samchain/econo-pairs-v1 huggingface dataset:
We addressed the first issue through increasing information sharing and facilitating the dialogue between the monetary policy and the financial stability and supervision of the Bank. Normally, the foresight of monetary policy is from the trough to the pick of the business cycle because it is mandated with smoothing the fluctuation in economy or prices. However, the duration of financial gaps and excesses might be very different and usually much longer. Therefore monetary policy by design has the potential to forget about financial stability; therefore we were potentially missing important information regarding the effects that decision making on monetary policy could have on the sustainability of agent’s budgets. That is why I believe was important to have guardians of financial stability in the monetary policy decision making process. With this reasoning we have brought the director of supervision and the director of financial stability in the monetary policy advisory committee. In this respect our monetary policy did not focus only in the discussion of macro effects but also in the discussion of the micro effects of decision making. This resulted in policy coordination within the central bank. I believe that this is the first line of defense that we had in our philosophy. This helped us to strike the correct balance between all policies. The second issue was addressed through tightening macro-prudential regulations and policies and strengthening the on-site supervision of banks.

And absent significant intervention from authorities here and in other countries, would have risked tightening financing conditions significantly and made the impact of the pandemic much worse. Tackling the causes of that is today a major area of work both internationally and domestically. For banks, we tested rigorously to ensure safety and soundness, and particularly that banks could support the economy through these very hard times. Indeed, we tested to make sure this support could continue through even harder times, and the answer was positive. This matters greatly because having a resilient system has meant that business lending could be sustained, and mortgage servicing pauses to support households seriously affected by Covid and its economic effects were extensively available and used, all to assist with dealing with the consequences of Covid. It has been the first major test of the post-financial crisis reforms to regulatory standards. In my assessment this outcome mainly passes the test of resilience, accepting both that we have work to do on the lessons from the dash for cash, and that we can never stand still because the positive benefits of innovation also create their own challenges. But, what is meant by the idea of resilience? A resilient financial system has the resources and flexibility to respond to a range of shocks of different sorts. In doing so, it will support stronger growth over the long-run, helping the economy to bounce back and reducing long-term economic scarring caused by the shock.
Mr Trichet gives an address on the risks and challenges of the international financial scene Text of the Third Hong Kong Monetary Authority Distinguished Lecture delivered by Mr Jean-Claude Trichet, Governor of the Banque de France, the central bank of France, in Hong Kong on 8 July 1999. It is a great pleasure to be here in Hong Kong and I am greatly honoured to have been invited to deliver the Third Hong Kong Monetary Authority Distinguished Lecture. So I would like to thank you for giving me the opportunity to express my views on the challenges and opportunities of the international financial scene. The international financial scene has been faced with two major changes over the last quarters: í  the recurrence of financial crises, originating generally in emerging or transition economies, which has emphasised the need to reform the architecture of the international financial system;  í  the introduction of a new currency, the euro, which should contribute to a balanced international monetary system. FINANCIAL CRISES AND THE REFORM OF THE ARCHITECTURE OF THE INTERNATIONAL FINANCIAL SYSTEM Two major explanations of the recent financial crises have been put forward: í  one which can be called the “fundamentalist” view argues that Asia’s healthy macroeconomic indicators – low inflation, fiscal balance, low government debt, high rates of savings and investment – offered a misleading picture. This view points out that many Asian governments provided implicit guarantees to the banking sector, which often engaged in borrowing abroad and in reckless lending to unqualified borrowers.

Low for long makes demand management of the economy more difficult in downturns, reducing the space for monetary policy easing with conventional tools. This is because, for a given inflation target and with the reduction in long-run real rates, policy rates are closer to their effective lower bound. Changes in the structure of the financial system as a result of low for long may also weaken the transmission mechanism. Monetary policy, to be clear, is not powerless at the effective lower bound. As post crisis experience has demonstrated, ‘unconventional’ monetary policy tools can and have provided stimulus when interest rates are at or near the effective lower bound. These are now very much a part of central bank toolkits.24  22 For example, the share of corporate debt owed by UK companies with a ratio of net debt to EBITDA  greater than four was 35% in 2018, compared to 28% in 2007. 23 See Bank of England (2019), Chart F.6. 24 See, for example, a recent BIS paper that conducts a cross-country analysis of unconventional monetary policy tools. Potter, Smets et al (2019).
However, for EEA countries outside the euro area, this framework also has embedded in it a potentially huge foreign currency liquidity risk in the banking system that is not covered by a lender of last resort. Let me conclude by briefly outlining what I think the analysis so far means in terms of reform of national monetary and financial stability frameworks, on the one hand, and EU and global frameworks (IMFS), on the other hand. At the national level, monetary and exchange rate frameworks might respond to recent experience by moving away from free floating towards some form of managed float. I call it “inflation targeting plus”, where an inflation target is linked with active foreign exchange intervention policy aiming at reducing excess volatility and leaning against capital inflows but without targeting an exchange rate level, and the joint striving for price and financial stability is supported by macroprudential policy and fiscal policy. In addition, countries will consider tools aimed directly at the net capital inflow problem, including taxes or reserve requirements. The gross capital problem will be dealt with by putting prudential limits on the size and composition of home-headquartered banks’ foreign currency balance sheets and foreign-denominated lending to domestic households and unhedged companies. In the absence of global and EU reforms, individual countries will therefore self-insure in various ways and impose prudential restrictions that might further fragment the international financial system.

Perhaps it is imperative here to emphasize that it is important for Islamic banks to provide all information about their activities and financial statements with full transparency, especially that they bear moral responsibility. This would enhance their credibility, contribute to their good reputation to be accepted on a broader range, and remove any false beliefs concerning their activities. Dear Brothers, A number of central banks and supervisory authorities have recognized the nature of risks confronted by Islamic banks and pursued a supervisory approach based on measurement of risks. Thus, they have developed appropriate mechanisms for banking supervision depending on the type of risks. They have also realized the need for international cooperation to develop standards that could form the basis of a strong structure for Islamic banking. The increasing global interest in Islamic banking, in recent years, is attributable to the rapid growth of this type of activity in terms of size, scope and significance both in Islamic countries and other parts of the world. Islamic banking has spread widely in more than twenty-five countries in Asia and Africa. It has also emerged in many financial centers in Europe and North America to the extent that major international banks and specialized financial institutions have started to offer Shari’a-compliant products to meet the needs of a wide spectrum of customers in their markets and those of Islamic countries.
Today, that fraction is less than 15%. There has also been a sharp fall in the fraction of shares held directly by individuals, from more than 50% in the 1960s to little more than 10% today. Today, these individual holdings tend to be indirect, operating through investment intermediaries of various types. That means the beneficial owners of shares – individuals – tend to have little direct communication with, involvement in, or indeed knowledge of, the firms in which they are investing. One consequence of a more dispersed and disinterested ownership structure is that it becomes harder to exert influence over management, increasing the risk of sub-optimal decision-making. 17 There is some empirical support for this hypothesis. For example, companies tend to have higher valuations when institutional shareholders are a large share of cashflow, perhaps reflecting their stewardship role in protecting the firm from excessive risk-taking (La Porta et al (2002), Claessens et al (2002)). (c)  Short-termism  A third friction in the manager/shareholder relationship, distinct but related, arises when different classes of shareholder have different rates of time preference. In particular, there have been concerns about the rising share of investors with excessively high discount rates and low holding periods – in other words, about “short-termism” (Kay (2012)). There is clear evidence of the investor scales having rebalanced in this direction over time. Average holding periods of shares have been in secular decline in a large number of countries for a number of decades (Chart 1).

Caleb M Fundanga: Improving school infrastructure in Zambia Remarks by Mr Caleb M Fundanga, Governor of the Bank of Zambia, at the Handover Ceremony of computers to Mumbwa High School, Mumbwa, 4 February 2010. *  *  *  The Board Chairperson, Mr Gracious Hamatala Board Members Present The PTA Chairperson, Mr Mwila Kabange The Headmaster, Mr Kizito Kalonga Distinguished Teachers Students Members of the Press Ladies and Gentlemen It is an honour and privilege for me to be with you today as the Bank of Zambia makes this humble donation of 5 computers to Mumbwa High School. I am also glad because in some small way we are making a contribution towards ensuring a brighter future for the students. Chairpersons, I am informed about the numerous challenges and difficulties, the school continues to face in its quest to produce high quality education to students. For instance, I am aware that there is a critical low level of books compared to the population of students in the school. Further, having been established 40 years ago, the School’s infrastructure urgently needs to be rehabilitated. The refurbishment of infrastructure is not an easy task but in the able leadership of the Board Chairperson, I have no doubt that a solution will be found in good time. As we grapple with the ways and means of improving the school infrastructure, let me reiterate that the school need to maintain and protect the little infrastructure available.
Mugur Isărescu: Financing investment projects in the Danube region Speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the 3rd Danube Financing Dialogue, Bucharest, 30 October 2013. *  *  *  Distinguished guests, Ladies and gentlemen, I am pleased and honored to welcome you at the National Bank of Romania. Allow me thank the organizers for giving me the opportunity to open the 3rd Danube Financing Dialogue. Time has come for Bucharest to host this important event, after Vienna and Belgrade. The place has changed, but the venue remained the central bank, the agenda and the conference framework being quite the same. This gathering enables both European and local financing institutions and small and medium enterprises from the Danube Region to reach a common language in order to find the most suitable solutions to specific projects. This conference, like the two others that preceded it, would like to put an emphasis on Danube’s enormous potential for doing business. •  Danube rises in the Black Forest mountains of western Germany and flows for 2,857 km to its mouth on the Black Sea. Danube is Europe’s only major river, flowing west to east, from Central to Eastern Europe and having its basin roughly twice the size of California.

It was for the first time when such a complete vision of the Danube was unveiled. All these facts constitute reasons that lead the European Commission to recognize the importance of Danube as being “the single most important non-oceanic body of water in Europe” and “a future central axis for the European Union”. But there still remains a major issue regarding this subject –the Danube basin is still not used to its full potential. Its remarkable business prospective is yet to be taken advantage of in terms of agriculture,  BIS central bankers’ speeches  1  energy sources, wastewater disposal, industrial or even recreational purposes. This massive potential alone is not enough to implement a business plan; it certainly needs vision and funding. And financing is exactly the main issue upon which the today conference focuses. For instance, one could take inspiration in the Rhine basin management project which turned the Rhine into Europe’s most densely navigated shipping route. It connects world’s largest seaport, Rotterdam, with world’s largest inland port, Duisburg, although the Rhine’s length is less than a half of Danube’s. And while large sections of the Upper Danube in Germany and Austria have been regulated, the areas of the lower and middle Danube were not. I strongly believe that middle and lower Danube and the Danube Delta offer a great business potential for investment projects.
The proportion of women on the Executive Commission now stands at 40%, while at the senior management level, two of the seven directorates general, namely the important areas of Banking Supervision and Cash and Branches, are currently headed by women. These figures demonstrate the Banco de España’s commitment to diversity and the role of women in management positions; however, these changes are taking place at all levels. 1  As many of you know, I am a bank examiner by trade. When I joined the Banco de España, a number of years ago now, banking supervision was a highly male-dominated profession. This has changed radically. In the latest banking supervision intake, the majority of those qualifying for the entry examinations were women (54%). What’s more, not only was the majority reasserted following the exams, it was amplified (61% of those who passed were women and 39% men). This result occurred naturally, meaning without any explicit policies, positive discrimination or quotas. A higher number of women passed simply because their examination results were better. Despite this headway, more work unquestionably needs to be done to ensure equality in all areas of leadership and team management. At the Banco de España, we are working towards this on several levels.

In other words, are women being promoted because of their gender or because they are the best candidate irrespective of their gender? After being promoted, women’s wage progression is, on average, faster than men’s. This suggests that the women selected for promotion perform better.6  Allow me to focus on my organisation now. As I said earlier, the Banco de España currently has a gender-equal workforce, with the share of women having gradually risen from 30% at the end of the 1980s. Significant momentum was gained in the mid-2000s, coinciding with greater awareness about the advantages of gender diversity. However, at that point no specific policy geared towards increasing women’s presence was implemented. Instead it came about ‘naturally’. Despite the workforce parity achieved, there are still sizeable differences across professional groups: in 2019, women accounted for 40% of managerial staff, 46% of senior experts, 52% of experts and specialists, 66% of administrative staff and 11% of other support services staff. 6  The criticism that this could be to compensate for prior wage gaps after the diversity policy was ushered in also appears to be baseless since women’s relatively quicker salary increases after promotion were faster still pre-2011. 6  This recent momentum was above all due to women making up a relatively larger share of new entrants joining the Bank (see centre panel). Logically, among the most experienced staff, the relative share of women has increased at a much slower pace (see right-hand panel).
Second, a well integrated financial system helps to make the euro area economy more efficient through the reduction of financing costs and an improved allocation of financial resources. This is likely to be conducive to higher and more sustainable non-inflationary growth. A study sponsored by the European Commission concluded in 2002 that further integration in the European Union might generate additional gains of 1% in the overall level of real GDP over a decade or so. Third, European financial integration is a priority that has been reiterated by the European Council on several occasions. The ECB’s support for European financial integration is therefore in accordance with Article 105 of the Treaty, which states that “the ESCB [– European System of Central Banks –] shall support the general economic policies in the Community with a view to contributing to the achievement of the objectives of the Community”. Finally, there is the interconnection between financial integration and financial stability. As deeper financial integration may, to some extent, change the interplay of vulnerabilities, the potential impact of these on financial stability – which is of natural interest to central banks – has to be taken into account. The ECB uses all available channels in its efforts to foster European financial integration. We try to raise awareness of the need for integration and the means of achieving it. We also advise on the shaping of the legal framework. Furthermore, the ECB can act as a catalyst for collective initiatives from the private sector.

For example, in the securitisation market, originators need a two-layer structure to create pan-European transactions backed by well diversified multi-jurisdictional asset portfolios: first, assets must be securitised at the domestic level, and then, a pan-European vehicle backed by several domestic securitisation transactions must be set up. This is a complex procedure and incurs costs. I now turn to an important retail market, namely the mortgage credit market which represents in the EU an outstanding volume of around EUR 4 trillion. The lack of integration manifests itself here in numerous ways. In no national market can borrowers access the full range of mortgage products. Moreover, only a negligible portion of European mortgage credit is granted across borders, and the techniques for loan origination and servicing differ substantially from country to country. More than half of mortgage lending is still financed by retail deposits, although in recent years capital market instruments, such as covered bonds and residential mortgage backed securities, have gained in importance. These are important asset categories that can also be used as collateral in the Eurosystem’s monetary policy operations. Nevertheless, they still exhibit a high degree of heterogeneity across countries due to differences in their legal, tax and regulatory framework. BIS Review 18/2005  3  Given the size of the mortgage credit market, the costs incurred through the lack of integration cannot be ignored.
The gradual adjustment to the new regulatory framework over a sufficiently long period, also to take into account the weakened economic position of many developed countries and financial systems as a consequence of the crisis, will mitigate the impact of implementing the new rules. In the medium to long run, the transition to a regulatory framework designed to improve the capital  4  BIS central bankers’ speeches  position and the risk management practices of financial institutions will play a major role in fully restoring the credibility and public confidence in the financial system. Further initiatives aiming to improve the governance and transparency of capital markets and institutions will also be needed to restore the orderly functioning of the markets. In this regard, the ECB has launched, in cooperation with market participants, an initiative to disclose loan-by-loan level data in the European ABS market, which in our view will help reviving such market and mitigate some of the risks associated to those products. Of course, this initiative relies on the will of market participants to improve the way in which due diligence is performed. The commitment of the ECB and the Eurosystem in this regard may serve market participants as a benchmark. It is the duty of public institutions to live up to the highest governance standards, and therefore we strive at continuously improving our due diligence and risk management practices. We expect that financial institutions and private investors in general also will rethink their governance and risk management functions.

In this regard, we should also be ready for new crises that will be different from the present one. No matter whether the next crisis ahead will be due to increases in the prices of oil and food, to geopolitical tensions or to the bust of potential asset bubbles in emerging markets, we should stand ready to react to any of those possible shocks. In order to be prepared we need to understand that finance and economics are not natural sciences, there are no “fundamental laws” to discover, but they are more about modelling and understanding the outcome of interactions between humans in human-made systems. That is, probably, one of the biggest challenges risk managers need to face. 4. Challenges ahead for central banks as risk managers  Last but not least, I would like to quickly refer to the challenges ahead for central banks. I’m not going to refer to the challenges faced by those central banks which are also banking supervisors or regulators, which are relevant enough to be deserve a full conference on their own, but I will focus on the crisis and risk management function in central banks. The job of central banks is akin to that of risk managers, in the sense that they have to deal with crisis situations and manage risks to the economy using a limited toolbox.