samchain/econo-pairs-v1 huggingface dataset:
Such an occurrence can affect other economic agents. They may face illiquidity and even insolvency, affecting market interest rates, in turn leading to changes in trading activities and a disruption in market confidence Payment systems are an essential component in preventing such occurrences and a technical mechanism for the central bank to step in order to challenge contagion or potential contagion. The interest of central banks in financial stability was largely triggered by the Herstatt incident of June 26, 1974. German banks processed Deutsche Mark payments to Herstatt bank in exchange for US Dollars, to be delivered through Herstatt correspondent account in New York. Regulators, deciding to close the bank for lack of solvency immediately, failed to appreciate the time-zone difference between Frankfurt and New York, leaving transactions half-completed. German banks did not receive their US Dollar payments. Although the Herstatt incident did not lead to a financial-stability crisis, it made central banks aware of the risk and they started developing a continuous linked settlement platform, whereby commercial banks manage settlement of foreign exchange amongst themselves on a payment versus payment basis. Cooperation in this area led central banks to share experiences covering other areas of payment systems and financial stability. Well-functioning markets depend on the willingness to develop adequate solutions to ensure smooth functioning of payment systems. Ironically, part of the problem stems from the very fact that technological advances speed up the payment systems and make them more reliable. This in turn enables banks to economise on liquid balances.

They have to judge to what extent their local currency strength is a result of solid fundamentals and to what extent it is just another “no-brainer” trade that may last for quite a while but may also end suddenly. Research conducted at the National Bank of Poland and by other institutions indicates that financial markets have become much more integrated in recent years, global factors drive the performance of emerging market currencies much more than just a few years back, that home bias is being reduced and even a well-known Feldstein-Horioka puzzle is almost gone 10 , ie the cross-country correlation between saving and investment rates has declined markedly. Favorable global liquidity conditions, attractive rates of returns and good economic prospects draw global investors to Polish financial markets. Additionally, Poland’s accession to the EU and the future  6  See Dooley M., Folkerts-Landau D., Garber P. „An Essay on the Revived Bretton Woods System“, NBER Working Paper 9971, September 2003; and a series of other papers published by these authors in 2004 and 2005. 7  http://www.um.warszawa.pl/v_syrenka/miasto/mosty-9.htm  8  International Monetary Fund “Global Financial Stability Report”, March 2006. 9  Bank for International Settlements “BIS Quarterly Review. International banking and financial market developments”, March 2006. 10  Feldstein M. “Monetary Policy in a Changing International Environment: The Role of Capital Flows”, NBER Working Paper 11856, December 2005.
The measure obtained by relating actual GDP to potential GDP – what is known as a GDP gap – has the advantage of being easy to understand. It is also close to a number of concepts that are used in monetary policy analysis. The so-called Taylor rule often used to describe how monetary policy is conducted contains such a GDP gap. When one talks about the target for monetary policy being to minimise deviations in inflation from the target and fluctuations in the real economy, the latter is often illustrated with a GDP gap. But it is not entirely clear how one should measure the long-term or trend level of GDP. A common method for determining this GDP level is to use some statistical tool to find a trend in the available GDP statistics. The Hodrick-Prescott filter, or HP filter, is one such tool. This filter is used to obtain an HP trend which is a cross between a linear trend and the uneven curve showing the actual GDP outcome. Such HP trends are regularly reported in the Riksbank's Monetary Policy Reports. Figure 1 shows actual GDP, potential GDP measured as an HP trend and the GDP gap, which is the difference between these. The actual GDP gap is stated as a percentage of GDP, measured on the right-hand scale, and in the figure this becomes a form of enlarged image of the difference between actual and potential GDP. The dotted parts of the curves represent the Riksbank’s forecasts from the April Monetary Policy Update.

But this does not prevent it from being very useful to continue developing aggregate measures of resource utilisation. Secondly, all of the measures described show that resource utilisation has recently fallen rapidly. The GDP gap, the flexprice gap and the indicator that is intended to provide an aggregate measure of resource utilisation show that resource utilisation is already below the normal level. The labour market gaps are lagging behind, but will, according to our current forecast, soon point to labour force use of below normal levels. The GDP gap that is based on an HP trend for GDP indicates that resource utilisation is falling by around 10 percentage points from the peak level in 2007 to a trough in 2010. Although we have used a gradually declining output capacity as a basis for the calculation of the HP trend, this fall in the GDP gap probably gives an exaggerated picture of the fall in resource utilisation during the period as the potential output level ought to have fallen more than is reflected in the HP trend. The deeper and longer the economic recession is, the larger the output capacity that can be expected to disappear. The resource utilisation indicator shows the same picture as the GDP gap, but there are no forecasts for this. BIS Review 66/2009  5  The employment rate and unemployment will deteriorate by around 5 percentage points from 2008 to 2011 according to the forecast we made in April.
Sukhdave Singh: The rise of the South at a crossroad – a view from East Asia and Latin America Opening address by Dr Sukhdave Singh, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the World Bank Knowledge and Research Hub Conference “The Rise of the South at a Crossroad: A View from East Asia and Latin America”, Sasana Kijang, Kuala Lumpur, 16 May 2016. *  *  *  I am pleased to welcome you to today’s Conference on “The Rise of the South at a Crossroad: A View from East Asia and Latin America” organised by the World Bank Knowledge and Research Hub in Kuala Lumpur. For those of you who have not been here before, I would also like to welcome you to Sasana Kijang. I congratulate the World Bank Knowledge and Research Hub for organising this conference on economic integration. Economic integration within the current global context It is indeed an opportune time for us to look at economic and financial integration and what it can offer to emerging economies in Asia and Latin America. It is an opportune time because the world seems to have been unable to bounce back towards a healthy growth path after the financial crisis in the developed world. It is an opportune time because policymakers have not been successful in generating strong sustainable growth. The traditional tools for nursing the economy back to health don’t seem to be working as well – possibly because of overuse or misuse.

Crisis response: change in central bank interactions with markets The Markets Group’s monitoring responsibilities and broad array of contacts across different market segments were critical to identifying underlying causes of the increased volatility and sharp repricing observed across a wide range of financial markets in 2007 and 2008. This information contributed to policymakers’ understanding of where and how to target liquidity support measures beyond the traditional form of discount window lending to depository institutions. The temporary liquidity facilities were designed by drawing upon skills across the Federal Reserve System including market and operational experts, lawyers, economists and accountants. Given the unprecedented shocks to the market and the economy more broadly, the facilities had to be set up very quickly – in a matter of days or weeks. These included facilities designed to lend to banks and primary dealers to ensure adequate access to shortterm credit, such as the primary dealer credit facility (PDCF) and the Term Securities Lending Facility (TSLF). Other programs were designed to lend directly to borrowers and  2  To further this objective, the New York Fed also sponsors a private-sector group of market participants – the Treasury Market Practices Group – to support the functioning of Treasury, agency debt, and agency mortgage-backed securities markets. For further information, see the following: http://www.newyorkfed.org/ tmpg/index.html.
Deposit to GDP ratio was 64.2% at end-year, higher than its level prior to deposits withdrawal. In addition, the profile of deposit time structure reflected a higher preference for saving, characterised by a shift to longer maturity-term deposits. Easing lending terms during 2010 H2, stimulating measures taken by the Bank of Albania, and decreasing uncertainty and risk premiums were followed by a gradual credit growth. Private sector loan portfolio expanded by 10% in 2010, principally influenced by foreign-currency credit growth. This performance reflects prudential bank policies on loan portfolio quality and economic agents’ moderate demand for loan. In general, lending continues to suffer from lack of demand and realistic, qualitative and valuable business plans for crediting. Restoration of confidence in the financial system, macroeconomic stabilisation, and regulatory and supervisory measures taken by the Bank of Albania led to stabilisation and improvement of banking system capitalisation, liquidity and profitability indicators. 2. Inflation and monetary policy  Annual consumer price inflation was on average 3.6% in 2010, remaining within the Bank of Albania’s targeted band. Inflationary pressures were more concentrated in 2010 H1, mostly triggered by a rise in some administered prices. Average annual inflation in 2010 H1 was 3.9%. In the following two quarters, relative stabilisation of the exchange rate and low inflationary pressures from the domestic demand contributed to the average inflation rate convergence around the Bank of Albania’s target. Negative output gap generated contained inflationary pressures throughout 2010, thus balancing the national currency depreciation effect and the international market price rise.

We are fortunate in having been able to grab him for a couple of hours today while he is briefly passing through Hong Kong. It is my pleasure to welcome him and to join with you all in the launch of this seminar, which will, I hope, be the first of many organised by the MPC over the coming months and years. 8. Finally, let me record my gratitude and congratulations to all the Committee members of the MPC for the excellent work they have put into the reconstruction of the Committee, and my thanks to everyone here for supporting this event today. 2  BIS Review 3/2001
An important similarity with the other measure, however, is that the liquidity that was injected via Kaupthing into the system also comes back to the Riksbank in the form of deposits from the bank(s) that have excess liquidity. In this way this measure does not have any direct monetary policy effects either. The common denominator for everything the Riksbank has done to date is that all measures are aimed at strengthening liquidity conditions within the Swedish financial system. Unlike many other countries, thus far it has not been necessary for the Swedish authorities to provide the banks with any form of capital support from the government. This point is also important. However, it remains to be seen whether the Riksbank and other authorities have done enough. How the situation develops in the future is essentially a question of what happens outside of Sweden. Nevertheless, the Swedish authorities are prepared to take those measures that are necessary to ensure financial stability. For the Riksbank, this means that we will continue to provide the banks with the liquidity required for the financial system to function. Let me now proceed to discuss paths out of the crisis. Paths out of the crisis We are now in the middle of the most serious financial turmoil that the world has seen in a very long time. It is difficult to anticipate how the situation will develop in the future, which means that it is also difficult to talk about paths out of the crisis.

Cooperation within the EU offers a unique opportunity to discuss and agree on how to handle these problems. 6  BIS Review 125/2008  However, dealing with all of these problems is not just a matter of changes in regulation and supervision. If I may once again take the US as an example, the problems there show that the incidence of financial crises can also have a clear political dimension. One important reason for the lending boom was that the country's political leaders had long pressured the mortgage lending institutions to increase lending to low income groups. Institutions such as Fannie Mae and Freddie Mac were quite simply forced to base their operations on political objectives rather than on sound credit risk policies. The fact that unfortunate political decisions such as these, as well as inadequate regulation, can help to create a crisis is an important lesson to keep in mind when we eventually close the books on this crisis. I am aware that my wish list is long and requires extensive reform work. However, the course of events over the past year has clearly underscored the need to quickly deal with these issues. Meanwhile, it is important to make clear that we must not become overly zealous about regulation. In times such as these it is easy for opportunism to gain the upper hand, resulting in measures that do more harm than good.
Having more firms would allow clients to be provided with more choices of financial services and an overall increased competition. However, scale is important in the financial sector, and having too many firms providing the same service may not be efficient. In this sense, incumbents may have an edge over FinTech innovations, as they also have because of the prior knowledge of their clients. Striking the right balance between competition and efficiency is up the market to decide; but from a regulator perspective ensuring a levelled playing field is important and how decentralization unfolds, if at all, should be followed closely. ▪  Personal credit assessment and privacy. Financial information is very sensitive by its very nature, and ownership or access to it may be controversial. It is true that having access to that information could allow for a better and more targeted supply of financial products, and having a record of sound financial behavior can improve credit scoring, which can bring benefits for consumers. However, spreading that information raises concerns. Unrestricted access for FinTech companies to financial information is not an appealing option, whereas a full ban in practical terms may choke them. A middle ground can be to allow for some sort of access and use of financial information by FinTech companies, with strict sanctions for misuse or leakages.

Challenges and dilemmas for central banks and financial regulators  Slide 16  ▪  FinTech is not necessarily a threat to a central bank  ▪  Smets (2016) | FinTech offers good opportunities to central banks coming from the cost reduction implied by the DLT  ▪  The ability to align FinTech developments with central bank objectives depends on the regulations issued by central banks and financial authorities  Developments vs stability and trust o Inclusiveness vs risk of uninformed decisions o Decentralization, choice and competition vs. operational efficiency, economies of scale and client knowledge o Personal credit assessment and privacy  Challenges and dilemmas for central banks and financial regulators [SLIDE 16] FinTech is not necessarily a threat to a central bank, no matter how striking the contrast between its sobriety and the exuberance of FinTech developers. The Governor of the National Bank of Belgium Jan Smets,4 has argued that FinTech offers good opportunities to central banks coming from the cost reduction implied by the “distributed ledgers” technology; in his opinion, the greatest revolution of FinTech. The ability to align FinTech developments with the objectives of inflation control and financial stability depends to a large extent on the regulations issued by central banks and financial  4  Smets, J. (2016), “FinTech and Central Banks,” speech delivered at the Conference “FinTech and the Future of Retail Banking,” Brussels, 9 December, 2016. 13  Central Bank of Chile 29 June, 2017  authorities themselves.
These have enabled banks to obtain long-term funding at beneficial interest rates, which may temporarily be as low as -1%, on the condition that the participating banks maintain their supply of credit to the real economy in the context of the COVID-19 crisis. To reinforce this measure, the ECB also eased the collateral eligibility criteria for banks in its refinancing operations, thus increasing the volume of funds they may obtain. These measures have been highly successful. In the June TLTRO-III operation, participating banks received liquidity totalling € trillion, an all-time high in Eurosystem refinancing operations. The available evidence suggests that participating banks are using a significant portion of the funding received to continue to provide liquidity to the real economy. In short, the measures taken by the ECB under its refinancing operations are playing a key part in preserving the supply of bank credit. And, in an economic setting as difficult as the present one, they are helping to hold interest rates on bank loans at historically low levels and to support the vigour shown by new bank lending since the start of the crisis. Indeed, in Spain the volume of credit to the non-financial private sector has expanded again after ten years of deleveraging and posted year-on-year growth of 2.5% in the summer months.

A correct diagnosis of the situation and decisive national policy action to help fully harness the opportunities offered to us by the EU are essential preconditions for future well-being. This is why I advocate achieving broad political and social consensus to address the urgent, ambitious and comprehensive growth strategy that our country needs. Thank you very much. 11  See M. Tommasi and A. Velasco (1996), “Where are we in the political economy of reforms?”, Journal of Policy Reforms, No 1, pp. 187-238. 22
Moreover, as transactions that shift risk become more common and complex, disclosing the associated residual exposures takes on added importance. Such reporting, in turn, requires that banks have in place the appropriate systems to identify and measure these risks so that the risks can be documented for the marketplace. Finally, as we move toward improved disclosure, we must keep in mind that the goal is useful and reliable information - not simply a large volume of information. More is not necessarily better. In the area of disclosure, I should also mention that my colleague, Peter Fisher, is chairing a Multidisciplinary Working Group on Enhanced Disclosure, comprised of representatives from the banking, securities, and insurance industries in a pilot effort to formulate a set of public disclosure guidelines that make sense for an increasingly integrated financial market. The working group will assess the extent to which the pilot data can provide a meaningful basis for comparing risk management practices as well as the level and types of risk across institutions and across countries. The Basel Committee supports this pilot approach. It limits the burden on the banking industry and at the same time makes clear that the private sector has a key role to play in improving disclosure and enhancing market discipline. Firms participating in this program will have the opportunity to shape the exercise and influence the interpretation of its results. Through their participation, these firms will be sending a clear signal about their willingness to improve market discipline.

With regard to the latter measure, I would like to point out that such initiatives from the banks are of course welcome and praiseworthy. But it is also essential that the banks follow up what is happening and that the authorities monitor to what extent the recommendations are actually followed. Moreover, awareness that rising indebtedness and housing prices could entail problems has gradually increased among both lenders and borrowers. The situation on the housing market is now discussed regularly in the media. I would like to believe that this is at least partly because the Riksbank has long been pointing out the risks involved here. However, it remains to be seen whether these measures and the increased general awareness will be enough to slow down developments and bring us onto a less risky course. Very recently there have been signs that developments in both lending to households and housing prices have entered a calmer phase. We are of course following developments very closely. Continued vigilance necessary Despite the calmer situation, there are nevertheless strong reasons to remain vigilant. If it turns out that this was not a break in the trend, but merely a temporary slowdown, and that housing prices and the build-up of debts among households accelerate again, we and others must be prepared to take action. We therefore cannot just twiddle our thumbs; the Riksbank and others must ensure that we have an effective toolbox of measures that can be quickly and smoothly put into operation. I will return to this shortly.