samchain/econo-pairs-v1 huggingface dataset:
It can be argued that such policy instruments should be on the law books by the time the auction of offshore krónur takes place because, if the auction is as successful as we intend, it is possible that confidence in Iceland will grow still further and capital inflows will increase. BIS central bankers’ speeches  3  Why do we need all of these additional tools and contingency measures? An important reason is the risk to financial stability that accompanies excessive and volatile capital movements that are unconnected to economic fundamentals. Another important reason is that in an increasingly financially integrated world, it is more difficult for small countries to deviate too far from the monetary policy pursued in the larger countries that determine global financial conditions. We saw this before the financial crisis, in New Zealand and here in Iceland. And we have seen it more recently, in countries like Switzerland and Sweden. We can better understand why this is so if we consider a situation where cross-border financial integration is nearly perfect, so that capital movements very quickly even out the difference in risk-adjusted real returns on assets in different countries. The interest rate channel of monetary policy transmission then becomes clogged up in small, open, and financially integrated economies, where long-term interest rates are determined by rates in large countries and transmission takes place largely through the exchange rate channel.

Furthermore, it is at the core of central banking to prioritise macroeconomic objectives over the central bank’s own finances. Moreover, this situation could make it possible to resolve most of the problem in the auction, in a more permanent way than was previously envisioned. Preparations for the auction are now well underway, and the date and format will be publicised soon, so that the auction can take place in the first half of the year. Other things being equal, it should then be  2  BIS central bankers’ speeches  possible to move relatively quickly towards lifting capital controls on residents, as the current account surplus, foreign exchange inflows, and robust foreign exchange reserves provide ideal conditions for it. On the other hand, it is important to reach successful conclusion regarding offshore krónur before general liberalisation of controls on residents can take place. Now I would like to turn to longer-term issues regarding monetary policy and its relationship to other aspects of economic policy and prudential policy. In its reports entitled Monetary policy after capital controls and Prudential rules following capital controls, published in 2010 and 2012, respectively, the Central Bank described the new monetary policy framework and prudential rules that will be necessary to preserve financial stability and support monetary policy after the capital controls are lifted.
The growing sophistication and complexity of financial activities, brought on by financial innovation and globalisation, have made risk management a key and important task for all banks. In particular, the integrity of real-time information on changing prices, valuation of financial position, and warning on breaches of internal control is most critical now for bank’s top management in taking timely and prudent decision. The recent episode in the global financial market has demonstrated again the costly implication of weaknesses in this area. For these reasons, information technology and its management has become a key part in business strategy as it can provide lever to create competitive edge and innovate business model, especially for providing customer reach in a cost-effective manner. But on top of this, pressure from competition and the need to cut costs also have forced banks to rethink their business models and strategies, leading to fundamental changes in the business process that include the proliferation of outsourcing, electronic banking, and the use of the internet. Again, while these developments are positive, they also expose banks to a different aspect of risk management, for example how to manage and control outsourced activities. Such an environment, if not properly managed, can lead to greater technological and security risk, as well as to malicious activities. For central banks, one of our key mandates is to ensure financial system stability.

Ardian Fullani: Agreement between the Bank of Albania and the Competition Authority Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the signing of the Memorandum of Understanding, Tirana, 17 July 2007. *  *  *  Dear participants, I am pleased to have concluded this co-operation agreement between the Bank of Albania and the Competition Authority. In observance of the legal responsibilities of the institutions we represent, this agreement concludes the formal basis for cooperative efforts, in terms of achieving the objective of enhancing the competition conditions, in which the banking and financial activity is being conducted. Fair competition promotes the efficiency in the banking business and refines the composition and the functioning of the banking market, by providing significant services to clients and the public at large, being users of banking and financial services. It has been for some years now that the Albanian economy and the financial system are in an intensive process of integration into the regional economies and markets. This process requires the improvement of the legal and regulative framework for developing the business and the enhancement of the human and institutional capacities to cope with the challenges deriving from the economic openness and the enhancement of competition.
In parallel with the role of ERTEs, it is important to ensure the proper functioning of the different labour flexibility mechanisms available to firms, whose function is particularly useful in these circumstances for efficiently accomplishing the adjustments arising from the crisis. Active labour market and training policies for the unemployed and workers affected by ERTEs also take on considerable importance. Once suitably re-designed, these policies should be geared to boosting employability and smoothing the relocation of the workers most affected by the crisis to sectors or firms with greater growth potential. The criteria whereby support instruments are maintained, but after being appropriately designed so as not to distort the necessary adjustments in the economy, are also important. And particularly so those expressly intended to sustain the income of the most vulnerable households. The necessary implementation of an ambitious structural reform agenda Let us look beyond the policies needed in this phase of incipient economic recovery. Taking a broader view, the extraordinarily complex setting envisaged by the Banco de España’s latest economic projections - and those of the vast majority of analysts - for the coming years also means we should define a reform agenda aimed at tackling the structural challenges our economy faces, and which this crisis has made more pressing. In this setting, an ambitious reform strategy would be an essential lever for positioning the Spanish economy on a sustainable path of growth, job creation and well-being. One of the key structural challenges is that relating to the need to increase our economy’s growth potential.

Concluding, I would like to thank all the researchers, the speakers, the audience and our collaborators, who responded positively to our call for participation. With these words, I wish you all fruitful deliberations, I wish the conference all success and I wish all the guests an enjoyable stay in Tirana. Thank you! 2/2  BIS central bankers' speeches
With respect to prices, inflation has been running somewhat below the Federal Reserve’s objective of a 2 percent annualized rate for the personal consumption expenditures (PCE) deflator. For example, over the past twelve months, the overall PCE deflator has risen by 1.4 percent, and the core PCE deflator, which excludes food and energy, has increased by 1.5 percent. Moreover, for the next few months, inflation is likely to moderate further as the impact of falling gasoline prices and the firmer dollar feed into the official U.S. inflation statistics. Thereafter, I expect that inflation will begin to move back towards our 2 percent objective, pushed there as slack in the economy continues to diminish and pulled there by well-anchored inflation expectations. In assessing inflation expectations, I currently put more weight on survey-based measures of inflation expectations as opposed to market-based measures. Survey-based measures have been generally stable, consistent with inflation expectations remaining well-anchored. However, market-based measures, such as those based on breakeven inflation derived from the difference between yields on nominal versus Treasury Inflation-Protected Securities (TIPS), have registered declines over the past few months, even on a 5-years forward basis. Research done by my staff suggests that much of this decline in market-based measures of inflation compensation reflects a fall in the inflation risk premium – that is, what investors are willing to pay to protect themselves against inflation risk. Adjusting for the fall in the inflation risk premium, inflation expectations appear to have declined much less than implied by TIPS inflation breakeven measures.

Denis Beau: Financial supervisory and coordination - new issues and challenges  regulatory  policy  Contribution to the panel discussion by Mr Denis Beau, First Deputy Governor of the Bank of France, at the Salzburg Global Finance Forum, 22 June 2021. * * * Regulatory policy and Supervisory coordination has always been fraught with challenges. I remember panel discussions with market participants about this very topic at the BIS twenty years ago. No surprise for me that it is still a topic today, because there is a deeply rooted reason for it: the inevitable tension between market forces on the one hand, which push for a borderless financial system in many of its layers, despite step backwards, as we have seen since the Global financial crisis, and on the other hand the jurisdictions in which regulators and supervisors operate, are accountable and must discharge their obligations, which at best are regional for some and most often are national. This observation does not mean that we have not made progress in addressing this tension over the last decades. Nevertheless, I would differentiate between coordination issues to manage large-scale crisis and to prevent those crisis. Regarding the former, I think it is fair to say that the Covid-19 pandemic acted as a test of the resilience of our global coordination framework, which has improved with a strong G20 dimension after the GFC.
To further develop the operational framework for financial stability, and following the implementation in 2010 of the new accounting rules, in line with international standards, as well as those related to the assessment of the risks associated with new financial products, a regulation on the identification, measurement, and management and control of the liquidity risk was enacted by the Council on Money and Credit in May 2011. This regulation introduces a minimum short-term liquidity ratio which must be met by banks and financial institutions at all times. In the same vein, the Council on Money and Credit has also enacted in May 2011 a second regulation establishing an internal surveillance system and a ceiling by counterpart regarding interbank outstanding lending and borrowing, especially those occurring in the money market. The assessment made by the Bank of Algeria for 2013 suggests that all banks meet the liquidity ratio requirements (169.87% at the end of 2013), despite the relative stabilization of banking liquidity over the past year. In terms of banking sector depth, it is worth noting that the ratio of collected resources (demand and term deposits excluding hydrocarbon deposits) to nonhydrocarbon GDP increased in 2012 and 2013 (62.73%) after a stabilization at 61.44% in 2011. The upward trend between 2008 and 2013 of the credit to the private sector as a proportion of private sector deposits in local currency, in a context of increased financial transformation, is another relevant indicator of the banking system depth.

Thomas Jordan: International money market disruptions, central bank reactions and lessons learnt Introductory remarks by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the end-of-year media news conference, Zurich, 13 December 2007. *  *  *  As early as the first half of 2007, turbulence could be observed now and then on international financial markets. However, each event was isolated and short-lived. In the second half of 2007, there was a fundamental change in the situation. The sub-prime mortgage crisis in the US had a substantial impact on international financial markets, the extent of which had never been anticipated. I will cover three areas in my following remarks. First, I will discuss the upheaval on the international money markets. Then I will talk about the reaction of central banks, in particular that of the Swiss National Bank. Finally, I will outline some of the lessons learnt from this crisis to date. Serious disruptions on international money markets At the beginning of August, the US sub-prime mortgage crisis spread like a shock wave into the money markets of the most important currencies. In doing so, it hit the vital nerve of the international financial system. Well functioning money markets are essential in ensuring that financial market participants can adjust their liquidity positions. Ultimately, they are crucial for banks' solvency and long-term commercial viability.
–  Requirements for sustaining pegs have become very demanding in an environment of high capital mobility; however, “intermediate solutions” may still remain a relevant option for a number of countries; particularly for open economies with close links to a partner country or a partner single currency area that maintains price stability or for countries experiencing high inflation, where anchoring the currency provides a simple and credible rule for monetary policy. Needless to say that the intermediate solutions are considered particularly appropriate in the European framework where the belonging to an exchange rate mechanism plays a major role in the preparation to join the single currency. –  In cases where countries need to respond to very large capital inflows and related risks of inflation and real appreciation, greater exchange rate flexibility might become desirable. Let me conclude these considerations with two observations: –  First, we should concentrate all our efforts on implementation of existing codes and standards. Implementation is the key word at present times. Applying standards and codes in 3  BIS Review 52/2000  all economies of the world, including emerging economies and economies in transition is an immense, challenging and urgent endeavor. –  Second, as regards the private sector involvement, I will recommend being as pragmatic and as consistent as possible. Pragmatic because a case by case assessment is always needed and there is, in my opinion, no mechanistic “a priori” approach which would be advisable.

In the financial domain, the valuations of certain assets in some jurisdictions and segments of the capital markets have increased most markedly, suggesting that there has been an increase in the risk of there being corrections in the coming years potentially affecting financial stability. I would also like to refer to the economic risks posed by the political situation in Catalonia. In our Financial Stability Report, published early last November, the Banco de España estimated a range for the economic impact of the tensions in Catalonia drawing basically on assumptions about their duration and intensity. The conjunctural information for the final 5/6  quarter of 2017 indicates that economic activity is expected to have slowed in Catalonia in the closing months of the year to a greater extent than in the other main regions with the greater GDP; at the same time, it seems clear that the application of Article 155 of the Constitution has contributed to easing economic tensions, as shown by recent developments on financial markets, where a correction has been observed in the higher volatility and more negative dynamics that stock markets and the Spanish sovereign debt risk premium had experienced in the opening weeks of October. Indeed, the risk premium stood today below 85 basis points relative to the German benchmark, the lowest level since 2010, following the upgrade announced by a rating agency.
Fifth, the risk of default on the country’s sovereign debt must be viewed as negligible, to ensure both that the currency is a stable store of value and that continuous, deep liquid domestic markets will be available regardless of the economic circumstances. Sixth, the country must have a credible central bank that is insulated from political interference and committed to keeping inflation low and stable – a necessary condition for a reserve currency to be a reliable store of value. I think that the U.S. dollar satisfies these general criteria. That is why over 60 percent of foreign exchange reserve holdings are denominated in dollars – a share that has been quite stable in recent years. The dollar’s share has remained steady despite the presence of a number of currencies that broadly satisfy the attributes that I have just discussed. But should the U.S. be concerned if more countries satisfy the attributes needed to be successful reserve currencies? Would it be problematic for the United States if the U.S.  BIS central bankers’ speeches  1  dollar share of foreign exchange holdings slipped over time because of progress made elsewhere? I think the answer to both of these questions is “no.” It would seem positive to me if a decline in the U.S. market share reflected the following developments: a greater number of stable and effective central banks and fiscal authorities, more investors who are reassured about countries’ institutional arrangements and financial stability, and deeper and more liquid capital markets outside the United States.

After the introduction and the keynote, the conference explores four directions of thought on the topic of monetary unions in history. A panel is devoted to each of them. The first panel will explore the link between monetary unions and economic integration by offering a glimpse in their history. The second session will focus on twentieth century monetary unions following the great and continuous economic stress of the First World War. The third panel will examine monetary unions as facilitating tools for greater customs and economic integration within the Comecon and the Austro-Hungarian Empire. Finally, the last session will address the question to what extent the political relations transcend in the monetary unions as well illustrated by the Great Britain and the member-states of the European Union. This program will break for a discussion between leading academics and policy-makers on the issue of the parallel currencies in history. I would not crowd out the precious conference time by dwelling on each piece of research to be presented and discussed today. Let me pause here, to give way to interesting and open exchange of opinion and deliberations which I believe this conference will stimulate. And once again – welcome to Sofia and enjoy your stay in Bulgaria! Thank you. 2/2  BIS central bankers' speeches
Second, a greater capital requirement also increases the stakes for shareholders as it decreases the degree of leverage of the financial institute. This somewhat alleviates (although it does not fully resolve) the asymmetry problem facing limited liability shareholders and thus improves their incentives to undertake risk monitoring. Third, to the extent that equity capital is more expensive than debt, a capital surcharge works like a tax. It lets the firm decide on its optimal size but in so doing forces it to integrate the fact that a larger size imposes an extra cost to society and is thus only warranted if the additional benefit for the firm justifies the additional social cost. In other words: be big if you are convinced of the benefits of size but cover the social cost of your decision!11 Imposing organisational measures The level of the capital surcharge for systemically relevant institutions can, in the spirit of the Pigovian approach, be decreased if the size of the TBTF externality is further reduced by other means. This provides the rationale for imposing organisational measures with the goal of making partial bankruptcy possible.12 The aim of organisational measures is to encourage banks to isolate the divisions that assume essential systemic functions from those that do not, so that the functioning ability of the former can be maintained in a case of nearbankruptcy, while the latter can be wound down.

What follows is a review of the situation of these stakeholders in relation to the desired risk profile of a typical bank.3 Depositors Deposit insurance ensures that it is not the business of depositors to worry about the amount of risk that the bank, in which he or she has deposited his money, decides to take. A key lesson of the Great Depression was that deposit insurance is a socially justified feature of the banking system. This follows from the fact that banks are institutions vulnerable to bank runs, no matter how well they are managed. The principle of deposit insurance is widely accepted and I will not further question it. Yet, the extent of deposit insurance and the form of its financing are important questions. Recent history has refocused our attention on these matters, but these are not the issues I would like to deal with today. Shareholders The incentives for shareholders differ from those of depositors. At first sight shareholders, as ultimate owners of the bank, can be counted on to discipline risktaking by the institution they own. After all, they stand to lose their entire stake if the risks taken lead to bankruptcy. However, this is only true to a limited extent. Indeed, if we go beyond an initial, superficial consideration of the situation, we soon realise that shareholders cannot be expected to discipline risk-taking by a bank. There are a number of reasons for this.