samchain/econo-pairs-v1 huggingface dataset:
Effective financial infrastructure is as important to Hong Kong as is the extensive and far more visible physical infrastructure that we see around us. And Hong Kong is fortunate to be equipped with a financial infrastructure that is as advanced, reliable and efficient as the road, rail and airport facilities that keep our city moving. Since 1994 the HKMA has implemented a number of major reforms to Hong Kong’s payment and settlement systems. The largest of these reforms was the launch, in December 1996, of Hong Kong’s Real Time Gross Settlement (RTGS) system for interbank payments in Hong Kong dollars. This state-of-the-art system is widely acknowledged to be one of the most advanced and robust of its kind. It has served Hong Kong remarkably well, and made an important contribution to maintaining financial stability during the Asian financial crisis, which erupted not long after its introduction. Our experience with the RTGS system, and in particular the technology produced for it, plays an essential role in the development of the next great milestone, the US dollar clearing system. The US dollar is the currency in which most world trade in merchandise and financial products is denominated. Because of Hong Kong’s role as an international financial centre, and the fact that our own currency is linked to the US dollar, there is extensive holding of US dollars and a considerable trade in US dollar-denominated assets.

The mood is to continue cautiously down that path, but to emphasise the need, not only for sound macro-economic policies, which everyone accepts as a sine qua non, but also for steps to accompany capital account liberalisation designed to reduce the risks of volatility. These relate in part to the process of capital account liberalisation, where there is now a good deal more stress on ‘sequencing’ - that is on liberalising potentially more stable, longer-term, capital inflows initially, rather than short-term borrowing denominated in foreign currency. BIS Review 49/1998  -4-  But they relate particularly to three key conditions for living with free capital movements. The first is “transparency”. In a broad sense a need for greater transparency is recognised in relation to public policy, to the relationship between the public and private sectors, to corporate governance, accounting standards, and so on. In a narrower sense there is seen to be a need for more reliable, and greater and more timely disclosure of, financial information generally, at the level of individual borrowing entities, but especially also in relation to countries’ true foreign exchange short-term asset and liability positions. This is especially important in relation to the foreign currency liquidity position of the monetary authorities and of the banking system.
That means there is no room for the type of misguided economic policy that characterised the 1970s and ’80s, for example, when Sweden used repeated devaluations in an attempt to rectify the situation. Such failures must be avoided at any cost. Against this background it is not remarkable that the discussion about economic policy with EMU has focused on stabilisation policy. Even so, it is important to start from a broader perspective. The issues to do with stabilisation policy have featured prominently in the Swedish debate. This has to do with a strong Keynesian tradition and the ability of Lars Calmfors and his former colleagues to place the so-called insurance argument in the centre of the whole discussion about a monetary union. The latter naturally has to do with the fact that the very dramatic crisis which hit Sweden in the early 1990s was so closely connected with stabilisation policy. It is hardly surprising that in many other countries the discussion took a very different course before they adhered to the EMU. It is extremely important that our discussion about economic policy – with or without the euro – does not overlook or play down the supply side of the economy. Countries that create conditions for a smooth adjustment of labour markets and a favourable development of productivity will almost certainly do well as members of the monetary union. Measures to this end are naturally warranted in any event – they promote prosperity.

Under these circumstances it will be exceedingly important to make a thorough scrutiny of the social security system’s design; this is a question that has been on something of a back burner, what with the crisis for stabilisation policy in the 1990s and the achievement of a more lasting solution to the issue of pensions. In such a discussion about social security systems that are effective and sustainable in the long term there is a place for the issue of cyclical stabilisation. Systems that are fully or partly funded, publicly or privately, can function well as stabilisers. Thus, it is mainly in this context that I would like to place the discussion that has taken place about various types of buffer fund. But the need to reform the social security system is primarily connected, not with stabilisation policy but with being able to guarantee a high quality of publicly financed services without raising the tax take. Measures for influencing the business cycle Finally there are the questions of whether a more active, discretionary fiscal policy would be advisable and whether, to function better in the future, it may need to be supported by new institutional arrangements. First, let me stress that, for reasons I mentioned earlier, I do not have much faith in fine tuning. Of course that does not rule out trying not to accentuate fluctuations as far as possible when measures are taken primarily for other reasons.
Also the East Asian countries around it, like South Korea, Taiwan, Singapore and Hong Kong had mounted their economic miracle by opening up their market and making their exchange rates competitive and basically getting huge amounts of foreign investment. That model worked effectively and it is the only model that really is open for emerging markets to prosper. But now they are facing a problem. Their populations have stopped growing so they do not have young, creative workers coming into the workforce in-order to make their economies continue to grow at the fantastic rates of growth they achieved for several decades; 10–12% of rates for economic growth. So now the challenge is for the countries around the Indian Ocean. Particularly the Southern Indian Ocean. The whole SAARC Region including India, Sri Lanka, Pakistan, Bangladesh, even the Maldives in its own way, and then look at the Middle East, parts of the Middle East which are prospering, particularly the UAE, Oman, Qatar and similar countries and then the whole of the African Continent, which you may or may not know, has about a billion people. This is almost the size of China about ten years ago. If Africa can get going with its vast stores of minerals and other types of natural resources, then you really see a transformation in this part of the world. This part of the Indian Ocean  4  BIS central bankers’ speeches  will, I think, really be the fastest growing region in the world in ten years’ time.

Clearly the wage bill cannot be expanded by major pay rises, since this eventually leads to a higher relative cost of labour and, consequently, less job creation, higher unemployment, loss of household confidence and fresh falls in demand, which would mean still lower growth and more unemployment. Therefore, it is crucial to adapt wages to the specific situation of firms, to their activity, productivity gains, profits, etc. The current wage bargaining system does not take into account the large differences in individual firms’ specific situations, so it is not the most suitable one to prevent the bout of weak demand from generating a sharp fall in employment. Further, the predominance of indexation clauses in collective labour agreements is a problem that becomes particularly harmful when, as in the current circumstances, inflation has risen due to an external shock, like oil prices, at a time of cyclical weakness. It is naive to believe that automatic wage adjustment to reflect past consumer price increases provides any protection to household disposable income. On the contrary, these clauses (which have now been done away with in most European countries) lessen the ability of firms to compete and keep creating jobs, generate inflation (which affects those not protected by similar provisions) and, in short, hinder adaptation to the external shock. In general, these characteristics of the Spanish labour market have meant that employment has so far been the economy’s main adjustment variable in periods of crisis, since it is the quantities (i.e.
In part this has been spurred by competitive forces. That such forces will diminish as financial restructuring accelerates seems unlikely. Information asymmetries lie at the heart of market failure, and the market's way of resolving them can give rise to unpredictable outcomes. Ensuring that markets have adequate information about national economies, the strength of financial systems, aggregate positions and the financial standing of counterparties is important. Equally important, if not more so, is to ensure that market participants' approach to risk management reflects the full balance of costs and rewards implied in their decisions. Given the costs and the difficulties of managing the successive crises over the past decade, we must continue to devote considerable efforts to avoiding future crises and try hard to understand the kinds of vulnerability that lie behind them. The work now being carried out in various international fora is thorough and can be summarised under three headings: crisis prevention, crisis containment and crisis resolution. Much of this work involves international institutions like, for instance, the International Monetary Fund, the World Bank, the Bank for International Settlements, the Basel Committee on Banking Supervision, and the OECD, as well as the Financial Stability Forum. However, it is with national authorities that the often hard work of implementing policies and codes lies. The measures will contribute to better financial stability only if countries actually adopt and implement them. A crucial ingredient in achieving this is of course to involve countries, formally or informally, in the development of the policies, codes and standards.

The crisis probability equation is estimated directly on a cross-country historical dataset, similar to the one described in appendix 1, giving estimates of ℎ0 = −1.7, ℎ𝐵 = 5.2, ℎ𝑘 = −27.8. The intercept is then adjusted to ℎ0 = −1.7 + 0.11ℎ𝑘 , to incorporate a steady state capital to risk-weighted asset ratio of 11%. The leakage 𝜙𝑀 (1−𝑏)  1  𝜙𝑠 𝑏  3  of credit into the market-based finance sector, given by ( 𝑠 𝐵  ) is equal to − in the red line in Chart 8, to  make it the same size as the leakage to foreign banks in the alternative model discussed below. Therefore 𝑏 = 0.75 implies that 𝜙𝑠𝑀 = 1. Finally, the policymaker’s preference parameter is set to 𝜆 = 0.05, broadly consistent with the literature where loss is derived from the welfare of agents in the economy, 𝛽=0.99 and 𝜁 is varied to derive each curve in Chart 8, where each point represents optimal policy for a different 𝜁. The policymaker’s period 2 loss if there is a crisis, relative to when there is not, is set to just over 4% of GDP lost for 3 years. This is broadly consistent with Chart 6 in Brooke et al (2015), which assumes that the cost of crises will be lower under a credible resolution regime. 3.
The financial system is important, and the risks in the system must be constantly reviewed. Let me give you some examples of areas that I believe will need to be investigated. As I mentioned earlier, the Swedish banks’ high dependence on market funding entails an increased risk that they will suffer liquidity problems in a stressed situation. It is of course always possible for the Riksbank to lend Swedish kronor, but it is unreasonable for the banks to take liquidity risks based on the expectation that the Riksbank will provide extraordinary loans if things do not go according to plan. The ability of the banks to comply with the Liquidity Coverage Ratio in the Basel III Accord should therefore be investigated. The differences in the maturities of the banks’ assets and liabilities in foreign currencies that I described above are also a potential source of concern in more troubling times. The Riksbank cannot after all offer unlimited liquidity in any other currency than our own. As you know, the Riksbank has therefore recently strengthened its foreign-exchange reserve so that in a situation in which the foreign-exchange market is seriously disrupted the Riksbank will be able to provide extraordinary loans in US dollars and euros. The aim of course is to strengthen the Riksbank’s preparedness to safeguard the basic workings of the financial system and thereby help us to avoid major economic costs.

The Swiss franc is trading currency number 5, ranging behind the Big Three and Sterling, but well ahead of the currencies of much larger countries like Australia and Canada. Economically more important than the trading volume is - second - the position of a currency held in international portfolios. Relative to the size of our country, the SFR occupies an unusually prominent position in international institutional and private portfolios. This position is the combined result of an above-average stability record, an efficient financial centre and the commitment to an independent monetary policy which lends the SFR special diversification characteristics in global portfolios. This certainly is a sign of strength, a sound basis for value creation, especially in our financial industry. At the same time, its strong position makes the SFR particularly sensitive to global capital movements. Thirdly, due to relatively low interest rates, the Swiss franc - like the yen - periodically plays an important role in the short-term financing of trading positions. Currency and securities traders take short positions in our money market to finance long positions elsewhere. This is a rather volatile game, often reinforced by herd effects, which comes and goes with short-term exchange rate expectations. These so-called carry trades from time to time generate a significant amount of short-term exchange rate volatility. In the recent past, however, such strategies have lost their appeal, probably as a combined consequence of last year's increase in money market rates and the appreciation of the Swiss franc.
47 More generally, strong international cooperation in the sphere of risk assessment and crisis management responses is also clearly important. With increased links between infrastructure providers in different centres and the emergence of new cross13 border infrastructures, greater cooperation is also required in the conduct of oversight: not only in terms of assessment of particular overseen cross-border infrastructures against international standards, but also in identifying potential interdependencies between national infrastructures. While existing cooperative arrangements work well, the model needs to expand and continue to evolve. 6. Concluding remarks  48 The resilience of the infrastructure of wholesale payment, clearing and settlement systems to both operational and financial shocks remains a key requirement of financial and monetary stability. But the landscape is changing fast in response to technological change and the financial innovation and globalisation it allows. Cross border and global networks are squeezing our national monopolies and commercial banks are playing an increasing role.

One danger of such developments is that, in the face of a prolonged period of low interest rates, asset managers might be tempted to chase “tail-risks”. This calls both for more market discipline in the form of better monitoring and disclosure of the risks borne by financial institutions and possibly by investors, and for a close supervision of these institutions. Demographic shifts are a key factor in the equation of the future world economy. They are key for economic activity, the fiscal stance, and, maybe less obviously, for the monetary policy stance, given their impact on output gap and financial stability. That is why I found the topic of this session particularly appropriate and timely, and I am sure that your discussions will bring very interesting insights. 2  BIS central bankers’ speeches
Combatting fraud is a high priority for the Bank, and we will continue to work with the financial industry, Government agencies and law enforcement authorities to further improve banking and payment fraud incident response and recovery actions. Alongside these efforts, increasing digital and financial literacy will be extremely important to build and preserve confidence in the use of digital financial services. Learning how to use digital financial services safely is just one dimension. An important goal of improving digital financial literacy is also to help individuals make better use of digital financial services to improve their financial well-being. With an explosion of digital tools that can help individuals plan and manage their finances better, a much wider range of financial solutions, and easier access to financial advice - financial literacy, including digital financial literacy, is critical to help individuals navigate the complexity that comes with more choice. Faced with the same set of choices, individuals armed with the knowledge and skills to make good choices and good use of facilities available to them could significantly improve their standard of living, while others who make poor financial choices could be plunged into personal financial hardship. 15. The Financial Literacy Month this year aims to amplify the importance of digital financial literacy in helping Malaysians build financial resilience, and enable them to participate fully in the digital economy with confidence. Our efforts should reduce the digital divide, expand accessibility, and strengthen individual skills to manage money wisely. 16.

As I understand, First Capital Bank has plans to increase its foot prints in Zambia and I hope that the bank will open up branches in other districts of BIS central bankers’ speeches  1  Zambia. This will enable it to enhance financial inclusion, which is among the country’s key priorities. Chairperson I have been informed that FCB has initiated the process of acquiring new state of the art banking software, and is in the process of introducing a full range of IT related products like internet banking, mobile banking and visa card. This demonstrates the bank’s strong and longterm commitment to becoming an important player in the development of our financial sector. This is no doubt driven by the confidence FCB has in the Zambian economy. Ladies and gentleman Zambia’s economy has continued to show resilience in the midst of a slowdown in the global economy as a result of the on-going Euro zone debt crisis and the sluggish growth in the United States of America and some leading emerging market countries including the BRICS. Economic performance has been strong with GDP growth in 2012 at 7.3%. Inflation has continued to be in single digits and was 6.9% in October this year. Although the exchange rate of the Kwacha against major international currencies has been under pressure, it has remained relatively stable, while the country has maintained a positive account balance over the last four years.
At a global level, there has been convergence of opportunities and outcomes, but this is only because the gap between advanced and emerging economies has narrowed. Within societies, virtually without exception, inequality of outcomes both within and across generations has demonstrably increased. 4 The big drivers of globalisation and technology are magnifying market distributions. 5 Moreover, returns in a globalised world are amplifying the rewards of the superstar and, though few of them would be inclined to admit it, the lucky. 6  1  See Ostry, Berg and Tsangarides (2014). 2  See Alesina, Di Tella and MacCulloch (2004); Wilkinson and Pickett (2009). 3  In 31 of the 39 countries surveyed by Pew Research in 2013, half or more of the population believed inequality to be a “very big problem” in their societies (Pew Research Center, 2013). 4  The Gini coefficient pertaining to household disposable income rose from 0.26 in 1961 to 0.36 in 2008 in the UK, and from 0.39 to 0.46 over the same period in the US, according to data collected by Atkinson and Morelli (2014). Those data show this to be a common pattern across many advanced economies. In emerging markets, Gini coefficients remain high relative to the average for OECD countries, and rose between the 1990s and 2000s for India, China and the Russian Federation, though falling for Brazil (OECD, 2011a).

With clear risks of a misplaced if not lost generation, to the extent appropriate under our mandates, the monetary policy response has represented a race against long-term (or hysteretic) unemployment. As Janet Yellen remarked, “the risk that continued high unemployment could eventually lead to more-persistent structural problems underscores the case for maintaining a highly accommodative stance of monetary policy.” 18 In Britain at least, these risks have been sharply reduced. The Bank of England has used a range of policies first to stimulate and then to secure the recovery. These have helped support the strongest job growth on record including record-high transitions back into employment by the longer-term unemployed. Longer-term social mobility will benefit from this track record. Looking ahead, improvements in policy frameworks should help to reduce – but not eliminate – the incidence of financial crises. A core lesson of the recent episode is the need to think of  14  For example, using data on over 30,000 households in 38 countries, Easterly and Fischer (2001) find that the poor are more likely than the rich to mention inflation as a top national concern. Moreover, higher inflation is associated with greater income inequality in cross-country data (Albanesi, 2007). Financial crises in developing countries are associated with an increase in poverty and, in some cases, income inequality – see for example Baldacci, de Mello and Inchauste (2002).