samchain/econo-pairs-v1 huggingface dataset:
Given the aim of attaining real convergence over time, accession countries will have to devote significant public resources to funding investment. However, candidate countries’ weighted average public deficit amount to 3.6% of GDP in 2001. The fiscal consolidation currently planned by some accession countries is welcome and likely to require sizeable expenditure cuts or tax increases. Looking ahead, accession countries will have to implement fiscal consolidation very credibly with a view to avoiding the risks associated with the existence of high “twin deficits”, i.e. fiscal and external. –  Fourthly, a sound and efficient banking and financial system is key. Significant progress has been made over the past few years in rehabilitating the banking sector and encouraging foreign ownership. The latter has also contributed to greater integration into the EU financial system. Nevertheless, adapting the legal and regulatory framework is a process entirely in the hands of the accessing countries. The intermediation role of the banking sector remains fundamental for the efficient use of capital and sustained growth. Progress in corporate governance, the enhancement of the legal and supervisory frameworks that support the banking sector, and an efficient fight against money laundering, are also crucial. These improvements are conducive to achieving the macroeconomic objectives of the accession countries. –  Fifthly, central bank independence is of the essence. It is an integral part of the acquis communautaire, which is laid down not only in national legislation but above all in the Maastricht Treaty.

For today’s purposes shocks are new, unanticipated developments which are clearly distinguishable from more routine developments. As an MPC member I want to try and bring out how I’ve been thinking about each shock in terms of the impact on demand or supply in the economy and the time frame over which these impacts persist. Demand being what we actually observe in terms of output, income and expenditure. Supply being more about the capacity of the economy. In terms of inflation, if a shock pushes up demand relative to supply then inflationary pressures are likely to build. Similarly if an unanticipated development pushes up supply relative to demand then inflationary pressures will subside. Back in February I focused on Brexit, the coronavirus pandemic and energy prices as three major shocks which were working through the economy. Today I want to cover four developments since then: the Russian invasion of Ukraine, the fall in UK labour market participation, UK fiscal policy and financial market turbulence. All four of these shocks matter to differing degrees to the economic outlook and to our policy response. Four shocks My February speech was two days before Russia began its illegal invasion of Ukraine. Today is Day 225 of the ensuing war and over that period global energy prices (as well as food and other prices) have risen further and also been highly volatile, particularly in the case of wholesale gas prices.
This is not driven by any ideological design but we have always been careful to ensure that policy prescriptions fit our economic, legal and operational circumstances. Some of the policy approaches that have been our practice are only recently being seriously considered by the global community. A good example is capital controls or now more elegantly known as capital flow management measures. Our approaches, while sometimes can be considered as ‘different’ are premised on several considerations. First, is that we considered financial stability risks in our monetary policy decisions. While moves to formalise this as part or within the broader context of monetary policy frameworks have been a more recent phenomenon in the aftermath of the recent crisis, Malaysia has always been vigilant against the risks of financial imbalances. We have looked into this aspect for as long as I can remember. In 1992, for instance, the Bank had already introduced administrative limits, or macro and microprudential measures as it is known now, to address the risks of financial imbalances arising from specific sectors of the economy. Back then, limits on hire purchase loans and guidelines on credit card operations were put in place as complementary measures to the tighter monetary policy stance of the Bank. Even since then, financial stability has remained an important mandate of the Bank. This mandate was reinforced with the introduction of the Central Bank Act in 2009, which established Bank Negara Malaysia as the financial stability authority for Malaysia.

We recognised much earlier on that the inflation targeting framework is not well-suited to our domestic conditions as it can compound the risks of unfettered capital flows. Instead, we believed that destabilising capital flows need to be effectively managed to ensure orderly domestic conditions. It did not help that some economies even hosted illegal NDF activities that had grave spillover implications on neighbouring economies. The fact that multilateral institutions are oblivious to these damaging consequences to some of their member countries is very disquieting. A further point is the dangers that can arise when inflation targeting inappropriately shifts the burden onto monetary policy to solve problems that in reality, require much broader policy responses on the fiscal side. When much needed actions are postponed, it has important consequences for our long term growth potential. Inflation targeting framework falling under heavy scrutiny As it turns out, our choice of not conforming to the norm was not in vain. Inflation targeting is now under scrutiny as its merits are debated widely. Many of these discussions centered on the waning effectiveness of the framework and the need for additional policy instruments to make the framework effective. The sequence of events leading up to the Great Financial Crisis raised the argument that an exclusive focus on achieving the inflation target could cause policymakers to overlook other vulnerabilities, such as credit and asset price bubbles. Delivering on inflation targets itself has also presented new challenges.
Consequently, our dialogue did not end with the publication of the Basel II text this past June. Indeed, it cannot cease, because, as I mentioned, one of the Committee’s underlying goals is to develop a framework that can adapt to future advances in risk management practices. Supervisors are committed to monitoring and discussing these developments with the industry. The Committee will make adjustments to the framework to reflect the state of risk measurement and management when necessary. I am pleased to say that the Committee is already honouring this promise. One topic that we are studying carefully concerns the treatment of “double default.” Some representatives of the industry believe that Basel II takes an overly conservative approach to the risk of loss associated with exposures covered by guarantees: they suggest that the risk of both a borrower and a guarantor both defaulting on the same exposure is lower than the risk of just one party defaulting. The Committee believes that the new framework should recognise double default effects, and a working group is currently considering all of the implications, including those associated with measuring the effects, before we agree on a solution. We remain dedicated to finding a sound treatment of double default prior to the implementation of the new framework. Other groups are discussing potential improvements to Basel II’s treatment of certain trading-related exposures.

Jean-Pierre Roth: Impact of the global crisis on Switzerland Introductory remarks by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the Schweizerisch-Deutscher Wirtschaftsclub, Frankfurt am Main, 2 March 2009. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  What started as a financial crisis has now become a global economic crisis. Although the Swiss economy was in a very sound state before the crisis set in, Switzerland’s standing as a financial centre, its real economy and its public finances have all been strongly affected by the global turmoil. Recovery will depend largely on the development of the US economy. Despite having reached worldwide proportions by now, the crisis was not triggered by globalisation itself. Rather, it is the result of a lack of discipline in the industrialised nations. Monetary policy today must contribute to the stabilisation of the financial system and the real economy without losing sight of its principal task, which is to maintain price stability. BIS Review 24/2009  1
The recovery in global economic activity that started on the back of the historically large fiscal stimulus packages launched by advanced economies contributed to the improvement of global risk perceptions and normalization of financial markets. Readings on economic activity and global financial system in the first quarter of 2010 point out that the recovery is ongoing. However, soaring budget deficits – especially in advanced economies – reach levels of concern, problems across credit markets linger, and unemployment rates continue to remain elevated, all suggesting that it would take a long time for the global economic problems to be resolved permanently. Moreover, ongoing uncertainties regarding the exit strategies from unconventional monetary and fiscal measures continue to pose risks on the sustainability of the recovery. 5. It is observed that advanced and emerging market economies started to recover as of the second quarter of 2009, mainly on the back of expansionary monetary and fiscal policies implemented worldwide and on inventory accumulation mostly in advanced economies. Despite positive signs of recovery in the global economy, high unemployment rates in advanced countries, primarily in the USA and Euro Area, still persist. With global economic growth mainly based on expansionary monetary and fiscal policies temporary in nature and the fact that unemployment rates remain currently high and oil prices re-started rallying, the global economic recovery will likely to be slow and protracted.

It is my pleasure to welcome you to Malaysia for this 13th Annual Conference that is being organised by the Fixed Income, Money Market and Derivatives Association of India and the Primary Dealers Association of India. We are most pleased to host this conference here in Kuala Lumpur. The theme of this conference, “Asian Money, Bonds and Derivatives in the New Global Economy”, is a relevant topic to be discussed in this period of transition to an increasingly multipolar world, in which Asia together with other emerging regions will have an increasingly more important role. Asia’s potential and regional integration While this recent global financial crisis has provided us with challenges, it has also seen the resilience of Asia in weathering a number of major shocks in the international financial markets. Asian financial systems have demonstrated the capacity to continue to function and to meet the demands of its significant investment requirements. Moreover, the trend towards greater regional financial integration will provide for a more effective and efficient channeling of the sizeable surplus funds to such activities within the region. This increased intra-regional economic and financial activities is already taking place. The economic integration is supported by the strong demand from the growing middle class Asian population, which is projected to reach 3.3 billion by 2030. The intra-regional trade in Asia now represents more than 50 percent of total trade in the region, increasing from 32 percent in 1995. Intra-regional investment activities have also been on a rising trend.
Our current forecast assumes, for instance, that there will be gradual increases in the repo rate over the coming period. This new assumption does not in itself have any significance for the policy conducted. However, it makes it easier to evaluate our forecasts as they become more realistic and it is easier to compare them with others’ forecasts. It is also important to know this assessment to understand our communication. If the forecast shows inflation as being lower than two per cent a couple of years ahead, this is no longer a reason to cut the repo rate. It may instead mean that there is reason to raise the interest rate at a slightly slower pace than the market is expecting. A further step in our method of making forecasts could be to make our own forecasts for interest rates, instead of using market expectations as a basis. This would require a number of changes in working methods, both for those making forecasts and for us Executive Board members. Personally, I think this would be a natural progression and it is a possibility we are considering. It is not only the inflation forecasts we examine when formulating monetary policy and considering how to set the interest rate in future. Our policy is flexible in the sense that we also look at how the economy as a whole is developing. We have the ambition, within the framework of our price stability task, of also contributing to stable development in production and employment. How do we do this?

Thomas Jordan: The Swiss franc – a success story Address by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the launch of the book Der Schweizer Franken – eine Erfolgsgeschichte (The Swiss franc – a success story), Zurich, 3 October 2012. *  *  *  Ladies and Gentlemen, allow me to begin by welcoming you all to the launch of the book Der Schweizer Franken – eine Erfolgsgeschichte. Since this book was commissioned by the Swiss National Bank, I would like to take this opportunity to say a few words as to how it came about. After I have finished, first Hans-Peter Thür, publishing director of NZZ Libro, and then Professor Baltensperger, the book’s author, will speak to you. After their comments, and before we close this event with a standing lunch, you will have the opportunity to ask questions. The German theologist, Hans von Keler, 1 is said to have commented “History is more than what has already happened; it is the layers of the past beneath our feet, the ground on which we lay our foundations”, and it seems to me to be particularly fitting for today’s book launch. Institutions do not just fall from the sky – they are created by people. Switzerland’s present monetary and currency institutions have come into being as the result of a gradual process. Professor Baltensperger’s book is an impressive account of the efforts to establish sound institutions over a period of more than 150 years.
Central banks have been carrying out significant efforts in order to improve the monitoring of the financial sector in the form of financial stability reports. Based on our recent experience we know that close monitoring of asset prices, credit flows and the current account deficit is required. Moreover, substantial work also needs to be done in monitoring the vulnerabilities of both bank and non bank agents – including financial intermediaries, firms and households. Finally, understanding interconnections in the financial system – be they via balance sheets, asset markets or risk perceptions – is also a key component of financial stability monitoring. The challenges in doing all of this are both conceptual and practical, as we often rely on a statistical toolbox best aimed at capturing macroeconomic trends and less suited for the analysis of the whole distribution and, in particular, tails risks, which are crucial for financial stability analysis. Although most central banks have an explicit financial stability objective, for some of them it was a secondary issue for many years, as GDP was growing strong and banks and firms displayed sound balance sheets. Now things have changed dramatically. As of last year, financial stability became the key factor driving monetary policy management in developed countries. It should remain at the same level of priority as price stability in the future to avoid a repetition of recent events.

The relationship between the incumbents and insurgents has been sometimes competitive but often collaborative – and both have been good for the ecosystem. We adopted a multi-pronged strategy to build what is now regarded by many as one of the most vibrant FinTech ecosystems in the world. First, a conducive regulatory approach that facilitates innovation while managing risks: simplifying rules; selectively easing licensing criteria; providing guidance on new areas like cloud computing, robo-advisers, and digital tokens; adopting activity-based regulation right-sized to the risks posed, as in our Payment 1/5  BIS central bankers' speeches  Services Act; and allowing experimentation through regulatory sandboxes. Second, the digital infrastructure necessary for the adoption and proliferation of new technologies: a 24/7, real-time electronic payment system; a national digital identity and trusted data architecture that allows seamless online authentication and financial transactions; digital platforms to connect businesses, financial institutions, and FinTech firms: matching buyers and sellers through, for example, Business sans Borders; and matching problem statements and solutions through, for example, the API Exchange (or APIX); cross-border data and digital connectivity agreements and frameworks; and Project Ubin - a blockchain based prototype platform for cross-border payment and settlement in different currencies on the same network – faster and cheaper than conventional cross-border payment channels.
Crucially, rising inactivity among the working age population represents an adverse supply shock, which adds to the difficult shorter-term trade-offs facing monetary policy. Looking back to a year or so ago, the MPC debated whether the prospective end of the furlough scheme introduced during the pandemic would release furloughed workers into the labour market and ease the tightness emerging in the labour market. This was a difficult judgment to make, given that the furlough scheme was without precedent. As it turned out, that easing did not materialise: through the middle of this year, the labour market has continued to tighten and has proved tighter than we had expected, largely owing to the adverse developments in participation that we did not fully foresee. Brexit may also have weighed on labour supply. While aggregate levels of immigration into the UK remain elevated, the loss of flexibility associated with the end to free movement of EU workers into the UK may have steepened the Phillips curve, as post-Brexit immigration has proved less effective in addressing labour market mismatches and more costly for employers. Page 7  Now that the economy has slowed (and probably entered recession), we are starting to see labour market indicators turn. Vacancies have stabilised and there are tentative signs they will fall from their historically high levels. Should economic slack emerge and unemployment rise as the latest MPC forecasts imply, that will weigh against domestic inflationary pressure and ease the threat of inflation persistence.

In the US, demand has played an important role: the US economy has more than recovered pre-pandemic levels of activity. So there are grounds for seeing US labour market tightness as a symptom of ‘overheating’ in the broader economy. This case is harder to make in the UK, where aggregate activity has still to regain pre-pandemic levels on the latest vintage of data. As a result, adverse supply effects seem to play a larger role in Britain. That said, vacancy rates have reached historical highs in the UK over the past year, perhaps redolent of strong demand for labour and echoing developments on this side of the Atlantic. But high vacancy rates have been associated with high hiring rates: the labour market has exhibited a high degree of ‘churn’, with many people moving jobs. In part, this may reflect a process through which workers are allocated to more productive activities, after the pandemic – and the UK’s furlough scheme introduced in response to it – had constrained their flexibility to move from one job to another. Behind labour market tightness in the UK lies a decline in participation rates among the working age population, particularly those in the 50-65 age group. The reasons behind this decline remain the subject of debate, but the impact of the pandemic on early retirement and long-term health, as well as underlying demographic developments, all seem to have played a role.
As you know, many individuals inside our member agencies devoted substantial efforts to the Basel II process. We are indebted particularly to the leadership of Bill McDonough, our prior chairman and the former President of the Federal Reserve Bank of New York, who championed this new approach to capital supervision. We appreciate as well the leadership and excellent work of Danièle Nouy, the former Secretary General of the Committee’s highly professional Secretariat, and that of her successor, Ryozo Himino. Given that the capital framework serves as a cornerstone to the safe and sound operation of the banking system, we sought to conduct our discussions in a highly transparent process. We engaged in extensive discussions with many interested parties on the domestic and international levels, and I would like to thank in particular two groups of external organisations and individuals who supported our efforts. First, I should mention the countless representatives of banking organisations, industry associations, and other private sector bodies who devoted time and energy to sharing their views. They offered hundreds of comment letters, as well as data to test the quality of the rules, and they engaged in exhaustive hours of discussion with the Committee, its working groups and member authorities. Above all, banks and other private sector bodies helped us to ensure that supervision would be more closely aligned to sound industry practices.

The responses revealed a strong support from market participants, mainly because of its potential contribution to increasing transparency, which is seen as an essential ingredient for more informed risk assessments and to restore weakened confidence in ABS markets. In addition, respondents  4  BIS Review 84/2010  issued a number of recommendations to the Eurosystem regarding specific implementation aspects that should contribute to a smoother introduction of the loan by loan level data. From a timing perspective, the Governing Council of the ECB will assess during the autumn the results of the final technical preparatory phase that has already started, also taking into account the recommendations put forward during the public consultation, before deciding whether to proceed with the final phase of the introduction of ABS loan by loan data requirements. This decision is envisaged to take place during the fall 2010. In case it is decided to proceed, a twelve-month phasing-in period – in line with the feedback received in the public consultation – would be sufficient for originators and issuers to adapt their systems to provide the required data. It should be noted that the Eurosystem’s initiative on loan level data is in line with certain amendments introduced by the Second Capital Requirements Directive (“CRD II”) that will enter into effect on 1 January 2011. Amongst other things, CRD II provides that the sponsor or the originator must ensure that investors and prospective investors have readily available access to all materially relevant data on credit quality and performance of the individual underlying exposures.