samchain/econo-pairs-v1 huggingface dataset:
In this view, it is worth mentioning the positive contribution of the new FDI inflows in tradable sector, which contributed to both higher and more diversified net export and higher employment. In addition, economic recovery was supported by the fiscal stimulus as well as the accommodative monetary policy stance. Since July last year, the main policy rate is at the historical lowest level of 3.25%. Moreover, during the crisis period, a combination of standard and non-standard measures have been undertaken by the central bank aimed to give additional support specifically to the credit growth and accordingly, to the economic growth, while still preserving the price and financial stability in the economy. The outlook for this year is also positive. We expect GDP growth of close to 4%, and therefore we see economy going up on the cycle. What one can learn from our experience is the fact that the implementation of sound structural reforms can definitely move the economy upward – even during the crisis – that is an important message for the macroeconomic policy afterwards. When discussing the recovery from the crisis, we need to point out some related issues that are dealing with the exit of non-standard policy measures and turning towards fiscal consolidation, currently being the topical issues between the policy makers worldwide. The tapering decision by the FED by the end of the last year somehow announced the need of this reversal that will eventually be recognized in other countries, too.

Dimitar Bogov: Towards recovery and sustainable growth in the altered global environment Address by Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, at the 3rd Research Conference “Towards recovery and sustainable growth in the altered global environment”, Skopje, 28–29 April 2014. *  *  *  Ladies and Gentlemen, Your Excellences, Dear guests, It is indeed with great pleasure that I welcome you all to our third Research Conference! Just like in the previous years, we hope to have a fruitful discussion on the main topics from the current surrounding and the economic prospects of the region and the global economy. This year’s conference will be focused on the recovery process in the wake of the long lasting global financial and debt crisis and making a floor for sustainable growth in the altered global environment. Today, we would like to talk with you about consequences from the crisis, the lessons learnt and the impact of the regulatory and institutional changes on the recovery process. To touch upon the issues: Why did it take so long to come to this point and how sound this recovery is? How close are we to the normalization of policies setup and the desirable growth rates? How successful the fiscal consolidation will be and is the financial system more resilient to shocks now?
Norman T L Chan: Keynote speech - HKAB & HKIB Distinguished Speaker Luncheon Keynote speech by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at the HKAB & HKIB Distinguished Speaker Luncheon, Hong Kong, 26 September 2019. * * * Mary (Huen), Patrick (Fung), distinguished guests, ladies and gentlemen,  Introduction 1. I have been Chief Executive of the HKMA for 10 years. This will be the last time I speak to you in my official capacity. 2. I would like to take this opportunity to look back at what all of us here have accomplished during those 10 years. 3. When I say “all of us”, I do mean everyone represented here today. 4. Under conventional wisdom, our relationship is not designed to be friendly or close. We all know that there is potentially going to be some sort of friction between the regulator and regulatees. If there were no friction, at least one of the two sides would not be doing their job properly. 5. But if we succeed in working together, we accomplish something of vital importance. We ensure that Hong Kong can fully trust the financial services that you provide and which keep our economy going. 6. Today, I want to look back over the last 10 years and see how well we have all done.

Third, increasing cost pressures have made it more difficult to sustain profit margins without raising prices. Energy and import prices are one source of higher costs. Another is the cost of employing labour which has been rising faster than the growth of real take-home pay. Higher pension costs for  BIS Review 9/2007  1  companies, on the one hand, and higher taxes, petrol and utility prices for employees, on the other, have opened up a gap between increases in the pay bill and real take-home pay. If investment and employment growth are to be maintained, the burden of these higher costs must either be passed back in the form of reduced input costs or forward as higher prices. So far, pay pressures have been subdued, but not sufficiently so to mitigate the rise in costs to employers. As a result, companies have scaled back their demand for labour and looked to raise prices. The risks to money spending, inflation expectations and cost pressures were not overlooked by the MPC and were explicitly identified as upside risks to inflation both in speeches and in our monthly minutes back in 2005. In the event, the upside risks to inflation did materialise to some extent. And a year ago, the MPC thought the risks to GDP growth were on the downside. Yet, the total output of the UK, leaving to one side the energy sector, has been rising at an annual rate of over 3%.
But given the nature of the problems at the source and in the development of this sovereign debt crisis, the role that any ECB decision may play in resolving it can hardly go beyond mitigating the risks of serious accidents and of providing more time so that the decisions that must be taken in areas other than the ECB may come to fruition. The Spanish economy Let me now turn to the key features of our current economic situation. The Spanish economy has been greatly affected by the financial tensions in the euro area, which emerged with the outbreak of the international financial crisis in 2007–2008, and the public finances problems of several euro area members, beginning with Greece. In our case, the crisis reached us and, in turn, we contributed to its unfolding as a result of the doubts over the sustainability of our public finances, our poor growth expectations and the scale of our foreign debt, which essentially built up during the real estate boom. Economic policy has striven to overcome various factors of vulnerability in a very adverse macroeconomic setting. The results of the reforms undertaken are still incipient, and we must persevere with this strategy, which is the only realistic way of resuming sustained growth. As recent events in Europe show, there are feedback loops from public finances and their problems to the banking system and its problems, and from the latter to activity and  2  BIS central bankers’ speeches  employment.

It has made it clear that it sees no constitutional bar to British membership. There are advantages. For example, the introduction of the single European currency will help to complete the Single European Market. And the uncertainty associated with investment decisions within the euro area will be reduced. Europe will continue its consolidation as a major trading bloc. And financial benefits should flow from the introduction of the euro as a major currency for financing. The tradeable government debt of the EU as a bloc, for example, amounts to around 2.6 trillion dollars equivalent, compared to 2.1 trillion here in the US. This will give the euro debt markets a broadly similar size and liquidity as hitherto has been the preserve of the dollar markets. But there are also risks. For example, will the UK economy be able to live comfortably with euro interest rates on a permanent basis? And if problems emerge after EMU begins, will a ‘one-size-fits-all’ monetary policy be adequate to deal with them, particularly if there is insufficient flexibility in product markets and labour markets? A particular concern is the high rates of unemployment in some Continental European countries, and the differing rates between them. The British Government has set a number of economic tests to ensure that, before the UK joins EMU, there will be sustainable convergence between the UK economy and the euro area.
Diagnosing the market failures So what were the failures, specifically of stress-testing and other risk management tools, that contributed to this credit boom and subsequent bust? It is useful to try and identify the microeconomic friction – the market failure – that was the root cause of these risk management problems. Doing so better enables both financial institutions and the authorities to pinpoint what needs to change and how. These market failures fall roughly into three categories: •  disaster myopia;  •  network externalities; and  •  misaligned incentives. All three have impeccable microeconomic macroeconomic consequences. credentials  and  potentially  disastrous  Disaster myopia In a nutshell, disaster myopia refers to agents’ propensity to underestimate the probability of adverse outcomes, in particular small probability events from the distant past. That makes it sound like a rather unworthy informational failure. In fact, it is well-established in cognitive psychology that economic agents have a tendency to base decision rules around rough heuristics or rules of thumb. 1 The longer the period since an event occurred, the lower the subjective probability attached to it by agents (the so-called “availability heuristic”). And below a certain bound, this subjective probability will effectively be set at zero (the “threshold heuristic”). If the period of stability is sufficiently long – a Golden Decade perhaps? – this subjective approach to evaluating probabilities looks increasingly like a fully-rational, Bayesian approach to updating probabilities. As time passes, convincing the crowds that you are not naked becomes progressively easier.

Figure 12: The average lifetime cost of risk factors associated with sexual exploitation Average cost per individual  Preintervention Postintervention Control group  Going missing  Substance abuse  Accommodation Total needs  £  Disengagement from education £  £  £  £  £  £  £  £  £  £  £  £  £  £  Source: PBE (2011). BIS central bankers’ speeches  25  Figure 13: Benefit of Centrepoint intervention to the public purse, average per Centrepoint client Central scenario £ 2010/11 prices) 6,989 12,332 2,639 46 188 117 –136 22,174  Avoided welfare benefits Tax raised Crime (avoided costs) Mental health issues (treatment costs avoided) Class A drugs (treatment costs avoided) Cannabis (treatment costs avoided) Alcohol (treatment costs avoided) Benefit of Centrepoint intervention to the public purse Source: PBE (2013). Note: row totals do not add to the total benefit due to rounding. Figure 14: Reasons for not participating in volunteering-related activities, 2010/2011 (% of respondents) Work commitments  60%  Doing other things with spare time  34%  Looking after children/the home  31%  Studying commitments  14%  Not knowing any opportunities to help  14%  Not knowing of any groups needing help  14%  Looking after someone elderly or ill  8%  Feeling too old  3%  Feeling too young  1%  Source: UK Civil Society Almanac (2014), Citizenship Survey (2010/11). 26  BIS central bankers’ speeches
3/5  BIS central bankers' speeches  Second, to measure and quantify the ESG impact of potential investments and loan portfolios, which is necessary to incentivise firms to make sustainable investments that meet their sustainability commitments. 11. To this end, MAS announced in December last year that we are embarking on Project Greenprint. Project Greenprint aims to deploy technology at different stages of the supply chain to better monitor commitment to the relevant green standards and requirements. For example, Internet-of-Things (IoT) devices could be deployed on-site to directly capture and assess relevant real-time data, such as energy and water consumption, by borrowers, portfolio companies, and suppliers. It will also explore the application of AI and other technologies on third-party data sources, to quantify the ESG impact of potential investments and loan portfolios. We will work with a consortium of financial institutions, FinTech firms, and industry players with expertise in Green FinTech, and also look forward to partner with like-minded central banks who are committed to harnessing the power of innovation to support sustainable finance. Multilateral connectivity to enhance cross-border payments 12. Let me turn now to cross-border payments. The G20 is leading a concerted global effort to make cross-border payments less expensive, faster, more transparent, and more inclusive, while maintaining their safety and security. We heard in an earlier session today how the pandemic has accelerated the shift to digital payments, a trend that is helpful to this objective.

These are the Hub’s contributions to the central banking community as we pilot global multilateral platforms for cross-border payments involving wholesale CBDCs. 15. More broadly, exploring multilateral connectivity is a massive undertaking, which needs to involve multiple centres of innovation. Each centre can have a role to examine different aspects, different models and technologies for enhancing cross-border payments. At the core of this, the BIS plays a critical role to set direction, forge consensus, and coordinate efforts to maximise synergies. There are two key benefits to central banks collaborating to work on the next generation of cross-border payments and settlements infrastructure in this manner. Firstly, we arrive at the finishing line faster, as we explore the extensive possibilities in parallel, whilst avoiding unintended duplications of work. Secondly, this gives us the best chance of an end-product that is interoperable, and meets the needs of many. This fits into the broader picture of the G20’s cross-border payments roadmap. Ambitious timelines have been set for this roadmap, and the BIS and the central banking community play a key role in making this happen. Conclusion 16. On this note, please allow me to conclude. The central banking community has come some way in our innovation journey. It has been a collaborative and iterative process, where we learn from each other and from the industry. The Summit has showcased the highlights of what we have done together thus far, but there remains much more that we can achieve together. 17.
This in turn led the authorities around the world to intensify their efforts. Uncontrolled lending and regulatory arbitrage are common features Although the current crisis is unique in terms of it extent and complexity, it is not difficult to see parallels to other, previous crises. Uncontrolled and careless lending in an economic boom is a common feature in the history of bank crisises. This is not the first time we have seen inadequate risk management. Another interesting feature is the attempt to circumvent regulations in both past crises and the present crisis. In Sweden, the "grey" credit market appeared in the 1980s in an attempt to get round the credit regulations. The latest wave of securitisation of credit portfolios at international banks was driven in part by a desire to avoid costly capital adequacy requirements. The fact that loans in both cases were partly offered alongside the ordinary banking market in what is now called "the shadow banking system" concealed the real extent and location of the risks. Why all these crises? So why do such financial crises arise? The root of most financial crises can be found in the imbalance between assets and funding. The simplest way to illustrate this is to look at a fictitious bank’s balance sheet. On the asset side there is lending to companies and households. These are assets that cannot be sold quickly without a substantial discount. In other words, they are illiquid.

And to find the means to counteract the build-up of large imbalances the authorities must begin to think along new lines. This is important but also difficult work. The financial sector is dynamic in the sense that new instruments, techniques and institutions are constantly appearing. This means that the risks are also constantly changing. Not least, the increase in the banks' cross-border operations and their increasing dependence on market funding pose new challenges to the authorities that are responsible for the stability of the financial system. This means that authorities like the Riksbank need to constantly reconsider and develop their methods. Ongoing and intensive everyday efforts are important, even when the crisis has receded and the spotlight is no longer aimed at the financial side of the economy. Since the bank crisis of the 1990s, the Riksbank has developed the tools it uses to promote financial stability. But these tools are largely "soft". They entail persuading and convincing those involved with good arguments, something that is usually referred to as "moral suasion". This distinguishes the Riksbank from, for ex-ample, Finansinspektionen, which has wider powers to intervene directly at individual institutions. When times are good, it may also be tempting to ignore the warnings of the authorities and it may be difficult to resist the opportunity to expand when all the indicators are positive.
And for this reason they are quite different in nature from some of the riskier financial activities that banks undertake, such as proprietary trading. In other industries we separate those functions that are utility in nature – and are regulated – from those that can safely be left to the discipline of the market. The second approach adapts those insights to the regulation of banking. At one end of the spectrum is the proposal for “narrow banks”, recently revived by John Kay, which would separate totally the provision of payments services from the creation of risky assets. In that way deposits are guaranteed. At the other is the proposal in the G30 report by Paul Volcker, former Chairman of the Federal Reserve, to separate proprietary trading from retail banking. The common element is the aim of restricting government guarantees to utility banking. There are those who claim that such proposals are impractical. It is hard to see why. Existing prudential regulation makes distinctions between different types of banking activities when determining capital requirements. What does seem impractical, however, are the current arrangements. Anyone who proposed giving government guarantees to retail depositors and other creditors, and then suggested that such funding could be used to finance highly risky and speculative activities, would be thought rather unworldly. But that is where we now are.

It is important that banks in receipt of public support are not encouraged to try to earn their way out of that support by resuming the very activities that got them into trouble in the first place. The sheer creative imagination of the financial sector to think up new ways of taking risk will in the end, I believe, force us to confront the “too important to fail” question. The belief that appropriate regulation can ensure that speculative activities do not result in failures is a delusion. Separation of activities does not resolve all misaligned incentives. Where private sector entities outside of the utility banking sector engage in a high degree of maturity transformation on a scale that could have consequences for the rest of the economy, the government would not want to stand aside when such an entity fails. That is the heart of the matter. Maturity transformation reduces the cost of finance to a wide range of risky activities, at least some of which are beneficial, but the implicit government guarantee means that the true cost of that maturity mismatch does not, as it should, fall on those who receive the benefits. The aim of policy should be to minimise or eliminate that subsidy. Separation of activities helps not hinders that objective, not least because it is the mixture of activities that  BIS Review 129/2009  3  reduces the robustness of the system.
The answer is that both have been reacting to an unprecedented financial shock, which resulted in significant excess capacity in the economy. When the Federal Reserve purchases assets and expands its balance sheet, it necessarily injects more reserves into the banking system. The key question is what banks do with those reserves. Reserves held by the banking system that are not used to provide credit to businesses will have little bearing on either real spending or inflation. The 2009 line in Figure 13 shows that the expansion of bank reserves has not generated increases in lending. As with the 1991 recovery, where a credit crunch impeded expansion of bank lending, there has not been an expansion of lending during this recovery. This is particularly noticeable if we look at business lending, in Figure 14. Commercial and industrial loans are substantially lower than at the recession trough. Of course, those who worry about the inflationary consequences of our balance sheet may be looking to the future. As the economy improves, banks may use their reserves to rapidly expand business lending – increasing economic activity and putting upward pressure on inflation. But as Chairman Bernanke has emphasized, the Federal Reserve has at its disposal a variety of tools that will allow it to remove reserves from the banking system once economic conditions get closer to normal.

They are an asset item on our balance sheet and are offset by the increased money supply as a liability item. If we were to make an unrequited transfer of our foreign currency to a sovereign wealth fund, our equity would reduce or even become negative. The sovereign wealth fund or the Confederation would therefore have to buy the foreign currency from us. But where the money would come from for this is not clear. In principle, the Confederation could borrow from the capital markets, though this is unlikely to be feasible due to the debt brake. Or, we could grant the Confederation a loan, but this would be equivalent to state financing via the central bank’s printing press, which is prohibited under the National Bank Act. BIS central bankers’ speeches  3  A further problem would arise if, in the future, a reduction in the money supply were to become necessary for monetary policy reasons. The money supply was originally expanded to satisfy the increased demand for francs. However, it is possible that demand may also fall again. If there were to be a sharp decline in demand, the SNB would have to reduce the money supply again in order to keep monetary policy conditions stable. The simplest way would be to buy back Swiss francs, namely by selling foreign exchange reserves. But if the foreign exchange had already been transferred to a sovereign wealth fund, this would no longer be possible.