samchain/econo-pairs-v1 huggingface dataset:
It is obvious that ways of paying for things both in Sweden and abroad are undergoing rapid transformation. It is not merely a question of a reduction in cash use. Another aspect is that demand for instant payments continues to grow, that is, payments that occur in real time and can be made around the clock. 27 When the current payment systems emerged in the late 1800s and the early 1900s, everything was on paper, which put a limit on how quickly payments could be made. In the future, we must assume that nothing will be on paper. There is therefore reason for states and central banks to consider what monetary and payment systems should look like in the future and what role they should play. The vision I have of what the Swedish payment system will look like in the future can be described as follows. There should be a legal definition of what constitutes electronic legal tender and the e-krona, issued by the state via the Riksbank, should be such legal tender. It should also be possible 24/7/365 to make payments in real time in e-krona and in addition make at least smaller transactions between currencies. There should be an electronic state ID document that also defines who a person is in a legal sense, and if electronic systems were to fail, there must, as a contingency measure, be a sufficient amount of physical banknotes in different parts of the country.

In our simple example, imagine people’s satisfaction has a logarithmic relationship with income, consistent with diminishing marginal utility. Then, we find that social welfare is almost 10% lower after than before the changes, even though GDP is 5% higher. When it comes to assessing how societies are doing, the distribution of gains and losses really matters. The role of the Bank of England is to serve the good of the UK people, as it has been since its inception in 1694. Monetary policy is very unlikely to be the most effective tool for changing the distribution of gains and losses across society – other macroeconomic tools are better placed. And, indeed, doing so would be inconsistent with the Bank’s monetary policy mandate. But policymakers, including central banks, do need to dive beneath the statistical surface to understand the economy region by region, city by city, town by town, sector by sector, household by household. Indeed, that is the very purpose of regional visits like this one. The economic jigsaw Before turning to the distribution of outcomes, let me start by looking at measures of economic health for the economy as a whole. When it comes to economy-wide measures of activity, economists typically look at metrics such as output (often measured by GDP), employment (such as the number of people in jobs) and wealth (financial, property etc). These are, essentially, different pieces of the same economic jigsaw. Chart 1 plots these three measures over the past decade.
Most importantly, European economies and their financial systems, among which the Austrian financial system enjoys a significant share of the market, define the globalization for the region and are, to a large extent, important determinants for the success or failure of these economies. Given the large share of the European financial groups, they have and will play an important role in the transmission of global shocks in the region. What is more important, they have a significant role in the transmission of legislative and regulative shocks carried over by European monetary and supervisory authorities. The size is such that even a simple change in the future business plans of a single European financial institution can transform into real shocks for the economies of the region. It became evident during the crisis and afterwards that an increase in risk and uncertainty, led to increased incentives for banks to withdraw from the Emerging Europe economies. Though this was mostly prevented due to increased cooperation through institutions such as the Vienna Initiative, the concerns from our perspective have not completely dissipated. In this respect the business plan of EU based groups can play a potentially important role in the nature and outcomes of this cooperation.

In fact, more than 75% of Malaysians find it difficult to raise even RM1,000 of immediate cash for emergencies. The ability to plan for the future and exercise self-control is a crucial life skill that needs to be cultivated and nurtured. In fact, a key predictor of success in life, is to be able to take the longer term perspective. Let’s move on to the issue of debt. Not all debt is bad as any economist would tell you, for borrowing to invest in productive assets or purposes will make one better off in the future. However, when the level of one’s borrowings is too high, it is a cause of concern. Let me illustrate, a significant proportion of youth today are surviving on high borrowings. The statistics are telling, 38% of youths take up personal loans, 47% have expensive credit card borrowings 1/3  BIS central bankers' speeches  and more than 3,400 borrowers between the ages of 20–30 years have sought out AKPK’s financial assistance in 2017, which would likely mean that the actual numbers facing financial difficulties are higher. To those of you today who are making early forays in the working world, it is our collective hope that you will take all active measures to not be part of those statistics. The future ahead of you is bright and the burden of being weighed down by excessive debt is a hindrance to your development and success.
We can expect the tightening measures to have a restraining effect on growth over the next few years.1 In a situation where it seems that growth is anyway slowing down this is of course unfortunate. Nevertheless, tightening measures are necessary to reduce concern and increase confidence on the financial markets. However, not everything is gloomy in the global economy. It is expected that growth in Asia and Latin America will remain high, even though it may be dampened by the slowdown in the United States and Europe. It is difficult to assess exactly how much the emerging economies in Asia and Latin America will be affected by the slowdown in the western world. This depends in part on to what extent they manage to reduce their dependence on exports to maintain a high rate of growth. A major challenge for many of these countries is to move from primarily export-driven growth to growth driven more by domestic consumption. How does this affect the Swedish economy? How do these economic developments affect resource utilisation and inflation in a small open economy like Sweden? Their impact will be through two main channels: through trade links with the rest of the world, that is via imports and exports of goods and services, and through the globally-integrated financial markets. Let me begin by discussing the role of the trade channel. 1  According to the theory of expansionary fiscal contractions, an extensive budget consolidation programme can have a positive effect on growth.

François Villeroy de Galhau: France and Germany facing European challenges in the crisis Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Berlin Academy, Berlin, 10 September 2020. * * * Ambassador Descôtes Professors Schwan, Göring, Kaplan, Ladies and gentlemen, I am very pleased to be with you today, despite the obstacles related to Covid. The Berlin Academy is one of the essential forums where Franco-German relations, which are at the heart of the European project, can be deepened over time. I am completely convinced of this. I am French, but my family's roots are in Saarland. My family has lived there since the end of the 18th century and its ceramics manufacturing company Villeroy & Boch is part of the German “Mittelstand”. I love Germany, its language and its culture. I've always been struck by a difference in terminology: the French speak, as romantics, of the Franco-German "couple", and the Germans speak as engineers and use the term “engine”. But let’s set clichés aside: France also has excellent engineers, and romanticism was also born in Germany with Goethe, and Schiller. And above let’s all see the common reality.
During more recent decades, global inflation has declined. This is of course due to many factors. One is increased competition resulting from the deregulation of the financial and product markets as well as from the fact that previously closed economies are now integrated into the world economy. In Europe, the preparations for and introduction of the EMU contributed to a greater degree of price stability. In addition, the shift in economic policy in general has made a contribution, not least the introduction of inflation targets. In Sweden we chose the alternative of a flexible exchange rate combined with an explicit inflation target in 1993. Since then the inflation rate has gradually shifted down and appears to have stabilised at a low level. Inflation has been around 2 per cent a year on average since 1993, which can be compared with an average inflation rate of almost 8 per cent a year during the 1970s and 1980s. Everyone now understands that we are serious in our fight against inflation, which is important for the policy to succeed. There has been less fluctuation in the real economy than during the decades prior to the crisis in the early 1990s, and developments in both real growth and real wages have been significantly better. In addition to the introduction of an inflation target, the consolidation of central government finances and efficient wage formation have been important conditions behind this positive development. Where has this development taken us? The Riksbank’s tasks are stated explicitly in the Sveriges Riksbank Act.

Financial inclusion is a perfect example. Technology is helping thousands of families and business all over the world to gain access to financial tools that improve their day-to-day living. Yet, despite these many positive developments, digital transformation of the financial industry is also known to harbour significant risks. Some of them might be new but others have been long associated with the provision of financial services, such as operational, financial, legal and reputational ones. A telling example of this is banks’ -and Fin Techs’increased reliance on third and fourth parties. One such essential external partner are cloud and data service providers. In this context some of the more fundamental concerns expressed by central banks and supervisors have to do with issues such as the degree of concentration among a small number of dominant players, the potential loss of control over and visibility of whether a service is being delivered in line with laws and regulations, and the possible difficulties authorities may encounter to effectively access critical data held by third parties, if and when  2  Just in the case of Spain, a Banco de España led survey showed that by end-2019 about 89% of banks had already reached a high to medium degree of digitalisation of their internal processes; a figure that is close to 95% in the case of customer-related ones. In fact, the same study claimed that prioritisation was given to the retail segment (e.g. biometry, digital wallets, etc.).
Corporates in Asia rely more on bank loans compared to bonds. MAS will therefore introduce a grant to fund the costs of conducting external reviews and ratings, for green and sustainability-linked loans. The grant will also promote the development of sustainable lending frameworks that provide simplified processes and standardised criteria for borrowers. This will reduce the cost of green borrowing and encourage more small and medium enterprises to tap on such loans. Progress on the green bond and green loan fronts has been good. Singapore is now ASEAN’s largest green finance market, accounting for close to 50% of cumulative ASEAN green bond and loan issuances. [6] Notably, sustainable financing and investment flows have held up well through the first half of this year, despite the pandemic and broad-based economic weakness. Singapore is also steadily developing solutions such as Insurance Linked Securities to address climate risks. MAS’ Insurance Linked Securities Grant Scheme has seen strong take-up since its launch in 2018. Within two years, we have seen nine catastrophe bond issuances in Singapore. This includes the first Asian sovereign and catastrophe bond covering earthquake and typhoon risks in the Philippines. The strong expansion of wealth in Asia will provide a boost to sustainable investments. Personal wealth in Asia excluding Japan has seen an eight-fold increase over the past two decades. [7] Despite the economic disruption due to COVID-19, Asia is projected to have the strongest wealth growth in the world over the next 5 years. This wealth is increasingly being allocated to ESG causes and investments.

Oversimplistic rules such as raising nominal interest rates until inflation returns to target would fall in this category. But this approach ignores the fact that monetary policy is subject to time lags - of up to two years to pass through fully to inflation - and that other factors can affect future inflation. It would put us at risk of overreacting. Making decisions on a meeting-by-meeting basis and the latest available data does not mean that we should be short-sighted, on the contrary forward-looking. At a bit of a stretch of my definition, another example of the “empiricist approach” would be to simply follow the US Federal Reserve, perhaps with a gap to reflect different long-term neutral rates. This is obviously what countries with exchange rates pegged to the dollar do. Of course central banks are aware of what their peers are doing and there are undoubtedly some spill-overs from the actions of the Fed, not least through the effect on the exchange rate, on which I will have more to say later. But it would not make sense for the ECB to blindly follow the Fed: although inflation has dramatically accelerated in both economies, the underlying causes are not the 4  Page 5 sur 14  same and hence the monetary policy stance should be different too. On the one hand, the energy supply shock is considerably more intense in the euro area which is a large energy net importer while the US is a net exporter.
Authorities could also conclude that the standards themselves are not sufficiently strict and that there is a need for CCPs to bolster the arrangements that may be used in a pre-recovery stage. This might require CCPs to cover their exposures beyond the “cover 2” standard currently set by the PFMI for systemically important CCPs. Bear in mind that prudent margins and an adequately sized default fund are the very foundations of a CCP’s risk management. If CCPs appropriately cover credit and market risks via their initial margins, and adequately stress test their exposures under extreme conditions, there will be only a residual chance that they will not be able to cover default losses.11 We should remember that cover 2 is already a very stringent criterion, which has never been observed in a real crisis. However, as I stated earlier, the unthinkable may happen. The next question is how this increase in resources should be funded. Recently, there have been some calls to increase the contributions made by CCPs themselves to the total amount of financial resources posted – the so-called “skin in the game”. In the European Union, CCPs already have to contribute 25% of their required regulatory capital to the default waterfall, which would be used before tapping the mutualised default fund. Should we go further, and demand a larger contribution from CCPs? 10  On the one hand, participants may be more willing to share losses if the CCP provides some form of compensation instrument proportionate to the size of the losses they incur.

Such assessments are usually allocated according to each member’s contribution to the CCP’s default fund. This way of allocating assessments, provided it is transparent, gives members a degree of predictability about what will happen. Nevertheless, they could expose surviving clearing members to sudden and very large liquidity demands which they would have to source in the market, and could thus have strong contagion effects14 – even pushing members to close out their contracts and leave the CCP, rather than face the spiralling costs of remaining a member. For these reasons, such tools may prove problematic for bank supervisors. Another tool which is frequently mentioned in discussions on CCP recovery is variation margin gains haircutting (VMGH). In my view, this tool may have a certain advantage over ex post cash calls, in the sense that it would alleviate the need for members to raise extra  12  While central clearing protects banks against idiosyncratic risk, it can reduce their incentives to protect themselves from non-diversifiable shocks, hence the need for regulation to provide a strong incentive framework. For a theoretical discussion, see Biais, B., Heider, F., and Hoerova, M., “Clearing, counterparty risk and aggregate risk”, European Central Bank, October 2011. 13  For a discussion of loss-allocation rules, see also Elliott, D., “Central counterparty loss-allocation rules”, Bank of England, Financial Stability Paper, No. 20, April 2013. 14  See Heath, A., et al. (2015, op. cit.) for a simulation of the impact of different loss allocation mechanisms.
Firstly, banks need to continue to maintain high prudential standards so as to remain sound institutions. Next, they have to develop new strategies to continue growing strong, viable businesses. Sound institutions MAS does not seek to prevent institutions from taking risks. It is the business of financial institutions to take on and intermediate risks. But if risks are not well managed or events turn out unfavourably, institutions can incur substantial losses. No amount of regulation or supervision can completely prevent losses. On the other hand, over-regulation would curb innovation and enterprise. This was a key message in MAS’ Monograph on the Objectives and Principles of Financial Supervision in Singapore. Financial institutions therefore need to build their capacity to identify, monitor, and control the risks that they take. Banks should benchmark their risk management against international best practices. Risk management should be an integral part of their operations, and should keep pace with their business profile and with industry developments. The banking sector as a whole has done well in this respect, and we expect to see this continue. One major change in the way banks manage risks will be triggered by the new Basel Accord. Implementing Basle II will be a complex exercise but will spur banks to enhance their risk management practices. Banks need to develop robust systems and processes to make the new capital adequacy rules work.

These reforms have had an immediate and positive impact on the payment card landscape. The cost of payment card acceptance had started to moderate whilst the annual growth of payment card terminals had tripled from 5.4% in 2014 to 18.1% in 2015. In addition to promoting effective competition within the payment industry, it is also important to preserve the neutrality of Payment and Settlement Systems. This includes neutrality among instruments and geo-political interests. This is especially true for global and critical market infrastructure providers such as SWIFT where the offer of services to all parts of the world should be guaranteed and reliable. The emergence of other service providers to fill any void should it happen, would be most unfortunate as it could diminish efficiencies gained from access to global market infrastructures. As a participant-owned institution, adequate safeguards to maintain SWIFT’s neutrality and finality are essential to ensure it continues to serve its mandate as a trusted provider of secure financial messaging services to facilitate global connectivity. Opportunities from greater standardization and interoperability Let me now move on to the need for standardization and interoperability in Payment and Settlement Systems. Proprietary and legacy systems are costly and a source of much inefficiency as time and resources are needed to maintain different systems and facilitate interconnectivity. Hence, there is much value for the financial community to collaborate through greater standardization to facilitate interoperability and innovation to achieve greater economies of scale and network multiplier effects.
If the build up in credit risk is underestimated, foreign banks will tend to set overambitious ROE targets. When the extent of underestimation is recognized, banks have to increase their provisioning rate in line with their upward reassessment of credit risk, reducing ROE projections. This could lead management of large foreign bank groups to conclude that their ambitious ROE targets cannot be met and curtail lending growth in response. The entrance of big international foreign groups puts upward pressure on the entire banking system attempt to compete for borrowers. However, there is a risk that credit growth is associated with lower lending standards, enhanced by the lack of financial information available on potential borrowers that continues to be a problem in the region. As the FSAP for Albania indicates, in the area of corporate lending, firms balance sheets and income statements may be altered to avoid taxes, while information about remittance income for individuals is imprecise and unverifiable. The rising real estate prices in the region have also encouraged lending, using the real estate as collateral to a great extent. As real estate prices continue to rise, this could lead to an over-extension of credit, and if the real estate market becomes more speculative and more leveraged through bank loans, a decline in demand can cause a fall in real estate prices, causing both collateral to fall in value, and the ability of borrowers to pay to decline.

Therefore, we still cannot define the high growth rates observed in the last three years as sustainable growth. It should not be forgotten that strategies, which initiate growth and those, which achieve the sustainability of growth differ. . In this framework, the achievement of sustainable growth in our country requires more comprehensive and radical reforms. Now, I will explain the measures to be taken by outlining the reasons for the failure to achieve sustainable growth. The main reasons behind the failure in achieving sustainable growth include a large underground economy, the inadequacy of domestic savings and capital accumulation of the private sector, the fact that increases in productivity may not be permanent due to deficiencies in institutional governance, problems concerning the quality of labor supply, poor relations between the banking sector and the real sector and the inadequate tax system. According to predictions made in studies, the extent of the underground economy in Turkey ranges from 16 to 50 percent. As we cannot impose taxes on the underground economy, the state takes heavy losses. Moreover, the underground economy causes inefficient utilization of the country’s resources and creates unfair competition. That is why it is of the utmost importance that policies aimed at the registration of the underground economy are carried out at once. The domestic savings rate of our country is very low compared to that of both developing and developed countries. Actually, what lies beneath this fact is Turkey’s low-income level.