samchain/econo-pairs-v1 huggingface dataset:
In addition, this expansion has also fostered the development of complex banking structures and, in some cases, unsustainable business models. The Icelandic banks are illustrative examples in this respect, attracting depositors’ money from the UK and the  2  BIS Review 50/2010  Netherlands and investing these funds in high yield structured products overseas. When their balance sheets had grown to around ten times the size of the Icelandic economy, it was quite clear for anyone to see that, if turmoil broke out, managing the situation was not going to be easy. But to be fair, it was difficult to anticipate the perfect storm in advance. Another lesson from this – and the strenuous and protracted negotiations between Icelandic and, primarily, British politicians that followed – is the need for establishing deposit guarantee schemes that are built up before a crisis occurs. The international expansion of banks and the home country principle have also had other effects on crisis management. Authorities have simply not kept up with developments in the banking system. Contingency arrangements between home and host countries are not highly developed and neither are there any concrete suggestions for how to share the costs of a crisis. While we have achieved economic integration and maintained national sovereignty, we have renounced effective supervision and crisis management. But national sovereignty does not mean that our hands are tied. The remedy is quite simple, at least on paper: we need better and more extensive cooperation between supervisory authorities, central banks and finance ministries in Europe.

Stefan Ingves: The importance of being savvy – lessons on European crisis management Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, at the Fundación Rafael del Pino, Madrid, 15 April 2010. *  *  *  Crisis management is messy, time-consuming and costly. Thank you for inviting me to this renowned institute. My talk today will focus on crisis management. I have seen enough crises to be able to draw a conclusion or two from them. I learned my first lessons from the Swedish banking crisis of the early 1990s. After this I worked at the IMF, assisting in crisis resolutions in many parts of the world. During my time at the IMF, I also benefitted from discussions with a Spanish colleague of mine – Aristóbulo de Juan. His experiences from dealing with the Spanish banking crisis of the 1980s, working at the resolution authority – Fondo de Garantía de Depósitos – proved a valuable source of knowledge and inspiration. As you all know, the IMF is located in Washington. And working there, you not only learn about crisis management, but you also pick up a few local habits. For instance, Washingtonians like to use the word “savvy” – it sort of means being a bit cunning and perceptive. On reflection, being savvy pretty much sums up how you should behave when handling a crisis. Lately, a lot of attention has been given to preventing the crisis we have just experienced from repeating itself.
In spite of the differences between the Nordic countries, our central banks cooperate closely with each other. The central bank governors meet regularly for discussions, and once a year there is a big meeting between the central banks' Executive Boards and a number of experts, depending on the themes that are up for discussion. Together with Estonia, Latvia and Lithuania the Nordic countries are jointly represented in the International Monetary Fund (IMF) and the World Bank. This has partly resulted in close cooperation between the countries' respective central banks on all issues related to the IMF. Furthermore, a memorandum of understanding was recently signed by the Nordic central banks regarding the management of financial crises. There is also a continuous exchange of expertise between the Nordic central banks. The Riksbank expects moderate inflation The Riksbank's monetary policy remit is to adjust interest rates with a view to influencing price developments so that inflation is 2 per cent one to two years ahead. As a basis for our decisions, we carry out regular forecasts of inflation and economic activity in Sweden. Thus, at our monetary policy meetings, we in the Executive Board must decide whether inflation is forecast to be above target,  BIS Review 46/2003  1  which usually implies raising the repo rate, or whether it will be below target, thereby resulting in a repo rate cut.

Inflation has fallen back since June but not as much as we had expected. This is because energy prices have not dropped as forecast. This decline will now come somewhat later. Excluding energy prices, inflation two years ahead is expected to be on target. Risk factors for Swedish inflation What then are the risks and threats that we see regarding a continued improve-ment in economic activity? In the Riksbank's Inflation Reports, we always assess the risk of inflation being higher or lower than in the main scenario that we present, which in turn is closely related to our forecast of future economic activity. There is a risk that international economic activity will be slacker than in our main scenario. In the US, the large deficits in the public finances and current account may prompt a rise in long-term interest rates, which in turn would hamper consumption and investment. The large current account deficit implies that there has been a substantial flow of capital to the US from abroad. Good productivity growth and high GDP growth have so far contributed to considerable confidence in the US economy. This has enabled the US to attract international investors. But should investors believe that they risk earning less or risk losing money by investing in US assets, their interest will wane. This could give rise to both a weaker dollar and a rise in bond yields.
The fact that some had to go through a difficult period of adjustment was first and foremost a consequence of their past decisions. Nevertheless, standing on one’s own feet is not the same thing as standing alone. Renationalising our economies is also not the answer. It would not change the basic economic realities that European countries confront – that we are ageing societies which have to grow primarily through raising productivity. And it would not offer citizens any more economic security. There is no country in the world that is both prosperous and insulated from globalisation. In fact, the Single Market process was introduced precisely because European economies, acting alone, could not create enough jobs in an increasingly open world. And that process led in turn to monetary union because – as the ERM crisis in the early 1990s showed – countries realised they could not integrate in part and benefit in full. The financial and sovereign debt crises since 2008 have only reaffirmed that truth. So the answer is not to unwind integration. Nor is it to hold out an unattainable vision of where integration should lead. It is to complete our monetary union in the areas where it can and needs to be completed. We need ambition in our ends and pragmatism in our means. We have already shown how this can be done with the solidarity and stabilisation mechanisms that were set up during the crisis. Banking Union is also a remarkable achievement.

It may reshape the mechanisms for making secured payments: instead of settlement occurring across the books of a single central authority (such as a central bank, clearing house or custodian), strong cryptographic and verification algorithms allow everyone in a DLT network to have a copy of the ledger, and give distributed authority for managing and updating that ledger to a much wider group of agents. The Bank is undertaking work to understand the implications of new digital or e-monies and new methods of payments and financial intermediation as part of the One Bank Research initiative 6. Machine learning also promises to transform financial services and widen the potential players in payments. Banks will increasingly be able to automate interaction with customers. As ever more data is analysed and algorithms that “learn” replace rules-based programming, a number of areas such as credit assessment, risk management, fraud detection and product personalisation will increasingly rely on technology. Many banks are already embracing these changes, but many non-bank players with ready-made access to a wide range of customers and their data are well positioned to compete. Alongside the potential opportunities offered by changes in technology, there are also potential risks. For example, the demand for real-time retail payments can make it harder to implement effective defences against money laundering, terrorist financing, identity theft or other forms of fraud. More connected, IT-intensive networks provide more channels for cyber attackers to target and greater risks of contagion.
Their validity in ensuring the convergence of transition economies is an issue that is hotly contested by several economists (see Buiter et al., 2002). 3  See Buiter and Grafe (2002) and Begg et al. (2002). 2  BIS Review 1/2007  (IV)  The Bank of Albania approach to EU accession  The monetary policy of the Bank of Albania focuses on maintaining price stability through the control of monetary aggregates which are used as intermediate target. Indirect instruments are used to transmit interest rate and liquidity signals to the market. Repo rate is the leading indicator for short term interest rates while repo and reverse-repo operations are used to manage liquidity. Over the last five years the Bank of Albania stability oriented monetary policy has generated low and stable inflation; it has also ensured that medium and long run inflation expectations have been well contained. The economic growth has been robust at around 5-6 percent of GDP, while enjoying a high degree of financial stability. (In other words, it seems like we are already close to the ERM II standards.) Such results reflect the opinion that economic convergence should not be held back by the political one. Political processes dictate that ERM II and EMU should be preceded by entry into the EU. The Bank of Albania has a clear view of the EU accession process. The design of the current and future monetary policy strategies is in line with the ultimate objective of EU accession.

The best environment that the central bank can provide for the economy to attain a high level of output and steady growth is one with price stability. Under inflation targeting, the Monetary Policy Board has to look ahead 18-24 months and adjust its stance today to influence the outcome of the future. This will help minimize the boom and bust phenomenon. The floating exchange rate regime will also help prevent imbalances from building up excessively, hence minimizing the risk of major crises. In terms of transparency and accountability, inflation targeting is probably the best tool of communication. While the general public may have difficulty understanding and keeping track of monetary growth targets, it fully understands inflation, the index of which is calculated and announced by an independent agency, in the case of Thailand the Ministry of Commerce. The regular publication of inflation reports will also help inform and educate the public much better than in the past. In the case of Thailand, inflation targeting is the best tool to ensure high output, sustainable growth, export competitiveness, prevention of a worsening of income distribution and a transparent and accountable central bank. The Bank of Thailand last year announced our explicit intention to control inflation, and the range of 0 to 3.5% of core inflation was announced in 23 May 2000. Since the beginning of the year, we have seen the yield on 10-year bonds drop from 7.91% per annum to 6.1%.
Michael C Bonello: Opportunities and challenges of the euro for business Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the conference The Transition to ERM II, EMU Convergence & EURO Adoption - Implications for Enterprises, organised by the Malta Business Bureau and the Mediterranean Bank Network, Valletta, 15 October 2004. *  *  *  The rationale for a common currency In addressing this topic it is first of all important to understand that the adoption of the euro marks only the last stage in a much broader process which started with accession to the EU. At that point, Malta concurrently joined the Economic and Monetary Union (EMU), but its participation in EMU is for the time being limited. In particular, Malta has not yet entered ERM II. This means that both monetary and exchange rate policy are still under the control of the local authorities. This is in line with the EC Treaty, which confers upon new members the status of Member State with a derogation, allowing them considerable discretion as to how and when they should proceed towards the euro. Such an approach builds on the premise that whereas a currency union offers the prospect of considerable benefits to its members, these can only materialise when a high level of convergence has been reached with the other participants in the union. When this point has been reached, a prospective new member is much less susceptible to asymmetric shocks, i.e.

As Hari Vittas, Alternate Executive Director for Malta’s constituency in the IMF aptly put it during a recent IMF Economic Forum, “The potential benefits of monetary integration may be large, but they are not automatic and can easily be wasted in the absence of good policies.”1 On balance, however, the benefits of participation in the euro area should more than outweigh the costs, such that over a sufficiently long time span the growth potential of an economy should be higher than it would have been outside the union. This expectation is supported by the results of recent research. An extensive study by Andrew K Rose of the University of California at Berkeley, for example, concludes that a currency union results in approximately a doubling of trade. Within the euro zone, moreover, it is estimated that trade volumes have increased by 15 per cent, beyond what can be explained by growth and other factors. Recognizing such benefits of EMU, many credit rating agencies foresee an upgrade in the ratings of those new Member States that are among the first to adopt the euro,2 although they generally emphasize that what matters is establishing a track record with respect to the implementation of reforms, especially fiscal consolidation.3  The broader macroeconomic challenge These observations notwithstanding, premature participation in a currency union is nevertheless associated with some potential pitfalls. These result from the loss of monetary and exchange rate policy as a tool for stabilisation purposes.
By this time next year, I should be able to report progress made in Hong Kong as well as in the international arena. 14. Let me conclude my speech with the big picture: Hong Kong, as the premier IFC in Asia, is uniquely well positioned under the One Country, Two Systems arrangements to benefit from the internationalisation of RMB and the Belt and Road Initiative. Whatever you have seen or witnessed in the past few years is merely the very beginning of a multi-decade long process. China has been on average contributing more than one third of global growth in the past 10 years and is clearly the most powerful engine for growth in the years to come. China has reached a stage that it has the necessary technology and surplus capital for its corporates to “go out”. Hong Kong, which has been the major hub and springboard for foreign corporates to “go into” China since the beginning of China’s reform and opening programme, has now taken up the extremely crucial role of serving as the hub and springboard for China’s new “going out” era. 15. Ladies and gentlemen, it’s a great pleasure to be able to talk to you today. As a treasury market practitioner, you are in the right place at the right time. Hong Kong is a place that will offer enormous headroom for growth.

In this context, in addition to the intensive work on the CTC project that I have just described, the HKMA is also busily working on a number of other market development initiatives. One of such initiatives that I wish to highlight today is our effort seeking to modernise the legal framework and tax treatment to make it attractive for private equity funds to domicile in Hong Kong. The objective of this project is simple: to strengthen Hong Kong’s leading position as a private equity fund hub in Asia. 8. Market development is a never ending race. It is not enough for us to be making good progress and improvements every now and then. We must be able to improve and move faster than our peers if we wish to stay ahead of the game. 9. Now that I am talking about ‘brand’, it should be no surprise to you if I now return to the theme of my first choice, “culture and ethics”. Just like any luxury goods, a brand in the context of IFC entails quality and credibility. Quality requires technical competence in a wide range of financial services, such as FX, interest rate, credit, hedging, derivatives, ECM, DCM, asset management, private equity, etc. I think Hong Kong is in a good position in all these markets. We have done rather well in all these markets and should be able to further deepen and broaden them given the exceptional opportunities emerging from the internationalisation of RMB and the latest Belt and Road Initiative.
Additionally, it provides for a new resolution procedure for large financial companies, a creation of a new agency responsible for implementing and enforcing compliance with consumer financial laws, introduces more rigorous regulatory capital requirements, affects significant changes in the regulation of OTC derivatives, includes reform of the regulation of credit rating agencies, implements changes to corporate governance and executive compensation practices, incorporates the Volcker Rule, requires registration of advisers to certain private funds, and affects significant changes in the securitization market. In the EU, Markets in Financial Instruments Directive MiFID is an important step in the biggest overhaul of financial markets regulation in the EU for a decade. However, the new regulatory framework consists of Directive (MiFID 2) and Regulation on markets in financial instruments (MiFIR). It is an integral part of the EU’s strategy to address the effects of the financial crisis, but at the same time aims to bring greater transparency to markets and to strengthen investor protection. These changes are a key for restoring the trust in the EU financial markets. In reaction to the global financial crisis, the EU has also introduced the European Market Infrastructure Regulation (EMIR) that initiates a reporting obligation for OTC derivatives, a clearing obligation for eligible OTC derivatives, measures to reduce counterparty credit risk and operational risk for bilaterally cleared OTC derivatives, common rules for central counterparties (CCPs) and trade repositories (TRs), and rules on the establishment of interoperability between CCPs.

The fact that inflation has been lower than inflation expectations means that the longrun sustainable rate of unemployment may have been overestimated The Riksbank (2012a) presents a briefer estimate of long-run sustainable unemployment in the form of the interval 5–7.5 per cent, thus with a midpoint of 6.25 per cent. Long-run sustainable unemployment is calculated in two stages, as by the Ministry of Finance (2011). In the first stage, long-run sustainable unemployment in 2006 is estimated in the form of the interval 6.5–7.5 per cent, that is, with a midpoint of 7 per cent (to be compared with the Ministry of Finance’s corresponding estimate of 6.6 per cent). The second stage entails estimating the effect of government reforms and changes in the composition of the labour force on long–run sustainable unemployment since 2006, in the form of an interval of 0 to 1.5 percentage points, that is, with a midpoint of 0.75 percentage points (to be compared with the Ministry of Finance’s corresponding estimate of 1.6 percentage points). When this interval is deducted from the first one, we get an interval of 5–7.5 per cent, with a midpoint of 6.25 per cent (to be compared with the Ministry of Finance’s corresponding estimate of 5 per cent). The Riksbank uses as a base in the first stage the average rate of unemployment during the period 1999–2006, that is, about 7 per cent, which is then made into a midpoint in the estimated interval of 6–7.5 per cent.
Net lending in the UK was broadly flat in the second half of last year up modestly in the remainder of this year. This compares with an expectation prior to the launch of the Funding for Lending Scheme that net lending would decline over last year and this. I emphasise this point because the record of the first year of FLS needs to be judged against a worse outlook for lending a year ago. Net lending to large businesses remains weak, but these companies tend to have access to alternative sources of external finance, such as corporate bond markets and such bond issuance has been very strong so far this year, more than double the quarterly average precrisis. Small and medium-sized enterprises are more reliant on banks for external finance. Survey evidence suggests some improvement in the pricing of loans to small firms, but applications for credit have not yet picked up, and net lending to SME’s remained negative in the first quarter of this year. Survey evidence suggests that both lenders and borrowers expect an increase in firms’ demand for loans. This is the pattern also seen by firms surveyed by the Bank of England’s regional Agents. But, the extent of any increase will depend on the macroeconomic outlook, as well as the perceived reliability of bank credit as a source of finance.

At that time, the FSA eased banks liquid asset requirements following a recommendation from the FPC, and also the FSA relaxed capital requirements on eligible net new bank lending as part of a deliberate set of actions to combine the objective of resilience with supporting activity in the economy. Since then, the focus has been on the capital of the banks more than anything else. The FPC has recommended to the PRA that it should seek to establish a minimum level of capital on the final Basel 3 measure of at least 7% after taking account of three issues, namely uncertainty around asset valuation in more vulnerable portfolios, possible future conduct of business costs, and aggressive use of risk weightings. A further test is to consider whether banks are making acceptable progress towards the Basel 3 minimum leverage ratio (leverage is a simple concept in many respects, but it is confusing in one respect, namely that you might – but Basel doesn’t – describe this as a maximum leverage ratio). The PRA is in discussion with the banks on the issue of capital. I read a lot on this most days of the week. Let me make a few points. Many commentators and journalists have worried publicly that these recommendations will lead to lower bank lending. I want to reassure you, that is not the case. Capital is not money that has to be stashed away for a rainy day. Essentially, it is the shareholders’ stake in the company.