samchain/econo-pairs-v1 huggingface dataset:
Svante Öberg: Increased financial integration – future challenges Speech by Mr Svante Öberg, Deputy Governor of the Sveriges Riksbank, at the Conference “Bank & Finance Outlook” (Affärsvärlden), Stockholm, 19 April 2007. *  *  *  Introduction To begin with I would like to thank you for the opportunity to come here and speak about financial integration and the challenges this entails. My main message today is that financial integration is increasing rapidly in Europe, and that this leads to better conditions for economic growth, but that it also means that regulations, supervision and arrangements for crisis management must become more international. I have divided my speech into four parts. I shall begin with a brief description of financial integration in Europe in recent years. After that I shall discuss the advantages of greater integration. Then I will go on to talk about the challenges we face as a result of integration and conclude with some possible solutions to the problems. It is a broad subject and we have very little time, so I will limit myself to the banking sector. Financial integration Traditionally, most countries’ bank markets have been almost exclusively national. When banks have conducted operations abroad, these have primarily focused on large corporations and securities markets. Smaller companies and consumers have in principle been obliged to use the services offered by the domestic banks. However, in recent years the bank markets have undergone major changes. Several European banks now offer their services outside of their national borders.

10  For instance, the 2nd 2012-2014 Employment and Collective Bargaining Agreement, signed at the start of 2012, set out wage recommendations that excluded the energy component from any wage settlements in the event, as is currently the case, of rising energy prices. makes it possible to estimate how a reaction in other domestic prices and in private wages, in line with the direct impact of higher energy prices on the general price level, might affect activity and employment. If higher energy prices are fully passed through, the overall adverse impact on activity and employment, in terms of the divergence from the current projections, could be around 1.5 pp in 2024. Moreover, real disposable household income would decline, owing to the fall in employment and a further increase in inflation. Conclusions I will end by highlighting three key messages I would like you to take away from my speech at this critical historical juncture in which the attack on Ukraine could represent, as well as an extraordinary human tragedy, a serious threat to the European social and political project. First, in a variety of ways, the war will undermine the gradual post-pandemic recovery under way, though we can for the time being only hazard a guess at the scale of the fallout. As is only to be expected, the impact will depend on the severity and duration of the conflict.
Furthermore, efficient and well-balanced financial system will allow the system to better manage and absorb shocks as the market would be less prone to one-way market conditions and possesses greater liquidity. The experience of the Asian crisis, for example, points to the critical importance of the development of long-term local currency debt market, to increase the depth and the breadth of financial market. In addition, the lack of diversified structure and market may lead to increased risk from concentration of credit and maturity risks in the banking system. Lack of markets may lead to the mispricing of risk and excessive delay in correcting large exposures, as well as increased vulnerabilities from capital inflows. Ladies and Gentlemen, The interaction between financial markets, economic growth and monetary policy is by no means a new issue for central bankers. Indeed, the continued deepening of capital markets is a significant issue for policymakers, and particularly for central bankers, since smooth functioning and efficient financial markets are crucial in ensuring an effective transmission of monetary mechanism. The best contribution that monetary policy can make to Thailand’s capital market development and its economic growth is to maintain steady medium-term price stability. Such a policy is beneficial, as it will minimize the adverse effects of inflation and high inflation uncertainty. As we all know, price stability brings numerous benefits.

Tarisa Watanagase: Securing Thailand’s future with capital market development and the role of the Bank of Thailand Keynote address by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the Thailand Focus 2008, Bangkok, 17 September 2008. *  *  *  Excellencies, Distinguished Participants, Ladies and Gentlemen, Good morning, I would like to begin by thanking the Stock Exchange of Thailand for inviting me to deliver a keynote address at this year’s Thailand Focus. This annual forum, traditionally opened by the Prime Minister of Thailand, has firmly established itself as the event of the year where domestic and foreign investors meet and interact with Thailand’s top policymakers and leading listed companies. It is thus not only my great pleasure but also my great honor to be here. Ladies and Gentlemen, Given the turbulent time we are in at the moment, I am very pleased at the number and the composition of this year’s turnout. Glancing through the list of prospective attendees, I saw participants from Asia, Australia, Europe and North America, representing a large spectrum of investors. This is despite the fact that a number of invited fund managers were forced to cancel their trips due to the declared state of emergency that was lifted on Sunday. Moreover, I see that many of you have been long-time investors in the Thai stock market. All of these are quite reassuring, for they reflect your continued faith in the Thai economy.
It is true that there is no immediate sign of cost or price inflation at the early stages of the production-distribution chain; and it is true in particular that the tightening labour market has not yet resulted in an acceleration of pay settlements or earnings. But these are backwardlooking data. If we are to maintain that happy position, we need to anticipate what is to come, and begin to moderate the pace of the upswing before the evidence of imbalance comes through into the statistics. Two years ago my message to you was that we needed a stitch in time to save nine, which indeed we did. I bring you the same message again this evening. The position is however complicated on this occasion by the recent strength of the exchange rate. Since the summer sterling has appreciated by just over 13% in effective terms - by rather more against the major European currencies and the yen (+15-16%) but rather less against the dollar (+7%). The speed and the size of sterling’s appreciation is, of course, causing understandable anxiety, particularly for those sectors of manufacturing industry exposed to international competition. Already this is beginning to affect export orders. Given that those sectors account for perhaps half of total manufacturing, which in turn accounts for nearly a quarter of total output, it is clearly a serious issue.

This could happen for a number of reasons - related to different cyclical positions, different fiscal positions, or as a result of external shocks or structural changes. The famous Maastricht criteria for sustainable convergence that are to be met, according to the Treaty, before a country qualifies for the Single Currency were designed precisely to reduce the risks of tensions of this sort arising after the start. I should like to think that the political leaders across Europe, who will take the decisions, all really appreciate the crucial importance of sustainable convergence to the success of the venture and that they do not see it just as a technical obstacle to their wider aspirations - I should like to think that. So, Mr. Chairman, some difficult decisions lie ahead. The period up to your next biennial dinner will be momentous. But that should not obscure the fact that our immediate economic prospects remain encouraging. I do not know of any serious economic forecaster who does not expect the economy to continue to grow over the next two year, or unemployment to continue to fall. The challenge is to ensure that we can still say that in two years’ time. BIS Review 5/1997
Central to the New Keynesian view is the assumption that some prices are “sticky” and adjust slowly. That assumption has two implications. First, high inflation produces inefficient changes in relative prices. As a result, there is a cost to inflation. Second, when central banks change nominal interest rates they also affect real interest rates, and so encourage households and businesses to switch expenditure from today to tomorrow or, as in present circumstances, the other way round. In this way, central banks can, in the model at least, offset shocks to aggregate demand. But there are shocks to supply as well as demand. External cost shocks sometimes drive inflation away from the target, as we saw in recent years with rises in world energy and food prices. Because other prices are “sticky”, attempts to keep inflation at target all the time would result in inefficient fluctuations in output. There is, therefore, a trade-off between stabilising inflation and stabilising output. Following a cost shock, it is sensible to bring inflation back to target gradually. 4  The difference between inflation and price level targeting is often exaggerated in the literature, as discussed in King (1999). 5  Since the start of the crisis, there has been a convergence between the practice of flexible inflation targeting and the practice of dual-mandate central banks. The Federal Reserve quietly adopted a 2% inflation target in January, and Japan did the same with the announcement in February of a numerical goal for inflation of 1% a year.

First, money is needed to place even a riskless bet. That was the scarcest of commodities after the failure of Lehman Brothers in October 2008. Second, placing a bet also requires a trustworthy bookmaker. They too were thin on the ground in the midst of crisis. In their absence, arbitrage may be more “apparent” than real. Market prices are likely to deviate from fundamentals due to liquidity and counterparty premia. By way of illustration, Chart 5 provides a decomposition of the yield on sub-investment grade corporate securities in the UK. By mid-2007 at the peak of the boom, the liquidity premium on these assets had pretty much been eliminated. By the end of 2008, this liquidity premium had risen by almost 2500 basis points. As capital markets moved from flood to drought, market prices turned from rich to poor. Fair value and financial stability Against this backdrop, what are the potential financial stability implications of using market prices as a valuation yardstick? In roughly chronological order, three main arguments have been used in defence of marking to market. Broadly, these mirror the three historic phases of fair value:   “Protecting shareholders”  During the 19th and early 20th centuries, as joint stock companies sprang up, the key purpose of company accounts was to protect shareholders’ interests. Like truth in the face of the war, in the face of crisis the financial accounts appear to have been the first casualty.
Central Bank of Chile March 2019  CBC-IADB Joint Workshop on “Basel III in the Context of the Macroprudential Approach” Opening Remarks by Mario Marcel, Governor of the Central Bank of Chile Ritz-Carlton Hotel, Santiago, Chile – March 29, 2019 Good morning and welcome to the “Basel III in the Context of the Macroprudential Approach” workshop which is co-organized by the Central Bank of Chile and the Inter-American Development Bank. It is a pleasure to host this event in Santiago, at a very appropriate timing. After a year and a half of legislative discussion, on January 12th of this year, the new General Banking Law was enacted. This is the most significant change to solvency regulations since 1986, setting the basis for the implementation of the Basel III framework in Chile. A second reason goes back 35 years. In a few more days, the Central Bank will receive the last repayment of the subordinated debt originated in the rescue of the Chilean financial system of the early 1980s. It has been a long way since this episode, and the fact that only now can we finally put it behind us, highlights the importance of doing everything in our reach to prevent the occurrence of major financial disruptions. Allow me to go briefly over the history of the Chilean financial system over the last five decades, and how regulation has reacted and evolved over time. Some 50 years ago, banks where almost the only source of financing for companies and households.

External financing for the banking and corporate sectors has evolved as well. Macroeconomic stability under a flexible exchange rate, together with regulatory changes, have fostered the development of overseas bond market for Chilean companies. Corporations have learned to operate in a flexible FX environment by using both, natural and market-based FX risk hedging instruments. This, in turn, has also been supported by the development of the derivatives market, in which Pension Funds have been key counterparts as well. Page 3 of 5  Central Bank of Chile March 2019  By now, the Chilean financial sector is one of the most developed in the emerging world. It has transited from being largely dominated by traditional banking to being composed by several other market participants, including Pension Funds, General Fund Administrators and Insurance Companies; among others. Assets under management of these non-bank investors went from less than 1% of GDP in 1984, to 65% in 2000, and to almost 100% of GDP in 2018. This development has translated in improved access to alternative sources of funding by Chilean corporations. Currently, around 85% of total corporate bonds are held by institutional investors, as a result of which reliance on banking credit of these corporations has gone from 91% of financial debt in 1986 to around 25% in the recent years1. Financial development has been important not only for firms but also for the country. A deeper and far-reaching financial system contributes to building financial and economic inclusion, and financial stability against external shocks.
The good news however is that despite this and other serious challenges, the country was able to maintain macroeconomic stability at a reasonable level. The balance of payments recorded a surplus; the exchange rate, which in the years 2001 to 2004 had depreciated by approximately 5.9 per cent per annum, depreciated by only 5.2 per cent during 2006; a comfortable level of reserves was maintained; Government revenue and fiscal deficit targets were achieved as planned; the outstanding Government debt to GDP ratio declined; investor confidence remained high; a remarkable increase was seen in foreign direct investments (FDI) and for the first time, the yearly FDI exceeded US dollars 500 million; foreign portfolio inflows into the Stock Market increased substantially; the share indices recorded its highest ever levels; the government was able to mobilise around US dollars 1.2 billion in loans and grants from bilateral and multilateral donors and commercial sources. But we have to admit that not everything was rosy. There were a few down-sides and draw-backs too. Inflation began to rise since April due to higher than expected monetary expansion, some revisions to administered prices and escalating vegetable prices. In response, a tight monetary policy stance was adopted to curtail high growth in monetary and credit aggregates and it is likely that such measures would lead to the moderation of the rising inflationary pressures, and reflect a downward trend from April 2007 onwards.

That is why, at the beginning of 2007, in close consultation with the Secretary to the Ministry of Finance, the Monetary Board developed a comprehensive monitoring mechanism of key macroeconomic variables in the external, fiscal and monetary sectors. These are based on a financial programming framework to ensure that key macroeconomic targets are met as announced, both in the Budget and our Road Map. We will continue to monitor these key macro economic variables and take appropriate policy measures if and when there are any deviations from the predetermined targets. We are therefore confident that we will be able to keep our economy and development agenda on track and make rapid progress. It is also our hope that our development partners will understand our strategies and efforts towards achieving macroeconomic stability and growth and we look forward to their close support in our endeavours. Finally, I would like to leave a simple message with all of you, our Development partners. The outlook for Sri Lanka is bright. We are optimistic about our country. Join us in our endeavours. Now is the time. 2  BIS Review 11/2007
Materialization of such risks will not only disrupt vital financial services but will also undermine the security and confidence in the financial system. In fact, the scale and sophistication of cyber-attacks is already on the rise. Examples include data breach at Target of 70 million credit card users, a cyber-attack on Equifax compromising data of 143 million customers, and the hacking of over 100 million customers’ data at Capital One Bank. No wonder, cyber risk features as a key concern in different industry surveys. For instance, respondents to the Bank of England’s Systemic Risk Survey of 2H-2018 quoted the risk of a ‘cyber attack’ as the second major threat to the system, only behind the Brexit induced political risk. The growing threats of cyber risk need to be reflected in banks’ operational risk capital charge. Incidentally, the Basel Committee has revised its operational risk methodology by replacing the existing three techniques with a simplified Standardized Measurement Approach and expects that its implementation, due by January 2022, will increase capital risk charge for operational risk by 18% for a group of banks currently using Standardized Approach of the old regime. While it is not clear how much of the increase in operational risk charge is driven by the recognition of growing cyber threats, greater capital allocation for operational risk is a step in the right direction, given the increasing significance of such low probability but high impact risks. However, reliance on capital alone will not suffice.

BIS central bankers’ speeches  3  And that is a good challenge for us at the Bank as well as the broader official community when explaining what’s happening and how the system works. Lack of understanding leads to disengagement, which in turn leads to mistrust. Let me conclude by thanking the huge range of people across the country who really did engage, who did spend the time here with us today. The long-term reward of course, is a more resilient financial system that better serves the needs of society. In the short-term, I hope you will join us for a quick drink in the Crypt of this fantastic building. For those of you in Edinburgh, Alex Brummer would be happy to stump up. And for those of you at home, I hope you will join us in spirit with a drink at your local pub – put it on the Bank of England as a form of quantitative easing. 4  BIS central bankers’ speeches
2  BIS Review 33/2001  And substantial new uncertainties have emerged more recently, relating in particular to the extent and duration of the slowdown in the United States and to the associated weakness of equity prices, and their potential impact on our economy, as well as to the direct and indirect effects of our own outbreak of foot and mouth disease. The list could go on. But please don't think I'm complaining. We are paid to look ahead as best we can because of the length of time it takes for monetary policy changes to have their full effect. Our task would be far less challenging if we could predict the future with great confidence. The point I want to emphasise is that monetary policy is in the end an art rather than a precise science, no matter how much science we try to bring to bear on the process. But in looking ahead each member of the MPC has to try to distinguish between what we actually know, what we think is the most likely outcome, and what we fear could happen - we cannot simply act on a hunch. We then have to watch the evolving situation measured against our central expectation for signs that prospective inflationary pressures are proving to be either weaker or stronger than we had, individually, anticipated, adjusting our policy view accordingly.

Given our starting point, with inflation somewhat below target and expected to remain so for a while, we are relatively well placed to weather the storm if it begins to blow more strongly. BIS Review 33/2001  3
At the same time, the rule made fiscal policy more robust: By decoupling spending from current petroleum revenues, the fiscal rule provides for a gradual and sustainable phasing-in of petroleum revenue spending. The guidelines ensure the necessary flexibility to allow automatic stabilisers to work, and they allow for careful countercyclical policy. The savings plan has remained intact and the Fund has now reached a size of nearly NOK 4 trillion, or 130 percent of GDP. When the fiscal rule was introduced in 2001, Norges Bank was charged with the task of keeping inflation low and stable. Thus, our traditional fixed exchange rate policy was abandoned. A clear division of responsibilities between monetary and fiscal policy was now established. Norges Bank’s conduct of monetary policy is geared towards low and stable inflation. The operational target of monetary policy is consumer price inflation of close to 2.5 per cent over time. When setting the key policy rate, we also take into account the impact of the interest rate on output and employment. In addition we give weight to the risk that a prolonged period of low interest rates can lead to elevated risk-taking and excessive debt accumulation in the household and business sectors. Inflation targeting has become more flexible. The present economic situation in much of the rest of Europe stands in contrast to ours. In Norway, domestic activity is high, and particularly so in the oil industry and the construction sector. Unemployment remains low and stable. But the Norwegian economy is not unaffected by the turbulence abroad.

To ease and empower the user in manipulating and utilizing these new data we launched a new visualization tool developed in Power-BI. The lesson learned is also that to keep up with the changes and react promptly, we must continue encouraging the digital transformation of our organizations, incorporating advanced analytical techniques, and providing more timely and granular information that considers heterogeneity to complement conventional statistics. As the access to new large-volume databases and the use of granular data almost always poses the challenge of confidentiality, the Central Bank of Chile has sought to implement best practices and safeguards to exploit such information. With this objective, we established a Data Governance Agenda, led by a Strategic Committee that reports directly to the Board and whose executive management is located in the Statistics Division. Likewise, we are working on our Big Data Strategic Project, which contemplates a centralized data repository that all user areas can access. 2  Climate and distributional challenges Central banks actively participate in different initiatives to respond to the demands derived from climate change. In April 2022, the Intergovernmental Panel on Climate Change (IPCC) stressed the critical role of climate data in effectively aligning the financial sector with science-based decarbonization and adaptation goals.