samchain/econo-pairs-v1 huggingface dataset:
First, I feel that the ECB deserves recognition for having been the European institution that provided the quickest and the most ambitious response to the crisis. It assumed, in exceptional circumstances, a key role in vanquishing doubts as to the continuity of the euro, in underpinning the recovery and, subsequently, in combating the risks derived from the current situation of near-zero or even negative inflation rates. Notably, the ECB’s unique role as the monetary authority of various states and economies did not weaken its resolve as it pressed ahead with its four broad lines of action: First, key policy rates were reduced almost to the bottom of the possible range. Thus the marginal deposit facility rate, which had been negative since 2014, stood at –0.4% in March this year. In the current context of abundant liquidity, this rate is a key reference in monetary policy. BIS central bankers’ speeches  1  Second, the ECB Governing Council strengthened its communication policy through the publication of forward guidance. Third, the liquidity-providing instruments used since 2008 were adapted to the new circumstances. In mid-2014 longer-term refinancing operations were commenced with the specific objective of stimulating credit expansion, i.e. making access by banks to very long-term funding from the ECB conditional on them granting credit to households and nonfinancial corporations. In March it was decided to extend this instrument to 2017.

In the case of services, European Commission studies suggest that full implementation of the Services Directive would deliver significant productivity gains and growth potential. Efficiency gains may also be achieved through the creation of a single energy market. Regarding the free movement of persons, we should be aware of the risk of the spread of an uncoordinated response that may ultimately fragment the Schengen area. The introduction of reforms and deepening of the single market are clearly crucial to achieve the structural convergence needed to improve the functioning of the euro area and make further progress towards a more robust monetary union. Our aim is to achieve sustainable activity and a recovery in employment, while maintaining the essential bases of the welfare state which is naturally one of the pillars of the construction of Europe. Clearly the result of the referendum held on 23 June in the United Kingdom is a major setback along that road, with consequences for the medium and long term that are still difficult to gauge but which, in any event, obliges all of us, economic agents, citizens and governments to reflect on the future of the European Union and its governance. In light of the uncertainties unfolding in this new scenario, it is now more important than ever to achieve sufficient and sustainable economic growth that will boost income and employment. The message reiterated by the ECB over the last two years at least is that monetary policy cannot be the only economic policy instrument.
The Swiss Value Chain, run by the three companies, is of vital importance for the implementation of monetary policy. There is no alternative infrastructure for our monetary policy operations. Therefore, we will keep a very close watch on further developments in this area. 3. Developments in the financial markets  The positive underlying sentiment in the international financial markets remained largely unchanged in the first half of 2007, despite some turbulence in the stock markets, which was rather strong at times, and some difficulties in the US sub-prime mortgage market. On 27 February, after a correction in the Chinese stock market, major falls in share prices were recorded worldwide. The price decline temporarily gave rise to fears that the current bull market, which has lasted for many years now, could come to an end. After only a few days, however, the markets returned to normal. A few weeks later, most share indices had already compensated the losses (figure 1). A further correction has occurred in the past few days. However, despite this turbulence, the rise in implicit volatilities – a measure of expected uncertainty – has been relatively insignificant and shortlived in historical terms. Implicit volatilities are still at a very low level (figure 2). In addition, interest premiums on credit risks both for companies and emerging economies remain low, although yields on long-term government bonds have increased markedly since the beginning of March.

The deployment of responsibilities outside monetary policy cannot be divorced from the government in the same way as is possible for monetary policy. For example, in the area of financial stability and banking supervision, there will be times when public funds may be put at risk when rescuing or resolving a failing institution – and that decision is properly one for the finance ministry. It is far from straightforward for a central bank governor to be completely independent in terms of monetary policy, somewhat independent in terms of financial stability, and not at all independent in terms of operations that risk taxpayers’ money. The financial crisis has challenged our understanding of the objectives of monetary policy and exposed its limits. And, through the proliferation of instruments and resulting increase in responsibilities, it has complicated the question of central bank independence. So how should we respond to this more complex environment? We must keep sight of three important principles. First, although they should be realistic about what can be achieved, it is right that elected politicians and parliaments decide on the objectives of policy. Second, as we learned in the 1970s, if the central bank is to achieve price stability – its fundamental role – it must be sufficiently independent. And third, in order to protect that independence, its limits should be very clearly circumscribed, and we should be exceptionally careful with decisions that put public funds at risk. The challenge remains, as it was twenty years ago, to make “constrained discretion” work in practice.
This subject is being given a high priority in the State's plans which envisage expansion in the establishment of more universities, specialized colleges, training centers and encouraging the private sector to  BIS Review 150/2007  3  contribute to the effort in that direction. Notable progress has been made in providing most government jobs to Saudis. A major achievement of the Saudi Banking system has been in areas of human resources, where banks have continued to increase the use of Saudi citizens. I am therefore pleased to note that in this regard the Banking sector is ahead of all other industrial sectors and currently a level of about 80 percent Saudization has been achieved. The employment of Saudis at senior executive level has reached 70 percent. However, one of the most important challenges currently facing the financial sector is the great increase in the need for qualified skills due to the expansion by banks in their business and establishment of financial services institutions and insurance companies and insurance related services and free professions. This will result in a great pressure on available technical skills in these fields. This has been noted recently in the high rise in the wages for such specialized skills and competition by financial institutions to attract such skills. I hope that exaggeration in this competition will not increase the rotation of the manpower in this sector in a manner that would affect work in its institutions.

Several companies have applied, and Royal Decrees were issued approving the establishment of 21 insurance companies. Approvals were issued by SAMA for 50 offices to provide insurance related services such as brokerage, loss assessment and insurance consultations. Some offices completed necessary procedures to obtain commercial registrations and others are about to finalize necessary procedures. More licenses are expected to be issued soon. The banking system is also being expanded by allowing foreign banks to open branches in the Kingdom. So far ten licenses have been issued for that purpose to 5 GCC banks and to 5 banks from other countries. All of them have already established their branches in the Kingdom, or are likely to open their branches in the very near future. Also, in March 2006 the Council of Ministers approved the foundation of a Saudi joint-stock company under the name "Alinm'a Bank" with a capital of SR 15 billion to carry out normal banking business and investment. This bank is likely to become operational in the near future. Saudi Arabia has one of the youngest populations in the world. This means that one of the challenges facing the national economy is to continue creating jobs for our young people to enter the labour market. This involves development of education and training to qualify the youth and prepare it to meet the requirements of the labour market.
It is pleasing that the market is at last beginning to show signs of strengthening. Indeed there is some evidence of incipient overheating. 10 Many institutional investors are taking the view that commercial property will be one of the better performing asset classes over the next couple of years and there is significant buying activity both from UK and overseas. There are increasing signs of development, involving both institutional investors and, on quite a large scale, property companies. And the banks too have been showing strong interest in the sector, with many new entrants joining the large number of more established participants. 11 Finally, there are encouraging signs of progress on several initiatives. The IPF has made its case to the Treasury for a change in the tax status of securitised vehicles, and others are looking to develop existing routes. Many investors are telling us that progress on securitisation will be crucial if they are to remain in property at all, so the better tone is not a valid excuse to give up on structural improvements to the market. There is welcome progress on BIS Review 11/1997  -3-  the derivatives front, through BZW’s Property Index Forward instrument and the REIM initiative. Some participants are showing interest in improving the quality of market information.

However, given the need to have a framework which can be adapted to a wide range of circumstances, cooperation among supervisors is clearly the most important tool in achieving an appropriate level of consistency. The Committee has established a working group of supervisors, called the Accord Implementation Group, or “AIG,” that shares information on implementation efforts among Basel Committee member countries. The AIG works with other supervisors as well, including through the Core Principles Liaison Group, a group of supervisors from many other countries that shares views and exchanges information. By promoting the sharing of information on practical issues, the AIG’s discussions will help to foster greater consistency in the implementation and application of the new framework across countries. Conclusion I now look forward to hearing some additional perspectives from our panellists on Basel II and especially their thoughts on its implications for the Indian banking sector. As I have stressed in my remarks, Basel II is intended to reinforce our focus on risk and to encourage all of us to improve our skills in measuring and managing those risks. In one sense, then, Basel II might be considered an effort to re-invigorate the risk management culture in the banking sector. I believe that Basel II provides banks with the incentives necessary to encourage them to improve their risk management systems and processes. At the same time, the new capital framework will help to ensure that capital supervision continues to serve as a cornerstone to safety and soundness in the banking system.
Furthermore, over the first two years of Monetary Union, there has come to be greater understanding that this is indeed a sensible approach. 2  BIS Review 10/2001  Monetary policy in an environment of structural change Central banking entails, by definition, acting under uncertainty. While this statement holds true in general, it is particularly the case for the ECB. The introduction of the euro had the potential to trigger structural changes in financial, goods and labour markets, which are in part already visible today and may evolve further in the near future. With regard to financial markets, the integration of national money markets into one area-wide money market has been almost without friction since the very start of Stage Three, which has allowed for an efficient implementation of monetary policy decisions. In the other segments of the financial markets, considerable progress has been made, although the integration process is far from complete. The removal of barriers to exchange rate risk between the countries of the euro area helped to facilitate the standardisation of debt instruments and widen the range of investment opportunities. Portfolio allocation strategies within the euro area are now mainly oriented towards a sectoral selection and, to a lesser extent, a national selection of assets. That is an impressive indication of the ongoing integration of financial markets in the euro area. This trend, in turn, enhances the liquidity of markets and affects the financing decisions taken by companies.

In-house training courses tailored to each business unit, commitment by senior management of banks, understanding of benefits of implementing Basel II by all stakeholders and hiring of right skills would help in mitigating skills shortage related risks. Regulators and supervisors have to be at it to assess progress within a reasonable time frame. 2  BIS Review 88/2005  11. Without data, there are no models and without models, the risk management capability is reduced. This does not mean that commonsense approach in handling matters should be discarded altogether. Given the heavy competition and highly leveraged nature of businesses, banks, at minimum, should record historical data for computing the probability of default loss, and operational risk losses. This is a difficult task. The challenge for banks is to build up databases for operational losses, both historical and potential future losses. The challenge for regulators is to ensure that banks start collecting this type of data in a systematic manner. Banks often see regulators as a pain in the neck due to constant nagging. Perhaps, moral suasion and organizing peer pressure might encourage banks. 12. Unbundling risk related capital charges in the new Basel II Capital Accord requires an explicit capital charge for operational risk. Calculating such a capital charge has proved extremely difficult because of a lack of an accepted methodology and credible industry data.
The financial market liberalization made the monetary policy effectiveness increasingly dependent on market expectations for the interest rate policy, which additionally raised the need for developed central bank communication with the public to the degree of necessity. As an illustration of the central bank communication in the past, and what it is today, I would remind you that the world’s largest central bank – the FED, publicly announced the decision on interest rates for the first time in 1994. Today, it seems unreasonable 1/3  BIS central bankers' speeches  for a central bank not to announce its decision on the interest rate. The recent global economic crisis has once again affirmed the necessity of developed communication and transparency and has been an incentive for many central banks to ensure proactive approach in promoting their transparency. Today, as the ECB President, Mario Draghi, emphasized, “the central bank communication is actually a monetary policy tool in itself”. Besides the numerous monetary instrument innovations aimed to stabilize the financial markets and encourage the economy, central banks have begun to struggle to improve the quality and quantity of communication of their measures, including their future measures. Namely, the central banks not only tried to better explain the measures they took and the reasons for doing this, but also reported on the future measures (monetary policy set-up), which is an important novelty in the central banking operations. Why is all this necessary?

Interpreted broadly, this can include relatively simple indicators, such as interest rates, interest rate spreads, and returns. They include other measures related to the value of financial or tangible assets like bonds, stocks, housing, and gold. And of course they also include more sophisticated, data-intensive estimates of risk, which we hope to discuss today. For central banks, one of the main questions that arises is whether financial market indicators are useful in setting monetary policy. And if so, which ones are most useful for central banks, and for what purpose? In general, financial market indicators are used by central banks to: (1) gauge market sentiment with regards to expected changes to policy variables; (2) identify types and sources of shocks to the economy; and (3) predict future developments in economic activity and inflation. Such predictions of longer-term inflation are also useful in checking how markets view the credibility of the authorities’ commitments to their final price target. So financial indicators can be used to double check econometric and judgmental predictions as well as flag a problem of asset price misalignment, which may need to be addressed by policy. In addition, financial market indicators have the potential to reflect developments at critical stages of the transmission process. This is due to the fact that financial markets in general adjust faster than goods markets, and their prices are timelier and less prone to measurement error. Today’s workshop will give us the chance to discuss these and many other issues.
Part of the reasons for success in these countries can be attributed to their modern financial systems and clear policies that support the growth of the sector. However, the fact still remains that for most African countries, a sustainable way of financing SMEs has yet to be found. As I mentioned earlier, the programme for this meeting is broad and extensive. But I would wish to draw your attention to a number of broad areas of reflection which I believe can help in delivering greater finance to the sector. The first area is that there is a need to accept that not all banks can or should even be expected to provide SME financing products. The cost structure and skills orientation simply make some financing institutions completely unsuitable to deliver SME products cost effectively. The implication of this is that greater effort must be placed on developing financial institutions that see SME financing as the core business and therefore set out to develop the expertise required to finance the SMEs successfully. Fairly often the discussion on SME financing is reduced to two diametrically opposed positions. On one hand, SMEs are considered by banks as representing a high risk and therefore, should be avoided or only dealt with cautiously and at a premium price. On the other hand, banks are accused of being inflexible and risk averse and consequently irrelevant to the sector. It is important to understand where the truth lies in these two statements in order to advance the cause of SME financing.

Firstly, it gives recognition to the fact that we are all aware of the potential of this sector in generating employment, promoting economic growth and reducing existing poverty levels. In low income sub-Saharan African countries, SMEs and micro-enterprises make up about 90% of all enterprises. However, due to the various constraints they face, their overall contribution to GDP can in some countries be as low as 20% although estimates show that this could be scaled up to 60% with the greater realization of the sector’s potential. Contribution to employment can be as high as 63%. For most low income countries, SMEs are the main  BIS central bankers’ speeches  1  source of jobs and income after subsistence agriculture. Particularly significant is that they are a great source of livelihood for women who own more than half of SMEs while over 70% of Africa’s rural population survives through the formal and informal SME sector. There is little doubt, therefore, that SMEs form a solid basis for sustainable economic development on our continent. Secondly, the continued discourse on SMEs reminds us of the possibility that we have probably done more talking about the problem than fixing it. Although the development of SMEs is varied extensively across Africa, what is clear is that in most countries a major obstacle to their growth is the lack of sustainable and cost effective financial products. South Africa and Mauritius in this region and North Africa have done a commendable job in developing flourishing SMEs sectors.
We therefore took a series of measures aimed at immediately restoring the situation by dealing with all the problems within our sphere of competence and, in particular, we decided to intervene on securities markets whose abnormal functioning was jeopardising the implementation of monetary policy and financial stability. In this case, we targeted sovereign debt markets because they determine the financing conditions of the country’s other issuers. When sovereign debt markets cease to function, the financing needs of the country as a whole cannot be met. This type of intervention is not a quantitative easing operation since no particular amount is set beforehand and all the liquidity provided through the purchase of securities is sterilised in the interbank market via term deposits offered to banks. Neither is it a credit easing operation targeting a particular type of agent ; government securities are not purchased in the primary market and the securities in question may be issued by borrowers such as Greece that has almost stopped issuing debt due to the mechanism in place to ensure its financing by euro  area countries and the IMF. It was simply a measure to restore the monetary policy transmission channels via the debt markets. I believe that recent episodes clearly highlight what the markets may expect from central banks, that is to say resolute action to deflate positive and negative asset price bubbles if they interfere with monetary policy transmission channels.

Rare events, even when dramatic at the time, lose their power to shape policy as memory recedes. The role of institutions is to retain a collective memory and to resist the temptations of the present. That is one of the most important roles of a central bank. It is accepted as such in the domain of monetary policy. And there is an equivalent role in financial stability. The introduction of simple and robust policy tools into a regulatory regime based on the exercise of constrained discretion would make it easier to resist overly rapid expansion of financial institutions. In particular, the authorities should maintain a clear focus on the issues that matter when the worst occurs – liquidity and leverage. It should be intrusive, in the sense of knowing what is going on, but not bureaucratic. A system in which it is easier for a large bank to expand and then destroy its balance sheet than for an individual to open a bank account has lost focus. That is not the fault of regulators, but a reflection of the pressures and incentives they have faced – from all of us. As a Kennedy Scholar at Harvard, I have always treasured Harold Macmillan’s words in his tribute to John F Kennedy. He was, said Macmillan, a man “whose eyes were on the horizon but whose feet were on the ground".