samchain/econo-pairs-v1 huggingface dataset:
Therefore, central banks and governments increasingly pay more attention to the monitoring of structural and macroeconomic developments that may pose risks to financial stability as well as to the effectiveness and robustness of institutions operating in financial markets. 2 Under the CBRT Law, financial stability has been stated as a supportive objective. In this framework, the Bank is empowered to monitor the financial markets, to regulate the volume and circulation of Turkish lira, to establish payment, securities transfer and settlement systems and to set forth any regulations regarding these systems; and to set up the procedures and conditions regarding the liabilities of financial institutions for reserve requirements. The Central Bank takes the necessary measures in order to achieve stability in the financial system in the face of developments, shares its evaluations on financial stability with the public in line with the principle of transparency and issues warnings concerning the fragilities and risks in the financial system. 1  Schnasi, Gary (2004), “Defining Financial Stability” IMF Working Paper, WP/04/87. 2  V. Sundararajan, Charles Enoch, Armida San José, Paul Hilbers, Russell Krueger, Marina Moretti, and Graham Slack, IMF, Occasional Paper No:212, 2002. BIS Review 68/2006  1  Distinguished Guests, As I have just emphasized, the function of monitoring financial stability takes place within the framework of the goals of central banks to achieve price stability and develop sound payment systems and it is of a different nature to the supervision of other institutions operating in financial markets.

Durmuş Yilmaz: Financial Stability Report – II Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at the presentation of the “Financial Stability Report – II”, Ankara, 13 June 2006. *  *  *  Distinguished Guests, Dear Members of the Press, Last August, we shared with you the first Financial Stability Report, which we consider to be supportive of price stability, our primary objective, and involves a compilation of our studies on the evaluations of financial stability. I am happy to present the second report to you today. I would also like to remind you that this report will be on the Bank’s web page as of today. Today, I would firstly like to focus on the definition and significance of financial stability and central banks’ approaches to the issue. Then I will touch on the duties and powers of the Bank regarding financial stability. Lastly, I would like to emphasize the main points in the Financial Stability Report. Distinguished Guests, Providing a clear definition of financial stability is as difficult as achieving and maintaining it. In a broader sense, financial stability can be defined as the condition of an economy’s mechanisms for pricing, allocating resources and managing financial risks functioning well enough to contribute to the performance of the economy. 1 The European Central Bank defines financial stability as a condition whereby the financial system is able to withstand shocks without impairing the transformation of savings to investment opportunities.
•  Fourth, there is the more specific concern, that either of the two available means for financing the deficit - by, as now, realising foreign currency investments or by government borrowing – would impact adversely on Hong Kong's financial standing in the eyes of rating agencies and others. Of course, it is by no means obvious that these financing activities would necessarily endanger monetary stability or weaken the exchange rate. Indeed, there are plenty of examples of economies with low foreign reserves or high government borrowing having enjoyed firm currencies and strong credit standings, and it's hard to see why, for example, the act of the Hong Kong government borrowing modest amounts on the capital markets in its own currency should have any substantive adverse impact on sentiment. But perceptions are typically coloured as much by unusual or sudden changes in circumstances as by continuity of particular circumstances, and analysts and markets tend to respond accordingly. 4  BIS Review 70/2002  •  Fifth, observers may – not unreasonably – regard the deficit not so much as a problem in its own right as a symptom of other things, such as sharp cyclical recession or perhaps more serious underlying problems in the economy which affect future prospects. It would be natural for these considerations to unsettle general confidence, independently of the budgetary arithmetic. •  Sixth is fear of the unknown. The current run of fiscal deficits is taking Hong Kong into uncharted waters.

Between these two extremes – the US and the no-hoper – there are of course many cases where the situation is less clear-cut or less predictable. Euroland provides an interesting example. Given the careful steps which were taken before the advent of the euro to ensure the insulation of monetary from fiscal policy and to outlaw monetary financing of budget deficits, we might wonder why the news of impending budget overruns should cause the euro to weaken. It seems that not only do credit spreads faced by individual deficit countries widen (presumably for fear, however slim, of sovereign default), but also the currency weakens for fear of governments conspiring with the central bank to abandon its mandate against inflation or to break the rules against monetary financing. A rather different interpretation could be that foreign exchange markets are merely exhibiting a pavlovian reaction: having been brainwashed to the effect that a deficit is inherently bad if it surpasses certain preannounced limits, the reaction when such a breach does occur is bound to be negative, even if analysis of the substance underlying the breach provides little or no justification for such a reaction. In the context of trying to identify a relationship between the fiscal position and the exchange rate, these examples demonstrate that there is no simple, pre-ordained relationship. The outcome depends on a wealth of factors, including the nature of the disturbances affecting public finances, the policy regime and policy responses, and the state of sentiment in financial markets.
Actual and potential GDP Logarithmed levels 14.0  14.0 GDP GDP, forecast  13.8  13.8  GDP, potential (PF) GDP, HP-trend  13.6  13.6  13.4  13.4  13.2  13.2  13.0  13.0  12.8  12.8 80  85  90  95  00  05  10  15  20  Sources: Statistics Sweden and the Riksbank  8. GDP gap Per cent 6  6 GDP gap (HP)  4  4  GDP gap (PF)  2  2  0  0  -2  -2  -4  -4  -6  -6  -8  -8 80  85  90  95  00  05  10  Note. GDP gap (HP) refers to GDP’s deviation from trend calculated with a HPfilter. GDP gap (PF) refers to GDP’s deviation from trend calculated with a production function. Sources: Statistics Sweden and the Riksbank  12  BIS central bankers’ speeches  9. Hours gap Per cent 6  6 Hours gap (HP)  4  4  Hours gap  2  2  0  0  -2  -2  -4  -4  -6  -6 80  85  90  95  00  05  10  Note. Hours gap (HP) refers to the deviation of hours worked from trend calculated with a Hodrick Prescott filter. Hours gap refers to the deviation of hours worked from the Riksbank’s assessed trend for hours worked.

Last year, we also discussed the significance of education, work organisation and intangible investments. 1  Svante Öberg, “Productivity and monetary policy”, 7 June 2007 and Svante Öberg, “Monetary policy and productivity”, 29 January 2008. BIS central bankers’ speeches  1  In conjunction with the financial crisis, GDP then fell by over five per cent in 2009, before rising again by over five per cent in 2010. Productivity in the economy as a whole, measured as GDP per hour worked, decreased for two consecutive years by a total of over four per cent. I will later address the possible reasons for this and the possible consequences. But I will start with the significance of resource utilisation for monetary policy. Resource utilisation is of great significance to monetary policy According to the Sveriges Riksbank Act, the objective for monetary policy is to maintain price stability. At the Riksbank, we have interpreted this to mean that we should strive to hold inflation, measured in terms of the consumer price index, at two per cent per year. We have been clear about the CPI being the target variable. But we also follow a number of other inflation measures to analyse and better understand the development of inflation: the CPI with a fixed interest rate (CPIF), CPIF excluding energy, the EU-harmonised measure HICP and several measures of underlying inflation.2 There are two reasons for the Riksbank to care about resource utilisation, in addition to price stability.
Chart 1: UK employment rate Per cent 64 62 60 58 56 54 52 50 1971  1975  1979  1983  1987  1991  1995  1999  2003  2007  2011  2015  2019  Sources: ONS. Notes: 16+ employment rate. Chart 2: UK unemployment rate Per cent  14 12 10 8 6 4 2  1971  1975  1979  1983  1987  1991  1995  1999  2003  2007  2011  2015  0 2019  Sources: ONS. Notes: 16+ unemployment rate. 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  This jobs bonanza has had a broad geographic base. Since 2012, unemployment has fallen by at least 4 percentage points in all corners of the UK (Chart 3). Unemployment here in Scunthorpe has also fallen significantly from its peak of over 11% during the financial crisis but, at around 7 ½%, remains well above the national average. Chart 3: Fall in UK unemployment by region (latest vs. post-crisis peak) Region NI Scotland Wales SW SE London East W Mids E Mids Y&H NW NE 0  1  2  3  4  5  6  7  Percentage points Sources: ONS and Bank of England calculations. Notes: Data for NUTS1 regions. Changes between post-crisis peak and latest data in Labour Force Statistics. A high quantity of new jobs is no guarantee of quality. Yet recent job creation has also been encouraging on that front.

The likely accuracy of these expected responses is extremely unclear. But “no deal” expectations are already affecting financial markets. As the perceived probability of a “no deal” Brexit has risen, sterling has weakened and UK short-term interest rates have shifted downward (Chart 31). Having expected rates to rise modestly at the time of the May Inflation Report, financial markets now expect UK interest rates to fall over the next year or so, before rising gradually. 28  All speeches are available online at www.bankofengland.co.uk/speeches  28  Chart 31: UK short rates Per cent  2 1.75 1.5 1.25 1 0.75 0.5 0.25 0  2014  2016  2018  2020  Latest (cob 18 July)  2022  May 2019 IR  Sources: Bloomberg LP and Bank calculations. Notes: May 2019 IR line refers to 15-day average curve used to condition the May Inflation Report projections. This forward path of interest rates is, in practice, a rather peculiar one. It is likely to reflect a probabilityweighted mix of two quite different possible outcomes for the economy – a “deal” scenario in which the economy grows and a “no deal” scenario in which some expect it could shrink. In that sense, the market path of interest rates is not an accurate reflection of the most likely path of interest rates. To illustrate, consider a simple thought-experiment. Assume, in the event of a “no-deal”, the economy followed the course expected by companies in Chart 30.
Intra-firm trading in Asia has been the most dynamic segment of the international trading system. Sri Lanka has a minimal presence in these networks. This has to be reversed for Sri Lanka to transform its export performance by leveraging its geographical location in Asia. I need to say something about location at this point. A lot of people say: you are talking about export led growth, FDI etc., when the global economy is rather subdued. That this is a low-growth, sluggish international trade environment era and we are trying to Page 8 of 17  say that we want to pursue an export led growth model. The  answer to those people, in my view, is that our location, and our international relations help to overcome the headwinds in the global economy. We are right in the middle of China’s Maritime Silk Road. We are twenty-miles from the fastest-growing large economy in the world, India, and the five Southern States of India, are growing at 10% plus, and have been for a number of years. The middle class has been increasing dramatically in these States. We also have excellent relations with the Capital surplus countries of East and South-East Asia – Japan, China, Korea, even some of the ASEAN countries. And in Asia, you can leverage government-togovernment relations to bring investment into your country. So,  whatever is happening in the global economy, we can trump that with the  advantages  of location and  excellent international  relations.

Overly expansionary fiscal policy may de-anchor inflation expectation and further fuel inflation. So far, some of the central banks have "looked through" these supply side factors, while others, where labour markets have been tight and economy has been gaining steam or inflation expectations have risen, have already started the tightening cycle. The tightening of monetary policy in the advanced world may lead to headwinds for EMEs that may well have no choice but adjust their monetary policy stance. Not doing so risks capital outflows and currency depreciations, further fueling inflation. Emerging Europe already witnessed 300 million $ outflow since the beginning of the war, though it is far smaller than in March 2020 when they amounted 1.7 billion $ While calibrating monetary policy, we also have to be mindful of the price effects of some structural forces such as green transition and globalization, which may put upward price pressures. In the past, globalisation enabled rapid trade integration of many countries, lifting up their growth potential and putting persistent downward pressure on inflation. Now, with globalisation under threat, price pressures are upward. Overall, in an environment of rising inflation and limited policy space, blanket support should give way to more targeted and time bound policies, and even more importantly shift the focus back to structural and transformational policies, which are key for lifting the growth potential and building resilience. The latter is particularly relevant for the countries in the region that are faced with slow real convergence and stagnant growth potential.
I can safely say that for a central banker of an emerging market country, managing monetary policy has more qualifications as an art, rather than a science. As Mervin King, the Governor of the Bank of England, once said, “I have raised more questions than I 8 have answered, perhaps that is what happens when you become a central banker” . I hope that you will find some of the answers in the panel. Thank you. 8  King, M. (2004). “The Institutions of Monetary Policy”. Lecture at the American Economic Association Annual Meeting, San Diego, 4 January 2004. 6  BIS Review 88/2006

•  As of 1 May 2004, ALL new member states will have to treat their monetary and exchange rate policy as an area of common interest for all member states. Price stability is the main aim of Estonia’s monetary policy already now, and it MUST remain so also according to the principles of the European Union. But as far as the choice of strategies for managing the monetary and exchange rate policy is concerned, this will still be decided by each member state individually. •  Therefore ALL the countries joining the European Union together with Estonia face another important merger in the near future - accession to the Economic and Monetary Union (prior to that the countries are EMU members with limited rights). Only after completing this change can we be sure that our state is capable of fully utilising the possibilities that the merger with a powerful economic area offers. Estonia hopes to be among the very first member states to do that. •  At some forums outside Estonia we have been asked why we are rushing to the euro zone. Actually, the question should be formulated the other way round - why are some countries incapable of taking this next step in the near future? Estonia has pursued conservative economic policy and achieved success. Thus it is inappropriate to imply that we should wait for others for whom our pace of movement is too fast.
In other words, the Swiss franc already faces competition, not only against the currencies of other countries but also against alternative non-governmental currencies. 8  4  For further information, cf. ‘Bericht des Bundesrates zu virtuellen Währungen’ (Federal Council report on virtual currencies, in German only) of 25 June 2014 (www.news.admin.ch/NSBSubscriber/message/ attachments/35361.pdf). BIS central bankers’ speeches  However, the key issue is rather different. A modern economy with a well-developed financial market requires a statutory means of payment. The Swiss franc is the official unit of currency in our country; Confederation coins as well as SNB banknotes and sight deposits are Switzerland’s statutory means of payment. Therefore these instruments must be accepted as payment in this country by every individual, without restriction, unless otherwise agreed. A statutory means of payment creates legal certainty and efficiency in everyday life. Consequently, the governmental Swiss franc is indispensable in Switzerland, even in a situation of competition with private currencies. Moreover, as long as a central bank fulfils its mandate diligently, I do not consider it likely that a private currency can pose any serious competition to a state currency. Return to a gold standard The second reform idea, the return to a gold standard, is directly linked to the financial crisis. In some circles there are fears of massive inflation in the short or long-term as a result of the unprecedented relaxation in monetary policy worldwide. The solution that is sometimes proposed is a return to a gold standard, in other words, pegging the currency to gold.

This legislation included provisions requiring the 29 issuing banks to hold at least 40% of their banknotes in circulation in the form of currency metal. In other words, banknotes were a kind of cash substitute and did not qualify as legal instruments of payment. 7 Since banks did not gear their banknote issue to fluctuations in demand, there were regular bottlenecks in supply on days when large numbers of bills had to be paid. Our next leap in time takes us to the year 1950. By now, only Swiss coins and banknotes issued by the SNB were in circulation. The Confederation had transferred the exclusive right to issue banknotes to the SNB, which began business operations in 1907. Switzerland had been incorporated in the Bretton Woods fixed exchange rate system created in 1944, which was based on the US dollar as the lead currency – but ultimately on gold, since a fine ounce of gold was equivalent to precisely USD 35. However, for private individuals it had been impossible to exchange banknotes for gold at the SNB since 1936. 2  Paul Meier: Der Währungswirrwarr von der Helvetik bis zur Bundesverfassung, dissertation, Berne 1951, p. 60. 3  The true scale of the multiple currency confusion only became apparent 20 years later in connection with centralisation of the coinage system at federal level. At this point, in 1851 and 1852, following the introduction of the Swiss franc, the old types of domestic coins were collected.
We are going to develop our regulation in such a way as to encompass other non-core assets of credit institutions as well. According to our assessments, the total value of such immobilised assets 4/7  BIS central bankers' speeches  that have no requirements for repayment and are often liquid only to a limited extent already exceeds two trillion rubles. However, banks’ regulatory capital covers as little as 15% of these assets. I would like to reiterate that we do not want to limit market development, decrease Russian ecosystems’ competitiveness, and curb the deployment of innovations. Just the opposite. We believe that if banks develop ecosystem business, they should do this at the expense of their shareholders, rather than depositors and creditors. We are aware that other sectors of the financial market should also create conditions to offer comprehensive solutions to clients. For many years, we have been working towards elimination of regulatory arbitration, implementing a risk-based approach, and raising the requirements for financial stability, and now we believe that we are really prepared to switch to regulation by activity type. This approach implies that main regulatory requirements will be set not for a legal entity, but rather for the activity it carries out. What services will be covered in the first place? Payment services may be provided by nonfinancial and non-bank financial institutions. In our opinion, it is possible to combine the activities of a non-governmental pension fund and a life insurer.

Two months ago, we released a consultation paper on floating interest rates and discussed it with the market community. The findings of this discussion are as follows. It would be unreasonable to prohibit floating interest rates completely since this reduces opportunities to expand lending, especially given that banks have increasingly more current liabilities and increasingly more non-current assets. Floating interest rates really help address this mismatch. Nonetheless, I would like to emphasise that in the first place banks still need to expand the share of long-term funding, for instance, through bonds. However, unrestricted access to floating interest rates should only be provided to ‘qualified’ borrowers, that is, the highest-income people who are well aware of inherent risks they accept taking out very large loans. In contrast, small loans should be issued on very clear terms, and floating interest rates in this case should be prohibited, in our opinion. Floating interest rates should be available in the absolute majority of loan types (including in mortgage lending). However, the range of possible changes in floating interest rates or loan maturities should be limited. Let’s say that this should be no more than a third of an interest rate or no more than a fourth of a loan maturity. We still need to discuss these parameters in greater detail. People would thus be able to measure their risks under various scenarios and make a wellinformed decision. We believe that the caps setting the maximum amount of a small loan should be established taking into account regional specifics.