samchain/econo-pairs-v1 huggingface dataset:
BIS central bankers’ speeches  1  In this presentation I will try to explain why I think this is so. I will also speak about what is still lacking and the regulatory challenges we face ahead. Why we shouldn’t back-track on regulation There are several reasons why I don’t think the regulatory agenda has gone too far. First of all, my experience is that important regulatory and structural reforms are all too often hindered by myopia. People tend to focus on costs and pains in the short run, leaving aside the longer term gains that reforms aim to achieve. The perceived short-term costs are simply much easier to sell politically, compared to the abstract benefits of lowering the risk of crises. This is especially so, since the benefits may accrue only to future generations – a group that has difficulties making its voice heard in today’s policy debate. This time has been no exception: for years, people shied away from necessary actions to strengthen the financial system. When the crisis hit, perceptions changed, providing a window of opportunity for regulatory reforms that were long overdue. However, we mustn’t begin to close this window and lose sight of why we are undertaking these reforms. Let me start with a reminder of the regulatory framework before the crisis. Both Basel I and II included a risk-weighted capital adequacy framework. However, for the last 20 years banks’ balance sheets ballooned, while their equity failed to take off.

For example, the gross market value of the OTC derivative markets increased from USD 2 trillion in 1998 to USD 35 trillion at the end of 2008. The intensive use of complex and off-balance sheet products distanced the final borrower from the final investor. As underlined by a recent IMF study, 1/3  BIS central bankers' speeches  most of the pre-crisis financial globalisation had taken place through cross-border activities with little involvement from global banks in local retail activity. It ultimately led to a reduction in efforts from banks to monitor the creditworthiness of their borrowers and mitigate the associated default risks. These two levels of complexities were exacerbated during the European sovereign debt crisis as European banks were put under funding pressures by market participants concerned by the opaqueness of their portfolio composition and the lack of credibility of the previous resolution mechanism. B – A comprehensive and strong policy response: both on the regulatory and the supervisory sides However, I just want to convince you of how strong the regulatory and supervisory responses have been since then, in curbing the detrimental impacts that overly complex organisations or overly complex activities might produce. First, the new regulatory framework treats global and complex banks differently. Global Systemically Important Banks (aka GSIBs) are subject to higher capital requirements explicitly determined by the importance of their cross-jurisdictional claims and liabilities, their OTC derivatives, and their Level 3 assets exposure.
Rogoff, Kenneth S., 2011, “The Bullets Yet to Be Fired to Stop the Crisis”, Financial Times, August 8, available by subscription. BIS central bankers’ speeches  5  Smets, Frank, and Rafael Wouters, 2007, “Shocks and Frictions in U.S. Business Cycles: A Bayesian DSGE Approach”, American Economic Review, Vol. 97, No. 3, June, pp. 586–606. Werning, Ivan, 2011, “Managing a Liquidity Trap: Monetary and Fiscal Policy”, National Bureau of Economic Research, working paper, No. 17344, August. 6  BIS central bankers’ speeches

A robust and stable financial system, that we have managed to ensure so far, is a necessary, but not sufficient condition for achieving sustainable growth. Financial system efficiency needs to be upgraded, so that it serves to lift economic efficiency, not least by harnessing the hitherto untapped strength of the grass-root economies, where the emerging organic social-economic network has increasingly highlighted the potential contribution to growth and welfare improvement. For the banking system, the strategy to harness this potential is set out in the Financial Sector Master Plan Phase 2, which is a continuation from Phase 1. BIS Review 20/2010  1  Ladies and gentlemen, The challenges I have raised, together, pose a tall order. So in today’s talk, let me set out our strategy and policy priority in three parts. First, the SWOT analysis of the banking system and the challenges we face; Second, the key strategies in the Financial Sector Master Plan Phase 2; and Third, the key measures in risk-based supervision to ensure stability. First, the strength of our banking system is evident in its continuous solid performance. During the toughest times, our banks remained strong and resilient against the backdrop of economic slowdown. Loan decelerated, partly due to contraction in corporate portfolio and deceleration in household portfolio, as a result of more cautious business undertaking and household spending, and partly due to tightened loan underwriting standard. The good news is the figures are already starting to pick up again.
We will be working with firms to make sure these expectations are clear, and will also ensure that the way in which the transitionals apply is transparent to  2  Full version of the speech "Milestones of preparation for Solvency II"  BIS central bankers’ speeches  3  all market participants. This includes how transitional measures might apply to books of business that are subject to a Part VII transfer, and the frequency with which some of the transitional measures need to be re-calculated. The cap on the level of benefit firms can derive from the technical provisions transitional presents a practical challenge, given that it will require firms to be able to produce estimates of their solvency position on an ICAS basis for a period after the end of that regime. Clearly it would be unreasonable and unrealistic to expect ICAS models to be maintained and run once Solvency II has been implemented. Therefore we will be exploring with firms ways in which they might be able to satisfy the requirement to approximate ICAS solvency positions in a cost-effective and efficient way. Conclusion I will add a very quick word on the process of internal model approvals before summing up. I consider it vital that our approval process is entirely consistent across firms, and that the timing and communication of our decisions is consistent with orderly markets.

This study, which we expect to be completed by the end of 2017, will include various original aspects to address the special characteristics of the Spanish case. First, educational skills are decentralised. Given the nature of financial competence, which varies significantly according to the level of education of the individual concerned, the project will use representative samples of the different levels in the various regions. Second, the financial knowledge of each individual may not reflect that of the persons who actually take household decisions. For example, in Spain, important financial decisions regarding house purchase and mortgage borrowing are taken at different ages than they are in other European countries, as a high proportion of young people live with their parents. As a result, information is sometimes needed on the financial competence of those members of the household who take saving and borrowing decisions affecting the whole household. 4/5  Apart from its financial knowledge, we have little evidence regarding the general economic knowledge of the Spanish population. Given this situation, questions have been included in the financial competence survey that aim to measure, inter-alia, knowledge of certain key concepts, such as inflation and money. In 2018 we will have the results of the survey, which will enable us to analyse on a sound basis the financial knowledge of the adult population in Spain and to identify those areas on which the Financial Education Plan needs to focus. Future activities will be based on this information.
We must not forget that our region has had failed experiences before. Countries that had all the conditions to become developed didn’t make it, and froze their economies exactly at that crucial moment. Today Chile is in a BIS central bankers’ speeches  7  state of anticipation. It is our duty to succeed and take the leap that is pending. On the part of the Central Bank, with monetary policy and our role as financial regulator, we will continue to work towards achieving the objectives we have been entrusted: to safeguard price stability and the normal functioning of internal and external payments. Thank you. Figure 1 Inflation indicators (*) (annual change, percent)  8  8 CPI  Services EFE  6  6  4  4  2  2 CPIEFE  0  0 Goods EFE  -2  -2  -4  -4  -6  -6 11  12  13  14  15  16  (*) As from January 2014, the new indexes with annual base 2013=100 are used, so they are not strictly comparable with earlier numbers. Sources: Central Bank of Chile and National Statistics Institute (INE).

Prices for imported consumer goods showed a considerable smaller decline than in the three preceding years. Our inflation projections were revised downwards in the light of actual developments through 2006. Underlying inflation has recently picked up somewhat and is more closely in line with that expected one year ago. At the same time as inflation has been low, growth in the mainland economy has been strong, and stronger than expected. The Norwegian economy is booming, after a strong upturn since summer 2003. The upturn followed a period of slow growth from 1998 and a mild recession in 2002 and into 2003. Growth has been stronger and occurred earlier than in the cyclical upturn in the mid-1990s. When Norges Bank reduced the key policy rate in 2003, demand and output rapidly recovered. Strong productivity growth supported the upturn, which was reflected in exports, petroleum investment and  BIS Review 47/2007  3  after a period in general government demand. So far in this cyclical upturn, the mainland economy has grown by an average of a little more than 4 per cent annually. The upturn is now in a mature phase. Even though production increased rapidly, it took a long time for employment to pick up. Employment growth was lower for a long period compared with the upturns in the 1980s and 1990s. Moreover, high growth in labour productivity partly reflected a marked fall in sickness absence in 2004.
Christian Noyer: Central banks in the financial crisis – a European perspective Speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the Bank of Korea International Conference, Seoul, 1 June 2010. *  *  *  Introduction Ladies and gentlemen, It’s a great pleasure for me to address such a distinguished audience. First, let me thank the organizers of the conference for giving me the opportunity to open this second day of the conference. Yesterday’s contributions have been outstanding and, in view of our program I have very high expectations for our discussions of today. From the outset, Central Banks have been major actors in fighting the financial crisis. Overall their actions have been broadly successful. In the period to come, however, steering the economy may prove more challenging and new risks can weigh negatively on the recovery underway. A case in point is the brutal reassessment of sovereign risks by market participants. The euro-area has been at the epicentre of this phenomenon. Some market segments have become dysfunctional to a point that jeopardized the transmission of monetary policy. The Eurosystem has therefore resorted to new steps to contain those tensions and prevent their spill over to the real economy. The sovereign debt turmoil is the most recent episode of a crisis that started already more than two years ago.

Lee Hsien Loong: Capital markets in the new economy  Speech by Mr Lee Hsien Loong, Chairman of the Board of Directors of The Monetary Authority of Singapore and Deputy Prime Minister, at the 25th Anniversary Celebration Dinner of the Singapore Investment Banking Association, held in Singapore, on 6 September 2000. *  *  *  Chairman, SIBA, Mr Koh Kah Yeok, distinguished guests, ladies and gentlemen, Introduction I am happy to celebrate with the Singapore Investment Banking Association (SIBA) your 25th anniversary. For many years, SIBA has actively provided industry feedback on government policies, especially on capital market regulations and developments. These inputs have helped MAS to create a conducive environment for all financial players. Last November, your association broadened its charter, reconstituted itself to include a wider spectrum of activities and financial institutions, and changed its name to SIBA. This was a timely move. I am pleased to note that you have formed the SIBA Debt Capital Market Committee. As an MAS survey1 shows, corporate debt issuance more than doubled last year to $ 19.5 billion. In the first half of this year, corporate debt issuance is already $ 21.2 billion, exceeding the volume for the whole of last year. More diverse issuers are tapping the debt market, and interest from local investors has grown. An industry body to champion the development of the debt market, and institutionalise a feedback channel to MAS, will therefore play a useful role. Global trends in capital markets In the financial industry, globalisation is proceeding apace.
Let’s talk about something else that is somewhat hard to fathom. What are your thoughts on the election? Let me make it a little more – are there lessons from the election that you think are particularly important for the economy going forward? President Dudley: Well, obviously, the Federal Reserve is completely apolitical, so we don’t take sides in terms of elections, and whether the Democrats or Republicans win. But I do think there is an interesting lesson in the election in the sense of support around the country and around the world for globalization, and why that support did not seem to manifest itself in terms of our election outcome. You know, I think that globalization has lifted literally hundreds of millions of people out of poverty over the last decade or two. And so I think net-net from my perspective it’s been a good thing. But people have been left behind from globalization. I think a lot of people in the United States didn’t put enough weight on those people. You look at income distribution in the United States it’s become a lot more skewed. You look at income mobility in the U.S., it’s not very good. I think those are things that we really need to work on is the country. I think we really want to make it so that globalization lifts all boats rather than just some boats because if you don’t have that, you’re not going to have support for globalization. You’re not going to have support for free trade.

The third risk is induced rather by the effects of the global developments on the gradual deterioration of macroeconomic performances of the economies in the region, and resulted in impairment of the credit portfolio quality of the banking system, which has undoubtedly affected or will affect their future activities and performances. Let me summarize the first point – the region has successfully dealt with the euro area crisis so far, but the risks remain. Many issues are still open and accordingly, the alertness of policy makers has to remain high. What are the lessons learnt from the crisis? The financial crisis shifted many traditional views in the economy, including the role and the objectives of monetary authority, where besides the conduct of monetary policy and the concern for the price stability, there is an obvious need for more active engagement of the central banks in the maintenance of financial stability in the economy. The period of crisis worldwide is full of many successful examples, probably the most so far in the world history, of application of wide range of prudential measures, modifications in the standard set of instruments and implementation of nonstandard measures of monetary policy. The need of comprehensive risks monitoring in the economy and greater flexibility concerning the intensity and the type of measures, taking into account the ultimate monetary objectives, is probably one of the major lessons from the crisis.
Clearly, I think it is neither probable nor desirable that negative rates will be applied to private individuals – except in the case of certain large fortunes – or to SMEs. Firms in the euro area, and especially SMEs and VSEs,ix have benefited from easier access to credit at low rates: it should be noted, however, that on the  Page 9 of 14  whole, they are no longer net borrowers, in other words they can completely self-finance their investments; nonetheless, this historical, and perhaps temporary, inversion is less evident in France. Last, state governments are clear winners, and alongside them the taxpayers, thanks to the savings on government interest payments. In the case of France for example – which can borrow at negative rates at maturities of up to nine years – interest payments, as a percentage of GDP, have been halved in the 20 years since 1998,x whereas the level of debt [% of GDP] has been multiplied by a factor of 1.6. Page 10 of 14  But this very gain has raised questions: are low rates responsible for the increase in government debt, as well as in private sector debt – that of households and firms? In France, they have undeniably facilitated the rise.

However, at the rate it is growing, we will only reach 16% in 2020, from the 14.8% today. This would be even lower if we were to correct for double counting of policies. Clearly, the data proves that takaful is still far below its full potential, and is nowhere near where it should be. Second, individual takaful operators have not reached optimal size. Takaful operators are dwarfed by their conventional counterparts. Without sufficient scale, takaful operators are hampered in making meaningful inroads against their larger competitors. This is not just about competition within the takaful and insurance industry, but also of technology. Technology is reshaping the landscape of finance and lowering the barriers to entry from adjacent industries. Takaful operators must shape up, or risk being marginalised, or worse, made irrelevant. Third, the value proposition of takaful needs to be more apparent. As it currently stands, many view it as being no different from insurance. Some even view it as being unnecessary. It is disheartening to learn that 51% of respondents to a MTA survey cited these very reasons on why they have little knowledge or interest in takaful products. The issue of misperception also remains, with many non-Muslims deeming takaful as being only for Muslims. Opportunity to reposition takaful for the future This is the grim reality of the state of the industry, but it need not be so. In fact, I am positive about the prospects and potential of takaful. However, to get out of this “predicament”, we need an immediate and radical change.
In that case it could be worth discussing a comeback for the tolerance band, but reintroducing the band would neither contribute to higher inflation expectations nor consequently to a rise in interest rates. Monetary policy cannot solve the problem of rising debt and housing prices What can be said then about the growth of household debt and housing prices? After all, one issue central to the criticism is that the low interest rate contributes to further increases in debt and housing prices. 13  The Riksbank (2010). 14  For example, Heikensten and Vredin (1998, pp. 585-586) noted that "A tolerance band could be a reflection of the fact that the central bank does not consider it important to aim for an inflation target in the middle of the band. Instead it may, as long as inflation is contained within this band, want to focus on achieving other targets, such as production or employment for example. This is portrayed at times [...] as "opportunistic" monetary policy. We do not feel, however, that this was the reason certain countries chose to put a tolerance band around their inflation target". 8  BIS central bankers’ speeches  It has been obvious to those who have followed the monetary policy debate that the Riksbank shares many people’s concerns about this development. This is clear from reports, minutes, speeches and a number of debate articles. The Riksbank has therefore pointed out the necessity of measures in other policy areas for several years.

The period where inflation has been below the target has gradually become longer and longer. Even the more stable underlying inflation measure, where both interest-rate effects and volatile energy prices are excluded, has been below 2 per cent since January 2010 (see Figure 2). According to the Riksbank’s forecast, it is expected to reach this level again in autumn 2016, provided that monetary policy is very expansionary. This means nearly seven years below the target, at least five of which have been clearly below it. 9  Se for example Williams (2009), Blanchard et al. (2010), Calmfors (2013), Ball (2014), Krugman (2014), and Rosengren (2015). 10  See Côté (2014) and Kryvtsov and Mendes (2015). BIS central bankers’ speeches  5  Figure 2 Inflation has been low for a long time Annual percentage change  Note: CPIF is CPI with fixed mortgage rate. Sources: SCB and the Riksbank. Once inflation had undershot the target for a while, inflation expectations began to fall. Economic agents did not expect inflation to meet the target even five years ahead. In other words, a risk began to build up that the role of the inflation target as a benchmark for pricesetting and wage formation would begin to weaken – that the nominal anchor that has been an important part of the favourable developments in Sweden since the 1990s crisis would no longer hold.