samchain/econo-pairs-v1 huggingface dataset:
Authorities everywhere are having to innovate to help get us through this crisis. And we will need to innovate to build a better system for tomorrow. Our dialogue with you can only help that. We are very grateful for it. 4  BIS Review 71/2009

With mobile payments, the cost of travel to a financial service provider is reduced to pressing a button, the risks associated with carrying cash are managed by simply securing a pin number. Since the mobile telephone industry has seen tremendous growth in its coverage, mobile payments seems to be the inevitable retail payment method that reaches out to large segments of the population a way that the conventional ones do not. Chairperson, notwithstanding these advantages, mobile payment platforms are not without challenges. At the centre of these challenges is the need to protect the consumer or user of mobile payment platforms. Undoubtedly, the number of people with access to mobile payment services in Zambia has significantly increased since the early days of Celpay. However, for us at the Bank of Zambia, as regulators we have taken note of how growth has been accompanied by a change in the character of mobile payments. The line between a mobile payment product and a conventional banking product has now become a fine line. For this reason developing appropriate regulations that protect the consumer against fraud and such risks anti-competitive practices, is a critical and necessary response to the innovations brought about by the mobile telephone technology. But it is important to understand that by its nature technological innovation can achieve an overnight quantum leap by the sheer ingenuity of one person. Where this happens, there is a danger that the development of appropriate regulation can lag behind technological advancement.
Finally, the soon-to-be-implemented second phase of the financial sector master plan will further improve efficiency of the banking sector through reduction of regulatory costs, enhanced legal and information infrastructure, and new competition introduced in orderly manner through phased deregulation and liberalization. 2  BIS Review 118/2008  Fourth, the private sector has shown much resiliency and adaptability. For example, in response to the appreciation of the baht, exporters have made increasing uses of foreign exchange hedging instruments. At the same time, the increasingly diversified export market structure has provided Thai exporters with cushions against the current slowdown in major advanced economies. As another example but perhaps more relevant to today’s audience, our listed companies no longer over-leverage their balance sheets, turning instead to equity and retained earnings as major sources of funds. Fifth, Thailand is among the world’s top places when it comes to the ease of starting and operating businesses. The recent report, “Doing Business 2009,” by the World Bank upgraded Thailand by six places. Despite all the storms we have faced, we are now ranked at 13th place out of 181 countries (4th in Asia after Singapore, Hong Kong, and Japan). According to the report, Thailand led other reformers in the region with improvements in four areas – Registering Property, Protecting Investors, Paying Taxes, and Trading across Borders. As investors, you may be interested to hear that one of the cited reform measures is amendments to the Thai Securities and Exchange Act to strengthen minority shareholder rights.

Oil prices have fallen much lower than what we had anticipated during our last round of economic forecast in July which had headline inflation projection in the range of 7.5-8.8% for the year. The fall in oil prices adds on top of the temporary favorable price impact from the government’s six-months-six-measures program which was not included in time for the forecast and will together be a major factor in our October forecast round. The fall in oil prices is also expected to have a significant impact on economic growth which was forecasted to be in the range of 4.8%-5.8% for this year. Unfortunately, the impact of the escalated political tension was also something we had not anticipated. In particular, the damage it has inflicted on the tourism sector will significantly shave off one significant source of external revenue the economy has relied on. Still, we see the economy’s growth momentum to remain in tact. Here I am not alone in believing so. The latest SET’s CEO Survey released last week showed that the majority of listed companies’ CEOs remained confident in the growth prospect of the Thai economy. Obviously, this is a difficult time for the economy. But you have to remember that we are no strangers to difficult challenges, some much worse than what we are facing. Most importantly, as I repeatedly said on different occasions, Thailand possesses strong economic fundamentals and room for maneuvering the right policy mix that makes us resilient against economic shocks. Allow me to elaborate on some of these.
Without non-standard measures, we estimate that we would have had to lower key rates by around 100 basis points in June 2014 to achieve a similar effect on bank interest rates. This has also helped to stimulate lending to the real economy: in the euro area, outstanding loans to businesses have gone from a contraction of –2.5% in June 2014 to growth of 0.6% in January 2016. The impact is even more marked in France, where outstanding business lending grew by 4.8% year-on-year in the first month of 2016 – the highest pace of growth in the euro area and, what’s more, with the lowest rates of interest. Convergent estimates from the ECB and the Eurosystem indicate that, all other things being equal, the measures introduced since June 2014 should add 1 percentage point to inflation over the period 2015–2017, with a similar impact on growth. In France, they helped to boost 2015 growth by 0.3 percentage point, and estimates from INSEE even put the impact slightly higher at +0.4 pp. That represents about 80,000 additional jobs for the economy – although only structural reforms can generate lasting gains for a country’s growth and employment. To conclude on this estimate of effectiveness, the IMF – regarded as an objective judge of the relevance of economic policies – was unequivocal in its assessment at the last G20 meeting in Shanghai at the end of February, saying, “The ECB’s asset purchase programme has supported the recovery by improving confidence and financial conditions [and] monetary policy should remain accommodative”.

This forum, which was held on the eve of global turmoil outburst, indicated that the Albanian banking system had significantly increased its resilience. It addressed important matters related to: •  Transparency and customer services,  •  Risks related to foreign currency credit and consumer credit, as well as  •  Interbank market functions and monetary policy transmission in the economy. Today’s forum takes place in an important moment of the banking and financial system. After a hard year, it seems that the situation is becoming eventually normal. Therefore, I am confident that, figuratively, the third forum will have the consolidation of public confidence in the Albanian banking system as the main motif. Achievements in this regard are not lacking. Statistics show that deposit level is approaching steadily to its prior-crisis level, while ALL credit livening-up is continuing. Dear participants, Today’s meeting is held after some important financial and economic events dictated by the global crisis. Now that the situation has cleared up and has entered into an improvement stage, a thorough analysis is being made about its causes, about public authorities’ reaction and about actions to be taken, in order to raise the global financial system’s resilience. Now, allow me to deal briefly with the main features of this unmatched crisis, and then continue with some arguments on the functioning of the Albanian financial system and some necessary regulations for its further perfection.
Illiquid assets continue to be a small proportion of the total, generally of the order of 2%, and the houses mitigate the maturity transformation risk in holding these, and marketable assets of more doubtful liquidity (such as some emerging market instruments), by matching with long-term borrowings. What is certainly true is that the securities houses have expanded their activities enormously - with balance sheets extending to $ billion, which puts them in this respect on a par with large international banks. And, given their focus on trading activity - in money, capital and foreign exchange markets - they are, of course, huge counterparties of the banks, with very large exposures both among themselves and between them and the banks, but with the important distinction that exposures between, or to, securities houses are more typically secured. Size in any event does not in itself mean that the securities houses now have the special, distinguishing, characteristics of banks - any more than the long-term savings institutions or the money funds or indeed large non-financial corporates, which may also have huge balance sheets and which may also have large Treasury operations in-house to manage the funds for own account. Systemic risk So it seems to me that banks are indeed still special insofar as they continue to perform distinctive economic functions and insofar as their liabilities and assets still have distinctive characteristics.

The Bank’s sermons on the storms ahead would have had more influence if at the same time a collection plate was passed round the congregation so that money was available in the event that the church roof had to be replaced. But a macro prudential regime also has a key role to play in the downswing phase of the cycle. Since 2008, credit conditions have tightened, jeopardising the recovery and, in turn, threatening renewed losses for banks. By allowing banks to draw on their macro prudential capital buffers, while credit conditions remain tight, the system is counter-cyclical. In other words, a credible macro prudential regime could help forestall both excessive exuberance and unnecessary caution. By altering the pressure on the financial brakes according to circumstances, regulation, far from being an inflexible foe, would become a flexible friend. This type of regulatory regime, and its objectives and tools, are largely untried and untested. But that is not a reason for not trying and not testing. The Financial Policy Committee will be a first. Over the next few years we will put in place a framework for financial stability to  BIS Review 84/2010  3  parallel that for monetary stability. We need both. As we have seen, one without the other is not enough.
However, the banking system’s relative well-being does not mean that the banking sector resolution is over. Problems accumulated by banks turned out to be more significant than we expected. As I have mentioned, here belong sizeable loans to companies connected with banks’ owners. Not all of these companies are successful, and their projects remain unimplemented for years. Similar to owners, large creditors often use their funds deposited with banks to fund projects of their owners or chief executives, shifting all the risk to the banks. Complications in obtaining relevant information from a foreign jurisdiction by the supervisor allowed banks to accumulate sizeable assets abroad (loans to non-residents, large correspondent account balances with foreign banks, securities in foreign depositories, letters of credit and other transactions outside the RF jurisdiction). A detailed inspection reveals that most transactions with non-residents are of fiduciary nature, and a foreign company or bank is not the ultimate recipient of funds. As a result of such transactions, funds are ultimately used for loans to owners or fictitious increase in the bank’s capital. Currently, the supervision’s main objective is to timely reveal such fiduciary transactions which undermine financial stability of credit institutions. Today, we are completely rebuilding the whole system of bank supervision, accelerating supervisory decision-making, and, moreover, striving to enhance the proactive nature of the supervision.

2  BIS central bankers’ speeches  A special emphasis should be made on monetary policy challenges facing the central banks throughout the world. Easy monetary policies helped stabilise the situation in advanced countries, but the quantitative easing programmes were introduced as short-term interim measures allowing to gain time for structural reforms. As you know, however, nothing is more permanent than the temporary and structural reforms show little progress, while the easy monetary policy now involves more risks than benefits due to its longevity. Monetary policy in itself is not able to set the economies of advanced countries back to resilient growth, since there are structural limits and there is no room for reducing interest rates any further, i.e., they have already been negative in many countries. Nonetheless, low interest rates in advanced countries were conducive to fast accumulation of external debt in the emerging market economies subjected to capital inflow and bubble formation. On the one hand, we realise that an exit from the easy monetary policy is fraught with an about-turn in capital flows and consequently the need to tighten monetary policies in emerging market economies. This may bring down the global economy’s growth rates even further. Moreover, as a result of a quick monetary policy normalisation holders of these countries’ bonds may incur losses and financial stability risks cannot be ruled out. On the other hand, a refusal to normalise monetary policy may lead to stagflation.
We have seen an exceptionally long period of strong growth in the world economy, but that growth was based on large and unsustainable global imbalances. For growth to be sustained, it must be more broadly balanced, both geographically and across economic sectors. •  Second, the current crisis may dampen economic growth in the future, reduce growth in the capital stock and thereby lead to a prolonged reduction in the level of output. The composition of output might change as well. I would not be surprised if the financial sector, the car industry and the construction sector were to shrink regionally. The economies that will be affected the most are those where the financial sector has expanded significantly in the last 20 years. Especially in those countries the financial sector will obviously have to become smaller, because it has decoupled too much from the real economy and because experience suggests that banks may have become too big to fail, too complex to be managed and even too big to be rescued. •  Third, the simple statement that “if banks are too big to fail, they are probably too big to exist” is a reasonable rule. In any case, for large banks the capital should increase more than they increase in size. The post-crisis financial system should be more riskaverse, less leveraged, less complex. The prevailing business model will probably place greater emphasis on traditional banking activities, which tend to produce lower margins, but are also more robust, less risky and less volatile.

As an example, the HKMA and our peer authorities in the region have adopted fintech sandbox 3/4  BIS central bankers' speeches  regimes, which are effectively testing grounds with a well-defined scope and a clear timeline. The authorities do not generally stipulate an exhaustive list of regulatory requirements in these sandboxes; rather, the products are to be developed flexibly, and requirements would be evaluated during the process. Coordination among regulators has also already begun as the Global Financial Innovation Network (GFIN) is now inviting applications for cross-border testing of financial innovations. That said, while providing a conducive environment to support innovation, central banks and regulators would have to strike a good balance with its other functions in consumer protection and financial stability, especially as the new and innovative services grow in scale or become widely adopted. Cross-border coordination is also required to address potential arbitrage across jurisdictions, given the much wider reach of fintech products and services. Derivatives markets, on the other hand, have a much longer history. The regulatory framework should therefore be informed by history, and lessons from the global financial crisis must not be forgotten. Regulators need to guard against the problems that plagued derivatives markets before the crisis: namely, the overuse of leverage, excessive interconnectedness, and opacity. I don’t need to “preach to the choir” on the tremendous efforts exerted by regulators and market participants internationally to solve these problems.
For example, if the haircut was 10% and the value of the security was $ the most the investor could lose would be $ Thus, the facility eliminates much of the downside risk that would arise from a very deep recession or the fire sales of assets that could cause prices to drop sharply temporarily. This is a very exciting program because it provides balance sheet capacity to risk capital that cannot currently get leverage. It goes beyond current programs. Just as important, once it is up and running it can be scaled up and out in many different dimensions. In principle, it could be applied to other distressed asset classes, it could move down the credit spectrum to lower-rated tranches, and it could be used to fund older vintage assets. Two other important initiatives are also in train that deserve note. Last week the Treasury and the major banking supervisors announced the details of a capital stress assessment process for all bank holding companies with assets in excess of $ billion. This process is designed to ensure that the banking system has sufficient, high-quality capital to be able to absorb the losses that would likely be generated by an economic scenario considerably worse than generally expected. The stress assessment assumes an adverse economic environment. For example, under this scenario, the unemployment rate is anticipated to average more than 10% in 2010, considerably higher than the consensus economic forecast. The stress assessment will unfold in three steps.

This desire to postpone capital raising stems, in part, to the fact that bank executives often do not want to dilute the existing shareholders (which, of course, include themselves). I believe that the management calculus has often gone like this: In good states of the world, I have enough capital. In bad states of the world, perhaps I don’t. But to raise enough capital to guarantee I can endure all the potential bad states of the world, I will have to massively dilute my existing shareholders now. So the self-interested thing to do is to avoid the dilution and hope for a good state of the world. This does not always work well in practice. Once capital preservation becomes paramount, deleveraging intensifies and counterparties grow more wary about engaging. This dynamic, in turn, makes a bad state of the world more likely. What may be sensible for each institution individually, may collectively be a bad idea. That is because each firm does not internalize the cost that their decision not to raise capital has on the overall financial system. A healthy banking system is always essential. But never has that been more true right now given what has happened to the securitization markets and the broad “shadow” banking system. So where are we now? In my view, the deleveraging process is still far from complete. Hedge fund redemptions have soared.
Although the details of this programme are still being worked out, the volume of the funds involved, which including the IMF contribution could amount to as much as € billion, seems sufficiently illustrative of the determination of governments to defend the common European project. Naturally, as in the case of the initial support package for Greece, the possible financial support will always be subject to a strict principle of conditionality, as an indispensable factor to ensure that the underlying problems are addressed with sufficient ambition and determination, and to avoid possible situations of moral hazard which could degenerate into the accumulation of new risks for the future. The European Commission and the European Central Bank have also contributed decisively to this task of strengthening the common pillars of the area. In this respect important steps have been taken to establish a sounder framework of policies to preserve the smooth functioning of the euro area. I refer in particular to the Commission’s recent proposals to strengthen in various ways the Stability and Growth Pact and to extend the areas of mutual oversight and consultation within the EU. The ultimate aim of these proposals is the early detection and redressing of those imbalances which, as has become clear to us in these last few months, will put the stability of the euro area at risk if allowed to continue and accumulate. In this respect, the European Central Bank has also reacted to the emergency situation.

This meant that private sector solutions were prioritised, as has been seen in the processes that have unfolded in the past few months. Today, it is fair to say that the restructuring and recapitalisation of Spain’s financial institutions is well under way. It is now just a case of formalising and implementing the agreements reached. As a result, Spain’s deposit institutions that did not already have sufficient capital have now secured it, either from the markets or from the FROB. The Banco  8  BIS Review 86/2010  de España has conducted stress tests to verify that all institutions – banks, savings banks and credit co-operatives – will actually have sufficient capital available, not only for what would currently seem to be the most reasonable scenarios, but also for complex growth scenarios in the near future. Accordingly, before end-June, the Banco de España will take the steps necessary to formalise the processes already agreed and to ensure they are correctly implemented. If, by month-end, any of these processes has failed, or any institution has been left behind, the Bank will act, using the mechanisms envisaged for this purpose in the FROB legislation. Moreover, the Bank intends to publish the results of these stress tests, to reveal the deterioration estimated, the consequent capital requirements and the capital funding committed, to provide the markets with a perfectly clear idea of the situation of the Spanish banking system.