samchain/econo-pairs-v1 huggingface dataset:
Even this very summary review illustrates how the changeover to a single currency in Europe will affect conditions for the financial system. The financial markets will become larger, accompanied by increased competitive pressure. Some activities will be modified or disappear entirely. Others will be concentrated to one or a few financial centres. But there will probably also be some new activities. These developments will leave their mark even in countries that do not join the euro area but are adjacent to it. This, too, is a process that has already begun. Banks are being merged into large units. Cost-cutting has come to the fore. Modes of distribution are being overhauled along with a buildup of specialist knowledge. Systems for pricing different products are being changed. Financial transformation not straightforward Today there is a widespread conviction that free trade in goods and services enhances prosperity in the long term. In the same way, most things suggest that in time, free trade in the financial field leads to increased economic growth. But we have also learned that the transformation and development of the financial field are not without problems. In the past decade there have been bank crises in a number of countries as well as several heavy corrections and large fluctuations in money, equity and currency markets around the world. There is nothing inherently new about financial crises. On the country, they have occurred from time to time for many centuries.

The banks’ ability to transmit monetary policy effectively may be jeopardised if they have problems. The central role of the banks in the payment system - as the channel for payments of every type - makes it important that the banks are financially healthy and operate efficiently and reliably. Otherwise the traffic in payments is liable to be disturbed. If the problems become so great as to constitute systemic risk, it is incumbent on the central bank to consider support for liquidity. Moreover, in that central banks provide settlement systems for large-value payments, they also have a direct, operative function in the payment system. All inter-bank payments are channelled through the settlement system, which is thus the hub of the entire payment system. In Sweden the Riksbank now regularly publishes a Financial Market Report, in which we present our appraisal of the financial system’s development and stability. The Report is thus a way of monitoring one of our primary functions - the promotion of a safe and efficient payment system. There are some parallels here with the Inflation Report, which we publish regularly as part of the work on our other primary function - safeguarding a stable value of money. The rapid pace of financial developments, particularly in the international payment system, also calls for extensive international cooperation. The issue of financial system stability will be up for detailed discussion in various fora in connection with the coming annual meetings of the World Bank and the International Monetary Fund.
But if the foreign reserves are evaluated as a percentage of foreign debt, Iceland is relatively weak. On behalf of the Board of Governors, I would like to take this opportunity to thank the many people and institutions whose representatives are here today for a very satisfying collaborative relationship. BIS Review 36/2008  5

While a general set of rules for European banks was progressively established in successive capital requirements directives, substantial flexibility remained in how those rules was interpreted at the national level. The Lamfalussy process was launched in an effort to iron out these differences, but the process rested entirely on cooperation between national supervisors, with no possibilities for binding mediation or enforcement at the European level – and it was fiercely resisted by countries with financial centres. The divergence this permitted in the application of regulatory and supervisory standards allowed serious financial imbalances to build-up in some jurisdictions, which then of course created serious blowback for the euro area. But similar to fiscal policies, an inconsistent framework also undermined the value of prudential policy itself. As, for example, definitions of forbearance and non-performing exposures differed widely across countries, investors simply did not trust in banks’ stated asset values and provisions. In other words, the confidence effects that prudential policy is supposed to provide disappeared when they were most needed. For structural policies there were no binding European rules at all, as they were seen as having a primarily national significance. Inconsistency between policy areas These governance arrangements were not only internally inconsistent, however; they were inconsistent with each other.
What we are seeing is a sharp increase in private holdings of assets both in Norway and abroad. This constitutes the core of globalisation. Capital finds its way to the highest return irrespective of national borders. Challenges posed by a global capital market The Norwegian capital market is part of a Nordic market, which is being increasingly integrated into an international capital market. Capital markets are a very efficient tool for channelling funds from savers to investors. Capital markets act as a catalyst for restructuring and growth, but also for financial bubbles and crises. This places new demands on economic policy. If a country is to benefit from a free capital market, it must draw up legislation providing for regulations and supervision that ensure stability. Countries with poorly developed capital markets may benefit from some limitations. They should exercise some caution in opening these markets too suddenly. The flow of capital is like electricity. Adequate insulation should be in place before it is turned on. When the Nordic countries liberalised credit markets in the 1980s, we experienced considerable problems because supervision and rules were not adequate. The same was witnessed in the crisis in Asia and Russia a few years ago. Inadequate and ineffective legislation and supervision resulted in weak control of financial sectors in the beleaguered countries. The liberalisation of the capital market within a country requires national regulations and supervision. The liberalisation of capital movements across national borders requires coordination and regulation at an international level.

Developments in 1998 are one example, when the krone came under growing pressure as a result of the sharp fall in oil prices, turbulence in international capital market in the wake of the Russian crisis and imbalances in the Norwegian economy. Monetary policy The long-term objective of monetary policy is to provide the Norwegian economy with a nominal anchor - domestic price stability, and thereby the basis for a stable krone. Nominal stability is the best contribution monetary policy can make to economic growth and prosperity. A nominal anchor is also a necessary precondition for stable financial markets and property markets. High inflation and wide swings in the exchange rate impair the function of prices as an information vehicle. This leads to booms followed by busts and an arbitrary redistribution of income and wealth. Inflation therefore poisons the economy. By linking movements in the krone to the euro, we have chosen to follow the same standard for nominal stability in the economy as set by the euro area countries. BIS Review 19/2001  7  Since 1997, inflation has been higher in Norway than in the euro area. The difference partly reflects a period of strong growth in Norway, while the level of activity in Europe has been low. But the relatively high inflation rate in Norway cannot continue as this will undermine the basis for stability in the krone exchange rate and weaken confidence in monetary policy.
To this end, MAS has proposed a new Capital Markets and Financial Advisory Services (CMFAS) examination module on product knowledge for representatives who want to sell “complex investment products”. MAS has been working with representatives from various industry associations and The Institute of Banking and Finance to develop this CMFAS examination module. But in addition, financial institutions must ensure that their representatives keep up to date with market developments. MAS will review and intensify our supervision of financial institutions in the sale of investment products, and commit more resources to this. We will continue to use thematic and ad-hoc inspections to review compliance policies, procedures and controls of financial institutions. MAS’ supervision cannot replace the primary role of the Board and senior management to ensure that controls and processes are implemented robustly by all their staff in all dealings with customers, at all locations. We will therefore scrutinise the steps being taken by Board and senior management to ensure fair dealing by the financial institution with its customers. This will include areas such as product approval due diligence, as well as the pay and incentive structures for sales and advisory staff, and their training and supervision. Downstream, we will increase the use mystery shopping to complement inspections and other supervisory tools to help us identify specific areas where financial institutions are falling short.

To further enhance this facility, with immediate effect: a)  3  We will accept AAA-rated $ debt securities issued by sovereigns, supranationals and sovereign-backed corporates as collateral in the Standing Facility in addition to SGS. Given this change, we will also permit banks to treat these securities as Tier 2  Conducted US-based recruitment firm Hudson. BIS Review 91/2009  3  liquid assets, with the same zero risk weighting as SGS. This will help banks to better manage their risks and liquidity profiles. b)  We will also enter into cross-border collateral arrangements with other central banks to accept well-rated foreign currencies and government debt securities as collateral in the Standing Facility. Last month, I signed an MOU with the Governor of De Nederlandsche Bank N.V., the Dutch Central Bank. Discussions are ongoing with several other central banks. Globally, government bond issuance is rising while banks’ balance sheets which are typically used to underwrite these issuances are shrinking. We have seen in some jurisdictions several instances of poor or even failed auctions of government bonds due to unexpectedly weak sentiment or concerns about ballooning government debt and fiscal deficits. Singapore is different. The Government does not issue bonds to finance its budget deficit. Investors understand that the Government issues SGS for the sole purpose of building a risk-free yield curve for the corporate sector to price its debt. But the SGS market can be affected by contagion of weak sentiment spilling over from other markets.
Unconventional measures have varied across countries depending on many country specific factors including real and financial sector imbalances built-in in the run-up to the crisis and fiscal and monetary policy buffers. Still, given that many of the unconventional instruments were more targeted at specific segments of the markets/economy, in principle the traditional data sets may not be fully fit for the purpose entailing a need for additional information to make a good diagnosis, prescribe a proper medicine and finally evaluate the success of the treatment. This is especially the case if the unconventional measures become conventional or new unconventional tools emerge along the horizon, which is not to be excluded. Thus, again a move from traditional aggregate-based statistics to a granular multi-purpose statistics  4  BIS central bankers’ speeches  seems a way forward. Going back to our experience with non-standard measures, given the shallow and underdeveloped financial market, we did not face with the same data challenges as central banks in more advanced economies. Yet, in terms of the unconventionality, efforts were made to affect the distribution of the already solid credit growth, by supporting credit to corporate sector, to net-exporters and energy producers in particular. These were identified as segments that on a longer term can support the external position of the economy. In addition, measures were undertaken, supportive to the financing of the corporate sector through the issuance of longer-term debt securities, as alternative source of financing.

This was considered a natural consequence of the Riksbank being an authority under the Riksdag (the Swedish parliament). It was therefore considered unnecessary to specify any further objective than price stability in the law text. It would moreover be difficult to combine such objectives with the EU regulations and also inappropriate given that monetary policy cannot govern long-term developments in production and employment. Monetary policy affects the economy with a certain time lag. This means that the Riksbank cannot control inflation in the very short term and that monetary policy decisions must be based on forecasts of future inflation. Monetary policy is normally aimed at achieving the inflation target within two years to avoid the deviations from target from being too large and too protracted. The two-year horizon can be regarded as a restriction the Riksbank has taken upon itself to give credibility to the inflation target. At the same time, it provides an opportunity to show consideration for the real economy. If, for instance, there is a shock that leads to inflation being pushed upwards despite weak demand, a very rapid return to the inflation target could lead to a more severe slowdown in the already weak demand, than would be the case if the recovery was allowed to occur at a slower pace. If inflation is instead held back despite good growth in demand, attempts to quickly return it to target through very expansionary monetary policy could lead to the economy overheating.
From LIBOR to SONIA: a bridge to the future  Remarks given by Andrew Hauser, Executive Director, Markets At the ‘Is Your Business Prepared for LIBOR?’ webinar 18 September 2020  I am grateful to Stefania Spiga for her help in writing these remarks, and to Amber Evans, Tom Horn, Al Hughes and Alieda Moore for their input and guidance. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  Thank you Phil. It’s great to be with you, and it’s great to have such a fantastic line up to discuss this vital issue for every company in the UK. We’re here today to talk about what it will take to get your business ready to transition away from LIBOR. But I want to start somewhere different. I want to start with a bridge: Hammersmith Bridge in London, to be precise. It’s been around forever. People love it: it can carry over 20,000 vehicles a day. And to the naked eye, it seems in the prime of health: beautiful to look at, safe as houses? Well no, actually: it’s completely unsafe. Below that shining metalwork, there are big and growing cracks – and sooner or later, if nothing is done, someone driving over it is going to fall headfirst into the Thames. So the local council has closed the bridge – it had no choice. But the disruption has been huge. Journeys that used to take a few minutes can now take hours. There are traffic jams everywhere.

Efforts aimed at integrating these markets into regulated and supervised market infrastructures are indeed an essential policy response to risks accumulated in these markets. However, the crisis has not just shown us that we should expand the scope of regulation and supervision. In fact, two clear trends have emerged and are greatly affecting the very nature of regulation. The first observable trend is that we must complement micro-supervision with macrofinancial supervision: this macroprudential approach has in fact developed in many countries. The second trend is that regulation needs to become more global in response to the globalization of finance. In that respect, the commitment by all G20 jurisdictions to implement Basel II by 2011 and to finalize this year a new package aimed at strengthening bank capital and liquidity standards is a great achievement. We are confident that making tangible progress on each of these fronts is an essential response from policy makers to the roots of the global financial crisis. To some extent, the ultimate aim of financial regulation has to do with financing the real economy. Sound regulation should enable the stable provision of financial services to economic agents as they strive to finance their productive investments and consumption, which constitute the fuel for growth. Banks are central to the financing of economic activity because they perform maturity and liquidity transformation as well as a credit risk screening function. This is  BIS Review 93/2010  3  especially true in continental Europe, where they are responsible for more than 80% of financial intermediation.
Forbes, K. (2016), “Global economic tsunamis: Coincidence, common shocks or contagion?”, Speech at Imperial College, 22 September 2016 Grote, R and Marauhn, T (2006), The Regulation of International Financial Markets, Perspectives for Reform. Cambridge University Press Hoggarth, G, Jung, C and Reinhardt, D (forthcoming), “Capital inflows — the good, the bad and the bubbly”, Bank of England Financial Stability Paper IMF (2016), Global Financial Stability Report, April  15  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  15  IMF-FSB-BIS (2016), “Elements of Effective Macroprudential Policies – Lessons from International Experience” Laeven, L and Valencia, F (2013), “Systemic Banking Crises Database”, IMF Economic Review 61(2): 225– 270 Reinhardt, D and Sowerbutts, R (2015) “Regulatory arbitrage in action: evidence from banking flows and macroprudential policy”, Bank of England Staff Working Paper No. 546 Reinhart, C and Rogoff, K (2009), “This Time Is Different: Eight Centuries of Financial Folly”.

Higher interest rates can also reduce the probability of a banking sector crisis through the same leaning channel (𝜙𝑖 < 0), but do not increase resilience directly. The banking sector only provides a proportion (𝑏) of credit to the economy, the remaining (1 − 𝑏) share is provided by the market based finance sector (𝐵1𝑀 ). While higher interest rates have the same effect in reducing credit and the crisis probability in both sectors, increasing the CCyB leads to a leakage of credit from the banking sector to the market based sector, so the marginal effect of a higher CCyB on marketbased finance is to increase its growth rate (𝜙𝑠𝑀 > 0). This increases the probability of a crisis originating in the market based finance sector (𝛾1𝑀 ). In addition, there is no resilience benefit from a higher CCyB working to reduce the probability of crises originating in the market-based finance sector. The overall probability of a financial crisis is equal to the sum of the probabilities in each sector, weighted by their market-share. Both sectors are subject to shocks (𝜉1𝐵 , 𝜉1𝑀 ). A single policymaker sets both instruments, the CCyB and the interest rate, to minimise the joint loss function given below under discretion.
Finally, Governor, would you say there is a relationship between EU membership, and by implication EMU, and the deterioration in the current account of the balance of payments in 2004? There is clearly such a relationship, though other special factors have also been at play here, including the large fiscal deficit. For example, we had anticipated that the total liberalisation of trade and capital controls upon accession to the EU would have left their mark both on the current account and on the external reserves. As expected, there has been some adjustment of asset portfolios by households and private corporate investors in response to the wider range of investment products available overseas. On the trade front, the removal of the remaining levies has led to greater consumer demand for imports, particularly of foodstuffs and furniture. There has also been a surge in foreign travel. In 2004, the number of Maltese leaving by air rose sharply by almost 17 per cent, which implied an additional outflow of Lm7 million. Another factor that has undoubtedly served to encourage consumption, and even possibly investment abroad, has been the relative unattractiveness of the traditionally preferred saving outlet, the 12-month fixed deposit. The gradual reduction in the Central Bank of Malta's central intervention rate these last years was followed by more than proportionate cuts in the rates offered by banks on fixed deposits, probably because of the abundant liquidity available at the time.

That date is, to an extent, at the discretion of the national authorities. This approach builds on the premise that the considerable benefits of a currency union can only materialise when a close similarity exists with other euro area participants and a high degree of convergence has been attained with them. When this point has been reached, a prospective new member is much less susceptible to shocks which are not common to other members. This ensures that the monetary policy of the European Central Bank (ECB) is equally suitable for all euro area members - old and new. The two Cabinet meetings held recently assessed Malta's state of readiness in this regard, on the basis of a report prepared jointly by the Central Bank of Malta and the Ministry of Finance. The meetings also discussed issues related to Malta's participation in the exchange rate mechanism, also known as ERM II. The first decision which has to be made in fact concerns the timing and method of participation in ERM II because a Member State cannot adopt the euro without having successfully spent a minimum period of two years in this mechanism. While this decision is taken in a multilateral context involving various EU authorities, Member States and the ECB, the Maltese authorities nevertheless need to have a position. The Central Bank of Malta contributes to the formation of that position through its role as advisor to the Minister of Finance on financial and economic matters.