samchain/econo-pairs-v1 huggingface dataset:
Is there a similar need to change the rules of the game for the international financial system? Capital markets do not operate on their own. They need an adequate legal and supporting infrastructure for participants to engage with each other. There is no magic wand that can be waved to create such an infrastructure internationally. Short of a world authority, what is required is a patient process of building such an infrastructure. Some have described this as a need for new architecture, others as a need for plumbing. I prefer to speak of bricklaying. But after innumerable meetings of ministers and governors, deputies, deputies’ deputies and so on, we still do not have an adequate building. Recent crises have shown that the need is not for a lavish palace, but simply a roof over our heads. We need to get to the point where less time is spent on the role of the IMF in handling crises and more on the role of the World Bank in promoting development. So where should we start? In order to answer that question it is necessary to understand the causes of recent financial crises. Without pretending to be comprehensive, I shall focus attention on the importance of balance sheets – national balance sheets – as the trigger for financial crises. I shall discuss four issues. First, I shall try to identify the problems underlying recent financial crises.

It is important to focus on the nature of capital flows not the nationality of investors concerned. Hence the resolution of crises involves more than simply restructuring liabilities to foreign banks or overseas investors. The problems created by the volatility of short-term debt flows require a structural solution. 3. Purist solutions  How can we design an appropriate infrastructure for the international capital market to prevent, or at least limit the frequency of, crises? To return to our transport analogy, there is clearly a case for eliminating blind spots on the road or lengthening the runway. But this is not enough. We also need to think about how the emergency services should respond to a crash. The purist is led naturally to consider solutions of two opposite kinds. One, which maintains open and free capital movements, is to create an international lender of last resort (ILOLR). The second, at the opposite end of the spectrum, is to reinstate permanent capital controls. Consider first the merits of an ILOLR. The obvious institution to play that role would be the IMF, and its First Deputy Managing Director, Stanley Fischer, provided a comprehensive cost-benefit analysis of an ILOLR earlier this year.4 Although not new, the concept of an ILOLR has, in polite official circles, become the facility that dare not speak its name. The principle of a lender of last resort was described by Thornton and Bagehot in the nineteenth century as a willingness to lend freely against good collateral at a penal rate.
Choosing the alternative connected to the forecast that provides the best target fulfilment is sometimes called forecast targeting. 1 A further argument for making forecasts is that the efficiency of monetary policy can be improved through transparency and credibility. By publishing our forecasts and explaining how our monetary policy decisions relate to them we make it easier for the outside world to have correct expectations of how the Riksbank will react to new information. It is important that we are clear about how the Riksbank views developments and what effects the monetary policy decisions are expected to have. Forecasts and uncertainty As I said, forecasts are always uncertain. Neither the Riksbank nor other forecasters have access to all of the information that has significance for the development of the economy during the forecast period. Shocks to the economy can occur suddenly and surprise the forecasters. It is thus impossible to avoid forecasting errors. One example of a time of great uncertainty over future economic developments is the recent financial crisis. One indicator of this uncertainty is reflected in the broad spread between the different analysts’ forecasts. According to the compilation of around 30 different forecasters’ assessments in “Consensus Forecasts” (CF), which has, for instance, compiled forecasts for GDP growth each month since 1989, the uncertainty over developments in the US economy was the largest it has been in at least 20 years.

Part II of the Foreword explicitly recognises that ‘the steps that different Market Participants take to align their activities with the principles of the Global Code will necessarily reflect the size and complexity of the Market Participant’s FX Market activities, and the nature of the Market Participant’s engagement in the FX Market.’ The Code is also a living document, which allows it to be strengthened or clarified where necessary, including in areas of particular interest to the buy-side, such as last look and disclosures. In December 2017, Principle 17 of the Code was updated to make it clear that market participants should not undertake trading activity that utilises information from a client's trade request during the last look window. Though I know this remains a topic that can arouse real passions in a room full of asset managers, it does show the commitment of the Global FX Committee to ensure that the Code responds to buy-side concerns. And it’s working: a recent report from Nex suggested that hold times and reject rates have fallen materially since the change.7 Similarly, on sell-side disclosures regarding service levels and protections – another contentious and uneven area of the market in the past – the Global FX Committee is preparing to publish new guidance aimed at improving transparency.8 I hope this will have a similarly positive effect on market norms, and the Global FX Committee will be critically monitoring its impact in due course.
However, the European Union holds a trump card as it boasts the world’s largest pool of savings, with the annual surplus of domestic savings over investment regularly exceeding EUR 300 billion. For this reason, we see a critical need to foster equity financing, as it is ideally suited to innovative projects, which entail higher risk-taking. This is also why, on a broader note, we support implementation of the Capital Markets Union [SLIDE 5], which, through a series of technical reforms, will enable Europe’s plentiful savings reserves to be allocated efficiently to companies through market financing. Efforts to strengthen the Capital Markets Union must be conducted in concert with steps to deepen the Banking Union, which remains an absolute priority. These two initiatives are crucial to the continued financial integration of the EU and will ultimately pave the way for investment and innovation to be funded more effectively. That is the diagnosis that I wanted to share: the twin transition to a digital future and a sustainable economy has the potential to weaken not only banks, but also financial stability and the real economy. Yet this is merely a diagnosis, not a prognosis. This same risk could also be a source of beneficial changes. 2. The banking sector: a participant in the digital and green transition  3/6  BIS central bankers' speeches  And so I come to what could and should be done to turn these challenges into opportunities. I will talk about three courses of action.

It is such action, called for at the level of the international community three days ago in Washington by the G7, the IMFC and the G20, that the Europeans considered indispensable, particularly in the euro area last Sunday, with the adoption of a concerted European action plan. This plan has six dimensions: ensuring appropriate liquidity; facilitating the funding of banks through various means (guarantee, insurance or similar arrangements for new medium-term – up to five years – bank senior debt issuance); providing additional capital resources to financial institutions; recapitalisation of distressed banks; ensuring appropriate implementation of accounting rules; and enhancing cooperation among European countries. The very day after the meeting, namely yesterday, a large number of euro area countries displayed their implementation of the Eurogroup commitments at the level of the Heads of State and Government. I will not hide the fact that I am impressed by the degree of responsibility and decisiveness that was demonstrated last Sunday and this week in the euro area. I am impressed by the will of the countries that share the single currency not only to work together, but also very closely with the United Kingdom and all EU Member States. And I see that the new decisions taken in the United States are further reinforcing this very impressive implementation of the plan that has been approved by the international community. This is no time for complacency. Central banks will remain solid anchors of stability and confidence.
For instance, assets held by pan-European investment funds represented 8 25% of total assets at the end of 2000, up from 12% in 1998 . The development of a genuine pan-European approach is also illustrated by the introduction of various European stock indexes. The turnover on options based on these indexes –for instance, the volume of options traded on the Eurostoxx50 contract– now matches the turnover of options based on well-established domestic indexes such as the CAC in France. This provides evidence that large investors are looking for – and actually have recourse to– hedging products that are suited to a cross-border oriented strategy. However, this evidence of a strong impetus towards integration does not necessarily support the argument that a brand new asset allocation is overwhelmingly dominant. Let me emphasise two aspects. First, pan-European sectoral strategies have also embraced non-euro area stocks in order to reach an appropriate level of diversification. This is the case in sectors such as pharmaceuticals, or telecom equipment, with stocks listed in non-euro area countries such as Switzerland, the United Kingdom and Sweden. This is in line with some theoretical assumptions, which are stating that currency risk is outweighed by the risk-return parameters, as far as investing in equities is concerned. This leads me to the second aspect: the sensitivity of stock market to general macroeconomic events suggests that domestic macroeconomic variables still influence stock prices.

This has been evidenced in studies reviewing factors behind currency crises in emerging countries. Macro data –such as balance of payment or 13 fiscal policy indicators– prove to be discriminant-leading indicators from this point of view . However, I cannot affirm that the resolution of market imbalances would result in a reduction of volatility to levels that prevailed before these imbalances were taken into account by market participants. In my view one should not underestimate the part played by technical factors in the persistence of volatility peaks. This persistence in volatility is fuelled by technical features that facilitate the build up of mimetic behaviours (amplifying effects), or that reinforce the links between the various market segments (diffusion effects). Mimetic behaviour is of course by no means a new phenomenon on financial markets. However benchmarking, index management, and risk management techniques may have gradually reinforced this type of behaviour, as participants are under increasing pressure to follow their peers through matching the performance of a benchmark. There is no doubt that the spread of benchmarking allows fund managers and clients to better assess their performance against that of other funds. But, in a context of growing competition within the sector, it may well have increased mimetic behaviour. Some market participants (whose own compensation is closely linked to the relative, rather than absolute, profit and losses they generate) may indeed have come to the conclusion that it would be better to be wrong along with everybody else, rather than to run the risk of being right alone.
Anita Angelovska Bezhoska: Welcoming remarks - Vienna Initiative Full Forum Welcoming remarks by Ms Anita Angelovska Bezhoska, Governor of the National Bank of the Republic of North Macedonia, for the Vienna Initiative Full Forum, Skopje, 22-24 March 2023. *** Your excellences ambassadors, minister of finance, dear governors, chair of the Vienna initiative, distinguished representatives of European and International institutions Dear Ladies and Gentlemen, It is my great honor and pleasure to welcome you at the Annual Full Forum meeting of the Vienna Initiative. As Helen Keller said - "Alone we can do so little, together we can do so much." This saying lies in the essence of the Vienna Initiative – partnership among international institutions, public and private stakeholders whose common objective is safeguarding financial stability of CESEE region. Established at the height of the GFC to prevent nation-based uncoordinated policies that could led to systemic banking crisis, we have come a long way, expanding activities and fostering financial stability in the region. This initiative is particularly relevant for countries that still do not belong to the European Union family, do not have access to EU backstop facilities and as such are even more vulnerable to exogenous shocks. Collaboration and coordination is key in times of crisis. Unfortunately, in the last three years we are in the mode of "Perpetual crisis". Severe global shocks of unprecedented nature are hitting the world economy and unfolding into the "great return" of inflation and cost of living crisis.

Weaker growth implies a diminishing risk of inflationary impulses from demand, which normally warrants a less restrictive monetary stance. Conversely, demand that is excessively strong in relation to potential output implies a risk of rising inflation and a need to raise the repo rate. The current discussion seems to be about whether the Riksbank acts symmetrically. In other words, is the Riksbank as concerned about under-shooting the inflation target as it is about preventing inflation from exceeding the target? My answer to that question is definitely “Yes”. The Riksbank aims to keep the rate of inflation at 2 per cent, neither more nor less. The issue of monetary policy asymmetry seems to be linked mainly to two matters. One is the question of monetary policy’s central concern. Is this inflation’s prevailing rate or the rate that assessments point to one to two years ahead? The answer is that the Riksbank is guided by the assessment of future inflation. If inflation is currently running at 2 per cent and the predicted rate (based on an unchanged instrumental rate) one to two years ahead is, say, 1 per cent, then the instrumental rate should be lowered. The reason for this is quite simply that monetary policy acts with a time lag of one to two years. Using the prevailing rate of inflation as a guide would involve adjusting the instrumental rate more frequently and markedly, thereby entailing undesirable economic instability. But how can we be sure that the assessments are always correct? Of course we cannot.
A recent Banco de España’s research paper documents that this programme also had a positive side effect on the access of SMEs to funding given that banks reallocated the credit previously granted to bond issuers to smaller firms that do not have access to financial markets.7 Among the more permanent factors that could have contributed to the recent trend of financial disintermediation is the introduction of the new global banking regulation as a reaction to the financial crisis. The new regulation aims to improve primarily the resilience of banks to shocks and will have a positive impact on overall financial stability. However, as it has been documented in some papers, these regulatory measures might also reduce somewhat the ability of banks to compete in the intermediation of some financial flows8. But going forward, it is still under debate at the global level to what extent elements of the new regulatory framework should be also applicable to some non bank financing channels, as long as they might share with banking activities similar underlying risks to financial stability, such as maturity transformation and high leverage. If finally applicable, this might imply a more level playing field between banking and non bank intermediation. Another permanent factor that is contributing to the development of capital markets in the EU is the launch of new markets such as the alternative stock and fixed-income markets aimed at attracting medium-sized companies, although the size of these markets is still relatively small.

Chairperson, some of the challenges faced by women entrepreneurs regarding access to finance have been specifically identified as follows: •  Lack of collateral/ discriminatory property rights;  •  Financial illiteracy;  •  Lack of awareness of development finance;  •  Lack of financial confidence;  •  Lack of appropriate products;  •  Uncertain business climate;  •  Inadequate financial skills;  •  Lack of banking facilities;  •  Cumbersome application procedures and complicated forms to complete;  1  2  A Report on the Study Tour to Tanzania and Rwanda, 20–26 June, 2011, Gender in Development Division. BIS central bankers’ speeches  •  High cost of finance. •  Poor gender disaggregated data which limits market information on what women want and need  •  Most businesses are informal and in lower value areas  Bank of Zambia response The Bank of Zambia has responded by putting in place measures to maintain a stable macroeconomic environment which have resulted in significant reduction in inflation; downward movement in interest rates; and a fairly stable exchange rate. The Bank of Zambia is also the lead implementer of the Financial Sector Development Plan on behalf of the Government of the Republic of Zambia. As you may be aware, the Zambian government formulated the FSDP as a comprehensive strategy for addressing challenges in the Zambia financial sector.
Meanwhile, but sometimes with lags, the French capital account was liberalised. We switched from a situation, in 1983, where the exchange rate controls were at their tightest, following speculative attacks and three devaluations in 18 months, to a gradual removal of these controls beginning in 1984 and completed in 1990. Trade-related operations were gradually liberalised, followed by most financial transactions and, finally, residents were allowed to freely open foreign currency accounts and French banks to lend French francs to non–residents. 2  BIS Review 64/2007  Of course, the Indian experience differs from the French one as there is no "one-size-fits-all" transition process. And I would be very interested in listening to your views on this. 2. But before, let me remind you that, to be successful, it is not sufficient to improve the financial system: shaping appropriate institutions and economic policies is of the essence  The need to set in place strong institutions should never be underestimated. A G20 work entitled "Institution building in the financial sector" (in which both India and France participated) stressed the importance of solid institutions along with deep and sophisticated financial markets as key elements to maximise the benefits of globalisation and reduce the risks of financial crises. An appropriate institutional framework includes among others a well functioning legal system, a reliable payment system, a proper framework for regulation and supervision, an appropriate deposit insurance scheme, and propitious conditions for implementing new developments in information and communication technology.

In particular, I would like to mention: •  The historical links with the public sector, such as in India where public banks still dominate the banking sector and  •  Banking sector expertise both in a rural environment, especially relevant for India, and in large industrial groups, as indeed Indian industrial groups are active internationally. In this respect, I am very pleased to participate with the RBI in the launching of the first French-Indian Financial Forum on May 16, in Mumbai. Thank you for your attention. 4  BIS Review 64/2007
The innovations that the Central Bank of Chile has incorporated into all its areas of action, from monetary policy to its own corporate management, from generating statistics to the management of circulating money, are proof that a sound institution is not necessarily immutable. Also, that an autonomous organization can develop beyond its legal mandates. The challenges facing the Bank in the future, in both the macroeconomic and the institutional fields must not be underestimated. The confidence that our citizens put in this institution is not an insured capital but something that, again, needs to be earned day by day in each one of its areas of responsibility. 8 / 19  BIS central bankers' speeches  These challenges involve, first and foremost, applying the inflation targeting framework in a changing macroeconomic context, both externally and internally. The business cycle has stopped behaving as it was traditionally understood—with a certain regularity between economic activity in the United States and the emerging economies; between the value of the dollar and commodity prices; between the money supply and market interest rates. International trade and investment have been slow to recover, which has been especially damaging for exporters of natural resources, such as Chile. China’s economic prominence, the integration of financial markets and the accumulation of liquidity globally have amplified the contagion mechanisms across countries and sectors.

7  Bank of England: Quarterly Bulletin 1, 2011, Chart 13: http://www.bankofengland.co.uk/publications/quarterlybulletin/qb1101.pdf  BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13  14  BIS central bankers’ speeches