samchain/econo-pairs-v1 huggingface dataset:
Ajith Nivard Cabraal: Responsibilities of financial institution directors in the current turmoil Address by Mr Ajith Nivard Cabraal, Governor of the Central Bank of Sri Lanka, at the Seminar on Regulation, Governance and Legal Responsibilities of Directors of the Registered Finance Companies, Colombo, 24 April 2008. *  *  *  Deputy Governors, Assistant Governors, Directors of Finance Companies, My dear friends, I welcome you warmly to this seminar organized by the Department of Supervision of NonBank Financial Institutions. I also want to say “thank you” to all of you for taking the time to participate at this important occasion. You may have wondered as to why the Central Bank has decided to have a seminar of this nature and invited you to spend nearly half a day with us. Therefore, at the outset, I will try to give you a little insight into the financial turmoil that the world is facing today. Many of you, I am sure, are aware of the upheaval that is taking place worldwide, and I am also sure many of you understand the risks that are associated with it. My dear friends, somewhere around July-August of last year, various changes took place in the financial world. It started softly, like all difficulties, like all problems, and then suddenly, we realized that it was gathering momentum. The expression “sub-prime issue” was first of all, whispered; people didn't say it out loud; many didn’t even know what it is.

In the absence of independence, the Central Bank of Turkey would not be able to focus on its primary objective of price stability. Introduction of the free-floating exchange rate regime in 2001 and formal inflation targeting regime in 2006 can be classified as the other two key steps. The inflation targets became the new anchor instead of exchange rates and the Central Bank has started using overnight interest rates as the main policy tool to reach these targets. Communication tools of the central bank have played a key role in explaining the price developments and the monetary policy outlook to the public and also in managing expectations. The Bank’s communication policy has become more effective over time with the introduction of new communication tools, such as the quarterly inflation reports since 2006, the bi-annual financial stability report since 2005 and the monthly price development reports since July 2006. In addition, a summary of Monetary Policy Committee meetings are published on our website within 8 business days following the Committee meeting, simultaneously in English and Turkish. I believe all of these instruments have contributed to a more transparent monetary policy. After briefly touching upon the main features of the monetary policy in the context of good economic governance, I will continue with the fiscal side. The prudent fiscal policy that has been implemented since 2002 has made significant contributions to the disinflation process and the economic growth. The ambitious primary surplus targets are at the center of the improvement in fiscal policy.
As a result of joining the Single Supervisory Mechanism, our country also joined the Single Resolution Mechanism. From 1 October 2020, the European Central Bank exercises direct supervision over five Bulgarian significant credit institutions, and the Single Resolution Board assumed the function of a resolution authority for these institutions and for all cross-border groups. Owing to the good preparation effort, the transition to the new supervisory regime was smooth, without any turbulence for the banks and their customers. 1/3  BIS central bankers' speeches  Therefore, the answer to the first question is that up to now we have been successfully performing both the emergency tasks caused by the pandemic and the strategic tasks facing the banking sector. The Banker’s Day is a good opportunity for us to mention the contribution and to commend on and give recognition to all our colleagues for having a banking sector that is just as strong and supportive of companies, households and the entire economy, with a preserved general financial stability in the country. The more important question for us now is what lies ahead? There is no easy answer to this question because of the development of the crisis which makes it much more uncertain in terms of parameters as compared with previous historical periods of economic and financial turmoil. The second wave of rapid spread of COVID-19 and the new phase of the restrictive measures are once again challenging a number of sectors.

So far, the BNB Governing Council has adopted concepts for the work in the main areas of activity; a package of amendments to the internal rules and regulations, as well as specific measures for resource and capacity improvement. Our full participation in the institutions of the Banking Union plays an important role in consolidating the integration process. Obviously, this is a topic that will be on the agenda in the next few years and one we will have many occasions to discuss. Meanwhile, maintaining the capacity of the banking sector for continuity of lending activities will be our joint contribution to supporting each individual bank customer and the country’s economy. As during the most difficult phases of the crisis, the banking sector should be able to take on the supportive role as a source of credit in the subsequent period of recovery and growth as well. Despite today’s crisis picture, such a period may occur relatively soon. The challenges arising from COVID-19 appeared unexpectedly and the negative results in the economy manifested themselves quickly; yet overcoming the crisis may just as likely occur in the foreseeable future, if solutions are found to effectively restrict the pandemic. Let us mark the Banker’s Day in the difficult and unprecedented 2020 on such a note of hope and optimism! 3/3  BIS central bankers' speeches
Page 3  One such source was CHAPS, the UK’s high value payments system, which we have operated within the Bank of England since 2017. This provides individual payment-level data on corporate revenues received from debit and credit card expenditure. As the operator of CHAPS, this transactional data is accessible in real time to the Bank. Such data will only ever give a partial picture and the Bank’s Monetary Policy Committee and the staff who support them, are experienced in contextualising and framing such data in nowcasting and other applications. The most obvious benefits of the data were its timeliness, granularity and availability. GDP data is published with a lag of weeks and sometimes months whereas we had a proxy for it in two days. The CHAPS data provided signals on sectoral performance. And it was coming in to the Bank via our payments systems at a time when a lot of official data couldn’t even be collected because of the pandemic. The MPC referred to the use it made of the data in supporting its policy response in its March 2020 minutes and subsequently[2] . In case anyone is worried that we kept this public good to ourselves be assured that as soon as we could we made it available to our statistical authority the ONS who included it in the regular data release they developed as one of their responses to the pandemic. Improving the quality of payments data I’ve provided what is hopefully a relevant case study but it’s a narrow one.

David Carse: The Hong Kong banking sector - performance and outlook Speech by Mr David Carse, Deputy Chief Executive of the Hong Kong Monetary Authority, at the Asia Pacific Loan Markets Association, Hong Kong, 9 July 2003. *  *  *  Ladies and Gentlemen: I have had the privilege of speaking to the Association on two previous occasions, beginning at its inaugural lunch five years ago. I am pleased to have the opportunity to do so again, particularly since the fifth anniversary of the Association marks another milestone in its presence in Hong Kong. During this time, the Association has done much to promote the development of the syndicated loan market in Hong Kong and in the region more generally. As I noted in my speech to the Association last year, its work in establishing common standards for documentation has been particularly commendable. I want to use this occasion to talk about the current state of the Hong Kong banking sector and about its prospects. This is something whose significance extends beyond the interests of those, such as yourselves, who are directly involved with the industry. The banking sector plays a vital role in the service-based economy of Hong Kong, and its profitability is something in which all of us have a stake. A profitable banking sector is better able to withstand negative shocks, and this helps to preserve the stability of the financial system.
Now the public administration has become a client of the system and I think that there are real opportunities to resolve the utility services payments through the banking system. Also, I hope that the system will be aggressive and will keep promises to the public to put its windows at the service of selling Treasury bills directly to the interested public. We, as Bank of Albania, have kept our promises and very soon we will introduce as a first step a commission that is presumed to cover the transaction cost while we will accompany this move by the ban of cash flows receipt at the windows of Bank of Albania. We shall request the individuals that their participation in the auctions, through windows of Bank of Albania, will become possible only upon presentation of a banking document, which certifies that the client has deposited a certain amount as a guarantee in one of the banks pertaining to the system. Another direction on which banks must further focus relates to an aggressivity of broader propaganda and clarification. I think that still the majority of common people show a certain hesitation to refer to banks. I believe that they have a feeling of non-confidence that the bank shall not resolve their problems. Many individuals, though in an absurd way, are still in search of a “friend” to negotiate with the bank.

The decisions adopted weigh the different risks to our price stability target in the current context. First, the new shock drives up the inflation dynamic in the near term. Inflation had already escalated in the second half of last year and was proving more persistent than initially expected. In this scenario, the conflict’s short-term inflationary impact increases the probability of second-round effects and, therefore, of the inflationary pressures extending into the medium term. Conversely, the war will have an adverse impact on growth by undermining the real income of households and firms and driving up uncertainty. This impact could be very significant indeed, particularly in the short term and in a setting in which the euro area economy remains well short of its potential level. That adverse impact could reduce inflationary pressures in the medium term. Bear in mind that it is precisely a medium-term orientation that we use in our monetary policy decision-making, since this allows us to distinguish between the external shocks and the domestic factors affecting inflation. Under all of the scenarios analysed by the Governing Council, inflation is still expected to gradually decline and stabilise at levels close to our 2% target in 2024. Various indicators 5  of long-term inflation expectations drawn from financial markets and surveys also stand at around 2%, once adjusted for risk premia.
Squeezed margins are mainly a function of increased lending competition in core building society markets, both from existing large banks that are rebuilding their market shares, and from new “challenger” banks that are seeking to carve out their own competitive niches. Squeezed margins at building societies are exacerbated when pitted against the mutual pricing strategy many have adopted to protect members in an era of low rates – and so, building societies seek to source new lending that earns higher than average rates. This combination of circumstances is what led a number of societies to broaden their lending appetites in the mid-2000s. I do not intend today to re-hash the full set of warnings about lending quality, assessing affordability and undertaking new business lines that John Tiner, as CEO of the FSA, set out to attendees of the 2004 BSA conference – if you want to remind yourself, his speech is still available to read on the archived FSA website! 46  However, I would observe that part of the reason why only 44 societies are  attending this conference rather than the 60+ that came to its equivalent in 2004 lies in the fact that many of those societies were unaware of, or failed to control, the risks they were taking. As survivors, societies here today ought to be well aware of the warning signs, but I’m conscious that corporate memories can be shed surprisingly fast.

However, it has also increased the risks for cross-border contagion and accelerated the transmission of external shocks. The rapid transmission of the financial crisis in the major advanced economies in 2008 to other parts of the world demonstrates the significance of these contagion effects. These increasingly complex global networks have given rise to demand for new sets of data to enhance our understanding of the interlinkages and to assess the implications. While many global initiatives on enhancing statistics were the result of financial crises that happened in the 1990s, we now find ourselves recognising that far more needs to be done following the much worse and devastating global financial crisis that has resulted in significant costs around the world. The recent crisis has tested policymakers to the limit and has placed greater demands on the community of statisticians. While the lack of data was not the root cause of the global financial crisis, it did reveal serious data and information gaps in key areas that might have helped the authorities to measure, understand and respond better to risks in the international financial system. Even for the most advanced statistical systems, such as in the US and Europe, the crisis highlighted “black holes” in data that now need to be addressed. Closing these information gaps involve an important and heavy work agenda for the years to come. More efforts are now underway to strengthen cross-country data collection and close these information gaps.
Banks, brokers, insurers, nongovernmental pension funds, and microfinance organisations should get equal opportunities to combine their activities with asset management and investment consulting. In the next few weeks, we are going to release a consultation paper to discuss these and other proposals in greater detail. I have already mentioned the trend related to the energy transition, the green economy, and green finance. It will require a turnaround in the operation of the financial sector. The last trend in the financial market I would like to focus on today that requires our regulatory response is the transformation of financial consumers’ behaviour. During the pandemic, increasingly more people started to invest their savings in market instruments, that is, shares and bonds, rather than deposits. This is a positive trend for the development of the national stock market, financing investment projects, and forming the sources of long money. However, it is crucial to protect people in the stock market: risks they accept should be adequate to their knowledge and needs. Disappointingly, financial institutions often abuse customers’ trust. Consequently, we are forced to regularly toughen the requirements for products, selling practices, and services. The market is not happy with our policy as it believes that we are simultaneously curbing the launch of good products. We would have also preferred to avoid tightening the screws regularly because this is not a proactive way of doing things. Only during its last session, the State Duma adopted 12 laws on financial consumer protection.

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.
So the next decade is likely to be a sober decade – a decade of savings, orderly budgets, and equitable rebalancing. Our prospects remain closely linked to developments in the rest of the world. But we can influence the outcome, with monetary policy still a potent weapon to ensure that the amount of money in the economy is growing neither too slowly, as in the recent past, nor too quickly so as to reignite inflation. With that, and the inspiration provided by the Black Country’s example of how to adapt to economic change, I am sure of one thing. A sober decade may not be fun but it is necessary for our economic health. 4  BIS Review 136/2010

At such a time, it would be possible for established market access channels, via electronic trading platforms or phone links to the trading desks of the main currency trading firms, to be widely used – although there were some bottlenecks immediately after the announcement. By contrast, if we had announced the move at the weekend, for instance, this would have caused uncertainty about the trading conditions when the foreign exchange market opened on Sunday evening (Swiss time). Australia, which normally accounts for only around 1% of daily turnover in Swiss franc forex operations, would have been overwhelmed by the volume of trades during its business hours. You can easily imagine that the turbulence on the Australian market would have been far greater than that observed on the morning of 15 January, with contagion potentially spreading to the entire financial market. We wanted to avoid this. Monetary policy after the minimum exchange rate So what will the minimum exchange rate discontinuation mean for monetary policy in Switzerland? First, let me emphasise that the exit from the minimum exchange rate does not mean that we will simply be a passive observer of the foreign exchange market in future. The SNB will continue to take account of the exchange rate situation in formulating its monetary policy and will intervene in the foreign exchange market as necessary in order to influence monetary conditions. Nonetheless, the end of the minimum exchange rate does mean that interest rate steering will once again take on a more prominent role.
Another important factor in the longer run is inflation expectations. If households and firms count on the Riksbank fulfilling its function, the inflation target can serve as a benchmark for their decisions about prices and wages. So what effects might the new economy have in this simplified world? It could result in a more favourable path for productivity and thus a stronger expansion of potential output - a steeper path for trend growth - at least for a time. Demand could then rise more rapidly without exceeding the long-term capacity ceiling and generating inflationary pressure. It is conceivable, moreover, that the new economy can lower price pressure in the economy even without an appreciable positive effect on productivity as usually measured. It is possible, for example, that Internet commerce and generally stronger international competition could tend to restrain inflation by making it more difficult for firms to raise prices. That could lead to a reduction of inflation that does not have to do with the level of demand in relation to trend growth. It may be worth noting that strong competition as such does not necessarily imply lower inflation. There are many indications, on the other hand, that downward price pressure can be generated during the transition from lower to higher competition. As such a process probably takes a considerable time, the mounting competition’s impact on inflation will also be protracted.

A closer look at the figures reveals that the improvement has been most marked in manufacturing and particularly rapid in industries where computers are used most intensively. The upward shift in US productivity growth was preceded by an investment boom that gave pride of place to investment in IT-related capital. Since the 1980s, American investment in computer capacity has doubled in nominal terms; in relation to the dramatic price fall for computer capacity, the level has risen by a factor of more than twelve. To what extent, then, has the improvement in productivity come from IT? What are the mechanisms? Computers have clearly helped to make production processes more efficient and automated, just as new techniques have led to the creation of many new goods and services, from compact discs to tele-medication. But in order to understand the broader implications for the workings of the economy, one should perhaps heed Alan Greenspan, head of the US Federal Reserve, and single out the word “information”. When information flows more efficiently, there will be a better matching of supply and demand both internally and between firms, as well as less tied-up capital for coping with contingencies. In that firms can use IT to enhance “just-in-time” routines, they can cut the levels of stocks and working capital. Better information also paves the way for smaller production units and less bureaucratic structures. All these processes are now being further reinforced by the rapidly growing flow of information on the Internet.