samchain/econo-pairs-v1 huggingface dataset:
What could also be helpful in this respect is the enhancement of the surveillance of financial systems of all countries in the framework of the Financial System Assessment Program (FSAP), as well as the publication of their conclusions. 3. The last area of reform that strikes me as particularly important is enhancing the legitimacy and resources of the financial institutions at the heart of the international financial architecture  For international cooperation to function, institutions must be efficient and accepted by all economic players. This means that they must have clear mandates, appropriate resources and governance that correctly reflects today’s multipolar and interdependent economic and financial world. BIS Review 101/2009  3  In this area, the G20 also agreed on robust measures aiming in particular to adapt the resources and functioning of the Bretton Woods institutions. For instance, while we have observed an increasing number of bilateral initiatives, such as swaps offered by major currency issuers, such as the Fed and Eurosystem, as well as, in a very different context, by China, these mechanisms cannot alone constitute a coherent insurance system. This is why the G20 decided to triple IMF resources to USD 750 billion, which is unprecedented. The intervention tools were also reformed. A multilateral instrument for the prevention and early management of crises was also created, the Flexible Credit Line (FCL); Mexico, Poland and Argentina have already signed up and this has without doubt reduced the risk of contagion. In addition, the Poverty Reduction and Growth Fund was established for the poorest countries.

All of this helped transform the city from an increasingly blighted urban landscape to the vibrant economy of today. And, New York City is not the only example of a major turnaround. Now-dynamic cities such as Washington, D.C., Pittsburgh, and Seattle also went through wrenching economic and fiscal contractions. While Puerto Rico’s path to prosperity will not look exactly like that of New York or other cities, history can provide valuable lessons, as well as hope for a better future. The same can be said for the U.S. Virgin Islands. In addition, Puerto Rico has a number of unique attributes and endowments that it can leverage as it seeks a path toward prosperity, including its educated and bilingual workforce, its proximity and access to markets on the U.S. mainland, and its extensive experience as a host to various major U.S. multinational corporations. But, a recovery is not going to happen on its own. We at the New York Fed have made a number of suggestions over the years that we think can help improve Puerto Rico’s competitiveness and economic prospects.2 Some of these issues are now being addressed, and still more are at least being discussed. Among others, lowering the costs and disincentives to doing business, helping Island residents develop and use their human capital, and improving labor market opportunities are all important steps that must be taken. On the fiscal side, the Financial Oversight and Management Board and the Commonwealth together will be making a series of difficult choices over the coming months.
This is around a tenth more than we estimated in our Monetary Policy Report. Compared with the  6  BIS Review 100/2008  forecast in the Report, it is primarily electricity prices that have been higher than calculated. Food prices increased by 8 per cent, which is more than in almost all of the countries in the euro area and could indicate that what started out as price increases in the world market have begun to spread to other goods. On the other hand, oil and other commodity prices have fallen, which may dampen inflation in the future. However, the krona has weakened, which makes imports more expensive. To sum up: the picture presented in July largely remains unchanged – with lower growth and high inflation. But GDP growth has so far this year been weaker than anticipated. Inflation is at its highest level since the mid-1990s. However, oil and other commodity prices have fallen. At the same time, productivity has been lower and resulted in increased wage costs. At the Riksbank we are now working hard on producing new forecasts for the coming years. At the beginning of September my colleagues and I will take a new monetary policy decision. We will then once more take a stance on economic developments and on how the interest rate should be set to attain our inflation rate of 2 per cent. The economic situation  GDP growth will slow down this year and  next year.  Employment will stagnate and unemployment begin to increase.

Following the intensification of the financial crisis in Autumn 2008 – and against the background of rapidly receding inflationary pressures – we have taken monetary policy measures that are unprecedented in terms of nature, scope and magnitude. These measures fall into two categories: first, standard measures in the form of interest rate changes (Since October 2008, our key policy rate has been cut from 4.25% to 1%); second, what is known as “non-standard” measures, encompassing a policy of fully accommodating banks’ liquidity needs, enlarging the list of eligible assets, lengthening maturities for refinancing operations, the provisioning of liquidity in foreign currencies but also the purchasing of covered bonds and, more recently, government bonds. 8. Let me add that we never ruled out to implement asset purchases, when it appeared necessary to repair dysfunctional markets to ensure a proper transmission of monetary policy impulses. Indeed, in 2009, the ECB embarked into a program of covered bonds purchases, which is now completed. Although modest in size (60 bn euros), this program has been fairly successful in reviving a market segment which in turn supported bank funding at a time where bond issuance were secure. 9. The recent decision to purchase Government securities should be seen in the same light. The objective of this program is to address the malfunctioning of securities markets to restore an appropriate monetary policy transmission mechanism. These interventions are sterilized as liquidity injected is exactly drained, thus fully neutralizing the effect on the banking system. 10.
The floor system makes it easy to ensure that money market rates track key rate decisions. However, the system has proved to have undesirable side-effects. It makes banks passive. The market for short-term unsecured liquidity becomes very limited or disappears. The pricing mechanism – or the rates set in the money market – contains information that will not emerge if a public actor such as the central bank takes the market’s place. Consequently, we now need to set clearer boundaries between the central bank’s role as lender of last resort and settlement bank and the role of the market. In order to stimulate money market activity and reduce demand for central bank reserves, it should be more expensive for banks to hold substantial deposits in the central bank. We are therefore working on changes in our lending and deposit facilities. There are also other weaknesses in Norway’s money market. When setting household and corporate interest rates, banks not only take into account movements in the key rate, but also give weight to the money market rate, i.e. the Norwegian InterBank Offered Rate (NIBOR). In our opinion, there are shortcomings in the way this rate is set. The basis for setting the rate can be made more transparent for the benefit of other participants and it is calculated using information from only six large participants. This group does not include Norway’s largest saving banks or any international banks. We will take the initiative for improving the structure for setting NIBOR.

The third term represents the desire for gradual interest rate changes in criterion 3, i.e. that the current interest rate it should not deviate too far from the rate in the previous period it-1. The fourth term represents criterion 4 and can be interpreted to mean that there is also a cost or risk in setting an interest rate it that deviates substantially from the interest rate implied by simple monetary policy rules itsimple. By giving some weight to the consideration that the key rate  BIS Review 113/2010  3  should not deviate too far from simple rules, monetary policy may become somewhat more robust. 1 Key policy rate  A monetary policy that only takes into account the consideration of bringing inflation rapidly back to target (criterion 1) would imply that the interest rate should rapidly have been reduced to below 1 per cent when we presented the latest Monetary Policy Report. In that case, the interest rate would have had to be raised rapidly again to prevent activity and inflation from becoming too high further ahead. Such a strategy could be consistent with the desire to safeguard against inflation expectations becoming entrenched below the inflation target, but could on the other hand have a substantial impact on output and employment. Developments become more stable if weight is also given to stabilising output (criteria 1 and 2). This would also imply an interest rate reduction first and then an interest rate increase further ahead.
However, if developments in the real economy are to be satisfactory over time, real wage growth must be adapted to underlying productivity growth. A precondition for countering a possible downturn by means of monetary policy easing is slower growth in labour costs. Monetary policy cannot prevent an increase in unemployment that is caused by a significantly higher rate of growth in labour costs in Norway compared with other countries. Nor can an expansionary fiscal policy counter a cost-driven rise in unemployment. Growth in real wages is far higher than the underlying growth in productivity. If higher costs cannot be 1 passed on to customers, earnings decline and the wage share increases . Many businesses will have to adjust their workforces to maintain profitability. This leads to a fall in employment and increased productivity. For some companies, this may be a prerequisite for maintaining operations in Norway. The alternative is to close down or relocate production to another country. While the wage share has risen sharply in manufacturing, it has remained fairly stable in other industries. Import firms have wider margins, suggesting that the appreciation of the krone has not fully benefited customers. We also know that employment in some service industries has fallen. Many companies in the service sector have adjusted their workforces to maintain profitability. To some extent, higher costs can also be passed on to customers through higher prices in this sector. Manufacturing employment is declining.

With more demand for liquidity and less supply, the cashproviding banks were able to achieve higher, i.e. less negative, interest rates, which led to an upward drift in SARON, shown by the black line in Chart 4. These upward pressures on SARON and other short-term money market rates, while anticipated, were not desirable from a monetary policy perspective. Since last November, the SNB has conducted a number of operations to keep secured shortterm money market rates close to the SNB policy rate. Between November 2019 and July 2020, and in particular since the end of March, we conducted several fine-tuning operations in the overnight segment of the repo market. These operations are shown as red diamonds in Chart 4. In a fine-tuning operation, the SNB places so-called ‘cash provider quotes’ directly on the repo trading platform, which any repo market participant can then ‘hit’ if they choose to do so. When the SNB offers funds at a particular quote, cash takers have no reason to accept liquidity at a higher – that is, less attractive – interest rate. With these fine-tuning operations, the SNB can cap repo rates and limit upward spikes. Since July, we have further supported the gradual convergence of SARON towards the SNB policy rate by auctioning one-month funds on the repo platform. These auctions are depicted as blue triangles towards the right-hand edge of Chart 4. Unlike fine-tuning operations, with which the SNB caps interest rates, the SNB’s one-month auctions offer liquidity on a medium-term basis.
He argues that monetary independence is still possible, but because of the impact of financial globalisation, monetary policy carries a much bigger burden in trying to achieve both financial stability and purely macro objectives. 26 Recent Asian experience is illustrative. The exuberance in Asian asset markets and consequent build-up of financial risk in recent years has been exacerbated by the global search for yield in a zero interest rate environment. Raising policy rates may not sufficiently alter the level of risk-taking in these economies. •  In fact, paradoxically, a central bank that tightens monetary policy to stem financial vulnerabilities could perversely attract more capital flows into the economy, resulting in stronger credit growth and rising asset prices. 27 Third, it is not clear that monetary policy can fill all the cracks. Monetary policy flows into all the cracks no doubt, but some cracks are just too big to fill. 28 Financial vulnerabilities are not evenly spread across the economy. They tend to be concentrated in specific sectors and segments, such as in real estate. So, even when monetary policy has configured overall liquidity and risk-taking settings appropriately, specific pockets of financial market vulnerabilities, e.g. a property bubble, could remain. 29 Monetary policy is too blunt an instrument for addressing such specific risks to financial stability, and it can cause significant collateral damage on the rest of the economy if it tries to do so.

Svensson, L E O (2009), “Flexible inflation targeting – lessons from the financial crisis”, speech at the workshop “Towards a new framework for monetary policy? Lessons from the crisis”, organized by the Netherlands Bank, Amsterdam, 21 September 2009. Taylor, J B (2007), “Housing and Monetary Policy”, NBER Working Paper No. 13682. 8  BIS central bankers’ speeches
Indeed, in the three years before the creation of the PRA in 2013, just two new UK headquartered banks had been authorised. And the financial crisis had exposed the need to ensure UK retail deposits were never again put at risk by poor management including of the international and investment banking activities of the big banking groups. Parliament rightly did two things to address these issues. It implemented legislation requiring the ring-fencing of the core services in the largest UK banking groups those on which retail and smaller business depend.2 And shortly after setting up the PRA, it gave us a clear secondary objective to facilitate effective competition.3 The PRA embarked on multiyear programmes on both fronts. To achieve ring-fencing, the banking system saw over £ billion of assets moved between legal entities, governance structures re-written and IT systems rewired. As part of our focus on competition, the New Banks Start up Unit was established with the Financial Conduct Authority in 2016,4 and barriers to entry for new banks were lowered.

But we still need to press on with further reforms and policy adjustments, because the international financial landscape continues to evolve. In this regard, let me highlight two things that MAS is doing. Revisions to capital adequacy requirements of locally incorporated banks First, MAS will be revising the capital adequacy requirements of locally incorporated banks. Singapore banks have since 1992 been required to meet a minimum Capital Adequacy Ratio, or CAR, requirement of 12%. MAS has progressively adjusted this requirement.1 However, the current MAS requirement of 12% Total CAR of which 8% must be Tier 1 capital still exceeds those in other major financial centres. As part of MAS’ efforts to keep our regulatory framework up-to-date with international best practices, we started to review the CAR requirements in March last year. I am sure the industry will be pleased to know that MAS has completed the review. MAS will announce the details at a press conference tomorrow evening. I will touch briefly on the three components of the revisions. (i)  Minimum CAR  The first change is in the minimum CAR requirements of local banks. MAS will lower this minimum CAR to 10%, of which at least 7% should comprise Tier 1 capital. This is competitive, taking into account our small and open economy, and the systemic importance of the three local banks. Some other countries, including Switzerland, similarly have a higher requirement than other developed jurisdictions.
This adds additional complexity to the setting of monetary and macro-prudential policies. It is possible to explore this complex interplay using simulations from models comprising both nominal and financial frictions. Both are needed to accommodate a role for monetary policy (whose effectiveness relies primarily on nominal frictions) and macro-prudential policies (whose effectiveness relies principally on financial frictions). A number of models have recently been developed with these core ingredients and have been used to explore monetary and macro-prudential policy interactions (Smets (2013), Paustian and De Paoli (2013)). Chart 18 shows the results of a simulation from a model developed by two colleagues at the Bank (Aikman and Nelson (2014)). This, too, embodies both nominal and financial frictions. On the axes are plotted two measures of stability – macro-economic stability (as proxied by the variability of nominal GDP) on the x-axis, financial stability (as proxied by the variance of  12  More details are available at www.crisis-economics.eu. 13  For more on the Bank’s research agenda, please see http://www.bankofengland.co.uk/research/Documents/onebank/discussion.pdf. 12  BIS central bankers’ speeches  credit spreads) on the y-axis. Historically estimated levels of these two variables, normalised to one, are shown at point A in Chart 18. If we now allow monetary policy to play an active role in stabilising the business cycle, through an optimal policy rule which weights output and inflation deviations from target, we can move the economy to point B.

With effect from 1 July 2022, we are also adjusting the threshold factor used to calculate the level of banks’ sight deposits at the SNB exempt from negative interest. The factor will be lowered from 30 to 28. This will ensure that the secured short-term Swiss franc money market rates are close to the SNB policy rate. Page 1/5  Berne, 16 June 2022 Thomas Jordan  News conference  Inflation forecast Inflation reached 2.9% in May and is likely to remain at an elevated level for the time being. The main reason for the higher inflation is the increase in the prices of oil products, food and goods affected by the global supply bottlenecks. However, there has also been a rise in inflation for some other goods and services. The SNB’s new conditional inflation forecast is based on the assumption that the SNB policy rate is −0.25% over the entire forecast horizon. The new forecast for the next three years is above that of March (cf. chart 1), and stands at 2.8% for 2022, 1.9% for 2023, and 1.6% for 2024 (cf. table 1). Without today’s SNB policy rate increase, the inflation forecast would be significantly higher. Global economic outlook Let me turn to the economic outlook worldwide. Global economic growth has slowed markedly recently. This slowdown is on the one hand attributable to the high level of inflation, which is weighing on purchasing power and thus reducing demand.
Banks must decide whether they aim to be central to their customers’ needs or they are content to be merely balance sheet providers, where someone else owns the relationship with the customer. In the second scenario, banks would have no brand affinity or loyalty from their customers and would be easily replaceable. As things stand, the banking industry is surely struggling on this front. Today, no bank is placed among the top twenty global brands in terms of value. Even banks which were there a decade ago have since slipped off the list. Banks must work hard to ensure that they remain the first choice for their customers, and that means taking a much broader view of their relationship with customers. Banks need to consider how they can help solve their customers’ problems and improve their lives, while being cognizant of their broader social purpose to promote inclusive, sustainable prosperity. After all, banks can no longer take customer loyalty as a given. A recent banking consumer study conducted by Accenture found that 40% of customers expressed decreased dependence on their bank as their primary financial services provider and 42% said they had used non-bank providers for financial services in the past year. A good example of non-banking providers displacing traditional banks is Kakao Bank in South Korea. Kakao Bank was launched in 2017 as a digital bank by Korean Internet company Kakao, which also owns the popular free mobile messaging service KakaoTalk.

Today, we see technology firms actively entering the banking space, most recently with the introduction of the Apple Card from Apple or the planned launch of Libra, a crypto-currency from Facebook. Banks could find themselves sidelined by the Big Techs if they fail to actively adopt and fully utilize the available technologies. To prevent this from happening, banks will need to go back to basics and revisit the core utility of their institutions rather than becoming constrained by existing processes and legacy systems. iii. Consumer Expectations Thirdly, the industry needs to meet the challenge of rapidly shifting customer needs and expectations. Today, we live in a world where digitally empowered consumers expect ‘on-demand services’ that allow them to access products and services wherever and whenever they desire. This is particularly true of the growing number of millennials who will soon become the largest customer segment for the banking industry. Even in Kuwait, approximately 58% of the population consists of millennials and younger. Their behavior and characteristics can be very different to those of previous generations.8  Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬  -7-  9 10 11  . Around 57% of millennials say they would change their banks for a better digital platform. But it is not just millennials who are using digital platforms to access banking services. In 2018, 72% of all bank contacts from customers were digital, and 82% of consumers first go online if they are looking to buy a new product or service.