samchain/econo-pairs-v1 huggingface dataset:
In fact, central banks contribute to financial stability. But improved coordination and institutional innovations, while necessary, are not sufficient to make the euro area economy more resilient to adverse shocks. To enhance the adjustment capacity of the euro area economy, the current situation should serve as a catalyst for the resolute implementation of the necessary reforms. This would enable the Member States of the EU to fully exploit the benefits of economic and financial integration, with positive effects on growth potential and job creation in the euro area. Having said all this, we should not forget how Europe would look today without the euro. An issue that was only marginally addressed during the conference. It goes without saying that the euro area countries would be significantly worse off. Multiple crises would arise simultaneously. Currency crises would go hand in hand with banking crises and real economy disruptions at country level. These currency crises might also spill over to other countries in the region. Not to forget political tensions between countries. By eliminating contagion via the exchange rate channel, the euro has mitigated the risk of contagion stemming from national economic or financial crises. In this sense, the euro has been a very important stabilising element in difficult times. BIS Review 139/2008  3  It is therefore not surprising that many central and eastern European countries would like to join the euro area on a fast-track procedure to be better shielded from global financial tensions and crises.

Finally, one principle – that has gained much attention during the current crisis – is to keep the determination of the monetary policy stance distinguished from the management of liquidity in money markets. All these principles are captured in the ECB’s monetary policy strategy. And globalisation does not fundamentally alter these principles – which give guidance, in particular, in critical times. To weaken or even abandon these principles would undermine our commitment and credibility. And, in the end, we would risk losing orientation. Our strategy has provided a consistent and coherent framework not only for internal analysis and policy decision-making but also for external communication. Using the same framework for internal and external purposes has helped the ECB to ensure that its monetary policy remains consistent, credible and effective. One key element here is that the ECB, from the outset, has been transparent about its mandate, strategy, and decisions, as well as about what monetary policy can do and, even more importantly, what it cannot do. In this sense, expectations about transparency requirements should be in line with the actual strategy followed by the central bank. Without compromising on its mandate, the ECB has demonstrated a willingness and capacity to react rapidly to exceptional circumstances. It has taken a large number of extraordinary measures to support the functioning of the money market and interbank intermediation.
It was exacerbated by classic moral hazard – the result of past government  BIS Review 69/2007  1  interventions to limit corporate and bank failures. And it was made worse by poor disclosure, which masked the scale of the increase in external liabilities and the deterioration in the level of official reserves. The scale of the buildup of foreign currency debt was fundamental to the dynamics of the crises. Once confidence weakened, and fixed exchange rate commitments became unsustainable, the economies experienced a sharp reversal in capital flows as both residents and nonresidents sought to limit their exposure to domestic institutions and assets. This broad flight from domestic assets created conditions similar to a classic bank run. The exchange rate decline magnified concern about potential losses in the corporate sector and banking system, which led to a further shift in assets out of the country, which exacerbated the exchange rate decline. These balance sheet vulnerabilities led to a vicious cycle in which the exchange rate and financial weaknesses reinforced each other. As economies slipped toward the edge of the cliff, policymakers were left with alarmingly few options to try to contain the crisis and mitigate the damage inflicted on the real economy. Given that real interest rates were already negative, relaxing monetary policy further risked accentuating the exchange rate decline, which would, in turn, have exacerbated the problems of the banking system. But with demand already in free fall, policymakers were equally reluctant to tighten policy and risk further damage to growth.

A popular perception was that economies with strong records of growth and financial management were forced into positions of vulnerability by externally imposed programs of capital-account liberalization and then were pushed into turmoil by an unstable, even predatory international financial system. Adherents of this view tended to view the policy response to the crisis as harsh or inept or both. Time has taken some of the edge off these criticisms, but they still affect the political debate in the region today. They reflect anxieties about the balance of risks and benefits of economic and financial integration that still play an important role in shaping economic policy, even with the substantial progress achieved since the crises. I want to outline some of the principal lessons of that period, both in terms of reducing vulnerability to financial crisis and in terms of strategies for crisis resolution. I offer these with the knowledge that it is hard for anyone who was not a finance minister or a central bank governor in the region at the time to understand what it was like. As one of those involved in shaping the international response, I can say that there was a lot we did not fully appreciate about the dynamics of the crises then, and that justifies humility today in thinking about the lessons for the future.
The adjustment of costs and relative prices, albeit with some delay compared with what would have been desirable, has ultimately placed the Spanish economy in a much more competitive position. The reduction in unit labour costs has allowed virtually all of the losses in competitiveness that had built up in the first ten years of the euro to be absorbed. The process has not, however, been free from difficulties, since it was initially based, as I stated earlier, almost exclusively on job destruction. From 2010, the contribution of the adjustment in wages progressively became more prominent, a trajectory which stepped up following the 2012 labour market reform. The gains in competitiveness and Spanish firms’ greater export-geared thrust are providing for the growing penetration of our products in foreign markets, against a background of increased geographical diversification and higher goods and services exports. The marked decline in imports during these years also reflects the gains in competitiveness, although the weakness of domestic demand has likewise helped contain purchases from the rest of the world. Set against these developments, the least favourable aspect of our foreign trade continues to be the high dependence on imported energy. As a result of the foregoing, our economy posted – for the first time since 1997 – a balance of payments surplus, i.e. net external lending, of 1.5% of GDP. This trajectory will foreseeably continue over the coming years, meaning that Spain’s high level of foreign debt will be declining.

Luis M Linde: Exiting the economic crisis Speech by Mr Luis M Linde, Governor of the Bank of Spain, at a conference at the Colegio de Ingenieros de Caminos, Canales y Puertos, (School of Civil Engineers), Madrid, 18 February 2014. *  *  *  Let me first thank the School of Civil Engineers, their Governing Board and its President for inviting me to participate in this conference. Civil engineers are one of the most prestigious professional groups in our country, and their contribution over many years to the development of our economy and society has been most important. Currently, they are moreover participating decisively in the expansion abroad of our construction and engineering companies, raising them to the ranks of the international first division. In my address today I shall discuss our view at the Banco de España of recent developments in the Spanish economy and the prospects open to us to emerge from the crisis that began seven years back. I shall begin by recalling the severity of this crisis, moving next to discussing the discernible signs of recovery. Finally, I shall refer to the complexity of the current situation and the challenges ahead for us. The crisis has been of a depth and seriousness unprecedented in our economic history.
This afternoon, I would like to start by explaining the ambivalent relationship between finance and growth, and the attendant need for financial regulation. Then, I will discuss at greater length what has been done, with an initial assessment of our achievements. Lastly, I will consider our challenges for the future. I. The ambivalent relationship between finance and growth. I would like to say right away that finance is a remarkable instrument for economic progress, decisive in the birth of European and then global capitalism since the 16th century. In order to support trade initially, then investment, and innovation today, – as well as growth –, it is naturally vital to create the right conditions for financing the economy and for sound financial institutions. 2 1/7  BIS central bankers' speeches  Many academic studies2 confirm that finance makes a positive contribution to economic growth because it reduces transaction and information costs and leads to a better allocation of capital. It is estimated for example that between 1960 and 1995, some developing countries would have accelerated real per capita GDP growth by an additional 0.4 to 1 percentage point per year if their financial systems had been more developed.3 Some authors even go as far as positing that it would be preferable to let market forces prevail without worrying about the emergence of bubbles or financial imbalances which would be absorbed by themselves. This would mean that financial crises would just be the price to pay in the short term for stronger medium to long-term growth.

New forecasts have not been prepared for this monetary policy meeting, but we have assessed new information against the forecasts we presented in March. Chart 3: International inflation has slowed Inflation among trading partners is also high but has eased in many countries in recent months. Gas and power prices have come down from the very high levels seen last year. Problems at some US and Swiss banks led to large movements in financial markets in March. Global equity indexes have risen since the March Report, and bond risk premiums have fallen. US and European households and firms appear to be finding it more difficult to obtain loans. Chart 4: The krone has depreciated High inflation has prompted central banks in many countries to raise policy rates quickly and more than in Norway. The Norwegian krone has depreciated in recent months and  1/2  BIS - Central bankers' speeches  is now at its weakest level since the onset of the pandemic in spring 2020. The krone is weaker than we projected in March. Activity in the Norwegian economy is high. Household consumption has continued to increase despite high inflation and higher interest rates. The employment rate is high and employment has risen further so far this year. The labour market is tight. Economic growth has nevertheless slowed recently. Unemployment moved a little higher in April, and the number of job postings has declined. Chart 5: Wage growth has risen The tight labour market has led to a pick-up in wage growth.
In my own view, large complicated government units are probably not possible in Thailand unless we get some fantastic new government which is very sophisticated and lasts a very long time, say, 10 or 20 years, a prospect, which presently one should not plan on. In this case, one should then design government units to be small independent units, independently managed, and the governments that come in execute their mandate through budget allocation and legislative changes where necessary. Interestingly, all over the world for a very long time, the concept has been that civil servants have a lot of authority and are not profit-oriented. One should make sure that they have tenure and are well compensated with pensions after they leave, otherwise they might try to stock up some assets for their later life. The philosophy is going in the opposite direction everywhere now. Civil servants are powerful and important and therefore they should not have tenure. For that reason one must make sure that civil servants perform by giving them only limited term contracts, and they will have to perform responsibly and efficiently to get a new contract. I am inclined more towards the latter as one can never make sure of hiring or promoting the right person, and therefore one should plan on an easy change of personnel to get the best results. Let me make a controversial statement on the platforms of the various political parties in terms of spending more and taxing less.

But in financing, it is quite obvious that the SMEs with NPL have to get some more money or some guarantees, and one or the other must come from the government. This happens to be the one area where, for various reasons, there is the least progress. The new government must take a look at this immediately and bite the bullet and adopt what might well be necessarily a fairly costly solution. Another important or strategic sector of the economy is probably tourism with Thailand well-situated in the air routes of the world. But people don’t want to spend 50 weeks in a year or half of their life, whichever the case, and then spend time in an inhospitable location. We have to clean up, especially the visual environment of Bangkok, and the major historical sites of Ayuthaya, Sri Satchanalai and Chiengmai. Putting the electric power line for these cities underground, for instance, would be a most expensive investment, but worthwhile, and the new government must immediately begin to adopt long-term solutions like these. The last area of the private sector which I would like to talk about today is the Stock Exchange of Thailand. The Stock Exchange of Thailand lacks sophistication. It has only just begun to allow short selling, which is essential to allow liquidity in a controlled manner.
In this dynamic environment, the scope of the Islamic finance business has expanded from simple retail and trade financing to include private equity, project finance, sukuk origination and issuance, as well as fund and wealth management products. Today, the total global size of the Islamic financial assets has surpassed more than 1 trillion US dollars. There are now more than 600 Islamic financial institutions operating in 75 countries. The vision for the Islamic financial system in Malaysia was articulated in our first Financial Sector Masterplan that was launched in the year 2001, in which the plans for building the foundations for the Islamic financial system were outlined. This included strengthening and diversifying the financial intermediaries in the financial system, building and developing the financial markets, and enhancing the regulatory supervisory, Shariah and legal framework. Ten years later, in 2011, a new Financial Sector Blueprint was launched, charting the path for Islamic finance to transition to become increasingly internationalised, and thus to become more integrated into the mainstream of the global financial system. Whilst Islamic finance has all the ingredients and the potential to meet the needs of the global economy, the channelling of funds to productive activities in Islamic finance today is still largely being carried out through non-participatory contracts, that includes the mark-up sale (Murabahah) and the lease-based (ijarah) structures, which continue to remain essential to cater for financing trade and the purchase of assets. Such contracts are similar to lending instruments which expose the Islamic financial institutions mostly to credit risk elements.

by opposing techno‐utopians and techno‐pessimists, or proponents of “degrowth” to proponents of “green growth”) is not constructive Lastly, given the well‐known limitations of GDP as a measure of well‐being, it is also important to bear in mind that the definition of growth itself is bound to evolve in the future. For instance, as recently stressed by Professor Nicholas Stern and co‐authors in an IMF working paper,17 we should move from a “flow‐ 16  See Keyßer, L.T., Lenzen, M. (2021). 1.5 °C degrowth scenarios suggest the need for new mitigation pathways. Nature Communications 12, 2676. https://doi.org/10.1038/s41467‐021‐22884‐9 17 Bhattacharya, A., Ivanyna, M., Oman, W., Stern, N. (2021). Climate Action to Unlock the Inclusive Growth Story of the 21st Century. IMF Working Paper 21/147. 7  centred focus on GDP” to a “stock‐centred focus on a broad definition of capital”; “the conceptual framework used by policymakers must treat planetary boundaries – notably climate overshoot – as a hard constraint”. They also propose to establish an annual carbon budget at the national level which would be binding. In short, if we are to hold a serious discussion about what an ecological transition means for central banks, including the impact it will have on output and other key macroeconomic variables, we need to be able to engage in a responsible and scientific manner on these difficult questions, rather than sweeping them under the rug.
31.10.2022  Remarks at the Conference “Building resilience in uncertain times: safeguarding financial stability, encouraging investments” 2022 Conference of Mediterranean Central Banks/Banco de España, Central Bank of the Republic of Türkiye, OECD and European Institute of the Mediterranean Pablo Hernández de Cos Governor  Good morning ladies and gentlemen. It is a great pleasure for me to welcome you all to this Conference on Building resilience in uncertain times: safeguarding financial stability, encouraging investments. We could not have asked for a more delightful setting for this Conference than this beautiful city of Istanbul. Let me start by thanking our colleagues from the Central Bank of the Republic of Türkiye, the OECD and the European Institute of the Mediterranean (IEMed) and, in particular, Governor Kavcıoğlu, Ambassador Florensa and Achraf Bouali for jointly organising this Conference. I would like to especially emphasise the decisive commitment of IEMed, thanks to which we are now opening the seventh edition of this Conference, which is becoming a reference among the fora for dialogue and cooperation in economic and financial relationships in the Euro-Mediterranean region. The last edition of this conference was held in June 2021 in a fully virtual format, as we were in the middle of the pandemic. On that occasion, an incipient recovery was taking place and there was optimism about the outlook, given the good progress made with vaccination. However, almost a year and a half later, even if we have returned to a face-to-face event, we are once again in a highly uncertain environment.

See, C. Toloba and J. M. del Río (2020) “The outlook for the digitalisation of Spanish banks: risks and opportunities”, Financial Stability Review, Issue 38, Spring. 3  necessary.3 It is precisely for this reason that a few years ago the European Banking Authority came up with a set of Recommendations aimed at cloud outsourcing activities.4 This example proves once again the fundamental role that central banks and financial authorities should play in the current digital context, including developing a proactive stance towards digitalisation with a view to ensuring that the latter can take place in an orderly manner. On the one hand, central banks need to boost their understanding of the changes that the industry is now experiencing and how these are likely to impact its present and future structure, and also to identify potential sources of risk for financial stability. Enhancing stakeholder engagement appears to be a cornerstone for achieving this objective. Furthermore, they must be ready to move ahead in deploying tailored, swift and proportionate responses as needed. A very good example of this is the work that both the BCBS and the FSB are steering in terms of assessing the vulnerabilities of crypto-assets and the potential practical strategies to address them in a cohesive way across borders. In addition, financial authorities may wish to show greater ambition and explore how emerging technology can help enhance the way they fulfil their supervisory, oversight or market conduct tasks, to name just a few.
42  Philip Coggan (2012): Paper Promises: Debt, Money and the New World Order, Penguin, London. 43  Many attempt to measure whether institutions are fulfilling their societal role, which is a difficult exercise. As a nation, Norway scores high. Individual institutions are also measured. If any of us has preconceived notions, at least mine bear out. The institutions I thought would be at the bottom of such lists are at the bottom, and vice versa – those I thought would be at the top are at the top. But this is not a static situation. Movement is possible – in both directions. 44  The expertise must of the highest standard. A central bank’s competence does not always translate well into performance. There are two reasons, in particular, for this state of affairs: First, the Bank is a monopoly and there is no domestic benchmark. Second, it has a potentially very generous budget, since it prints its own money. Even though Norges Bank ranks high in terms of reputation and confidence, it may quickly slip into a state of complacency and then mediocrity. It is only the Bank itself that can establish the mechanisms that will prevent such a development. BIS central bankers’ speeches  11  3. Leaders must be aware that the institution will be held accountable – it must practice transparency as a principle. 4. Leaders must utilise institutional memory and staff experience – they must learn from history and manage their wealth – their cultural heritage.

However, there is a connection between “what is a central bank” and “who is the central banker”. 8  BIS central bankers’ speeches  After the First World War, inflation and large-scale imports of goods caused a loss of confidence in the krone, which dropped considerably in value. When Nicolai Rygg became Governor of Norges Bank in 1920, he started work on putting the monetary system in order. In his view, the central bank was obliged to bring the gold value of the krone back to its prewar level – referred to as par policy.33 However, this ambitious aim entailed years of strong deflation and blight before the gold value was achieved in 1928. For 90 years, historians have discussed par policy. My contribution will have to be a presenttime analysis with the inherent scope and limitations.34 Was this a good policy? There is no doubt that the motives were good. Rygg considered that Norges Bank had a moral obligation to keep its word, as it had done a century earlier, but was also of the view that this was rational in the longer term. There is also no doubt that Rygg adhered to the rules of the game. Par policy had the support of the political authorities. Nevertheless, an action must also be assessed by the outcome. The central bank was blinded by the old gold content as a guideline for monetary policy and implemented a policy that inflicted large-scale real economic costs on the country.