samchain/econo-pairs-v1 huggingface dataset:
First, more information has to be gathered to determine more accurately the extent of the US slowdown and its possible transmission to the world economy. Second, the ultimate effects that the upward revision of credit risk premiums will have on the cost and availability of private sector financing will have to be determined. These premiums had reached very low and, in general, scantly discriminatory levels in recent years against a background of widespread optimism and economic boom, and so may have led to probably excessive investment in certain potentially high-risk activities. Such a revision is, in itself, a healthy sign, but it is yet to be seen how large it will be and whether it will be orderly, as would be desirable. Also, the significance, and the impact on European corporate and consumer confidence, of the poor functioning of some markets will largely depend on how long this bout of turbulence lasts. Against this backdrop of uncertainty, on 4 October the ECB Governing Council decided to hold official interest rates unchanged, reiterating its commitment to price stability, close attention to ongoing developments and readiness to act as necessary to prevent the risks to price stability from materialising. At the same time, the ECB has expressed its determination to use the resources available to it to smooth the process of normalisation of European interbank market conditions.

While at one end of the spectrum, the case is being made that there is no other alternative to the market to generate an efficient functioning financial system, at the other end of the spectrum the call is for a more interventionist regime. The solution lies in a balance between these, and the avoidance of an over reaction in addressing weaknesses and excesses that have been built over an extended period of time. Equally important is to recognise that for markets to function efficiently, institutional and market infrastructure need to be well developed. The incentive structure, the rules of the game, the transparency and the levels of financial literacy also needs to be in place. When these elements are still yet to be developed, as in many emerging economies, it increases the risk to financial stability. For advanced financial systems, however, when the institutional structures and rules became deficient and less relevant, it is necessary for them to be changed. In essence, the environment has become highly dynamic requiring regular regulatory reinvention. Let me turn to the approach adopted by Bank Negara Malaysia. The recent global developments will not fundamentally alter the main tenets of our approach to the regulation and supervision of financial institutions in Malaysia. It will continue to be a balance between rules-based and principles-based regulation. The principles-based approach is more likely to produce more efficient market outcomes, better risk-alignment and socially responsible behaviour.
  Finally our balance sheet has a key role to play in supporting financial stability by providing insurance to banks and other financial intermediaries against liquidity risk – the risk that solvent firms cannot meet their financial obligations as they fall due. Of course we expect firms to self-insure against liquidity risk as part of prudent financial management. But it would be unrealistic and inefficient to expect them to insure against all shocks and so as a backstop we provide firms with the ability to borrow reserves (as well as dollars and euros). Liquidity insurance is very much an “old normal” – it goes back to Walter Bagehot in 1873 and his famous dictum to lend freely, at a high rate of interest and on good banking securities. But it is worth noting that, whilst liquidity insurance is an “old normal”, our current suite of facilities is much expanded over the last fifteen years. The Bank learned lessons from the GFC, launching a revised Sterling Monetary Framework in 2013 under an approach Mark Carney, the Bank’s former Governor and another former student of Peter’s described as Open for Business10. This expanded toolkit is just as much a part of the “new normal”.11  Of course the financial system is constantly evolving.

On the one hand, European economies are in recession, the US economy has been struggling to return to the path of growth, and more recently, fast-growing economies such as Brazil, India, China, Turkey have also slowed down. In such circumstances, it would be logical for the prices on the commodity exchanges worldwide to fall. But it is not happening. Prices of oil and basic agricultural products are not falling, but maintain the previously achieved high level or even continue to rise. In part, this is due to the overly relaxed monetary policy of the Fed, the ECB and the Bank of England, as well as the debt crisis in the Euro area, which “urge” investors to invest in real goods on the commodity exchanges. The rest is a consequence of the so-called supply shocks, i.e. political tensions in the Arab world and the Middle East, as well as the drought in the countries that are the largest producers of grain. In such conditions, despite the slowdown of economic growth, Macedonia is facing a higher imported inflation. In conditions of such an emphasized economic crisis, how will the monetary policy be put into operation to encourage economic growth? You claim that the NBRM can contribute only by keeping price stability, but obviously it is undermined. Price stability is neither undermined nor will it be. In August and September, a higher than usual monthly price increase for this time of the year was registered, due to one-off factors that I have already explained.
Having said that, I am fully aware of the possibility that the negative interest rates on excess liquidity holdings may affect the profitability of bank intermediation in the long run (since they are primarily funded by their clients’ deposits). I hence strongly advocated the introduction of the two-tier system in 2019, which aims to exempt part of credit institutions' excess liquidity holdings from the cost of the negative deposit facility rate. This has been a success in limiting the negative side effects on bank intermediation of low-for-long interest rates, thereby preserving the transmission of monetary policy. The exemption volume is determined as a multiple of banks' minimum reserve requirements, which is currently set at six. When the two-tier system was introduced, in October 2019, total excess liquidity was just above € trillion. As a result of the ECB response to the Covid pandemic, this has now jumped to € trillion, an amount well above the level of reserves necessary to steer market rates towards the deposit facility rate. This FREL - floor required excess liquidity - is currently estimated at about € trillion. Consequently, I would support a more rule-based approach to set the level of the multiplier, as a function of the change in excess liquidity net of both necessary (FREL) and borrowed reserves (TLTROs). Much more than subsidising liquidity provision beyond exceptional circumstances, a well calibrated tiering system belongs to the normal tools of monetary policy as shown by other jurisdictions. Let me conclude.

François Villeroy de Galhau: Monetary strategy and inflation in Europe - what’s new? Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the SUERF Conference, New York City, 12 October 2021. * * * Ladies and Gentlemen, I am very happy to join you today for this discussion on "EU and US Perspectives". Exactly one year after my previous intervention in this Forum, I definitely see a change for the better in the economic climate in Europe. Europe is now the most vaccinated continent in the world. Economic growth in the euro area has so far been stronger than expected and according to our latest forecasts, real GDP is expected to exceed its pre-Covid level by the end of this year. If anything, we can perhaps say that uncertainty has shifted a little bit from the growth outlook to the inflation outlook, but I will come back to this point later. My speech today will address three interconnected issues: I. What are the key changes following the ECB strategy review? II. Where do we stand on inflation? III. Perspectives on the ECB's monetary policy up to and after the end of the Covid crisis. I. The ECB’s monetary policy framework The unanimous adoption in July of the new monetary policy strategy was an important achievement for the Eurosystem. Let me pay tribute to Christine Lagarde, and sum up our review in three key messages: 1.
14  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  14  References  Akerlof, G and Shiller, R. 2009. Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism. Princeton. Gigerenzer, G. 2004. ‘Dread Risk, September 11, and Fatal Traffic Accidents’, Psychological Science, Vol 15, Issue 4. Grupe, D and Nitschke, J. 2013. ‘Uncertainty and Anticipation in Anxiety: An integrated neurobiological and psychological perspective’. National Review of Neuroscience. 2013 Jul; 14(7): 488–501. Haldane, A. 2015 ‘Stuck’. Speech to the Open University. Haldane, A., Chowla, S. 2020. ‘Fast economic indicators’. Nature Reviews Physics. Nessen, R. 2008. ‘The Brookings Institution’s Arthur Okun – Father of the “Misery Index”’. Brookings Op-Ed. Okun, Arthur M. 1962. ‘Potential GNP: Its Measurement and Significance’. American Statistical Association, Proceedings of the Business and Economics Statistics Section, pp. 98–104. 15  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  15

An exciting development in that area has been the creation of the Financial Stability Board Data Hub at the Bank for International Settlements, the result of extensive collaboration among central banks and banking supervisors in many countries. BIS central bankers’ speeches  5  Conclusion To conclude: I’ve focused on two challenges that we face in making the best use of data to address pressing policy questions. The first challenge is to bring innovative ideas to data. Although progress has been made in this area, more imagination and thought are needed in identifying and creating useful data. Once a data product is imagined, the right investment is crucial to deliver good data to analysts and policymakers. The second challenge is to provide effective data stewardship. Good management of data is needed locally, often in the person of data stewards who make information accessible in a world of imperfect data, nonintegrated technology platforms, and statistical packages. Significantly, learning from one another in conferences such as this one is vital to meeting the innovation challenge and to improving data around the globe. 6  BIS central bankers’ speeches
To address these issues, the Basel Committee has proposed a new Accord which would allow firms to use externally or internally generated credit risk ratings to differentiate more precisely between different risks. There would also be a significant expansion in the recognition of collateral, credit derivatives and guarantees as means of reducing overall risks. These proposals are currently under discussion by central banks, regulators and market practitioners. Given our financial stability responsibilities, the Bank of England has been closely involved in this process. A team led by Patricia Jackson at the Bank has been providing technical and policy support to the Basel Committee, and we hope to have an agreement in the course of next year. The new Accord does not, however, go to the point of recognising VaR-type models for measuring credit risk on portfolios as whole. At present, these models are not judged to be sufficiently robust to form the basis of a regulatory regime. A central issue is the sheer lack of information. Many types of loan have no publicly visible price, so the models lack a large and reliable data base. The behaviour of loans under different scenarios, and the correlations between different assets - both key inputs to any VaR model - have in many cases to be assumed rather than measured. And testing the ex post performance of the models is difficult. Where credit instruments lack market prices, model predictions can only be compared to data in the event of defaults, which are relatively rare.

Monetary and fiscal policy must be complementary in order to curb cyclical fluctuations. BIS Review 20/1999  16  Fiscal policy must be credible in the long term. The welfare society is dependent on solid government finances. The authorities must exercise caution in establishing fixed long-term priorities in the government budget. Measures aimed at countering an increase in unemployment must not be irreversible and undermine long-term credibility. The conditions for addressing the challenges are favourable. Employment is high and the population is well educated. However, our economy is also exposed and vulnerable. In recent years fiscal policy has been too expansionary. This year the fiscal stance is appropriate. A continued tight fiscal policy can contribute to restoring credibility and confidence so that interest rates can gradually be reduced. Let this be my hope for future developments. 17  BIS Review 20/1999
Indeed, it  would require more than just adjustments in exchange rates. The nature and breadth of the adjustments will be important to achieve a long-term solution. With its young workforce, growing productivity, competitive and dynamic economies, there is great potential for the Asian economies to contribute towards the re-balancing of global growth. With rising income levels in regional economies, particularly among the growing middle income group in China, India and the ASEAN economies, there is potential for an expansion of demand within the region. The rebalancing of global growth across the world will eventually contribute towards reducing the prevailing imbalances. Malaysia's own agility to absorb and respond to the external and domestic challenges has allowed us to efficiently shift resources to new areas of growth, to new areas of comparative advantage and thus, sustain our long-term prospects. Going forward, Malaysia's economic policy will therefore continue to focus on ensuring that the economy's flexibility and resilience is sustained. With the strengthening of the economy, the financial system and our fundamentals, the opportunity has been taken to deregulate and liberalise the environment further. The most recent policy initiative in this direction has been the shift in the exchange rate regime to a managed float. Under this regime, exchange rate stability will continue to be a primary objective of exchange rate policy. Malaysia is a trading economy that is highly integrated with the world economy, and in this context, a stable exchange rate environment continues to be important.

The Guidelines will be released to the industry this month for implementation early next year. This is an important strategic development, both from the public policy and consumer perspectives. Today, medical insurance business accounts for the largest share1 of non-tariff general insurance premiums in the market, with premiums exceeding RM1.3 billion in 2004. The revised Guidelines have retained a significant degree of product flexibility, and enhanced disclosure requirements to promote increased competition while more clearly defined rules governing  1  10,5% of total general gross direct premiums, third (in terms of market share) only to motor and fire business. minimum policy terms and conditions will be put in place to deliver a reasonable level of protection to policyholders. These requirements will also promote more consistent treatment of consumers in the provision of core benefits under medical insurance policies. Where regulatory intervention remains necessary, the Bank will continue to balance the business interests of industry participants with that of consumers, to ensure that the costs of regulation are commensurate with its perceived benefits to consumers. In the long term, however, reliance on regulation and supervisory oversight alone is not a sustainable solution to the market conduct and broader confidence issues that confront the industry. The desired outcome should be one where freedom of action is accompanied by an appropriate degree of moral restraint on the part of the market.
What do you think of the European Commission’s proposals for each country to create an insurance fund specifically for banks to assist them in case of need? We take a very cautious view on bank taxes. It seems to us that we must first draw the lessons from the financial crisis with regard to prudential regulations, in particular the Basel III rules. The question of a possible tax should come second. That said, I am deeply concerned by this gulf between the values of our democracies and those of the financial world, reflected particularly in the abnormal behaviours observed so often in recent years. This problem is faced by all of our democratic societies, and certainly on both sides of the Atlantic. The values of the financial world must change. In the prevailing ethos, they will no longer be tolerated as they are. 4  BIS Review 76/2010

As in the past, in this latest episode the structural deficiencies identified are partly linked to a deficit of cohesion among the national economies that can only be remedied through further relinquishing of sovereignty. Perhaps the relative novelty of the recent crisis in the monetary union is that it shows, with particular seriousness, that any delay or lack of resolve in adopting the necessary reforms would not only be harmful to European construction but would generate very pronounced risks to economic and financial stability in Europe and the rest of the world. Admittedly, major reforms to monetary union governance have been made to date. I refer, for instance, to the new requirements made of domestic policies to contain macroeconomic imbalances in several areas, to the surveillance mechanisms established for these requirements and to the setting in place of national crisis-management systems, with centralised financial support arrangements for those countries most affected. However, such progress is not sufficient to ensure the proper functioning of a common monetary area. One of the main manifestations of the shortcomings observed is the continuing market fragmentation within the euro area. This is, namely, the existence of a country-risk component that means that markets assign different valuations to similar financial assets on the basis of the issuer’s nationality. In particular, the perceived risk of financial institutions’ liabilities depends to some extent on their geographical location.
This is an identity theft whereby Internet hackers trick some naïve customers into revealing their sensitive information such as User ID and password through fake email addresses, through social engineering, or spy ware. The Bank of Thailand has recently issued notifications to address these issues and encourage financial institutions to raise customer awareness of such frauds through education. As stated earlier, financial institutions now take advantage of IT to innovate financial products and services. Such innovation brings to a financial institution new dimensions to traditional risks, which include strategic risk, credit risk, market risk, liquidity risk and operational risk. Therefore, the lack of efficient and appropriate controls may amplify the likelihood of each risk and its impact. Internet banking, e-money and IT outsourcing are good examples that highlight the importance of IT supervision. At this point, may I draw your attention to the next topic which is IT risk-based supervision. 3. IT risk-based supervision  BOT has adopted risk based supervision for the past several years. Supervision objectives: The primary objective of BOT supervision is to encourage FIs in Thailand to conduct banking business in a safe and sound manner and consistent with related laws, rules and regulations. It is also our duties to ensure that supervisory framework is keeping up with demand from the financial community as well as with market innovation, international best/ sound practice; finally, to protect customer rights as well. IT risk-based supervision helps ensure the safety and soundness as well as legal compliance of a FI.

No doubt at some point such perceptions will change - or the anticipated differences in future earnings growth be discounted by the change in asset prices, including the effect of exchange rates. There are some tentative signs that this may be beginning to happen. But in the meantime it is not at all clear that there is much that we could do - even if we wanted to - to weaken sterling against the euro by marginal changes in short-term interest rates. As it is our interest rate differential over the euro zone has halved since the euro started, while our exchange rate against the euro has appreciated by around 15%. We do already, of course, take full account of the exchange rate - and other prices - in both our forecasts and our policy decisions. Indeed, it was partly to avoid pushing sterling higher and so aggravating the imbalance within the economy, when we were not wholly convinced that we needed to take that risk in order to achieve the inflation target, that the Committee refrained from further monetary tightening over the past eight months. But looking ahead the risks and uncertainties are such that it would be unrealistic to suppose that we can altogether exclude the need for further tightening at some point.