samchain/econo-pairs-v1 huggingface dataset:
I believe this has broadened my own horizons and enabled me to interact with many different people from different cultures all over the world – creating and cementing many valuable friendships. The second reason is that the theme of this year’s book fair – READING TOWARDS A SUSTAINABLE ECONOMIC FUTURE – touches squarely on my own professional responsibilities as Governor of the Bank of Zambia. Our main pre-occupation at the Bank of Zambia is to help Government attain a sustainable economic future by working to keep increases in the average prices of goods and services low, the price of money (i.e. interest rates) low, and maintaining a stable exchange rate and financial system. This is the best way in which we can assist the Government as it works to advance the welfare of the Zambian people. Needless to say, one of the key pre-requisites for the Government in achieving this goal is the need to develop an educated and enlightened citizenry, which can effectively contribute to the development process. From the Bank of Zambia’s own perspective, the experience of central banks around the world is that effective communication with the public is a very important part of the success of central banks in achieving their objectives of price and financial system stability. The written word, although not the oldest form of communication, is perhaps the most powerful and enduring form for communicating and exchanging ideas. It is therefore indispensable in the work that we do.

The culture of reading does not exist. In the past, a bookshelf was one of the most cherished assets in a typical Zambian home. Today, the picture is very different. Either books are not readily available or they are too expensive to buy relative to people’s incomes; or they have lost their place of pride in the home – to home entertainment units packed with latest movies, music and Play Stations, to mention but a few. This situation has been compounded by the non-availability of sustainable library services in our schools, colleges, universities and public libraries. At the moment the better library services are being provided mainly in the urban areas, for instance, by development partners such as the British Council in Lusaka. This clearly needs augmentation by all interested stakeholders to set up libraries both in the urban and rural areas. The other aspect that, therefore, needs to be addressed, in relation to the theme of the Book Fair, is the availability of appropriate reading materials. Achieving a sustainable economic future requires the active participation of a dynamic private sector. Such dynamism requires the availability of relevant and specialised reading materials. The agricultural sector, for example, is an important part of the Zambian economy whose success holds the key to the rapid reduction in poverty that must be achieved if Zambia is to take its place amongst the community of progressive nations. Higher literacy levels in the rural areas will help to propagate better farming methods and conservation techniques.
Central responsibility for this lies with lenders communicating effectively with their clients. But to support that the Working Group recently issued a fact sheet with the Association of Corporate Treasurers, the CBI and the authorities. 12 And a number of other collective initiatives are planned in 2020, including events with a wide range of trade associations, and further materials to help support borrowers to transition. If those are the challenges facing the private sector, what more can we in the public sector do to assist? Let me talk about the two further steps we are announcing today. A new compounded SONIA index  Before borrowing firms can transition away from LIBOR-linked loans and bonds, they need to know what rate they will be transitioning to. That rate needs to be fair, verifiable and cost efficient to use. An early desire to minimise change from the status quo led some initially to look for a forward looking SONIA-based term rate to replace LIBOR. As I have mentioned, UK financial markets are deep enough to allow such a rate to be offered in due course.

Edwin Schooling Latter will talk more to these issues this afternoon. Having put in place the foundations for a decisive switch in swaps liquidity to SONIA, the next challenge for derivatives markets is to accelerate transition in futures and non-linear products. In preparation for the provision of a robust forward-looking sterling term rate, many banks are now streaming executable SONIA swap prices to regulated trading venues. Having the inter-dealer market able to trade SONIA in a single click is a key building block to helping firms hedge with the smallest friction possible. The Working Group will be considering what more needs to be done to drive transition in these markets over the coming months. 11  www.bankofengland.co.uk/-/media/boe/files/speech/2019/join-the-revolution-why-it-makes-business-sense-to-move-on-from-liborspeech-by-andrew-hauser.pdf 5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  Progress in sterling markets: cash instruments and lending  If derivatives are well on their way, the big challenge for 2020 is to drive transition in the sterling cash markets – and in particular to hit the market’s target of no new issuance of term LIBOR-linked cash instruments after Q3. We know it can be done. SONIA has quickly become the default reference rate for floating-rate notes and securitisations – accounting for around 85% of new issuance across the two markets in the second half of 2019. But these are predominantly wholesale transactions, involving a relatively small number of experienced counterparties.
Although there is a considerable stock of equity in owner-occupied housing, with banks tightening the supply of both secured and unsecured credit, consumers will find it more difficult to borrow to finance spending. So in 2008 it is likely that a less buoyant housing market will go hand in hand with slower growth of consumer spending. Tighter credit conditions mean that, as a nation, we are likely to save more of our income this year than in the recent past. In the short run, that will slow economic activity, possibly quite sharply. And there is a risk that weaker activity and lower asset prices could result in another round of losses for banks and a further tightening of credit conditions. The adjustment which not only the British but the world economy is experiencing is necessary as the imbalances, between spending and saving and between domestic demand and trade, unwind. As part of a longer-run rebalancing of the UK economy, an increase in our national saving rate, both private and public, is necessary. The low level of national saving is apparent from the current account deficit – our new net borrowing from overseas – which in  2  BIS Review 8/2008  the third quarter of last year was, relative to GDP, the biggest in the past fifty years and the largest in the G7. It is possible to run a current account deficit for a considerable period. Australia, for example, has done so in every year since 1974.

The scenario I described above was that encountered by the Governing Council of the ECB at its meeting in the first week of June and required resolute and more expansionary monetary policy action. Such action was required because, although available indicators still pointed to medium-term inflation expectations remaining anchored at levels compatible with the definition of price stability, if inflation becomes entrenched at excessively low levels for an extended period, there is a significant risk that these expectations will ultimately be for deflation and a long period of low growth. And we know from Japan’s experience that once this disanchoring has taken place, it is very difficult to return to normal. Before June, the ECB had already reduced its policy interest rates to very low levels on several occasions. The rate on the main refinancing operations stood at 0.25% and that on the deposit facility at zero. The ECB had also embraced the policy of forward guidance, both in the area of liquidity, by announcing in advance that it would extend the fixed-rate tender procedures with full allotment, and in the area of interest rates. Here, forward guidance was introduced in July last year when the uncertainty surrounding the Federal Reserve’s intentions led many investors and analysts to anticipate a change in monetary policy stance not only in the United States but also in the euro area – a change evidently not on the ECB’s agenda. The ECB had also resorted to assets purchases before June.
Inflation has risen more slowly following the recent pay hikes than perhaps could have been expected in view of historical experience, and it is still well below target. This could be due in part to the additional scope provided by the favourable initial position of many firms and by the improvement in terms of trade. But the most obvious explanation is that lower prices in international trade and low or zero inflation in trading partner countries offsets domestic inflationary pressures, as can be seen in Chart 3. The downward price pressures from abroad have been stronger in recent months than was projected last spring, partly because of economic developments in China. But it is unlikely that the price of oil and other commodities will continue falling for a long time to come. The question, then, is what happens when prices stop falling – not to mention if they begin to rise again, as is forecast. Other things being equal, measured inflation would rise in Iceland. The Central Bank’s new forecast assumes, in fact, that oil prices will begin to rise again towards the end of this year. In addition, a portion of the wage increases will finally pass through to prices. According to the forecast, inflation will therefore rise in coming months, overtaking the target next year and peaking at just over 4% in the first half of 2017. It will not return to target until 2018.

Terms of trade are projected to improve significantly this year, contributing to a larger current account surplus than would otherwise occur, but the improvement will reverse to an extent in 2017 and 2018. The sizeable current account surplus of the past few years will therefore shrink significantly during the forecast horizon and will have nearly disappeared by 2018. Rapid growth in domestic demand under conditions of full utilisation of resources has often proven dangerous to Icelanders. Other things being equal, such a situation calls for monetary and fiscal tightening. Our initial position is unusually good this time, as can be seen in a strong current account surplus, a central government surplus and declining government debt, and inflation that is still below the target. But the tug-of-war between large pay increases and the  BIS central bankers’ speeches  1  global tendency towards deflation will determine how much and how rapidly this situation deteriorates in the coming term. In my speech at the Central Bank’s Annual General Meeting, I expressed considerable concern about the unrest in the labour market and the consequences that it could have for economic stability. In the speech, I noted that wage pressures that jeopardise the inflation target are generally considered a sign of both demand pressures in the economy and excess demand in the labour market, which must be met with tighter monetary policy. However, this was not consistent with a slack that was just about to disappear and a sizeable current account surplus.
Malta also compares favourably on social cohesion, with income dispersions being comparable to those in other acceding countries and with the long-term unemployment rate being significantly lower. In summary, it appears that Malta has costs which do not reflect productivity levels and a highly expansionary fiscal stance. There is also a need for more spending on innovation activities and business investment. For while our economic system is successful in delivering social cohesion and stability, these factors cannot alone sustain the economy’s growth rate at sufficiently high levels. This suggests a need to question existing priorities and to re-direct policies to activities which can support higher income levels in future. Malta and EMU Malta’s participation in EMU will eventually lead to the adoption of the euro, a step which holds out the prospect of significant benefits. Perhaps the foremost of these is that Malta would share in the strength and credibility of a single, Europe-wide monetary policy. This would not only mean reduced exchange rate risks and less uncertainty for economic agents in Malta and for their foreign business partners, but also the elimination of the risk premium on the Maltese lira. The reduction in interest rates consequent upon the introduction of the euro would be of direct benefit in terms of price competitiveness, as would also be the reduction in currency conversion costs and the increased price transparency.

The country would then probably also face difficulties in meeting the other Maastricht convergence criteria, further complicating the task of economic management. If the risk of this happening is considered unacceptably large, a slower pace of fiscal consolidation, entailing a smaller risk of slippage, could be chosen. The late adoption of the euro would, however, imply that the enjoyment of the relative benefits would be postponed, and that the country could lose competitiveness if other new member States successfully adopt the euro at an earlier date. In summary, the best case scenario is the one where a relatively fast pace of fiscal consolidation is both planned and achieved. The worst case scenario is the one where fiscal policy fails to deliver on a planned fast process of consolidation. The scenario featuring a slower pace of consolidation can be described as intermediate in terms of its degree of preference. However, this could turn into a worst case scenario if fiscal policy fails to deliver even on a planned slower consolidation process. It is for these reasons that medium-term fiscal planning should be adopted, detailing concrete objectives and measures to be implemented over a number of years. It is equally important that such a programme enjoy the support of the social partners. The consensus-building approach being followed in the MCESD is a welcome, positive development in this regard, one that could facilitate an early adoption of the euro.
This therefore, not only includes providing greater access to financing but the complete financial services solution to the small- and medium-sized enterprises. In addition, monitoring loan performance during the lifetime of the loan rather than only during the approval process will allow for early remedial action to be taken well before difficulties emerge. 4  BIS Review 43/2003  A further important contribution in emerging market economies is to enhance consumer literacy through consumer and investor education to increase the potential for well-informed financial decisions. Another area that is important is the investment in human capital to create a workforce that is skilled and competent, as this will bring substantial long-term benefits. Finally, foreign institutions that have a presence in the region need to recognise the meaningful role that can be realised in the region not only in meeting the requirements of the domestic environment but also to promote investment and business opportunities from their established networks in other parts of the world. The Asian Financial Crisis not only presented the opportunity to improve the region’s resilience to external shocks, but also underscored the importance of breadth in the financial sector, in particular, the development of alternative avenues of financing. Historically, bank loans, as well as funds raised through equity markets have assumed significant roles in Asia as the main sources of financing.

Of importance, is the need to recognise the on-going economic transformation that is taking place in the region and to facilitate a more balanced growth between domestic and external sources of growth, between public and private sector-led growth, between the balance of consumption and investment, and between the different sectors of the economy, regions and communities within the country. Facilitating a more balanced growth will contribute toward sustainability of the growth process. With new areas of growth emerging, and new business models being adopted, new and more differentiated customer requirements need to be met. The level of innovation will need to be accorded increasingly important attention. While for the most part, pricing for products and services need to reflect the costs and risks, the industry needs to recognise that in emerging market economies, the basis to do so should take into account the social agenda that is an integral part of the sustainable performance of the country. The ability to achieve socio-economic stability will produce a more balanced growth. Ultimately, the objective of increasing competition and therefore enhancing efficiency in pricing needs to be balanced against providing basic financial services to the less advantaged retail customers at very minimal costs. Such trade-offs need to be made and managed. This also includes enhancing access to financing to the various sectors in the economy, to both the large and small borrowers. In emerging market economies, providing other ancilliary financial services especially to small businesses will enhance the potential quality of such assets.
By winning the battles for customer loyalty, value, efficiency, resilience and talent, banks can remain the dominant players in this space. The bank of the future will be completely unrecognizable from that of today. It will be closer to its customers, digitally enabled, and ahead of the curve when it comes to anticipating customer needs. It will be more efficient, more resilient and better able to address the economic and social challenges of the future. In the end, only collectively, we as the key stakeholders in this industry can take the difficult yet necessary steps required to shape the future of the banking industry. As Einstein said: “A new type of thinking is essential if mankind is to survive and move toward greater levels.”  Thank you.

In short, banks will need to either go digital or risk being sidelined. Failure to meet changing consumer expectations can have serious implications for banks. The recent history of the mobile phone industry is a case in point. In 1997, 60% of the mobile phone market belonged to the specialist mobile phone producers like Nokia, Motorola and Sony Ericsson. Today, that same market share has been captured by Samsung, Apple and Huawei. Not only are the current market leaders three entirely different firms but they are essentially electronics and computer companies, unlike the past firms that specialized in manufacturing mobile phones.12 The incumbent mobile phone companies of the 90s failed to recognize the evolving needs of their customers. Ultimately, their complacency saw them being pushed to the fringes of a market they once dominated. Something similar could happen to the banking industry. Unless it pays attention to and serves the changing needs of its customers, it might be sidelined by telecom companies or technology firms as primary providers of financial services. Take the example of Ant Financial, WeChat Pay and M-pesa, which are firms that were launched by technology and telecom companies. All three have enjoyed tremendous growth to become the largest providers of financial services in their respective markets. By leveraging technology and adopting a customer-centric approach, they have surpassed the largest banks in their markets.
The high cost level in the Norwegian business sector is adapted to a situation where we are developing the petroleum sector and phasing in the use of petroleum revenues into the mainland economy. After a period, we will be able to cover a smaller share of our imports using current petroleum revenues and by drawing on capital in the Petroleum Fund. The Norwegian cost level will then have to be dampened, also compared with that of Sweden. Competitiveness may in the longer run be brought back to the level prevailing at the end of the 1960s before Norway became an oil nation. During such a period of adaptation, which may start in 5 or 10 or 15 years, a flexible exchange rate, with a fall in the Norwegian krone against the Swedish krona, will have to play an important role. Where do we stand today? Tariff barriers for trade in goods are low. The EU/EEA agreement also provides for increased trade in services. During the 1990s, capital mobility has increased to a level that is higher than 100 year ago. Free capital flows and free trade pave the way for high economic growth and prosperity, but also entail challenges. Competition has increased in many industries. Labour-intensive processes are being transferred to new EU member states such as the Baltic countries. Some multinational companies have streamlined various production processes and distribution and centralised them in the same location. Saab has been acquired by General Motors and Volvo by Ford.

Instead, it is important to analyze the loan growth in broader economic policy context where due consideration should be paid to the credibility of macroeconomic policies and the impact other policies may have on the incentive structure in the financial markets. As I stated earlier, the presence of Nordic banks in the Baltic market is, of course, a hugely important positive factor. Parent banks are sometimes considered to have an implicit responsibility for the stability of the banking systems in the Baltic countries. It is said that the Baltic banks are too small to fail. International experience lends support to this view, although the evidence is not always in one way. Hence, there are also potential risks. If parent banks are active in many countries of the region, a shock affecting exposure in one country may lead to a reduction in their exposure across the region. Build-up of exposures to common risk factors in a region may also increase the potential for contagion - a reduction in lending to countries not affected by a crisis. The potential for contagion is naturally higher in highly integrated economies. Another potential risk factor is the smallness of the banks in the Baltics combined with their high profitability. While the Nordic banks have high profitability in all of their markets, profitability in the Baltic market is especially high. As a result, the share of banking groups' assets in the Baltics is significantly lower than the share of profits banks make in this region.