samchain/econo-pairs-v1 huggingface dataset:
These stronger foundations, of steady growth, low unemployment, relatively low inflation, and strong and more developed financial systems, have strengthened Asia’s resilience and its ability to manage external vulnerabilities. They have placed Asia today in a stronger position to secure and sustain its future growth and stability, compared to a decade ago Three prominent characteristics that are common to most countries in the region have contributed to Asia’s economic success. First and most important is the economic flexibility of Asia – the ability to adjust to changing conditions without being weighed down by structural impediments and policy rigidities. The significant investment in productivity enhancements and technology is complemented by the high degree of capital and labour mobility. Financial reforms for deregulation and greater market orientation and liberalisation have also facilitated the region to continually shift resources to new areas of comparative advantage. These have not only enhanced Asia’s competitiveness, but also yielded a more diversified economic structure. More recently, the policy strategy has been to strengthen domestic demand as an important driver of growth. This will serve to anchor Asia’s growth prospects. As domestic demand strengthens, Asia is transitioning from being global producers to becoming global consumers. This trend will also contribute towards more balanced global growth. Asia is one of the most diverse regions in the world – in terms of market size, stage of development, resource endowment, economic structure, financial sector development, and market systems. Asia has leveraged on the complementarities arising from this diversity.

Safe, efficient and competitive payment and settlement systems must be available in our own marketplace, and they will be. London has huge advantages as a strong and competitive financial centre in or out BIS Review 1/1997  -6-  of EMU. We are confident that those advantages will remain. The fact that more and more banks are centring their foreign exchange, corporate finance and investment business in London suggests that they share our confidence in the future of London. In these matters it always seems to me to be best to take one’s cue from ‘revealed preferences’ - where financial institutions choose to base themselves, taking account of all the uncertainties. Those revealed preferences remain strongly in London’s favour. The preparations for EMU are now hotting up. All over Europe, Boy Scouts are packing their rucksacks with the kit they will need for this determined assault on what, in deference to its German roots, we should perhaps call the Magic Mountain, with apologies to Thomas Mann. The Magic Mountain is perhaps a more tactful title to choose than The Confessions of Felix Krull, Confidence Man, or Death in Venice, as some others in London might suggest. I hope that this morning I have given you some insights into what we think should be in the central banker’s rucksack, and how the United Kingdom will assess its own preparedness next year, when the time comes. BIS Review 1/1997
And now that Europe is making significant progress, growth there has begun to pick up and broaden. 2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  First, reform implementation must not only be effective but also dynamic. That means adjusting measures if there are unnecessary duplications, inconsistencies or material unintended consequences. The objective isn’t just resilience, but efficient resilience. Second, we must resist steps that would fragment the global financial system. Instead, we should take full advantage of the progress made by building a system of deference to each other’s approaches when they achieve comparable outcomes. What a Difference a Decade Makes A decade ago, regulatory frameworks in advanced economies had become light touch and ineffective. Looming risks in the financial system were ignored. Markets were fragile and unfair, plagued by numerous instances of misconduct and insufficient market discipline on large firms. And few participants were exposed to the full consequences of their actions as governance and compensation arrangements focused on the short term. In Washington in 2008 in the aftermath of the Lehman debacle, G20 Leaders committed to radical reform of the financial system, and they charged the FSB with fixing the fault lines that caused the financial crisis. The comprehensive reform programme had four main components: -  Creating resilient banks  -  Ending too big to fail  -  Transforming shadow banking into market-based finance; and  -  Making derivative markets safer. A decade on, this programme has largely been achieved.

We host crisis management groups for the UK’s globally systemic banks, insurers, and systemic CCPs and attend all such meetings internationally for firms with significant operations in the UK. And we conduct exercises with other major jurisdictions to test preparedness. 10  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  10  That means recognising that because risks to financial stability are constantly evolving we must continue to work together to identify emerging vulnerabilities in a timely and consistent manner. 12  And that means not merely resisting the forces of fragmentation but actively building an open global financial system that places increasing reliance on, and deference to, each other’s national regimes when they achieve similar outcomes. A decade on from the start of the crisis, now is the time to take the high road to the benefit of all. 12  Just as the FSB is doing in its work to assess the financial stability implications – both opportunities and risks – of FinTech. 11  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  11
Per cent of trend GDP 6  6  5  5  4  4  Norway1)  3 2  3  OECD countries  2  1  1  0  0  -1  -1  Euro area  -2  -2  -3  -3  -4  -4  -5 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002  -5  1) Mainland Norway Sources: OECD and Norges Bank SG Gausdal 31.01.03  In spite of last year’s high wage growth, the interest rate was only raised by 0.5 percentage point last summer. Later in the year, the interest rate was reduced, primarily as a result of weak external economic developments that led to a reduction in interest rates abroad, thereby widening the interest rate differential. The global downturn and the strengthening of the krone have had a dampening impact on the Norwegian economy. When cyclical developments in Norway and abroad again converge, interest rates in Norway will be closer to the level abroad. This may also bring the krone back to a more normal level. Today’s particularly strong krone must also be seen in connection with the stock market decline, high oil prices and fears of war in Iraq. The very low level of interest rates among trading partners reflects an environment of sluggish growth, high unemployment and a risk of a prolonged downturn with deflation. This is a situation that we must strive to avoid.

Per cent 4.0  88  3.5  92  3.0  96  Interest rate differential, (left-hand scale)  2.5 2.0  100  TWI (right-hand scale)  1.5  104 108  1.0 112 Jan 99 Jul 99 Jan 00 Jul 00 Jan 01 Jul 01 Jan 02 Jul 02 Jan 03 1) Trade-weighted effective exchange rate (TWI). A rising value denotes an appreciating rate Source: Norges Bank SG Gausdal 31.01.03  The main explanation for the wide interest rate differential is not that interest rates are high in Norway, but that interest rates are at a historic low abroad. For example, interest rates have not been at such a  low level in the US since the 1960s. Foreign interest rates have been reduced markedly to counter a downturn, while Norway has featured labour shortages, high income and consumption growth and a more normal interest rate. Low volatility in foreign exchange markets has probably amplified the effect of a wide interest rate differential. Furthermore, equity prices have shown a pronounced decline over close to 2½ years and investors have been seeking alternative investment vehicles. The appreciation of the krone in the first half of last year gradually changed the inflation outlook. In isolation, this implied a reduction in interest rates. However, the Norwegian economy was also exposed to high pay increases last spring, which had the opposite effect. In this situation, if monetary policy were to give priority to short-term inflation considerations, we could perhaps have reduced the interest rate last summer.
The Bank of Zambia is in the process of engaging the banks with a view to finding a solution to the high cost of banking which is often cited as the main hindrance to access to finance. I therefore appeal to all the banks operating in Zambia to critically assess the level of their charges and to continue playing the supportive role to development that they have in the past. In this regard, I am particularly pleased to make mention of the spirited efforts that Standard Chartered Bank continues to make in financing SME’s and Micro-finance. The experiences of many economies show that these sub sectors have the capacity to create a middle class and  BIS Review 163/2008  1  to emancipate both rural and urban dwellers from their poverty trap. Zambia has many promising entrepreneurs whose only constraint is affordable funding. As you explore the opportunities that this new venture will bring you, I urge you to focus on the customers who may appear small today, but could grow with the bank if they are given the right support. I wish you every success as you embark on this journey into North Western Province. 2  BIS Review 163/2008

EBRD’s involvement in two very important initiatives, namely the Local Currency and Local Capital Market Initiative and the Vienna Initiative, has been essential for Romania and the region. I am closely following the evolution of the EBRD. I believe that it finds itself at a cross-road, as the world has been changing rapidly due to the remarkable achievements of the past century: the IT revolution, artificial intelligence, the technological progress and so on. EBRD, as other financial institutions, ought to adapt itself to this new environment and try to respond wisely and appropriately. In this respect, I think that EBRD has to continue its work in the countries for which the Bank was initially created, as transition gaps still exist. We all need to share our experience with the new countries of operations, adjusting our knowledge to new challenging environments. We need to remain open minded and ready to tackle further challenges in this multidimensional environment. EBRD needsto be ready to share, when and if its help is required. Together with the other institutions of European Union, the European Commission, the EIB Group, as well as the national development agencies of the member states, we all have a duty to help/assist the less fortunate. However, as expansion is a “hot topic” today in the EBRD, should it be considered by the shareholders in the future, it needs to be calibrated with a strong and decisive intervention in the current countries of operations, to remove as much as possible the transition gaps.
But as well as being able to withstand stress, we also need to be confident that the banking system is forward looking – that banks understand and plan, in the way best suited to them individually, to meet future challenges to their core business model. For that reason, last year, in addition to our regular annual stress test, we set the major banks a longer term ‘exploratory scenario’ exercise. This examined their strategic responses and preparedness to, among other things, increasing competitive pressures enabled by the changes I have described. In this ‘exploratory scenario’, customers move their money much more frequently and swiftly than they do at present between banks and different products. As customers become increasingly willing to move their accounts, the brand power of major banks diminishes, and savings not only switch between banks but also migrate more readily to non-banks. By the end of the scenario, there is much greater competition for retail deposits and the aggregate amount of deposits in the system falls. In the scenario, one consequence of this competition for retail deposits is an increase in pricing – banks have to pay more to attract scarce deposits. At the same time, strong competition in lending markets – mortgages, loans, credit cards, etc – means that banks are not able to simply pass on the higher cost of deposits to borrowers. As a result, in the scenario there is a marked squeeze in banks’ net interest margins and hence on banks’ revenues.

So we have seen financial firms outsourcing functions like IT support, systems development and HR both within the UK and Europe and to India. That too seems likely to continue so further growth of trading and management in London may well not lead to proportionate growth in jobs. On current trends we might expect a greater concentration of high value, high skill jobs in London. Conclusion So back to my question: wave or persistent stream? The answer is, as you will have spotted, both. Readers of the Bank’s Financial Stability Report (next edition due next month) – or those that have read the financial news – will know that the financial markets have been buoyant recently; in particular the premia for risks in the credit market are very low and profit growth and bonuses have been spectacular. Some of this may well be the crest of a wave. However, for the reasons I have set out this afternoon, London is also benefiting from a longer lasting and a strong current. We may expect that cycle to turn at some stage – and London will be affected because of its international position. But there are good reasons to expect London to further enhance its position as a global financial centre in the long term. And that will have implications for the rest of the economy and the risks it faces. It will continue to affect the labour market, the housing market, and the distribution of wealth and income.
These costs are significant, though still modest compared to the output falls during the recession of around 8 per cent in the United States and over 10 per cent in the United Kingdom, relative to a continuation of pre-crisis trends. So this could be an insurance premium worth paying if there was a reasonable chance that it could have prevented these falls. (The regression model obviously does not capture the inherently nonlinear link between the earlier credit/house-price boom and the subsequent near-collapse of the banking system and associated contraction in output; any gain from this more restrictive policy in terms of reducing the likelihood of a future bust is therefore absent – that is why the extent of the downturn in 2008–9 is largely unaffected.) Although the impact on house prices is quantitatively significant, the limited impact on credit – arguably the more important variable in determining the vulnerability of the system – as well as the plethora of other factors at work in creating the crisis, makes us reluctant to conclude that it would have had a major impact on the probability of a crisis materialising. But ultimately this is very much in the eye of the beholder, as we cannot be sure what would have happened under the alternative policy. There may nevertheless be times when a well-judged monetary policy intervention is particularly effective in curbing financial excesses.

•  Let me finish with a few words on the development of macro-prudential frameworks across the globe. For the most part good progress has been made in setting up effective macroprudential frameworks at a national level. However, many emerging macro prudential risks are cross border in nature – for example the GFSR has identified global factors as having played an important role in the quadrupling of corporate debt across major emerging economies, much of which is in foreign currencies. The risk inherent in this build up of leverage has motivated calls for a normalisation of advanced economy monetary policy sooner rather than later – a global leaning against the wind. •  But tightening advanced economy monetary policy solely to discourage further borrowing could make the job of getting inflation back to target more difficult. So, just as using a targeted macroprudential tool is preferable to using monetary policy to tackle domestic financial stability risks, so too would it be preferable to use efficient and effective international macroprudential tools to target global risks to financial stability. The framework for international macroprudential co-ordination is currently still in its infancy, and there is much room for improvement by way of surveillance, design and implementation of global macroprudential tools. This perhaps is the next frontier for macro-prudential policy and an important one for the FSB and IMF to take forward given the potentially significant negative spillovers that might result. BIS central bankers’ speeches  3
B., and M. Campello (2002), “Borrowers' financial constraints and the transmission of monetary policy: evidence from financial conglomerates”, Federal Reserve Bank of New York, Staff Reports: 153. BIS Review 149/2007  5  The fourth element in the story, underway since August, has been distributional. Banks relatively reliant on wholesale funding have bid up for funds. But doing so has been taken as an adverse signal, prompting further rationing of wholesale money market lending at term maturities and potentially deterring the strong from entering the market; this is what is known as a “Lemons” problem 13 . In the United Kingdom, since August, mortgage approvals and secured lending have declined by more at the medium-sized mortgage banks and specialist lenders than at the largest UK banks, partly due to Northern Rock (Charts 14-15). This was symmetric. Their mortgage portfolios grew faster over the previous years. All told, this looks like a manifestation of the Kashyap and Stein finding, in various non-UK settings, that lending is more cyclically variable at banks that start off with weaker balance sheets; 14 or, as I would prefer to put it, with concentrated income streams and/or funding sources. Won’t the macroeconomic effect of this be dampened by the bigger and more diversified banks picking up the slack? It is important to distinguish the longer term from the near term. The longer-term impact will depend on whether the structure of the industry shifts. The securitisation boom seems to have altered the terms of trade in UK banking for a while.

10  BIS Review 149/2007  ANNEX Chart 1: Money mentions(a) in MPC minutes and money growth M entions  6m-o-6m (ann) M oney mentions  2 1.8 1.6  14  M 4 growth  iloan D(2)  CD(3)  C  12  CS(1)  CD(1)  10  1.4 1.2 1 0.8 0.6 0.4 0.2 0 1997  Diagram A: Shifts in both supply of credit (CS(1)→ CS(2)) and demand for credit (CD(1)→ CD(2)/ CD(3))  8 6  il(2) il(1)  CS(2) F  A  E  C1  C2  il(2)  4 2  1999  2001  2003  0 2007  2005  C3Credit  Note: (a) number of mentions on “money” in “Immediate policy decision” section of MPC Minutes Source: Bank of England  Diagram B: Shift in supply of credit (CS(1)→ CS(2)), unchanged demand (CD)  Chart 2: Total credit to UK households  iloan  £ billions 1600  CD  1400  Total lending to individuals  1200  CS(1)  1000  A  il(1)  B  800  CS(2)  600  il(2)  400 Bank and building society credit  200 0  C1  Credit  C2  1987  1991  1995  1999  2003  2007  Source: Bank of England, ONS  Chart 3: Total credit to UK private nonfinancial companies £ billions 4000  Chart 4: Shares of total lending to UK households Percentage of total lending to households  Non-bank lending Bank lending  100 90 80 70 60 50 40 30 20 10 0  3500 3000  Total financial liabilities  2500 2000  Total lending to PNFCs  1500 1000  PNFCs' M4L 500 0 1987  1991  1995  1999  Source: Bank of England, ONS  BIS Review 149/2007  2003  2007  1993  1997  2001  2005  Source: Bank of England, ONS.
Birgir Ísleifur Gunnarsson: Interaction of monetary and financial stability in small open economies Welcoming address by Mr Birgir Ísleifur Gunnarsson, Chairman of the Board of Governors of the Central Bank of Iceland, at the SUERF Seminar, Reykjavík, 3 June 2004. *  *  *  Ladies and Gentleman On behalf of the Central Bank of Iceland, I warmly welcome you to this seminar on the Interaction of Monetary and Financial Stability in Small Open Economies. It is an honour for us to co-sponsor the seminar with SUERF. We are grateful to David Llewellyn, Eduard Hochreiter, Beatrix Krones and Micheal Bailey at SUERF for the excellent cooperation which we have enjoyed with them in its preparation. The topic of the seminar is an appropriate one which is attracting increasing attention, both within and outside central banks. I trust that the presentations and discussions over the next two days will leave us with a better understanding of this interaction and of the issues on which we wish to focus our attention in the period ahead. We will be assisted by very impressive speakers and participants. I wish to extend my gratitude to those who have agreed to give lectures and present papers and I look forward to inspiring and stimulating contributions by them. In this address, I will briefly describe our own recent experience in the areas of monetary and financial stability. The current Act on the Central Bank of Iceland was adopted in 2001.

Efficiency in individual financial institutions As regards individual efficiency, deposits institutions have the capacity to pursue selection processes among potential borrowers and, at the same time, on the basis of the relative risk, to set different prices. Moreover, they undertake monitoring, seeking to minimise the risk of borrowers not meeting their obligations. In sum, deposit institutions help reduce both adverse selection and moral hazard problems, while their ability to transform maturities allows them to provide liquidity. The enabling mechanism for the proper functioning of this system is depositors’ confidence in deposit institutions. Efficiency in savings banks Among overall deposit institutions, savings banks undoubtedly play a significant role, contributing as they do to the distribution of market share among a bigger number of institutions, thereby fostering  2  BIS Review 31/2003  competition. Likewise, in a sector whose cornerstone is depositors’ confidence, properly run savings banks contribute to reinforcing the stability of the financial system. Savings banks are an old and peculiar form of financial institutions, and display a set of particularities relating both to the significant social content of their action and to their strong regional roots. I shall address these two aspects. First, savings banks have, since the outset, been characterised by their contribution to preventing financial exclusion. That is to say, central to their objectives is a concern to ensure that the more disadvantaged segments of the population may have access to financial services.