samchain/econo-pairs-v1 huggingface dataset:
A number of important questions are currently being investigated and suggestions or announcements within various areas have been promised by September. After the European Council’s meeting at the end of June, the sentiment on the financial markets was characterised by uncertainty over the details in the measures the Council announced and the yields on Spanish and Italian government bonds remained high. The uncertainty concerned how to implement and design a joint banking supervision in the euro area, something that is a very large step for the member states. Joint banking supervision is, according to the agreement reached at the meeting, a necessary condition for the European Stability Mechanism, ESM, to be able to recapitalise banks directly. The uncertainty was fuelled by the criticism of another agreement reached at the meeting that the European relief funds should be able to buy government bonds to hold back countries’ interest costs. More details on the loan to the Spanish banking sector More details of the loan of up to EUR 100 billion to the Spanish banking sector were released after the meeting of the Eurogroup finance ministers in July. A Memorandum of Understanding with Spain states, for instance, that the exact size of the loan will be determined after a revision of the Spanish banking sector during the second half of September. However, EUR 30 billion is to be made available this summer as a preliminary bailout for urgent measures.

But during the second half of July, concerns increased again when reports were received of the weak finances in Spanish regions. This contributed to new speculations regarding whether the loan to the Spanish banks is sufficient, or whether it will be necessary to implement a full-scale support package for Spain. Yields on Spanish government bonds with both short and long maturities rose to new heights. Italy was also affected by the unease. At the same time, yields on German and French government bonds remained at extremely low levels. The problematic situation on the bonds markets was discussed by the European Central Bank, ECB, at the beginning of August. After the meeting, ECB Chairman Mario Draghi made it clear that countries needing acute assistance should first turn to the EFSF/ESM and accept support under the terms they stipulate. After interventions might be undertaken by the ECB, within its mandate for price stability, and the ECB will investigate potential measures. It was already clear that potential bond purchases by the ECB would focus on bonds with shorter maturities. Expectations were fairly high prior to the ECB meeting, and Spanish and Italian bond yields had fallen during the days before the meeting. When the ECB did not announce any immediate measures, yields rose quite strongly at first. They have since fallen somewhat again, primarily yields on government bonds with shorter maturities.
Using monetary policy to burst a bubble in asset prices is particularly complicated in emerging market economies, since bubbles in domestic assets generally take the form of an exchange rate appreciation caused by large capital inflows. Tightening monetary policy to burst the bubble may have perverse effects, since it induces further capital inflows and strengthens the currency. In this case, the interest rate is not the appropriate instrument. Exchange rate intervention could be a better policy tool. BIS central bankers’ speeches  3  Bringing back financial stability to central banking With the global financial crisis, there was a renewed discussion on the role of central banks in securing financial stability. This is not new. The first central banks (Sweden and the UK) were created in the 17th century, but no proper role for central banks was established, and indeed the Bank of England was founded to finance the war with France in the late 17th century (Davies and Green, 2010). It was not until the 19th century that the Bank of England was given the monopoly for the issue of banknotes and assigned the role of lender of last resort. Therefore, in the origins of central banking, its role was to secure the functioning of the payment system. Thus, financial stability was not new, although it was a secondary issue compared to the conduct of monetary policy, which gradually turned to focus on price stability.

In addition, the latitude of changes in regulation is much more limited than that of interest rates. A more constructive approach may be to design rule-based countercyclical regulation with a clear purpose to minimize the risk of financial crisis. Nevertheless, we still need to learn more about the interactions between monetary and financial policies. Final remarks A natural reaction to a crisis is to think that everything is wrong and that all must be changed. Emerging markets, and in particular Chile, performed well during the crisis, and above all during the recovery. Therefore, a first lesson must be on the factors that produced these good results, and macroeconomic management was certainly central to the rapid recovery. The financial system was resilient, which shows that the regulatory framework was appropriate. However, our role is not to congratulate ourselves for our achievements in the past, but to look at strengthening our macroeconomic framework. As development proceeds, new challenges arise due to financial innovation, and it is extremely important to look for lessons while the crisis unfolds, to take advantage of financial development without risking financial stability. There is a need to study the interactions between monetary and financial policies further, especially given the challenges stemming from the global outlook. Implementing monetary policy in a flexible inflation targeting framework has shown its benefits; incorporating financial frictions and the appropriate policies should help us to navigate better in a very uncertain world.
As you know, many individuals inside our member agencies devoted substantial efforts to the Basel II process. We are indebted particularly to the leadership of Bill McDonough, our prior chairman and the former President of the Federal Reserve Bank of New York, who championed this new approach to capital supervision. We appreciate as well the leadership and excellent work of Danièle Nouy, the former Secretary General of the Committee’s highly professional Secretariat, and that of her successor, Ryozo Himino. Given that the capital framework serves as a cornerstone to the safe and sound operation of the banking system, we sought to conduct our discussions in a highly transparent process. We engaged in extensive discussions with many interested parties on the domestic and international levels, and I would like to thank in particular two groups of external organisations and individuals who supported our efforts. First, I should mention the countless representatives of banking organisations, industry associations, and other private sector bodies who devoted time and energy to sharing their views. They offered hundreds of comment letters, as well as data to test the quality of the rules, and they engaged in exhaustive hours of discussion with the Committee, its working groups and member authorities. Above all, banks and other private sector bodies helped us to ensure that supervision would be more closely aligned to sound industry practices.

The Committee looks forward to continued collaboration with the BIS on matters related to financial stability. Basel II represents a genuine success story in international cooperation. And we know that our need to cooperate and to collaborate does not end when we release this framework. Indeed, under Basel II, supervisors and central bankers will need to work even more closely together in the future, especially in view of the evolutionary nature of Basel II. And the Committee has a full agenda ahead of it. We must, of course, continue to work on the specifics related to the implementation of the framework and its calibration. We must also ensure that the new framework keeps pace with market developments and advances in risk management practices. As we carry out this work, the Committee intends to continue its discussions with the industry and other supervisors in the same open and transparent manner as we have to date. It has been an honour for me to participate in and help to lead this process, and I look forward to the next phase of the Basel II project as we turn toward national adoption and implementation. Thank you. 2  BIS Review 38/2004
Low level of domestic savings in the Turkish economy, significant share of advanced economies in our exports, sensitivity of our exports to global economic cycles and deterioration in expectations of the private sector have caused a sharp slowdown in economic activity. However this contraction did not last long and Turkey has become one of the countries that have rapidly recovered from global turmoil. In other words, unlike previous crises, the Turkish economy has resisted global turbulence well owing to its structural transformation and policy implementations that have been underway since 2001. The main reasons for this resistance are the resilience gained from the implementation of a floating exchange rate regime, the robust structure of our banking system, counter-cyclical monetary policy implemented before and during the crisis and the room for maneuver provided to public finance by the fiscal discipline observed in the pre-crisis period. These factors, coupled with the subduing effects of the crisis, have promoted an earlier and stronger recovery in the Turkish economy, compared to that of the global economy. Accordingly, since the height of the crisis, by mid-2009 Turkey’s GDP and industrial production have increased by 11 percent and 21 percent, respectively, while the unemployment rate has dropped by approximately 3 percentage points. Although the level of production is still below its pre-crisis level, we expect that it will exceed this level in 2010. Meanwhile, we envisage that it will take an extended period for the labor market to recover.

At the end of 2003 the foreign reserves of BoA reached $ covering 4.7 months of imports. BoA continues to maintain its view of a free exchange rate regime. This was reflected in the fewer episodes of BoA’s intervention in the foreign exchange market during the first half of 2003, when the purchase of foreign currency was almost four times that of the second half of the year. Nonetheless, this did not hold back the domestic currency from appreciating against the euro and the US dollar, with a stronger appreciating trend in place in the second half of the year. The appreciation of the domestic currency was one of the factors behind BoA’s 2.0% interest rate cut during year 2003. Monetary indicators have generally been performed in compliance with the forecasts set out in the Bank’s monetary programme. The annual growth rate of lek deposits was 19.1% by the end of the year, which is significantly higher than the annual rates of the pervious years. The credit balance rose by L11.9bn or 30.9%. The new credit increased by 50% meanwhile 76% is in foreign currency. The loans/GDP ratio is still low, at about 7%. The banking system experienced important developments during 2003 and in the beginning of 2004. The entry of two new banks of Albanian capital was soon followed by the successful privatisation of the Savings Bank from the Raiffeisen Zentralbank (RZB) Austria. Now, all in all there are 16 banks in the Albanian Banking system.
At present, the plethora of international meetings offers many chances to see the world, if not actually to save it. Ultimately, only the Bretton Woods institutions themselves – the IMF and the World Bank – have the legitimacy to represent all of their 187 member countries. But their governance is outdated. At the height of the crisis, the G20 and the G7 provided strong leadership. But legitimacy and leadership should go together. One without the other does not offer a sustainable vehicle for international cooperation. So allowing the G20 to metamorphose into the governing body of the IMF makes a good deal of sense. Such an evolution would, with a little commitment and imagination, create a single effective framework for international economic cooperation. And in the long run a more powerful and legitimate international body might be able to use its clout to deal with the imperfections and frictions that I have discussed. It might even be the vehicle for a more rules-based framework for the IMFS, based on a judgement about the sustainability of the pattern of world demand. Although that seems a distant prospect today, there is a precedent for a system of internalising cross-border externalities: the WTO already plays a similar role in international trade. So far, these rules have stood the test of time. Indeed, it is now more likely that protectionism would result from high unemployment, which the rules were not designed to prevent, than the pressures from producers which have been resisted. There is much to do.

Fixed, or managed, exchange rate regimes may help to limit the real economic costs of “excessive” volatility that reflects short-lived shifts in market sentiment, but if they impede desirable adjustments of real exchange rates, they contribute to unsustainable patterns of spending. There are other reasons why emerging economies, in particular, have managed their exchange rates. Perhaps the most important is that pushing down on the exchange rate is a means to pursue a strategy of export-led growth. Another motive, important in the wake of the Asian financial crisis, was to build up large precautionary balances of foreign exchange reserves as a way of insuring against sudden reversals in capital flows, especially of shortterm bank lending, that proved so damaging in the 1990s. 2  BIS central bankers’ speeches  Such policies distorted saving and exchange rates, and created large capital flows unrelated to the distribution of profitable real investment opportunities. Given imperfections in financial markets in both borrowing and lending countries, such capital flows can lead to a degree of fragility, such that, when adjustment comes, there is a high probability that it will be abrupt. For example, the distortion from a “too important to fail” implicit subsidy to the funding costs of banks in the industrialised world led to excessive leverage in these countries. Creditors were prepared to lend at lower rates and on a greater scale than they would have without the implicit subsidy. In other countries, financial repression artificially raised saving rates by making borrowing too costly.
There seems to be a reluctance, perhaps just about understandable in some respects, to share information amongst home and host authorities and to co-operate when regulated firms are distressed, which of course is when it matters most that they should co-operate. The FSB needs to ensure that we confront and fix this. But a solution cannot emerge without political leaders making space for – indeed, without them positively encouraging – officials to cooperate properly. 2  BIS Review 145/2010  Capital markets: the financial network The second key plank of the FSB’s existing programme has been to mitigate the complexity of the financial network. We do not just live within a world, a financial system of massive but independent firms; we work in a financial system where everything is connected to everything else. That has been the case for long as I can remember. Central counterparties The use of central counterparties in over-the-counter derivative (OTC) markets is long overdue. But we will also need to ensure that these counterparties are robust. If ever a central counterparty fails, it will be a gigantic mess. Two have failed significantly over the past 30 years: a relatively small one in Paris, but the other was a significant one in Hong Kong during the 1987 market crash, which caused the Hong Kong equity and futures market to close. They were hard to reopen. And their securities markets and regulatory regime had to be completely overhauled as a result.

Paul Tucker: The programme of reform Remarks by Mr Paul Tucker, Deputy Governor for Financial Stability at the Bank of England, at the Institute of International Bankers’ Annual Breakfast Regulatory Dialogue, Washington DC, 11 October 2010. *  *  *  An earlier version of these remarks was delivered in the concluding Panel session, chaired by Jacques de Larosiere, at the Eurofi Financial Forum, 30 September 2010. Thank you very much to our hosts. I might start by saying that I believe that a material contributor to this crisis was the failure of the official regimes for overseeing the financial system – the intellectual framework, the machinery, and regulation and supervision – to keep up with the extraordinary evolution of our capital markets over the past two decades or more. The programme of reform is, accordingly, formidable. It will also be transformational. There is no doubt any more that the global financial system, regional financial systems and national financial systems are going to be transformed in the years ahead. And if there was any doubt in the market 18 months or so ago, I don’t think there can be doubt now that the energy behind reform hasn’t flagged. That is unsurprising given that unemployment remains intolerably high throughout the western world. Many of us have already had to take national measures, make national reforms. But, of course, it was a global crisis, and so it is essential that we also take measures at the global level, through the G20 and the Financial Stability Board.
I would add that an excessive focus on price competition also inherently increases the risk profile of MSB companies which companies must carefully consider. It can lead to a loss of focus on longer term competitive positioning which remains key to any successful business, compromise service quality standards and heighten compliance risks. The insights gained from a deeper understanding of customer needs and priorities should serve to focus competitive strategies on how to improve the customer experience. We firmly believe this needs to be an important part of the conversation in pursuing the goals of more inclusive and efficient remittance solutions. We are encouraged by the efforts of some MSB companies that have responded to greater competition through a focus on innovation and investing in building a trusted company brand that consumers can be confident in. As an example, today, there are 17 remittance service providers that have introduced digital remittance services, almost double the number only 2 years ago. The requirement for employers to pay foreign workers’ salaries through their local bank accounts starting next year will provide further impetus for the digitalisation of remittance services. With a high level of smartphone penetration among migrants in Johor Bahru at 74% and internet access at 90%, significant opportunities exist to promote e-remittances. Currently, outward remittances conducted through mobile phones or the internet represents less than 10% of total outward remittances recorded by MSB companies.

But that is the reality of development – we will continuously be called upon to respond to new and unfamiliar challenges and to effectuate changes wherever we can. I am optimistic that we can all contribute to do our part to make the change that is required. Global awareness on climate change and its risks being showcased today and during this Climate Week is reflective of a world that is determined to rise to the immense challenges before us. Thank you again to the organiser of this event and to all participants. I look forward to more meaningful engagements on this issue as we continue this onward march for a better life and a better future for our children and for mankind. Thank you. 3/3  BIS central bankers' speeches
Benoît Coeuré: Four years after Pittsburgh – what has OTC derivatives reform achieved so far Speech by Mr Benoît Coeuré, Member of the Executive Board of the European Central Bank, at the at joint Bank of France, Bank of England and ECB conference on OTC derivatives reform, Paris, 11 September 2013. *  *  *  I wish to thank Patrick Föll for his contributions to this speech. I remain solely responsible for the opinions expressed herein. Introduction Ladies and Gentlemen It is a great pleasure for me to speak here in Paris and to welcome you, on behalf of the ECB, to the conference on the OTC derivatives reform. The over-the-counter (OTC) derivatives markets were at the heart of the financial crisis and several root causes on what went wrong were identified. Increasingly complex and opaque financial products, combined with a lack of transparency, were contributing factors, but also the failure of public authorities to appreciate and address adequately the risks building up in the financial markets. Not only did regulators and supervisors not keep up with financial innovation, but they lacked the tools to monitor the risks adequately. Regulation also failed to keep up with the dynamics in the OTC derivatives markets over the last two decades, which saw an explosion in outstanding contract volumes. Post-trading infrastructures had become increasingly inadequate for coping with the growing volumes and complexity of such trades.

As the ability to generate great ideas in the CEE region is limited, it seems that in the transition period the most important modernization channel in the region was through foreign direct investments. Indeed CEE became a very large recipient of FDI, with FDI stock to GDP ratio topping 40 percent in CEE-4 region. Only NIEs economies managed to attract higher FDI stock in relation to GDP and enjoy higher FDI annual inflows. 2  BIS Review 138/2007  However, in the global knowledge economy it is important to attract foreign direct investments to sectors that can become globally competitive, in particular to these sectors that export high-technology, i.e. high value added goods or services. While CEE-4 significantly improved the structure of exports, the high-tech goods account for only 12 percent of manufactured exports, which is the world worst result, lagging even behind Latin American countries. NIEs are world leaders and China is about to take over the second post from the United States. Above data suggests that in the long run low ability to generate innovation combined with low value added FDI may harm the CEE ability to improve productivity. On top of above-mentioned factors I should also add that in the last few years we have witnessed very fast growth rates of asset prices in CEE. The amount of loans granted to households increased 3.5 times since 2004 and almost 10 times since 2000.