samchain/econo-pairs-v1 huggingface dataset:
But change there has to be – if both the regulators and regulated are to re-establish society’s confidence that we can have a dynamic and global financial sector, one that serves the real economy, without generating such painful financial booms and busts. And the process of designing, agreeing and implementing that change is long and complex. I make no apology for this. The financial crisis was not a simple and short-lived episode. Nor can the response be simple or quick. We are now, however, well into that programme of regulatory reform. I want to talk today about some of the key elements of that programme. Elements that are now moving from the stage of discussion and design to the stages of agreement and implementation. And I want to talk particularly about the various initiatives that together bear on what is perhaps the biggest challenge; ensuring that no bank is too big to be allowed to fail. It is pretty obvious now that we went into the crisis with a high risk, highly interconnected banking system that had dangerously thin levels of capital and liquidity. Not only were too many banks too vulnerable to serious stress; the authorities also lacked the tools and the options to deal with failure once it occurred, particularly when dealing with large international banks. So when undercapitalised banks faced failure, when they could not raise sufficient private capital to restore viability, authorities around the world were faced with the same journey of horrors.

Their solutions, however, undermine the liberal market democratic system that has brought about prosperity. The appropriate solution to many of our problems consists of returning power from the state to the community. Communities should be able to develop policies to address their own needs. This makes them less receptive to populist solutions. Raghu’s view reminds me of the political system in Switzerland. Here, political decisions are taken at the lowest possible level of governance, closest to the people concerned. This decentralisation fosters citizens’ engagement in their communities. Today, Raghu will speak about an issue that is more narrow in scope, but which is of great importance to central banks, not least to the Swiss National Bank. His speech is about the spillovers of monetary policy beyond a country’s border. This topic has attracted a lot of attention in the past few years following QE and other unconventional monetary policy measures adopted by central banks. Who better to speak to us on this subject than Raghu with his profound knowledge of capital markets and his experience as the central bank governor of a country highly exposed to monetary policy decisions taken elsewhere? Ladies and gentlemen, please join me in welcoming Raghuram Rajan with a big round of applause. Page 4/4
A greater degree of cooperation is required from governments in the area of reforms and budgetary policies, to encourage growth and reinforce the monetary stimulus. Conclusions I shall now conclude. Central banks have played a fundamental role in the economic policies launched to combat the crisis, especially in the most developed economies, namely the United States, the European Union, Japan and the United Kingdom. This response has been based on very loose monetary policies, which have led to growth in central bank balance sheets to unprecedented volumes and, although at different tempos, has helped to contain and reverse the negative demand and employment dynamics. In the context of the European Union, the role of the ECB has, of course, been extremely important, and the attention aroused by its measures, initiatives and announcements is therefore entirely understandable. 6/7  I said at the start that central banks are offspring of the Enlightenment. As heirs to this tradition we should all aspire to ensure that pursuit of the common good and reason continue to be the main driving forces guiding these institutions. Thank you very much for your attention, and my congratulations to all this year’s CUNEF graduates  7/7

The performance of revenues and expenditure led to the budget deficit amounting about 1.25 times higher than a year earlier, most of which was funded through domestic long-term instruments. Budget deficit dynamics was reflected in further expansion of public debt. Data from the external sector of the economy show that foreign demand, net, was weak in the second quarter. Real exports, net, narrowed by 1.5% during this period, contributing negatively to aggregate demand. Their performance was determined simultaneously by increase in imports and deceleration of exports, in real terms. Foreign trade data for goods, for July-August, reveal that trade deficit narrowed 15.1% in annual nominal terms, during this period. Exports surged 15.8% during this period in annual terms, whereas imports dropped 3.0%. Financial markets continue to reflect low risk and inflation premia. In the interbank market, trading volume increased and interest rates fell, showing lower volatility. In the primary market, yields fell further, especially on securities with longer term to maturity. The yields curve moved downward and its slope was reduced. Interest rates continued to fall in the deposits market, while, in August, interest rates on credits fell as well. In spite of this, credit performance was weak during these months. Following the persisting deceleration over the first half of the year, private sector credit contracted in July and August. As at end-August, it stood 2.0% lower than a year earlier. Credit performance reflected the weak credit demand from both businesses and households, as well as the tight standards of the credit supply.
The Promise of FinTech – Something New Under the Sun? Speech given by Mark Carney  Governor of the Bank of England Chair of the Financial Stability Board  Deutsche Bundesbank G20 conference on “Digitising finance, financial inclusion and financial literacy”, Wiesbaden 25 January 2017  1  All speeches are available online at www.bankofengland.co.uk/speeches  Ecclesiastes 1:9 What has been will be again, what has been done will be done again; there is nothing new under the sun. 1. FinTech’s Shining Future It is a pleasure to be at Schloss Biebrich as part of this Bundesbank conference on “Digitising finance, financial inclusion and financial literacy.” Just a few hours ago, I was in the world’s leading FinTech centre. One which generated £ billion in revenue, attracted just over £ million in investment and employed around 61,000 people in 2015. 1  From start-ups in London’s Silicon Roundabout to established players in The Valley, entrepreneurs are applying their creativity and technical ingenuity along the financial services value chain. To its advocates, this wave of innovation promises a FinTech revolution that will democratise financial services. Consumers will get more choice, better-targeted services and keener pricing. Small and medium sized businesses will get access to new credit. Banks will become more productive, with lower transaction costs, greater capital efficiency and stronger operational resilience. The financial system itself will become more resilient with greater diversity, redundancy and depth. And most fundamentally, financial services will be more inclusive; with people better connected, more informed and increasingly empowered.

3  All speeches are available online at www.bankofengland.co.uk/speeches  3  At the request of the German presidency, the Financial Stability Board (FSB) is considering the most important financial stability issues associated with new financial technologies and, drawing on a stocktake of national approaches, it is assessing the extent to which these risks are addressed by existing regulatory 2  frameworks. The FSB will report its findings to the G20 summit in July to promote the G20’s broader objectives for financial inclusion and strong, sustainable and balanced growth. In that spirit, this evening I would like to highlight some of the potential financial stability issues raised by the FinTech revolution. 2. The Financial Services Value Chain But first I should make a confession: I was a banker once. To earn money for university tuition, I worked as a teller in my native Canada. To be more precise I was a Customer Service Representative. My core responsibility was simple: stand at a wicket and accept customer deposits, mainly from small businesses, and pay out withdrawals, mainly to their employees. Over time, I got to know the regulars ranging from the baker who would come in every afternoon to deposit a bundle of bank notes smelling of bread (literally dough) to the executives of a failing construction company who would cash weekly their pay cheques with alacrity and trepidation. I learned that there were two types of client: those who engaged with me and those who didn’t.
Referring again to the Global Competitiveness Index, Albania is ranked the 90th as regards the level of education and high-level training, and only the 109th and 126th respectively at the level of business sophistication and innovation. These vulnerabilities will ever-increasingly become an obstacle for the country’s economic growth in the future, unless addressed on due time. Public reform in the education system and the need for more backup funds should be a priority of every development policy. On the other hand, I consider that the Albanian business can and should do more for supporting the Albanian education. First, the business can and should be more supportive to higher education institutions, at the same time cooperating with them in the area of market research and student training. The economic development history shows that the countries, which have invested in education, are currently in the group of most developed countries of the global economy. Second, I think that more efforts should be made in attracting and absorbing the brain in the administration and management of your businesses. Investing in education, in enhancing professionalism and expertise, is the best investment we can make for the future of our country. Parallel to this, the enhancement of our development infrastructure should be a priority issue. Beyond the road infrastructure development, which rightly is a priority of the public sector, the Albanian business can and should do more in this regard.

Scenarios however, are not projections, predictions or preferences but rather it provides a way of making sense of uncertainties and in addition it challenges our assumptions about what the future holds. Scenario building today is synonymous with thinking broadly and more freely about a problem, enlarging the frames of reference and involving different worldviews, rather than seeing a situation from a single perspective. Essentially scenario planning interventions have been most useful in supporting the construction of multiple frames of future states of possibilities. The process of scenario planning enhances the evaluation and integration of information and promotes contingency planning. Scenarios are also important for risk management. As risk is inherent in any business activity the framework becomes a useful tool in risk assessment and management. Most of all a major risk in the current environment is the lack of preparedness for how the environment might change and for the new challenges that may emerge. To attempt to predict these changes in any specific manner in this environment would be highly speculative. The risk management process therefore involves preparing for, rather than attempting to predict the change. This would promote an increased level of preparedness to cope with the inevitable changes. Scenarios also help to connect strategies and action plans to our visions. Using scenarios will essentially widen our perspectives, increase our understanding of the issues and developments. It also allows us to see opportunities that we may otherwise miss. New developments emerging would be seen from different angles and perspectives.
Technology dissemination users as a percentage of total population (unless indicated otherwise) 0% P C -u s a g e s o u r c e s : N e t p r o f it , F T  20%  40%  60%  80%  100%  S weden 1 US A G e rm a ny 2 3 4  In te r n e tusage s o u r c e s : N e t s iz e r , F T  S weden 5 US A G e rm a ny 6 7  E -c o m m e r c e u s e rs a s s h a re o f In t e r n e t - u s e r s .

These anchors are strong arguments in the hands of the public at large to exert pressure on public institutions, and to formulate and implement policies that guarantee long-term stability and sovereignty. Unfortunately, as I stated earlier, these anchors are currently being jeopardized by internal factors. Driven by short-term perceived benefits vis-à-vis the real costs of the correction process, the public, the business community, syndicates and stakeholders ask for short-term concessions from the institutions, and particularly from the central bank. Judging on the benefits, they require shifting the focus from the objectives and traditional instruments our institutions have been mandated for. These short-term perceived benefits, seemingly, have the potential to offer a right and moral solution to sovereignty versus stability, but they bear the risk of causing the loss of both in the long run. Political and institutional factors have not addressed yet some important concerns identified by the Bank of Albania to have caused financial stability-related concerns and decelerated economic growth in Albania. I refer here to collateral execution, lowering of perceived risk arising from the severe political situation and lack of consensus, deceleration of reforms required by the European Commission and receiving EU candidate country status, severity of political warfare, and use of the economy and the situation for political gain. Lastly, the Bank of Albania notes that the Albanian economy remains under the pressure of market developments in our main trading partners and their economic and financial policies.
This means that the companies can obtain financing by issuing commercial paper and selling to the banks, which can in turn use this as collateral to borrow from the Riksbank. The interest on the loans provides compensation for risk and time to maturity and the banks can only use the credit facility if they buy new commercial paper. If large companies outside of the financial sector gain greater access to credit, then the banks should have more scope to lend more money to small and medium-sized enterprises as well. Liquidity assistance on special terms The Riksbank has also provided special liquidity assistance to two Swedish financial institutions, namely Kaupthing Bank Sverige AB and Carnegie Investment Bank AB. These loans have been granted against collateral and at an interest rate that is higher than the normal borrowing cost. Although neither of these two market participants has a dominant position in the Swedish market, the Riksbank chose in both cases in the current turbulent market situation to grant liquidity assistance to prevent serious disruptions to the financial system and to maintain confidence in Sweden’s credit and payment systems. The decisions were based on assessments that the participants were solvent, but that they nevertheless were unable to acquire the necessary liquidity themselves to meet their payment obligations. With regard to this type of loan, liquidity assistance on special terms, it is important to remember why they are being granted. The issue is to safeguard the financial system and important social values.

When goods are transported to consumers via our physical infrastructure, such as the road network or by air, the payment for the product is sent to the end recipient by means of the “financial infrastructure”. If the financial infrastructure did not function, the economy would more or less grind to a halt. The financial system also makes it possible to manage various risks that can arise in the financial markets. This is important to both households and companies. Another important function is to be able to save and borrow money via the financial system. This gives households and companies the possibility to distribute incomes and consumption over time. The funds that are saved can be borrowed by companies and households to finance various investments which can then create employment and growth. When there is distrust and disturbances in the financial system, this function may be impaired, which can  BIS Review 138/2008  1  lead to a credit crunch. First the financial sector is affected, but then it gradually becomes more difficult for households and companies to borrow, too. Consumption and investment then decline, which can lead to a substantial economic downturn. A credit market that functions well is thus an important condition for good growth. To summarise, one can say that the financial system’s functions are very important for economic development. It is important that the system is stable for our society to function properly on the whole. But financial stability is something that most people probably often take for granted.
That will require the sound functioning of the credit channel, which is so important in the European economies and, of course, in Spain. … and immediately tackle structural problems and challenges Beyond the short-term reaction, it is time for economic policy to focus on tackling structural challenges. Allow me to summarise some of these, both at the national and European levels, including those relating to monetary policy and the banking sector. As regards national economic policy, one of the major challenges is undoubtedly to restore health to public finances. I have already pointed out that one of the most adverse consequences of this crisis will be the strong growth of public debt. And high public debt increases the economy’s vulnerability. Hence, the necessary counterpoint to the current fiscal activism is the announcement of a multi-year strategy to correct budgetary imbalances, to be implemented once the health crisis is behind us. The scale of the challenge is substantial. Even before the crisis the structural budget deficit exceeded 3% of GDP. We must now add to that figure the increase in the interest burden owing to the greater volume of debt. Also, there are expenditure increases derived from the introduction of the minimum living income and, in the case of pension spending, from population ageing pressure and the decision to link pensions to the CPI, along with the potential structural increase in certain expenditure items, such as healthcare.

The crisis has also shown that monetary policy cannot be the only euro area stabilisation mechanism. We must equip ourselves with a permanent fiscal stabilisation mechanism that allows us to face future crises without the need for ad hoc political agreements. The European funds approved during this crisis may be a good precursor of this mechanism. And we must also debate the reform of the Stability Pact. It should be simplified and tailored to the current circumstances, namely the low interest rate environment. Further, its scant capacity to successfully steer countries to build up fiscal buffers in boom periods for use in crises must be resolved. The medium-term challenges also affect monetary policy.8 These challenges arise from the progressive reduction in the so-called natural interest rate in recent decades. It is attributed to demographic factors, such as population ageing, or technological factors, such as lower productivity growth, which have altered the balance between the supply of saving and the demand for investment. The upshot is that, to stabilise inflation, real interest rates must now be lower. The problem lies in the fact that there is a lower bound on nominal interest rates, meaning that monetary policy is more effective in combating inflation than deflation or, even, persistently low inflation. 8  See Hernández de Cos (2021): "The European Central Bank’s monetary policy: response to the pandemic crisis and future challenges", speech at the Universidad Autónoma de Madrid. 8  Against this background, the main central banks have deemed it necessary to review their monetary policy strategies.
I referred in detail to these structural reforms in my appearance before the Parliamentary Committee for the Economic and Social Reconstruction of Spain after COVID-19 last June.9 Allow me simply to recall here that low potential growth was already a problem in Spain before the crisis, characterised by low growth of factor productivity and a higher unemployment rate than in the other developed countries. Also, although it is still early to quantify its impact, this crisis will foreseeably further damage the economy’s potential 8  Also, the debt rule requires that the ratio between this variable and GDP be reduced annually by one-twentieth of the differential with respect to the reference value of 60%. Since the debt ratio could reach around 130% of GDP, this differential would amount to some 70 pp, so that, according to this European rule, it would have to be reduced by some 3.5 pp per year. 9  https://www.bde.es/bde/en/secciones/prensa/intervpub/Discursos_del_Go/comparecencia-del-gobernador-en-la-comision-para-lareconstruccion-social-y-economica--de-espana-tras-el-covid-19--del-congreso-de-los-diputados.html  29  output. The message is that structural reforms are now even more necessary; they are also needed to alleviate and accelerate fiscal consolidation. 3.3  The composition of public finances  The strategy to reduce budgetary imbalances should be detailed and credible, setting out the deadlines and objectives and the measures to achieve them. It should also be long-term growth-friendly, which requires a thorough review of the various revenue and expenditure items. In addition, it should ideally be an integral part of an overall strategy that also addresses the adoption of long-term growth-friendly structural reforms.

In the September Banco de España forecasting exercise I have referred to in my address today, the impact of this programme was not explicitly incorporated into the projections, since at that time there was notable uncertainty over many key areas in relation to the use of these funds. However, we did publish an analytical text in which, under different assumptions about the execution time of the projects requested, the types of projects and how they would be financed, an initial approach was made in respect of their potential macroeconomic impact.4 4  See Box 9 of the “Quarterly report on the Spanish economy”, Economic Bulletin 3/2020, Banco de España. 11  The results of this analysis suggested that the European programme, given the potential volume of funds it could mobilise, has the capacity to become a significant factor of support to the Spanish economy’s recovery in the wake of the impact of COVID-19. Also, and in particular, it could be a unique lever for raising our modest potential growth rate, especially if the design and prompt implementation of new public investment projects exerting a high multiplier effect on activity were pursued, accompanied by the introduction of structural reforms providing for the more efficient functioning of our economy as a whole. In this respect, the NGEU programme entails an upside risk to our September forecasts that I shall quantify later.