samchain/econo-pairs-v1 huggingface dataset:
Given that the current turmoil will bring about changes in the financial landscape, both the policymakers and private sector have to adapt themselves in an effective manner. To increase financial system resiliency, including by improving the credit information system,  4  BIS Review 135/2008  regulatory reform could possibly mean more stringent prudential guidelines during the upturn to help financial institutions achieve bigger cushions during the downturn period. In this challenging time, the private sector has to be alert, yet prudent with the new opportunities available. The board of directors and senior management has to oversee the operations and risk profile of their organization closely and regularly. Ladies and gentlemen, Just before ending note, allow me to touch on the situation in Thailand and the impact of the global crisis. The latest assessment of Monetary Policy Committee projected that growth is expected to moderate, to a range of 4.3 to 5 percent this year, and 3.8 to 5 percent next year. Inflation should subside next year, with headline CPI at around 3 to 4 percent. External position will remain strong with current account surplus for this year and next year, international reserves currently at around 104 billion US dollars, while external debt is 65 billion US dollars as of August, of which just over one-third is short-term. Overall, the economy does not have imbalances that could pose as vulnerability.

Moreover, raising new private capital in this environment is a very tall order; while the option of public capital injection very costly for shareholders and tax payers. Therefore, it is imperative that banks need to be even more vigilant in managing not only their asset quality but also their internal capital, funding, expenditure including executive pay, and dividend policy. Looking at banks in the Asian region, such as Thailand, despite rapid development of capital market in recent years, the core banking businesses remain traditional; largely deposit taking and loan extension. Meanwhile, treasury operation remains relative small. Moreover, with the financial market predominantly bank-based rather than market-based, there tends to be less risk and complication arising from the originate-to-distribute models of securitisation. Nevertheless, in the past few years, banks have expanded business scope, operating as universal banks or financial conglomerate, with securities and insurance arms. Therefore, organisational structure and risk profile, of even the more traditional banks, have become much more complex. This, in turn, demands that bank’s risk management, Board’s oversight, and supervisory framework can match the increasing complexity and ensure adequacy of capital and risk management system on a consolidated basis. On market risk, some banks in Asia and Pacific countries have been exposed to the subprime related assets such as CDOs as well as assets of failed institutions. The losses so far have been limited to foreign assets and are addressed by private and government assistance. On hindsight, this crisis highlights the fact that it is easy to overestimate one’s risk management ability.
After all, the levels of dealer  BIS central bankers’ speeches  7  activity and of market liquidity in the run-up to the crisis were ephemeral. They did not serve the real economy. It is important that other parts of the financial system, such as asset managers, adapt to the new environment and manage liquidity positions prudently. But these developments should, and they are, prompting us to assess whether targeted amendments to the design of regulations could benefit the real economy, without exposing it to more risk. The design of new requirements was macroprudential. So must be their implementation. The system has come a long way on the march to more capital and greater resilience. The benefits of that are being seen today. Lending to real economies is growing again. Resilience is more insulated from questions about returns. With resolution regimes well advanced and game-changing bail-in principles established, the upward march to higher capital levels can soon reach the new baseline. A baseline that, on what we know today, protects the real economy without unnecessary risk of holding it back. And with the flexibility to adapt and continually align resilience with threats, we have a compelling answer to the question of how to marry prudence with macroeconomic sense. So that you can protect and serve the real economy in good times and bad. Thank you.

ELA as part of general crisis management and resolution  Should a financial crisis occur, there are a number of measures that may be used by authorities to limit the consequences of the crisis. In addition to ELA, examples of these measures are financial support to protect the solvency of institutions, brokering of private sector support to or acquisitions of troubled institutions, management of deposit insurance schemes and insolvency procedures for financial institutions. In general, these measures may be undertaken by different authorities. A consequence of this is that cooperation between authorities is an important element of crisis management. The authorities must have a common strategy for how the crisis should be managed in order to avoid excessive support to the financial sector. Excessive support may lead to undue costs to taxpayers and to unsound incentives for the financial sector. In this context, it is important to emphasise that these effects can arise from all kinds of official support. Thus, the authorities must limit the support that is  1  BIS Review 42/2000  offered. Support may be warranted only when there is a considerable risk for a systemic crisis that may lead to a severe decline of real economic activity. Typically, real economic activity is affected by a breakdown of payments systems or restrictive granting of credit, a credit crunch. Traditionally, ELA provided by central banks has been seen as a measure to deal with pure liquidity problems in banks that essentially are solvent.
This would then be taken into consideration in our monetary policy thinking in some way.2 Nevertheless, it is probably the case that the greatest contribution to a more effective strategy is to ensure that appropriate regulations and supervision procedures are in place. New financial supervision arrangements As I mentioned earlier, one of the problems was that financial supervision did not give sufficient consideration to factors in the macro economy and to systemic risk. At the Swedish level, an important step in this is of course to ensure that the coordination between the Riksbank and Finansinspektionen functions as efficiently as possible. It is also necessary to have coordination at the international level. In November 2008, the European Commission appointed Frenchman Jacques de Larosière to lead a task force to draw up proposals for reforming the regulatory regime within the EU. The proposals were presented on 25 February this year.3 They include establishing a special body, the European Systemic Risk Council, with responsibility for overall financial supervision (macro-prudential supervision) in the EU. The idea is that the twenty-seven central banks in the EU would be members of the council and that the council would receive resources from the ECB. Its tasks would include pooling and analysing information, for instance on macro economic conditions, which may be significant to the stability of the financial system. Part of the problem is that financial supervision has had an excessively national focus. The de Larosière group therefore proposes enhanced coordination of the national supervisory authorities.

Christian Noyer: Some thoughts on the financial crisis Speech by Mr Christian Noyer, Governor of the Bank of France, at Paris-Europlace, Tokyo, 18 November 2008. *  *  *  Ladies and Gentlemen, It is a great pleasure for me to be here and share some thoughts on the financial crisis. It is too early to draw all the lessons from recent events in financial markets. It is however vital to start reflecting on the experience of the last few months. Even more in periods of tension than in normal times, action and reflection should reinforce one another. It is at the very moment of managing the current crisis that we lay the foundations for the future financial system. Having said that, I propose to reflect with you on four topics: •  The nature of the financial crisis  •  The policies implemented to address it  •  The macroeconomic outlook  •  The outlook for financial regulation  The nature of the crisis The crisis first emerged as a liquidity crisis. The first symptoms appeared at the beginning of August 2007 when serious disruptions surfaced on the inter-bank market. More than a year later, tensions on money markets are still with us. Recent weeks have witnessed abnormal levels of spreads, a shortening of maturities, and the contraction, or even closure, of some market segments. Through spill-over, these tensions are also affecting non-financial corporations and, more broadly the financing of the economy.
Preserving or further building up macroprudential buffers would support credit institutions' resilience and enable the authorities to release these buffers, if and when risks materialise and negatively impact credit institutions' balance sheets. But, as ever, these decisions should be made considering each Member State's specific macrofinancial outlook and banking sector conditions, in order to limit the risk of procyclicality. - Financial stability risks beyond the banking sector should also be addressed. This requires tackling vulnerabilities and increasing the resilience of non-bank financial institutions and market-based finance. In this regard, the ESRB has  2/3  BIS - Central bankers' speeches  repeatedly noted that a lack of tools is hampering authorities' ability to address financial stability risks beyond the banking sector. It has called for authorities to be provided with such tools, for example, in the context of the review of the prudential rules governing investment funds and insurers. The current heightened risk environment makes this more urgent. Against this background, let me now turn to the four distinguished panelists that are together with me today: Claudio Borio, Alfred Kammer, Lucrezia Reichlin and Ricardo Reis, who are very well known to you in the audience and, therefore, need little presentation. Let me, anyway, briefly introduce them to you, by alphabetical order: Claudio Borio is the Head of the Monetary and Economic Department of the Bank for International Settlements.

And it is the combination of the uncertainty derived from the war (and more in general from geopolitical tensions) with the increase of inflation and the rising interest rates that has generated, ultimately, a general deterioration of the economic outlook with, for example, one-year ahead recession probabilities having increased markedly, in both the euro area and other major advanced economies. This challenging financial stability outlook is well laid out in the Warning on vulnerabilities in the EU financial system that the European Systemic Risk Board issued last September. Indeed, the ESRB has alerted of the heightened uncertainty and the increased probability of tail-risk scenarios materialising. In particular, the ESRB has warned of three severe systemic risks :  1/3  BIS - Central bankers' speeches  (i) first, the deterioration in the macroeconomic outlook combined with the tightening of financing conditions, leading to negative consequences in terms of balance sheet stress for non-financial corporations and households, especially in sectors and Member States that are most affected by rapidly increasing energy prices. (ii) second, a possible sharp fall in asset prices, leading to large mark-to-market losses, amplified market volatility and liquidity strains. In addition, the increase in the level and volatility of energy and commodity prices has generated large margin calls for participants in these markets and this has created liquidity strains for some participants. (iii) and third, the potential deterioration of asset quality and the profitability outlook of credit institutions.
I had the privilege of chairing the Group of Central Bank  Page 3 sur 11 Governors and Heads of Supervision (GHOS) up to the start of this year, and I would like to reiterate here its call for a “full and consistent implementation”. For Europe, this means adopting as quickly as possible, in trilogue with the Council and the European Parliament, a position as close as possible to the Commission's proposal: the proposed transitional measures – particularly regarding housing loans – must not turn into permanent exceptions; capital requirements must be applied at the consolidated group level, with no new internal barriers to the Banking Union. And all jurisdictions – including by the way the United Kingdom, where regulators rightly argue against the temptation of a race to the bottom – must effectively implement these accords by 1 January 2025 – just over two years from now. b. Financial stability Financial regulation is not an end in itself; it is “only” a means to achieve the overarching goal of financial stability. The regulation put in place over the past 15 years has proven quite effective so far: we have successfully overcome the “stress test” of the Covid crisis; it is no coincidence that it has not escalated into a financial crisis. Capital requirements have considerably bolstered the resilience of the banking sector: the CET1 ratio of the six main French banking group increased continuously from 5.8% in 2008 to 15.7% in 2021 [with the first slight decrease in June 2022 at 14.8%].

The current upturn has lasted about two years. The fairly low level of growth in employment, as measured by the number of employed, must be seen in the light of the sharp decline in sickness absence through 2004. The decrease in sickness absence has reduced the need for new employees. Measured in terms of person-hours worked, employment growth was solid last year. 2  BIS Review 21/2005  Inflation was low in 2004. Underlying inflation rose by 0.3 per cent from 2003 to 2004. The unusually low rise in prices for imported consumer goods over the past few years is partly due to structural developments, primarily changes in Norwegian import patterns. It is difficult to estimate how long the effect of these changes will last. High capacity utilisation, a tighter labour market and higher wage growth imply that the rise in prices for domestically produced goods and services will move up in the years ahead. The projections for the years ahead are based on a gradual rise in the interest rate. This is in line with financial and foreign exchange market expectations. A gradual rise in the interest rate will after a period curb the strong growth in demand, and capacity utilisation in the economy will decline and then stabilise. Economic policy tasks The various components of economic policy have varying effects. This is why they have different functions: •  Monetary policy steers inflation in the medium and long term and can also contribute to smoothing swings in output and employment.
The main risks currently being considered by the Central Bank are: (1) an eventual propagation of food and energy price shocks to inflation dynamics, in the context of a closing output gap and transitory high inflation rates. This propagation could be materialized via rising wages, due to wage CPI indexation and a reduced unemployment rate; or via rising medium and long-run inflation expectations that significantly could diverge from the inflation target; (2) larger adjustments in global financial markets, with more severe consequences for world growth and commodity prices; (3) signs of more rapid moderation of internal GDP growth dynamism, beyond expected. In particular taking into account these risks, the Central Bank continues conducting the course of monetary policy according to its constitutional mandate to safeguard price stability. Yves Mersch: Recent financial market developments Speech by Mr Yves Mersch, Governor of the Central Bank of Luxembourg, at the 50th anniversary of ACI Luxembourg, Luxembourg, 12 October 2007. 4  BIS Review 120/2007  *  *  *  Since my first invitation to an ACI event as a speaker a few months after assuming my first mandate 9 years ago, the markets have undergone many turbulent sequences, although I could not detect a correlation between market upheavals and my regular appearance at ACI events. Let me therefore thank the Luxembourg chapter for inviting me again today. I feel honoured.

At the same time, stock issuance up to the third quarter of 2007 is higher than that of 1996. Notice, however, that the persistent weakness of expectations indicators and the effect of the recent increases in inflation on families’ purchasing power imply a risk for private consumption growth. 2  BIS Review 120/2007  As a result of the above, the GDP and aggregate demand growth have been somewhat below the forecasts of the September 2007 MPR. There, the GDP growth forecast for this year was 5.75% to 6.25%, with a downward bias. The evidence accumulated so far, indicate that the GDP growth will be in the lower part of the range. The turbulences in international financial markets could be affecting expectations of consumers and entrepreneurs. In fact, consumer expectations have worsened and the forecast of the GDP growth in expectation surveys has fallen. The most important development in recent months, however, has been inflation. Inflation has picked up, reaching annual rates of 5.8% in September, both for total CPI and core CPI (which excludes perishable foods, energy and regulated tariffs). This surprising rise of inflation has been influenced by unusual (and simultaneous) increases in the prices of food items, given rises in their foreign similes and harsh weather conditions in Chile. These high prices have not only persisted but also intensified in the last months. Additionally, electricity power rates have also increased, as a result of natural gas restrictions coming from Argentina, and the replacement of hydro by oil-based electrical generation.
Figure 2 Long-term interest rates (percent) 4.5  4.5  4.0  4.0  3.5  3.5  3.0  3.0  2.5  2.5  2.0  2.0  1.5  1.5  1.0  1.0  Oct.08  10-year BCU  Jan.09  Apr.09  10-year U.S.A.  Jul.09  10-year Eurozone  Sources: Central Bank of Chile and Bloomberg. 4  BIS Review 105/2009  Figure 3 Deposit rates (percent) 12  12  10  10  8  8  6  6  4  4  2  2  0  0  02  03  04  30-89 days  05  06  90 days to 1 year  07  08  09  1 to 3 years  MPR  Source: Central Bank of Chile.

The measures taken by our trading partners to enhance confidence in their financial systems and adjust the macro-financial imbalances hamper monetary policy transmission in the economy. They heighten public concern and undermine its confidence in the future. These are the very reasons preventing the banking system to finance the economy and the government at lower interest rates and, consequently, the central bank’s monetary policy transmission to easing the monetary and financial conditions. What is currently happening represents higher risk premium in the countries of the region for all the reasons referred to earlier, rather than an increase in real interest rates. Concluding, I would like to clarify that central banks should make their utmost to preserve the frail macrofinancial balances and bolster public confidence in institutions and the financial system. In this context, the Bank of Albania, as to date, will continue to foster macroeconomic and financial stability in Albania. This is our major obligation arising from the Constitution and relevant laws. We are committed to meeting this obligation with dedication and meticulousity. We are fully focused on these two major objectives, just like a good captain focusing on the horizon, rather than on the hands laid on the ship’s wheel. The Bank of Albania believes that, by guaranteeing these two vital pillars to the stability and prosperity of the economy, we have provided the best contribution to achieving higher economic growth.
Between 1997 and 1998, countries of South-East Asia experienced this effect, when all of a sudden capital flew out, bringing about financial crisis in economy after economy, which could not be prevented by either the monetary or exchange rate policy. Re 4) One of the vital dimensions of globalisation is the fast spreading of knowledge, technology and knowhow. The flow of know-how also applies to the public sector, including the central bank. One of the features of modern central banking is gradual homogenisation of the strategies applied to the monetary policy. Since 1990, when for the first time the central bank of New Zealand started to implement the strategy of direct inflation targeting (DIT), over 20 central banks followed and adopted that strategy. As a result, the DIT strategy (applied since 1998 by the NBP) is now the dominating strategy of the monetary policy, applied by the majority of central banks in developed countries 22 , and more and more, by central banks of the developing countries (such as Turkey, the Philippines, Ghana, Romania and Armenia). A bloom of the DIT strategy endorses the observation that central banks adopt the “technology” of low and stable inflation from one another. The dissemination of the DIT strategy was accompanied by a decrease in the average inflation level, especially in the developing countries that lowered inflation from a high level. This may prove that the dissemination of the DIT strategy was one of the factors that have contributed to disinflation.

As a logical consequence, a question arises about how the monetary policy should be conducted in these circumstances, and in particular, whether it should respond to the increase in asset prices despite the fact that inflation of consumer goods and services remains low or very low. Another vital question arises about the appropriate level of central bank interest rates when long-term interest rates remain low, possibly as a result of globalisation. A hot debate accompanies the issue, both among the central 26 27 bankers and among academics. The Chairman of the Federal Reserve, Ben Bernanke, in his address 28 last month, presented possible diagnoses regarding the sources of low interest rates on the bond market despite as many as fourteen increases in the central bank references rates. There are at least two explanations of such situation. If the long-term interest rates remain unchanged and the short-term ones increase, this means that either the markets pessimistically assess the perspectives of economic growth or the risk premium related to forward rates decreases; here this may be the inflation risk premium or real interest rates volatility risk premium. Another explanation may be the very effect of global imbalances, i.e. the result of large purchases of sovereign bonds by Asian central banks and oil- exporting countries. Depending on which hypothesis is true, the implications for the monetary policy are different. If the long-term rates go down as a result of poor growth prospects, the current short-term interest rates should be lowered  23  See e.g.