samchain/econo-pairs-v1 huggingface dataset:
If the costs associated with a crisis are sufficiently large, systemic risk can be considerable even if the probability of a crisis seems small. As underlined in the theoretical literature, the economy can be vulnerable to substantial deleveraging when debt is at a high level. Previous economic downturns provide confirmation of this. The costs of a crisis may then be substantial. The empirical models can provide support when we assess financial imbalances and whether a crisis is emerging. At the same time, humility is required and we must recognise that our ability to provide a precise estimate of systemic risk is limited. No two financial crises are alike, and the financial system is constantly evolving. There are many sources of systemic risk and new ones may emerge – not least when new regulations are introduced. We must be prepared for possible changes in the predictive power of the indicators. Norges Bank will therefore always have to exercise professional judgment in its assessment of systemic risk. The aim of macroprudential regulation is to strengthen the resilience of the financial system and dampen the build-up of financial imbalances. The purpose of the countercyclical capital buffer is primarily to increase banks’ resilience to loan losses in a future downturn. If the BIS central bankers’ speeches  3  buffer functions as intended, banks will tighten lending to a lesser extent in a downturn than would otherwise be the case. In addition, the buffer may to some extent dampen high credit growth during an upturn.

In doing so, I will focus on two prime channels underlying the second stage of transmission: the exchange rate channel and the real interest rate channel. My remarks will therefore be neither exhaustive nor complete, given that monetary policy can affect the economy through many other channels as well, such as its impact on the valuation of equities and, hence, on firms’ cost of capital and investment decisions, Tobin’s q in short.3 Another channel of relevance is the bank lending channel as formalised by Bernanke and Gertler (1995). But by focusing on the exchange rate and interest rate channels, we can get a good understanding of how effective recent policy measures have been. In particular, I will show that monetary policy-induced exchange rate movements may have considerable impact on consumer prices, but that this relationship depends on the state of the economy and the shocks driving it, much in line with the recent literature in this field. And I will show that the New Keynesian Investment and Savings (IS) curve is alive and well in the euro area – that is, aggregate demand responds to changes in real ex ante interest rates, and can also be shown to have done so in recent times, provided it is measured properly. A state-dependent exchange rate pass-through Let me start with the exchange rate channel – a channel that has been heavily debated in recent months in the light of the large movements that we have observed in the foreign exchange market.
The same can be said for the public and business community in these economies. The economies enjoying a favourable fiscal position also faced the crisis without impairing their long-term fiscal sustainability. The situation seemed slightly more complex in some developed European economies. Seeking to find a balance between deleveraging and fiscal consolidation, euro area authorities demanded setting up a protective wall against the possible fire bursting into from the outside. But, as noted, this fire had already burst out and was spreading inside the euro area walls; therefore, setting up this “protective wall against fire” was pointless at this point. The European Union and its institutional structures, along  BIS central bankers’ speeches  1  with the international financial institutions and partners, are undertaking a number of reforms to put this “fire” out. However, it is still unclear how long this “agony” will last and likewise is its impact on the euro area and its trading partners. The exhaustion of fiscal and monetary policy incentives failed to increase economic activity and, moreover, it further aggravated the sovereign debt situation and financial stability. Consequently, the sovereign debt sustainability and banking system credibility-related issues were added to the concerns about economic growth. The question facing many countries today has the form of a trade-off between stability and sovereignty. Currently, the latter two are intertwined in an endogenous relationship (of mutual impact on one another), in which the multi-dimensional need for stability (implying the maintenance of price stability, macroeconomic stability, financial and fiscal stability) requires taking balancing measures.

On the other hand, this would create an attractive surrounding for absorbing and accommodating foreign investment, and allowing the entry of new capital into the economy, which is vital to support the country’s economic activity and its credibility in the region and beyond. The Bank of Albania is committed to guaranteeing a sound banking system and efficient in channelling public savings into the economy. We will continue to carry out our periodic examinations to guarantee the banking system’s stability. Sufficient capitalisation and capital quality remain our primary objective. I would like to guarantee the system that the Bank of Albania will take all the measures to supply with liquidity, while increasing the pressure for higher credit volume and improved quality. Dear guests, I invite you to actively participate in today’s debate and discussions on issues that have been and will remain the focus and our common interest in the future. I invite you all to contribute,  BIS central bankers’ speeches  3  through presentations and discussions, to setting objectives our region will face in the future and solving the current challenges. Thank you for your attention! 4  BIS central bankers’ speeches
Information technology  In 2015, the aspect of Information Technology saw several achievements. The AFISaR system started to operate. It is a central electronic register for the documentation of each element involved in the issue and transactions with securities by the Albanian state. Other achievements include: -  automation of the reporting system for banking activity indicators;  -  integration and optimisation of the IT network utilisation, reducing therefore operational costs of the Bank of Albania;  -  automation of accounting transactions in Bank of Albania branches and improving information processing and storing capacities. xii. Internal audit  In 2015, in addition to planned audits, auditing and non-auditing commitments were carried out, upon the request of the Supervisory Council, Audit Committee, Administrators and Inspector General. Another important development in this regard was the Quality Assessment for the Control [Internal Audit] Department at the Bank of Albania by the De Nederlandsche Bank (DNB). Conducted for the first time, the assessment serves as an important development plan for strengthening the audit activity in the future. During 2015, nine full-scope audits were conducted. In addition, three full-scope audits started in 2015, but were completed in the first months of 2016, bringing the total number to 12. The findings and recommendations of each audit have been addressed to the heads of the respective units, the Administrators of the Bank of Albania, the Audit Committee and the Supervisory Council, as part of the periodic reporting by the Inspector General. xiii.

They reflect Supervisory Council’s monetary policy decisions, the underlying factors and expected results. The periodic reports of the Bank of Albania publish comprehensive analysis on economic and financial developments, the outlook for the short and long term, and the performance of the banking sector along with the risks facing the financial stability of Albania. Events organised with representatives of the banking system, business community, specialised international institutions are another aspect of our communication with the public. Examples include the Forum on “Promoting credit growth” in April 2015, “Albania Financial Forum III” organised with the International Monetary Fund in June 2015, and a meeting with the banking system discussing on “The economy and banks: present and future challenges” in September 2015. viii. Public education  The launching of the Museum of the Bank of Albania was the main highlight in the area of public education. Designed as an inter-disciplinary museum, it integrates numismatic, historic and educational functions, which contribute to enhancing the financial literacy of the public in general and of the younger generation in particular. ix. European integration  Another important aspect of our work has been the contribution of the Bank of Albania in the context of approximation to the European Union. The Bank of Albania has intensified its cooperation with the European Central Bank, central banks of the European System, and European structures that regulate financial aspects in the EU.
In Malaysia, the commitment to the financial inclusion agenda is legislated under the new Central Bank of Malaysia Act 2009 which provides as one of our primary functions – to promote the development of a sound, progressive and inclusive financial system. Malaysia’s financial inclusion agenda has been developed in concert with the development of the overall financial sector and encompasses the five broad strategies. Our blueprint for the development of the financial sector for the next decade will give special focus on financial inclusion and consumer protection. In the previous decade, the focus was  2  BIS central bankers’ speeches  to enhance the access to financing, financial education and putting in place the supporting institutional arrangements to enhance financial inclusion. While these efforts will be intensified further in this next decade, greater leverage will be made on technology and on new institutional arrangements to extend the outreach to the range of users from households to micro enterprises and small and medium scale enterprises. Also important is the development of the enabling environment conducive for innovation of the range of financial products and services needed for the spectrum of society and businesses and for cost effective pricing to take place. This will be reinforce by the supporting infrastructure for the effective management of risks by financial institutions; strengthening of the development financial institutions; and putting in place a comprehensive consumer protection, redress and education framework. These strategies are pursued under a collaborative approach that effectively combines with the efforts by the private sector.

Our central view remains that inflation will fall back this year as the rises in domestic gas and electricity prices last year drop out of the annual comparison, and the recent cuts in prices feed through to household bills. But it is important to look through those temporary effects to the outlook further ahead. The discussion within the Monetary Policy Committee is explained in the minutes of our June meeting which were published this morning. As ever, there is room for differences of judgement as to the appropriate level of Bank Rate – as shown by the differing views within the MPC. But every member of the Committee is determined to bring inflation back to target and keep it there – or as close to the target as possible – indefinitely. In the long run, it is of the utmost importance that the right institutions to secure both monetary and financial stability are in place. I believe they are. Chancellor, you are now moving on. Our country continues to benefit from the institutional arrangements you introduced in 1997. As that great political commentator Niccolo Machiavelli noted, “nothing brings a man greater honour than the new laws and new institutions he establishes”. I encourage you to be equally bold in your next job. Institutions outlast us all. Over time, they are adapted as we learn the lessons of the past in the light of a changing present to meet our future needs.
Prasarn Trairatvorakul: The rise of Asia – finding the right balance for policy Address by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the Japan Bank for International Cooperation (JBIC) seminar on “Outlook for the Global Economy and Financial Markets 2011”, Bangkok, 8 February 2011. *  *  *  Distinguished Speakers and Guests, Ladies and Gentlemen, It is my honor and pleasure to address today’s distinguished audience on the outlook of and the main challenges facing the global and Thai economies. Rather than giving you data and projections, which are readily available, I would like to take this opportunity to share with you my observations on the economic future of Asia and Thailand. While economic recovery in the West will likely be constrained by crisis legacies, the rapid bounce-back in Asia and its fast rising role in the world economy have made many believe that Asia is on the continued rise, to the extent that Asia is entering a golden age. Nevertheless, there are questions whether Asia can manage the risks associated with continued growth, particularly inflationary pressure and the impact of volatile capital flows. In line with this introduction, my presentation today will focus on four related topics. First I would like to pose a question whether Asia is truly approaching a golden age. Secondly, to sustain the rise of Asia, I would like to highlight the need for Asian economies to build capacities, as well as strengthen innovation and productivity.

This is because it helps investors, businesses, and household to effectively make plans and manage their risks, as well as lower businesses’ cost of funds. To end my remarks today, I would like to stress that while there remain risks and uncertainties surrounding the overall outlook for global growth, prospects for Asia remain relatively bright. However, countries in Asia, and Thailand especially, need to put real efforts to foster capacity, innovation, and productivity. We must also prevent excessive risk taking and lax policy-making from becoming the norm. This requires preempting excessive risktaking and conducting policy with prudence. I can assure you that the Bank of Thailand is committed to ensuring a stable macroeconomic environment which would help investors, businesses, and households in planning their economic activities and to operate effectively. However, policies can mitigate only parts of the spectrum of risks. The business sector must also be mindful and well-prepared to deal with new risks and challenges, going forward. Thank you. BIS central bankers’ speeches  3
I therefore do not intend to discuss this specific issue today, but refer to the comprehensive academic literature. 2 Many analysts would argue that both of these changes, at least partly, share a basis, namely higher global saving, which, in turn, is a result of the world having become richer. 3 But I would like to separate them, as the discussion has primarily come to focus on the lower level of interest rates. The fact that the financial sector has also changed in several respects is something that needs to be given more attention, considering that the conditions on the financial markets steer how monetary policy is designed and acts. Allow me, therefore, to make a brief digression on the subject. In the 1970s and 1980s, the world's capital markets were gradually deregulated. This, combined with good global growth, which is to say a richer world, and the development of information technology, led to strong development on the global financial markets in terms of outstanding volumes, turnover and new instruments. The development had major advantages. With less regulation, the financial sector’s basic functions – executing payments, allocating savings to investments and managing risk – could be better managed, at the same time as the strong growth on the financial markets contributed to the strong growth in the global economy. But a larger financial sector has also led to greater potential risks, as exemplified by the financial crisis twelve years ago.

Preparedness to act rapidly and in several different ways has now become part of ordinary monetary policy in Sweden and other countries. During the financial crisis, the Riksbank did not carry out asset purchases. Monetary policy was instead primarily broadened by new forms of, and conditions for lending to the banks. But in 2012, the Riksbank purchased government bonds for SEK 10 billion, a relatively small amount in the context, to create operational preparedness in the event that large-scale asset purchases would later become necessary. And in 2015, when inflation had been too low for too long and the ECB was initiating large-scale purchases of bonds, the Riksbank was able, in a relatively simple way, to make monetary policy more expansionary - that is, to hold down the general level of interest rates in Sweden - via large purchases of government bonds. Correspondingly, this year, we have decided on the purchase of corporate bonds to a value of SEK 10 billion to strengthen monetary policy preparedness. We are thus building up an operational capacity in the event a highly unfavourable scenario arises and more comprehensive purchases, for example of corporate bonds, become necessary to ensure that lending and the financial conditions do not deteriorate too much. In this context, I need to address the Riksbank Inquiry. Previously, in its consultation response, the Riksbank has questioned the actual starting point for the Inquiry's way of looking at monetary policy.
BIS Review 20/1999  8  Division of responsibility fails Stabilisation policy is a very demanding task in an economy like Norway, with occasional major exogenous shocks. The question that must now be asked is how our system functions when exposed to pressure. Oil prices were high in 1996, 1997 and into 1998, which resulted in large surpluses on the current account and the government budget. Domestic activity was also rising, with strong growth in employment. Deliveries to the petroleum sector generated a strong and uncontrolled growth impetus to the mainland economy. During the budget deliberations in the Storting (Norwegian parliament), major changes were made. Compared with the large surpluses generated by petroleum revenues, the changes to the budget may have seemed small, but these changes were important for economic developments. I will illustrate this by means of an example. Assume that the oil price temporarily increases by NOK 10 per barrel, or a little less than USD 1.50 per barrel. This is a small change in the oil price, well within normal variations from one year to the next. Government revenues – and thereby the budget surplus – would then increase by about NOK 9 billion in the first year and NOK 11–12 billion the next year. This corresponds to about 1% of Norway’s GDP. The assumption is that all the revenues from such a minor increase in oil prices will be transferred to the Government Petroleum Fund and that fiscal policy will remain firm.

Our experience in Malaysia shows that a more diversified and sound financial sector, a more efficient and competitive financial industry and all the structural enhancements made, have evolved a more effective and resilient financial system. This has enhanced the tolerance level to withstand the more difficult and challenging environment. Such fundamental changes, however, cannot be expected to be achieved within a short period of time. Enhancing the tolerance level in the financial sector of the East Asian economies is one of the important elements in strengthening the growth prospects for the region. The overall economic and financial transformation that has occurred has resulted in an Asia that is a mutually reinforcing region of growth; an Asia that has an increasing role in the creation of wealth; and an Asia that will be an important region in promoting and supporting global stability and global growth. BIS Review 40/2003  7
Whilst risks to the outlook for global growth continue, with new events unfolding daily, Asia’s economic growth remains strong and transformation is expected to expand well into the future. This growth is set to drive increasing trade in goods and services, as well as the flow of capital between the region and the world. At the same time, Asia is also intensifying intra-regional financial and economic integration that would contribute towards accelerating the region’s growth prospects. Adding to these transformative trends is the march towards urbanisation which will continue to stimulate demand for infrastructure development. All these factors will have an important influence on the way in which the financial services industry responds to new growth opportunities in the region. To support Asia’s growth, financial markets in Asia must continue to grow in size and sophistication to intermediate capital towards productive investments. We can expect increasing demands being placed on Asian banks for services and expertise in trading, risk management, structured financing and loan syndication, infrastructural financing, and capital raising. Equally, recent efforts focusing on strengthening regional financial integration to facilitate the increasing intra-regional trade and investment, such as the ASEAN Banking Integration Framework, will offer tremendous opportunities for banks with the right credential to establish their presence as regional players. On the retail side, there exists vast potential for growth – owing much to the demographic transformation in the region. Asia is now home to a growing middle income population, the number of which is projected to reach 3 billion by 2030.

What will that entail? Controlling the excesses of finance cannot be achieved only with monetary policy interest rates. We need to expand the concept of leverage to other segments of the financial system, particularly synthetic leverage. I mean leverage which is not easily seen in the balance sheet, because it’s built up with derivatives. It’s not seen but it’s very relevant for banks and for the economy, as we saw during the crisis. 5/8  BIS central bankers' speeches  The obstacles to regulating markets, and not just banks, are not so much technical; the obstacles are more political or ideological. It requires more regulation and supervision by not only central banks, but also in some cases governments. It is politicians that often need to enforce macroprudential measures, and in some countries some governments do not want to use them. Another aspect that is different now is that we have in our economies too much finance. There is a strand of literature showing that after certain limits there are diminishing returns in the expansion of finance. And to tame these imbalances we will also need macroprudential measures. You have talked about the need to reform economics too. What do you have in mind? Big changes are happening, we are going in the right direction, but in my view we are not there yet.