samchain/econo-pairs-v1 huggingface dataset:
Carlos Massad: New economy, old cycle? Remarks by Mr Carlos Massad, Governor of the Central Bank of Chile, in a panel discussion organised by the Bank for International Settlements, Basel, Switzerland, 10 June 2001. * 1. *  *  Introduction  The new economy involves changes: faster and cheaper communications, higher labor productivity, savings in the supply chain in the business to business sector, and improvements in inventory control. It also involves growing integration of world markets. As a counterpart, we are experiencing increased volatility in stock prices and terms of trade. Krugman has gone even further, to assert that “growing 1 integration does predispose the world economy to more crisis” . What are the consequences of these changes on emerging market economies? Furthermore, we Central Bankers have faced many changes, and must be prepared for changes, whatever their source. How should these economies respond to those changes? These are critical issues today for almost every emerging economy. 2. Any impact on the real economy? Globalization of international financial markets over the last decade, a by-product of cheaper and faster communications, has led to an increase in asset return correlation around the world. Swings in the Dow Jones, NASDAQ and in fixed rate instruments lead to adjustments in portfolio decisions the world over that have implications for the real economy. The higher the correlation of returns, the lower, on this ground, the incentive for short-term capital movements.

Retail activity, which was buoyant in May, fell back in June partly due to poor weather conditions. In aggregate, activity was up over the last two months. The construction and civil engineering sector1 recovered in the second quarter of 1997 primarily as a result of seasonal factors. Employment levels held steady in industry, except for the automobile sector, where there was a further contraction, and the building, retail and market services sectors. Wherever possible, companies sought to enhance workforce flexibility via temporary staff and overtime, in order to cope with fluctuating demand and organize themselves for the summer vacation period. __________________ 1  Unadjusted data. BIS Review 70/1997
Jan F Qvigstad: Seminar on Bayesian Econometrics (ESOBE) – opening remarks Opening remarks by Mr Jan F Qvigstad, Deputy Governor of Norges Bank (Central Bank of Norway), at the fourth annual meeting of the European Seminar on Bayesian Econometrics (ESOBE), Norges Bank, Oslo, 22 August 2013. *  *  *  Good morning everyone! It is a privilege for me to welcome you to this year’s European Seminar on Bayesian Econometrics, which has attracted the interest of such a distinguished group of international scholars. I would like to extend a special welcome to those of you who have traveled far in order to be here today. As a practitioner of economic policy, I have experienced the use of economic models for almost half a century. Back in the late 1970s, the Norwegian Ministry of Finance used a large input-output model to calculate the effects of fiscal policy. Somewhat contrary to common sense – even then – the model suggested that an increase in government spending would reduce inflation. To remedy this obvious mistake, we calibrated a new model – using our priors on critical parameters – to get results that were more consistent with our experience. The lesson I take away from this is the following: To be useful, models need to be consistent with the view of the world that we apply to policy. This consistency principle, in my view, lies at the heart of the progress made possible by Bayesian modeling.

At the individual depositor level, additional safeguards such as a deposit insurance scheme (which we already have in place in Singapore) and local incorporation will provide better protection for depositors from problems emanating from other parts of the banking group. Local incorporation can also bring benefits to a bank, especially where it has a significant retail presence. Liquidity rules under Basel III will require long-term stable sources of funding to comprise a larger share of a bank’s total funding. Competition for deposits is expected to intensify, and banks that can attract stable funding will gain an advantage. Local incorporation can therefore demonstrate a bank’s long-term commitment to depositors and other stakeholders in a world of possibly permanent heightened volatility and uncertainty. Beyond local incorporation, encouraging strong international banks to sink deeper roots in a domestic economy will allow them to play a greater role in contributing to financial resilience. Let me elaborate on this important objective of encouraging strong international banks to sink deeper roots in a national economy. One of the key features of our banking liberalisation has been the Qualifying Full Bank (“QFB”) privileges that have been granted to foreign banks. The number of QFBs has increased from the initial four in 1999 to six in 2001 and eight today. QFBs have also been allowed more places of business from 10 in 1999 to 25 today. MAS will continue to liberalise the domestic banking sector in a progressive and calibrated manner.
The foreign loan that the Central Bank was authorised to take was its largest on behalf of the Treasury so far. It can only be said that this was a highly successful measure –in fact, a respected international financial journal ranked it one of the ten most successful international bond issues worldwide last year. The borrowing terms were very favourable and of course reflected the confidence enjoyed by the Republic of Iceland in the market. The Central Bank’s greatly enhanced capital position and stronger foreign reserves do not signal any shift in its policy, but represent a natural response to changes in the environment in which the Bank operates. At last year’s annual meeting we all had serious concerns about the peculiar discussion and sometimes unfounded speculation aired then about the Icelandic banks, their position and strength. There is no doubt that this debate and the ensuing events made conditions tighter for the banks for a while. The banks responded firmly to the uncomfortable position that had arisen. They made great efforts to explain the structure and organisation of the Icelandic banks. This was no half-hearted measure, but a steadfast and confident approach which produced results. The banks adjusted certain aspects of their operations and operating environment in response to relevant criticisms, and dismissed what was less relevant with explanations, reports and candid communication, at large meetings, small meetings and man-to-man, depending upon which was most productive.

A growing middle class and rising affluence will underpin a steady increase in insurance penetration rates. Continued industrialisation, growing trade activities, and infrastructure development will mean greater demand for insurance solutions to mitigate a variety of risks. Over the next decade, insurance business in Asia is projected to grow at about 8% per annum. By 2020, Asia is likely to account for almost 40% of the global market. It is vital that insurers seeking to expand in Asia have a deep understanding of Asia’s risk landscape. Aggregate exposures have grown steadily in Asia, due to rapid urbanisation and economic growth over the last two decades. Asia’s strong record of development means that we have more to lose from unforeseen calamities. Take for example the spate of natural calamities in Asia in 2011. The three costliest events – the Tohoku earthquake and tsunami, Thai floods and New Zealand earthquake – caused a combined insured loss of almost $ billion. The scale of these losses was unexpected. Thailand had not even been viewed as a catastrophe risk zone, and had in fact been used to diversify against catastrophe risks. These events are a timely reminder to the industry to constantly stay ahead of the risk management curve. BIS central bankers’ speeches  1  3 + One strategy I understand that Allianz embraces a “3+One” strategy to achieve sustainable growth. In the spirit of this very happy occasion, allow me to adapt your framework to illustrate its relevance to Singapore’s insurance industry as a whole. One, Capacity.
At what speed is this move to the neutral rate, which we estimate at the Banque de France at below or close to 2% in nominal terms, likely to take place? In this regard, let me recall the statement made by François Villeroy in his recent public communication on monetary policy: as long as it is about lifting off the accelerator, we have to act for sure, in a determined but orderly way, and we should be there by the end of the year. Here, let me only add that, in the current context, it is of particular importance to be nimble and be ready to adapt the speed of normalisation to changing circumstances. A second important question regarding the normalisation of monetary policy underway in the euro area is the destination of the journey, the so called "terminal interest rates". As regards this question, let me offer a typical economist's type of answer = it depends! Indeed, it is important to keep in mind that it is only beyond the neutral rate that the tightening would properly begin. In my view, the Governing Council of the ECB will then have to discuss and decide, based on its assessment of actual inflation and the future outlook, focusing in particular on its core part and on wage developments. An important role for monetary policy is to ensure that inflation expectations remain anchored, especially when actual inflation is high. Up to now, inflation expectations remain relatively well anchored in the euro area.

A well-designed digital takaful solution that not only offers affordability but also seamless customer experience can go a long way towards elevating consumer trust and changing perceptions about the value of takaful protection, particularly among low income groups. Secondly, technological advances present opportunities for Islamic financial services providers to further automate their business to bring about greater efficiency and transparency as well as manage risk effectively in delivering value-driven and impact-focused products and services that can realise the aspiration of Maqasid Shariah. This is particularly important for products and services with multiple applications of shariah contracts as well as those instruments such as risk sharing, waqaf and sadaqah, which demand not only a high degree of transparency and disclosure but also positive customer service and engagement to engender trust and confidence. There is scope for the industry to explore the potential of new technologies that can transform risk management and compliance, remove information asymmetry and integrate the value chain of financial intermediation seamlessly with the real economy, particularly in trade and the Halal industry. Ultimately, realising the full benefits of digitalisation to deliver the intrinsic values of Islamic finance successfully, relies on the foresight to embrace innovation to deliver greater customer value, openness to change and responsible adoption by the industry. Right now, digitalisation is riding on the coattails of the Covid-19 crisis. With social distancing and travel restrictions, anything that can be done online or virtually is being done so.
So today’s orthodoxy ascribes to macro-economic policy the job of keeping demand in line with the capacity of the economy to meet that demand in the medium and longer term. Within this overall framework, monetary policy is allocated the specific task of achieving and maintaining effective price stability. This is not, as some commentators still seem to suggest, simply some doctrinaire end in itself. Inflation is seen rather as a symptom of imbalance between demand and supply in the economy. So what we are essentially aiming to do through monetary policy is to anticipate the emergence of that imbalance and head it off before it becomes entrenched. If we are successful in that, inflation will be lower, there will be less need for violent interest rate movements than in the past, and the economy will grow at a steadier, and more sustainable and predictable, rate. That, in turn, will encourage more rational, longer-term, economic decision-making and investment, which will help indirectly to improve underlying, supply-side, performance. Similarly, today’s macro-economic orthodoxy requires fiscal policy to be directed to restricting government borrowing to levels that can be sustained into the medium and longer term, without either forcing up real yields or implying the prospective need for progressively rising tax rates - which could otherwise damage the development of private sector economic activity. Now in some respects we have made considerable progress over the past two years and more.

We would like to request your good office, “Your Worship” to issue mandatory directives to all business houses in the country to complete construction sites within a stipulated period and to ensure that all buildings are properly maintained and where necessary repainted on a regular basis. In conclusion, Ladies and Gentlemen, I wish to commend the Bankers Association of Zambia and in particular the Project Committee for the effective and efficient manner in which this initiative has been implemented thus far. My hope is that the initiative will not only be confined to Cairo Road but to all areas of the country. Finally, I would like to urge all of us present here today to extend this initiative to our homes. Let us keep our homes, communities and the country clean as cleanliness is next to godliness. I thank you. 2  BIS Review 112/2009
However, the successful battle against inflation and the related reduction in macroeconomic volatility – also known as the “Great Moderation” – were not able to prevent serious instabilities within the globalised financial system. Alongside its evident benefits, the “Great Moderation” thus seems to have produced a number of damaging by-products. In combination with low real interest rates, financial  BIS Review 121/2010  1  innovations and liberalised capital markets provided enormous credit-creation potential. Together with a reduced perception of risk, this fostered a rapid rise in asset prices which ultimately led to excesses and imbalances in some markets. Through contagion effects, the bursting of a credit and asset price bubble can bring the entire global financial system to the brink of collapse within a very short period of time. In view of the interaction with the real economy, this also has serious implications for the world economy and global growth. This raises a number of questions about the future role of central banks. Can and should monetary policy be used to actively counter the development of imbalances or financial bubbles? Does it make sense to use monetary policy instruments for this? Will the new instruments used during the crisis also play a more important role in monetary policy in the future? To answer these questions, I would like to look specifically at two aspects. First, I will examine the measures used by central banks during the crisis and briefly outline the possibilities and limitations on their future use in monetary policy.

Since asset prices are typically far more volatile than real economic variables and general price levels, substantial changes in interest rates could be required to check financial imbalances, and this could have serious side-effects on the goal of maintaining price stability. BIS Review 121/2010  3  As you can see, there are many questions that have not yet been clarified. The problems I have mentioned make it clear that central banks would rapidly reach their limits if they were simply to add a further goal alongside price stability without new instruments to deal with it. The more objectives an instrument is expected to achieve, the greater the risk of wrong decisions and conflicting objectives. However, as I have already said, these problems do not mean that financial stability should be ignored completely in monetary policy decisions. Asset prices and other variables such as credit growth must be included as indicators when assessing the situation and the outlook for inflation. They are already included in the practical implementation of today’s monetary policy strategy. Yet care must be taken when interpreting such “instability variables” because they provide only limited information about future economic trends. To sum up, monetary policy can make an important contribution to financial stability. However, the set of monetary policy instruments is unsuitable for excluding all imbalances in all circumstances. Accordingly, instruments that have a direct effect are needed to counter the emergence of (global) financial instabilities.
The absorption of higher capital for the country’s development is another opportunity the global crisis provides us. It is a well-known fact now that technology and financial capital tend to move towards sectors, branches and countries that offer higher return on investment. In my personal opinion, but also based on a thorough analysis of the Albanian economy, Albania is a great destination in this respect. There is undoubtedly a high perceived risk in the global markets, not only for Albania but also for all the countries in the region. We should, however, make our competitive advantages clear to the global markets and continue to work on the structural reform in order to release more development potentials and energy. Another lesson drawn from the crisis is that consumption should be re-oriented from imported goods to domestic production. I have addressed it before too that the list of imports should get shorter through their substitution with domestic products, which has to be the priority of the new economic growth model in Albania. To this purpose, time is ripe perhaps to give priority to the organization of financing schemes to support the traded sector. In more concrete terms, I refer to development financial institutions that support the agriculture sector, agro-business industry, extracting and processing industry, where the Albanian economy offers competitive advantages. The  BIS central bankers’ speeches  3  economic benefits provided by these financial institutions to domestic production go beyond the low financing cost.

2  BIS central bankers’ speeches  The credibility of the central bank and our monetary policy is now a tangible reality for Albania. It is reflected in the trust of our economy in the national currency and its purchasing power in the future. The investment made by the Bank of Albania to earn the public trust has required a lot of efforts to be made, but they get rewarded multiple times with the greater opportunities we have now to stimulate the economy without prejudice to the inflation outlook. Against this background, the Bank of Albania has provided the necessary economic stimulus, while there is still room for other additional monetary stimulus in the medium run. The accommodative policies generally aim at boosting economic activity and domestic demand, in order to keep the consumer prices within the Bank of Albania’s target in the medium run. We have also other reasons to support economic growth. We believe that if the economy grows at its potential rate, there will be substantial impact on the improvement of public and private sectors’ and individuals’ financial balance sheets. Their capacity to pay off past-due financial liabilities will subsequently improve, and their creditworthiness will enhance. I think this is one of the challenges that, on one hand, would restore the macroeconomic equilibrium to the pre-crisis level and, on the other hand, would guarantee the financial sector’s stability in the long run.
Lars Heikensten: Risk management and financial stability Speech by Mr Lars Heikensten, Governor of the Sveriges Riksbank, at the Risk Management Forum, Stockholm, 17 February 2004. *  *  *  Why is the Riksbank interested in risk issues? Firstly, I should like to thank you for the invitation to come and speak at the Risk Management Forum. The Riksbank’s objectives are not limited to price stability; the Sveriges Riksbank Act also requires that we promote a safe and efficient payment system. We therefore have a natural interest in monitoring risks in the financial sector and that these are handled in a responsible, but also efficient, manner. As you know, this has not always been the case. At the end of the 1980s, risks built up in the Swedish banking system that were much greater than most people realised. The Riksbank was as unaware of the situation as others. However, when the crisis was over, we decided that we needed to improve our knowledge of the risks in the financial system and to closely follow their development. Later, we began to publish a twice-yearly report on financial stability, which focuses on the development of risks in the financial system. We were actually pioneers in this work and several central banks have since followed our example. Naturally, our endeavour has not been to ensure that the risks are as small as possible in every aspect.

However, before I go into this further, I should like to provide some background to this by reminding you of a time when some risks were managed inadequately, which led to a serious systemic crisis, namely the Swedish banking crisis at the beginning of the 1990s. The banking crisis from a risk management perspective Taking a narrow view, one could say that the banking crisis was the result of the institutions and authorities lacking the capacity to assess and manage risks. The banks came from an environment that had been strictly-regulated for many decades and where their operations were so firmly controlled and restricted that a cursory awareness of risk management sufficed in day-to-day operations. The demand for credit was much greater than the supply, which meant that only those with the best credit ratings were allowed to borrow. When the regulations were gradually phased out during the 1980s, the banks and other financial institutions lacked the expert knowledge and organisation necessary to manage the new, increased risks, which were also more difficult to assess. As this curb no longer existed and the banks instead began to compete for market shares, they took on hasty and in many cases unhealthy risks. We were not the only country to experience this development. Over the past fifteen years, many countries around the world have suffered financial crises for similar reasons; as the result of financial deregulation, which has not been combined with the necessary improvements in risk management and supervision.