samchain/econo-pairs-v1 huggingface dataset:
Potential drawbacks of the new framework on a small open economy  But would the introduction of the euro be only good news for the Swiss economy? A revolution is always associated with risks and uncertainties, thus it should not surprise you that we were concerned about potential negative developments. In the mid-1990s, as the European monetary construction was under way, we tried to imagine the potential negative effects of the euro introduction on the Swiss economy. Our goal was to be prepared to face difficult situations. This is what central bankers are paid for, after all. We had identified three main challenges: (a)  First, the major risk was that the introduction of a European currency would destabilize the Swiss franc. In the past, the Swiss franc, along with the German mark, played the role of a safe haven currency whenever monetary crises occurred. With the disappearance of the German currency, the Swiss franc would find itself first in line of fire in case of a dollar crisis, for example, or even worse, in case of doubts about the stability of the European currency. (b)  Second, we risked seeing the euro being increasingly used as a means of payment in Switzerland. As the common currency was about to become the main unit of account for our exports, we feared that domestic firms might adopt the euro as well, so as tominimize exchange rate risks. Some were even imagining wages being paid in euros.

The notion that the welfare of a country boils down to the short-run profits of a few foreign exchange dealers is narrow minded. The reality offers a completely different picture. Switzerland has always suffered from external monetary turbulences and always wished for a stable monetary order. For example, the various crises of the European Monetary System in the 1990s, with a dramatic drop of the Italian lira, have led to the complete removal of the traditional textile industry from our economic geography. Such structural adjustment could arguably have occurred anyway, but the decisive factor at the time was of monetary origin. The purpose of the creation of the common currency was not only to concentrate the monetary power in the hands of the European Central Bank, but also to promote the conditions for transparency and competitiveness that would in turn foster trade, investment and growth in the internal European market. Price comparisons are indeed easier today, andtrade and liquidity management are much simplified, although it is still too early to numerically assess the impact of these effects on growth. Simplifying trade and investments in the European market not only benefits members of the European monetary zone, but it also helps anyone interested in being active in the European market. Switzerland, with its high degree of integration in the euro zone, reaps large benefits from this stable situation. Thus, it is clear that on those aspects, the introduction of the euro was very good news for the Swiss economy. 2.
We all know that regulation in markets is nothing new and what it requires is a better analysis by firms on the cost of doing business in different markets compared to profitability. For some firms, we see aggressive actions to adjust their geographic footprints to avoid, at least for a time, the impact of the new standards. For other firms, we see productive and realistic discussions about how to address the new standards, including how booking models and other business operations need to change. In addition, we are seeing home country supervisors engaging in discussions with firms, asking important questions about how host country rules and regulations will affect group operations and seeking to understand the knock-on effects of the new rules across the global operations. As firms are adapting both business strategies and operations to meet home country and host country rules and regulations, we are hearing about the challenges that have been identified. However, there is still a lack of specificity around these challenges, including quantifying the impact – on business, strategy, customers and staff; identifying potential near-term mitigants; and developing proposals on potential longer-term solutions that could be the basis of a productive dialogue. Rhetoric is fine, but it’s not enough. We need to understand on a more concrete level how these changes are going to impact the firm, from your clients to your operations, from your business models to your culture.

To achieve this end, we need a much better definition of the public interest, which I believe we now have in the new legislation. The second important point in terms of the meaning of the PRA’s objectives is that it will not be the PRA’s role to ensure that no firm fails. Rather, the PRA will seek to ensure that any firm it regulates that does fail should do so in a way that avoids significant disruption to the supply of critical financial services. Nevertheless, failure is not costless and there is inherent uncertainty about whether a firm can fail without damaging the financial system and the supply of critical services. Consequently, the PRA will expect a given level of resilience to failure from all firms. There is another major public interest in the banking system, namely that by becoming too big to fail, the largest banks have developed an implicit, and in some cases explicit, dependence on public money. This is unwelcome, for the public, and for the banks, the former because of the unwanted cost, and the latter because of the intense scrutiny and oversight of the banks, which must be more intense as long as this state of affairs lasts. Now, I recognise that we have a lot to do still on resolution planning to be comfortable about our objective of avoiding a no failure regime and thus solving the Too Big To Fail problem.
The Bank had some guidelines on the metrics it would tolerate - for example, there was an expectation that about one-third of deposits plus one-fifth of acceptances  10  should be matched by liquid assets. And the  Bank showed willing when it came to enforcing this, though notably only through moral suasion rather than any formal sanction. The Governor would sometimes meet the prospective leader of a bank should there be a change in leadership, and he would expect to be notified of any significant transactions, a fact that Samuel Montagu (whose business is part of HSBC’s private banking arm today) was sharply reminded of in 1957 when he 11  reportedly neglected to update the Governor on a potential M&A deal . Overall though, much of this interaction was based on courtesy rather than any expectation that the Bank’s approval was a pre-requisite or necessary. There was a relationship to be sure but it was all very informal; the terms supervisor and supervised would have sounded out of place. There were no hard and fast requirements and the approach was minimalist in style. 7  For example, through the granting of waivers on the publication of balance sheet data. Originally set up in 1914 to manage difficulties in payments between countries at the start of World War One. 9 Fforde, John.

Regulatory arbitrage  I have spoken extensively about the steps we have taken, especially over the past few years, to build a robust regulatory framework and maintain a fit but lean army of supervisors to ensure it is implemented. It is worth noting here that we are not pig-headed about the specific way in which all elements of the regulatory framework fit together. Where we see something is not working as well as intended, we are prepared to make adjustments as long as we do not jeopardise financial resilience as a consequence. Take the modification the PRA made last year, in which central bank reserves were excluded from the exposure measure in the UK leverage ratio. This change was made to ensure the effective transmission of 19  All speeches are available online at www.bankofengland.co.uk/speeches  19  monetary policy was not impaired and was recently followed up with a proposal to increase the minimum leverage ratio requirement from 3% to 3.25% to maintain the resilience of the standard overall. Where it makes sense to make a design improvement to better align with policy intent, we will do so. But on the whole, my sense is that we have the right shape of regime. So with reforms to the regulatory framework almost complete, how do we as supervisors remain vigilant in defending it? I mentioned that the PRA’s supervisory approach relies on a healthy dose of judgement.
In turn, developed repo markets can play a relevant role in providing a source of short-term financing, allowing liquidity to flow between financial intermediaries, providing resilience to the financial markets mitigating systemic risk by diversifying funding sources, and contributing to the depth and liquidity of fixed-income instruments markets. The last FSAP pointed out this shortcoming of the Chilean financial system and suggests taking action to develop this type of secure funding operations To close this gap, the Central Bank has been in close interaction with market agents in this regard through its Local Markets Committee and we recently proposed the creation of an ad-hoc task force of the Financial Stability Council on Repo Markets, where we aim to play an active role on strengthening the private repo market with two main objectives. The first goal is to deepen and strengthen systemwide liquidity; and the second is to broaden and enhance the tools available to market participants when facing stress scenarios in fixed income and money markets. 10  The bill of law of Resilience in the Financial System provides for a special treatment of defaults in repo contracts, basically imposing a brief stay on early termination, like that applying to OTC derivatives. This would strengthen the legal certainty and protection of collateral property rights, fostering the private market for repos.

During this year some things have certainly changed. Internally, uncertainty has decreased after experiencing peaks at certain periods. Key asset prices, such as interest rates and the exchange rate, have shown high volatility and, in spite of a reduction, have not returned to previous levels. Externally, persistent higher levels of inflation have prompted a strong reaction by most central banks and uncertainty remains elevated. This driven by factors such as the war in Ukraine and the likelihood of recession in US and Eurozone. These elements add complexity to an already challenging scenario. Yet, despite these difficulties and a weakened capital market, the financial system has proved to be very resilient. 1  I will start this presentation with a macro-outlook, in particular at our continuing efforts to resume balanced growth on the back of a sound macroeconomy, by applying the appropriate monetary and exchange rate policy in times of high uncertainty and external shocks. Then, I would like to share with you the factors that explain the remarkable resiliency of our financial system, and the policies we are developing from the Central Bank to contribute to strengthening and developing the financial markets, in accordance with our mandate of financial stability. 1. Building resilience over the years as a source of strength 50 years ago, Chile was an economy mostly closed to international trade and capital flows, with severe credit constraints and a fairly basic financial system, with banks as the only source of financing for businesses and individuals.
The MPC set out its collective assessment of the potential issues that a negative policy rate in the UK could raise, and how that might impact the effectiveness of negative rates as a monetary policy tool, in its August 2020 Monetary Policy Report.13 I won’t repeat all of the analysis from the Report; instead I want to draw out three key points. The first is that the effective lower bound is likely to be different across different countries, reflecting different macro-economic circumstances, structural features and financial systems. This is a simple point but an important one. Just because negative rates are appropriate in one country does not mean they would be appropriate in another, and for some countries and in some circumstances the effective lower bound may well be positive. The second point is that while some aspects of the transmission mechanism would be the same as any other rate cut, others could be quite different. In all use-cases, market interest rates would fall, asset prices would rise and the exchange rate would depreciate, and that would stimulate demand and raise inflation in the usual way. But evidence from other countries’ experience suggests that while corporate deposit rates can turn negative, household deposit rates would be unlikely to fall below zero, meaning that pass-through could be somewhat weaker than for a normal rate cut. Building on this, the third point I want to draw out is that there can be knock-on economic effects through the banking system.

UK GDP has recovered fairly rapidly in aggregate so far from its trough earlier in the year. In our August Monetary Policy Report forecasts, we projected that recovery to continue, though at a slower pace. Unemployment was projected to peak in Q4 and decline only gradually. And inflation was projected to return to target from its current low level as domestic price pressures picked up. (Figures 11-13) Those projections were conditioned on the assumption that the direct impact of Covid-19 on the economy would dissipate gradually over the forecast period, as well as on market interest rates and the monetary and fiscal policy support measures that were in place at the time. This summary is in no sense intended to downplay the unprecedented impact the virus continues to have on individuals, on particular businesses and sectors, and on different regions and nations of the UK at different times. As flagged in the MPC’s September Minutes, there is a real risk of a more persistent period of higher unemployment, and the recent strength in income growth might not be sustained. I remain particularly concerned that we could also see structural headwinds to recovery in the labour market, with particular impacts on younger workers and those joining the workforce. The negative impact on the supply side of the economy, or degree of scarring, could potentially be greater than the 1½% we have assumed to date based on very preliminary work, a risk the MPC has previously highlighted.
For instance, it is estimated that about two‐thirds of the outstanding stock of 10‐year treasuries is in private hands.6 It would not be surprising that those private bondholders would become wary of the possible price impact of a reduced demand for these assets by the Fed, and decide to anticipate this move. Dealing with such a situation would be challenging for any authority. In sum, the baseline scenario is one of a gradual reversal with some temporary financial turbulence taking place as markets take notice of the new policy stance. However, a tail event of heightened and persistent financial volatility cannot be written off. Although there is some research estimating the impact of the implementation of QE on key interest rates in the US, it is likely that the impact of the removal of QE will not be the flipside image of its implementation. Let me turn now to the last determinant of the impact of a reversal: what countries do in the meantime. Recent events have shown us that even a gradual normalization of global monetary conditions may not be welcome news for all countries. For various reasons, these conditions have bred more vulnerability in some countries than in others. Those countries that have been running large current‐account deficits, where these deficits have been financed mainly with debt, where fiscal positions are weak, and where capital inflows have bred large expansions in credit, may have already become too dependent on abundant and cheap international funding.

Nonetheless, identifying the role of pull versus push factors poses problems akin to those of separating supply and demand. There is still room for research that finds clever identification strategies to settle this question. Under most conditions, a situation of abundant capital inflows and low global interest rates is good for developing countries. Theory tells us that, in the absence of frictions, international capital flows not only contribute to expand a country’s productive capacity, but also allow their citizens to share risk with the rest of the world. However, the presence of pecuniary externalities, of inefficient fluctuations in credit standards, or of other types of financial frictions may lead to perverse situations where these inflows result in excessive credit growth, risk taking, or misallocation of capital. An important amount of recent research has been devoted to understanding how an economy may borrow in excess and miss‐allocate credit.3 Of course, if we believe that these frictions are present and strong, first‐best policy actions should aim to undo them. But this may not be feasible, either because we are unsure about the presence, type, or magnitude of the frictions involved, or because first best policies cannot be implemented in the timeframe required. In such a situation, policymakers may have to resort to second best policies. We will address some of the roles of financial frictions in the transmission of foreign shocks in the presentation by Javier García‐Cicco this afternoon.
If we allow this culture of cynical greed to take root, it will undermine the public trust that is so critical to not just the growth but the viability of financial institutions. The leadership of financial institutions – Boards and senior management – owe a special duty of care to ensure that finance is trustworthy, socially redeeming, and economically purposeful. They must send a clear, unadulterated message, down to the last person in their organisation: “If it is not right, don’t do it. If it is not true, don’t say it.” 26. This is an area that MAS intends to engage the Boards and senior management of financial institutions on. Conclusion 27. We are making good progress in our corporate governance journey. We are now entering a new phase, and must go beyond rule reforms to create the conditions for good governance to flourish – developing a conducive ecosystem for market discipline, building up the competencies of our Board directors, and instilling a culture of ethical conduct and values. 28. I wish you all success in this important new phase of our corporate governance journey. 1  Joseph Barr, “From the Boardroom: The Role of the Professional Director”, Harvard Business Review, May-June 1976. 5. 4  BIS central bankers’ speeches

We faced the challenge to prepare and submit nine new or appropriately adjusted categories of data, out of which seven are within the competence of the NBRM, and two within the competence of the Ministry of Finance:  1/2  BIS central bankers' speeches  -real sector data - statistics of sectoral financial accounts which is actually an overview of the structure of financial assets and liabilities of individual sectors, their mutual exposure, financial flows and, accordingly, possible accumulation of risks;  - financial sector data – statistics of non-bank financial institutions (more detailed data not only for the banking system, but also for the pension funds, insurance companies, investment funds, financial companies, leasing companies), statistics of debt securities and seven financial stability indicators that enable better identification of the risks in the financial system;  - external sector data – data on the currency structure of the foreign reserves, the coordinate direct investment questionnaire and the coordinate portfolio investment questionnaire which provide more detailed findings for cross-border links and the possibility of transfer of the effects from the external shocks to the domestic economy, and  - fiscal sector data – general government statistics and data on gross debt of the general government. Aware of the challenges that the countries faced with and the need for making extremely great efforts to produce them, the IMF allowed, at the time of application for this standard, fulfillment of the dissemination requirements of at least five from the nine mandatory indicators.
Each of these boxes shed light on important and current issues pertaining to the Turkish economy. I strongly recommend that you read these boxes, which will soon be published on our website. Esteemed Guests, I would like to commence my speech by reviewing the global economic outlook, given its ongoing influence on our policies. As you all know, monetary policy developments in advanced economies were the major factor feeding into volatility in global markets in the third quarter of 2016. In this period, major central banks opted for more monetary easing, yet growing expectations of a possible Fed rate hike and uncertainties surrounding monetary policies of other advanced market central banks stopped the ongoing decline in bond yields (Chart 1). Thus, after a marked upsurge following the previous reporting period, portfolio flows into emerging economies have recently started to slow down again (Chart 2). 1 / 10  BIS central bankers' speeches  In addition to the volatility in global markets, both geopolitical developments and decisions of credit rating agencies caused domestic financial markets to fluctuate over the third quarter of 2016. In this period, Turkey attracted less portfolio flows than other emerging economies, while the Turkish lira depreciated against the US dollar and the country’s risk premium inched up. Overall financial conditions were supported by reduced tightness in monetary conditions, thanks to our policy actions, and macroprudential measures. The gradual fall in the marginal funding rate has partially passed through to loan and deposit rates while consumer loans have edged up in recent months.

In this respect, I would like to commend the ambitiousness of the European Commission’s recent Digital Finance Package and its priorities, in particular those to fight against the fragmentation of the digital single market for financial services and to address the new challenges and risks associated with the digital transformation. With regard to these risks, I think it would be appropriate for the Commission to address the complex but currently unavoidable issue of the oversight framework to be applied to critical IT service providers, including cloud service providers, and the equally important matter of the supervision of issuers and distributors of stablecoins, whether they be single or multi-currency coins. I will not go into detail on the Commission’s proposed legislation, which still requires careful examination on our part and which will, of course, have to be improved by the negotiations that are about to get underway. I simply want to say here that the regulations’ proposals aimed at critical IT service providers and stablecoins include promising provisions: for the former, a dedicated framework that does not exempt financial intermediaries from their responsibilities and their obligation to use European service providers, and for the latter, a strict supervision that involves and associates national and European authorities.