samchain/econo-pairs-v1 huggingface dataset:
2  BIS central bankers’ speeches  Most FinTech ventures, globally, have indeed not succeeded to date. The real stress test of any new idea in finance is the economic and credit cycle. But even where new players fail, they usually leave behind an idea – an idea to be modified, taken over or improved. We must allow for this experimentation, but we must do it in a way that preserves trust and credibility in our financial system. That is foremost in our minds. So regulators are watching this carefully. We have to allow for innovation. But any player that acquires a meaningful scale in finance should expect to be regulated like any other financial institution in their business. There must be a level playing field, and there are to begin with good reasons for why regulations exist. We cannot stifle innovation. We must let people come up with new ideas, and let them run with it. But once they acquire meaningful scale in the financial sector, they should expect regulation. Ten years from now, finance will be very different. We can’t say exactly how. But we in Singapore intend to be a key player in innovation in finance. A key player in advancing ways to help consumers with their needs as lenders, borrowers, as makers of payments. In Singapore and the Asia-Pacific. We will go about this very energetically in Singapore, especially in developing common infrastructure or utilities, as I just mentioned. Ravi will be going through some of our strategies.

First, I will summarize the recent inflation developments, and then compare the short term forecasts in the October Inflation Report with the actual inflation data regarding the fourth quarter of 2011. There were a few developments in the interreporting period which led inflation to deviate significantly from October forecasts. More-than-envisaged increases in unprocessed food prices were an important cause of this deviation. The ongoing depreciation in the Turkish lira amid the deterioration in the risk appetite was another factor leading to a deviation in short-term forecasts (Chart 8). BIS central bankers’ speeches  5  Chart 8. October 2011 Inflation Forecasts and Realizations  * Shaded region indicates the 70 percent confidence interval for the forecast. Owing to the lagged effects of the exchange rate pass-through, core inflation indicators remained at elevated levels during the final quarter (Chart 9). This mainly stemmed from soaring core goods prices, while the moderate course of the underlying trend of services inflation indicated a benign outlook in terms of second round effects (Chart 10). Chart 9. Chart 10. Core Inflation Indicators SCA-H and SCA-I  Prices of Core Goods and Services  (Seasonally Adjusted, 3-Month Average, Annual Percent Change)  Source: TurkStat, CBRT. (Seasonally Adjusted, 3-Month Average, Annual Percent Change)  Source: TurkStat, CBRT. We see that economic activity remained robust in the second half of 2011, despite a slight deceleration. Gross Domestic Product (GDP) data pointed that domestic demand proved stronger in the third quarter of 2011 compared to the outlook presented in the October Inflation Report (Chart 11).
In their current state, they therefore cannot address issues of financial stability or the link between low interest rates and financial excesses. II. The recent financial crisis: are central banks the culprits? The recent financial crisis has thrown the positive pre-crisis perceptions of modern monetary policy into question. Indeed, many analysts now attribute a certain degree of responsibility for the financial crisis to central banks, in sharp contrast with the typically benevolent assessment of their contributions to the “Great Moderation”. Two main lines of argument support claims that central banks were contributed to the crisis, as Slide 2 illustrates. The first is that the precepts of the “inflation-targeting” paradigm were misapplied and that these policy errors have contributed to, or have directly caused, the crisis. The second is that the paradigm itself is deficient, or at least incomplete. Indeed, even when central banks conduct monetary policy optimally, according to the “inflation-targeting” mantra, it is a mistake for them not to recognise that a long period of low interest rates may encourage financial intermediaries to take increased risks with negative consequences for systemic stability. One clear proponent of the first argument is John B. Taylor. Taylor has argued that the Federal Reserve contributed to the crisis by setting interest rates too low prior to 2007.

But uncertainty had increased as a result of the financial unrest and we expected this to lead to some negative consequences for growth both internationally and in Sweden. This was why I concluded that it was still reasonable to count on roughly the same interest rate path as in June. But such considerations and deliberations are the final stage in a long process. For me and my colleagues on the Executive Board, the next opportunity for this will be at the monetary policy meeting at the end of this month. 6  BIS Review 112/2007
As is now well known, the EU authorities came up with a “shock and awe” package10 that, after some hesitations, market participants accepted as providing some reassurance, although not a complete and final solution to the European periphery debt problem. By the end of May, the pressures on the franc started to subside. Taking stock of these developments and of the visible strengthening of the recovery of the Swiss and global economies, the SNB considered in its June monetary assessment that the threat of deflation had largely disappeared. A further appreciation of the Swiss franc was no longer such a threat to price stability and the economy as it had been previously. In the second half of the year the SNB thus refrained from carrying out further interventions on the foreign exchange market. One can summarise this historical episode as follows. From March 2009 to the end of the year the SNB decided, in view of providing the most appropriate monetary conditions to an economy in recession, and given that traditional monetary policy had hit the zero lower bound, that it would prevent any appreciation of the Swiss franc against the euro. It maintained this policy stance until the MPA of December 2009. As Chart 7 shows, the nominal export weighted value of the Swiss franc which had appreciated by more than 10% since August 2007 was halted.

Unfortunately, one can see that the authorities in many countries have insufficient resources, independence and competence to match the often financially strong and rich in expertise financial institutions, whose owners can moreover all too easily gain the support of politicians against the supervisory authority’s demands for measures. This is of course a more serious weakness in a problem situation where a lack of measures, insufficient measures or delayed measures can aggravate the crisis. Another problem, although fortunately one we do not have in the Nordic countries, is harassment of the management and personnel within the public authorities for the purpose of reducing their ability and willingness to take supervisory measures against wrongdoing banks. In addition, it is important to establish clear roles and areas of responsibility between public authorities within the same country, between authorities in different countries and also between the authorities and the financial institutions. I have seen that in some countries it is unclear which authority makes the decisions, or which authority has the power to decide on a particular issue, because the law is unclear or because it is not followed in practice. This lack of clarity is accentuated in a crisis situation and hampers crisis management. This can be expressed in different ways, such as poor coordination between the authorities with regard to public statements and decisions or territorial conflicts arising and special interests being favoured over general solutions.
José Manuel González-Páramo: The European experience on macro-prudential regulation Speech by Mr José Manuel González-Páramo, Member of the Executive Board of the European Central Bank, at the I Jornada Financiera Banco Central de Bolivia, La Paz, 29 September 2010. *  *  *  I am grateful to Inês Cabral and Fabio Recine for their contributions to this speech. I. Introduction  It is a great pleasure for me to be today in La Paz to participate in this important event organised by Banco Central de Bolivia. In the course of my presentation I will try to illustrate our approach to the concept of macro-prudential regulation and oversight, a new policy area where central banks are expected to play an important role. My remarks are organised in three main parts. I will start by justifying the need to develop a macro-prudential policy framework. I will then move on to reflect on what we mean by macroprudential oversight. Finally, I will elaborate more in detail on the establishment of the ESRB as part of the reform of the EU supervisory framework, and briefly touch upon other reform initiatives in Europe. II. Why we need to develop a macro-prudential policy framework? The global financial crisis has unearthed fragilities in a range of policy areas which have prompted a careful review of main policy objectives and instruments. This applies to the field of micro-prudential regulation and supervision, which failed to ensure that financial institutions had sufficient capital and liquidity to cope with the financial shock.

Furthermore, given the fact that the framework for macro-prudential analysis and policy is presently only at a formative stage of development, the need for reflection on the risks of unintended consequences is key, as formulating policies that are aimed at safeguarding financial stability may create vulnerabilities further down the road. BIS Review 125/2010  3  IV. The establishment of the ESRB as part of the reform of the EU supervisory framework  One of the main lessons from the financial crisis concerns the necessity of a framework for monitoring the various sources of systemic risk and assessing their consequences for the financial system in a comprehensive and timely manner. Therefore, there is an agreement at international level about the need to strengthen the macro-prudential approach to regulation and supervision of the financial system as a whole. So far there has not been in Europe an authority able, both from an institutional and operational point of view, to conduct a comprehensive financial stability assessment covering the whole EU financial sector. Apart from the financial stability assessment conducted by individual central banks, the only area-wide comprehensive assessment is contained in the Financial Stability Review, which is prepared by the ECB and focuses on the euro-area. Moreover, Europe has lacked a framework that could allow translating warnings about possible building up of systemic risks in certain components of the financial sector into concrete policy actions by competent supervisory and regulatory authorities to address such risks.
But a drawback to this development is that if it continues, Sweden may find itself in a few years’ time in a position where cash is no longer generally accepted by households and retailers. Technological development may in other words make physical banknotes irrelevant. This raises a number of fundamental issues about the payment system which we have not previously needed to consider. If cash were to be completely phased out within a not-too-distant future, there would, basically for the first time in modern Swedish history, no longer be a means of payment whose value is guaranteed by the state, via the Riksbank. We would therefore face a situation where all means of payment available to the general public are issued by private actors, on a payment market that is highly concentrated. This could make it more difficult for the Riksbank to perform its remit of promoting a safe and efficient payment system. In light of this, the Riksbank has been looking into the scope for issuing a new form of digital cash, a so-called e-krona, for some time. In this age of digitalisation, with several already existing so-called cryptocurrencies and others, such as Libra, on the cusp of being introduced, the Riksbank is far from the only central bank looking at the issue of digital central bank money. But as cash use is declining so rapidly in Sweden, there is more pressure on us than on other countries to come to a conclusion. The Riksbank has presented its work on the e-krona in two reports.

Box 8 of the Review discusses recent market initiatives for improving the functioning of the credit derivatives market. As shown by the chart on the right, the structure of market participants on the two sides of the credit derivatives market has changed over the past three years. Among the buyers of credit protection, the share of banks has declined in favour of hedge funds and other investors, such as private equity firms. Among the sellers of protection, insurance companies have increased their share at the expense of banks. It is worth noting, however, that hedge funds have been active also on the issuing side of the credit derivatives markets which is a business typically characterised by lucrative fees. 5.2. Euro area banking sector  With regard to the financial situation of large euro area banks, the financial results, overall, paint a picture of a very profitable banking sector with rather comfortable solvency ratios. In most euro area countries, bank profits were driven by continuing cost control and volume growth in mortgage lending that more than compensated for the narrowing of interest rate margins. Moreover, banks have also benefited from a recovery in lending to the non-financial corporate sector, as well as from the buoyant growth in fees and commissions. It should also be kept in mind, however, that the introduction of new international accounting standards might have had an impact on banks’ profitability.
These include: supply chain finance, which enables businesses particularly SMEs, to leverage on the creditworthiness of their anchor suppliers or buyers who are mainly MNCs, to obtain financing at a more affordable rate which may not be possible through direct approach with banks; coverage in takaful products at competitive prices, which for example include coverage for loss or damage to goods shipped on all types of conveyances from manufacturing to trading; the Investment Account Platform or IAP, established by six Islamic banks in 2016 as the world’s first Islamic bank-intermediated fintech platform that offers more competitive financing terms and variations in financing structures for ventures. To date, the IAP has supported eight ventures worth RM161.3 million; and sukuk as an alternative form of financing for businesses, such as green sukuk for green 1/3  BIS central bankers' speeches  businesses. To date, five green sukuk have been issued by Malaysian solar companies to finance solar power projects, amounting to RM866.8 million since July 2017. These are but a flavour of what Islamic finance can offer and I am sure you will hear about many more today. National policy for nurturing SMEs At the national level, the government is indeed supportive of the role of Islamic finance as an important tool to assist businesses and SMEs to flourish. Developing Islamic finance and the growth of SMEs are key national strategies, as reflected in the recent 2019 Budget. The SME Shariah-Compliant Financing Scheme of RM1 billion was established to strengthen SMEs.

But the extraordinary stability of the past decade may have given people an exaggerated idea of what to expect of monetary policy. While the Bank can deliver low inflation, we cannot reliably deliver rock steady growth in output and employment, still less falling unemployment. Whether or not that happens depends on events in the wider world – what economists like to call ‘shocks’ - and other economic policies, including taxes and regulations. All we can do is try to keep demand growing in line with supply. And in fact, most economists a decade ago would have said that the Great Stability, as we have experienced it in the UK, represented a pretty unlikely set of outcomes. The then Governor, Eddie George, said he hoped that low inflation would contribute to a more stable economy but warned: ‘We cannot hope to achieve that with any great precision’ 2 . The MPC’s formal remit from the Chancellor, originally drafted nearly a decade ago and still in force, seems to be predicated on a more turbulent world. It makes specific allowance for situations in which inflation might be thrown sharply off course. It reads: ‘The framework is based on the recognition that the actual inflation rate will on occasions depart from its target as a result of shocks and disturbances. Attempts to keep inflation at the inflation target in these circumstances may cause undesirable volatility in output.
With this in mind, the HKMA will set up shortly a new Centre for Green Finance (CGF) under the Infrastructure Financing Facilitation Office (IFFO). The CGF will serve as the focal point for capacity building and experience sharing. As most of you are aware, IFFO has already become an active facilitator for capacity building in infrastructure investments and it would be logical and timely for the new CGF to be set up to promote capacity and expertise in Green Finance. Only yesterday, IFFO co-organised a seminar with the Chinese Ministry of Finance and IFC on ESG and Impact Investing. So the CGF will provide a one-stop shop in capacity building for Green Finance for the financial industry, especially banks, in the coming months. We are already in discussion with the IFC on how to leverage their expertise on this. Furthermore, I would like to mention that the CGF, together with the IFC, will coorganise the next Climate Business Forum in Hong Kong in early 2020. This Climate Business Forum is the IFC’s flagship event to discuss trends and business opportunities relating to climate change and sustainability. In addition to green finance, the Forum will also cover topics such as green city, buildings, infrastructure, transportation and energy storage etc. So I look forward to your participation and support of the future activities of the CGF. Conclusion 9.

There has been growing evidence that Green and ESG investments may not lead to a sacrifice in returns. On the contrary, some ESG investments could actually enhance long term sustainability and improve risk-adjusted returns for investors. As the manager for the Exchange Fund, the HKMA takes a long term view and sees Green and ESG investments as an important driver of value in the long term. In this connection, the guiding principle that the HKMA will adopt going forward is that priority can be given to ESG investments if the long term return is comparable to other investments on a risk-adjusted basis. More specifically, the HKMA has taken or will take the following measures to support Responsible Investment: ___ (a) we have already incorporated ESG factors in our credit risk analysis of bonds; we have required our external managers of the Hong Kong equity portfolios to comply (b) with the Principles of Responsible Ownership promulgated by the Securities and Futures Commission in 2016; we have invested two tranches of $ billion each in the Managed Co-lending Portfolio (c) Programme (MCPP) run by the IFC. A substantial part of the MCPP will target sustainable investments across emerging markets; (d) we will further grow our green bond portfolio, through direct investment or investment in green bond funds; (e) we will participate in ESG-themed public equities investments through external managers in passive or active mandates targeting ESG benchmark indices; and (f) we will accord green accreditation as a predominant factor in investment in buildings in our real estate portfolio.
8  BIS central bankers’ speeches  Revised forecasts suggest that credits should grow at a measured and vigorous pace to keep inflation in line with targets over the medium term. To this end, we provide a numerical range for the annual rate of credit growth in order to be more concrete. I would like to underline that these growth rates should not be perceived as strict targets for the CBRT. At this point, I would also like to emphasize that the nominal credit growth consistent with the medium-term inflation target may vary over the years depending on the course of factors such as inflation, growth and the composition of the aggregate demand. As illustrated on the slide, over the next three quarters, inflation may display significant fluctuations mainly due to base effects driven by food prices. Accordingly, annual food inflation is expected to rise in the second quarter, decline in the third quarter, and increase markedly in the last quarter (Chart 15). Comparison of January 2011 and April 2011 Inflation Report Forecasts  Chart 16. Chart 17. Output Gap Forecast  Inflation Forecast  Source: CBRT. Source: TurkStat, CBRT. Comparing our current forecasts with those of the previous reporting period, I would like to reiterate that we revised the initial point of our output gap forecasts upwards due to the more-than-expected increase in the domestic demand in the last quarter of 2010 (Chart 16).

Monetary policy developments and monetary conditions  The mentioned discrepancy between advanced and emerging economies accelerates capital flows into countries, such as Turkey, with strong economic fundamentals and relatively low risk. Rapid credit expansion and widening current account deficit fueled by short-term capital inflows increase risks to financial stability and carry the potential to hamper price stability  BIS central bankers’ speeches  1  over the medium term. This gives rise to adopting different approaches that incorporate financial stability into the monetary policy framework. As you have been following very closely, we have designed and adopted a new policy strategy as of the end of 2010. While our new policy approach maintains the priority of price stability, we also observe financial stability as a supporting objective. In this context, in addition to policy rates, we jointly use complementary tools such as reserve requirement ratios and the interest rate corridor. The primary objective of this new approach is to contain the negative effects of the ongoing global imbalances on the Turkish economy. Now, I would like to summarize the decisions that we have made within the new policy strategy. The downtrend in inflation during the last quarter of 2010 allowed the CBRT to give relatively more weight to financial stability during this period. In this respect, in order to reduce short-term capital inflows, we lowered policy rates on one hand and raised the volatility in short-term interest rates by widening the interest rate corridor on the other hand.