samchain/econo-pairs-v1 huggingface dataset:
Petar Goshev: Alleviating the negative effects of the financial crisis Welcome address by Mr Petar Goshev, Governor of the National Bank of the Republic of Macedonia, at the World Bank event, Skopje, 15 March 2010. *  *  *  Distinguished ladies and gentlemen, It is my honor to give a welcome address at this important World Bank event that it is taking place at a critical transitional stage when it seems that the strongest impact of the severest crisis since the Great Depression is behind us and the global economy is beginning to grow again. Still, although we believe the worst is behind us, the global crisis has had strong negative effects that will continue to be felt in the years to come. Because of that, the efforts of the national authorities and international financial institutions for mitigating the negative effects have to continue. In this regard, the enhanced role of the international financial institutions, including the World Bank, is vital. The economic, social and human implications of the global crisis have further emphasized the World Bank’s mission of eliminating poverty, enhancing growth and providing inclusive and sustainable development. Achieving Millennium Development Goals (MDGs), as a set of priorities for the World Bank, is becoming more challenging.

This means that we, together with the Ministry of Finance in the Government Offices, coordinate and conduct Swedish policy in this forum. This evening, I am intending to talk about globalisation - as an opportunity and a challenge. I am going to discuss what the International Monetary Fund is and the role that it has in an increasingly globalised world. To conclude, I will take up Sweden’s participation in the IMF, and what we can expect from the meetings in Prague next week. Globalisation and its benefits Before commenting on critical remarks often presented on globalisation, let me first begin by noting that prosperity in the world has improved dramatically during the past decades. Never before in history has the situation of so many people improved so much so quickly. Since the beginning of the 1980s, purchasing power per capita in the world has more than doubled. In the poor developing countries, this has meant that purchasing power correlated GDP per capita has increased by almost 350%. In the rich industrialised countries, the corresponding growth was 220%. In certain cases, developments have been particularly spectacular, not least in Asia. In 1975, six out of ten Asians lived in absolute poverty - under a dollar a day. Today, the figure is two out of ten. In China alone, the number of poor has fallen from 60 to just under 30% in less than twenty years. There are many factors that explain this development.
Paris has the potential, the expertise and the infrastructures to do so. To introduce your two-days Forum on “Growth and Investment Opportunities in Europe”, I wish to first give you an overview of the current economic and financial situation in the euro area and then discuss the major changes currently underway that are considerably strengthening our monetary union. 1. Overview of the current economic and financial situation in the euro area  Before I start this overview, I would like to quote a famous sentence by Jean Monnet, one of the founding fathers of Europe: “what matters is neither to be optimistic nor pessimistic, what matters is to be determined”. In other words, what the euro area needs is neither euro-bashing nor celebration, but awareness and action. As you all know, overall growth in the euro area has been very weak for a few years. The most recent figure is a 0.3% contraction in GDP in the first quarter of 2013, following a decline of 0.6% in the fourth quarter of 2012. Output has thus declined for six consecutive quarters, with labour market conditions remaining very weak. The euro area economies were badly affected by the crisis (first financial, then economic, then sovereign debt), and the fiscal adjustment that became necessary to overcome it has had a negative impact on growth as well. ECB projections see a gradual recovery taking shape later this year.

In this field too, the euro area has made considerable progress over recent years, especially in the countries that had a particularly large competitiveness gap vis-à-vis the rest of the zone and which, as a result, fell deeper into the crisis than their neighbours: •  We have seen a significant improvement in cost competitiveness as measured by unit labour costs (ULC). Between 2008 and 2012, in the three programme countries (Greece, Portugal and Ireland) cumulated ULC growth stood about 12 percentage points below the euro area average. •  The current account balances clearly show a strong correction. In the three programme countries, the current account balances as a percentage of GDP improved by more than 9 percentage points between 2008 and 2012. In Spain, the current account deficit improved by more than 7 percentage points over the same period. Most of the adjustment has been driven by a contraction in domestic demand. However, in Ireland, Spain and Portugal export performance has been very strong compared with the pre-crisis period. 2  BIS central bankers’ speeches  In total, the euro area generated a trade surplus of more than 1% of its GDP in 2012 compared with around zero in previous years. We expect this surplus to continue growing in the coming years. The speed and depth of the reforms underway in euro area economies is unprecedented.
Three main issues warrant specific attention: –  First, at the G20 level, the reform on OTC derivatives;  –  Second, the Basel Committee work for banks (Basel 3);  –  And third, the accounting reforms by the IASB and the FASB. 1.1 One of the most visible regulatory changes is the reform to address weakness in OTC derivatives markets Although they were not at the origin of the crisis, they certainly and conspicuously aggravated systemic stresses in a weakened global financial system. The forthcoming European Market Infrastructure Regulation – commonly called “EMIR” – as well as the Dodd Frank Act is both of paramount importance in order to fulfill the Pittsburgh’s commitments made by G-20 leaders. I see as particularly important the increase in transparency, the prevention of systemic risk, the promotion of financial stability. In order to meet these objectives, both regulations do introduce mandatory reporting of derivative transactions to trade repositories as well as mandatory clearing for eligible standardized transactions. Both regulations do take into account the fact that a mandatory clearing obligation may also increase the systemic importance of clearing houses. Indeed, both regulations introduce more stringent organizational, managerial and prudential requirements in order to ensure that those clearing houses are safe and sound and comply at all times with those requirements. The fact that both regulations are overall consistent and support the same objectives is of crucial importance and it is a first achievement for financial stability.

But in absolute terms, the cost of risks amounts to EUR 63 bn for the top 4 US banks, as opposed to only EUR 58 bn for the 11 largest European banks. –  •  Solvency ratios have significantly improved in Europe, banks have retained earnings and increased capital through various ways (new equity issues, dividends paid in new shares);  •  With Tier 1 ratios comprised between 10% and almost 18% for the main European banks, they are equivalent to the range of 11%–16% of American banks. •  Regarding now the core Tier 1 ratios, which is the measure displayed by banks for the markets, they are also pretty equivalent. Again, with ratios ranging between 8.5% and 15.3%, the main European banks are as solid as US banks (with ratios between 8.4% and 13.3%). Secondly, the differences in the leverage ratios levels mainly result from accounting discrepancies that can lead to particularly misleading comparisons: •  If we observe the leverage multiples, it is true that the figures displayed by US banks (between 10% and 14%) are lower than those of most of European banks. For the latter, the range is much wider (between 15% and 25%). •  But we all know that the measurement of the leverage ratios is significantly impacted by different accounting treatments, the main differences between IFRS and US GAAP arising from the netting of derivatives and repos. •  The example of Deutsche Bank is a case in point to illustrate this impact.
Moreover, new estimates of the public finances indicate that public consumption this year may be somewhat weaker than assumed in December. This is mainly due to the financial situation of municipalities. The municipal sector as a whole is running a deficit, which must be redressed in the years ahead. One issue that has been debated recently is the effects on the Swedish economy of the weaker dollar. It is true that the dollar’s performance has been weak, but this is not the whole picture. In tradeweighted terms (TCW), the krona has not strengthened recently. This is mainly because the krona quite contrary to what many had expected - rather has weakened slightly against the euro. So for foreign trade as a whole, the currency developments should not constitute any great problem. Another issue of course is if the weaker dollar, primarily in relation to the euro, could jeopardise the revival in the world economy. Neither does this appear likely as long as the adjustment is fairly orderly. As I mentioned earlier, it is probable that growth in Europe will be slowed down somewhat, but on the other hand it is likely to be more robust in the US. Moreover, the most recent data for the National Accounts and foreign trade indicate that we so far rather have been slightly too pessimistic about Swedish exports. The most palpable concern is the labour market, where growth has been weaker than expected particularly towards the end of 2003.

Many securities depositories chose to participate because they saw great potential in T2S in terms of cutting settlement costs, fostering competition and generating new business opportunities. But overall, T2S had the potential to bring about a more integrated financial market and thus to benefit all. Second, the governance structure of the project is special as national central banks, securities depositories and market participants formed a partnership with one objective – to launch T2S successfully. It is this unique collaborative effort, mentioned by some of you tonight, that has ensured the success of the T2S project, a project of such size and scale that it has changed the industry completely. Finally, the project is unparalleled in that it has led the industry to impose new rules and procedures on itself. And let’s be honest: this does not happen often. That is why many believe that the post-trade harmonisation agenda is the greatest benefit of T2S. BIS central bankers’ speeches  1  The launch of T2S is a great achievement. With T2S we have a big story, and I am confident that the story of its development will continue to be a winning one. Of course, there are many types of stories – some rooted in fantasy, some in fiction, and some in reality. The T2S story is a reality, and to symbolise this, a 3D printer is installed in the corridor that you will pass through several times tonight. I invite you to keep an eye on it and see how the T2S logo will materialise.
Svein Gjedrem: Economic perspectives Annual address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the meeting of the Supervisory Council of Norges Bank, Oslo, 11 February 2010. *  *  *  This current global crisis had its origins in an abundant supply of credit, market participants who took steadily higher risk and a lack of oversight on the part of banks, companies and authorities. This is reminiscent of a play by Bjørnstjerne Bjørnson’s entitled “A Bankrupt”. In a conversation between the main character, Tjælde, a businessman, and his daughter Valborg, she says that no man of honour would keep his family or his creditors in ignorance of the events that foreshadow a crisis. Her father rebukes her: 1 “… you don’t understand what a business-man’s hope is from one day to the other – always a renewed hope. That fact does not make him a swindler. He may be unduly sanguine, perhaps – a poet, if you like, who lives in a world of dreams – or he may be a real genius, who sees land ahead when no one else suspects it.” The conversation is also reminiscent of current discussions about accounting principles. Then, as now, the mark-to-market value of assets was under debate. Tjælde says: “[…] values are fluctuating things; and [a businessman] may always have in hand some venture which, though it cannot be specified, may alter the whole situation.” Valborg has little regard for ventures at creditors’ expense. She thinks accounts should be transparent.

Perhaps we shouldn’t be too surprised by the first panel. The “leavers” tend to foresee a positive economic impact, the “remainers” the opposite. The “remainers” are apparently more uniform in their answers: adding them up, the balances in the aggregate sample are also negative. What’s striking, however, is that there’s no  Chart 6: Even households who are negative  Brexit-induced cut in planned spending, even for the  about Brexit do not plan to cut spending  “remainers”. We need to be a little careful here, as it’s not clear whether people are telling us about their spending in real or in nominal terms. If it’s the latter then, allowing for inflation, perhaps some of the bars might turn negative when measured in real terms. But, on the face of it, there is very little correspondence between people’s views about the economic impact of Brexit and their consumption plans, and no anticipated response of spending for the sample as a whole. Whatever the reason – perhaps, given all the myriad uncertainties involved,  Sources: NMG survey and Bank calculations. 6  The empirical research has demonstrated that, even if consumers do respond to expectations of future income, they are more sensitive than the simple theory predicts to shifts in current income, even when these are identifiably temporary. For an extremely readable account of the prevailing view of the evidence at the time, see Deaton (1992). For a possible explanation, see Carroll (2001).
Ladies and gentlemen, Weaknesses in risk governance have been one of the major cause for the recent global financial crisis. Until now, risk governance remains a work in progress as evident from the recent money laundering control failures experienced by some big financial institutions in developed economies. The theme for this year’s conference, the “Risk, Governance & SelfRegulation: Within and Beyond”, is not only timely but also an ongoing self-reflection for all of us. The organisers have also impressed upon me that this year theme is a continuation of 2012 theme of “Compliance, Challenges and Effectiveness: The next level”. After the efforts in putting in place the appropriate risk management framework, it is time for us to ask ourselves the following questions: Have we done enough on risk and governance? And can we do it better? Sound risk management is fundamental to preserve the integrity of the financial system and there has been increased attention given to this area. In my remarks today, I intend to focus on the following key points and highlight initiatives undertaken by Bank Negara Malaysia to strategically support financial sectors’ governance and self-regulation in preventing the risks related to financial crime. Firstly, the risks and its importance in setting the context: Secondly, the governance and risk culture; and thirdly, self-regulation. Risks and its importance in setting the context In principle, money laundering and terrorism financing risks are no different than other type of risks facing businesses.

We are therefore calling for a reduction in the shock applied to all equity categories, to make the standard easier to read and reduce insurers’ capital charge. “Insuring in the long term”, to come back to today’s topic, means providing our MTEs and SMEs with greater access to equity financing. Our economy, like that of our euro area neighbours, is seriously lagging behind in this field: in France, equity financing only amounted to 79% of GDP in 2019, compared with 122% in the United States. (iii)  The weight of the risk margin, which on average accounts for 30% of capital requirements at the European level, needs to be reduced. The current method of calculation is too prudent and penalises long-term insurance products such as savings, retirement and prudential products. (iv)  Last, we need to move towards greater simplification: “What is simple is always wrong. What is not is unusable”. i This irrefutable observation from Paul Valéry should be an incentive for us to push for concrete measures to simplify the standards and converge supervisory practices. I'm thinking about a reduction in the reporting burden and requirements for activities that are low risk. And on a more structural level, I'm thinking about the overcomplexity of the method for  Page 6 of 6  calculating mathematical reserves, which undermines the comparability of prudential balance sheets. With the upheaval currently underway in standards, it would be a mistake to roll out IFRS 17 too prematurely.
There has also been some further deregulation. For instance, state monopolies have been abolished and freedom to establish new companies with regard to, for instance, transport, communications and energy has been introduced. Changed competitive conditions thus affect productivity growth, but they can also affect price developments more directly. Despite the fact that we gained much stiffer legislation on competition in 1993, developments in this field appear to be moving slowly. Swedish prices remain higher than in other countries in several areas without explanations for this in the form of differences in VAT rates and wage levels. Increased competition can contribute to price levels converging, but this assumes that the relative price changes will be accepted and it can entail, as in the 1990s when electricity and telecommunications were deregulated, such large price reductions in some sectors that our inflation rate will be lower than that of other countries. Special interests and consumer interests Limits to competition are a clear example of how special interests dominate over general consumer interests. There are many examples of this in various areas of the Swedish economy, and in particular the construction sector. This means that we allow inefficiency to remain, which reduces growth and the development of most people’s standard of living. One interesting and very recent example of how special interests have declined concerns pharmaceutical prices.

The report will provide a helpful basis for each individual jurisdiction to analyse whether and how to extend domestic operating hours. It will indeed feed into the Bank’s own analysis of extended operating hours. I would encourage central banks to undertake self-assessments against both frameworks. If more firms can use payment systems and for longer, it could simplify payment processing, expand the global settlement window and increase opportunities for new entrants to stimulate innovation for the benefit of consumers and businesses around the world. The Road Ahead There are three key ingredients that if mixed together could help the global payments ecosystem move the dial on payments. First, an innovative and forward-looking fintech and financial sector. Second, resilient, accessible and functional public infrastructure creating a platform for coordinated innovation. Finally, international collaboration across the public and the private sectors to promote harmonisation and interoperability. The combination of the three can speed up our journey to a world where any customer wherever they are and whatever the size of 5/6  BIS central bankers' speeches  payment can transact quickly, cheaply and securely. I would like to thank Andrei Pustelnikov for his help in preparing these remarks. I would like to thank John Jackson, Andrew Bailey, Dave Ramsden, Megan Solomon, Paige Benattar, Jurin Ohyama, Sam Leighton, Anna Koch, Michaela Costello, Paul Bedford and Dovile Naktinyte for their helpful contributions and comments.
Inflation reached the Central Bank’s inflation target towards the end of last year, due to a stronger currency, spare capacity in the economy, and inflation expectations approaching the target. This development is not independent of the monetary policy stance, however, as spare capacity can be associated with a vicious cycle of falling exchange rate and rising inflation expectations if confidence is lacking. Indicators suggest that a weak economic recovery began in the third quarter of 2010, and forecasts assume that it will continue this year. The recovery is still weak, not least given the substantial slack in the economy. Two points of concern in this connection are that business investment is very low in historical context and export growth is rather weak in view of the low real exchange rate and robust recovery of global trade. An important factor here is that Iceland’s major export sectors face capacity constraints; therefore, exports cannot be increased to any significant degree without further investment. Growth is strong in export sectors without such limits, but their share in total exports is still small. The next crossroads stems from the vast improvement in Iceland’s foreign liquidity and the build-up of the foreign exchange reserves. As of the end of February, the reserves totalled 719 b.kr., or 46% of GDP. Iceland’s foreign reserves have never been larger as a share of GDP, not even at the end of World War II.

It is not yet possible to state with certainty that financial institutions could fund themselves without the support of capital controls and the declaration of a blanket deposit guarantee. In this context, it is critical to enhance the functioning of the financial markets, which are important for trading, funding, and risk diversification – particularly the foreign exchange and equity markets. It is also essential that financial institutions and other entities re-establish their access to foreign credit markets. A further task is to formulate policy regarding the nature, size, and international relations of the Icelandic financial system. It is no less important to formulate policy concerning the tools and institutional structure for financial stability: the financial crisis has taught us that assessing systemic risk is key, as are sound arrangements for the application of tools to mitigate it. The final crossroads is faced by economic policy, as a result of the changes I have described. In short, it can be said that the tasks at hand are shifting from the achievement of stability to promoting growth, and from crisis management to longer-term development. In terms of monetary policy, this can be seen in the Monetary Policy Committee’s shift of its bias from monetary easing to neutral. This does not mean that interest rates cannot be lowered further, but it does mean that because inflation appears to have hit bottom, economic recovery has begun, and the effective policy rate is closer to equilibrium than before, it is not as clear what direction upcoming interest rate decisions will take.