samchain/econo-pairs-v1 huggingface dataset:
Plans put forward from time to time from the early-1990s, which proposed dropping zeros from the lira continually had to be postponed as the structural economic problems could not be solved, nor could the rate of inflation or the inflation expectations be brought down to acceptable levels. The chronic and high inflation experienced during this period gradually took its toll on banknote denominations and monetary values. As you all know, this process eventually not only led to the Turkish lira having the highest denominated banknote numerically all over the world, but also adversely affected someof its functions, namely as a medium of exchange and a store of value. Following the program under implementation, the distance covered in terms of economic stability prepared a suitable environment for monetary reform, and six zeros were dropped from the Turkish lira as of 1 January 2005 when the New Turkish Lira was put into circulation. 8  BIS Review 36/2005  The experiences of other countries that dropped zeros from their currencies differ in those which suffered from hyperinflation and those , which had relatively, lower rates of inflation. In the former, it can be seen that monetary reforms were generally carried out as part of the stability program, without waiting for inflation to go down considerably. Whereas, in the case of the latter, reforms were implemented after inflation was brought down sufficiently. In other words, reforms were carried out after a certain distance had been covered in the fight against inflation.

The pass-through effect has been gradually becoming weaker, as a consequence of the transition to the floating exchange rate regime, increasing competitiveness, inflation targets increasingly assuming the role of being an anchor owing to reliable economic policies, as well as changes in the pricing behavior of producers and consumers. Especially in the recent period, the effects of the changes in the exchange rate on inflation were lower than expected, and at the same time were weaker and more lagged compared to previous periods. As a matter of fact, worldwide examples also show that in economies that have achieved price stability, the pass-through effect on prices of exchange rate movements becomes weaker owing to the  BIS Review 36/2005  7  prevalence of pricing in terms of the domestic currency, thus perceiving any depreciation of the national currency as temporary, and companies resort to price adjustments much less frequently. In fact, it is inevitable that exchange rate developments will influence prices in Turkey due to the fact that the goods basket of the CPI mainly consists of imported goods and imported intermediate goods make up a significant portion of input costs. Another contributory factor is that Turkey is a small sizeopen economy obtaining goods at global prices. Yet, studies conducted under the umbrella of the CBRT point to an evident breach regarding the reflection of exchange rate developments on prices following the 2001 Crisis. The pass-through effect of the historically high exchange rates on prices seems to have weakened especially in case of non-tradable goods.
3 Thus, the actual goal of monetary policy – price stability – can be achieved (cf. chart 4). In the fiscal policy domain, the “rules versus discretion” debate is of much newer vintage. Whereas, in 1990, there were only five countries with fiscal rules (Germany, Indonesia, Japan, Luxembourg and the US), today there are 81. 4 The current financial crisis and the associated debt crisis have highlighted the importance of fiscal rules. In principle, fiscal policy can be implemented by means of automatic stabilisers and discretionary measures. To be effective, discretionary measures have to fulfil a number of conditions. These can be  2  Cf. Friedman (1948). 3  Cf. Kydland and Prescott (1977), and Barro and Gordon (1983). 4  Cf. Budina et al (2012). BIS central bankers’ speeches  3  summed up as the three T-criteria: timely, targeted and temporary. 5 In other words, discretionary measures have to take effect in good time, to avoid them having a procyclical effect. This risk arises, in particular, from the fact that discretionary measures require political decisions. So their implementation can take a lot of time. Second, such measures need to be targeted, so that support can be given to the sectors and industries affected. Third, they must be temporary, so as not to permanently weigh on public finances. Experience has shown that, in the upswing, budget deficits are not offset by surpluses, and that discretionary measures therefore often result in government finances being burdened even beyond the downswing.

In the current geopolitical environment, such risks are, unfortunately, not as remote as they once were and need to be taken seriously by European policymakers. Conclusions We have laid the groundwork by providing safe and efficient market infrastructure, and this should be used as a basis for innovative, user-friendly solutions. The way to protect the integrity of European payment services is not by closing them off to the world, but by making them global players. Building on local or national solutions is anachronistic and will not meet the needs of the market. If we are to succeed at a global level, the issue of domestic governance needs to be addressed. Our reliance on non-European card schemes for domestic payments in Europe is suboptimal. European card schemes should make interoperability and full pan-European reach their main priorities, enabling any card to be used at any terminal. At the same time, governance arrangements need to cater for European needs, given that cards are the single most important electronic payment instrument in Europe. However, protectionism should not be used to artificially promote European innovation in payment services. We should remain open to global players, but should focus more on addressing the reasons for the lack of major European providers in the payment market. It is important that European payment service providers are active at a global level. Rather than establishing national solutions, we should seek to develop global solutions based on European open governance that use European infrastructure.
An outline: trade-off between target fulfilment in the short and long term Last year the Riksbank published an article with an outline for how financial imbalances can be included in the monetary policy deliberations.10 The point of departure was that a central bank now needs to have a more long-run focus than was traditionally the case. The reasoning leads to the conclusion that monetary policy should be regarded as a trade-off between target attainment in the coming years, that is, the period for which central banks normally make forecasts, and target attainment in the longer run, beyond the forecast horizon.11 The idea is that a monetary policy that solely focuses on target attainment a couple of years ahead could miss the fact that financial imbalances are building up, which risk leading to very poor macroeconomic outcomes in the longer run. So according to this outline, central banks need to balance target attainment in the shorter run against target attainment in the longer run.12 Inflation target still the foundation, but may take longer to attain The first important thing to note is that this trade-off does not mean throwing away the inflation target. Attaining the inflation target thus remains the foundation for monetary policy.13 However, one consequence of conducting a policy that tries to counteract financial 10  Sveriges Riksbank (2013).

BIS Review 44/2003  3  demographics and the pressure this will inevitably exert on our social services and programs, such a shortfall in growth can have debilitating longer-term consequences. (see annex for graph 3) With the post-bubble collapse in the equity markets, a heated political debate has emerged in Switzerland as well as in many other countries about the sustainability of our retirement and social welfare programs. Ideas, concepts and frameworks are being discussed by politicians and frequently commented upon by the media. The fact that these difficult long-term problems which lie at the heart of our social contract are being openly debated is a welcome development. However, short of reneging on promises that are deeply embedded in our cultural and social fabric, the most meaningful way to address these problems in the decades to come is to invigorate our economic growth performance. The challenge for our politicians is a formidable one. The political interests that defend the legislative hurdles which distort the domestic sector of our economy and thus undermine our growth potential are deeply entrenched. Never does this become more obvious than during a parliamentary electoral campaign. Admittedly, painful short-term adjustment problems might emerge once the reform process is initiated. Accelerating productivity growth rates can – in the short term – lead to a further reduction in employment as uncompetitive industries are compelled to restructure. In the longer-term, however, a rise in productivity is unquestionably beneficial. Ultimately, it will lead to higher growth rates.
In setting a course for nominal demand, we are usually trying to stabilise inflation in line with our target over a horizon of 2–3 years. Of course we care about longer horizons. As a number of us have argued over the years, 13 that is nicely captured by approximating our objective with a so-called quadratic loss function that gives weight to deviations of inflation from target and deviations of the level of output from its sustainable course. In that set up, the policymaker cares about future volatility (or uncertainty) about the inflation rate and the “output gap”. Sizeable imbalances create precisely that uncertainty, threaten precisely such volatility. All very useful as an abstract framework for thinking about policy. The trouble is that there is not a policymaker anywhere who has much of a clue about how to operationalise it in actual interest rate decisions. This matters because not all imbalances are associated with credit booms that pose a threat to financial stability. The development of a set of macroprudential tools would not be sufficient to insulate our economies from imbalances. But I do believe that it is necessary.

Lars Heikensten: On clarity and flexibility Speech by Mr Lars Heikensten, First Deputy Governor of the Sveriges Riksbank, at a Center for Business and Policy Studies (SNS) seminar held in Stockholm on 9 May 2001. *  *  *  Let me begin by saying that I welcome this opportunity for a fundamental discussion on the way monetary policy is formulated. The background to today's discussion consists of a number of contributions to the debate in which it has been asserted in somewhat differing ways that the way we have chosen to formulate monetary policy is not sufficiently flexible. Our critics are of the opinion that by tying ourselves down to an inflation target of 2 per cent we risk allowing unacceptably high domestic inflation. And that we risk strengthening "bubbles" in asset prices. It has also sometimes been intimated, in so many words, that the way we have chosen to formulate policy is one explanation for the very weak exchange rate. Furthermore, in this debate, it has also been suggested that we should adopt less specific inflation targets, similar to those of the European Central Bank (ECB) and its American counterpart – The Federal Reserve. The debate has arisen primarily in three different contexts. How deregulation should be handled, to what extent asset prices should be taken into account, and the role the krona has to play in this analysis. The mainstay of my argument is that there are no simple solutions to any of these problems.
This way, expectations for the FOMC’s future policy stance will be properly incorporated into the term structure of interest rates, and thereby appropriately affect broad financial conditions and the broader economy. It’s not necessary that the effective rate stay within the target range each and every day. Before the crisis, there was usually a bit of variability in the effective rate owing to limitations on the Desk’s ability to achieve completely precise daily forecasts for reserve demand. Now, as I said earlier, the FOMC sets the target as a range, not as a point value. The federal funds rate can vary within that range, and it could even move outside that range on occasion, without materially affecting the economy.25 We have instituted a data-driven, cross-market framework for evaluating interest rate control. In unsecured markets, we gather daily, transaction-level data through a new Federal Reserve statistical collection called the FR 2420. These rich data give us much greater insight than we had before the crisis about how these markets are structured, which is important to developing and maintaining an operating regime based on improving competition among borrowers in money markets, in the context of a large amount of reserves and substantial ongoing regulatory and business model changes. Monetary control does not stop at the effective federal funds rate: The Federal Reserve also wants to ensure that the stance of monetary policy is passed through into other money market rates.

And monetary policy was well positioned to support the economic expansion and the achievement of the Fed’s goals of maximum employment and price stability. Risks to the Economy However, during the past month the outbreak and subsequent spread of the coronavirus has brought with it new risks to the economic outlook. This is first and foremost a human tragedy, and my deepest sympathies are with those who have lost loved ones. The virus and the necessary scale of the response to address the public health challenge will have near-term effects on the global economy. These repercussions have been especially strong in the hardest-hit countries, including China, South Korea, Japan, Italy, and Iran. We are now also hearing reports that some businesses here in the United States are being affected by supply disruptions and weakening demand. As people take precautions, we’re seeing concerns around the tourism and travel sectors, in particular. Disease outbreaks require a multifaceted approach, and the coronavirus is no different. This is primarily a public health issue, which will be fought on the front lines by doctors, nurses, and other healthcare professionals. Governments will also need to step in to support the healthcare response, and, if needed, to provide targeted relief to affected industries and workers through fiscal measures. Monetary Policy Central banks like the Federal Reserve also have an important role to play in addressing the economic effects of the coronavirus, ensuring that financial markets function effectively and providing support to the economy.
If the FOMC did not make this adjustment, the stronger dollar could result in an undesired tightening of U.S. financial conditions. The expected forward interest rate paths in Europe and Japan have fallen considerably this year. If the FOMC had followed the median federal funds rate path from the December 2015 SEP projection, then the U.S. dollar would likely have appreciated much more significantly. Instead, the U.S. interest rate path has come down in tandem with the foreign interest rate paths and the dollar has appreciated only modestly. BIS central bankers’ speeches  3  This is a crucial point and I want to make sure there is no misunderstanding. The Federal Reserve is not targeting the exchange value of the U.S. dollar. What the FOMC considers are financial conditions broadly defined, because they affect the saving and investment decisions of households and firms. The dollar is but one component of these financial conditions. The level of short- and long-term rates, credit spreads, and equity prices are also important components of the financial conditions that we closely monitor. If international developments shift U.S. financial market conditions – including the dollar – then we need to take this into consideration in our U.S. monetary policy decisions. Third, I have found that market participants broadly appreciate that the FOMC needs to take a risk management approach in its conduct of monetary policy. There are at least two important aspects of this approach.

Bringing the issue up to date, this is why there are clear benefits to banks if they issue contingent convertible capital instruments with a trigger point that is safely above the point at which there is likely to be a question mark as to whether the bank remains a going concern – in other words before it is too late. Also, holders of these instruments have to be very clear that they are at risk of conversion or write-down. We cannot have a situation where holders gamble on an assumption that the trigger will not be pulled – it will. 1  2  Canada introduced the “asset-to-capital” multiple in the early 1980s. The definition pre-crisis was defined as on and some off-balance sheet exposures as a ratio of total capital. Generally, this was set at the assets being no more than 20 times the total capital amount. However supervisory discretion could permit a higher multiple (up to 23 times) if the firm met certain conditions. In the US a minimum everage ratio was introduced in the early 1980s. Pre-crisis, the definition used was Tier 1 capital/on-balance sheet assets, as measured under US GAAP. Firms had to meet a 3% ratio if considered “strong”, and 4% otherwise.
But it is sometimes forgotten that, as well as improving the quality of risk management and regulatory compliance, Regtech offers longterm cost savings. This is a benefit that needs to be articulated much more loudly and clearly going forward. 27. And then about the lack of mature solutions – a lot of available Regtech solutions were developed for other markets, and respondents to our study shared that those solutions may not adequately address specific Hong Kong circumstances. Nor are those solutions always able to meet all the specific business requirements of our financial institutions. 28. Another barrier is the lack of skilled talent. Our findings show that local banks have particular difficulty in recruiting and retaining talent with skills across multiple disciplines. It appears that we do need to focus more of our efforts in developing a workforce that possesses skills across different business domains, as well as technical programming, data analytics and an understanding of regulations. It does sound like an impossible mission, but nonetheless we believe it is a critical one. 29. It was also noted that most banks are taking a “low-risk” and conservative approach to adopting Regtech solutions. Some still consider Regtech to be a relatively new area that requires further investigation before any action is taken. 30. That is closely linked to the fifth barrier: a lack of awareness of Regtech.

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.
On the other hand, it is hard to imagine that this scenario could have played out as it did without the worldwide glut of cheap credit in the years before the global financial crisis and Iceland’s position as a party to the EEA Agreement, which provides for a legal and regulatory framework based on European Union Directives, including free movement of capital and provision of financial services. The underlying principles are those of home licensing for operation throughout the EEA and a level playing field for competition, where size and location are not supposed to matter. This European “Passport” enabled the Icelandic banks to operate throughout the EEA, including through branches in other EEA countries. We know now that there were and are deep flaws in this framework: flaws that are important elements in the current eurozone crisis. A key issue here is the dichotomy between  BIS central bankers’ speeches  1  European passport rights, on the one hand, and national supervision, national deposit insurance, and national crisis management and resolution regimes, on the other. This is what recent proposals of a banking union are supposed to deal with. But then, for EEA countries outside the euro area, this framework entails potentially enormous foreign currency liquidity risk in the banking system that is not covered by a lender-of-last-resort (LOLR). This was a key element in the Icelandic banking crisis and must be addressed in future reforms of the system. Let me now say a few words about Iceland’s crisis and recovery.

But the policy measures were successful in turning the situation around: the exchange rate stabilised in 2009, fiscal consolidation progressed from 2010 onwards, growth resumed in the second half of 2010, the sovereign regained foreign capital market access in summer 2011, and the new banks were profitable and well capitalised. On the other hand, private sector debt restructuring has proven more time-consuming than originally hoped, and lifting the capital controls is a challenging task. According to the latest figures, Iceland’s growth rate is 4.5% and the unemployment rate has fallen to the 5½–6% range. What lessons can be drawn from this story? 1. Excessive and volatile capital flows played an important role in Iceland’s crisis, and the capital controls and the underlying balance of payments problem are a legacy of that. 2. To a significant degree, the euro area crisis is also a capital flow – balance of payments problem. 3. The framework for cross-border banking in the EU is deeply flawed. Either there will be a regression of financial globalisation at the EU level, or the freedoms must be matched by public frameworks and policies. 4. In the absence of international or EU-wide reforms, small, open economies like Iceland might have to take action to protect themselves, such as restricting the international activities of home banks and placing much more stringent prudential limits on foreign currency maturity mismatches and foreign currency lending. 5. An independent flexible currency is a double-edged sword.