samchain/econo-pairs-v1 huggingface dataset:
One sign that the effort mattered appeared as the commercial real estate market heated up later in the 1990s and lending terms started to loosen. Deal flow came to a near-standstill as the controls established in the early 1990s kicked in. The market only resumed when underwriting standards retraced their way back to higher ground. So, as we benchmark progress in the recovery of financial institutions from the recent financial crisis, one area stands out. The early 1990s supervisory program comprised strengthening capital and liquidity, identifying problem exposures and placing them in workout, and developing a new business plan – there is one area where more progress will need to be made. The international community of supervisors has done a great deal to address the need for more and better quality capital through new capital standards. The identification and workout of troubled assets has made significant progress, which we can observe in the recovery of markets for some troubled assets. But global financial firms are still working on the new business plan. From the financial press, it’s clear that many large financial companies have been rethinking their strategies, often along the lines of increasing the focus on nonfinancial businesses and households and reducing the focus on expanding capital markets businesses. But I believe we are more at the beginning than toward the end of that process of reconsideration.

In any case, I believe that the financial globalisation and the way it affects the conditions for monetary policy, including coordination with macroprudential policy, is a question that will continue to be discussed intensively in coming years. As an important problem is that exaggerated credit growth can arise in the countries to which capital flows, financial stability can hopefully be guaranteed by the frameworks for macroprudential policy that are now being built up.32 We will see how well these frameworks can resist the global forces in the “learning by doing” process we are facing in the macroprudential policy area. A more complicated world after the crisis Let me try to summarise. The fact that I have chosen cooperation as something of a theme is because, as I said initially, our world in the wake of the financial crisis appears more complicated than it was before – or at least more complicated than we thought it was. I think it has become more evident that monetary policy in individual countries is dependent on both what happens in other policy areas and on monetary policy in other countries. Of course, there has always been a need to get different policy areas to interact and support one another, and nor is it anything new that there are links between the monetary policies conducted in different countries. But my feeling is nevertheless that the financial crisis has in a way brought these relationships to a head.
As technology continues to reshape our world, we must balance improvements in efficiency and customer experience with the concomitant risks. Today, the trade-offs are still not well understood because while some use technology maliciously, many more use it for a good cause. Only by embracing this advancement, and by working together with tech-players, can we synergise and fully reap the benefits for the economy. In response to these technological shifts, ‘RegTech’ developments ought to be a high priority for global financial regulators. An end goal is to balance the risks and opportunities within the technological sphere. Equally important here are the complementary roles of governments and industries in sharing information, so that we can holistically mitigate various aspects of security threats. The catalytic role of behavioural analytics and big data further provides us with tools to address threats channelled through the financial system. In order to adapt to the borderless nature of globalisation, international cooperation is vitally important. Beyond the financial sector, we must prepare our human capital for the future. Close collaboration between public and private sectors is critical to ensure that displaced workers are adequately retrained and equipped with new skills. Those dislocated should not feel sidelined. We can address labour displacement by investing in education, skills re-training and increasing women’s participation in the workforce. We need to take a hard look at the current landscape of social safety nets, and draw best practices – both those tried and tested, and practices that can best respond to new challenges and needs of society.

This possible weakening in the link between wage rises and price rises could be attributable to more structural factors, which are also being discussed in the United States: we shall pay close attention to how data on this issue evolve. 3 - Relentless efforts towards a stronger Europe Monetary policy cannot be the only game in town. I understand and share German concerns on this... and that is why we need to push relentlessly for a strengthening of our Economic Union. Allow me to mention a great Luxembourger, Pierre Werner. At the end of the 1960s, he dared to suggest in his report that the monetary area needed a common budget, that its decisions should be endowed with democratic legitimacy or that unions should be given an active role. In this respect, the advances made by the Eurogroup in December 2018 constitute limited progress that needs to be extended. With regard to the Banking Union, its success will be predicated on the establishment of a solid and effective resolution mechanism, more than on the deposit insurance scheme. We need to pave the way for the backstop to be implemented as soon as possible. Moreover, in the interests of financial stability, we should consider extending the maturities on the credit lines and reach a definitive agreement on how to make emergency decisions. Unfortunately, there was almost no progress at all on the Capital Markets Union in the 4 December agreement.
Briefly, the problem with adhering to the 2 per cent inflation target, measured with the CPI, from 1996 to 1998 is as follows: In the short run, the downward and direct impact on CPI inflation from lower interest rates – the interest expenditure effect – is appreciably larger than the upward tendency associated with stronger economic activity: the macroeconomic effect. BIS Review 61/1999  8  A situation in which forecast inflation one to two years ahead points to the rate being below the target poses evident difficulties for monetary policy. In order to bring inflation back into line with the target further ahead, the Riksbank responds by reducing the repo rate, which has the effect of lowering inflation still more in the shorter run. The interest expenditure effect disappears after a couple of years and the macroeconomic effect gains the upper hand. The opposite applies if the repo rate is raised. This accordingly indicates that an appraisal of monetary policy must be based on a thorough analysis of the factors behind the path of inflation, for example by comparing CPI inflation with other inflation indicators that exclude transitory price effects. There was, in fact, a theoretical possibility of preventing CPI inflation from being so low in 1996, 1997 and 1998. The Riksbank never even considered it, for obvious reasons. Still, I can illustrate how the inflation target could have been fulfilled mechanically by avoiding the direct interest expenditure effect.

This is eminently logical and sensible, since with more cautious bank lending and enhanced risk management within the HLI sector, it should be very hard for the HLIs to build up excessive leverage and concentration in the major financial markets. This measure is being pursued with earnest in both the public and private sector. The Basel Committee on Banking Supervision, and IOSCO have issued respective guidelines on sound practices for interactions with HLIs for banks and securities firms. The latest discussion has focused on the kind of supervisory incentives for the compliance of risk management standards. The Basel Committee on Banking Supervision has put forward two proposals for the revision of the Capital Accord, which would help address the concerns on HLIs. One is abolishing the maximum 50% risk weighting for non-bank OTC derivatives exposures; and the other is encouraging counterparties to impose an initial margin on repo transactions. From the private sector, the Counterparty Risk Management Policy Group formed by twelve leading international financial institutions produced a report in June 1999. Five major hedge funds also produced an industry group report in February 2000 on improving counterparty risk management and internal control. While we agree that enhanced risk management of HLIs and their counterparties is a useful first line of defence, two major concerns remain. First, the return of competitive pressure may lead to a relaxation or even a breakdown in risk management standards again in the future.
If the effects of unchanged mortgage rates are excluded, inflation will develop in a more stable manner and be close to the target of 2 per cent for most of the forecast period. It is weak productivity developments and the weak krona that will contribute to holding up inflation despite the economic recession. If the Swedish economy risks deteriorating more than expected, it may be necessary to implement further unconventional measures The future direction for monetary policy will depend, as usual, on how new information on economic developments abroad and in Sweden will affect the prospects for economic activity and inflation in Sweden. If the economic situation deteriorates further it is possible to use monetary policy easing to further stimulate the economy. But there are also reasons for further consideration of what is an appropriate level for the repo rate. If the repo rate were to become too low the transmission mechanism might become less effective. This is because some market rates are lower than the repo rate. When the repo rate approaches zero, these interest rates would no longer be able to follow. A too low repo rate could also create costs in the financial sector as the result of, for instance, a reduction in the banks’ margins. There is thus a risk that the functioning of the financial markets will deteriorate if the repo rate is cut further. In this case monetary policy will not have the intended effect.

The real interest rate is expected to be very negative throughout the forecast period. This entails a powerful stimulus of the Swedish economy. The discussion is currently dominated by the question of how we should manage monetary policy in the prevailing recession. As monetary policy is forward-looking, it is important not to overlook the potential inflationary impulses now being built in for the future. Price impulses from a weak krona and from high unit labour costs are two such factors. If the global economy recovers more quickly than we are predicting, this will also contribute to making monetary policy less expansionary. Before further measures are taken, there are thus many reasons to evaluate the effects of all of the measures taken so far, and to evaluate the new information on economic activity and the financial market situation that is received.
When foreign market participants assess the situation and risks for Sweden and Swedish financial institutions, they also take into account to a large degree what is happening in the other Nordic countries and in the Baltic countries. The global financial crisis has affected financial stability in Sweden, although financial institutions here have coped better than those in many other countries. At the end of 2008 and the beginning of 2009 there was considerable international uncertainty and the market was particularly sensitive to consequences for Swedish banks resulting from the crisis in the Baltic. There was thus good reason for the Riksbank to take measures to stabilise the situation among the major Swedish banks in accordance with its task "to promote a safe and efficient payment system”. As the problems of the Swedish banks concerned mainly lay in the Baltic region, there was even greater justification for aiming the measures at strengthening these countries and thereby the banks there. The costs of these measures would probably be much lower if the problem could be dealt with at source rather than waiting until it had spread to the parent banks in Sweden, for instance through a dead stop in the liquidity supply from international markets. When the Riksbank made an assessment of the resources required to manage a widespread Swedish bank crisis, we took into account the fact that the Swedish banks’ balance sheets nowadays amount in total to 3.7 times Sweden’s GDP (which can be compared to 1.2 times GDP during the bank crisis in the 1990s).

Given Estonia’s own currency board arrangement, it would not otherwise have been possible for them to provide support other than on a very small scale  BIS Review 11/2010  3  and the Swedish authorities would have been forced to take full responsibility for a liquidity injection. This agreement is a good example of the allocation of responsibility between countries with interwoven financial systems. The legal base for the Riksbank’s loan arrangements with Latvia and Estonia is described in the Sveriges Riksbank Act, which enables loans to be granted for monetary policy purposes and currency policy purposes. An acute crisis in these countries would probably have such repercussions in Sweden that it would be difficult for the Riksbank to conduct efficient monetary policy, and the exchange rate would probably be weakened to an extent which would be detrimental to Sweden’s economic development. The Riksbank has strengthened its own foreign currency reserve through extensive borrowing abroad to have sufficient resources to be able to act effectively in a crisis. The size of the foreign currency reserve prior to the borrowing was not adequate to meet the demand for support measures that arose. When access to foreign markets disappeared after the Lehman collapse in the autumn of 2008, demand for foreign currency from the Riksbank increased sharply. Why has the Riksbank acted in the way it has?
One detailed factor that has complicated monetary policy recently is the effects on measured retail price inflation of regulated and administered prices such as above-inflation rises in utility bills, university tuition fees, rail fares etc. Individually these may be perfectly sensible public policy choices and I do not want to be interpreted as criticising their motivation. But the effect on CPI inflation is important. These prices – which are about 16% of the CPI basket – will contribute around one percentage point to the CPI inflation rate in the next couple of years, largely regardless of what happens to domestic demand. Pushing inflation down to 2% would require very low price rises in the other 84%. The risk of overall deflation is much less likely as a result. At our February meeting we faced, as so often in the recent past, a difficult choice. Should we offer more monetary stimulus, or should we not? My own choice, on a balanced assessment of the risks, was that we could and should do more now to support a nascent recovery with a further monetary injection. I do not believe the assertions of those who claim that that QE is noticeably less powerful than previously – although I have noted that there are limits to what monetary policy can be expected to achieve on real growth and it is impossible to measure the impact of monetary policy with any degree of precision. As with changing interest rates, the precise effects will always depend on the state of the economy.

There are areas where we are likely to have erred in being too prescriptive and others where we left too much room for discretion and judgment. It would be good if we could find a way to build into the initial design of guidance and regulation the capacity for quicker and continuous evolution as we learn more. Second, we need to continue to adapt our approach to the imperatives of a much more integrated global financial system. Global integration, of course, gives us all a greater stake in the quality of supervision outside our borders. This pragmatic interest will lead us to spend progressively more resources and attention on the international dimension of our work. This recognition informed the efforts that led to the Basel Capital Accord, the Lamfalussy Standards for payment and settlement systems and many other international cooperative efforts. But the imperative is much stronger today because of the much greater extent of financial integration, and it is only likely to grow. It is also important that the design of regulatory initiatives in the United States be informed by a careful assessment of their relative impact on U.S. institutions and markets. Effective solutions to many of the concerns we face in our national financial systems will require multilateral approaches.
Risks to the outlook for price developments are broadly balanced. Upside risks over the medium term relate, in particular, to the evolution of commodity prices. Furthermore, increases in indirect taxation and administered prices may be greater than currently expected, owing to the need for fiscal consolidation in the coming years. At the same time, risks to domestic price and cost developments are contained. Overall, the Governing Council will monitor closely the future evolution of all available price indicators. Turning to the monetary analysis, the annual growth rate of M3 was unchanged at –0.1% in April 2010. The annual growth rate of loans to the private sector increased somewhat further and turned positive, but remained weak at 0.1%. Together, these data continue to support the assessment that the underlying pace of monetary expansion is moderate and that inflationary pressures over the medium term are contained. Shorter-term developments in M3 and loans have remained volatile and, given the renewed tensions in some financial market segments, volatility in M3 and its components may well continue. The actual growth in M3 continues to understate the underlying pace of monetary expansion, but the downward impact of the rather steep yield curve and the associated allocation of funds to longer-term deposits and securities outside M3 appear to be gradually waning. The same holds for the shifts within M3 that have been observed as a response to the narrow spreads between the interest rates paid on different M3 instruments. At 10.7%, annual M1 growth is still very strong.

The still weak annual growth rate of bank loans to the private sector conceals the fact that monthly flows have now been positive for a number of months. At the same time, these aggregate developments continue to reflect mainly an ongoing strengthening in the annual growth of loans to households, while the annual growth of loans to non-financial corporations  2  BIS Review 80/2010  has remained negative. A lagged response of loans to non-financial corporations to economic activity is a normal feature of the business cycle. The latest data confirm that the reduction in the size of banks’ overall balance sheets has not continued since the turn of the year. However, further adjustments cannot be ruled out and the challenge remains for banks to expand the availability of credit to the non-financial sector when demand picks up. To address this challenge, banks should turn to the market to strengthen further their capital bases and, where necessary, take full advantage of government support measures for recapitalisation. To sum up, the current key ECB interest rates remain appropriate. Taking into account all the new information which has become available since our meeting on 6 May 2010, we continue to expect price developments to remain moderate over the policy-relevant medium-term horizon. Global inflationary pressures may persist, while domestic price pressures are expected to remain low. The latest information has also confirmed that the economic recovery in the euro area continued in the first half of 2010, but quarterly growth rates are likely to be rather uneven.
3 / This Report includes a box reviewing the possible impacts of the US fiscal measures. The conclusion is that, in the context of an economy with scarce capacity gaps and highly indebted, a bigger fiscal impulse will result in higher inflation and macroeconomic imbalances that will call for adjustments in the medium term. This makes the monetary-fiscal policy interaction in the US economy particularly delicate. A scenario where the Fed postpones the normalization process could create bubbles in asset prices, while if the Fed responds categorically to neutralize the fiscal stimulus, it might trigger an excessive adjustment in asset prices and an increase in volatility. Thus, the lack of coordination between fiscal and monetary policy in the United States is one of the main risks identified in this Report. 3  resolved, including a high level of domestic indebtedness. Any pitfalls in this process could have significant effects on the prices of global financial assets and commodities. Another important risk, which has gained importance in recent days, relates to the announced protectionist policies that may affect global trade. Beyond the short-term effects, such measures would negatively affect the world economy's and Chile's trend growth. Domestically, the Board estimates that the risks to activity are upwards biased. The outlook for 2018 shows investment growing in line with GDP. However, it may prove more dynamic, considering the favorable external scenario, the expansionary nature of monetary policy, improved confidence indicators and the data of recent months.

Caleb M Fundanga: Strengthening the Zambian banking sector Address by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the Commissioning and Official Opening of Access Bank (Zambia) Ltd, Lusaka, 24 September 2008. *  *  *  • H.E, Acting President of Republic of Zambia, Mr. Rupiah Banda M.P; • Honourable Ministers; • H.E Nigerian High Commissioner to Zambia; • Access Bank Group Deputy Managing Director; • Access Bank Zambia Chairman; • Access Bank Zambia Managing Director; • Distinguished guests; • Ladies and Gentlemen. I am greatly honoured to be given this opportunity to make brief remarks at this formal commissioning and opening of Access Bank (Zambia) Ltd. I wish to extend a warm welcome to all of you gathered here today, particularly those who have travelled from outside the country. Your Excellency, Honourable Ministers, today’s event is a crowning moment and demonstrates the fruits of the economic reforms that the Government has continued to implement in the financial sector in particular and the economy in general. Indeed it is a landmark achievement in the Government’s concerted efforts aimed at attracting foreign investors. It is also gratifying to note that Access Bank Zambia Limited is the first bank to be registered in the country since 1999. I am also happy to inform you, Ladies and Gentlemen, that the Bank of Zambia is currently reviewing other applications for banking licenses. In this regard, we expect a few more banks to be registered in the near future.