samchain/econo-pairs-v1 huggingface dataset:
Dimitar Bogov: Creating an environment for sustainable economic growth in Macedonia Opening address by Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, at the 13th Macedonian Stock Exchange Annual Conference, Skopje, 4 May 2012. *  *  *  Honorable Mr. Zoran Stavrevski, Deputy President of the Government of the Republic of Macedonia and Minister of Finance, Honorable Mr. Ivan Steriev, Manager of the Macedonian Stock Exchange, Distinguished ladies and gentlemen, During my last year’s address at this conference I announced that “the National Bank will create environment for sustainable economic growth through price stability, stable Denar exchange rate and stable, competitive banking sector which will produce sound credit growth. In order to achieve this, I will seek to conduct policy of optimal level of reference interest rate and optimal level of prudential banking regulation. In my view, optimal interest rate is the lowest interest rate that provides Denar exchange rate stability and price stability, and optimal prudent banking regulation is a regulation that provides necessary bank liquidity and solvency, without being a regulatory burden on the banks’ balance sheets”. Concerning the latter, in September last year, we integrated the Denar and foreign currency liquidity rate in a single liquidity rate. Simultaneously, we recognized a long-term character of twenty percent of time deposits that fall due, promising that this percent will increase in future. With these measures, we ensured larger liquidity management flexibility and higher income for the banks without deteriorating liquidity indicators.

When the National Bank intends to absorb more liquidity it could make the interest rate more attractive for the banks. But, if it considers that it should not sterilize such excess liquidity, it will make the interest rate less attractive or will restrict the amount allowed for the banks to subscribe. Distinguished ladies and gentlemen, At this very conference last year, I also said that the National Bank will not build its relations with the banks from the position of arrogance. Quite contrary, the banks are our partners. Therefore, the National Bank will keep on informing and consulting with the commercial banks about the regulatory measures. In this respect, presently we analyze the latest request of the Banking Association concerning the treatment of foreclosures and we will soon launch a dialogue to find solution in favor of the Macedonian economy. Hence, there should not be any doubt that in future the National Bank will “hear the voice” of the banks. But, also, it should be clear that the National Bank does not discuss the monetary policy measures with anybody, not even the banks, before it makes a decision to adopt them. They are at the absolute discretion of the National Bank. This is a worldwide practice. Neither the European Central Bank, nor the Czech Central Bank, nor any other central bank throughout the world consults or informs the commercial banks on the monetary policy measures before it makes the decision.
Too often, markets are constrained by obstacles, regulations and bans which act as a disincentive for investment. If we are going to apply a Keynesian economic model, then we need to apply it to the full, and avoid distorting his thinking. Structural reform doesn’t have to be painful; on the contrary, it often creates a brighter future, and opens up opportunities to those who have none. 5- Fifth, we need to incorporate the structural changes in the financial sector into our prudential oversight. We need to adapt to a new environment where asset managers play the dominant role in capital allocation and asset price formation. This means changing the way we think, as well as our methods of analysis and action. In this context, the French model of integrated supervision is particularly apt. 6- Lastly, number six, we need to refocus financial innovation on the long-term. Today, literally billions of dollars are spent finding ways to shave a few nanoseconds off arbitrage transactions between two trading platforms. At the same time, investors struggle to find secure long-term financing tools for public infrastructure, even though experience has shown that the private (and social) returns of this type of investment are much higher. “Infrastructure bonds” have been shown to offer return/risk ratios that are often higher than those on traditional assets. The G20 has rightly made this issue a priority and is looking for ways to strike a better balance between incentives and initiatives, through regulation and financial engineering. BIS central bankers’ speeches  3

Last week, HKMA also announced jointly with Bank Negara Malaysia (BNM) the establishment of a private-sector led joint forum for advancing the development of Islamic finance in Hong Kong, and we are glad to have Assistant Governor Bakarudin Ishak of the BNM attending the panel discussion of the Summit this afternoon; (d) open-ended investment company (OEIC): the HKMA has intensively lobbied for a legislative framework and regulatory regime for OEIC in Hong Kong. We were very encouraged that this initiative was announced by the Financial Secretary in the 2013–14 Budget to provide more choices to market participants in terms of the legal form of funds. This would be a major step to attract more funds to domicile in Hong Kong; and (e) last but not least, the HKMA, in close collaboration with the Securities and Futures Commission (SFC) and the private banking industry, has undertaken a series of measures to promote the development of Hong Kong as the premier private wealth management hub in  2  BIS central bankers’ speeches  the region. The HKMA issued guidance to private banks in June 2012 to facilitate the adoption of a portfolio based approach in assessing the suitability of investment recommendations so that private banks can be more flexible in serving customer needs without compromising investor protection. 7.
Recognising this does not mean denouncing low rates: they have been put in place for the common good and not just for the benefit of banks or insurers. But recognising it means accepting the need to adapt: a solid financial sector in Europe constitutes an asset. For insurers first, we support this urgent need for adaptation. Low rates have a dual impact on them in that they lead to a revaluation of their commitments on the liability side – via a reduction in the discount rate – but also reduce the returns on their investments on the asset side. Insurers therefore need to start reassessing in depth both their product offering and their positioning. Similarly, for banks, the first part of this adaptation has to come from their own digitalisation and consolidation strategies. But part of it also falls to us: in September 2019 we decided to put in place a so-called “tiering” system, which will reduce the cost of negative rates this year by close to EUR 4 billion for European banks, of which around EUR 800 million will benefit French banks. We are pursuing a macroprudential policy to encourage banks to manage their  Page 12 of 14  risks prudently. This is the role of the Haut Conseil de stabilité financière (HCSF – High Council for Financial Stability), which since 2018 has put in place an additional countercyclical capital buffer (CCyB), and then in December 2019 introduced recommendations for real estate lending which, if necessary, will be transformed into binding rules.

Therefore, it seems rather intuitive that a “Swiss-made” monetary policy would potentially fit Switzerland’s needs better than a “one-size-fits-all” European policy. The latest recession is a case in point. The investment spree of the late nineties created a massive worldwide capital overhang. The collapse in asset prices, in 2001, and the ensuing worldwide recession had a particularly strong impact on Switzerland, whose exporters are specialized in the production of capital goods and where the production of financial services represents about 13% of GDP. Because ensuring price stability means avoiding deflation as well as inflation, the SNB had to cut interest rates much more aggressively than the ECB from March 2001 to April 2003. The case of Switzerland is not unique in this respect. Canada, Australia, New Zealand, Norway, Sweden and the UK, for instance, also let their currencies float and pursue successful national monetary policies. They all follow a clear strategy of preserving long-term price stability, and they all have an independent central bank pursuing an independent policy. So we can definitely say that monetary independence and monetary stability are two sides of the same coin. 4  BIS Review 70/2004
Assuming, however, that we nevertheless conclude that monetary policy has not been clearly inefficient in the sense that I described earlier, the next step is to focus on what combination of the stabilisation of inflation and the real economy the central bank actually selected or, in other words, which of all the possible points on the Taylor curve the central bank selected. There are many different efficient monetary policy alternatives to choose between every time a monetary policy decision is made. But did the central bank make a good choice? In the event of a conflict between stabilising inflation and stabilising the real economy, did the combination chosen by the central bank represent a reasonable balance between the two? Did the central bank attach reasonable importance to the stabilisation of the real economy in relation to the stabilisation of inflation? In the literature, as in the case of the forecast loss function I presented earlier, the constant that is the relative weight that the central bank gives to the stabilisation of the real economy in relation to the stabilisation of inflation is usually denoted by the Greek letter lambda, λ. In Figure 3, we can show the forecast loss function with the help of iso-loss curves for combinations of sums of squared inflation-gap and output-gap forecasts that generate equally large losses. Such iso-loss curves are in this case downward-sloping, straight lines with a slope of 1/λ, the reciprocal of lambda. Iso-loss lines closer to origin correspond to lower losses.

Some observers have therefore posed the following question: has the functioning of the economy changed so that higher demand does not necessarily translate into higher inflation, but instead results in growing financial imbalances? If so, a conflict may arise between achieving the inflation target in the short term and financial stability. There are several reasons why financial bubbles can develop in periods of low inflation. First, a highly credible monetary policy results in low inflation expectations. Explicit or implicit long-term price and wage contracts will become more common. It will take longer for higher demand to translate into higher inflation. Cyclical changes will have less impact on inflation. Moreover, periods of higher productivity growth may lay the basis for high corporate earnings, heightened optimism and reduced risk awareness. At the same time, with strong productivity growth, inflation remains low. Banks that record low losses and solid results can increase lending without eroding their capital adequacy level. Debt-financed investments may lead to a faster rise in house and property prices. A third factor is that strong international competition may contribute to curbing inflation during a period of strong economic expansion. China, because of its access to an abundance of cheap labour and its substantial production capacity, has contributed to a fall in prices for many manufactured goods. In Norway, we have not experienced situations where there has been a conflict between the objectives of financial stability and price stability.
In the UK, the securitisation market trebled in size over the same period. Those were the heady days of summer. Since then the US repo market has shrunk by 40%, while the UK securitisation market remains frozen. Pro-cyclicality in the haircuts applied to secured financing transactions in turn amplified the cycle in credit. Thin haircuts made it cheaper for banks to mobilise collateral to finance borrowing when the credit cycle was in the upswing, adding momentum to the upward pendulum of asset prices and credit. And fat haircuts immobilised collateral when the credit cycle reversed, exaggerating the downward pendulum swing. A further factor amplifying these swings came from the fact that much of the secured financing took place within the financial sector. In the run-up to crisis, banks and near-banks entered into secured financing transactions with one another, inflating both counterparties’ balance sheet. In the UK, fully two-thirds of the trebling in balance sheets between 2002 and 2007 can be explained by expanding claims on other parts of the financial system. These cross-system dependencies in financing have “externality-like” effects. During a generalised boom, individual banks lend freely to one another and all of the moving parts of the financial system are lubricated. The system co-ordinates itself on a high liquidity equilibrium. Liquidity has positive spillover effects or externalities; liquidity is a public good. And with rising asset prices and liquidity and falling haircuts, the credit multiplier is high and self-reinforcing. But that cycle can just as quickly reverse.

Andrew G Haldane: Haircuts Remarks by Mr Andrew G Haldane, Executive Director, Financial Stability, of the Bank of England and member of the Financial Policy Committee, summarising a forthcoming paper in the Journal of Monetary Economics “Complexity, Concentration and Contagion”, 1 August 2011. *  *  *  The views are not necessarily those of the Bank of England or the Financial Policy Committee. I would like to thank Marnoch Aston, Benjamin Nelson, Sujit Kapadia, Vasileios Madouros, Priya Kothari and Andrew Mason for comments and contributions. During the summer months, I have my hair cut slightly shorter than during the winter months. This helps keep my head a little cooler in the summer heat and my ears a little warmer in the winter cold. Anyone who has seen them will know this is a smart strategy for my ears, to say nothing of my head. This strategy is explicitly counter-cyclical. When the temperature goes up, my hair-length comes down and vice-versa. I am not alone. National statistics show that expenditure on haircuts increases as temperatures rise. The financial system also makes choices about haircuts. The haircuts in question are the amount of collateral a borrower places with the lender over and above the face value of borrowing. But collateral haircuts tend to behave rather differently to personal haircuts. They fall when the financial temperature is increasing and rise when the chill sets in. This strategy is explicitly pro-cyclical.
There are new areas that we are looking to operate under the macroprudential surveillance framework of the Central Bank. These include analysing trends in banking sector and non-banking sector exposure to the corporate sector, assessing the impact of dynamic provisioning frameworks on the banking sector, analysing financial sector exposure to the household sector, evaluating the possibility of introducing Escrow accounts to safeguard the residential property buyers and to achieve long term stability of the real estate market as well as commencing multivariable stress tests for LFCs covering credit, market and liquidity risks. We have recognised risk management as a key strategic priority of the Central Bank, and we are in the process of implementing an Enterprise-wide Risk Management (ERM) Framework, which is intended to promote a culture of informed risk-taking at all levels. Accordingly, the Risk Governance Framework and the Risk Management Policy of the Central Bank were approved by the Monetary Board in 2018, and relevant committees were formed and meetings were convened to make the framework functional. We expect to develop Risk Registers and implement an Incident Reporting Mechanism in 2019. With regard to financial risk management, we will further strengthen the risk management framework of the fund management activities. With the growing priority being attached to achieving the Sustainable Development Goals (SDGs) as well as promoting greener and climate friendly 31  growth activities by providing productive and sustainable investment, the Central Bank initiated a process of promoting sustainable finance practices in Sri Lanka in 2017.

Mohammed Laksaci: Banking sector reform and financial stability in Algeria Communication by Mr Mohammed Laksaci, Governor of the Bank of Algeria, for the 38th meeting of the Board of Governors of Arab Central Banks and Monetary Agencies, Alger, September 2014. *  *  *  Introduction After being strongly involved since 2008 in addressing the liquidity crisis through massive liquidity support and expansion of their balance sheets, central banks in advanced countries must now pay more attention to monitoring systemic risk, in a context of interaction between banking and sovereign risks. Seven years after the burst of the international economic and financial crisis, the global financial sector reform agenda remains incomplete, while it is now important to also face the issues related to the difficult situation of the global economy transition. This calls for strong efforts to accelerate the repair of banks’ balance sheets in the euro zone and the early establishment of a unique and independent mechanism of crisis resolution. The prospects of monetary policies normalization (in particular in the United States) and its negative effects on emerging economies through capital flows require sustained attention. Like other central banks, the Bank of Algeria had to face the need of further strengthening systemic risk monitoring. This requires the deepening of the banking system reforms. 1.
But it was hard to join the two views together. Bringing CHAPS into the Bank meant a single organisation could take a holistic approach to managing risk across the end-to-end CHAPS system. It also meant we could draw on a wide range of skills within the Bank – from supervision to cyber. This change enabled the teams responsible for operation of CHAPS to work closely with colleagues in the PRA, who are responsible for supervising most of our participants, and to access a range of information and tools to effectively challenge risk management practices in our users. Another area of the Bank, responsible to a different Deputy Governor, continues to supervise CHAPS to the same standards as other systemically important FMIs. As a single unified operator for CHAPS, as well as RTGS, the Bank is taking important steps as a standard setter and a thought leader to drive increased resilience and improved recovery capability in payments. Minimising risk  Standards  As the operator of CHAPS, the Bank is well placed to drive greater resilience in members of CHAPS through the setting of standards. This is complemented by the Bank’s role as prudential regulator of many of these firms. In order to manage risk, a payment system has rules to govern who can join, how participants should behave, and what operational and technical requirements they must meet. The CHAPS Reference Manual (CRM)7 contains the rules and requirements that CHAPS Direct Participants must comply with.

First, we plan next year to enhance the Security Requirements in the CRM to align to the globally recognised National Institute of Standards and Technology (NIST) Cybersecurity Framework.8 The new requirements would align with NIST’s principles of Identify, Protect, Detect, Respond and Recover, and will be more outcome focused, balanced with prescriptive requirements when necessary. This will increasingly enable Direct Participants with different resources and business models to apply their own methodology to comply, thus supporting our strategy to allow a diverse range of financial institutions to use CHAPS. Second, the CHAPS rulebook clearly defines the Bank’s expectations around Direct Participants’ incident management approaches and reporting obligations. As I mentioned earlier, the FCA has observed a significant increase in technology-related outages across the financial industry. And for the first eight months of 2019, there were around half a dozen CHAPS Direct Participant incidents a month. The CHAPS rulebook provides an effective and timely means to manage risks through a focused root cause analysis, assignment of appropriate remediation plans and trend analysis to inform our assessment of the risks to the end-to-end CHAPS system. In line with the FCA’s analysis of incident reports,9 we have found that weaknesses in how changes are managed is a key driver behind nearly half of all CHAPS participant incidents. We are therefore revising the controls that Direct Participants should have in place in order to target areas that have contributed to incidents, for example, single-input of static data.
Such committees have been set up in practically all EU Member States, normally under the leadership of the central bank, following the recommendation made by the European Systemic Risk Board, on which all EU regulatory and supervisory authorities and central banks are represented. With regard to resolution functions, Spain has already adapted to European regulatory requirements. In this connection it has adopted a structure in which the resolution preparation and planning tasks are assigned to the sectoral supervisors [the Banco de España for banks and the CNMV (National Securities Market Commission) for investment firms], and those relating to the implementation of resolution measures are assigned to the FROB (Fund for the Orderly Restructuring of the Banking Sector). As you know, the FROB is also responsible for the management and ultimate divestment of the stakes the State holds in the capital of banks subject to restructuring plans as a result of State aid granted during the crisis. These arrangements are admittedly more complex than those adopted in most Member States, which have placed all resolution functions – preventive and executive alike – under the remit of the national prudential supervisor. In Spain, coordination between the resolution authorities and between these and the prudential supervisor is so far functioning smoothly.

Fernando Restoy: The organisation of financial supervision Speech by Mr Fernando Restoy, Deputy Governor of the Bank of Spain, participating in the presentation of the “Guide to the Spanish Financial System” (Guía del Sistema Financiero Español), compiled by AFI (Analistas Financieros Internacionales) and sponsored by Funcas (Fundación de las Cajas de Ahorros), Madrid, 18 January 2016. *  *  *  Introduction Good afternoon. I should like to thank Emilio Ontiveros for his invitation to participate in the presentation of the seventh edition of the Guide to the Spanish Financial System, compiled by AFI and sponsored by Funcas. Thank you, also, Emilio, for your kind and, as ever, overly generous introductory words. The new version of the guide accurately details the numerous changes in the wake of the crisis, essentially owing to the start-up of the banking union in Europe and to the considerable reinforcement of regulatory requirements. As a result, the guide firmly stakes its claim as a reference that has proven extraordinary useful for helping to understand the complex mesh of Spanish and European rules and institutions that make up the regulatory and supervisory framework of our financial system. This presentation also affords me an excellent opportunity to reflect on the different models for the institutional organisation of financial supervision and, in particular, on the possibility of making further adjustments to the supervisory structure currently prevalent in Spain. That will be the focal point of my address.