samchain/econo-pairs-v1 huggingface dataset:
And, as I discussed earlier, the puzzle about the apparent weak feed through from demand to inflation is reduced somewhat by the Committee’s judgment that the performance of the labour market improved over recent years. That leaves continuing demand pressures likely to feed through to inflation, looking ahead. With monetary policy needing to be set on a medium-term view, overall I concluded at the MPC’s latest meeting that our interest rate should be increased by 25 basis points – a small tweak to reflect the outlook. But, as my remarks today have emphasised, there are considerable uncertainties. Two final thoughts about them. The first concerns the precision with which any monetary authority can achieve its objective. In the bad old days, it should probably have been clear when the economy was experiencing unsustainable excess demand. In today’s world, when we discuss excess or deficient demand we are generally addressing much smaller deviations from trend than in the past, as Chart 19 suggests. In consequence, our debates about cyclical conditions lie well within the margin of error of any sensible estimate of underlying trends – especially given uncertainty about the structural changes affecting the economy. In a similar vein, we – and commentators – need to keep some perspective about deviations from the inflation target. In November, the year-on-year measure of CPI inflation was 1.1%. By January it was 1.6%.

Jaime Caruana: The future of banking supervision in Europe Address by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the conference “Supervision of International Banks: Is a Bank Crisis still Possible in Europe?” – European Banking Federation (FBE), Brussels, 28 October 2005. *  *  *  Introduction First of all, I would like to thank Michel Pébereau and the European Banking Federation for inviting me here today to participate in this conference on important issues relating to the future of banking supervision in Europe. Usually I speak from the perspective of the Basel Committee on Banking Supervision. Today, however, I will mainly take the viewpoint of one of the central banks of the Eurosystem with banking supervisory responsibilities. The subject of this debate is particularly timely, given the European Commission’s current initiative to define financial services policy for the EU over the next five years, to which I understand the FBE has been an active contributor. I would like to use my time this morning to suggest a number of principles that I believe could help in addressing the key challenges for European banking supervision structures in the coming years, and also to reflect on some concrete steps to build a European framework fit to meet these challenges. What is the main issue we face?
The contribution from improved technology, that is from TFP, has increased substantially, while the contribution from capital intensity has remained roughly the same. If I now return to my three explanations for the high productivity growth, they can be classified according to this division. The contribution from IT capital accounts for roughly half of the increase in total capital intensity during the 1980s, but significantly more over the past ten years. If we look at the deregulated product markets and globalisation, they instead influence total factor productivity. This contribution has increased significantly. But the two reasons mentioned are probably do not entirely explain the increase. This is because total factor productivity is calculated as a residual. That which cannot be explained by capital intensity ends up in the residual. But it is possible to make a better and deeper analysis. Higher productivity can be explained by other factors than general technological developments and increased capital intensity. One possibility is to make a more detailed division into labour and capital, and another is to divide the business sector into industries. The studies on which my figures are based give consideration, for instance, to the fact that there is both IT capital and other capital. Similarly, one can take into account the fact that there are different types of labour. Merely counting the number of persons or hours is rarely correct. The increased level of education and competence among the staff also affects productivity.

Because this cost both time and money, it took a while before these changes were implemented. 10  Conclusion – most indications point towards a slowdown Historical averages are usually a fairly good starting point for forecasts of future developments, particularly in the slightly longer term. But in the case of productivity, history gives us different answers. The reason for this is that the trend in productivity growth has varied so substantially over time. The average increase in productivity growth in the business sector was around 4 per cent a year during the past five years, but only around 3 per cent a year if one instead looks at the past fifteen years. If one goes further back in time, one can find both higher and lower rates of increase. During the 1960s the rate of increase was around 6 per cent a year and during the 1980s it was only 2 per cent a year. It is thus not history giving us the answers, but the two parts I mentioned just now – changes in the economic cycle and structure. The cyclical factors indicate a slowdown. Productivity has been unusually strong in recent years during the initial phase of the economic upturn, but will probably be weaker in future when economic activity slows down. The structural factors also indicate a slowdown. While globalisation will continue to contribute to stiff competition and IT will in future contribute to continued rationalisation.
If leveraged loans experienced loss rates in line with the financial crisis, the equity tranches of CLOs would lose all their principal. Before everyone takes fright at the ‘s’ word, some important context is needed. These securitisations are very different beasts to their ancestors of 2008. CLOs now have much less embedded leverage than they did before the crisis, with equity tranches around 25% thicker. And they are not held in ‘shadow banks’ like investment vehicles that turn out really to be a part of banks. They are held properly outside the banking system, on the balance sheets of non-banks like hedge funds and open-ended funds. Chart 17 shows our map of who holds the loans and in what form. 9  These are estimated five-year loss rates based on observed default rates during the global financial crisis on the S&P leveraged loan indices for the US and Europe and Moody’s data for all corporates. We assume a recovery rate in line with the average on first lien loans.

Christian Noyer: No moral hazard – the banks are doing their job Comment by Mr Christian Noyer, Governor of the Bank of France, in the Financial Times, 18 September 2007. *  *  *  In recent weeks, Central Banks in Europe and the US have acted repeatedly to provide liquidity to interbank money markets. These interventions have raised some questions. Concerns were expressed that monetary authorities were bailing out speculators, thus creating the same kind of moral hazard that may have led to excesses in the past. There were also concerns as to whether the integrity of monetary policy would be compromised. These are valid questions. On numerous occasions, in the past, we pointed out the potential dangers that mispricing of credit risk posed for financial stability. We may be now seeing some of the consequences. Excessive risks were taken, and losses will have to be accepted. It is important that monetary and financial authorities take no action that would prevent this process from running its course, let alone be seeing to be condoning past or future excesses. However, the logic behind recent interventions is different. Put very simply, financial turbulence and uncertainty have suddenly triggered an upward shift in the demand for Central Bank money. Faced with such a shift, whose direction is apparent but amplitude uncertain, the choice, for monetary authorities, is clear: either accommodate, and provide temporary liquidity; or not, in which case, interest rates would have to rise to restore balance in the interbank market.
Indeed, the acceleration in globalisation in the 1990s and 2000s was accompanied by steady growth in world imbalances. Even though the role played by these imbalances in the triggering of the last crisis is still a matter of debate, their coincidence with the rise in financial imbalances in several economies, such as the credit and securitisation boom, the sharp increase in asset prices, government deficits, etc., is striking. In short, the issue of global imbalances and that of regulation in a global economy are undeniably closely linked. Two major topics appear particularly relevant to our discussions today. The first focuses on the developments in the international monetary and financial system. The financing of current account imbalances has been facilitated by the liberalisation of capital movements that occurred in a large number of countries in the 1990s; international capital flows thus increased seven-fold between 1990 and 2010. These flows clearly had a positive effect, in particular for emerging countries which require capital to develop. However, the rapid increase in the volume of financial flows was accompanied by a rise in their volatility, which represents a new source of risk. The sudden withdrawals of international capital have played a major role in triggering and spreading financial crises over the past fifteen years. This is the main concern of the French Presidency of the G-20 and it appears crucial to me to examine it, not only from the narrow perspective of the management of capital flows, but also from the wider perspective of global liquidity.

Ambitious, of course, as it involves countries making explicit commitments on measures to be taken and discussing the outcomes with their peers, as part of what is known in G-20 jargon as the Mutual Assessment Process (MAP). Under the Korean presidency, whose efficacy and vision I would like to praise, an initial exercise resulted, in late 2010 in Seoul, in the adoption of a detailed country-by-country action plan and the commitment to tackle more specifically the global imbalances identified by the indicative guidelines. Far from me the idea of underplaying the difficulty of the exercise but the progress made so far is not inconsiderable and in this regard I am happy that the Ministers and Governors meeting in February in Paris resulted in agreement on a set of benchmark indicators. The second component concerns financial regulation. It is very clear that, in this area, we are past the stage of proposals and are now mainly concerned with consolidating the agreements approved by the Heads of State and Government in Seoul, especially the Basel III framework. The agreement that we achieved in 2010 made it possible to reconcile the need for far-reaching reforms with the need to reduce uncertainty relating to regulatory changes. Implementing these reforms in a harmonised framework capable of ensuring a genuine level playing field is now the crucial challenge, both from the point of view of our collective credibility and the overall effectiveness of the new mechanism.
I’m glad to say that our efforts to reform and strengthen the risk focus have paid off. Excellencies,  2  BIS Review 15/2009  In summary, the Thai economy has achieved significant structural improvements since 1997. Our economy has strong fundamentals, underpinned by price and financial stability. Nevertheless, it is perhaps inevitable that we may yet see more negative impacts from the present international financial market turmoil before the improvement, since no one knows how much deeper or longer this global downturn will be. What we need to do now is to ease some of the pain currently experienced, build up safeguards and prepare for the eventual upturn. In Thailand, policymakers on all fronts together with the private sector are doing just that. BIS Review 15/2009  3

The various national regulations also contributed to limiting the banks’ possibilities to compete on equal terms. 1  SEK 310 billion, according to the Swedish Association of Local Authorities and Regions. (https://skl.se/ekonomijuridikstatistik/ekonomi/sektornisiffror.1821.html)  3 [12]  Consequently the Basel Committee presented the so-called Basel I Accord in 1988. This was implemented into Swedish legislation in the early 1990s. Basel I was the first internationally-agreed minimum standard for capital levels to be held by internationally-active banks. It is worth noting here that the Basel Committee agrees on minimum standards. All countries are free to introduce stricter national requirements regarding their banks’ capital levels if they find it appropriate. This is something the Basel Committee encourages its members to do. The idea behind Basel I was, somewhat simplified, that the banks with assets assessed as less risky had a lower capital requirement than the banks with assets assessed as more risky. The regulations were simple and consisted of only a few risk categories. But this meant that one could take into account that the risk of losses was greater for banks with more risky assets than for banks that had more assets that were less risky. The banks’ capital could thus be distributed through regulation in a way assessed to increase efficiency in the economy. Basel I lead to the introduction of some new concepts, such as risk weights and riskweighted assets.
Economic activity relied on the public sector and external demand, although more moderately than in the first quarter of the year. In the meantime, the private sector demand appears sluggish, also conditioning our projections for economic growth for the rest of the year.   Private investments continue to be slow, compared with their historical rates and the country’s needs for quantitative and qualitative production capacities. This  BIS central bankers’ speeches  1  The expected easing of funding terms during the second half of the year as well as the decline of perceived uncertainty by businesses and individuals are expected to be accompanied by the somewhat more positive performance of private consumption and investments in this period.   Stimulating nature of fiscal policy during the first half of the year is reflected in a positive contribution of public expenditures to economic growth. For the first seven months of the year, public spending increased by 5.9% in annual terms. Moreover, performance of fiscal revenues was slow, reflected in their annual growth of 2.3% during this period. This behaviour of income and expenditures is materialised in a higher budget deficit than a year earlier. Fiscal impulse to the economy was consistent throughout this period. It showed tendencies of moderation during the second quarter, which are expected to strengthen further during the rest of the year, in conformity with the revised budget of 2011.   Contribution of foreign demand to economic growth was lower during the second quarter of the year.

However, the implementation had to be postponed with the onset of the crisis. The seminar today represents an effort to catch up with the international standards. With the implementation of the '96 Accord on Market Risk, we would be one step closer to being able to adopt the New Accord in the future. Ladies and gentlemen, I would like to take this opportunity to share with you the Bank of Thailand's stance on how we would like to see the industry go forward. It is our intention to actively promote the development of the strong competency and practice for risk management within the Thai financial institutions. However, we will not expect nor require the financial institutions to develop risk management systems that are more complex and inappropriate for their respective needs. At the same time, the turbulence ahead cannot be underestimated. The Thai financial system and the real economy should be prepared to face increasing risks, and we have a duty to prevent the history of 1997 from repeating itself. Since capacity building for risk management is a long-term process, therefore I must insist that the Thai financial industry step up its already tremendous effort even more, today and in the future. 2  BIS Review 87/2001  Our goal is to adopt the '96 Accord on Market Risk. Timing of its implementation has to be appropriate, however I would look to implementing risk assessment process in 2002, and to require capital charge by a later date, tentatively 2003.
In doing so, banks also suffer serious consequences from money laundering, which include: •  First, reputation risk - banks become vulnerable to reputation risk because they easily become a vehicle for or a victim of illegal activities perpetuated by their customers. Once banks are associated with such activities, their reputation in the market becomes tainted and they risk losing customers. For instance, in Zambia, the closure of one bank was as a result of allegations that the bank maintained accounts keeping proceeds of drug money. Banks therefore, need to protect themselves by continuously and vigilantly evaluating their customer base. The quest to mobilise deposits and improve liquidity must not be an overriding factor to accepting money from questionable sources. •  Second, legal risk - banks may become subject of lawsuits resulting from failure to observe ‘know your customer’ standards or from failure to practice due diligence in customer evaluation and acceptance. As a result of this, banks can suffer from criminal liabilities, supervisory fines and other penalties. •  Third, concentration risk - banks are expected to have information systems to identify credit concentrations and to set prudential limits to restrict exposures to single borrowers or groups of related borrowers. The challenge for banks therefore is to adopt vigorous programs for the detection of suspicious transactions, since failure to report such transactions under the new money laundering legislation may subject the bank to criminal sanctions.

Mr Chairman, it is clear from the definition that money laundering is a tool that is used by people involved in illegal activities, such as drug trafficking, organised crime, tax-evading, political bribery and th above all, corruption. In addition, the events of September 11 have added another dimension to the problem of money laundering and brought to light the synonymity between money laundering and terrorism. What then are the stages in money laundering? Though the money laundering process seems so complicated, it usually follows a traceable pattern and three distinct stages can be identified. These are: •  Placement Stage. This it involves the disposal of cash proceeds of the illegal activity. It is at this stage that the proceeds are introduced into the financial system in a manner that avoids detection by the banks and the authorities. At this stage criminals use techniques like depositing large amounts of money in several smaller batches so as to avoid suspicion and detection. BIS Review 6/2003  1  •  Layering Stage. This is when the true character of the cash proceeds of the illegal activities is hidden through a series of transactions in order to erase the audit trail. This is done by transferring this money to off-shore banking centres with strict secrecy laws, or to bearer bonds, and/or shell holding companies and accounts held in the name of nominees. •  The last stage is the Integration Stage where the successfully laundered money is integrated into the financial system.
Today, only one central securities depository, Euroclear Sweden AB, has access to central bank money in Swedish kronor for securities settlement. Connecting to T2S, this access would be broadened to more than one central securities depository, improving competition in the market. T2S started operations in 2015 and has been developed as a multicurrency platform with the Danish krone available for settlement since October 2018. Like for TIPS, sharing the T2 and T2S platform with the Eurosystem will provide significant economies of scale. It also ensures access to the Eurosystem’s resources and expertise. This will help to keep future service developments in line with best practice. Moreover, connecting to both platforms will be important steps towards further European harmonisation of the Swedish financial market. The Riksbank views this as the best strategy to ensure that Swedish and foreign banks and investors will be able to settle their transactions in Swedish kronor in an efficient way. 12 [15]  As platforms for wholesale transactions, those effects of joining T2 and T2S will impact first the participants of the Riksbank’s current settlement services. Ultimately, however, this should bring about cost savings and other improvements also to end-users of financial services. One example could be issuers of debt instruments. In the future, more Swedish corporates may consider this type of financing. They will clearly benefit from settlement practices that are harmonised with larger European markets.

Take the mobile application Swish that was introduced in 2012 as an example. In the beginning, few of us had Swish, and it did not provide much value. However, as more people adopted Swish, its value increased since the number of connections increased. Swish is also good example of the benefits of banks working together. By launching a joint service, the Swedish banks managed to benefit from network and scale effects. Moreover, sharing infrastructure and development costs is cost-effective and makes it easier to reach the critical mass needed to take advantage of economies of scale. It is also important to point out that the uniformity of money is closely related to network effects. In a situation with multiple currencies present, we would not be sure if the merchant or payee would accept the money held. That would mean  9 [15]  having to carry different kinds in our wallets, establishing exchange rates and so on, all very inefficient. It is then likely that some would limit themselves to a subset of currencies. It is then undoubtedly harder to achieve the benefits from network effects. While network and scale effects generate efficiency gains, they also create barriers to entry. Or put differently, together network and scale effects often result in a ‘winner takes all’ situation. These entry barriers, thus, manifest themselves in possible concerns about the level of competition. Therefore, the public sector needs to balance the perils of what is often called a natural monopoly with the gains from joint services or sole providers.