samchain/econo-pairs-v1 huggingface dataset:
Why do I say this, when we have other resolution tools available? I say this because of the importance of protecting critical  1  http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2014.173.01.0190.01.ENG  BIS central bankers’ speeches  1  functions. It is simply not credible to think that a G-SIB could be dismantled over a resolution weekend without a destabilising disruption to critical functions. Finding a private sector purchaser capable of taking on the business – in whole or in parts – is likely to be even more difficult. Bail-in enables us to stabilise a firm. It buys the time that will allow for an orderly reorganisation or wind down of all or part of a failing firm, in order to address the underlying cause of the failure. There is more than one way to effect a bail-in: either through the use of write-down and conversion powers directly, or via a bridge institution. In a bridge, liabilities are exposed to loss by leaving them behind in an insolvency process with the activity that is to continue transferred to a new legal entity. In contrast, where the bail-in tool is applied directly, liabilities are written down or converted into equity within the existing legal entity. Applying the bail-in tool directly has a number of advantages over the bridge approach, at least in the context of a resolution at the level of an operating company.

Since, in a cross-border resolution of a G-SIB, it is in the interests of both home and host resolution authorities that key subsidiaries that are not themselves resolution entities do not formally enter resolution, and instead resolution tools are applied only to resolution entities, this will incentivise cooperation between home and host and reduce incentives to ringfence assets locally in an uncooperative manner. So, if there is sufficient GLAC of adequate quality that is distributed appropriately within G-SIB groups, we will have made a further, major step in making G-SIBs resolvable and ending TBTF. Again, let me emphasise the importance of disclosure at the legal entity level. It is important that investors in GLAC, and creditors of G-SIBs generally, can identify their place in the creditor hierarchy and therefore better estimate their expected losses should resolution become necessary. This will reduce moral hazard, improve certainty of outcomes in the event of failure, and so incentivise investors to ensure the firms they are investing in are run in a prudent manner. Conclusion I want to emphasise just how much progress has been made in last three years: resolution regimes and authorities are now in place where there were none previously in many countries. Resolution planning for systemic banks is taking place in Crisis Management Groups and will soon be taking place in EU resolution colleges too. We look forward to the guidance and technical standards from the European Banking Authority on how resolutions will be transacted.
In addition, there is uncertainty over how monetary policy affects asset prices. The Riksbank conducts what is known as flexible inflation targeting. The objective is that the annual change in the consumer price index (CPI) shall be 2 per cent, but we also attach some importance to attaining a balance in production and employment. Asset price movements are normally included within the scope of flexible inflation targeting. We include changes in asset prices and other financial variables in the balance when we make our forecasts. However, the Riksbank has no target for property prices. 1  2  IMF World Economic Outlook, April 2003. BIS Review 60/2008  The Riksbank’s view is close to the reasoning that changes in asset prices should only be allowed to affect monetary policy to the extent that they affect our forecasts. But such a view is based on the forecasting models used being able to include the full effect of house prices on total demand in the economy. This is not the case for the Riksbank or other central banks; there are no forecasting tools that can entirely capture the effects of changes in property prices. The forecasts therefore have to be supplemented with qualitative assessments. How has the Riksbank’s stance affected monetary policy in practice? When the Riksbank raised the repo rate in January 2006 borrowing and house prices had a more pronounced effect on the decision.

Indeed, estimates from both the International Monetary Fund and various investment banks suggest that the current value of Thai baht is consistent with the underlying fundamentals. To promote a deeper foreign exchange market and foster more balanced capital flows, the Bank of Thailand also launched a Capital Account Liberalization Master Plan, which entailed liberalization of Thai investment abroad and a streamline of foreign exchange regulations. There are also continuing efforts to enhance the private sectors’ adaptability and foreign exchange risk management. These initiatives should provide an extra layer of cushion to shield businesses against short-term market volatility. They are not, however, a substitute for structural improvement in productivity, which in the long run holds the key to success for the export industry. Given that the global environment is still subject to uncertainty, capital flows may continue to be volatile, and risks to financial stability warrant close monitoring, it is more important than ever that monetary policy strikes the right balance between providing support to sustain growth momentum while ensuring long-term financial stability. In the judgment of MPC, the current stance of monetary policy remains accommodative, with the real policy rate still in negative territory. As the balance of risks shifts between the need to support growth and the duty to safeguard financial and price stability, monetary policy stance will have to be adjusted accordingly. The Bank of Thailand stands ready to employ the right mix of policy tools under its purview to attain these goals.
In 2018, Banque de France organized more than 800 training and information sessions, attended by over 16,000 social workers. 2/ How digitalization changes the way we approach financial inclusion 2/5  BIS central bankers' speeches  The examples I have been mentioning from Banque de France experience give an illustration of what can a public authority like a central bank does to promote financial inclusion. But it is essential to also consider how this can be done. And here, Fintechs and digitalization of the financial sector are creating new ways to bring about more inclusion. Many examples of this “Financial inclusion 2.0” will be presented this afternoon and how specific technologies such as blockchain can play a role. There are many areas where Fintechs can help bring more financial inclusion, but let me name a few: Improving access to financial services, for instance via mobile devices; Gathering more and better data, which allows for more tailored and better priced products; Driving down operation costs, and making relationships with fragile clients more profitable. This also means major change for public authorities. Fintechs means dealing with new firms, new technologies, new ideas. To be reactive and engaged, many authorities have set up Fintech units, which is the case for ACPR in France. We work in close cooperation with our counterparts worldwide, and in particular with MAS, which is spearheading these developments. As public authorities, we also encounter new risks and challenges related to financial inclusion in a digitalized world.

It is about growing the Singaporean talent base as well as being a magnet for the world’s talents. It is about a vibrant entrepreneurial and innovation base, characterised by a lot of start-ups, a lot of experimentation, and a lot of R&D. A key aspect of dynamism is also high rates of churn in the labour and capital resources in our firms: There needs to be continuous flux and reallocation of resources in response to changing economic and market conditions. Both capital and labour need to be nimble and highly adaptive. The structure of the Singapore economy is well suited for sustaining our dynamism. Singapore’s strong advanced manufacturing and related trade and logistics activities are internationally competitive. In modern services, comprising financial, professional services, and info- communications technology, we enjoy an international hub status. Together, these sectors make up some 40% of our economy. If our domestic services can be further professionalised – job by job, each worker possessing deep skills and delivering a high quality of service, we will be a dynamic economy. Finally, dynamism must be about our people. We must remain an open society. 16 / 17  BIS central bankers' speeches  Not just in being open to foreign trade, investment, and talent, but being deeply connected to the rest of the world. Not just attracting foreign talent to Singapore but Singaporeans venturing abroad as our companies and industries internationalise.
Essentially the monetary policy maker does just what he would do if there were no banking friction present, with the impact of that friction being offset through the macroprudential instrument. Similar results obtain in the face of a financial “panic” (middle panel), which leads to a lower volume of deposits and loans for a given level of bank capital. In this case, it is inefficient for output or physical capital to fall, so policy needs to counteract the tightening in credit conditions in order to stabilise inflation, output and capital. The viable path of leverage is lower because of the tightening of the incentive compatibility constraint, so bank capital needs to be higher to sustain investment. If this has to be done through monetary policy alone, the nominal interest rate needs to be cut sharply initially in order to widen the lending margin and build up the necessary extra bank capital. When the macro-prudential instrument is also available, the necessary increase in bank capital can be achieved immediately using the bank levy/subsidy, leaving physical capital, output and inflation unaffected, again obviating the need for monetary policy to react. The bottom panel of Chart 8 shows the response to a persistent positive mark-up shock. Unless counteracted, the immediate impact of this shock is to push up inflation and to reduce output, profits and the price of capital.

I will be talking about issues like the present state of the Russian economy and the impact this has on financial stability; key challenges facing the world today; the current situation in the banking sector; and finally I would like to go into more detail on some policy measures undertaken by the Bank of Russia for the express purpose of mitigating risks in the Russian financial system as a whole. 1) On key risks and the current state of the Russian economy First of all I would like to draw your attention to a number of improvements in the Russian economy that began to take place in 2016. GDP moved into growth from the third quarter of 2016, and we expect that the positive effects of this change will continue to be felt. According to our assessment, the GDP will see growth of 1-1.5% in 2017, and 1-2% in 2018–19. It is worth noting that in recent years indices of business activity have grown considerably and now sit at the highest levels of the last 9 years: in industry the PMI rose from 49.8 points in January 2016 to 52.4 points in March 2017; in the service sector – from 47.1 to 56.6 points over the same period. Economic recovery has contributed to the reduction of current credit risks in the banking and financial sectors as a whole. Inflation is falling even more quickly than expected. The annual rate of consumer price growth fell to 4.3% in March 2017, down from 12.9% in December 2015.
In this context, I should mention that the ECB with the assistance of the Banking Supervision Committee is carrying out work on banks’ stress-testing and contingency funding plans. On all the issues mentioned above, work is already under way at both the international and European level. The ECB is strongly supportive of the work of the Financial Stability Forum, as well as of the European initiatives discussed in the ECOFIN Council. In this context, I would like to once again stress the importance of effective cooperation in any policy actions to be taken at the international level. The impact of globalisation on price developments Ladies and gentlemen, let me turn to the impact of globalisation on price developments. As a preface, let me say that while globalisation could influence aggregate prices in several ways, such impacts are limited to the short term given that inflation is ultimately a monetary phenomenon. The direct, and perhaps most visible effect of globalisation for consumers, is its implication for relative prices. On the one hand, globalisation has dampened increases in euro area  4  BIS Review 3/2008  import prices of manufactured goods given a rising share of imports from lower-cost countries such as China and the new EU Member States. On the other hand, rising demand associated with globalisation has contributed to the significant increases observed in world energy and other commodity prices.

Although such relative price shocks do not necessarily affect inflation, prolonged short term impacts of sizeable relative price shocks could result, for instance, from adjustment frictions in the economy. Empirical studies for the euro area have tended to suggest a small dampening influence of trade openness on prices in the early part of this decade, though globalisation’s contribution to recent movements in commodity prices – particularly energy and food – has had a significant offsetting upward impact on prices. This warrants close monitoring, in particular given the risks of second round effects. In case of food related commodities, it also underlines the importance of efficient supply side adjustment in agricultural commodity markets. A separate but nonetheless potentially equally important channel through which globalisation can affect inflation involves the indirect price impact of increased competitive pressures, with two main aspects. First, in principle it could contribute to compressing firms’ price-cost markups as competitive forces resulting from trade openness would depress profit mark-ups of domestic firms competing with international firms. In practice, however, such effects have been hard to identify and, indeed, aggregate profitability has remained high. Second, in principle competition associated with globalisation could alter the responsiveness of prices to costs or measures of economic slack, or imply a greater role for foreign conditions in the inflation process.
In this way, structural reforms in the major economies can also contribute to a normalisation of the interest rate level and monetary policy worldwide – including in small open economies. In principle, structural measures that result in higher productivity growth, a lower propensity to save and a greater willingness to invest will increase the equilibrium interest rate. Absent a change in monetary policy, such an increase means that monetary conditions will become more expansionary. This would further encourage economic recovery and facilitate the implementation of these structural measures. The central banks could then gradually raise policy rates again, and the undesirable sideeffects of low or negative interest rates would be contained. Conclusion To conclude, let me sum up my remarks in five core messages. First, the low level of interest rates is a global, secular phenomenon. Real interest rates have fallen worldwide, and have been doing so steadily for the last 20 years. This suggests that the equilibrium real interest rate has declined. Underlying this are demographic trends and altered behaviour on the part of consumers and companies, which have resulted in a higher supply of savings and lower investment demand. Second, although negative nominal rates are often perceived as unnatural, the laws of economics are not inverted once the zero lower bound is breached. In principle, taking a policy rate into negative territory has a similar effect to cutting a policy rate in positive territory. In Switzerland, the negative interest rate has its main impact via the exchange rate channel.

The low inflation as such has no doubt helped to make the economy function better. The conditions for a long, stable upswing have improved. Together with clearer price signals, this makes it easier for households and firms to plan and make decisions. The workings of the economy have also been improved by the tax reform, various deregulations and changes to social security systems. Competitive pressure has grown as a result of EU membership and the globalisation of trade. The result is discernible in a higher rate of capital formation and structural changes in the economy. In both 1994 and 1995 GDP growth topped 3 per cent. In 1996 the growth of final demand remained fairly high, 2.1 per cent, and the rate accelerated in the second half-year to 2.6 BIS Review 56/1997  -3-  per cent from the corresponding period the year before. Total production, however, did not match the growth of final demand, the reason being that firms chose to trim stocks. The growth of GDP, which represents total output, stopped at 1.1 per cent in 1996.
For ten years, therefore, Iraq had two currencies: one issued by the official government and the other backed by no government at all. The Swiss dinar continued to circulate in the North, even though backed by no formal government, central bank, nor any law of legal tender. For a fiat currency this was an unusual situation. Whatever gave the Swiss dinar its value was not the promise of the official Iraqi government, or indeed any other government.13 Although there was little or no trade between North and South Iraq, both the Swiss and Saddam dinars were traded against the dollar. The implied Swiss to Saddam dinar cross-exchange rate from 1997 onwards is shown in Chart 3.14  Chart 3: Saddam/Swiss Dinar exchange rate, Jul 1997-Oct 2003 Saddam/Swiss Dinars (log scale) 400  200  100  50 Jul-97  Jul-98  Jul-99  Jul-00  Jul-01  Jul-02  Jul-03  Source: United Nations, Central Bank of Iraq  After 1993 the Swiss dinar deviated from parity and rose to around 300 Saddam dinars to the Swiss dinar by the time Saddam’s regime was deposed in 2003. The appreciation of the Swiss dinar is  13  At no stage did the Kurdish groups lay claim to the Swiss dinar as their currency - they had no control over it - as shown by the interview given to Gulf News on 30 January 2003 by the Kurdistan Regional Government Prime Minister Barzani who said, “We don’t have our own currency”.

In the international regulatory front, we recently assumed the chair of the Asia Pacific Regional Committee (APRC) of the International Organisation of Securities Commissions (IOSCO), and sit on the IOSCO Executive Committee. We have also assumed the chair of the EMEAP Working Group on Banking Supervision, which will facilitate the region’s discussion on implementation of Basle II. We are committed to regional and international co-operative efforts that help to foster a stable global financial system. In that regard, we contributed actively to initiatives of other forums such as BIS, FSF, IAIS and FATF, in the areas of financial stability, regulation and supervision, corporate governance and antimoney laundering. VI  Ensuring business continuity  In the area of Business Continuity Management (BCM), MAS conducted several exercises last year to ensure the effectiveness of our BCM plans. We also inspected BCM plans of major financial institutions (FIs) and found that FIs are generally prepared. For example, during the recent blackout, affected FIs continued operations smoothly on back-up power and activated their incident management process to verify that their buildings and operations were functioning normally. The blackout had minimal impact on the financial sector. VII  Accounts  Let me now move on to the MAS’ financial statements. MAS’ total assets grew 16.8% during the year ended 31 March 2004 to $ 179.7 billion. The Currency Fund’s assets, at the financial year-end, exceeded the $ 14.6b currency in circulation, providing 110% asset backing.
Let us assume that inflation in one country is on average 2 per cent, while in another it is on average 0 per cent – one can assume, for instance, that they have different inflation targets. The interest rate in the first country will therefore be  5 The examples I use focus on the central bank's policy rate, but the reasoning can be extended to include more  long-term interest rates. Unconventional monetary policy in the form of asset purchases works partly by lowering long-term interest rates. 6 This correlation is described by what is known as the Fisher equation, named after the American economist Irving Fisher, who is renowned for his works on the theory of interest and debt deflation during the first decades of the 20th century. The Fisher equation is expressed by the formula i = r + π, where i is the nominal interest rate, r the real interest rate and π is inflation. 4 [15]  on average 2 percentage points higher than that in the second country, as those borrowing money do not need to pay any compensation for inflation if it is zero. Let us now assume that a recession occurs in both countries, and the respective central banks need to cut their policy rates. Let us also assume that real interest rates are at record low levels, as is the case today, and that the neutral level of the policy is therefore already low.

For example, banks may have domestic currency liabilities but foreign currency assets, and thus may use the FX swap market to source foreign exchange. The spot market, which accounted for about 40 percent of trading activity in 2013, is used by private nonfinancial entities to trade goods and services or to invest in foreign businesses, while banks may use it to engage in cross-border lending and asset managers may use it to purchase financial assets or take positions based on their economic and financial market outlook. The foreign exchange market is a truly global market and one of the few markets that trades around the clock. This gives it the unique ability to provide signals as to how market participants are interpreting or responding to developments taking place in other markets or in the real economy. During the global financial crisis, the foreign exchange market often was the first to reveal how market sentiment was evolving in response to significant events that occurred outside of trading hours in other markets. Such signals can be very useful to policymakers and market participants, particularly during periods of market stress. Of course, the foreign exchange market’s ability to support price discovery and to enable the international flow of goods and capital requires a marketplace that is founded on integrity and capable of ensuring smooth and efficient interaction among market participants. This remains especially important as the structure of the market continues to evolve and adapts to new technologies and financial flows. 1  World Bank Development Indicators; http://data.worldbank.org/data-catalog/world-development-indicators.