samchain/econo-pairs-v1 huggingface dataset:
It is important to strike a balance between the two by enhancing regulatory and supervisory structures, as this process should by no means result in stymieing competition or economic agents' creative energies. 3. The EU lacks certain institutions. This is clearly pointed out in the De Larosière Report. The chapter focusing on EU supervisory repair proposes a structural reform targeting two areas, namely micro-prudential and macro-prudential supervision. The Report recommends the establishment of the European Systemic Risk Council (ESRC), which should pool and analyse information pertaining to macro-prudential risks and vulnerabilities across all EU financial sectors. The ESRC shall issue risk warnings and shall adopt economic policy recommendations. Another institution proposed in the Report is the European System of Financial Supervision (ESFS), within which the level 3 committees (CEBS, CEIOPS, CESR) will be transformed into three new European Authorities: the European Banking Authority, the European Securities Authority and the European Insurance Authority. These three entities will have wider powers in the licensing and supervision of some specific EU-wide institutions, but it is the strong coordinating role of the ESFS that I want to stress. The fact that the European Systemic Risk Council would be set up under the auspices of the ECB and of the European System of Central Banks would allow it to benefit from the  2  BIS Review 56/2009  analytical capabilities and technical infrastructures developed by central banks in their own monetary and financial stability analyses. This also implies a strong cooperation between the ESFS and the ESRC.

This is why I have proposed, as have others, the creation of a euro area finance minister. This person would embody and bring to fruition the shared commitment of our Member States. Conversely, to my mind, the priority is not to create a “transfer union” and a common fiscal capacity. * * * Hans-Dietrich Genscher said during a previous European crisis in the the 1980s: “scepticism and pessimism are just as poor advisers as national egoism”.4 Yes, we all love our country, our Nation. But the Franco-German friendship can be the defence that we need today against the reigning scepticism and pessimism. Friendship is more than a polite end-of-meal platitude, it is a sometimes demanding requirement, but always concrete as it is embodied in the projects. It must continue to inspire the European project, this singular collective will of which we should be proud. As a central banker, it is naturally not my decision. My responsibility, together with the other euro area governors, is to conduct a monetary policy that is in line with the mandate assigned to us, and to make proposals to render other economic policies more efficient. This is what I have outlined before you with my commitment to Europe. Thank you for your attention. 1 After-dinner speech in honour of the President of the French Republic, Charles de Gaulle in Bonn – 4 July 1963. 2 Eurobarometer Survey, December 2016. 81% in Germany and 68% in France.
In the more recent period, this trend has been reinforced with increased overseas investments by Korea and Malaysia. Eight, engaging the emergence of large new markets in the region. Overall, as a high level of integration exists at the regional level in terms of trade and FDI, shifts in trading and investment patterns both from external sources into the region and within the region itself have been a dynamic process. Hence, given the emergence of large new markets in the region, the opportunities present in these markets show complementarities in the region. Countries in the region need to therefore focus on these complementarities in new potential areas of growth. In an  BIS Review 43/2003  3  increasingly competitive environment, economic progress in the region is benefiting from the strategic specialisations which are supported by the leverage on comparative advantages. Nine, regional cooperation gathers momentum Given the existing mutual interest amongst countries in the region, regional cooperation efforts are gathering momentum in East Asia, notably in the context of ASEAN+3 and EMEAP. To-date, the focus of such cooperation by Governments has been on regional surveillance, developing institutional arrangements and according high priority to co-operation in trade and investment. The drive toward regional cooperation will continue to increasingly focus on enhancing regional trade and investment linkages to maximise the comparative advantage of each member country. Toward this end, studies have already been commissioned to explore the feasibility and identify the preconditions for the creation of an Asian common market, a logical long-term objective of regional cooperation.

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.
One can say that these trends in principle function as prolonged positive supply shocks that affect the economy over a long, but nevertheless limited, period of time. However, the inflation rate does not depend on this type of trend or shock on the long run, but on how expansionary monetary policy is, regarded as an average over a long period of time. Inflation is, as they say, a monetary phenomenon. Let us assume the hypothetical case of two countries – one that is fully digitised and the other  13  The question of the effects of globalisation on inflation and monetary policy was discussed frequently in the years prior to the financial crisis. See, for example, the IMF (2006) and Mishkin (2009) for surveys. 14  However, it is still unclear to what extent inflation in the industrialised nations was actually affected by this. According to empirical studies, the effects appear to be relatively limited, see for instance the IMF (2006). BIS central bankers’ speeches  5  without any actual digital technology, let us say like Sweden in the middle of the last century. If the central banks in both countries conduct the same policy, there is no reason to assume that inflation would systematically be lower in the entirely digitised economy. On the other hand, it may very well be the case that there is downward pressure on inflation during the actual process when a country becomes increasingly digitised.

We are then using our existing frameworks to respond where necessary. We are disciplined. Just because something is new doesn’t mean it should be treated differently. Similarly, just because it is outside the regulatory perimeter doesn’t mean it needs to be brought inside. We apply consistent approaches to activities that give rise to the same risks regardless of whether those are undertaken by old regulated or new FinTech firms. Some of the most important questions we are considering include: -  Which FinTech activities constitute traditional banking activities by another name and should be regulated as such? 7  -  How could developments change the safety and soundness of existing regulated firms? -  How could developments change potential macroeconomic and macrofinancial dynamics including disruptions to systemically important markets? And  5  For further details on the New Bank Start-Up Unit, see: http://www.bankofengland.co.uk/pra/nbsu/Pages/default.aspx For further detail on the work of our FinTech Accelerator see: http://www.bankofengland.co.uk/Pages/fintech/default.aspx Systemic risks associated with credit intermediation including maturity transformation, leverage and liquidity mismatch should be regulated consistently regardless of the delivery mechanism. 6 7  4  All speeches are available online at www.bankofengland.co.uk/speeches  4  -  What could be the implications for the level of cyber and operational risks faced by regulated firms and the financial system as a whole? To illustrate some of the issues, consider how FinTech is affecting the financial services value chain (Figure 1).
What to expect from the Fed’s Monetary Policy Normalization?1 Sebastián Claro Vice‐Governor, Central Bank of Chile              I would like to start thanking the organizers for this invitation. Let me start with a disclaimer. Next Monday, April 3rd, the board of the Central Bank of Chile will present its inflation report to the Senate. Therefore, I will not be able in this occasion to offer a detailed discussion on the macroeconomic situation and perspectives in Chile, which will be described in detailed in the report. Rather, I have decided to focus on a broader issue that is relevant for Chile and the region in the current scenario. During 2017, we will finally witness the process of monetary policy normalization in the United States. After almost 8 years keeping the Federal Funds rates essentially at zero, the Federal Reserve has started a gradual process of interest rate hikes. This is good news. Fundamentally, the normalization of monetary policy is the natural consequence of a normalization of the US economy after the Global Financial Crises. A normal US economy is a positive phenomenon for the world economy. However, this transition period may become bumpy. Indeed, previous episodes of rate hikes by the Federal Reserve have not been smooth at all for emerging economies. The most obvious of these examples is the debt crisis in the early 1980s.

Also, as Panel A in Figure 2 shows, the shape of the yield curve moves similarly, with a flattening of about 150 basis points between the 10‐ and 2‐year US government bonds in the first year.5 In a related phenomenon, shown in panel B, the term premium implicit in the valuation of the 10‐year US government bond also dropped between 1 and 2 percentage points in the two years after the start of the cycle. Essentially, the monetary policy shock and the shift in the yield curve were comparable in both episodes. Indeed, the lack of response of long term rates to short term hikes in the mid 2000s, labeled as the “conundrum” phenomenon by Alan Greenspan was, to some extent, also present in the mid 1990s.6 However, in many dimensions, these two episodes show very distinct features. (See panels C to E in figure 2.) First, during the 1994 one, there was a sharp increase in credit spreads to emerging economies, which contributed to their difficulties in the balance of payments. In less than a year, the EMBI credit spread increased, on average, more than 1,000 basis points. A decade later, Fed Funds increases were followed by secular decline in EMBI spreads for emerging markets. This contrast strikingly with the episode a decade later, when Fed Funds increases not only did not generate an increase in credit spreads but rather it was accompanied by a secular decline in EMBI spreads. A year later, EMBI spreads had fallen about 150 basis points.
We foresee a transition period that will last until the end of 2018. Are you still worried about the capacity of certain countries, such as Ireland and Greece, to reduce their public debt levels? What is certain is that it is very important for all countries, and not just Ireland and Greece, to take measures to ensure medium-term fiscal stability. This is necessary in advanced economies, in the European Union in general and, of course, in the euro area in particular. A feature that is shared by the industrialised countries after the very significant recession triggered by the financial crisis is that they find themselves in a vulnerable fiscal position. The European Central Bank has always defended the Stability and Growth Pact, even when large countries such as France and Germany wanted to relax its rules. BIS Review 154/2010  1  The Federal Reserve System decided last week to inject massive amounts of dollar liquidity into the economic system, a decision which has the effect of reducing the value of the US currency. Has the currency war started? That is, of course, a totally inappropriate expression to use. There are two main topics that need to be tackled seriously. On the one hand, there is the relationship between the major floating convertible currencies of the industrialised countries, such as the dollar, the euro, the yen and the pound sterling.

What is your view on the current economic situation in France? France, like all of the other European countries, is asked to subject itself to a very sizeable fiscal consolidation exercise. This will help to engender confidence and thus to consolidate the recovery and, in turn, create jobs. Like all euro area countries, France is encouraged to continue to actively implement reforms. The euro area as a whole can and must increase its potential for growth and job creation. The extensive reforms that have been undertaken in all countries, such as the pension reform in France, are needed. They are a step in the direction of fiscal responsibility and the smoother functioning of the European economy, and of the French economy, and will lead to more growth and jobs. BIS Review 154/2010  3
The financial system is built on a fundamental (and ever-present) mismatch. Savers want access to their money instantly, if necessary. But borrowers are usually unable to give it to them anything like as quickly. BIS Review 142/2007  1  The banks have traditionally bridged that gap. But the only way they can do so is to borrow short and lend long. This mismatch makes them vulnerable. That is why governments have imposed regulations on the banks, requiring them to hold reserves against emergency. But if there is a complete loss of confidence among depositors, there is really not much an individual bank can do. The central bank is usually obliged to help. Modern innovations in the financial system have seen banks, rather than holding on to the loans that they have made, parcelled them up and sold them on. The aim was to disperse risk; in the case of default, it was better for a lot of investors to lose a little than for a few banks to lose a lot. However, all the clever types of “securitization and structured products” have not eliminated the fundamental mismatch. Someone still has to borrow short and lend long. Northern Rock, the stricken British bank in recent weeks, is a case in point. In relation to this case, I just want to paraphrase an interesting article in the latest publication of The Economist headed “A generation has prospered from the wholesale transfer of risk through securitization. Now it is paying the price”.

The case study that will provide the experience of Palau regarding the failure of one of its biggest bank, will not only remind us of the reality and the crucial role of bank supervisors, but it should bring us together to learn from it and be better prepared for the possibility of such crisis occurring in our own respective countries. I also note with interest that you will be covering the Basel Revised Core Principles which, as I mentioned earlier, reflect the ever changing environment in which banks operate, that international standards continue to change as the environment of risks also changes. And as part of the global financial system, we all need, to some extent, to adapt to such changes. Although some of these changes may not directly affect us due to our narrow market base, others can impact on our financial system indirectly. One of these changes would be the Basel II new capital adequacy framework that has already been advanced for some years for adoption. From experience, the new Capital Accord will have significant impact on our limited resources and our capacity to administer and properly implement. In this connection, I am pleased to acknowledge the presence of resource experts, Ms Elizabeth Roberts, Director of the Financial Stability Institute (FSI) at the Bank for International Settlements, Basel; Messrs Graham Johnson and Chris Gaskell from the Australian Prudential Regulatory Authority (APRA); Mr Kim Norris, Director, International Advisory Group, OSFI, Canada; and experts from the IFC.
That is the reason why we ourselves are telling all members of the euro area to respect the Stability and Growth Pact. It is the legal framework that we have as a quid pro quo for the fact that we do not have a federal budget and a federal government. And it is economically based on solid ground. Consider the spreads for the refinancing of the various government’s treasuries: they are taking into account the various fiscal policies. Consider the Ricardian effects, the level of confidence or the lack of confidence that you observe in the various constituencies of economic agents, particularly at the level of households: they suggest that there are certain situations where if you do not behave properly you might lose more in terms of confidence than what you are supposed to gain through the additional spending. We also say regularly to the various members of the euro area that they must be aware of the unit labour cost evolution, of the relative competitiveness of the various economies inside the euro area, and inside the single market of the 27 EU members. This is something which is also very important. FT: But of course the Stability and Growth Pact, thanks to the French government, 1997, is still very constricting. Trichet: It is supposed to function so as to prevent the various fiscal policies from loosening during the positive part of the business cycle in order to provide appropriate room for manoeuvre when we are in the downbeat episode of the business cycle.

So on that point, there is no ambiguity at all. We are also strongly thinking that better coordination for big cross-border institutions is absolutely necessary; even if we could cope with all the issues at stake in the present circumstances, we should not forget that. It's clear that we can improve the present framework and we have to improve it. Some avenues have already been suggested by Ecofin. There has already been a consensus on appropriate Memoranda of Understanding. But going further in this direction also seems important. At this stage, I have to say, I do not have a full-fledged Governing Council position. We are still reflecting, and we will see what will be the position of the Governing Council. But I understand that the European Parliament has carried out several works which have been done within the suggestion that the ECB would play a particular role in this domain for the coordination of surveillance for cross-border institutions – a little bit like in the US. The Federal Reserve has a position which concentrates very much on the big cross-border institutions. And I see also suggestions coming from the private sector, coming from the industry, that we could play a more important role in this domain.
With a floating exchange rate and unchanged interest rates, an increase in wage growth of one percentage point will eventually translate into a comparable increase in price inflation, unless this increase is based on higher productivity. The interest rate increase must be adjusted accordingly. First, the nominal interest rate must be increased to maintain the real interest rate. Second, the real interest rate must also be increased in order to prevent inflation from accelerating. When wage growth reaches a level that is inconsistent with the inflation target, the result will be higher interest rates, lower employment and higher unemployment. Similarly, when wage growth is lower than the level consistent with the inflation target, the result will normally be lower interest rates, higher employment and lower unemployment. The sharp growth in labour costs in recent years is a source of higher unemployment. When real wage growth is higher than productivity growth, corporate profitability declines. As a result, businesses will recruit less and shed more labour. In the public sector, we will see a growing conflict between budget limits and service production requirements. A monetary policy that is oriented towards low and stable inflation will contribute to stabilising aggregate demand and output. As a result, the central government budget will not normally have to be used actively to stabilise the economy.

Andres Sutt: Emerging energy markets – key issues Introductory remarks by Mr Andres Sutt, Deputy Governor of Eesti Pank (Bank of Estonia), at the GIC/MKM/Eesti Bank Conference on emerging energy markets, Tallinn, 21 August 2008. *  *  *  Mister Minister, Excellencies, Ladies and Gentlemen, Dear Guests, It is a great honor to welcome you here in Tallinn. The issues of our conference on emerging energy markets are of great importance in today's world. We are very lucky to have an excellent lineup of highly distinctive speakers from both the public and the private sector, so our discussions will no doubt be interesting and useful. I also have to admit that that interest in the conference exceeded the organizers' most optimistic expectations. Energy issues and related policy choices have come forward forcefully and en masse for policy makers and public at large. Indeed, there is hardly any other area where choices that are made today will have a direct impact on the way of life of the generations to come. In this regard, I would like to briefly outline the key issues that will be discussed also today. First and foremost, human activity and energy consumption are, in all likelihood, having a direct impact on climate and, ultimately, on living conditions on the Planet Earth. While the direct effects of climate change on growth and prosperity vary, it is beyond any doubt that the challenges ahead are formidable.