samchain/econo-pairs-v1 huggingface dataset:
A council for cooperation on macroprudential policy How Sweden should best organise macroprudential policy for the financial system is one of the – very difficult – questions currently being addressed by the Financial Crisis Commission. While awaiting the report of the Commission and a future parliamentary decision on a longterm solution for a macroprudential policy framework we will have to try to make the most of the existing arrangements. It makes sense that a small country like Sweden should utilise the expertise and know-how that already exist at the Riksbank and Finansinspektionen. In January 2012, these two organisations set up a joint council for cooperation on macroprudential policy. The idea behind this council is that the authorities should consult and exchange information concerning their assessments of risks to the financial system as a whole, and discuss appropriate measures to prevent these risks. Another task will be to discuss the development of tools and methods in the area of macroprudential policy. The first meeting of the council was held on 24 February and the aim is that the council should meet at least twice a year. The minutes of the meeting are available on the websites of the Riksbank and Finansinspektionen. The intention is to publish the minutes of all the meetings. Great need for clear communication The publication of these minutes is an expression of the ambition to be open and transparent – an ambition that has become something of a trademark of the exercise of public authority in Sweden.

2.4 Given these challenges in Risk Management, financial institutions are expected to move towards Integrated Risk Management (IRM) which, in simple terms, is a continuous proactive and systematic process aimed at understanding, managing and communicating risks from an organization-wide perspective. It is about making strategic decisions that contribute to the achievement of an organization’s overall corporate objectives. In other words, IRM requires an on-going assessment of potential risks at every level and every segment and then aggregating the results at the corporate level to facilitate priority setting and improved decision-making. IRM should be embedded in the organization’s corporate strategy and it should shape the organization’s risk mitigation culture and highlight the importance of effective coordination among interdependent risks. 2.5 Many of you may have been following the rogue trading scandal that cost 4.9 billion Euros for Societe Generale – SocGen, the French Bank in recent months. The credibility of the bank suffered a fresh blow this week following the interim report handed over by the Finance Minister, Christine Lagarde to the Prime Minister. In summary, the findings of this report said “Very clearly, certain mechanisms of internal controls of SocGen did not function and those that functioned were not always followed by appropriate modifications”. Further, the report highlighted 8 elements of internal controls that were clearly inadequate and they may have been the decisive factors behind the crisis.
However, this has diminished during 2022 with the recovery of labor supply and lower demand. The peso's depreciation has also played a relevant role in the rise in inflation. The increase in the exchange rate has been caused by a combination of internal and external factors, where the former have a greater weight. In recent years, the Chilean currency has lost value vis-à-vis other comparable currencies, mainly because of greater local uncertainty and some political-legislative decisions taken in previous quarters. More recently, the peso's evolution has been more linked to the dollar's global appreciation. Data for the quarter ending in August shows that job creation is stagnant, the unemployment rate remains at 7.9% and labor participation has stabilized. On the other hand, the Internet Job Postings Index shows a decreasing trend during the year. Nominal salaries present annual increases of around 11%, and real salaries remain at negative values close to 3% annually as of August. 1  Bilateral Meetings  •  Persistence  Inflation expectations have remained above the 3% target for several quarters. Although some measures they have receded somewhat at the margin, the fact that they have remained elevated for so long increases the risk of a mores persistent inflationary process and constitutes a very relevant point of attention for the Board's decisions. In fact, the latest Financial Operators' Survey (FOS) indicates that expected inflation in one-year falls to (previous: 6.3%) 6.0% and in two years to 4.5% (previous: 5.0%).

Investment on the contrary has fallen less than expected due to the dynamism in specific sectors (energy, public transportation) while its fundamentals continue to anticipate a weak performance. In this context, long-term interest rates have resumed an upward trend since the beginning of September, with 10-year peso rates close to 7% and indexed rates at 2.6%. These levels were observed in October 2021 and before that in February 2011. Most of this recent increase is related to external financial conditions. Consumer interest rates are at 28%, while commercial rates are around 15%, values not seen for more than a decade. Meanwhile, housing rates remain at just over 4%. Real 2  Bilateral Meetings  commercial and consumer loans fell by more than 2.2% and 3.0%, while housing loans grew by 2%. Projections and monetary policy decisions  A key driver for declining inflation is that the economy continues with the adjustment process which started this year, after the large imbalances it accumulated in 2021. In our forecasts, the economy will begin to contract in annual terms from the end of the third quarter of 2022 and continue to do so in 2023. This will keep the activity gap in negative territory for several quarters, which is consistent with the spending adjustment required to reduce inflation to the 3% target within two years. The spending adjustment will also reduce the high level of the current account deficit.
I believe it is possible to do that while being proud of our institution and all the good things it has done through the last four centuries. Second, while improving ourselves we also need, together with Nikhil and his team at the FCA, to help the financial sector do likewise. In the case of the PRA, this is both because, in common with other public authorities, the PRA has a legal duty to promote equality, and also because there is a clear and direct linkage from a lack of diversity and inclusion in firms through to groupthink and from there through to financial disasters. I’m pleased that we’ve managed to advance the debate on this, and other very important aspects which the FCA is also interested in, through our recent discussion paper, and look forward to moving on to next steps once we have considered all the responses. Conclusion Now I can imagine that at this point the more jaded amongst you may be eyeing the prudentist somewhat sceptically as she points out these various new features of her surgery. Where is the tooth-pick marked “asset quality”, the drill called “liquidity management”, the dreaded waterscaler known as “governance review”, and that nice whizzy little polisher thing she uses at the end in order to test firms’ cyber defences? Fear not, they are all still safely there in the tray and are all being used very thoroughly.

Good risk management as a competitive advantage The importance of Basel II lies not just in aligning capital adequacy requirements more closely with the way banks measure economic capital. The real payoff will be the positive impact it will almost certainly have - indeed is already having - on the risk management practices of institutions. Improvement in risk management will tend to enhance the competitiveness and financial success of banks. As suggested earlier, good risk management practices allow a bank to take more risks and improve profitability. Such practices foster better understanding of risks and allow the managers of banks to establish proper tolerances for the risks they assume. Good risk management allows banks to weather the unexpected shocks that occur from time to time. The danger, of course, is that as risk management practices improve, a bank’s risk appetite may increase disproportionately. Bank directors and supervisors must be vigilant against this possibility. 1  2  Basel I was officially implemented in 1992. BIS Review 42/2004  Main benefits of implementing Basel II improvement in risk management will materialise The risk management standards and practices embodied in the more sophisticated approaches under Basel II are real and are drawn from the best practices of large internationally active banks. They reflect many insights gathered through practical experience, including both successes and failures in risk management. Even for institutions at the forefront of risk management capabilities, we think the Basel II standards will be useful.
That is due in particular to the property market boom, on which the recent structural changes in the economy, including immigration, have had a bearing. Consequently, the financial position of the sector as a whole is fairly sound. The trend of indebtedness in the past ten years has been sufficiently significant as to identify it as one of the risks to consider in the essentially favourable scenario of the Spanish economy. The Banco de España should signal this fact, particularly in a setting in which credit continues to show signs of being very buoyant. But, at the same time, we cannot ignore the fact that the financial position of households and firms is healthy and provides a sound basis for adaptation to the interest rate levels in keeping with the recovery in economic growth in the euro area. The solvency of the Spanish financial system is a further guarantee for the maintenance of stability in the economy as a whole. In sum, the outlook for growth in the Spanish economy in the coming quarters is, in my view, relatively healthy. And economic policies can contribute to providing continuity to this expansion in the medium term, defusing some of the risks highlighted. In that connection, it will be essential to restrain demand impulses and improve supply-side functioning.

****** The changes I have described in the international setting, where the greater dynamism of the euro area and, therefore, of our export markets is notable, along with the gradual withdrawal of the impulse provided by monetary conditions, all shape a favourable scenario in which the Spanish economy may continue growing at a high rate in a sustained fashion. The easing in oil prices has led to a marked slowdown in the inflation rate, which it would be highly desirable to consolidate in the coming quarters. The information available on the first half of 2006 shows the Spanish economy has remained very strong, with activity even moving on a mildly accelerating path. This means that the improved external environment has so far offset the slight tightening of financial conditions, which has made for some rebalancing of the sources of growth of our economy, in favour of the external sector and with a smaller contribution by national demand. The increase in GDP growth in Q3 is along similar lines, with a yearon-year growth rate of 3.8%, as a result of a further improvement in the contribution of net external demand to output. This will allow activity to expand over the course of 2006 at a sharper rate than in 2005, meaning the current year would show the highest growth rate of the present decade.
The capital conservation buffer allows banks to dip into their capital reserves, while at the same time providing disincentives for banks to do so due to the restrictions it imposes on dividend and bonus payments;  •  add a macroprudential element in the form of the countercyclical buffer, which requires banks to hold more capital in good times to prepare for inevitable downturns in the economy;  •  supplement the risk-based regime with a simple backstop in the form of a (non-riskbased) leverage ratio;  •  impose additional capital requirements on systemically important banks – both global and domestic – to take account of the externalities their failure would impose on society; and  •  introduce the first international standards for bank liquidity and funding, designed to promote the resilience of a bank’s liquidity risk profile to both short term liquidity shocks (the Liquidity Coverage Ratio – LCR) and longer-term mismatches in funding (the Net Stable Funding Ratio – NSFR). Of course, there are plenty of other big ideas being floated on how the banking industry should be restructured in the aftermath of the crisis, particularly those related to varying models of structural separation (eg the ideas of Volker, Vickers and Liikanen).

Del Negro, Giannone and Patterson (2015) ‘The forward guidance puzzle’. Federal Reserve Bank of New York Staff Report n.574. 12. Lagarde (2021), Press conference on the ECB monetary policy statement on 22 July 2021. 13. ‘Norges Bank’s monetary policy handbook’, 2022. Other examples are from the Riksbank: “The publication of repo rate forecasts has given the general public greater insight into monetary policy and improved possibilities for evaluation and accountability.” (‘The Riksbank’s experiences of publishing repo rate forecasts’, 2017). And from the Reserve Bank of New Zealand: “Published forecasts help markets assess the economic environment and understand our policy strategy.” (John McDermott (2013) ‘The role of forecasting in monetary policy’). 14. In a speech in 2012, while still Governor of the Bank of Canada, Mark Carney put this well: “Today, to achieve a better path for the economy over time, a central bank may need to commit credibly to maintaining highly accommodative policy even after the economy and, potentially, inflation picks up. Market participants may doubt the willingness of an inflationtargeting central bank to respect this commitment if inflation goes temporarily above target. These doubts reduce the effective stimulus of the commitment and delay the recovery.” 15. Haberis, Harrison and Waldron (2019) ‘Uncertain policy promises’, European Economic Review, Vol 111, pages 459-474. 16. More formal, written constitutions, which usually can’t be altered except by super-majorities in the legislature, and therefore evolve more slowly than the electoral cycle, could be seen as a commitment device to allow for (otherwise) time-inconsistent but optimal government policies. 17.
To do that, trust should be rebuilt between the countries of Europe. Trust is vital. From a French perspective, how can that trust be re-created? By carrying out reforms, and France is doing that. And by reducing deficits even more? By continuing to reduce the deficit so that debt falls and France is ready when growth slows down. And by making further cuts in public spending? It is not for the ECB to tell the French government what needs to be done in detail, but what we wish is for France to have the capacity to respond economically when growth slows down and for it not to depend completely on monetary policy. 2/2  BIS central bankers' speeches

We can make good use of this information as a starting point for the design and implementation of a national strategy of financial education and financial inclusion. They are both important objectives for the central bank. These two topics are set to gain central stage following the emergence and growing trend toward digitalization, emergence of digital financial instruments and potential introduction of Central Bank Digital Currencies. I am sure that as financial inclusion and financial education gain more attention in the mainstream central bank agenda, we will see these topics discussed in our future workshops. My most important recommendation is that research produced at the central bank, remains close to central bank interest and has practical value for policy and decision making to achieve their objective. It must flow naturally into policy making and provide solid foundations for 2/3  BIS central bankers' speeches  monetary and financial stability policy. Finally, I am proud to see how our researchers have progressed in the adoption of the most sophisticated techniques of research. Simultaneously, I am glad to see that the adoption of research methods has crossed the boundary of research department and is spreading well into other departments. Our economists are doing independent research work in support of their day to day activity. This is the result of our continuous efforts to increase the impact of research in policymaking.
For example, almost all DSGE models were set up to describe fluctuations around a steady state. With a major feature of the crisis being a disruption to the steady state/supply side, these models weren’t suited to describing the resulting fluctuations. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  Following the deepest recession since the war, a recovery slower than the recovery following the great depression and a badly damaged financial system, there was good reason to be concerned about deep structural changes to the UK economy. And, as the recovery finally gathered momentum and turned to 6  expansion, the incoming data on pay and productivity certainly suggested something had indeed changed. Similar evidence appeared in the data on other economies. 7  Against that background the case for ‘stodginess’ was in my view very strong. Two years ago, I posed the question of whether what we were seeing was some form of ‘super-cycle’ following a breakdown of the financial system in which it could take up to a decade for us to return to something resembling the old economic model, or whether what we were seeing was more secular stagnation and even longer lasting change. I concluded in favour of optimism or at least that we should not yet give up hope of a return something more like the old model – though with weaker potential growth, given the likely persistence of some longer term 8  economic forces.

Some focus on assets, others focus on organizational units, and yet others look at specific parts of processes. The result can be a set of assessments with potentially inconsistent coverage and disconnected recommendations. So, an appealing alternative to counter that trend and bridge siloed assessments is to integrate risk assessments. A unified approach can bring together risk and business professionals to understand and manage the risks to critical processes. The idea is to create a common picture of gaps and then design coordinated action plans that can target improvements in resilience. Let’s focus on business continuity to see how an integrated risk approach can strengthen resilience.5 Business continuity programs have traditionally been designed to restore critical physical or technology infrastructures that can be disrupted by threats like extreme weather or loss of power. So, a business continuity plan might involve arranging for a backup data center if the primary data center goes down due to a hurricane. Within an organization, different business areas may develop their own plans that are focused on their specific business needs and priorities. An integrated business continuity plan is one that is designed to protect critical organizational processes and their essential assets from the full range of relevant threats. An integrated approach begins with organizational objectives. This bridges a gap between what good looks like to an individual business and what it looks like to the organization as a whole.
So far, the processes of the EIA, HIA, and public hearing processes have been formalized and the government is now in the process of establishing independent agencies which will be responsible for evaluating all of the proposed investment projects. It will take some more time, but progresses are being steadily made. In my view, the “Map Ta Phut” problem is only a temporary hiccup in Thailand’s long record of investment-friendly climate and rapid industrial development. It can be seen as part of a growing pain that developing countries such as Thailand experienced as it becomes more developed. On the positive side, it should provide opportunity to forge a closer coordination among related parties and establish a clear process in achieving sustainability of industrial development. As for the second issue, I think, it is too early at this point to put out an exact estimate of its negative impact on the recovery process. Should the problem takes time to resolve itself, the negative impact on the economy will become more visible especially on the tourist industry and private consumption. These, together with the severe drought that we have been experiencing thus far, may somewhat dampen the robust economic momentum that we carry forward from the fourth quarter of last year. Ladies and Gentlemen, I would like to turn to my last topic: Thailand’s economic policies going forward, starting with our monetary policy strategies in 2010.

Furthermore, the exit policy especially of the major economies could spill additional risks to the ongoing global recovery. Their timing and speed will be crucial. The action that is either too early when the economy is not sufficiently robust, or too late when inflationary pressure and/or economic imbalances have already been formed will have important implication on recovery, price and financial stability. Second, emerging economies, Thailand included, face the challenge of sizeable and volatile flows of capital due to their better growth prospect and sooner policy normalization vis-à-vis G3 countries. These flows could lead to volatility in foreign exchange markets and might potentially create financial imbalances. From the data thus far, we have seen sizable inflow  2  BIS Review 41/2010  of capital into some of the Asian countries such as Korea, Taiwan, India, and China since the second half of 2009. And in the last couple weeks, this money started to flow into Thailand. Third on domestic front, as you are well aware, Thailand also faces two major uncertainties: the problem of Map Ta Phut and the on-going political unrest. I believe the “Map Ta Phut” problem is of the most interest to Japanese investors, and therefore I would like to say a few words. At present, the authorities have put all efforts to achieve the resolution of the problem, given its implications on the country’s future investment prospect, industrial practice, and economic recovery.