samchain/econo-pairs-v1 huggingface dataset:
SPEECH DATE:  2021-10-06  SPEAKER:  First Deputy Governor Cecilia Skingsley  LOCALITY:  Swedbank (digitally)  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  Building payment systems for our grandchildren* Payments at the heart of our everyday lives Firstly, thanks for inviting me this morning to speak about payments and the infrastructure that makes them possible.1 A topic that currently commands quite a lot of time at both the Swedish banks and the Riksbank, due to large projects aimed at basically building the future payment systems. I will say more about this shortly. Many of us tend to pay without thinking so much about what actually happens. On a typical day, a first interaction with the payment system could be preloading your public transport card from your bank account. At work, you use your mobile phone to send – or ‘swish’ as we call it after the domestic mobile payment service – a contribution to a colleagues 50th birthday present. Later, lunch is paid for with a bank card that you may also use to buy groceries with on your way home. Back from work, you may still have a few payments to make. In the evening, perhaps you log on to your internet bank to pay a couple of bills. Also, if the month has not been too costly, a sum of money may be placed in your savings account or even invested in the stock market.

The percentage of financially constrained but viable SMEs – defined as those with positive turnover in the last six months seeking a bank loan – was estimated to have varied from around 1% in Germany and Austria to a quarter of the SME population in Spain and as much as a third in Portugal. The second part of our response has therefore been to improve the transmission of loose market financing conditions into the actual borrowing conditions of firms and households. In this context, between June and September last year we launched our credit easing package to strengthen banks’ incentives to improve the availability and lower the price of credit. In parallel, we gave our full technical and operational support to the Comprehensive  BIS central bankers’ speeches  1  Assessment of bank balance sheets – the supervisory exercise aimed at forcing banks to acknowledge non-performing exposures and to raise provisions and capital where needed. This exercise was powerful in the sense that it accelerated what had until that point been a slow process of balance sheet repair in the euro area; banks strengthened their capital by over € billion in advance of the outcome. In this way the new monetary policy impulse coming from our credit easing package coincided with a banking sector in a stronger position to transmit it. But as these measures were coming into effect the euro area was hit, like all advanced economies, with a further downward shock to inflation emanating from the steep fall in global oil prices.
In the euro area, the economy depends on the banking system for more than two-thirds of its financing. Any lasting disruption to credit flows would cause considerable harm. Regulators could jointly decide on the following sequence. In the immediate future, priority should be given to capital conservation. As I mentioned, most of the current banking profits are, in fact, by-products of public policies and there is a good case for requesting that they should be kept inside the banking system and used to strengthen balance sheets and finance credit to the economy. This would require some restraint in dividend distribution and, of course, in the overall amount of variable compensation. In parallel, all possibilities to issue new equity should be exploited. This would be a first step. As a second step, a progressive schedule of capital strengthening could be precisely defined and published for the future. It would be crucial that this schedule be made explicitly contingent on the state of the world economy. Again, we want the direction and the path to be clear. But it is important to avoid any negative procyclical effects. The same approach could apply to the new liquidity regime when it is introduced. Let me conclude by mentioning one broader and fundamental issue. We don't know yet what kind of financial system will emerge from the crisis. We need to think about this. We want to reduce or eliminate moral hazard, but the definition of a systemic institution still eludes us.

As a result of the turmoil, and of the policies implemented to contain it, some financial activities have become heavily concentrated among a very small numbers of players. This raises some basic questions about monopolistic tendencies. Competition policy in the financial sector must be reinvented. This cannot be done without some vision about the future shape and structure of the financial industry, as well as the degree and modalities of its internationalisation. The debate is clearly open. This is – for all G20 policy-makers, the FSB and regulators – a formidable challenge. BIS Review 133/2009  3
This period coincided with the consequences caused by the pandemic. Second, the Bank of Albania has initiated and implemented a plan of measures to increase the use of the national currency, in the financial system. This plan of measures aims at strengthening the financial stability of the banking sector and economy and at the better monetary policy pass through. It has induced positive effects in terms of reducing the share of loans in foreign currency around the level of 50% and increasing the interest for holding savings in our national currency. Third, the Bank of Albania has successfully managed the consolidation process of the banking sector. This process, consisting in a huge investment of time and energy, has aimed at not simply reducing the number of commercial banks (from 16 to 12), but – above all – at the introduction of new and motivated actors in the domestic market and increase of competition in this market. Albania has benefited a more competitive, efficient and safer banking sector. Last, the Bank of Albania has worked for the adoption of the best practices in the banking regulation and supervision field, aiming at the convergence with the euro area standards and focusing on the analyses and address of large risks. In reflection of this work, the Bank of Albania is already a member of the supervisory colleges of central banks. We have also established and approved a complete and functional framework on resolution of banks, thus being the first amid regional countries. These efforts have given their fruits.

The FPC has said that it would take a proportionate and graduated response to evolving housing market risks. Experience suggests that momentum in the market, and an associated increase in indebtedness, can be hard to check, particularly if expectations of a rapidly rising market become deeply entrenched. A number of countries have had to take a series of actions over time to slow fast growth in housing market activity to more sustainable rates. 2  See the Box on page 22 of the May 2013 inflation report. BIS central bankers’ speeches  5  To return to where I started. The Financial Policy Committee of the Bank of England is charged with looking ahead to identify and to counter risks to financial stability. There will always be a number of blinking warning lights – risks generated at home and risks coming from abroad – on our dashboard. The growing momentum in the market is now in my view the brightest light on that dashboard. It has not yet been accompanied by a substantial increase in aggregate mortgage debt, though gross mortgage lending is growing and there are signs that debts are becoming more concentrated. This could fade as affordability and lender constraints act increasingly as a brake on momentum. But other outcomes are very possible and the Financial Policy Committee will need be both vigilant and ready to act. 6  BIS central bankers’ speeches
The Basel Committee on Banking Supervision, which was formed in 1974, in the wake of the Herstatt incident25, has been setting the norms for banks’ capital adequacy, for instance, since the 1980s. With regard to financial legislation, harmonised regulations have long been drawn up for banks and other financial companies within the framework of the European Union. However, there is no doubt that the international cooperation has further intensified since the global financial crisis. The focus has more clearly been on a systemic perspective, or, if you will, a macroprudential policy perspective. After the crisis, it became a natural task for the Basel Committee to make a thorough review of the requirements with regard to capital and liquidity. The results of this review include the guidelines that are known as Basel III. The G20 countries’ reform agenda now includes, within the framework of the work conducted by the Financial Stability Board, special capital requirements for so-called  25  On 26 June 1974, the West German authorities revoked the Cologne-based Herstatt Bank’s licence to conduct banking activities. On that date, several banks released payments in D-mark to Herstatt Bank in Frankfurt, in exchange for US dollars, which were to be delivered in New York. A time lag arose between the different time zones, where operations ceased before the counterparts in New York had received their dollars. The Herstatt incident is a famous case that is often used as an example of so-called settlement risk.

(2020), “Does financial structure affect the carbon footprint of the economy?”, Financial Integration and Structure in the Euro Area, ECB, March. 13. European Council (2022), “International taxation: Council reaches agreement on a minimum level of taxation for largest corporations”, 12 December.
Under these circumstances, there was a likelihood that a number of credit and interest rate markets would experience extreme price moves and possibly cease to function for a period of one or more days and maybe longer. This would have caused a vicious cycle: a loss of investor confidence, leading to a rush out of private credits, leading to a further widening of credit spreads, leading to further liquidations of positions, and so on. Most importantly, this would have led to further increases in the cost of capital to American businesses. Let me be clear: had we not just experienced in August precisely this type of shock to our credit markets, had we not just seen a sudden, world-wide straining of investor confidence, had there not already been underway a flight of capital away from private credit and into Treasury securities, were much of the world not experiencing financial strain, then our judgements about the risks to the American economy of an abrupt and disorderly close-out of Long-Term Capital may well have been different. But, in the circumstances that did in fact exist, it was my judgment that the American people, whom we are pledged to serve, could have been seriously hurt if credit dried up in a general effort by banks and other intermediaries to avoid greater risk.

There are several ways that the problems of Long-Term Capital could have been transmitted to cause more widespread financial troubles. Had Long-Term Capital been suddenly put into default, its counterparties would have immediately “closed-out” their positions. If counterparties would have been able to close-out their positions at existing market prices, losses, if any, would have been minimal. However, if many firms had rushed to close-out hundreds of billions of dollars in transactions simultaneously, they would have been unable to liquidate collateral or establish offsetting positions at the previously-existing prices. Markets would have moved sharply and losses would have been exaggerated. Several billion dollars of losses might have been experienced by some of Long-Term Capital’s more than 75 counterparties. These direct effects on Long-Term Capital’s counterparties were not our principal concern. While these losses would have been considerable, and would certainly have adversely affected the firms experiencing them, this was not, in itself, a sufficient reason for us to become involved. Two factors influenced our involvement. First, in the rush of Long-Term Capital’s counterparties to close-out their positions, other market participants - investors who had no dealings with Long-Term Capital - would have been affected as well. Second, as losses spread to other market participants and Long-Term Capital’s counterparties, this would lead to tremendous uncertainty about how far prices would move.
Mugur Isărescu: The single currency – a central banker’s viewpoint from an EU Member State outside the euro area Opening speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the 2015 COFACE Country Risk Conference, Bucharest, 29 April 2015. *  *  *  Dear Professor Issing, Ladies and gentlemen, I am delighted to have the honour of opening this conference, the more so as this is an opportunity to meet Professor Issing again – the similarity of our surnames brought us literally side by side at many events over the years. Professor Otmar Issing’s career is stupendous, but it is only natural that the general public has been remembering him as a prominent figure of the European Central Bank, whose inaugural chief economist he was, and as a key contributor to the building of the Economic and Monetary Union. I.  Euro adoption by Romania: between desirable and feasible  My intention today is to speak about the issue of the single currency from the viewpoint of a central banker in an EU Member State still outside the euro area. During my address, it is inevitable to touch upon various opinions which our distinguished guest has expressed over the years. I start by recalling what Otmar Issing said back in 2006, in a dinner speech occasioned by his leaving the ECB: “We were all privileged to participate in a historically unique experiment: the creation of a new currency for Europe.

Joseph Yam: Asia’s ability to cope with the continuing challenges of globalisation Statement by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority and Alternate Governor on the Board of Directors of the Asian Development Bank, at the 37th Asian Development Bank Annual Meeting, Jeju Island, Korea, 15-17 May 2004. *  *  *  Mr President, I join other Governors in: first, thanking the Government and the people of the Republic of Korea for their warm hospitality in hosting this year’s Annual Meeting; secondly, thanking the Bank’s management and staff for the excellent arrangements made; and thirdly, welcoming our two new members - Luxembourg and Palau. Mr President, on the governance of the Bank, I would like to commend the Bank for adopting a number of reform initiatives in the past year to enhance accountability and efficacy of operations. Greater transparency and accountability in all aspects of the Bank’s operation is to be welcomed. Measuring, monitoring and managing development results are essential. The creation of the independent Operations Evaluation Department will enhance the credibility of the Bank’s achievements. These initiatives will put the Bank in a stronger position in meeting the many tasks ahead. On the region, Mr President, I would like to focus just on the continuing challenges arising from globalisation and the ability, or rather the lack of ability, of Asia in coping with them. The Asian financial turmoil of 1997-98 demonstrated this vehemently.
It is, therefore, important that in the examination that follows a country’s request for a convergence report due consideration be given to the policy consistency and credibility of the applicant country. A comprehensive economic analysis that is not only quantitative but also qualitative, and which recognizes the difficultly of simultaneously satisfying all the Maastricht criteria in the current world environment would encourage EMU candidate countries to persist in their efforts to achieve even closer nominal and real convergence. It would also provide further evidence that the euro project is credible, that it is both feasible and realizable in a near-term perspective. Let me conclude by thanking you again for being here to contribute to a deeper understanding of the challenges ahead. I also wish you a pleasant stay in our country. BIS Review 53/2006  5

Arthur Yuen: Transforming risk management and compliance harnessing the power of regtech Speech by Mr Arthur Yuen, Deputy Chief Executive of the Hong Kong Monetary Authority, at the Hong Kong FinTech Week 2020, Hong Kong, 2 November 2020. * * *  Opening 1. Ladies and Gentlemen, a very good morning or good afternoon to you, wherever you are in the world! Welcome to the Fifth Annual Hong Kong Fintech Week. 2. The focus of this session is how we can harness the power of technology to transform risk management and regulatory compliance. 3. COVID-19 has sparked many changes for all of us. The fact that I am speaking virtually to you today as part of a fully virtual Hong Kong FinTech Week is one of those changes. And those changes once again reminded us of how important it is for government, regulators, banks and other industries to be adaptive. More importantly, these are not changes to be feared or avoided. Rather, we should embrace them in order to move forward. 4. At the HKMA, we have always been passionate about promoting and implementing technology solutions to make our banking system smarter. This, we reckon, is the only way to ensure that our banking sector remains internationally competitive. Along this same line of thinking, we are launching a White Paper today that sets out a glide path for the wider adoption of Regtech in Hong Kong. This White Paper outlines a series of actions that we would take to accelerate Regtech adoption. 5.
For Mervyn, I am guessing that one hundred years may not seem like a long time, given that the Bank of England is over 300 years old, but I am sure he will graciously allow us our moment. We are also joined by many other friends and associates of the New York Fed, and a great number of our current and former staff. For 100 years the Federal Reserve has been an essential contributor to American economic prosperity and stability and that record is reflected in this fascinating exhibit. Rather than focus on its achievements during my brief remarks this evening, I thought I’d highlight what I think makes the institution that I have the honor of leading, the New York Fed, such a remarkable place within this extraordinary System. First, we are a bank within government. That means we not only have researchers, supervisors and market analysts, but we also provide banking services and possess significant operational capabilities. We accept deposits, make loans and operate the System Open Market Account for the Federal Open Market Committee. When exigent and unusual circumstances require extraordinary operations, be it in a financial crisis or to implement  BIS central bankers’ speeches  1  unconventional monetary policies, we stand ready. Our operational capabilities complement our more conventional central bank policy role in a way that is, I think, very special within the Federal Reserve System. Second, the New York Fed is a vital component of the international role played by the Federal Reserve System.

Residents are also allowed to purchase, through authorised financial institutions, shares quoted on foreign stock markets, and are permitted to transfer foreign exchange abroad to pay for purchases of such securities. 3. By the same token, non-residents are allowed to buy and sell Turkish securities quoted on the Turkish stock market. They are also allowed to buy and sell Turkish government securities through intermediary institutions operating in Turkey. 4. A substantial part of the controls on capital movements were removed, greatly easing inflows and outflows of credit. Turkey has accepted the provisions of Article VIII of the Articles of Agreement. 5. To avoid excessive risks for the banks, new regulations were adopted governing the foreign exchange position of the commercial banks. The banks are free to set their own rates for buying and selling foreign exchange. Our foreign exchange system, described above, is very convenient for foreign capital flows. Now let me describe the main characteristics of our financial system. Even though our efforts to liberalise the financial system did not begin until 1980, the Istanbul Exchange Market has existed and operated since 1858. It grew out of the activities of Non-Muslim bankers in the Galata district of Istanbul. These operators, mostly Levantines, Jews, Armenians, and Greeks, used to risk their own capital by extending credit to the government, secured by pledges of future tax collections.
Using the adapted risk model, the maximum assumed risk of loss on the corresponding positions, and hence the requisite capital requirement, was reduced. 18 Granting permission to use this model was, in the conditions prevailing at the time, a logical step and in line with international practice. During the crisis, however, it became clear that the overreliance on risk models was a mistake – something which FINMA (the successor to the SFBC) has also acknowledged in hindsight. 19  Switzerland’s regulatory response to the ‘too big to fail’ issue The financial crisis vividly exposed the shortcomings of banking regulation. A broad consensus quickly developed over the need for a thorough overhaul of the regulatory framework. In Switzerland, the UBS case, in particular, generated strong political momentum for stricter banking regulations. a) Extensive adjustment of international regulatory standards  At international level, the Basel Committee and the Financial Stability Board (FSB) subsequently adopted a number of measures to strengthen banks’ resilience and find a solution to ‘too big to fail’. With respect to banks’ resilience, the Basel Committee increased the minimum risk-weighted capital requirements, in terms of both quality and quantity. It also specified a capital surcharge for systemically important banks over and above the new minimum requirements applying to all banks. Furthermore, it revised the calculation of risk-weighted assets with the goal of restricting banks’ freedom to determine capital requirements.

However, suppose that, for some reason, the appropriate and effective instruments to ensure financial stability are not available, for instance, because of serious problems with the regulatory and supervisory framework that cannot be remedied in the short run. In such a second-best situation, if there is a threat to financial stability, one may argue that, to the extent that policy rates do have an impact on financial stability, that impact should be taken into consideration when choosing the policy-rate path to best stabilise inflation and resource utilisation. Such considerations could result in a lower or higher policy-rate path than otherwise, in order to trade off less effective stabilisation of inflation and resource utilisation for more financial stability 5. However, so far all of the evidence indicates that in normal times  5  Such considerations could include evidence of the “risk-taking channel” as in Borio and Zhu (2008). Adrian and Shin (forthcoming) and Adrian and Shin (2010) argue, in a model with such a risk-taking channel, that short interest-rate movements may have considerable effects on the leverage of securities broker-dealers in the market-based financial sector outside the commercial-banking sector. If we assume that the risk of a financial crisis increases as this leverage increases, and that policy rates affect leverage, then policy rates would affect the risk of a financial crisis (Woodford 2010b). However, new regulation is likely to limit excess leverage and limit the magnitude of these affects.