samchain/econo-pairs-v1 huggingface dataset:
Most analyses indicate that the policy rate has very little impact on housing prices and thus also on household indebtedness.17 Using the repo rate would be justified if what we were seeing was a credit boom throughout the Swedish economy. But this is not what we are seeing. Household indebtedness is increasing at approximately the same rate as disposable incomes. The rate of growth in bank lending to companies typically varies with the business cycle, and at present this rate is low (see Figure 11). All in all, credit growth is relatively low in the Swedish economy. Figure 11. Lending to households and companies from monetary financial institutions Annual percentage change 20  20  15  15  10  10  5  5  0  0  -5  -5  Total lending from monetary financial institutions Companies Households  -10 03  04  05  -10 06  07  08  09  10  11  12  13  Source: The Riksbank. Another problem with using monetary policy to influence household indebtedness is that this also has an impact on the exchange rate. All else being equal, higher interest rates lead to a stronger currency and, again all else being equal, a stronger currency leads to lower inflation and lower resource utilisation. There are thus clear costs associated with using monetary policy in this way. The alternative – and a better one – is to separate monetary policy from the policy that aims to promote financial stability.

The risk that low interest rates will increase household indebtedness and that this in turn will increase the vulnerability of the households if, for example, housing prices fall for some reason has been put forward as an argument against lowering the repo rate.22 Personally, I do not believe that the latter risk is particularly serious at present as the rate of increase in lending to households has declined significantly since before the financial crisis. Nevertheless, it is a risk that is taken into account in the monetary policy decisions. All in all, therefore, economic policy has not sufficiently counteracted the effects of weak development abroad and pessimistic households and companies. How can we establish an effective policy for business cycle stabilisation in Sweden without at the same time exposing the economy to considerable risks with regard to financial stability? One important step is to establish a separate policy area with explicit responsibility for preventing financial crises. If we succeed in creating an effective framework for such a policy area, monetary policy would be better able to focus on its main tasks: stabilising inflation around the inflation target and resource utilisation around a sustainable level. The interim report of the Financial Crisis Commission, with its proposal to set up a council for macroprudential policy, is welcome in this context. However, as I have pointed out earlier, the division of responsibility is not set out very clearly in this proposal and it is unclear which authority should do what.
Are we headed in the right direction? Have we made any wrong turns – and what have we learned from them? This is a new journey for everyone, and after riding on this super highway for the last few years, I have three reflections that I would like to share with you. Technology adoption is a bumpy road 10. First, we must bear in mind that technology adoption is a bumpy road. It is definitely not a smooth and straight path. To innovate, we have to do things that others have not done before – or have attempted, but failed at. We have to go through processes of trial and error, and make adjustments along the way. We might run into dead ends at times, because some really exciting ideas may simply be unfeasible. We might run into problems even when adopting mature technologies, whether from a programme glitch or a clash with established work processes. 1/5  BIS central bankers' speeches  11. This is certainly our experience. Soon after the launch of the FPS in September last year, we started to see a few fraud cases coming in. These have nothing to do with the security design of the FPS itself – it’s about creative fraudsters exploiting the speed and convenience of the system. They stole money from bank accounts using fake e-wallets opened with stolen identity documents of victims.

For example, we have started a joint research project with the Bank of Thailand on implementing central bank digital currency in cross-border payments. We have also completed a proof-of-concept test with the we.trade platform to connect the digital trade finance platforms of Hong Kong and Europe. So far, it looks quite promising, and we have engaged Mainland China and Singapore on similar connections. 39. A lot of future Fintech development will involve cross-border collaboration. In recognition of this, the Bank for International Settlements (BIS) decided to establish an Innovation Hub to explore macro issues that cut across jurisdictions. And I am delighted to say that the first Innovation Hub Centre of the BIS has recently commenced its operation here in Hong Kong, and we look forward to close collaboration with the hub. Concluding Remarks 40. Fintech in Hong Kong has come a long way since we first held this event in 2016. Many of you here have contributed to this progress. We now all look forward to building on our experience with exciting new initiatives and trends. The Government, the financial regulators and the industry bodies all recognise that we need a holistic “Hong Kong Inc.” approach in developing Fintech. This will be about making the most of synergy and collaboration to drive the Hong Kong platform forward. 41. As we continue this journey, we need your participation.
The constantly increasing employment of digital strategies by banks which has been boosted further by the pandemic and the banks' increasing dependence on IT infrastructures raises the need and the requirement to constantly enhance their protection against cyber threats. According to the Bank of International Settlements as well as the International Monetary Fund the financial sector ranks high in frequency of cyber security events when compared to other sectors and these events have tripled over the last decade. The interconnectedness of the financial system means that a successful attack on a major  2/5  BIS - Central bankers' speeches  financial institution may spread rapidly through the financial system with potential adverse effects on the stability of economies. In addition to the risks mentioned above, banks are also facing increasing competition emanating from new entrants in the market. For example in Cyprus, there are currently 15 authorised electronic money institutions and 10 authorised payment institutions. But that number is likely to change dramatically. There are currently at the Central Bank of Cyprus 44 pending licencing applications (33 EMIs and 11 PIs), which is twice the figure compared to the applications pending only a year ago. Notably, this number is significantly higher than the 11 local and foreign authorised banks and subsidiaries in our country. In the last few years, payments services regulation has allowed a number of payment institutions to make use of the banking industry's interfaces for accessing payment service users' accounts online.

Constantinos Herodotou: Address - Annual General Meeting of the Association of Cyprus International Financial Firms (ACIFF) Address by Mr Constantinos Herodotou, Governor of the Central Bank of Cyprus, at the Annual General Meeting of the Association of Cyprus International Financial Firms (ACIFF), Nicosia, 10 February 2022. *** It is my pleasure to address the open session of the Annual General Meeting of the Association of Cyprus International Financial Firms (ACIFF) today and present the current situation of the Cyprus and European banking sectors as well as the challenges ahead. I will also try to shed some light on the trends and developments in the banking industry. Let me start with an update on the Cyprus banking sector. We are now almost a decade after the peak of the Financial Crisis in Cyprus and looking at our banks' key financials, we observe a significant balance sheet derisking and an improvement in their loss absorption capacity. This is despite the shocks caused by the on-going pandemic. Specifically, the capital position of our banks, measured through the common equity tier 1 ratio rose from 14,2% at the end of 2014 to 17,2% at the end of September 2021. This is well above the EU average of 15,7%. In addition, during the same period a noteworthy clean - up from non-performing loans has taken place, where troubled loans in the banking sector have been reduced from 28,3bln euros in 2014 to 4,3bln euros in October 2021. Nonetheless, the NPL ratio in the Cyprus banking sector is still high, ca.
And I want to look not just at the regulatory landscape but at the commercial one too. What business models work in this new landscape? Banks, particularly those engaged in investment banking, are currently wrestling with this question. Macro-prudential policy The crisis and the determination not to allow a repeat has led to a much more intense focus worldwide on the stability of the financial system as a whole. This has led to the development  BIS central bankers’ speeches  1  of what, rather inelegantly, is called “macro-prudential policy” to protect that stability. Put simply, whereas “micro-prudential” regulation and supervision address the safety and soundness of individual firms, macro-prudential tries to address the safety and soundness of the system as a whole; to monitor whether risks are building up in the system and to take action to prevent those risks jeopardising financial stability. Monetary policy, of course, provides a powerful instrument for preventing risks building up in the financial system. But monetary policy also has a very powerful impact on the economy as a whole and there is a broader cost to directing it to address financial stability risks. So it is very much a last line of defense for managing financial stability risks, after macro-prudential policy. Many jurisdictions have put or are putting in place macro-prudential “machinery” responsible for assessing macro-prudential risks. In some cases, that has meant new macro-prudential authorities with both the responsibility to assess risk and the powers to address them.

In the European Union, the formation of a monetary union has represented a major element in realising their economic integration. The adoption of a single currency was a critical step in fostering the regional European integration. In contrast, a monetary union with a single currency is not the step forward for the ASEAN region. A study by the ASEAN Central Banks in the early 2000s concluded that a common currency should not be the direction to be pursued by the region, given that, the ASEAN economies did not have the preconditions to achieve such a union. Indeed, such preconditions would require significant and high costs to the region. This would make it a non-viable proposition. The ASEAN region represents one of the most diverse regions in the world in terms of size, economic systems and structures, stages of development, financial systems and prevailing economic and financial conditions. It was therefore concluded that rather than pursuing a strategy towards achieving a single currency and a monetary union, the region would instead be better served by greater regional financial integration to achieve the very same objectives of a greater shared economic prosperity for the region. Another key difference between the European and ASEAN model of integration lies in the governance structure. In Europe, the monetary union is governed by a centralised institution, while the approach in ASEAN is to build on institutional arrangements and mechanisms that would facilitate financial integration while leveraging on a network of committees for the governance process.
10  In addition, demand has been helped by an unexpectedly strong global recovery, which  will have boosted trade and investment, as well as by more supportive financial conditions, particularly 10  The MPC’s policy package in August 2016 – which consisted of a cut in Bank Rate, the introduction of the Term Funding Scheme to ensure that that cut was passed through, and an additional £ of asset purchases including corporate bonds – will have provided stimulus, as will the mild loosening in the fiscal stance in the subsequent Budget. In addition, the FPC amended the leverage ratio framework for UK banks by excluding central bank reserves, cut the counter-cyclical capital buffer to zero, and emphasised that banks’ liquidity reserves are usable, while the PRA Board decided to use regulatory flexibilities to smooth insurers’ transition to new regulatory standards in a very low interest rate environment. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  intense competition in mortgage markets, which will have helped offset some of the effects on consumption of the fall in income. 11  Finally, the third channel through which Brexit is affecting the UK economy is through its effect on the exchange rate. I have already discussed its effects of the recent depreciation on demand, where it has contributed to a rotation away from consumption and towards net trade. Equally important for the MPC has been its effect on inflation.

And this is exactly the opposite of what should have been happening if a functioning banking and contingent fiscal union had been emerging. So we are risking creating a half-baked BU which will not necessarily be ready for future bad times. And it is also a partial answer to the question of potential participation of some non-euro countries in the SSM. Simply, it is too premature to judge whether the BU is going to be a good project worth participating, or not. Only after the whole project with all it “legs” is created can one seriously answer this question. 2  BIS central bankers’ speeches
In Singapore, we have also introduced a regulatory framework for financial benchmarks. 4 The actual implementation of the new requirements including those overseen by various standard setting bodies are ongoing and will be done over several years for two good reasons: one, a number of the reforms will require new regulations, as well as changes to systems and processes in financial institutions; and two, a phased approach allows authorities to assess impact and any unintended consequences, for review and fine-tuning of the new rules. 5 Meanwhile, national authorities have also sought to strengthen our respective regimes in other ways. For instance, we have enhanced a number of areas relating to retail investor protection. We have expanded our regulatory perimeter to include less conventional investment products such as gold buy-back schemes and land banking. In doing so, such schemes will be subject to similar safeguards such as information disclosures and authorisation requirements as for conventional financial products. As another example, we have also imposed additional rules on capital market intermediaries in relation to client protection such as safeguarding of monies and assets for margined OTC derivatives, due diligence on custodians and better disclosures. Technology Revolution and Financial Services 6 In the last ten years, the financial landscape has also been shaped by a potent force of change – what some have referred to as the Technology Revolution. 7  Technology has always been an important driver for innovation in financial markets.

In Singapore, the new Cyber Security Act also established a legal framework for the protection of critical information infrastructure that include those in our key financial institutions. 18 The increased uses of AI and data analytics have also led the MAS to work with industry partners to develop a set of principles that promote fair, ethical and responsible use of data in financial services. Conclusion 19 Disruption is often an inevitable part of innovation. The ongoing waves of new technology will present exciting possibilities to uplift the range, quality and delivery of financial services. They also offer financial institutions new ways to be more effective and efficient. But the adoption of technology or simply being more digital can also open up new vulnerabilities if not properly understood and managed– such as in area of cybersecurity risks. 20 Notwithstanding the opportunities and challenges that technology and digitalisation present, it is worthwhile to remember that the fundamental principles underpinning a sound and progressive financial centre, and the capital market place, have not changed. These are: (a) Markets should be fair, orderly and transparent; (b) Intermediaries should act in their clients’ best interest;  3/4  BIS central bankers' speeches  (c) Infrastructure must be efficient, safe, and resilient; 21 A financial sector must ultimately be purposeful in supporting the broad spectrum of economic activities including to facilitate savings, investments, insurance, payments for goods and services and credit intermediation.
Since our forecast of June 2001, the world economy has moved towards recession. Short-term inflationary pressures have subsided considerably. On the assumption that the three-month Libor rate will remain stable at 1.75% during the next three years, inflation should amount to 0.9% in 2002, move up to 1.3% in 2003 and reach 1.5% in 2004. The fluctuations in the anticipated 2002 inflation rate are due to basis effects that do not reflect the inflationary trend. Inflation is expected to remain within the range of price stability throughout the forecasting period. From mid-2002 on, however, it will follow a slight upward trend through the rest of the forecasting horizon. This slight rise in anticipated inflation is attributable to two factors. First, the world economy will recover in due course. Second, Swiss monetary policy at a constantly low interest rate - which is currently 1.5 percentage points lower than in the June 2001 forecast - will tend to have an increasingly expansive effect as time passes. These two factors combined will cause inflation to rise somewhat over time. Our forecast is based on the assumption that the US economy will remain in recession until mid-2002 and will subsequently gradually return to its potential growth path. In Europe, the economy will presumably stagnate until mid-2002 and pick up momentum afterwards. We expect the US dollar to remain roughly at its current level vis-à-vis the euro. The forecast assumes that today's relatively low oil prices will eventually climb back slightly.

Depending on the development of the political situation, the global economy may thus recover at a faster or slower pace than we anticipated, and the exchange rates might be subject to major fluctuations. In this case, the National Bank would have to review its monetary policy. In the short run, the price of oil will also have a considerable influence on inflation. If it continues to erode, measured inflation might fall below zero for a few months. Should this situation arise, it is important to bear in mind that it cannot be equated with sustained - and thus economically dangerous - deflation. On the contrary, a low oil price level would create a positive supply shock and, under the current circumstances, would impact favourably on production. Inflation would be dampened temporarily. We also keep a close watch on the development of the money supply M3 in order to assess the medium-term inflationary risks. Following a phase of low, or even negative, growth rates, M3 is now expanding at a somewhat faster pace. So far, however, there has been no excess supply of liquidity in the economy, and the money stock M3, therefore, does not point towards inflationary risks at present. Finally, I would like to make some closing remarks about the imminent introduction of euro notes and coins. For about three years now, the euro has existed as deposit money. It has led to fixed exchange rates and a uniform interest rate level in the euro area countries.
In the area of clearing we need to monitor the impact of mandatory clearing not only on central counterparties, in terms of capacity and risk management, but the focus should also be on whether an increase in indirect clearing changes the risk profile of the direct clearing members. 6  BIS central bankers’ speeches  The reform will also have an impact on collateral needs, and we will hear more on this in tomorrow’s academic session on the topic. However, authorities should monitor the availability of high quality collateral and related collateral management services. New risks that appear as a result of innovation, such as those relating to collateral transformation, need to be analysed and addressed. We should not wait for the next crisis to happen but need to be constantly vigilant. Though substantial progress has been made, it is also true that only just over half of the FSB jurisdictions have implemented the reform agenda so far. Although these include the jurisdictions of the most important OTC derivatives markets, we need to be vigilant in order to avoid regulatory arbitrage – that is to say, business moving from jurisdictions that stick to the agreed agenda to others that lag behind. Little over two weeks ago, the BIS published its macroeconomic impact assessment of OTC derivatives regulatory reforms. The results are promising.

The authorities have delegated this task to Norges Bank and decided that the Bank’s monetary policy objective is to keep inflation low and stable. The inflation target is quantified in the regulation on monetary policy as annual consumer price inflation over time of close to 2.5 percent. The Bank’s policy instrument is the key policy rate. Confidence that inflation will be kept low and stable is underpinned by the central bank’s independence. Norges Bank has a clear mandate and an independent position. This fosters trust in the Bank’s ability to do its job. But a regulation defining the inflation target and central bank independence are not enough. Confidence in the inflation target can only be upheld if the central bank actually ensures that inflation is low and stable over time, thereby maintaining monetary stability. Credibility and trust are built up over time. In Norway, inflation has been low and stable for a quarter of a century. As the expression goes, the proof of the pudding is in the eating. How is money created? Today, there are two forms of central bank money. One of the forms is common knowledge – banknotes and coins. The other, bank reserves at Norges Bank, is less well known. The sum total of banknotes and coins and bank reserves at Norges Bank is about NOK 85 billion.5 But the total money supply is much larger than this. Customer deposits in banks are also money. These deposits, referred to as deposit money, total more than NOK 2 trillion in Norway.