samchain/econo-pairs-v1 huggingface dataset:
It seems implausible to assume that the impairment of our banking system – the very life blood of our market economy – has not affected the productivity and general efficiency with which companies operate.8 If that is the case, we may be less confident that the supply capacity of our economy will pickup markedly purely in response to an increase in demand, unless and until some of these credit frictions are repaired. Where does all this leave us? The argument that it’s possible to grow the economy without much increase in inflation is, of course, seductive and enticing. It’s like being offered a free lunch. And yes, there are some grounds for thinking that the trade-off between growth and inflation may well be unusually favourable. But how strong those mechanisms actually are is far from clear. And it seems  7  For a more detailed discussion of some of these points, see McCafferty (2013). 8  There are a number of empirical studies that suggest financial crisis can have material effects on productivity and output. See, for example, Furceri, D and Mouragane, A (2009), Oulton, N and Sebastía-Barriel, M (2013), IMF World Economic Outlook (2009). 6  BIS central bankers’ speeches  particularly optimistic to assume that the financial crisis and the near crippling of our banking system has played little role in the recent limp supply-side performance of our economy.

And ultimately delivering low and stable inflation is the best contribution monetary policy can make to achieving a robust and sustainable recovery. The trade off between growth and inflation Let me turn now to the second issue I wanted to discuss today which concerns the operation of monetary policy and, in particular, the likely trade-off between growth and inflation in the current environment. As I said, in February the MPC made clear that we thought it appropriate to bring inflation back to target more slowly than usual in order to support the nascent recovery. But is there a case for monetary policy going even further? What if, as some commentators have claimed, it were possible for the MPC to inject additional monetary stimulus, thereby providing even greater support to growth, with relatively little consequence for inflation. Stronger growth with little or no higher inflation: surely that would be a good use of the MPC’s flexibility? There are two strands of argument put forward as to why the current trade-off between growth and inflation may be unusually favourable. The first is that cost and price pressures in the current environment may be relatively insensitive to the degree of slack in our economy. If that were the case, the economy could grow relatively rapidly, absorbing spare resources and capacity, without putting much upward pressure on wages and prices. In economists’ speak, the so-called Phillips curve – which sketches out the relationship between spare capacity and cost and price pressures – may be relatively flat at the moment.
Turalay Kenç: Emerging market policies in a volatile global environment – the case of Turkey Remarks by Mr Turalay Kenç, Deputy Governor of the Central Bank of the Republic of Turkey, at the National Asset-Liability Management Europe Symposium, London, 3 March 2016. *  *  *  Accompanying charts can be found at the end of the speech. Good morning, ladies and gentlemen. I would like to thank Central Banking Publications for the honor of being invited to deliver the keynote address at this European Meeting of National Asset-Liability Management. I am delighted to be back. The first time I did this was back in 2011 in Istanbul. In my remarks today, I will focus on policies of emerging market central banks in a volatile global environment with a particular focus on Turkey. I will begin with an overview of the challenges facing emerging market central banks in an increasingly interconnected world. I will then discuss resilience of emerging economies (EMEs) to global financial conditions together with their macroeconomic and prudential policy responses. I will finish my talk with the Central Bank of Turkey’s roadmap of policy actions before and after global monetary policy normalization. Heightened global financial market volatility The volatile global environment mostly likely stems from the gradually worsening global economic and financial problems and the increasingly interconnected world through production, financing and communication technology channels. The former is essentially related to growth, stock balances and policy uncertainty problems. The latter underscores higher degree of external shocks’ transmission across globe.

Yet in spite of being the oldest, Matero has not seen any growth in modern infrastructure, let alone banking facilities. For this reason therefore, as Governor of the Central bank, it gives me tremendous pleasure to see a reputable, privately owned commercial bank taking the bold step of bringing banking services, of international standards, to the doorsteps of a community like Matero. In this regard, the opening of the Stanbic Branch today has given me enormous optimism and re-assurance that banking facilities can, indeed, be extended to ‘financially excluded’ communities, like Matero. Ladies and Gentlemen Developments, like the one we are witnessing today, must not be taken for granted nor taken lightly. I am reliably informed that this has come about as a result of the policy reforms, undertaken by the Standard Bank Group, which have culminated in Stanbic Bank Zambia being conferred with the status of a ‘Universal Bank’. By assuming this status, Stanbic Bank Zambia has been given the authority to offer banking services to all the segments of the market. For obvious reasons, this move is not only uplifting to the technological advancement and capability of the Matero community through the provision of modern banking services like the AutoBank, but also goes a long way in assisting the Bank of Zambia, as a monetary authority, to have a firm control over the implementation of monetary policy.
For this reason, the Bank of Albania, as we have pointed out at the beginning of this cooperation, has engaged in a series of projects aimed at analysing the domestic market with a view to identifying and addressing the needs for intervention. These projects are assisted by the World Bank and funded by the SECO. I take this opportunity to once again thank these institutions for their contribution and support. Moreover, the Bank of Albania and the National Payment Systems Committee has already adopted and is implementing the national strategy for the retail payments market. This strategy aims to create a contemporary and comprehensive market of retail payments, supported by secure and efficient infrastructures, as well as by a wide range of payment instruments and services that meet the needs of financially capable individuals to make payments across the country. Incorporating financial inclusion into the Bank of Albania’s objectives, this strategy has set ambitious quantitative targets aimed at doubling the number of bank account holders (from 38% in 2014 to 70% in 2022) and increasing the number of electronic payments per capita (from 4.3 to 2016, to 10 in 2022). However, in order to achieve these objectives, a concrete and detailed action plan is needed.

I am confident that we will continue, with the same intensity, our joint efforts to integrate this very important factor into the Albanian economy at the fastest and broadest extent possible. 2/3  BIS central bankers' speeches  Thank you! 3/3  BIS central bankers' speeches
This suggests that the industry is ripe for transformation to a new growth trajectory. The industry in essence has not delivered the required results. Jumping the “S-curve”: The need for positive feedback loops Successfully jumping the cusp of the “S-curve” is the only way to realise the aspiration of a deeper and more diverse insurance market. This calls for transformational change, driven and reinforced by positive drivers that will revitalise the industry. In the context of financial services today, these drivers focus on three “T”s – talent, technology and trust. These three factors can be harnessed to catapult the industry onto a path of new and stronger growth, or they can precipitate its decline over time. The industry must secure the former for its future expansion or else it will continue plateauing. Let me speak briefly on these three factors. Firstly, we must grow the talent we need to bring our insurance and takaful sector to the next level. As our economic structure evolves, we will need a deep pool of insurance and takaful professionals who can develop and support new solutions for managing risks. Unfortunately, talent shortage has been a persistent issue which, if not resolved, will not only hold back the industry from gaining new ground; it could lead to a further retrenchment of business growth. The industry needs to make further efforts to attract and nurture new talents.

with perfectly controlled deficits and levels of public debt, which logically places limits on the growth of public debt markets. This contradiction is known by economists as the “Triffin dilemma”. It was first identified in relation to the U.S. balance of payments deficits and the value of the dollar, but it can also be applied to fiscal equilibrium. The economy needs a growing volume of risk-free assets, but the more they are issued, the more risky they become. We cannot totally side-step this dilemma, but we can avoid making it worse. It is clearly not good for major developed countries to find themselves in a situation where their solvency is put into question, or to allow markets to think that under certain circumstances, they may be unable to honour all their commitments. But this is what we have done in Europe, against the better judgement of the ECB, by introducing the principle of private sector involvement. The idea is attractive in theory. However, its consequences for financial stability are extremely negative. There has never been any doubt about whether the United Kingdom or the United States would honour their debts. Today they are enjoying very favourable interest rates compared with Spain and Italy even though the latters’ fiscal fundamentals are better. I know that some attribute this difference in borrowing conditions to the actions of the UK and U.S. central banks. I do not agree.
Increased awareness of the risks and early reaction to problems is likely to lead to a smoother adjustment to new conditions or to the correction of mistakes, making decisions less abrupt. Basel II is built on the expectation that a country’s banks should be able to manage their risks today and respond to challenges tomorrow. The second reason I believe Basel II will enhance financial stability is that it promotes more effective corporate governance. A bank can have the most sophisticated measurement tools in the world, but if it is poorly governed, it will be vulnerable to financial and operational weaknesses. While much attention has been paid to some of the more complex quantitative aspects of Basel II, I believe the most important aspects are those that address how the bank’s risk management framework is governed. Banks that adopt Basel II will be expected to have a comprehensive and sound planning and governance system to oversee all aspects of their risk measurement and management process. The board of directors, senior management, and audit and other control functions will be expected to exercise their duties in a rigorous manner. I believe that better managed banks under Basel II will be safer, sounder, and more resilient. I should also add that the Basel Committee last month published a paper on sound corporate governance practices for banks, which I believe will be useful for all countries, whether they are ready or not to adopt Basel II.

One of the things that I strongly encourage for all countries is a review of implementation of the Basel Committee’s Core Principles for Effective Banking Supervision. These principles are key to laying a successful supervisory foundation. Likewise, sound accounting and provisioning standards are critical to ensuring that the capital ratios, however calculated, meaningfully reflect the bank’s ability to absorb losses. This brings me to the second stage. Supervisors do not need to wait for the formal adoption of Basel II to start introducing or using the principles of the three pillars. On the contrary, incorporating these principles is excellent preparation for adopting Basel II in the future. For example, supervisors might choose to move towards a more risk-based approach to supervision, developing skills in assessing the quality of a bank’s risk management and its ability to assess risk exposures. At the same time, banks could be reminded of their responsibility to develop their own processes for evaluating their capital needs and a strategy for maintaining their capital levels, consistent with the principles of Pillar 2. With regard to the principles of market discipline in Pillar 3, supervisors may wish to focus initially on ensuring a baseline level of disclosures across all banks. This might include discussing with banks, investors, and other users of financial information their information needs and the tools available so that supervisors can tailor requirements accordingly. In my view, these two preliminary stages provide an excellent preparation for the “final” stage of moving to Basel II.
As mentioned, twelve of the seventeen national central banks of the Eurosystem are prudential supervisors, while the others are also involved in supervision. The Treaty and the Statute of the ECB and the Eurosystem also foresee the activation of a role in prudential supervision. Therefore, it would be an alternative step which would be also fully consistent with the institutional requirements of a financially integrated monetary area. Fourth: financial crisis management and resolution A fourth pillar for financial stability governance in the euro area is crisis management and resolution. This is a very challenging process. Public authorities must aim to “square the circle” of preserving financial stability in a highly integrated financial area, while the competent authorities maintain national mandates reflecting their fiduciary responsibility to domestic taxpayers. Nevertheless, important progress is being made within these constraints. The recent Commission proposal on cross-border crisis management, for example, foresees a mediation  BIS central bankers’ speeches  5  role for the EBA in order to facilitate compromise in situations where national interests and assessments diverge. Whilst these proposals should contribute to effectiveness, in the longer term, I would also favour a more centralised framework for resolution within the euro area, as a necessary counterpart to the enhanced supervisory function for the euro area that I have just advocated. Ex ante burden sharing by public authorities appears unworkable as it creates misaligned incentives as well as the risk of moral hazard and free-riding.

De facto, we are already seeing some progress in the integration of financial stability within economic governance through the European Financial Stability Facility and the future setting-up of the European Stability Mechanism. The use of these facilities to provide loans for banking sector recapitalisation reflects the recognition that crisis management for sovereigns and for financial institutions is increasingly intertwined. Perhaps over time this will provide the foundation for a more integrated European system of crisis prevention and management for the public and financial sectors. Ultimately, it is every euro area country’s interest that the collective governance arrangements reflects the reality of economic and financial integration. Following this path of necessary gradual reforms is essential for the efficiency and welfare of the whole euro area. BIS central bankers’ speeches  7
Jessica Chew Cheng Lian: Credit reporting and risk management training Welcoming and opening address by Ms Jessica Chew Cheng Lian, Assistant Governor of the Central Bank of Malaysia, at the Third Credit Reporting and Risk Management Training, Kuala Lumpur, 26 September 2011. *  *  *  It is my great pleasure to welcome you to Malaysia and to the third series of the Workshop on “Credit Reporting and Risk Management Training”, jointly organised by the International Finance Corporation (IFC) and Bank Negara Malaysia. This annual workshop has provided an important platform for experts from the different parts of the world to exchange views and experiences on developments in the credit registry landscape and the role of credit registries in preserving financial stability and in contributing towards economic and social development. Indeed, centralised credit information registries, or credit bureaus, are a critical part of the infrastructure that facilitates and enables the efficient expansion and outreach of credit intermediation in an economy. This is now well-supported by empirical evidence. A wellfunctioning credit bureau serves as a lubricant to the intermediation process by overcoming one of the fundamental challenges with any credit market, that is the asymmetry of information between lenders and borrowers.

Indeed, the pandemic’s immediate economic impact was unprecedented and the pandemic caused the steepest drop in output in Europe’s post-war history. 1/3  BIS central bankers' speeches  With respect to the National Bank of Romania’s responsibilities, since the outbreak of the COVID-19 pandemic in March 2020, we have taken a series of measures proportionally with the evolving situation. When the pandemic broke out, the NBR initiated a program containing measures aimed at supporting the economy: It lowered the policy rate, but stopped at 1.25% Kept liquidity in the system at moderate levels, but avoiding to flood money market with excessive cash and looking carefully to a relative stability of the exchange rate Acquired a moderate volume of government bonds on the secondary market to stabilize the yields. Once inflation re-emerged, the NBR started a normalization process, with an adequate sequence (spring 2021): Stopped the purchase of government bonds Tightened liquidity control Since autumn − increased policy rate and extended the interest rate corridor On the macroprudential front, we have implemented similar measures adopted at the European level in order to ensure banks preserve their ability to finance the economy in a sustainable manner. The Romanian banking system entered the COVID-19 crisis with significantly improved financial soundness indicators compared to the 2008 financial crisis. The banking sector remains well capitalized, with liquidity ratios well above prudential requirements, and with adequate resources to fight back if NPL ratios will restart growing, as expected all around the world.
This averaging principle, which grants the banks more flexibility in meeting their reserve requirements, is conducive to more orderly market conditions. Since the start of EMU in January 1999 the ECB has been providing its (weekly) refinancing to the euro area banking system based on the concept of a benchmark allotment. This benchmark allotment is defined by the ECB as the allotment amount which allows counterparties to smoothly fulfil their reserve requirements until the end of the day before the settlement of the next MRO, when taking into account the aggregate liquidity need of the banking system. 4. The Eurosystem accepts a wide range of collateral to underlie its operations, including marketable and non-marketable assets. The Eurosystem has put in place a single framework for eligible collateral, which covers marketable and non-marketable assets that fulfil euro area-wide eligibility criteria. As far as marketable assets are concerned, there are four liquidity categories: The first and best category is made up by central government debt instruments, the second by jumbo covered bonds, agency, and local or regional government debt instruments, the third by covered and uncovered bank bonds and the fourth by asset backed securities. There are two types of non-marketable assets that are accepted as collateral: credit claims and non-marketable retail mortgage-backed debt instruments.

Given this objective, the monetary policy has been adjusted to avoid persistent deviations from 3% due to the second-round effects of supply shocks or the widening output gap. This is why the Board increased the monetary policy rate in 25 basis points in July, August and September 2007, to a current level of 5.75%. In September, due to the turbulences in global financial markets and their possible consequences on the Chilean GDP growth, the Board decided to change the upward bias in the monetary policy rate to a neutral bias. This was then confirmed in the monetary policy meeting of October, when the Board decided to maintain the monetary policy rate and remarked that future trends would depend on new information and its implications on inflation forecasts. This time the Board added that the future of monetary policy would depend on developments of the World Economy, the eventual propagation of the inflationary shock to other prices, wage trends, medium and long-term expectations of inflation, and the evolution of the output gap. The market has also adjusted its expectations on the future course of the monetary policy, given both the news on the internal inflationary front and the expected evolution of the worldwide GPD growth. As a result, financial prices have internalized the fact that the monetary policy rate will increase another 25 basis points during this year and another equal increase during 2008.
These countries’ governments are more concerned that their banks have framework conditions at least as favourable as competitors from other countries. This attitude leads to a competition to weaken the requirements as far as possible. The minimum requirements will not be lower than the level all the major countries will agree to. Given such minimum requirements, there is every reason to set stricter national rules. The Norwegian authorities have been doing this for a number of years, including requiring banks to hold more pure equity than most other countries have done. Banks object that higher capital standards make it more expensive to operate and will make borrowing more expensive for households and enterprises, in addition to reducing the competitiveness of Norwegian banks. But that a bank should be at a competitive disadvantage if it is not allowed to be as financially weak as another bank is hard to take seriously. This line of thinking presupposes that the government will bail out the banks. But we should not accept this supposition. Higher capital ratios will make banks less risky for shareholders, creditors and the government. Less risk means that banks’ creditors will require a lower interest rate. 48 In addition to higher permanent capital standards and other structural measures, it is also appropriate to use discretionary measures when systemic risk increases above normal. Under Basel III, higher capital requirements for banks can be required in the event of rising lending growth and surging property prices, see Chart 4. But other measures are also possible.

But if you wish to know who is at fault for hollowing out the welfare of middle-income workers and the American economy, kindly do not look at me or my colleagues at the Fed. When you go home tonight look at yourself in the mirror. We at the Fed are providing more than enough monetary  BIS central bankers’ speeches  3  accommodation. You elect our fiscal and regulatory policymakers. It is time for them to do their job, to ally themselves with us to achieve a fully employed, prosperous America. Only you, as voters, have the power to insist that they craft policies that are needed to restore American prosperity. Please do so. Have a most pleasant evening! 4  BIS central bankers’ speeches