samchain/econo-pairs-v1 huggingface dataset:
And also recall the words of ECB chief economist, Mr Otmar Issing. When he departed the institution, in front of 400 strong audience Mr. Issing reminding us that “Euro is an unfinished project”, stressing that it relied on the monetary pillar, while enhanced fiscal policies and economic cooperation were still needed. Therefore, as the recent developments also show, a more effective economic governance in the EU and the euro area is within reach through fiscal discipline, broader economic oversight, closer coordination, a more robust framework for crisis management, stronger institutions and a decision-making based on clear and strict rules. In the particular case of the interdependent economies across the EU, enhanced governance will boost economic growth and job creation. At the same time, developing a culture of values and professional conduct and ethics can make a very important contribution to the smooth functioning of markets and this is a prerogative of the corporate sector, the private sector in general. I’m confident Europe will find the right way to move forward, given the common cultural values, with measures and policies that should avoid both asymmetric and side effects. We all know how harmful sudden and large capital swings are. Europe’s governance raises also the issue at a more global level. In fact, international affairs and corporate governance are an integral part of this picture.

Thomas Jordan: Government debt and the independence of monetary policy Summary of a speech by Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, at the 21st Internationales Europa Forum Luzern, 8 November 2011. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  Monetary policymakers are not responsible for fiscal policy, yet they still have to take an active interest in government finances. The current financial and debt crisis reminds us that unsound government budgets can compromise independent monetary policy in the long term. Excessive debt carries the risk that fiscal policy can no longer be effectively implemented. It is therefore no surprise that this responsibility gets passed to the central bank, which is thought to be able to solve all manner of problems by simply printing more money. Faced with this situation, the central bank must – either under political pressure or by having to weigh up all the relevant factors – contribute to state financing or take quasi-fiscal policy measures. This can lead to a gradual loss of its effective independence and – in an extreme case – to it losing its statutory independence. Only an independent central bank, however, can pursue its goal of ensuring price stability in a credible way. The debt situation in Switzerland is much better than that of other comparable countries.
Switzerland as a partner of the EU  Switzerland is deeply integrated in the European economy. Although it is not a member of the European Union, it has very close ties with it. The EU accounts for 60% of our exports and as much as 80 % of our imports. In 2001, one-third of the 30 billion Swiss francs that were transferred abroad in the form of Swiss direct investment went to the EU, while 80% of foreign direct investment in Switzerland came from the EU. It is therefore not surprising that the Swiss business cycle is highly correlated with the activity in the EU, and that the exchange rate between the Swiss franc and the euro is of crucial importance to us. Close economic ties also mean close institutional co-operation. An initial step in this direction was taken with the 1972 Free Trade Agreement concluded with the European Economic Community (EEC). Full membership was never a serious option. In 1992, the Swiss people even rejected the option of becoming a member of the European Economic Area. Further progress was made with the implementation, one year ago, of bilateral agreements between Switzerland and the EU. The purpose of this set of agreements is to secure for Switzerland sectoral access to the European single market. They cover seven issues, among them an agreement on labour mobility and an agreement on transportation. Since the middle of last year new negotiations have been under way between Switzerland and the EU on a further ten issues.

Nonetheless, I hope to be able to give you some fresh insights into Switzerland’s position in the European framework. I shall first give you a brief overview of the present economic situation in Switzerland and then talk more specifically about our relationship with our neighbour countries. As you know, Switzerland is not a member of the European Union. But it is by no means an island or an isolated place in the Alps. Second, I should like to focus on Switzerland as a financial centre located in the heart of the continent and the challenges it currently faces. Finally, I shall outline the Swiss National Bank’s monetary policy and what degree of freedom it has in a country fully surrounded by the euro zone. This question is particularly relevant, since progressive globalisation and Switzerland’s close economic links with Europe regularly raise the question whether pursuing an autonomous monetary policy is still appropriate. Let me begin with the current economic situation in Switzerland. 2. The economic situation in brief  In Switzerland, as elsewhere, the boom of the late nineties has been followed by a prolonged period of stagnation accompanied by rising unemployment. Not only was last year disappointing, but 2003 also began badly. Given the sluggish economic development, especially in Europe, we have been forced to gradually downgrade our forecasts. On the exchange market, the strength of the Swiss franc has been an additional factor creating further difficulties for our export sector.
Finally, I will comment more specifically on some of these challenges, and in connection to that also discuss some of the proposed alternative ways of responding to these challenges. The Swedish case Before the banking crisis in the early 1990s, the cooperation between the Riksbank and the Swedish FSA (then the Banking Inspection) was limited to high-level contacts. In their day-to-day activities, however, the two authorities worked in different silos – the Riksbank with monetary and exchange rate policy and the FSA with regulating and supervising financial institutions. The crisis made it very clear to the Swedish authorities that there is a strong link between soundness of financial institutions and macro financial stability, and hence a need for close cooperation between the FSA and the central bank. This economic link is mirrored by a parallel link spanning at least three aspects of regulatory involvement in the financial sector – crisis prevention, crisis management and crisis resolution. In Sweden, these aspects of regulatory involvement are shared between the supervisor, the central bank and the Ministry of Finance. In crisis prevention, the supervisor has the tools for regulating and supervising the institutions, while the central bank might play a supporting role through monitoring the stability of the system and the links to the real economy. In crisis management, the supervisor lacks the financial resources to back any intervention, while the central bank has the power to act as a lender of last resort.

In all these examples host authorities have a legitimate interest in being able to influence supervision, share assessments and have a say in the event of a crisis situation. They have been given the task of protecting the soundness and stability of their financial sector and the general public in the host country will rightly expect their authorities to be able to do this. At the same time, the home authorities should have an interest in sharing resources in crisis prevention and risks and costs in crisis management and resolution with the host countries. In the current setting, however, this is only possible to a very limited extent. First, there is a need to share information between the home and the host. This should be the least difficult, but in practice everyone who has tried to share information between authorities knows it can  BIS Review 35/2005  5  be a complicated and cumbersome process, at least until there is an established routine. Even when there are no confidentiality concerns there are many practical obstacles to overcome. Information sharing is not only about sending data back and forth, but more importantly, it is about explaining information and sharing assessments. As long as hosts are under the impression that they know a lot less than the home, it will be very tricky to cooperate. Second, there is a need to cooperate on actions vis-à-vis the bank or the group and its components.
Employment had developed roughly in line with our forecast, while the labour supply appeared to have increased slightly less than expected. Unemployment was therefore a little lower than we had predicted in the February report. Shortages in the business sector continued to increase. But my assessment was nevertheless that there was still plenty of spare capacity, if not yet to the same extent as we expected in February. A further reason why we foresaw higher inflationary pressures was that the Government’s Spring Budget Bill appeared likely to stimulate demand slightly more, at least next year, than we had previously estimated. As I said earlier, I drew the conclusion from this that the repo rate needed to be raised more during the forecast period than we believed in the February report. But my assessment was that the economic picture on the whole had not changed so much that the repo rate needed to be raised immediately. Inflation was low, and it appeared, as I saw it, reasonable to assume that it would rise fairly slowly. The reason for this was that there were still several factors holding back prices. I pointed out that the important thing was to balance the pace of the interest rate increases so that inflation does not  2  BIS Review 62/2007  accelerate more rapidly than expected, but so that growth in production and employment is not slowed down too soon.

As we firmly believe in the need for strengthening inter-regulatory cooperation and collaboration, a Memorandum of Understanding was signed between the Central Bank, Securities and Exchange Commission and Insurance Regulatory Commission on risk based consolidated supervision where the Central Bank will be the lead regulator. As we have reiterated on many occasions, market driven consolidation will be facilitated with the objective of promoting strong and dynamic banking and non-bank financial institutions to meet financial needs of the economy more effectively, while safeguarding the stability of the financial system. The performance of Licensed Finance Companies (LFCs) and Specialised Leasing Companies (SLCs) slowed down significantly during 2018 due to low credit growth, declining profitability and increasing nonperforming loans. The slowdown in the sector was also a result of moderate economic growth and the impact of natural calamities, such as floods and drought conditions that prevailed in 2017 and the first half of 2018. Policy measures taken to curb excessive demand for vehicle imports also impacted the sector significantly. Several regulations were introduced to strengthen non-bank financial institutions during 2018. A financial customer protection framework was introduced to protect customer interests and to strengthen customer confidence in the sector. 26  A new capital adequacy framework for LFCs and SLCs was implemented with a view to fostering a strong emphasis on risk management and to encourage ongoing improvements in the risk assessment capabilities of the sector. In terms of the new framework, companies with assets over Rs.100 billion are required to maintain higher capital adequacy ratios.
This prevention is geared to establishing instruments whose effects are as broad-based as possible, in other words, instruments that are independent of the specific causes that lead to crises. One general pattern in financial crises is that market and investor confidence plays a central role. 2 In general, when a bubble is being formed, soaring price trends are initially explained in “rational” terms. In the recent crisis, for instance, developments in the US housing markets were, for a long time, regarded as a logical and unproblematic consequence of state support measures or of innovation in the form of new financial products, as well as the constant inflow of capital from Asia. 3 However, when the first symptoms of a crisis become evident, the focus moves directly to other aspects. Which market participants are exposed? How heavily are they exposed? How can one’s own assets be safeguarded in the best possible way? The irrational optimism of the previous period is followed by a rapid loss of confidence and then by a flight to security. A broad-based loss of confidence of this kind can sometimes result in serious liquidity problems, even for fundamentally well-backed banks, thereby triggering far-reaching second-round effects. 4  2  Cf. Akerlof/Shiller (2008): Animal Spirits. 3  Cf. Reinhard/Rogoff (2008): Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International Historical Comparison. 4  Cf. Acharya et al (2009): Manufacturing Tail Risk. A Perspective on the Financial Crisis of 2007–2009.

Above and beyond this, in taking on the market maker of last resort function, a central bank assumes significant financial and reputation risks. To summarise, the direct and indirect costs of this kind of market intervention need to be weighed up against the overall economic costs of a system-wide implosion of liquidity. At a time of significant stress in the system, we must probably retain a second line of defence of this kind for use when needed, if we are to carry out our task of ensuring sustainable welfare growth in the spirit of our mandate. However, liquidity or market assistance of this kind needs to be examined carefully, case by case. It must be planned as a distinct supplement to the first line of defence and clear principles laid down in connection with its provision. Last but not least, it must only be used to “kick-start” a market that is fundamentally capable of survival. Taking on a permanent market replacement function is something that should, fundamentally, be avoided. 11 Conclusion Ladies and gentlemen, I now come to the conclusion of my remarks today. The accumulation of systemic risk represents a serious threat to the stability of financial systems. It is therefore important, on the one hand, to recognise this risk at an early stage and, on the other, to develop measures capable of containing it. I have spoken about four fundamental criteria for evaluating measures of this kind.
The economy is in a good place, but not without risk and uncertainty (there, I said it!). Persistently low inflation is a key area of my attention, with the core PCE inflation rate—which strips out volatile food and energy prices—running at 1.6 percent, nearly half a percentage point below our 2 percent longer-run target. 1/3  BIS central bankers' speeches  On its own, inflation somewhat below our longer-run goal would not be such a big deal, especially with our economy strong. But the broader context is important. Ongoing disinflationary pressures from abroad, and the risk that inflation expectations in the U.S. may have drifted down after many years of inflation running below 2 percent, form an important part of this picture. If we look beyond the headline GDP figure, which remains good, there are more mixed signals coming from different sectors. Robust consumer spending is balanced by signs of slowing business investment. We’ve also seen a decline in exports and weakening manufacturing data, reflecting slowing global growth and uncertainty related to trade and geopolitical risks. I am carefully monitoring this nuanced picture and remain vigilant to act as appropriate to support continuing growth, a strong labor market, and a sustained return to 2 percent inflation. Monetary Policy Adjustments This brings me to our decision to lower the federal funds rate in July and how that fits into recent history. Cast your minds back to a year ago, when the Fed was continuing along the path of normalizing monetary policy.

Challenges on the Horizon When I think about the road ahead, my number one goal is to keep the expansion on track. This is how we will keep unemployment low and bring inflation back to 2 percent. I will be watching closely at how both domestic and broader, global developments unfold. At present, slowing global growth and geopolitical uncertainty pose particular challenges. In its latest World Economic Outlook report, the International Monetary Fund downgraded its projection for global growth and highlighted downside risks.3 Slower global growth reduces demand for our exports and puts a dampener on both U.S. inflation and growth prospects. And these aren’t just projections for the future—we’re seeing manifestations of slowing growth around the world now. Germany, the UK, and China are all experiencing slowdowns, and the euro area is of particular concern. In response, the European Central Bank and several other central banks have either adjusted, or indicated they will adjust 2/3  BIS central bankers' speeches  their monetary policy stance to support their economies. These concerns about global growth are compounded by broader geopolitical uncertainty. The risk of a no-deal Brexit for the UK is looming large, the political situation in Italy remains fraught, political tensions continue in Hong Kong, and Argentina’s economy is coping with a debt crisis. On our own shores, concerns around trade policy with China are adding to an uncertain picture. My contacts in the business community have said this is making them more cautious about investment.
Stress regimes need to capture market risk and credit risk across the firm, incorporating exposures in priced credit products, such as credit default swaps and structured credit products, and the strong linkages between these priced credits and traditional credit  2  BIS Review 28/2005  instruments such as bank loans. Stress regimes need to take into account the effects of a firm’s own actions and trading strategies on market prices during times of stress, and the constraints on their room for maneuver imposed by size. Banks hold a special place in our financial system, and most of our focus on improving the regulatory framework for capital will always be on banks. Getting to a greater degree of comfort about the adequacy of the capital cushion for banks is a necessary but not sufficient condition for achieving a higher level of comfort about the resilience of our financial system. This point applies equally well to non-bank financial firms that play critical roles in our financial system. These institutions, too, need to have internal controls and risk management systems and capital levels commensurate with their critical role in the financial system. The SEC’s initiative to implement internal-models-based regulatory capital requirements for securities firms as part of the Consolidated Supervised Entity (CSE) framework will help bring more consistency and more sophistication across banks and securities firms in the capital treatment of traded positions.

The risk-reducing benefits of these innovations, for individual institutions and for the system as a whole, are substantial, but these benefits are to some extent qualified by the limits of our knowledge of how they will perform in conditions of stress. The uncertainty and challenge posed by these developments are complicated by the confidence engendered by the stability and resilience of the U.S. economy over the past decade. Until very recently, we have seen an unusual dynamic in financial markets, in which low realized volatility in macroeconomic outcomes, low realized credit losses and low uncertainty about future inflation and interest rates have worked together to bring risk premia down across many asset prices. There is a self-reinforcing character to this pattern, with past stability seemingly increasing confidence in future stability, and this dynamic itself can magnify the risk of a more damaging reversal. These are all good reasons to pay careful attention to the strength of the financial system today. We have a strong interest in ensuring that the largest institutions in our financial system, and the system as a whole, are able to function reasonably effectively, even in the face of a more turbulent economic and financial environment. Capital is critical to this objective, and our current Basel I regulatory framework for capital is not up to the challenge. We have a very important global effort underway to improve the regulatory regime for capital, by tying it more closely to the actual risk profile of financial institutions.
Monetary policy The euro should be at least as solid and stable as the best currencies of the European Union and therefore at least as solid and stable as the French franc in the past. This is what inspires the policy of the European System of Central Banks, the European Central Bank and its Governing Council. This is what is required by the Treaty and also by our fellow citizens, who want a new currency that is at least as solid as the French franc. And it is indispensable in order to preserve the competitiveness of the European economy, ensure low medium- and long-term market interest rates on a lasting basis and therefore favour growth, job creation and the fight against unemployment. BIS Review 62/1999  2  The stability-oriented monetary policy of the European Central Bank and of the European System of Central Banks is guaranteed by their independence, which is enshrined in the Treaty. It is buttressed by the support of European public opinion which, like French public opinion, is deeply attached to the stability of the currency. In the final analysis, an independent institution is always accountable to the public. In a world monetary and financial system characterized by totally free capital flows, confidence is the most precious asset: the confidence that we inspire in economic agents and French, European and international investors; and the confidence with which we are credited today, tomorrow and in the future.

However, the reactivation of credit activity remains a challenging goal, which would require encouragement of the final demand and generation of business plans valid for bank financing, reduction of real and perceived risk in the economy, review of development strategies and commercial banks’ lending policies, as well as reduction of cost and non-cost elements in lending. All these factors are envisaged to gradually improve throughout the year; however, they will remain far from the pre-crisis levels. Bank of Albania’s monetary policy will continue to be prudent, chiefly oriented towards achievement of inflation target. The recent upward inflation trend might have been motivated by temporary-action and limited-intensity supply factors. The Bank of Albania has envisaged  BIS Review 28/2010  1  that the exceeding of 4 percent inflation rate will be for a short period of time and will not be followed by steady inflationary pressures. Our projections show that consumer price inflation will fall gradually towards the 3 percent targeted rate during 2010. However, we remain committed to taking all appropriate steps to ensure this performance and meet our legal mandate for price stability in the economy. 2  BIS Review 28/2010