samchain/econo-pairs-v1 huggingface dataset:
Gent Sejko: Aiming for a secure financial system and the key role of deposit insurers Welcome address by Mr Gent Sejko, Governor of the Bank of Albania, at the IADI's ERC Regional Committee Meeting, Tirana, 4 April 2019. * * * Dear ladies and gentlemen, Dear Mr Boccuzzi, Dear Guests, Good morning and thank you for giving me the opportunity to warmly welcome you all to Tirana and the Bank of Albania and address this international gathering. It is a particular pleasure to have you here at the premises of the Bank of Albania today and to host the meeting of the Europe Regional Committee (ERC) of the International Association of Deposit Insurers (IADI). After this opening meeting, the agenda will then continue with the Technical Assistance Workshop for the rest of today and tomorrow. I hope you will enjoy it and, most importantly, hold interesting and constructive discussions. I take this opportunity to thank the International Association of Deposit Insurers (IADI) and the Albanian Deposit Insurance Agency (ADIA), who have made it possible for this event to be held in Tirana. Throughout the development of ADIA, IADI’s contribution and input has been undeniable in setting standards. In this regard, IADI has played an important role as a forum for deposit insurers from around the world to gather and share knowledge and expertise. The IADI has also provided intensive training and educational programs and has produced research and guidance on matters related to deposit insurance.

Offshoring may impair the national capacity for systems operations, development and follow-up. It may also become difficult for the Norwegian authorities to coordinate contingency planning, if large parts of operations are managed from another country. Norges Bank sets conditions for interbank systems when tasks are moved abroad. Among these conditions are that hardware must be physically located in Norway. There must also be contingency arrangements in Norway that in a crisis can quickly take over tasks that are performed abroad. Norges Bank is of the opinion that critical providers of services to the payment system need to be more closely monitored. Norges Bank will, in consultation with Finanstilsynet (Financial Supervisory Authority of Norway), examine the contingency arrangements and security of the payment system’s critical ICT service providers and data centres. This will not entail a change in FMI owners’ responsibilities for outsourced operations. The banking and payment system in Norway is dependent on a very small number of ICT providers and data centres that are also vital to other critical infrastructure. This systemic risk needs to be followed up by the authorities. ICT service providers are not subject to direct supervision in the same way as entities in the banking and payment system. In its official report from last year, the ICT Security Commission found that the supervision of subcontractors may present a challenge for a number of systemically critical institutions.
But overly permissive terms create a moral hazard risk in the form of banks running excessive liquidity mismatches in normal times.16 Prudential supervisors can mitigate the moral hazard risk by imposing minimum liquidity requirements. But there is no point in setting those requirements at a very high level when the central bank is prepared to lend freely against good collateral to solvent institutions. So it is important to coordinate liquidity requirements and banks’ reliance on liquidity insurance from the Bank of England. Striking an efficient balance is most likely when responsibility for prudential policy also lies with the central bank.17 And it explains why we are announcing management changes today to enhance that coordination, with Paul Fisher – the Bank’s Executive Director for Markets – moving to become Deputy Head of the PRA. The Bank exploited those synergies in August 2013 when, recognising the greater availability of liquidity insurance provided through our facilities, and banks’ improved capitalisation, we reduced the required level of banks’ liquid asset holdings to help support lending to the real economy. And in October last year we overhauled our facilities, offering money and collateral for longer terms against a wider range of assets, at lower cost. We could do so because, as both supervisor and provider of liquidity insurance, we can manage any resulting moral hazard risk.18 More importantly these changes recognise and support the evolution of markets and the growing importance of collateral that in turn stems from financial reform.

Through our strategic plan, we will also increase the transparency of our work on financial stability. We will publish the results of regular bank stress tests. As with monetary policy, we also intend to publish more of the research and analysis underlying our policy choices. Over  21  See King (2005). BIS central bankers’ speeches  9  time, the financial sector will be better placed to anticipate our responses and as with monetary policy, increased transparency will make us not just accountable, but also more effective. Conclusion The first Mais Lectures launched the fight against inflation. With time and increased confidence policymakers would win that war only to lose the peace. As a consequence, George Osborne’s 2010 lecture heralded the return of prudential supervision and the introduction of macroprudential policy to the Bank of England. Today’s challenge is to create a macroeconomic environment that provides the basis for strong, sustainable and balanced growth, the economist’s equivalent of a land fit for heroes. This evening I have sketched how the Bank of England intends to makes its contribution. I am in no doubt that those who come after me will add to our collective knowledge of how best to coordinate the Bank’s vast array of policy levers to achieve our fundamental mission. An open and confident Bank will welcome such advice and criticism. Why? Because the need for broad macroeconomic management is not just an intellectual curiosity, but rather a reality that will persist for years to come.
The red line simulates an increase in inflation from 2% to 5%, three times the rise in the blue line. The peak effect on the debt:GDP ratio is 12%, quite a bit less than three times the effect of a 1%-point rise. 13  Using the same terminology but allowing for a surprise and persistent increase in inflation, from π to π + Δπ, the rate of change of the debt:GDP ratio becomes ܾሶ ൌ ݀ െ ሺ݃ െ ‫ݎ‬ሻܾ െ ߂ߨܾ଴ ݁ ିሺఈା௚ାగା௱గሻ௧ . The last term is the impact of the surprise inflation. That impact decays with the ratio of old debt to nominal GDP (so at a rate α plus nominal growth). We assume that the debt ratio was stable to begin with. This requires g>r and d = (g-r)b0, implying ܾሶ ൌ ሺ݃ െ ‫ݎ‬ሻሺܾ଴ െ ܾሻ െ ߂ߨܾ଴ ݁ ିሺఈା௚ାగା௱గሻ௧ . If some fraction µ of the starting level of debt b0 is owned by a QE fund, and backed by interest-paying reserves, the last term is just multiplied by (1-µ). For the graphs we use g=1.5%, r =-1%, π=2% and α=6% (implying it takes 12 years for half the existing stock of debt to mature). The simulations allowing for QE use µ = 0.4. The blue and red lines use Δπ = 1% and 3% points respectively. 13  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  13  That’s not to say inflation can’t or hasn’t in the past had material effects on government debt.

We know that central bank policies do affect financial conditions facing the private sector, not just the public sector. And we know that monetary policy makers can, and do, thereby affect inflation. Indeed, in the longer run, it’s all they can affect and – barring the sorts of restraints necessary for financial repression – the only enduring means by which they can have an impact on the real value of public-sector debt. We’ll now have a look at how that works. What higher inflation does to the public sector’s liabilities: a simple simulation As I said in the introduction, levels of government debt that are ultimately unaffordable – that the government cannot (or will not) finance through conventional fiscal measures – can in extremis present a threat to the stability of inflation. That’s because inflation – above all surprise inflation – can reduce the burden of that debt. What I want to do here is use a simple, stylised simulation to gauge the scale of this effect. I’m interested only in the pure effect of higher inflation. So the simulation assumes that all the real determinants of indebtedness – the path of real GDP, real (ex ante) bond yields and the government’s primary deficit (relative to GDP) – are all fixed. This is unrealistic. In the short term generating the higher inflation would probably require a period of lower real interest rates (if only a brief one, relative to the timescales involved).
Among the most effective instruments of macro-prudential supervision are the requirements for capital buffers to counter the creation of systemic imbalances, as well as capital buffers for systemic banks, which being large enough, may cause social costs beyond their individual dimension. Through this new capital composition, the macro-prudential instruments manage the systemic risk before it materializes, decreasing the probability of occurrence and, after its materialization, minimizing losses that are absorbed by the higher level 2/5  BIS central bankers' speeches  of capital. But still a lot of work remains to be done. It has long been recognized that a deeper financial integration also brings a better functioning of the European Union. Yet, financial integration showed to be shallow and reversible and, after the financial crisis, fragmentation increased against centralization and integration. The measures undertaken to reduce liquidity within each country improved the national financial stability, but neglected the effect on other countries. The banking union addressed these inadequacies by concentrating the national financial policies at the central level and aiming to fulfil two objectives: to ensure banks’ soundness and promote a deeper integration of the banking sector. The Single Supervisory Mechanism plays an important role in these objectives. A stronger and more uniform supervision enhances banks’ stability and provides them with a more coherent framework of policies on cross-border banking, producing benefits compared with the fragmented system of national supervision.

At present, the plethora of international meetings offers many chances to see the world, if not actually to save it. Ultimately, only the Bretton Woods institutions themselves – the IMF and the World Bank – have the legitimacy to represent all of their 187 member countries. But their governance is outdated. At the height of the crisis, the G20 and the G7 provided strong leadership. But legitimacy and leadership should go together. One without the other does not offer a sustainable vehicle for international cooperation. So allowing the G20 to metamorphose into the governing body of the IMF makes a good deal of sense. Such an evolution would, with a little commitment and imagination, create a single effective framework for international economic cooperation. And in the long run a more powerful and legitimate international body might be able to use its clout to deal with the imperfections and frictions that I have discussed. It might even be the vehicle for a more rules-based framework for the IMFS, based on a judgement about the sustainability of the pattern of world demand. Although that seems a distant prospect today, there is a precedent for a system of internalising cross-border externalities: the WTO already plays a similar role in international trade. So far, these rules have stood the test of time. Indeed, it is now more likely that protectionism would result from high unemployment, which the rules were not designed to prevent, than the pressures from producers which have been resisted. There is much to do.
The need for active multilateralism to face our global challenges. Let me now turn to my second point: the need for active multilateralism to face our global challenges. In the current context, international cooperation between countries is maybe more important than ever. Beyond the EU’s borders, and with all our partners, we have to strive to maintain the collective rules of the game in order to preserve the improvement in the global economic environment. The global recovery has indeed been gathering pace since 2016: according to the latest IMF forecast, global growth should stand at 3.6% in 2017, after 3.2% in 2016. However, there are two major risks threatening growth: first, financial instability, with the continued rise in global public and private debt since the start of the 2000s – from 190% of global GDP in 2001 to 230% in 2016. The 2008 crisis stemmed from this, but this trend has unfortunately not slowed down since; the private debt in emerging countries (namely corporate debt) has risen particularly rapidly. Any temptation to dilute the financial regulations implemented in the wake of the 2008 crisis would be all the more worrying.

The social model that we share in the Eurozone combines a high level of public service, relatively low levels of inequality – much lower than in the United States – and a good intensity of social dialogue. Call it “social market economy” if you want, without prejudice to the intense and legitimate debate within the UK today. Page 2 sur 5  In France, growth has started to pick up, reaching 0.6% and 0.5% in the second and third quarters of 2017 respectively. However, despite strong job creation, the unemployment rate is still high, at 9.4% in the third quarter of 2017. Therefore, stepping up reforms is now a priority in France too, with a focus on two main areas: sustainably consolidating our public finances, and aiming to achieve a structural economic transformation, with a major simplification effort in the labour market, and large-scale investment in education, vocational training and apprenticeships. The new government, under Mr. Macron’s Presidency, has made decisive steps in that direction. I stress this as an independent central banker. As regards public finances, France still has one of the highest public spending levels among OECD countries, at 56% of GDP in 2016. The French government is committed to reducing this ratio by 3 GDP points within the next 5 years. Besides, measures have been taken to keep public deficits below the threshold of 3% of GDP. For the first time in 10 years, the government deficit should be below this threshold in 2017 (2.9%).
Page 1  The regulatory foundations of international competitiveness and growth − speech by Vicky Saporta Given at the Bank of England  Page 2  Published on 27 February 2023  In her speech ‘The Regulatory Foundations of International Competitiveness and Growth’, Vicky Saporta talks about what a new secondary competitiveness and growth objective will mean for how the PRA makes rules. Speech Introduction Parliament is debating a Financial Services and Markets Bill that will redefine the PRA’s powers and responsibilities. The Bill would give the PRA a new secondary objective. This will require us to act when we can to facilitate the UK economy’s international competitiveness and its growth over the medium to long term, subject to alignment with international standards. Let me be clear. I – and the PRA as a whole – know that this is a very important change. I’m going to talk today about what this change will mean for how the PRA makes rules. It’s easy for me to sum that up. This is a big deal. It will make a big difference. We take the new objective seriously. We will make rules differently as a result. Let me tell you how. I’ll start by sharing my ideas about how the financial sector supports competitiveness and growth, and about how good prudential regulation provides foundations for success. I will then tell you what the PRA will do to strengthen those foundations. Our plan is to deliver responsible openness that harnesses the UK’s strengths as a global financial centre.

In the euro area, inflation has been approximately in line with the objective defined by the European Central Bank. The preliminary estimate for May points towards rising inflation, particularly as a result of higher oil prices. Capacity utilisation in the euro area is low and unemployment remains high. Growth potential is weaker than in the US, although GDP growth picked up in the first quarter. As in the US, private consumption is an important factor driving growth. Increased net exports also contributed to growth in the euro area in the first quarter. Interest rate expectations in the euro area have also been revised upwards somewhat recently. The market now expects the ECB to raise interest rates at the end of 2004 or the beginning of 2005. Interest rate expectations were continuously revised downwards up to March 2004. Interest rates abroad have been unusually low for 2½ years. This has been the greatest challenge for our monetary policy. Even though a somewhat swifter rise is now expected, it appears that interest rates among our most important trading partners will remain low for a period ahead. In Norway, output growth has picked up after a growth pause. The interest rate reductions since 2002 have contributed to the turnaround and a soft landing for the economy. Private consumption is showing fairly strong growth. Household demand will probably be the most important driving force in the Norwegian economy in the period ahead.
The individual responsibility to have in place a sound long-term retirement income strategy, that integrates private savings, contributions to the Employees Provident Fund and supplementary private pension and annuity plans, has therefore become important. Ladies and Gentlemen, This is not the first time that Bank Negara Malaysia has issued such bonds. The second and third series of the Malaysia Savings Bonds, which were issued in November 1999 and February 2002 respectively, had the same underlying objective. Each time, the features of the bonds have been enhanced. The Merdeka Savings Bond is for retirees who are 55 years old and above, and who do not have a full-time job. Armed Forces personnel who opted for mandatory retirement below the age of 55 are also eligible to purchase the bonds. The Merdeka Savings Bond, which will be based on the Islamic principle of Bai' Al-Inah, has several new features. Firstly, the bond will be issued on a regular basis over the next two years. Following the first issuance on 4 February 2004, there will be three other issuances on 1st April, 1st July, and 1st October in 2004. This will be followed by similar quarterly issuances in 2005. It is hoped that this regular issuance would provide interested investors, who may have their savings locked in other assets with the flexibility in the future to purchase the Merdeka Savings Bond. A total issuance of RM 2.25 billion has been planned for 2004 and 2005, with the first issuance amounting to RM 500 million.

Financial institutions, including insurance companies, unit trusts, and other non-bank financial institutions, need to continue to develop innovative financial products that can meet the needs of savers throughout their life cycle. The availability of a wide range of savings instruments for savers is a necessary pre-requisite for effective mobilisation of the nation's savings. Indeed, the ongoing evolution of an innovative, dynamic and diversified financial system in Malaysia will not only help Malaysians save, but also invest effectively for their future by facilitating the more efficient allocation of personal resources. Thank you. 2  BIS Review 2/2004
To me, both types of institutional setup may have one important common weakness, that is, there does not seem to be the notion of a lead supervisor in either model. Allow me to elaborate on this point. In the case of separate authorities, it would be normal for each authority to assume that every authority is doing its job according to its mandate. Therefore, one would tend to focus only on its own mandate. This can be a problem if some authorities fail to do a proper job, others may not be able to take note. Worse still, if there are supervisory gaps, the chance of any one authority identifying potential adverse impact from areas outside of one’s own mandate is even smaller. Take the US as an example, the authorities and investors did not  2  BIS Review 32/2009  realize that credit rating agencies were not doing an adequate job in their rating of complex structured products. If there were a lead supervisor, would the whistle have been blown earlier? I believe that there would have been a better chance if there were a lead supervisor with a clear mandate to take the lead responsibility and who is risk focused. There would have been more dialogues through which weaknesses may have been identified and corrected. The idea of a lead supervisor has gained widespread support in the area of cross-border supervision, as it contributes to better coordination, which in turn could help to prevent or identify problems at an early stage.

However, Mr Chairman, I am disappointed that the cost of borrowing has remained high in spite of the improvements in the fiscal management of our economy. As you know, the high cost of borrowing stifles the growth of the productive sector. BIS Review 52/2009  1  I therefore appeal to all the banks operating in Zambia to show more commitment to the growth and development of our country by: •  Opening more branches  •  Providing more loans to increase the productivity of our economy, and  •  Encouraging more Zambians to open bank accounts through provision of easily accessible and affordable products and services  All this, ladies and gentlemen, will greatly contribute to the emergence of a middle class in Zambia, which will bring real economic development and lead to poverty reduction. I am pleased to observe Standard Chartered Bank’s commitment to growth and reinvestment. You will all agree with me, however, that those who have more should do more. I therefore look forward to seeing more from Standard Chartered Bank Zambia Limited, as it is one of the leading banks in this country. I thank you. 2  BIS Review 52/2009