samchain/econo-pairs-v1 huggingface dataset:
As a result, interest rates in emerging market economies are expected to be raised faster than the industrialized countries. These interest rate and growth differentials against the backdrop of ample global liquidity are breeding the carry-trade behaviour with the USD as the funding currency this time. This leads us to our third challenge, which is how to prevent the surge in capital inflows from creating unwarranted instabilities such as excessive volatility in the currency market and asset price bubbles. In response to this challenge, we are beginning to see some countries such as Hong Kong, Korea, Singapore and China tightening their prudential standards to cool down speculative pressure in the real estate sector. In addition, Brazil has recently imposed measure to slow down the inflows of fund into its stock market. In the case of Thailand, net capital flows have turned positive in July and continued to remain so, causing the Thai baht to strengthen as the current account is also in surplus. Nevertheless, the Thai baht has been moving in line with other regional currencies and the Bank of Thailand remains vigilant in ensuring this continues to be the case. In order to make capital flows more balanced, we are in the process of furthering the liberalization of capital outflows. This would also increase the flexibility of our businesses in financial management.

The Need for Clarification  BIS Review 77/1999  2  Further clarification is particularly necessary at this time, notwithstanding the point that the general principles outlined in my 1994 statement still apply. The banking environment has changed quite dramatically in the past five years. Last year, after many years of growth, Hong Kong, in common with much of the rest of the region, entered a period of sharp recession, with all the stresses and uncertainties that this has brought to the banking sector. The face of banking across the world has also developed rapidly in the last five years. There are strong justifications for the HKMA not only to restate the principles under which we are ready to provide liquidity support to institutions experiencing difficulties, but also to further clarify the objectives, the mechanics, and the limits of this support. As I have said, it has so far not been necessary for the HKMA to exercise its role as lender of last resort, though we have, on one or two occasions, said that we stand ready to do so. Given the volatility that has been generated by the Asian financial crisis and the serious problems that have been faced by banks elsewhere in the region, this is in itself a remarkable testament to the resilience and prudence of our banking sector. It also underlines the effectiveness of our regulatory and supervisory system, which, as any good system should, takes a preventive rather than a curative approach.
In the longer term, we nonetheless believe that monetary policy and the interest rate differential against other countries are important exchange rate determinants. However, there will be short-term exchange rate fluctuations not necessarily in tandem with the interest rate differential. The chart shows the effective exchange rate for Norway and other small countries with inflation targeting. The fluctuations in the Norwegian krone are not particularly wide compared with the exchange rates of Switzerland, the UK and Sweden. In relation to the euro, the krone exchange rate has still varied between 7.22 and 9.25 since mid-1998. If such variations feel uncomfortable, it is possible to hedge against them. The forward exchange and options markets have expanded in recent years. A deeper market reduces transaction costs and it is easier to find counterparties. This has provided companies with greater scope for hedging against short-term foreign exchange risk. The use of instruments that reduce the risks associated with a floating krone is also increasing in Norway. However, in the somewhat longer run, exchange rate changes will have an impact. This is important if the exchange rate is to act as a shock absorber: When economic activity is high, an appreciation of the krone will restrain activity. Conversely, when there is a need for stimulating the economy, a weaker krone will contribute to growth. Over a somewhat longer period, it is not the nominal exchange rate that is the most important. It is developments in competitiveness that is of the greatest significance for the business sector.

Aligning the operational framework of monetary policy to European standards is another challenging objective the central bank faces. Obviously, I am talking about the still high reserve requirement ratios (given the need to contain credit expansion, foreign currency lending in particular, during the economic boom) and the relatively large width of the interest rate corridor (initially warranted by the imperative of cooling off speculative capital inflows and domestic currency appreciation). The NBR has capitalised, in the past two years, on the window of opportunity provided by the favourable macroeconomic and financial background to rectify the situation to a large extent, yet the process needs to be continued until reaching the prevailing levels across the EU. Looking ahead, it is essential that the NBR identify, as it has until now, the right timing for the upcoming stages of the alignment process to unfold  2  BIS central bankers’ speeches  without impairing the smooth functioning of the markets and without deteriorating key indicators for investor sentiment or, more generally, public perception. I will end my brief overview on the economic state of play in Romania by expressing my hope that this event will turn out to be the beginning of a lucrative and mutually beneficial partnership. BIS central bankers’ speeches  3
Measured in terms of velocity, after significant acceleration in the third quarter of last year, activity has moderated growth this year so far (Figure 1). In our baseline scenario, we project that the rate of expansion of final domestic demand will moderate further in the remainder of 2018. This will occur once the effect of the higher growth of more volatile items that have less capacity to permeate the rest of the economy dissipates, like the ones just mentioned. On the consumption side, this opinion assumes that the slowdown of the wage bill—given the behavior of employment and wages—limits the increase in household spending. In response to the traditional lag with which the labor market operates in the cycle, we can expect that the recovery of growth will translate into an increase in employment and greater growth of wages in the coming quarters (Figure 2). 1  On the investment side, gross fixed capital formation grew 3.6% annually in the first quarter, thanks to the construction and other works component that resumed positive expansion rates after almost two years. Plus, that machinery and equipment continues to be the most dynamic component of investment, with imports of capital goods that, as of May, excluding non-regular transportation, continued to improve. This, in a context where business expectations have returned to optimistic territory on aggregate (Figure 3). However, some numbers suggest that we cannot be sure yet that investment will be very dynamic, particularly because there we still see no significant change in the execution of large-scale projects.

Today, it amounts to 13%. It was also said at the time that one franc out of three was made abroad. Today, it is one franc in two! The 1990s marked the real turning point in our economy’s trend toward globalisation. Our commercial relations with China are exemplary in this regard. After having levelled off at approximately 900 million francs a year in the late 1990s, our exports to China grew at a rapid pace in more recent years, reaching 2.9 billion francs in 2004. With regard to Chinese exports to Switzerland, the trend is just as spectacular, but much more steady. Sales of products manufactured in China in the Swiss market have risen continuously for 20 years now, be it textiles, electronic equipment or - naturally - product components that are reintegrated into our domestic production. Owing to soaring exports to China, our trade balance with this country has thus flattened out steadily; toward the end of the 1990s, it was clearly negative, in 2004 we even had a slight surplus. Despite the rapid expansion of our trade with China, its overall significance remains modest, amounting to just 2% of total Swiss trade. From a Chinese perspective, the relative importance of trade relations with Switzerland is even smaller. Switzerland accounts for less than 1% of Chinese imports and exports. A similar picture can be observed with respect to Swiss foreign direct investment here. Despite a thirty-fold increase between 1993 and 2003, it still amounts to less than 0.6% of total Swiss investment abroad.
When one knows all about a particular “signature” or about a particular country, there is much less reason to embark into blind crisis contagion. Here is the motto I would like to be 5  BIS Review 52/2000  accepted globally by market participants: “Let us judge the quality and creditworthiness of any particular signature upon its own peculiar fundamentals, upon its own, particular, assets and liabilities”. –  On the euro, I want to stress that the euro zone has adopted a sound macro policy and has embarked in a fairly comprehensive program of structural reforms. These reforms will take time to be fully completed. But they have already boosted economic growth, job creation and the restructuring of firms. I am impressed by what has been achieved during the past years and National Central Banks as well as the ECB are strongly encouraging governments and corporate businesses to foster structural reforms and business restructuring in the future. The Eurosystem, which is the guardian of the euro for the sake of the people of Europe, knows that our fellow citizens want the single currency to be at least as solid as were their previous national currencies: in France, to give only one example, 96% of the people are calling for the euro to be at least as solid as the Franc; needless to say that it is the same in Germany and in all other countries of the Monetary Union.

There is a large degree of uncertainty among market participants about the magnitude and the timing of climate change, and about likely policy responses. This type of uncertainty may be a source of market failure. Climate risk is a complex topic covering a broad field of issues being to a large degree outside the remit of central banks. Climate change is a global challenge. The prime responsibility and the most effective tools to mitigate climate risk lie with governments and with fiscal policy. It is important to use the market mechanism by pricing emissions to reflect the true costs of greenhouse gas emissions. However, the financial system must adapt to climate risk. Central banks and financial supervisory authorities can, within their mandates, promote financial stability by ensuring that financial institutions appropriately includes climate risk in their risk management. Climate risk is not fundamentally different from other risks facing the financial sector. Other types of risks may also be systemic and characterized by historical data having uncertain relevance for future risks. Both financial institutions and authorities must consider how a changing climate will affect financial risks. This must be integrated in the risk assessment and hence in the overall assessment of the capitalization and funding of financial institutions Uncertainty with respect to the magnitude and impact of climate change can lead to simplified assessments of its risks. Authorities, including central banks, may contribute to a knowledgebased debate and reduce uncertainty by strengthening and refining reporting requirements.
The other quality that helped make our things turn out well, aside from being very proactive, is that we were also practical and flexible regarding the policy response. We adjusted our response when things did not work as we would like them to be. An example is when the initial soft loan facility went out. It had very low interest rates to ease the burden on the borrowers, but it was not very attractive because the interest rates were not high enough to compensate banks for the credit risk. As a result, the credit was not flowing through that channel. We responded and adjusted by launching the additional measures I have discussed previously. I think that flexibility of response is another thing that helped get us to where we are today. Page 2 of 8  Aside from expanding credit, another important measure that we put out recently is to address the existing debt burden that the borrowers face. One important measure that we announced last year was on long-term debt restructuring to encourage banks to restructure their debt on a more sustainable basis. We had recognized our initial take on Covid-19 that the crisis would be very severe but short. Therefore, the measures we came out with were blanket, broad-based, and very large. We then realized later that Covid-19 would be staying with us for a very long time, and thus, the measures must be more targeted and longer in terms of their response.

And we have established crisis management groups, and, in the EU, resolution colleges, that bring together the regional supervisors for the major cross border banks. These provide the mechanism for agreeing, in advance, the strategy for managing the failure of a major bank with a presence in a number of jurisdictions and for monitoring progress in making that strategy possible. This requires the continued build up, in line with the agreed international standard, of loss absorbing resources that can be used to recapitalise the group in resolution. And hosts’ confidence in the resolution strategy will depend on the contractually enforceable allocation of those resources across the groups major operating entities, again in line with international standards. Recapitalising a bank in resolution by bailing in the private sector restores solvency. But a solvent bank in resolution will still have liquidity needs. Our first preference – and that of the resolved firm – would be for the bank to meet those needs from some combination of its own liquid assets and private funding sources. But we cannot guarantee resolved firms will be in this position, even once they have been restored to solvency and are continuing to meet the requirements for authorisation. Ensuring solvent firms in resolution have access to public sources of liquidity is therefore a critical part of an effective resolution strategy and an area where there is great merit in clarity.
Firms have developed a wide range of more-or-less polite methods for providing us with feedback on the letters we write to them. But letter writing is an art rather than a science, and evaluating objectively how clear we are does not lend itself easily to traditional forms of quantitative methods. Advances in ML,  6  All speeches are available online at www.bankofengland.co.uk/speeches  6  however, are helping. We recently analysed the letters we write to firms on the key risks they face and our supervisory strategy. We quantified a number of qualitative features of these letters, for example, how blunt we are in our messaging, how personal we are in terms of to whom we address the letter, and the overall sentiment expressed by the letter. We then used an ML model called random forests to detect whether, for example, the PRA writes to firms differently than the prior regulator, the FSA. (We do. )10 On the back of that project, we have built an app that now enables supervisors to analyse their written communications. Supervisors can use the app to analyse any of their draft documents before they are sent to firms. IV. CONCLUSION  Advanced analytics, machine learning and AI seem to be everywhere now – from image and voice recognition software to driverless cars and health care.

It should also be noted that the figures for the twelve-month rise in consumer prices are considerably more volatile in Norway than in other countries. We see from the figures that consumer prices in Norway, even when tax changes and energy products are excluded, are more volatile than indices in other countries where these products are included. Low inflation is not the result of declining demand, activity or employment. In our conduct of monetary policy, we weigh the objective of stabilising inflation close to 2½ per cent over time against the objective of stable growth in output and employment. Since inflation is low, we have chosen to keep the interest rate at a low level and have at times considered an even lower interest rate. However, as the Norwegian economy has shown solid growth since summer 2003, we decided instead to use some time to bring inflation back to target. In a period of increasing cross-border labour flows, substantial technological advances, changes in competitive conditions and new trading patterns, we may, with our very open economy, have to accept a somewhat greater variation in inflation and deviations from the target, as we have witnessed over the past two to three years. BIS Review 17/2006  3
Miguel Fernández Ordóñez: Situation of the Spanish economy and financial sector Speech by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, at the XV Financial Sector Meeting “The way forward for the Spanish banking business model”, Madrid, 15 April 2008. *  *  *  I shall be focusing today on the Spanish economy which, naturally enough, has been affected by the changes in the international environment prompted by the further slowdown in the US economy, the rising course of oil prices and the prolongation of the bout of financial turbulence. To this end, I shall begin with a brief reference to the situation in the United States and in Europe, focusing thereafter on the macroeconomic outlook for Spain in an attempt to define its degree of exposure to the international financial turbulence. Finally, I shall offer some economic policy considerations. It is in the United States that the deterioration in macroeconomic conditions has been most marked. The effects of the sharp adjustment in the US real estate sector have been amplified by the consequences of the instability in international financial markets, severely affecting business and household confidence. The outlook of most analysts for 2008 points to a strong deceleration in the first two quarters of the year, and even to a recession at some point along the line, although any more medium-term projection is shrouded in considerable uncertainty. In the euro area, some of the risks to continued economic dynamism progressively materialised during 2007.

2  BIS central bankers’ speeches  Next-generation SIC payment system The thoroughly redesigned SIC payment system known as “SIC4” came on stream in April 2016. Based on cutting-edge, forward-looking technology, this new system reinforces the principles of security, reliability and high performance that have proved their worth for more than 30 years. It is particularly crucial for Switzerland’s finance industry that transactions can be effected with the highest possible levels of security. The SNB therefore welcomes the fact that the former security infrastructure for accessing the SIC system has been overhauled and that a tailor-made security solution will be used from now on. A large proportion of cashless payment transactions in Swiss francs is settled via the SIC system. In 2015, SIC settled a daily average of approximately 1.7 million transactions worth CHF 154 billion, including both client and interbank payments in Swiss francs. Moreover, SIC is an important system through which the SNB implements its monetary policy. We therefore have a keen interest in the ongoing development of the SIC system to ensure that it is able to meet changing technical and professional requirements. BIS central bankers’ speeches  3  4  BIS central bankers’ speeches  BIS central bankers’ speeches  5
This applies at any rate to interest-bearing assets, while for equities uncertainty over the future real value is only very slightly connected to the currency in which the share is issued. Basically, the earnings are determined by where the company has its production and sales and by the competitive situation. It is the profits that increase equity and thus shareholders' net wealth and real purchasing power. The choice of basic currency is not self-evident for multinational companies with owners, production and sales spread throughout the world. Essentially, it should be the shareholders' country of domicile that determines the currency. When this question was discussed prior to the introduction of the euro in 1999, the focus was on the size of the portfolio effects if several large multinational companies domiciled in Sweden were to convert to regarding the euro or another currency as their domestic currency. The connection was then made to the possibility of denominating and accounting in a currency other than the krona. There were considerable difficulties in assessing the possible size in portfolio shifts, but the illustrative examples then produced showed large shifts in portfolios. It was also assumed that demand for the krona on the futures market would decline significantly, as companies would not try to counteract uncertainty in profit forecasts by hedging expected net income in foreign currency against krona. Investments of liquid funds and profits accumulated over the year in krona would also decline for the same reason.

We have a diverse audience with well-known experts on Islamic finance and market participants who, I am sure, will provide us with a fruitful encounter. Let me thank the IE again for hosting the event and the IFSB and Mr. Jaseem Ahmed for bringing this initiative to Madrid. I wish you all a very successful Forum. 2  BIS central bankers’ speeches