards more global monetary cooperation? There are many arguments both for and against such an arrangement. In recent years we have seen substantial exchange rate fluctuations between some of the world’s large economic blocs. These have largely been related to developments in the US dollar. The dollar’s weakening against the euro has recently gained impetus once again; in two years, the euro/dollar exchange rate has gone from a low of 84 cents to 1.18 dollars in recent weeks - a rise of just over 40 per cent. Discussions of the implications of an overvalued dollar for the US current account deficit have quickly turned into concern over the effects of the rapid fall in the dollar on euro area growth. Should there be a quicker correction in the US current account deficit due to diminishing interest among international investors in US assets, the dollar could weaken further. A fast and dramatic depreciation of the dollar could derail Europe’s fragile recovery.

Meanwhile, the risks that stem from the countries possibly diverging from the euro area average are perhaps also clearer than for Sweden (which is a country that is unusually well-integrated with euro area countries and has a similar economic structure). But some factors suggest that the new Member States in central Europe do not need a different monetary policy than that of the euro area. These countries also have close ties with the rest of the EU, which is their biggest trading partner by far, accounting for some 50-70 per cent of imports and exports. Having said that, the countries are still undergoing a period of quick change; it is conceivable that any potential shocks during such a transitional period would be managed better through a national monetary policy. Their growth is and should be considerably higher than the EU average as long as they continue to reduce the differences in their standard of living compared with the rest of the EU. This always entails risks of overheating similar to that experienced by the fast-growing Irish economy. The assessment of the risks related to the process of change and of the long-term gains varies between the different candidate countries depending on how open and flexible their economies are. Nevertheless, it seems that the advantages of integration will outweigh the disadvantages when the new countries have assessed the euro, even if it is likely that some of the new Member States will have to wait longer than others before introducing the euro.