samchain/econo-pairs-v1 huggingface dataset:
For this reason, parallel to decisions adopted with respect to internal management and the promotion of a risk-awareness culture, we continued to work on strengths already present in key areas of the Bank, namely the Research, Financial Policy and Financial Operations Division. In this sense, it is good to recall the whole process of reorganization introduced by the Board to improve the Bank’s efficiency, taking advantage of economies of scope and reducing transaction costs. Our policy of transparency and diffusion crystallized in the creation of a Department of Communications, that later evolved into a Department of Institutional Affairs and a Department of Communications Advise, with the purpose of providing an organized structure to all the information that stems from the Central Bank of Chile and that is intended to emphasize equity and depth in the delivery of information, as well as to give the Chilean people a boost in their knowledge of economic matters. Regarding internal management, we have perfected a human resources selection mechanism through external head hunting firms for managerial posts, and open, informed contests published on the website for other job positions. We have made great progress in our job appraisal policies, compensation structures to every employee and the setting of clear, measurable goals for levels 7 and up of the organizational chart. Along the same lines, we have recently approved new labor policies oriented at integral development, in order to contribute to the institution’s increased efficiency in achieving its goals and the personal fulfillment of the people who work in the institution.

I take with me beautiful memories of all these years, which, I assure you, I will never forget. Thank you. 4  BIS Review 149/2007
Mr. George looks at the question as to whether banks are still special Speech given by the Governor of the Bank of England, Mr. E.A.J. George, at the IMF 7th Central Banking Seminar entitled Banking Soundness and Monetary Policy in a World of Capital Markets and held in Washington on 29/1/97. Mr. Chairman, I am delighted to take part in this well-directed and well-timed seminar. I am particularly pleased to be able to share with you my thoughts on the question you put to me “Are banks still special?” That question is partly a matter of institutional fact; but beyond that lies the question of whether the institutional characteristics of banks still justify central banks’ special concern for the stability of the banking system reflected in both macroand micro-prudential oversight and in their role as lender of last resort. So the answers to those questions could have far-reaching implications for the role of central banks themselves. In offering my answers I will ask, first, why banks have been regarded as special? Then I will ask whether banks have changed, or whether other financial institutions have become more bank-like? I will save my conclusions until the end! I am conscious, in this international forum, that I speak from a British perspective - in terms of the institutional and legal contexts and their evolution in relation to banks. But I would hope that, while some of the detail may be specific to the UK, the broad substance will not be.

Currently, we have 21 remittance service providers offering digital remittance services, more than double the number 3 years ago. With the implementation electronic know-your-customer or e-KYC, consumers will be able to experience end-to-end digital remittance transactions. These are positive and exciting developments happening in our remittance market. Better public-private sector alliance to strengthen compliance Bank Negara Malaysia will continue to work closely with the industry to promote financial inclusion and this will be done primarily through the digitalization of remittance. Regulators also need to keep up with the times. We are taking a different approach this time – from ‘regulator instruct, industry do’ and ‘regulator knows best’, to creation of public-private sector alliance. It is vital to leverage on each other’s strengths and resources, not only to reap the benefits of technology, but also to overcome the emerging threats. We are all in this together. Greater harmonisation of regulatory framework on the remittance industry at the regional and 2/3  BIS central bankers' speeches  global levels is required to increase consistency in standards and reduce regulatory burdens on industry players. As a start, we have shared with other central banks on how we regulate the money services industry in Malaysia. This includes the transformation journey of MSB industry in Malaysia, our approach to innovation and technology, as well as monitoring of the whole industry. I believe that in the long term, harmonisation of rules will also foster innovation and spur regional expansion amongst industry players, while upholding the highest ethical and professional standards.
4 First, thriving banks exercised a comparatively conservative growth strategy during good times, with a management culture that focused on long-term franchise value and not short-term profitability. Successful banks had lower concentrations in commercial real estate lending generally; and much lower concentrations in construction and land development loans specifically. While profitable during the boom, these loan categories suffered the greatest losses as real estate values declined and the recession set in. As the boom progressed, the more conservative underwriting standards of successful banks led to declines in their market shares as other banks competed for business by relaxing their standards. However, successful banks were able to gain back this market share and then some after the bust due to the relative strength of their balance sheets. The successful community banks were patient and conservative regarding investments – desiring reasonable, sustainable returns, not necessarily “spectacular” returns. It seems that their managers devised their business plans heeding Friar Lawrence’s advice to Romeo as he devised his courtship plan for Juliet: “Wisely and slow; they stumble that run fast.” Other noteworthy characteristics also identified in this research were an engaged board of directors, talented staff who were familiar with the community, sound senior management oversight and thorough due diligence before offering a new product or service.

Just last November I visited OnForce Solar, an installer of solar heating systems located in the Port Morris section of the South Bronx. There has also been a great deal of retail development over the past decade – most notably, perhaps, the Bronx Terminal Market just south of Yankee Stadium. A little known fact is that, on average, jobs pay more in the Bronx than in any other of the five boroughs, except for Manhattan. And my regional economists assure me that it’s not just the Yankees that bring up the average, although they do make a difference. This, of course, is not to say that all is well in the Bronx. Its poverty rate and unemployment rate are both roughly twice the national average, and higher than in any of the other boroughs. While crime has fallen dramatically over the past two decades, it also remains higher than in the rest of the city. Debt is also burdensome for many Bronx residents. Delinquency rates on household debt are relatively high, suggesting that many people are financially “distressed.” All this makes it especially important to maintain the economic momentum that is improving the quality of life in the Bronx. Community banks have an important role to play in this process. Bank lending can help businesses – especially new and small businesses – expand and grow jobs, and help residents invest in improving their homes, neighborhoods and communities.
The key to progress was the joint recognition by market regulators and supervisors that earlier identification of credit losses is consistent both with financial statement users’ needs for transparency regarding changes in credit trends and with the prudential objective of safety and soundness.19 In the other direction, bank supervisors have typically insisted on the vital confidentiality of the information they receive, while securities regulators emphasise transparency. One could argue that, in many countries, the bank supervisors have done too well in this debate. That was brought home to me some years ago when, in a previous existence at the Bank of England, my then team realised that we could analyse large and complex firms most easily using disclosures made under SEC rules. As announced last week in the joint Bank of England/FSA document on how the future Prudential Regulation Authority will approach banking supervision, we plan in the future to publish prudential returns to the extent possible. Shadow banking and the prudential perimeter My second point about firms concerns shadow banking, defined to mean non-bank firms or structures that replicate the monetary and/or credit services of banks in some way, involving maturity transformation and/or leverage20. 18  See Recommendation 19, FSB Report on Implementing OTC Derivatives Reforms (2010); and the recommendations of the FSB’s Data Gaps and Systemic Linkages Group.

In the domestic foreign exchange market, average annual depreciation of ALL against the EUR and the USD was 7.6 and 13.2 percent, respectively. 1.5  Inflation and monetary policy  1.5.1  CPI inflation  Consumer prices rose 2.2 percent on average in 2009, which is in line with the Bank of Albania’s target for inflation. As a result of the reduced inflationary pressures worldwide, annual inflation marked low rates – 1.8 percent on average – during the first quarter of 2009. In the following two quarters, inflation rates stabilized close to the lower limit of the Bank of Albania’s target, 2.0 percent. Annual inflation displayed an upward tendency in the last quarter, when it marked 2.9 per cent in average terms and converging to the inflation target. The highest inflation rate of 3.5 percent was marked in December. The increase of inflation in the last part of the year was mainly triggered by the more complete exchange rate devaluation pass-through to consumer prices, in the presence of upward primary commodity prices in the global markets. The slowdown of economic activity at home and the low inflationary pressures from the global economy created an environment of relatively low inflationary pressures. Core and non-traded inflation marked average rates of 1.3 and 1.6 percent, respectively, in 2009 attesting to the low inflationary pressures of the domestic economy. These factors offset the devaluation effect of the national currency, which led to higher prices of imported goods and a part of products that are still indexed to the exchange rate.
In 2007, growth in the labour force was almost as strong as employment growth. The increase in the labour supply has been particularly sharp in the youngest and oldest age groups. 8  BIS Review 37/2008  One particular feature of this upturn has been high inward labour migration, accounting for almost half of the growth in the labour force in recent years. Most work permits have been given to nationals from Poland, Germany and Lithuania. Most foreign workers from the new EU countries probably intend to remain in Norway for some time. Although unemployment has fallen sharply, wage-earners’ share of value added has declined since the early 1990s, but has picked up lately. Solid productivity growth and high prices for export goods and goods supplied to the petroleum sector have boosted corporate earnings and reduced the wage share over the past few years. The ample supply of labour has probably also had a dampening effect on wage growth. Increased globalisation may have provided greater opportunities for Norwegian enterprises to relocate production to other countries if labour costs become too high. This probably places some restraint on wage demands among workers in sectors where enterprises have such opportunities. But wage-earners have also fared well. We have seen solid growth in employment, and low prices for imported goods have resulted in a subdued rise in consumer prices and a substantial increase in wage-earners’ real wages. There are now signs that productivity growth is edging down at the same time as wage growth is high.

In addition to a favourable environment for Norwegian exports, Norwegian importers have gained access to new markets in central Europe and Asia which offer substantially cheaper consumer goods. As a result, Norway’s terms of trade have improved appreciably over the last few years. 6  BIS Review 37/2008  A second characteristic of this upturn is that productivity growth has been unusually high, resulting in lower production costs. The business sector has been quick to adapt and change, and to make use of new technology that is available in an international market. Banks and other service sectors, in particular, have outperformed other countries in this respect. This is probably due to the modernisation of the economy through the 1980s and 1990s, which resulted in more efficient markets. A third characteristic has been an ample supply of labour, which has boosted output growth. Over the past two years, an increase in labour force participation and high inward labour migration has provided room for continued high growth. In both 2006 and 2007, the number  BIS Review 37/2008  7  of employed increased by over 3 per cent. The number employed increased by 93 000 persons between 2006 and 2007, the highest increase over the past few decades. The sharp growth in employment has partly been reflected in a decline in unemployment and an increase in the labour supply. This is due to inflows of foreign labour and increased labour participation among the existing population. Labour force participation in the age group 15-74 has never been higher.
The circumstances in the Eurozone -and particularly in some member countries, Spain among them – would make it rather artificial for me to skip in my address to you tonight, the hard issues we are facing in Europe. But I’ll try, at least, not to be too long. When this series of Seminars started a decade ago, things among the countries gathered here today were very different. Latin America was going through yet another episode of regional financial stress – in the aftermath of the Argentinean crisis – and the euro area was still benefiting of the smooth start of the euro and the brilliant prospects offered by the Monetary Union. At present, the euro area is entangled in a serious crisis, whose roots – with hindsight – were already taking hold by 2002. The strong push towards economic and financial integration that accompanied the process of accession and the setting up of EMU triggered a period of intense economic convergence among member countries. This was especially the case in countries such as Spain, which had joined the project starting from real income levels below those of the main economies of the area. However, this process went hand in hand with the accumulation of imbalances at the domestic and European levels. The deep integration of European capital markets – one of the most remarkable features of the Monetary Union – resulted in a large availability of financing to those economies whose prospects were perceived as brighter.

The ESRB also has a formal role in the CRR/CRD, among other things through opining on some national macroprudential measures. A macroprudential framework extending beyond the banking sector But the ESRB’s macroprudential mandate extends beyond the banking sector, and not every spot on the map over the financial system is as well-known and covered from a macroprudential viewpoint as the EU banks in the remit of the CRR/CRD. The financial landscape is constantly evolving and subsequently the potential sources of systemic risks. One aspect reflecting this is that the share of credit provided by other financial institutions than banks has grown over the past few years. Hence, after making the macroprudential framework for the EU banking sector operational, targeting the parts of the map where we find the non-bank financial institutions, and working on how to provide a holistic view regarding all parts of the financial system, is a natural and important next step. The ESRB recently published a strategy paper on macroprudential policy “beyond banking”, which complements the guidance already provided on the policy framework for the banking sector. That strategy paper is meant to provide a point of reference as we now move on to further enhance the macroprudential policy strategy, regulatory data and instruments for addressing risks in non-bank financial sectors. I should mention that other work related to non-bank financial institutions has also been conducted, where the recently published annual ESRB Shadow Banking Monitor will hopefully provide important insights.
It was a risk about which bank management, investors, regulators and supervisors were all myopic. The socalled Fundamental Review of Trading Book Capital Requirements is, as Adair said, a very important opportunity to correct this. 5  See the Bank’s paper: “The role of macroprudential policy: A discussion paper”, November 2009 and Tucker P M W (2009e), “The debate on financial system resilience: Macroprudential instruments” at the Barclays Annual Lecture in London. 6  Tucker P M W (2010), “Shadow Banking, Financing Markets and Financial Stability”, Speech at a BCG Partners Seminar. BIS central bankers’ speeches  3  What that amounts to in practice is recognising that the degree of resilience of market liquidity matters a lot. I have been arguing that a market’s liquidity is unlikely to be resilient if demand is dominantly from leveraged investors and traders. They buy when prices are rising, but stop buying or even sell when the price stops going up, leaving prices without a firm underpinning – and often with prices perched on a precipice. That element of recent events is missing from Shleifer’s set up, but in the real world it is precisely what we might expect if one joins up his story about innovation induced by myopia with Hyun Shin’s earlier paper7 about the association of leverage and asset-prices fluctuations. If securities are fundamentally mispriced because of blindness to a type of risk and, further, are held dominantly by leveraged players, the adjustment when it comes will be all the greater.

Thankfully, all this is now also being worked on internationally in the Financial Stability Board. A second and obvious policy inference that one could draw from Shleifer’s paper, and one I want to spend a little more time on this evening, is that it is absolutely vital that (regulatory) capital requirements for banks more or less truly capture their risks. Two thoughts on that, of rather different kinds. First, it was very obviously a false step when, in Basel 2, the international-standard setters tried to follow the techniques and calibrations of private sector risk managers rather than engaging with the externalities that warrant State intervention in this area in the first place. Second, more particularly and more concretely, this underlines the vital importance of the current Basel work to review fundamentally the capital requirements for banks’ trading books. In short, Basel has recognised that the amount of capital a bank should hold against a liquid trading position often has good reason to be smaller than needed for a hold-to-maturity portfolio, ie where the bank can shed its exposure. But it failed utterly to recognise that since such books are marked-to-market (or model) and since the boundary conditions for solvency derive partly from accounting measures of asset values, it is vital that banks hold capital against the risk of violent swings in liquidity premia. Yet that is exactly what torpedoed a fair fraction of the largest banks and dealers in the world through their (levered) holdings of leveraged loans and super senior tranches of CDOs.
Youth unemployment would also remain elevated, with devastating effects for individuals in terms of labour market “scarring”. 8 And this would ultimately affect society as a whole as, given our demographics, realising the potential of the young and their capacity for innovation is essential for long-term sustainability. Second, a situation of persistently low potential growth would make it even harder to work through the debt overhang that still exists in parts of the euro area. For firms that took on debt based on pre-crisis growth expectations, low potential growth acts as a major barrier to new investment, as any profits generated will likely be absorbed by servicing existing debt. And we do see signs that this effect has been operative in euro area: there is a clear negative correlation between corporate debt-to-GDP levels in different countries at the beginning of the crisis and the evolution of business investment since. Third, low potential growth can have a direct impact on the tools available to monetary policy to deliver its mandate. The reason is that low potential growth implies a lower equilibrium real interest rate, which in turn means that, faced with a negative output gap, nominal policy rates need to go lower still to steer output back to potential. This materially increases the likelihood that central bank policy runs into the constraint set by the effective lower bound for interest rates, which is not far below zero. It therefore also increases the likelihood that we have to resort recurrently to unconventional policies to meet our mandate.

As for the inflation forecast used in this Report’s baseline scenario, a large part of the change responds to the direct impact of the fuel price increase. In the case of non-perishable foodstuffs, actual inflation data for the last few months show an increase that reflects December’s projections. The baseline scenario assumes that it will continue to rise at annual rates in the order of 4 to 5 percent during 2011 (figure 10). Thus, the Board foresees that annual CPI variation will return to the tolerance range during the second quarter of 2012 and will stay at 3 percent until the end of the year. This forecast assumes that the propagation of price increases in foodstuffs and oil will follow historic experiences. It also assumes that the economy will grow at a pace consistent with its capacity, limiting the propagation of these shocks to other prices and to labor cost pressures. Private inflation expectations are similar to those described in the baseline scenario. March’s Economic Expectations Survey (EES) shows an inflation rate at December of this year of 4.4 percent. The Financial Operators Survey for the second half of March shows inflation one year ahead at 4.4 percent. These two figures are slightly higher than they were in December 2010. For the medium term, expectations also rise and the EES of March foresees inflation two years ahead at 3.2 percent (figure 11). With respect to end-of 2010, breakeven inflation figures derived from financial asset prices have also increased for all the different terms.