samchain/econo-pairs-v1 huggingface dataset:
The implied volatility has declined from a peak of 9.7% to about 3.7% currently. The influence of offshore market activities and its damaging spill-overs to the ringgit exchange rate have subsided, consistent with the significant decline in transaction volume in the NDF market. On the other hand, foreign exchange (FX) transaction volume in the onshore market has been sustained with improving transaction costs, facilitating business transactions for all market participants. The domestic bond market has also been more stable and the risks of significant sell-offs from non-residents and other major outflows have reduced. Non-residents now hold a more manageable level of 26.4% of total government bonds outstanding, down from the high of 34.7%. During the early part of 2017, a period of significant capital outflows, the spike in bond yields was short-lived while the ringgit exchange rate remained well supported. This was due to the net export proceeds conversion rule that helped to balance the flows. Short-term positions by nonresident investors exited the market, and the majority of non-resident holdings now comprised of longer term investors, providing stability and depth to the domestic bond market. All these were made possible with the measures introduced by the Financial Market Committee (FMC) and Bank Negara Malaysia (BNM). It was part of an overall strategy to deepen and broaden the financial market. The measures removed the external destabilising influence of offshore to the onshore market, while at the same time creating a conducive environment for the domestic financial market to develop.

This is particularly the case for prices for domestically produced goods influenced by world market prices. The fall in prices for imported consumer goods is not solely attributable to exchange rate developments. Clothing prices have exhibited a falling trend over the past few years. In October 2003, clothing prices were 13.7 per cent lower than in the same month one year earlier, and almost 30 per cent lower than in 1995. In addition to low external price inflation for these goods, lower tariffs for clothing have translated into lower consumer prices. The removal of quota regulations has also led to a shift in clothing imports away from high-cost countries to countries with considerably lower production costs. The same trend has been observed for the audiovisual industry. Since the mid-1990s, prices for audiovisual equipment have fallen markedly. In October, prices for these goods were 8.5 per cent lower than one year earlier. International producers have moved production to low-cost countries, allowing them to reduce prices charged to Norwegian importers. In addition, new technology and intensified international competition have exerted downward pressure on prices. Global economic growth has been considerably weaker than expected. Changes in the economic outlook are clearly reflected in interest rate expectations. In the US, these expectations have been adjusted downwards considerably since summer 2002. At that time, market participants expected the key rate in the US to be increased to about 4 per cent towards the end of 2003.
The second story was the rise and fall of three cross-border banks operating on the basis of EU legislation (the European “passport”). This story was much more unique, as it was part of the first banking crisis in Europe since the EU single market was formed in the early 1990s. This framework, along with the prevailing conditions in international financial markets that provided for ample and cheap credit, facilitated the cross-border expansion of the newly privatised Icelandic banks. In less than five years, from the end of 2003 to mid-2008, the combined balance sheet of these banks went from under two times GDP to almost ten times GDP, topping other small European countries with international financial centres, as can be seen on Figure 1:  BIS central bankers’ speeches  1  Towards the end, around two-thirds of the combined balance sheet of the three cross-border banks was denominated in foreign currency. On the liabilities side, the share of FXdenominated debt was actually higher, as can be seen on the right side of the slide, with almost half of the financing in the form of FX deposits and other short-term FX financing. The FX part of the balance sheet therefore had a significant maturity mismatch. However, there was a very limited safety net of the type we have in a national setting, in the form of liquidity provision and lender of last resort (LOLR) to back it up.

The euro area-wide unemployment rate has fallen to 8.7%, compared with levels close to 13% at the height of the crisis, although there are substantial cross-country differences, ranging from an unemployment rate below 4% in Germany to 20% in Greece and 16.5% in Spain. Moreover, a balanced pattern of economic growth can be seen. Adding more recently to the momentum of private consumption, the sole engine of growth of the start of the recovery, has been the dynamism of business investment. Low financing costs, the sound performance of final demand and high capacity utilisation are enabling investment to pick up to pre-crisis levels. However, factors persist that might restrict medium-term investment projects, including most notably low potential growth expectations, the adjustment of balance sheets and the correction of high corporate debt levels still under way, and the problems that are creating political uncertainty. Euro area exports, boosted by more buoyant global trade, are also contributing to the momentum of activity. And this despite the notable appreciation of the euro since last spring. Undoubtedly, a significant factor underpinning the recovery has been the maintenance of an expansionary monetary policy, which has allowed financing conditions to be relaxed, contributing to the upholding of both private consumption and the recovery in investment. Specifically, estimates by the Banco de España suggest that the series of monetary policy measures adopted since mid-2014 might account for close to half of the nominal GDP growth in the euro area from 2015 to 2017.
The faith that the public places into the central bank imposes a constant obligation on the central bank to honour this trust and fulfil the promise of stable money. The bond of trust between the public and its central bank can be seen as something like a credit relationship. Indeed, the term “credit” is Latin for “he believes”, i.e. it expresses the hope and expectation that initially one-sided trust will be reciprocated and returned in the future. Trust is given “on credit” but in turn it is based on credibility or trustworthiness. If you allow me to jump from these etymological reflections straight to the mundane tasks of central banking in practice I should like to stress the following. In the case of European Monetary Union the promise of maintaining prices stable over the medium term - and thus maintaining the value of money - is built on solid and credible institutional foundations. So far in its young life the European Central Bank has lived up to its promise and there is every reason to believe that price stability in the euro area will continue to be maintained over the medium term. Long-term bond yields and surveys of inflation expectations continue to indicate a high degree of confidence in the ECB’s ability to deliver on its primary objective over the medium term. This is what ultimately counts. For this achievement the ECB can deservedly claim some “credit”, if I may say so.

The Treaty was ratified by the parliaments and governments of all Member States of the European Union and in some cases endorsed by referendum. Thus the delegation of European monetary policy to the ECB is endowed with full democratic legitimacy. This bond of legitimacy is a crucial aspect of sound institutional foundations for monetary policy. There is no doubt that in order to be successful over the longer term, the ECB as the guardian of price stability - like any institution in a democracy will have to win and maintain the trust and support of the European public. It can and should be held accountable for fulfilling its mandate. This mandate is clear, but it is also limited. It needs to be understood what monetary policy can be expected to deliver, but also what it cannot be expected to achieve. This is particular important in the case of the European Monetary Union, which not only delegates the authority for monetary policy to an independent central bank but which also severs the traditionally close link between the currency and the nation state. Historically, currency jurisdictions and national borders have tended to coincide, at least in more recent times. This reflects the fact that the right to issue money has been seen as a key attribute of national sovereignty. Thus monetary union cannot be regarded as just a small and innocuous step of a primarily technical nature.
This period would entail rather unpleasant outcomes such as outflow of capital, depreciation of EME currencies, contraction of domestic and foreign credit, rise in interest rates (some of which were engineered by the central banks to dampen inflation and outflows). As a result, the growth in EMEs is slowing down and there is now a clear shift of market sentiment on the prospects of the EMEs in favour of the US and, to a lesser extent, Europe and Japan. 4. The question I hope this Conference would discuss in the next two days is in what way and to what extent EMEs would be affected by the exit of QE and normalisation of US interest rates in the next 12 to 24 months. This is a difficult question because it is far from easy to ascertain the magnitude of the dollar carry trade that found its way to EMEs in the first place and what impact such carry trade would have on EMEs when it unwinds. Another related question is what kind of responses or measures that the EMEs need to take to mitigate the risk of shocks or turbulence during this period. These are very important questions not only for the EMEs but also for the US and other advanced economies. This is not because the advanced economies need to be kind to the EMEs but because there is a feedback loop that could possibly transmit negative shocks from the EMEs to the advanced economies.

In November 2021 the NGFS published an important report on climate-related litigation[15] which seeks to raise awareness about the growing source of litigation risk for public and private actors not convincingly supporting the climate change transition. Understanding the risks arising from climate-related litigation is clearly crucial for central banks and supervisory authorities, and the NGFS is continuing to monitor this field carefully. It plans to publish a further report next year with an update on the many developments since 2021. I hope I am leaving you with the right impression. The ECB is not an environmental activist, but rather a prudent realist. It is our job to point out risks, whether they are macroeconomic, macroprudential, microprudential or related to litigation, and to ensure that the financial sector takes them duly into account. Before I finish, let’s turn back to the brave fight of Vanuatu. You cannot blame Vanuatu’s president for seeking to defend the rights of countries most exposed to the ongoing climate and environmental crisis. Nor can we blame him for wanting to impose obligations on those most responsible for driving the crisis. Vanuatu’s mission is a stark example what the fight against the climate crisis is about. It underpins the task we have on our side. Europe has realistically no other choice than to deliver on the objectives of the Paris Agreement. If we waiver, the costs will only increase both in a moral and financial sense. Speaking as a  European citizen, I would like us to be ready for the challenge ahead.
In the central scenario, the projection that activity will accumulate several quarters of contraction is maintained. Accordingly, the activity gap will turn negative by the beginning of 2023, flatting out until the end of the policy horizon, which is necessary for bringing inflation down towards the target. In the central scenario, GDP will grow 2.4% in 2022, then fall between –1.75% and –0.75% in 2023 and recover between 2% and 3% in 2024. This upward revision for 2022 responds to actual data, while the bulk of the downward correction for 2023 and 2024 responds to the new assumption for trend growth. The projection continues to assume that consumption and investment will post negative variation rates in 2023. This reflects a weakening of the labor market, pessimistic household and business expectations, a high real exchange rate, and tight financial conditions for all credit categories. On the fiscal side, it considers expenditure in line with the approved budget for 2023, which follows a consolidation path over the following years (table 1). The current-account deficit will narrow in the coming quarters, as the economy restores its balance between savings and investment. The drop of transportation costs from its peak will also contribute. In the central scenario, the current account will close 2022 with a deficit of 8.7% of GDP, then will decline to 4.9% in 2023, and to 4.1% in 2024. The boost that the Chilean economy will receive from abroad is downgraded from our September estimate.

Source: Central Bank of Chile. Figure 4 Cost pressures a) Transportation costs and bottlenecks (1) (standard deviations)  b) IMCE: Cost expectations (1) (2) (diffusion index)  Manufacturing  100  Freight/amount imported Supply Chain Pressure Index (2)  5  Construction  Trade  4 3  80  2 1 60  0 -1 -2  10  12  14  16  18  20  40  22  17  (1) Standard deviations from average. (2) Global Supply Chain Pressure Index. Sources: Central Bank of Chile based on microdata of Chile's National Customs Service and New York Federal Reserve. 18  19  20  21  22  (1) Value above (below) 50 indicates expected expansion (contraction). (2) Dashed horizontal sines show historical averages between January 2004 and November 2022. Source: Icare/Universidad Adolfo Ibañez. 11  Figure 5 Activity indicators (index, 2019Q3 = 100, deseasonalized series)  GDP  110  Non-mining GDP  100  90  80  70 15  16  17  18  19  20  21  22  Source: Central Bank of Chile.
The world economic slowdown, with the attendant rise in credit risks, the deepening problems in Argentina spreading to its banking system, and the events of 11 September, creating temporary liquidity strains in New York and elsewhere, have all posed serious risks to the stability of the international financial system. So far, the response has been encouraging. The capital position of many of the larger financial players is stronger than in previous cycles. There seems to be a more sophisticated approach to differentiating between sovereign risks in the emerging markets. And the hugely impressive efforts of staff, together with the largely successful operation of contingency plans, and the flexibility of the US monetary authorities, saw us through the worst of the aftermath to last autumn's attacks without a serious crisis emerging. The latest topic of discussion in financial circles is, of course, the implications of the collapse of Enron. The case raises a host of issues for firms and policy makers. Some of these relate to accounting standards; some relate to the way in which the auditing profession organises itself; and some relate to corporate governance issues more generally. There are also some issues about the scope and operation of the financial regulation net. There have also been questions raised about the implications of the collapse for health of the financial system as a whole, which is very much of interest to the Bank, given our responsibility for systemic risk. From the current perspective, these implications appear limited, however.

Now I have the privilege of working with leaders like Roger Ferguson, the Vice Chairman of the Federal Reserve, and Jerry Hawke, the U.S. Comptroller of the Currency. Their hard work, and the hard work of the other supervisors participating in the discussions, have strengthened the quality of the capital rules. They and others have helped to ensure that the New Accord will be flexible, forward-looking, and fit for the service of twenty-first century banking. The process of revising the rules has involved formidable challenges. That should come as no surprise. Capital requirements make up the foundation of the regulatory framework. Even more importantly, capital is a key ingredient to the health of the banking sector. The changes we are proposing to ensure that banks hold adequate capital will have broad implications not just for the banking sector, but also for financial markets and the broader economy. But the new Basel Accord is about more than just capital, it is also about keeping a level playing field and about reinforcing incentives to foster sound risk management though three reinforcing pillars: risk sensitive minimum capital requirements, coordinated supervisory review, and enhanced market discipline through greater transparency. Supervisors and risk managers know that a bank’s management and controls make up its first and most important line of defence. The New Basel Accord seeks to capture the relationship between capital adequacy and risk management.
15 June 2021  Remarks for AFME/OMFIF European Financial Integration Virtual Conference Thank you for inviting me to deliver this address for your conference today. The theme of the conference – European financial integration – is both a timely and timeless one. On the one hand, the pandemic has further underlined the benefits of previous initiatives related to financial integration in Europe, most notably the banking union and its core components. On the other hand, the past year has also refuelled longstanding debates and discussions on the need for European further financial integration. Yet a prerequisite for a successful and enduring financial integration at the European level is for Europe itself to be aligned with global financial standards in order to achieve a truly global level-playing field. As such, my remarks today, which are primarily in my capacity as Chair of the Basel Committee, will focus on the crucial importance for Europe to implement the Basel III framework in a full, timely and consistent manner. Financial stability is a global public good. In a world with integrated financial markets, preserving global financial stability requires global minimum standards that are applied consistently and in full by all jurisdictions. This was indeed the motivation for initial Basel standards in the 1980s following the Latin American debt crisis. And it remains just as important today. Covid-19 has highlighted the clear benefits and importance of having a global and prudent set of regulatory standards for banks.

It also finds that potential deviations from the globally agreed Basel III reforms – for example, with regard to the output floor – would significantly dilute the benefits to the real economy. 2/3  To sum up, there are clear and significant benefits to all from implementing the Basel III standards in a full, timely and consistent manner in Europe: -  For households and businesses, it would reduce the probability and impact of future banking crises, and provide banks with the capacity to maintain lending in both good times and bad. -  For European banks, such an implementation would shore up their resilience by fixing some of the outstanding frailties in the banking system. It would also avoid any stigma and negative signalling to financial markets about their noncompliance with global standards. The pandemic has further reminded us that the benefits of a resilient banking system should not be taken for granted. -  For policymakers, it would help safeguard global financial stability and avoid the risk of a harmful “race to the bottom” in bank prudential standards. And it would serve as an important input towards greater financial integration in Europe. Europe has a strong track record of playing a lead role when it comes to multilateralism and sticking to global agreements. Now, more than ever, it is crucial for Europe to continue to demonstrate these traits, including with regards to globally agreed prudential standards.
The solution of the energy situation at the soonest time possible will provide positive impacts on the Albanian business, the soundness of public finances, the country’s sustainable economic development and the macroeconomic stability. Concluding this part, I would like to point out some other issues, which I think should be encompassed in the priority list of the country’s medium-term economic and financial development. The Albanian economy is leaving the status of a transition economy and is approaching to that of a developing economy. This qualitative step requires further deepening of structural reforms, enhancement of effectiveness of development policies and enlargement of the country’s absorbing capacities in terms of fostering the Albanian economy competitiveness at regional context and beyond it. I would highlight the constant trade deficit deepening, as an issue of the present and the future. Even though the current cross-border position of the country is not problematic, being materialised in such indicators as external debt, foreign reserve level or overall balance of payments position, I would point out that the rise of exports is not sufficient, particularly in the context of high reliability of the Albanian economy on remittances. The relatively high current deficit, around 7.6 percent of GDP, is another argument in this regard. The latter one, also in  2  BIS Review 80/2007  the presence of a fiscal deficit, increases our economy’s exposure and makes necessary the provision of foreign currency inflows of a more steady nature.

Experience-sharing sessions can also be organized for successful members to share their experiences in achieving cost efficiency and productivity improvements. As important as achieving cost efficiency is the need to raise the level of value creation and to find new areas of growth. This will require shifting resources to new areas of competitive advantage. In striving towards long-term competitiveness, SMEs should adopt best practices in their governance and risk management processes. An aptitude for hard work and prudent  4  BIS Review 90/2008  practices, the agility to adapt to changing conditions, perseverance and entrepreneurial skills and the ability for reinvention € these are the qualities that will enable SMEs to ride through the near term challenges and allow them to grow and enhance their contribution to our economy. Ladies and gentlemen, Today's seminar provides a platform for SMEs to widen their knowledge on the numerous financing arrangements offered by the banking institutions. Take advantage and benefit from this opportunity. On this note, I would like to congratulate the Association of Banks in Malaysia for organising this important seminar on "Enhancing SME Awareness on Access to Financing". I wish you a productive and successful seminar. BIS Review 90/2008  5