samchain/econo-pairs-v1 huggingface dataset:
The central bank deposits held by the national treasury and the domestic financial institutions are then converted to the anchor currency, as are the financial institutions’ domestic assets and liabilities. Technically, this can easily be done, but what comes next? Many of the pros and cons of unilaterally adopting another currency are the same as those pertaining to the euro area: inflation is better anchored and exchange rate risk disappears in trade within the currency area, although independent monetary policy and exchange rate flexibility are relinquished as tools that can be applied in response to economic shocks. The fact that no formal agreements are needed and the process can be concluded swiftly could  BIS central bankers’ speeches  7  be viewed as an advantage over and above negotiated euro area membership. But the lack of a contractual framework embodies many of the disadvantages of this option in comparison with euro area membership or maintaining the domestic currency. The main problem is that the supply of the new currency in the country will fluctuate with capital in- and outflows, while counteractive measures are much more limited than with an independent currency or full euro area membership. For instance, capital outflows could quickly develop into a liquidity problem for the banking system and for treasury financing, which could ultimately lead to default and a financial crisis that the domestic authorities would be unable to stop.

While these measures have merits in safeguarding financial stability, they could have complex and cross-border impact. Even on the monetary policy front, unconventional measures are becoming more conventional. Central banks in the major economies have increasingly used unconventional monetary easing. Though necessary to stabilize their economies at this juncture, these policies have side effects of large and volatile capital inflows into Asia. This further  BIS central bankers’ speeches  1  complicates safeguarding of financial stability in other countries including Asia, and could, in turn, trigger some countries to resort to macroprudential measures themselves. Thus, in terms of policy space, we are dealing with a new paradigm of expanded policy tools, with new transmission mechanism, and requiring their own policy framework and governance. So we need to recognize the need for crossborder coordination as well as flexibility in execution given emerging uncertainty. Turning to the more medium-term structural issues, major regulatory reforms especially Basel III, Financial Stability Board reforms, and Dodd-Frank Act are still a known-unknown. We do know that they are designed to redress weaknesses that caused the crisis by enhancing capital and liquidity, while addressing the problems of procyclicality, and too-big-to-fail of SIFIs. For this, their merits are well recognized. But these reforms will reshape the global financial landscape and raise cost of financial intermediation. They will also have implications for cross-border level playing field, regulatory arbitrage, and alter risk profile of banks.
From the position of the BNB and in view of the goals for controlling inflation, it is very important that the country does not assume significant additional permanent expenditures, which are not backed by permanent revenues. There are two groups of risks associated with such an approach: (i) the risk of an inflationary spiral and (ii) the need for painful fiscal adjustments in the near future, whether in terms of revenue, i.e. by increasing taxes, or by cutting costs. Along with external factors, this would lead to a significantly more complicated macroeconomic environment for the Bulgarian banks. In terms of the external factors and their further complication and deterioration because of the war in Ukraine, most important will be the decisions of the big leading central banks, primarily the ECB in our case. There are already clear statements about three things that will happen during the third quarter of this year: (i) the ECB will effectively end net asset purchases from the beginning of July; (ii) subsequently the ECB intends to raise its key interest rates; and (iii) will do it again in September so that by the end of the quarter we will move away from negative interest rates. Obviously, in the following months and at least a year ahead we will be facing the challenge to find the very difficult balance between the measures to control inflation and the measures to prevent recession. How is our banking sector meeting the new challenges? Our starting position remains very good.

We did it in March 2020, when it was still debated if it wasn't just a common cold that would go away in the summer. The alternative was to wait, monitor and analyse the situation for at least a few months before taking concrete action. From today's perspective, we can say that such waiting could have impacted very adversely banks, businesses and households alike. It was that anti-crisis package that allowed the introduction of a moratorium on loan repayments, which at its peak exceeded BGN 9 billion. Here is the place to emphasise that this was a private moratorium, an initiative by our commercial banks, as they better than anyone else understand that when their customers are not well, they are not well either. The Association played a key role in that process, which, among other things, is another testament to the excellent cooperation between the Association and the BNB. As with all our meetings, we prefer to look forward rather than backward. Unfortunately, what we see ahead are new challenges. On the one hand, these are the political and economic processes in the country. The intersections of their dynamics and development are basically three: prices, prices, and prices again. The outcome of the budget process that is currently underway will be indicative of the direction of these dynamics and development.
8 The predicted effect  Chart 7: The reduction in investment has been driven by firms that expect a resolution soon  is quite powerful: at least in this highly stylised set-up, halving the expected duration of the uncertainty (i.e. doubling q) has the same impact on the required rate of return on new investment as doubling the chances or scale of the bad outcome. Directionally, at least, I think the evidence provides some support for this effect. The  Sources: Decision Maker Panel and Bank calculations. fact that protracted declines in investment were seen only in 2018, some time after the referendum but increasingly close to (what was expected to be) the exit date in March 2019, is consistent with it. So too is Chart 7. Taken from the latest Decision Maker Panel survey, it suggests that the firms who’ve cut back the most on their investment spending tend to be those who also expect a relatively early resolution to Brexit. Firms who think the process will take longer – and obviously those (in blue) who don’t consider Brexit an important factor in their decisions to begin with – have been less aggressive in their response. One implication is that the overall hit to investment is worse than it need be if firms have unrealistic expectations about how rapidly the situation is likely to be resolved.

If, on the other hand, it thinks there’s going to be an imminent resolution (high q, low E[T]), there is every incentive to wait until that actually happens. In the meantime only extremely high-return projects would get the go-ahead. One general implication of this is that empirical estimates of the impact of uncertainty on investment, which generally assume that the effect is purely contemporaneous – investment today is a function solely of uncertainty today – are (strictly speaking) an over-simplification. At least in principle it will also depend on how long businesses expect any uncertainty to endure: the shorter the expected duration the greater the predicted impact. I doubt this would ever be straightforward to test empirically. As hard as it is to measure uncertainty very precisely it’s obviously harder to gauge accurately how long people expect that uncertainty to last. But the distinction may nonetheless matter on occasion. One such occasion is when there is thought to be a particular date at which important information is likely to be revealed. If so, then [3] suggests that the effect of uncertainty on investment should intensify the closer  8  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  8  one gets to that point. As the remaining time shortens the perceived cost of waiting for news falls with it.
As predicted in the previous report, the decline in inflation was due to the sharp drop in unprocessed food prices. Accordingly, the annual rate of increase in food prices was 7.02 percent at the end of 2010, undershooting the October estimate of 10.5 percent. The slowdown that occurred was sharper than we expected. These developments in unprocessed food prices explain the almost one percentage point deviation in short-term inflation forecasts. In fact, as also illustrated on the slide, inflation excluding unprocessed food and tobacco remained in line with the outlook presented in the October Inflation Report (Figure 3). 2  BIS central bankers’ speeches  Food prices became the main determinant of the course of consumer prices in the last quarter of 2010 as well. Food prices that posted record highs in the third quarter due to the hikes in unprocessed food prices, declined in the last quarter as opposed to the previous years (Figure 4). Moreover, the favorable developments in inflation in this quarter did not remain limited to food prices; quarterly inflation across all goods and services items stayed below the average of previous years (Figure 5). Meanwhile, energy prices, which followed a horizontal course in the second and third quarters of the year, increased in the last quarter parallel to the developments in international oil prices and exchange rates. The core inflation indicators decelerated in the fourth quarter of 2010 compared to the third quarter (Figure 6).

Much of the Basel Committee’s work on big “ideas” that respond to the shortcomings in the regulatory framework identified by the financial crisis is reaching the end stage. The capital rules are set (and, in an increasing number of jurisdictions, coming into force), and the revisions to the LCR have recently been agreed. In 2013, we will seek to set out the specification of the backstop leverage ratio, and the NSFR will be refined between now and the end of 2014. Clearly, we still have work to do, but increasingly it is about getting the technical details correct rather than new far-reaching ideas. Even when the Committee’s policy response to the crisis is complete, much more work will still be needed. Implementation needs to be seen as an integral part of the reform agenda, not a sideline activity. As we examine this issue to a depth that it has not previously been examined, we will inevitably find things that need improvement. Turning a blind eye to these, as may have occurred in the past, is not an option – we need to persevere and find those areas where additional modifications to the regulatory framework are needed to ensure it is effective. If we do not work to improve implementation, we will not embed the reforms into domestic banking systems in the full, timely and consistent manner that is in everyone’s interests. BIS central bankers’ speeches  7
A dynamic economy requires a strong banking industry; it's true in France, and it's also true in Germany. Undeniably, euro area banks are stronger than they were ten years ago. As a result of regulations and of their streamlining efforts, they  Page 5 sur 7 were able to significantly shore up their balance sheets. In particular, their solvency and liquidity have improved, while the weight of NPL has drastically declined: their Common Equity Tier 1 ratios (CET1) rose from 9% at end-2009 to 14.6% in June 2019. In addition, the major German banks themselves have seen their NPL amount fall more than twofold over the past five years, sliding from EUR 81 billion at end-2014iii to EUR 33 billion at end-March 2019. Euro area banks are nevertheless experiencing a serious problem of profitability, which is a cause for concern, both for you and us. I would like to outline three challenges that are often mentioned in this regard: low interest rates, the digital challenge, and consolidation. Let's start with the subject that is perhaps the most obvious to you: low interest rates. Negative rates are not an end in themselves, and we, as central bankers, are aware of the difficulties this represents for banks. However, I would like to qualify this statement. First, the effect of monetary policy on banks is not limited to exerting pressure on the net interest margin.

Denis Beau: For a contribution from our FinTech ecosystem to a more efficient and stable financial system Speech by Mr Denis Beau, First Deputy Governor of the Bank of France, at the Fintech R:evolution 2020, Paris, 15 October 2020. * * * Ladies and Gentlemen, I am delighted to take part in this 5th edition of Fintech R:evolution and I would like to warmly thank the France Fintech association and its chairman Alain Clot for their invitation to speak today. This event, organised against the backdrop of the ongoing health crisis, is proof of the drive, determination and adaptability not only of the organising association, France FinTech, but also of the entire innovative French ecosystem of the financial sector, which is now represented here as widely as possible. The French FinTech ecosystem, like any ecosystem made up of start-ups, is fragile but it is promising and, I believe, vital to the financial sector. The economic crisis associated with the health crisis highlights these contrasting characteristics: on the one hand, start-ups may be weakened or innovative projects delayed by the economic situation; and on the other hand, the health crisis has accelerated the adoption of new digital habits by the entire population. More generally, 2020 has only served to underscore the challenges facing the financial ecosystem as a whole as a result of the digitisation of our economy.
And to illustrate the importance of getting that focus back, let me draw on a parallel from history. One of the most fundamental reforms – if not the most – of the international financial system was the Bretton Woods Agreement of 1944. Wisely, our predecessors did not wait for the Second World War to end to determine what the future should look like, and thereby tackle problems that had beset the inter-war period. There are two strong messages from Bretton Woods that we should have at the front of our minds. Don’t wait for today’s problem to be over before setting the course for the future. And, once again we need a multilateral approach, and we have the opportunity to strengthen that multilateralism. But, if you read the history of Bretton Woods, you learn that the Agreement was not easy to reach and there were costs attached to it, 2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  which had to be met. It laid the platform for a sustained recovery from a terrible crisis. There is a lesson in that story. So what are we as a central bank and regulator of the world’s leading global financial centre doing to ensure the financial system plays it part to tackle climate change? Our goal is to build a UK financial system resilient to the risks from climate change and supportive of the transition to a net-zero economy.

For market discipline to work, it is essential that companies provide relevant and meaningful disclosures. Investors, in turn, can play an important role by scrutinising disclosures and providing relevant feedback to companies where boilerplate disclosures are ambiguous or unhelpful. Companies must similarly play their part to engage their stakeholders proactively. The engagement between companies and shareholders should be conducted responsibly by both parties. Companies should avoid taking an overly-legalistic approach in their dealings with shareholder queries as that can only engender distrust. Rather, they can have more regular dialogues with their investors to facilitate understanding with their investors, and to build a strong relationship that is based on openness and mutual respect. The rights of all shareholders should be respected. Investors in turn should engage companies in a constructive manner, and avoid unfounded allegations or speculative attacks. Industry associations are another key enabler group to foster strong market discipline. The Singapore Institute of Directors, as the national association of directors, advocates good governance practices through its conferences, training sessions and publications. The Securities Investors Association (Singapore) also serves to connect and empower minority shareholders, through efforts such as its initiative to raise the standards of queries at AGMs. 3/4  BIS central bankers' speeches  Other players in the CG ecosystem matter too. Journalists, analysts, academics, lawyers, other advocacy groups and the general public – all can contribute to raising of industry-wide CG standards through their reports and research.
And such an understanding of what drives the formation of our expectations in this area, might also help us to decide whether, as well as using policy counter-cyclically to build resilience in the system as risks grow and release it as risks crystallise, we should use policy more actively to ‘lean against the wind’ – to discourage and dis-incentivise any build-up of expectations that appear to have formed irrationally. 23  See Carney (2019) for an illustration of some key indicators for a range of major economies over the past four decades. See, for example, Bridges et. al. (2017) which looks at a sample of 130 downturns since the 1970s, across advanced economies While it finds some evidence of a role for the level of indebtedness, credit growth is found to be a more significant predictor, with rapid credit growth predicting worse recessions: longer with lower GDP per capital, higher unemployment, and more lost productivity. 24  9  All speeches are available online at www.bankofengland.co.uk/speeches  9  All of this, perhaps, seems very theoretical compared to your essay question of “What will be the next great financial crisis?” So I will try now to relate some of these issues to our current assessment of financial stability risks facing the UK. UK Conjuncture The most prominent short-term risk facing the UK today of some financial sector correction is the possibility of an extremely disorderly Brexit.

Core inflation, on the other hand, which excludes food and energy, remained stable at 0.9%. For us, the overall inflation rate is the key figure because we protect the purchasing power of citizens, albeit in the “medium term”, not on a month-to-month basis. Given the current high variability of energy prices, indicators of the underlying price dynamics say more about future developments than about the overall inflation rate. We still assume that, because of energy prices, the overall inflation rate will rise until the middle of this year – reaching our “comfort zone”. But one swallow doesn’t make a summer. For in the second half of the year, it is likely to fall again and then reach 1.5% in 2018. So, subdued inflation will be with us for quite some time, but the spectre of deflation has disappeared from the radar of market participants. For this recovery to gain traction, we have to keep our word. The adjustments to our asset purchase programme will be implemented as announced in December – because, first, it contributes significantly to the economic recovery and stabilisation on the price front. And second, monetary policy in times of heightened uncertainty must be a guarantor of stability and 2/5  BIS central bankers' speeches  reliability by being credible. And yet, at the same time, how much longer can we continue to talk about “even lower rates” as being a monetary policy option?
Innovation is as much about creating new institutions and smart collaborations to advance common goals, as it is about inventing a new product. We see this in the notion of “co-opetition”, where competing firms have found benefits in coming together to build shared infrastructure, or to facilitate the exchange of information for the purpose of preventing criminal activity and guarding against cyber threats, all the while remaining fierce competitors in their product and service offerings. Innovation is also about constantly finding better ways to do things within an organisation in order to deliver a better customer experience and to keep organisations interesting and fresh. It is about changing mindsets and culture to ensure that institutions never become tired or irrelevant. It is about re-thinking our approach to developing the workforce so that we are at our most agile to deal with new challenges and risks. These are all important aspects of innovation and I am reminded that in Malaysia’s own journey to transform the MSB industry, we benefitted from charting new and sometimes, untested paths to solve the problems that we faced. For example, we learnt from and then re-defined the principal-agent model to meet the dual objectives of maintaining broad access to money services while raising compliance and operational standards. We departed from conventional regulatory and supervisory approaches, on the conviction that we could not achieve our objectives through enforcement alone.

Whyconsumers prefer your competitors has also become an important factor. It matters to more consumers today whether companies are conducting business with integrity and ethically. Ultimately, consumers will almost always prefer to deal with companies that they trust. However, what customers look for to identify with companies that they can trust is changing. Advertising campaigns of some of the largest companies that are households names today, centre on universal values of charity towards our fellow mankind, honesty, and respect for one another. These are some of the clearest signs of businesses that understand the shifting preference of a fast growing, new generation of consumers, and are seeking to connect with customers on a deeper level. Innovation and its many faces As we contemplate these developments, the power and potential of innovation quickly shifts into sharp focus. Nowadays, we often hear innovation and disruption mentioned in the same breath. The flipside to that is really innovation and sustainability which are the themes of this conference. It used to be that if a business offered a decent product or service, and managed its costs reasonably well, prospects of survival were generally good. Today, survival – whether you are in the business of driving taxis, running a hotel, or offering a financial product or service – depends on the ability of companies to continuouslyharness and convert innovative ideas, however big or small, to serve customers better and multiply productivity gains. This is the challenge before the MSB industry.