samchain/econo-pairs-v1 huggingface dataset:
The possibility to create new access channels provides opportunities for nimble firms that are not banks to act as middle men and provide interfaces that facilitate the initiation of the underlying, more old-fashion payment. Remember that payment initiation services and third-party providers have been at the centre of the discussions on the new Payment Service Directive. These firms don’t compete outright with the banks and in some cases they may even directly cooperate with them. In other cases, the non-bank may compete directly with the banks. It may even have built its own infrastructure or account structure through which it processes payments. This is most likely in cases where the non-bank already has a kind of network that it can adapt and utilize for payments. Telecom operators and Internet service providers are examples of such firms. A concrete example of such a case is M-Pesa, the mobile payment service launched by SafariCom in Kenya. Initially intended for person-to-person payments, it quickly became a success and a platform for a number of financial services. Non-banks can also act as suppliers of services to the banks, e.g. payment switches routing the payment information or the outsourcing of back-end services such as the operation of large IT-platforms, etc. These are all essential inputs for payment intermediation. Because non-banks can enter the payment process in so many places, we have longer and more complex payment processes with more actors involved. Banks, at least for some type of payment services, have less direct contact with the end-users.

Central banks have an additional stake in this game. Cash is one of our main products and an increased supply of services from non-banks is likely to reduce its usage. On the one hand, central bank should embrace the development from an efficiency point of view. On the other, a rapid decrease in the use of cash is not without problems. This is only a few of the aspects that may be debated in the second session. The third topic is the future and we all want to know what it will look like. Will the banks be reduced to mere suppliers of infrastructure and account holding services while other actors, the non-banks, have most of the end-user relation-ship? Or will the banks win by knock-out? Will the non-banks become banks over time as their activity expands? Will payment services be delivered to us by Apple? Google? Facebook? Alibaba? What about Bitcoin and its peers? Will we simply have payment services provided by an anonymous network? In addition to having all these kinds of issue debated among representatives for market actors and authorities, we will also have the pleasure of listening to the academic perspective of Professor Charles M. Kahn from the University of Illinois. I’m really looking forward to learning more about all these topics today. BIS central bankers’ speeches  3
For 2024, the growth range is reduced by an equivalent magnitude, between 1 and 2% (between 2 and 3% in December). By 2025, the economy is projected to grow between 2 and 3% annually (table 2). We project that private consumption will continue to adjust in the coming period. Compared to December, this part of spending will fall less sharply in 2023 and rise more moderately in 2024. This projection assumes greater slack in the labor market, consistent with the expected 6  performance of the economy. It also considers greater uncertainty due to the external situation and that the local monetary policy will remain contractionary for a longer period of time. Access to credit will imply a more restricted consumption than in previous quarters, in line with the financial burden and delinquency of households that have increased rapidly in recent quarters, especially among lower-income households. All in a context of tighter international financial conditions. Our March 2023 Bank Lending Survey already reports a perception of lower demand for consumer credit and tighter lending standards (figure 13). Investment will continue to perform poorly this year and next. This assessment assumes a more deteriorated external scenario, greater global uncertainty and financial conditions that will remain constrained. Survey information —prior to the turmoil in the external banking sector— showed low levels of investment planned for the coming quarters (figure 14). The current account deficit will continue to tighten, to values in the order of 4% of GDP by the end of this year.

As foreseen in the central scenario of this MP Report, projected growth in the United States and Europe will be negatively affected by lower credit expansion and greater global uncertainty. This effect will be most visible in the second half of 2023 and early 2024. For these years, growth in those developed economies that are Chilean trading partners is expected to average 0.4%, which compares with the 0.7% forecast in December (figure 10). Emerging economies will face tighter financial conditions, which will also affect the external demand relevant to Chile. The better outlook for China after its reopening, together with the evolution of the copper and oil market balances, has been behind the improvement in our terms of trade, which are revised upwards from the last MP Report. This combines the better outlook for copper prices and lower projected prices for foods and fuels. For copper, our projected prices for this and the next two years are increased. We foresee an average price of 3.85 dollars per pound in 2023; 3.65 dollars per pound in 2024, and 3 and a half dollars per pound in 2025. Oil prices have been quite volatile due to the tensions in the financial markets in recent weeks and their possible implications for world growth. In addition, inventories have been accumulated and OPEC has recently announced production cuts. In the central scenario, the average Brent-WTI price is projected to gradually decline from 73 dollars per barrel in 2023 to 67 dollars in 2025.
Therefore it is natural that in the field of management science a great deal of research and study on how one can be successful in a highly competitive marketplace has been undertaken. I am no expert in this specialised field and thus not qualified to comment on a wide spectrum of management theories on the path to success. However, I have noticed that in recent years the “Blue Ocean” theory has gained a lot of popularity and support. I too have found considerable merit in this theory because, as the world has become more globalised and interconnected, capital, information and talent flows within and between markets have become much more efficient than ever. A profitable business would attract new participants or entrants, which would result in very fierce competition and the squeezing out of profitability. The Blue Ocean theory suggests that we should try to avoid a crowded marketplace by looking for new lines of business, new products and new markets. In taking the lead in a new market or new horizon, the enterprise can enjoy the first mover and  BIS central bankers’ speeches  1  associated advantages, at least for a period of time. That theory encourages managers and entrepreneurs to think outside the box, and to innovate and explore new lines of business and products. This is all very well, but there is, in my mind, an important catch. We can all see what Bill Gates has done in creating Microsoft and what Steve Jobs did to the success of Apple.

These are great examples of the success under the Blue Ocean theory. However, not all of us can become Bill Gates and Steve Jobs. And there is a limit on how often companies can innovate new products or lines of business. So the Blue Ocean theory is good but has its own limitations. Most people and companies would find it hard to create blue oceans in the day-to-day life. So what is the alternative route to survival and success? In this connection, let me share with you another story. It’s the story about a noodle shop in Wanchai. 7. In the 1970s, a young couple decided that they should start their own business. They borrowed money from their parents and relatives to set up a small noodle shop in Wanchai. They worked very hard and the noodle shop’s business was doing well after several years. In the 1980s the couple used the money they had saved up to buy the shop space of their noodle shop. However, the business of the noodle shop began to decline in the 1990s. A friend of the couple offered help by giving the following advice: “The noodle shop is too old-fashioned. People’s eating habit has changed and they prefer a wider variety of food in the form of a local cafe (茶餐廳)." This sounded sensible and the couple took the advice and converted the noodle shop into a local cafe. The business improved initially but worsened again several months later.
When liquidity was abundant, asset values were high and marked-to-market profits were high. Now that liquidity is scarce and asset values lower, mark-to-market losses and write-downs are high. The widespread use of credit ratings in valuing assets and managing counterparty credit risk has also had an impact. Credit rating agencies try to rate through the cycle. And for corporate ratings they may well succeed. But for some structured finance products, such as re-securitisations of sub-prime backed securities they (like many others) misjudged the impact of a downturn in the cycle and the non linearity of returns. As a result, there have been wholesale downgrades of the credit ratings of structured securities over the past 12 months. The problem for the financial system is that these ratings are often hard-wired into decision making. Certain classes of investors are forced to sell assets when they lose a AAA or investment grade rating. Remuneration structures have also amplified risk taking in the upswing. Two features of remuneration in the financial industry are that they are asymmetric (there is unlimited upside for high performance but a floor on the downside) and tend to be based on short-term targets. The asymmetry in reward creates an incentive to gamble and short-term performance targets encourage traders to follow rather than counter a deviation from longrun fundamentals. Even where the incentives were paid in options linked to the medium-term performance of the employer, the apparent rewards have been highly cyclical.

More-aggressive-than-usual policy responses may be appropriate to avoid the negative implications of an encounter with the zero bound. Paradoxically, though, once the lower bound on interest rates is binding, a less-than-usuallyaggressive monetary policy response may be appropriate. I have tried to articulate this in FOMC meetings ever since we started down the path of quantitative easing, drawing on anecdotal reports from my CEO contacts and what I thought was common sense. But my arguments fell on deaf ears until my more learned counterpart at the San Francisco Fed, John Williams, produced a formal study that posited that the aggressive use of unfamiliar policy tools like quantitative easing and Operation Twist add to aggregate economic uncertainty and, if applied at all, should be deployed more cautiously than our more familiar tools.7 Large margins of error In general, the objective of monetary policy is to provide households and firms with an economic environment that makes it attractive to use money as medium of exchange and store of value. Since many private contracts, including labor and debt contracts as well as capital expenditure commitments, extend out several years, a multiyear policy perspective is needed. A multiyear perspective is especially important when the economy may encounter the zero bound. The explanation is that by interfering with the normal conduct of monetary policy, the zero bound increases the likelihood that policy will miss its objectives year after year in the same direction, so that the errors accumulate over time.
And joint distributions with independence in the central mass but high correlation in the tails are likely to be extremely hard to model and calibrate. Monetary policy Other macroeconomic features also probably contributed to the growth in credit leading up to the crisis. In particular, according to some monetary policy was too loose over this period, especially in the United States (see Taylor, 2007). Fig. 6 shows the difference between the policy rate and benchmark estimates of an “appropriate” policy rate derived from a Taylor rule. Notwithstanding the usual caveats about the construction of such benchmarks, the very low level of the Federal Funds rate relative to the Taylor rule during 2001-5 is striking. Of course, the FOMC held rates this low for a reason – they were concerned about entering a Japanese-style deflation and in order to mitigate that risk committed to holding the policy rate at a low level for a sustained period so as to pull down longer-term market interest rates. There is, though, little to suggest that policy rates were noticeably out of line in the euro area and the United Kingdom. Credit was nevertheless growing rapidly, as documented earlier in Fig. 1. Despite generally low and stable inflation, that led some – most notably Bill White and colleagues at the Bank for International Settlements (Borio and White, 2003; White 2006) – to argue that the credit/asset-price boom was storing up trouble for the future.

In particular, access to a cheap source of manufactured goods as result of the rapid development of China and other emerging market economies created a terms of trade gain for the advanced countries and a beneficial “tailwind”, which only mutated into a “headwind” towards the end of the period as rapid global growth put upward pressure on oil and other commodity prices. Second, changes in the structure of the economy could have meant that similar sized shocks had smaller macroeconomic effects. Candidate structural changes included the shift from manufacturing to services, tighter control of inventories leading to an attenuation of the inventory cycle, increased competition in product and labour markets, and innovation in financial markets that facilitated the greater spreading of risk and an enhanced ability to smooth spending in the face of shocks to income or wealth. A final possibility is that better macroeconomic policies, including improved policy frameworks, had moved economies closer to the eponymous Taylor frontier which traces out the lowest achievable inflation volatility for a given volatility of the output gap. In particular, earlier periods were bedevilled by monetary policies that had failed to anchor inflation expectations. But the pursuit of inflation targets and similar stability-oriented monetary policies by independent central banks seemed to have been more successful in anchoring inflation expectations. Now if the Great Moderation was down to “good luck”, then improved macroeconomic performance was more likely to be ephemeral. But if it was down to structural changes or better policy, there was more chance of it proving permanent.
It results from standard economic analysis that fast growing economies require a higher level of real interest rates to remain on a sustainable path. Monetary policy in the Euro area is designed for advanced economies and would be inappropriate for less developed economies. Indeed, a premature entry would imply a downward shock on interest rates and other policy parameters such as reserve ratios. This would generate supply/demand imbalances, credit booms and asset or consumer prices inflation resulting in financial vulnerabilities and deteriorating competitiveness. It should come as no surprise that the third element relates again to the advancement in structural reforms: these are preconditions for ensuring viable economic development inside a monetary union. Such reforms are necessary in order to enhance flexibility, thus giving the economy the necessary adjustment capacity required in a monetary union. The key role of structural policies naturally includes the conduct of fiscal policy reforms (tax, pensions, and social security) and investments in public goods (infrastructure, education, healthcare, etc.) that have to be completed before entry in order to provide enough leeway for fiscal policy to serve as a stabilisation instrument inside the monetary union. The New Member States that have joined the EU since 2004 have made considerable progress in nominal and real convergence. Recovering from historic episodes of economic contraction, hyperinflation and exchange rate depreciation, these economies have recorded gradual macroeconomic stabilisation characterised by disinflation, high rates of GDP growth and real exchange rate appreciation.

I see three main reasons: -  not only to guarantee the credibility of the Euro (which is, in itself, in the interest of entrant countries themselves who will adopt this currency as their own);  -  but also to ensure equality of treatment between all entrants, who have to be applied, over time, the same entry criteria;  -  and, last but not least, to avoid the emergence of disequilibria after entry requiring painful adjustments, as shown by the Portuguese situation. Sound macroeconomic conditions have to be guaranteed before and after accession. Joining the Euro area does not guarantee convergence in development levels. National institutions and policy remain crucial after entry. The Maastricht criteria encompass: limited inflation differential vis-à-vis the best performing EU member; stability of the nominal exchange rate with the Euro; sound fiscal accounts; and low long term interest rate spread vis-à-vis the best performing EU member states in terms of price stability. BIS Review 115/2007  3  They must be satisfied simultaneously for a country to be able to join the EMU. Regarding participation in the ERM II, it is not a mere two-year “waiting room” before the Euro. It is a “training room” for full implementation and assimilation, by all economic agents, of sound policies. Therefore the criteria defined in the Treaty must be fulfilled, not just once, but with a good track record and with good prospects.
Last year, the Shenzhen Municipal People's Government issued offshore RMB municipal government bonds in Hong Kong for the first time, testifying to our strength as a platform for issuing RMB bonds, including green bonds, enriching the product range of the local dim sum market and paving the way for other municipal or provincial governments to follow. We will actively promote Hong Kong’s bond market to markets that are looking to strengthen their ties with China, and attract sovereigns and other issuers from these regions to arrange and issue bonds in Hong Kong. The third way we can expand our offshore RMB market is by enhancing our own financial infrastructure. At the core of this effort is the HKMA’s programme to develop the Central Moneymarkets Unit (CMU) into a major international central securities depository (ICSD) in Asia, to better support the connectivity between the Mainland and international  financial markets in cross-border clearing, settlement and custodian operations.

So let me start with what Hong Kong and Mainland China have achieved together in the past year and how much progress we have made as an offshore RMB business hub. I will then elaborate on the opportunities in front of us because I am very confident that our collective efforts will further strengthen Hong Kong’s position as an international financial centre. Achievements in the past year on offshore RMB hub and RMB internationalisation development 5. This year, we celebrate the 25th Anniversary of the establishment of the Hong Kong Special Administrative Region (HKSAR) of the People’s Republic of China. Hong Kong is poised to enter a new era of opportunities as we better integrate into and align with the nation’s development. The National “14th Five-Year Plan” and the development of the Guangdong-Hong Kong-Macao Greater Bay Area will herald massive opportunities for Hong Kong. In particular, in the 14th Five-Year Plan, the Central People’s Government  reaffirmed Hong Kong’s positioning as an international financial centre and, specifically, as a global hub for offshore RMB business. 6. There have been some important developments in this area that I am very pleased to share: First, the suite of mutual market access schemes was expanded in 2021 with the introduction of Southbound Trading under Bond Connect and Wealth Management Connect, and again this year with ETF Connect and Swap Connect. These schemes demonstrate the significant and ever-growing role Hong Kong plays in the two-way opening up of Mainland financial markets.
Putting the structural reforms that would remedy chronic problems in the labor market into practice immediately would prevent unemployment rates, which climbed during the crises, from becoming permanent and support potential economic growth. The lending appetite of banks significantly decreased due to the decline in risk appetite accompanied by the erosion of confidence and elevated uncertainties during the crisis. However, we can assert that there are favorable developments thanks to policy rate cuts made since November 2008 and the improvement in global risk perceptions. Especially the most recent developments suggest that there is an apparent improvement in Commercial Loans. The rise in loans extended to SMEs, which have an important share in the labor market, indicates that there is moderate recovery in economic activity. The NPL ratios, which saw all time highs during the crisis, started to decrease, albeit slowly and gradually. To sum up, the upward trend in bank loans, which started in the second quarter of 2009, continues on a stable course. As you all know, the impact of the global economic crisis on financial markets was terribly severe in the last quarter of 2008: countries’ risk premia saw record-high levels and excessive volatilities occurred in the currencies of many developing countries. Despite having been volatile at historically high levels and extremely sensitive to the global risk appetite, the Turkish lira displayed a relatively stable course, which lasted through the first quarter of 2010 following the peak of the crisis.

In this context, primarily the measures taken in direct crisis management will be withdrawn, and, as is the case in the rest of the world, the exit strategy will be a cautious and gradual process that safeguards financial stability in our country as well. I would like to end my remarks by extending my regards to all the participating academicians and policy-makers for their contributions to the “Global Crises and Economic Governance” congress. Also, I would like to thank, once more, the staff of İnönü University and everybody for their contributions to the conference. BIS Review 79/2010  7