samchain/econo-pairs-v1 huggingface dataset:
Moreover, excessive intervention might complicate the extraction of information from movements in market interest rates, especially at the maturity at which the ESCB would intervene. Intensive recourse to fine-tuning operations might also deprive regular refinancing operations and standing facilities of their signalling effect and be conducive to a centralisation of monetary policy operations;  •  provided they are set at a sufficient level, and include an averaging provision, reserve requirements constitute an efficient buffer against liquidity shocks ; this would help stabilize short-term interest rates over the maintenance period. In turn, setting a fairly high level of minimum reserves might require remunerating them in order not to induce significant delocation or disintermediation;  7 See the two EMI reports “The single monetary policy in Stage Three – Specification of the operational framework”, January 1997, and “The single monetary policy in Stage Three – General documentation on ESCB monetary policy instruments and procedures”, September 1997. BIS Review 112/1997  -7-  •  enhancing the signalling effect of the main refinancing operations should also contribute to lowering interest rate volatility. This may best be achieved through the normal conduct of fixed-rate tenders, which send clear signals to the market, rather than variable-rate tenders. The latter may nevertheless be useful in certain circumstances where the ESCB wishes to gauge market sentiment;  •  finally, the communication policy of the ESCB could also play a role in smoothing interest rate volatility. The ESCB will have to publish weekly a consolidated balance sheet.

As regards payment systems, the TARGET system will also contribute to the rapid emergence of a unified money market throughout the euro area. TARGET will connect the domestic real-time gross settlement (RTGS) systems operated by the national central banks. It will enable participants to make totally safe cross-border settlements in euro, in real time and at a low cost, thereby facilitating interest rate arbitrage. All large-value payments related to BIS Review 112/1997  -6-  monetary policy operations will have to process through TARGET. A common closing time for domestic RTGS and the harmonisation of conditions under which intraday liquidity will be provided by national central banks within the euro area should also help prevent any risk of segmentation of the single money market. 2.1.2. Interest rate volatility The EMI has described in various publications the set of monetary policy instruments that will be made available to the ESCB.7 This set will comprise open market operations, standing facilities and minimum reserves. It should fulfil two basic functions: firstly, to enable the ESCB to control efficiently its operational target; secondly, to signal the ESCB monetary policy stance. It should also be consistent with the requirement laid down in the Maastricht Treaty that the ESCB should act in accordance with the principle of an open market economy with free competition, favouring the efficient allocation of resources.
This awareness also reflects the difficult economic and financial context in which we have been moving. Evidently, financial end-consumers, especially individuals, are the weakest party in the customer-bank relationship.4 Hence the importance of banks behaving irreproachably when it comes to advice to customers to engage their services. However, we should acknowledge that the starting point is a significant shortfall in financial knowledge among citizens, a fact that may have been conducive to erroneous decision-making. Evidently, to be able to take an economic decision properly, a customer must be in full possession of all information and capable of understanding the implications that may arise in the future from what is to be signed. For instance, the consequences of taking on a variable interest rate throughout the life of a 30-year loan need to be understood, and variable income must be assumed to be so-named because of its variability. Admittedly, the younger generations are facing growing challenges arising from labour market aspects. These include the lack of job security, the need for flexibility and mobility, and property market developments. They are also especially affected by the structural changes in society, such as increased life expectancy or the reduction in the birth rate. This all involves the need to plan carefully for the future. We should not forget that education and financial knowledge are essential for improving financial inclusion. Clearly, digital transformation may help in this respect, especially in remote or thinly populated areas.

Unlike any of the ratios we are used to handling, there is no minimum level of governance that banks should reach. Governance is a means of doing things and a culture. And attaining it is an objective that takes some time to be implemented. All this makes it difficult to transmit a sense of urgency. Yet without proper governance, the conflicts of interests that arise daily at banks cannot be managed. When a conflict of interest arises, the bank must create a control function. Evidently, the control function will only work if it is independent and strong; otherwise, it will be neutralised or absorbed by the pressure of daily business. We have seen how, without proper governance, control functions are lacking in weight and effective power. This gives business units excessive influence and even, occasionally, exclusive influence over day-to-day bank management. Ultimately, then, it is governance that allows banks to manage the conflict in question which arises between the search for short-term profit and the bank’s sustainability and viability in the long-run. 9/13  Regrettably, we have seen how, as the crisis was brewing, a good number of banks behaved just as Keynes had predicted they would. Others, in contrast, decided not to emulate their competitors or to do so to a much lesser extent. I believe the quality of governance structures had much to do with this uneven behaviour. But there is always room for improvement.
These challenges increase ambiguity, uncertainty and volatility in goods, services and financial, markets, broaden and intertwine the nature of shocks and place the authorities vis-à-vis new and unprecedented phenomena. These developments render the well management of monetary policies and financial stability even more difficult As a result, scientific research needs to: explore and propose new solutions, more efficient empirical and theoretical models for policy implementation by central banks; assess the effects of the adopted policies; and, carefully observe the side effects in the economy or the financial system, which may potentially accompany such policies. Due to unconventional monetary policies, central banking is practically in unexplored territories; therefore, it is necessary to carry out an assessment of how the economy reacts to shocks under such circumstances. The Bank of Albania is interested in identifying potential shocks and their modelling with a view to guaranteeing optimal solutions in terms of prices, economic activity, employment and financial system soundness. For that reason, we invite you to discuss openly and thoroughly all the papers that will be presented during these two days. This would serve to discuss about their findings, improve them and assess their effectiveness for the Bank of Albania’ decision making. The Bank of Albania deems that the economy and the financial system are currently sound and in line with our expectations and forecasts.

The more certain assessments are about future interest rate developments, the lower risk premiums that investors will require to purchase short-term, interest-bearing treasury paper, for instance, or the banks to lend money to businesses and households. Great uncertainty leads to macroeconomic costs such as lower investments and higher costs for central government debt. There is therefore a wish not only on the part of the participants in the financial market but also from the Riksbank to be as clear as possible about the factors underlying monetary policy decisions. However, absolutely most important is to make the inflation target credible since that controls the long-term interest rates. However, it is important to be as clear as possible about the conduct of monetary policy in the short term to avoid unnecessary uncertainty. But this does not mean that we can remove the uncertainty that actually exists about future developments. We continuously evaluate our previous assessments when new information and statistics are received. And we continuously develop our methods and models and may, when we have received new information, be obliged to re-evaluate earlier conclusions. This was the case, for instance, in the spring when we revised our assessments about the output gap. The conclusion of that is that the interest rate path cannot be announced in advance and even less that we can undertake to supply the interest rate decisions that the market participants sometimes consider that we have given indications of.
This is an example of how Bulgaria can and should stand up for its own national economic interests, opposing (and even forming situational “coalitions”), if necessary, the large countries in the EU which as a rule pass their own interests as interests of the entire EU. The BNB is also a constructive opponent of the Bulgarian institutions when it sees that rash proposals are being put forward that may have an adverse effect on the stability and economic growth in the country. 1  I dislike the phrase “financial services consumer” because it brings to my mind associations with expending, eating or consuming (in the negative sense) without any efforts made and one-off, and this phrase does not consider the interest of the counterparty who is implicitly unethical. Whereas “client” implies reciprocity, discretion and a long-term relationship. 4  BIS central bankers’ speeches  Thus, what has been achieved so far gives us confidence in ourselves and optimism about the future of the banking sector in Bulgaria. Despite all the difficulties, the banks in Bulgaria bear responsibility not only for going forward as sustainable and successful business enterprises, but also for taking their clients and the whole economy through the times of crises. We do hope that in the coming years the banking community’s voice of common sense will be heard by the State institutions, businesses and society at large. Because we have learnt from experience that a well-functioning banking system is a necessary pre-condition for the economic prosperity of our home country.

Please note that these numbers do not even take into account the contribution by the central bank. Therefore, all that is good for the banking system and allows it to perform its traditional functions, is also good for the Bulgarian economy. Our country can ill afford to do without the banks’ considerable positive contribution to economic growth – which will be the effect, unfortunately, if the policymakers succumbed to certain populist sentiments that have been promoted recently by some figures who would use every occasion to come onto the media stage. There is no reason for the banks in Bulgaria to be additionally burdened by ill-considered administrative regulations and the related costs. Quite the contrary, the weight of such additional burden would turn back as a boomerang against the interests of our society and the Bulgarian economy in general. The nihilistic attitudes to our own achievements in the past hold back enterprise and the ability to plan for the future. That slows down the economy. Simply not knowing one’s own economic history, however, could lead to making decisions with very adverse implications. Therefore, the best we could wish ourselves for the future with regard to the sector and the economy as a whole is that in the future the public interference in the banking area in Bulgaria continues mainly within the confines of prudential and conservative regulations and supervisory practices.
Much has been said, and, more importantly, achieved in the area of transparency in recent years. There has been an explosion of codes and standards on different aspects of economic and financial policy in recent years. So much so, that some countries are claiming that the process needs to slow down. It is certainly important to recognise that the appropriate codes and standards for a country at one stage of economic development may not be appropriate to countries at other stages. I say advisedly "may", because in each individual case the argument has to be made. But if it is accepted that codes and standards are likely to reflect different stages of development, then it is even more important that countries make clear to which codes and standards they are actually adhering. That is why countries should not be able to opt out of "transparency about transparency". Following the production of pilot transparency reports on a number of countries, including the UK and Argentina, the IMF has now made rapid progress in producing reports on the observance of standards and codes (ROSCs). As of April 2001, 110 ROSC modules had been completed for 43 countries, of which 76 have been published covering 31 countries. India has recently had a ROSC published on fiscal transparency. It is critical that monitoring of the observance of standards and codes be fully integrated into IMF surveillance under Article IV. Here implementation is urgent.

In such a situation sudden reversals of capital flows can occur on a huge scale. That is the hidden cost of debt finance. In contrast, equity capital does not involve the risk of crises that are associated with the possibility of interruptions to payments on debt finance. This is because equity investment has a self-stabilising mechanism. Investors cannot withdraw from the equity market without finding a buyer to replace them. The market price adjusts in order for the seller to attract a buyer. Of course, the market price may move sharply and rapidly, and impact spending decisions. But crises resulting from payment interruptions are a feature of debt finance. Lenders whose bonds mature or who choose to withdraw their deposits do not have to find a buyer. Instead they simply exit, and, if they do so on a sufficiently large scale, countries can find themselves facing a liquidity run. Interest rates on lending to a country vulnerable to a run can rise to extremely high levels. If the market anticipates that a country may allow inflation to rise, or the exchange rate to fall, to alleviate the burden of domestic currency debt then interest rates on debt can rise rapidly. It is only ten years ago since overnight interest rates of several hundred percent were seen during the ERM crisis in Europe.
);  –  reducing fragmentation and possible conflicts of interest in supervision, and achieve supervision consistency: notably in EU through the “Banking Union/Single Supervisory Mechanism”: ECB – EBA – ESRB; in UK – BoE – PRA – FPC;  –  new directives to ensure timing and effective restructuring of banking business (BRRD);  –  better design and use of tools to assess resilience of financial institutions to risks, like stress-testing (in EU – EBA/ECB);  •  Improving the financial system infrastructure, through:  –  better protecting the “core” banking activity from other activities like “proprietary investment” through new rules and proposals (in US – the “Volcker” rule; in UK – proposals of the “Vickers” Commission; in EU – proposals in “Liikanen” report);  –  improving clearing and settlement of securities transactions and streamlining financial reporting;  –  improving deposit guarantee schemes  •  Improving in banks under “Basel III”:  –  the quantity and quality of the capital;  –  the funding structure  –  their risk management requirements and capabilities;  To summarize, the legacy of previous financial excesses and the following crisis, is a changing financial landscape ultimately determined by international financial regulatory reform, local financial market characteristics and the crisis impact itself. 2  BIS central bankers’ speeches  Following, in the second part of my speech I would like to briefly share some thoughts about possible implications for emerging markets and economies, including those in CESEE region.

–  banks play the main role in meeting the private and public financing needs, and they rely heavily in local deposits to finance their activity;  Changes in the regulatory superstructure, and enforcement of the regulatory requirements, have had important impact on Albania’s financial sector and economy. More concretely: In the financial sector, we have experienced: –  deleveraging in local financial assets investments, particularly seen at subsidiaries of European banking groups, as they try to meet requirements coming after EBA and ECB stress tests;  –  increasing preference by financial institutions to place local funds in foreign investments (abroad);  In the economy, such behavior by some of the banks has materialized in: –  lower financial intermediation to both private and public sector;  –  negative impact on economic growth;  However, the stability of both, financial system and macroeconomic framework, have been saved and at this point I would like to state that we believe that there can be found ways to further avoid or mitigate any negative externalities. On deleveraging, Bank of Albania has raised the concern on such phenomena directly with the EU counterparts, but also through its role in Vienna II initiative. In this regard, we have highlighted the need to establish effective mechanisms to restore healthy lending to economies of non-EU countries where subsidiaries of EU banking groups operate.
The second risk is that the United States will not rise to its fiscal policy challenges, which could hamper the continued strengthening of the global economy. Let me discuss these risks in more detail. A third risk that is often discussed concerns the slowdown on the Chinese property market. I shall not go into this in any great depth here; I shall merely note that if property prices were to fall uncontrollably, China has the scope to implement fiscal and monetary policy stimulation, in that they have a low national debt of around 25 per cent of GDP and a high policy rate of almost 7 per cent. 1 The debate on the Chinese economy is otherwise often fairly categorical. It concerns either overheating or an imminent crash. If we look back at earlier developments, we can see that they have successfully managed to avoid both of these extremes. My assessment is that there is good scope for them to do so this time, too. The euro area – prolonged deleveraging In the euro area, it is mainly the Greek debt that has received attention. But, as well all know, other euro area countries have also suffered debt problems; for instance, Ireland, Portugal and Spain. Italy also has a high national debt, but this is a problem it has had for a long time. The following figure shows how public debt as a percentage of GDP has developed in these countries and the IMF’s forecast until the end of 2017.

This is based on my reasoning as described above. In other words, I believe it is always a good idea to “keep a cool head” in the context of forecasting, even when the storm winds are blowing. Meagre growth in the euro area, but better elsewhere Developments in the euro area are subject to the problems with sovereign debt and growth is currently weak. In our most recent Monetary Policy Update we assume there will be a small decline in euro area GDP growth this year and a weak increase next year. It is these meagre prospects and concern that developments could be even worse that affect a lot of the economic reporting at present. However, we assume in our forecasts that it will be possible to resolve the problems with public finances and banking systems in an orderly manner, without an aggravated crisis causing an even sharper fall like the one we saw after the Lehman Brothers crash in autumn 2008. Even if the situation does not deteriorate so much, the necessary deleveraging in the euro area may take longer than we are assuming. I shall return later to the risk of a more prolonged debt reduction that would involve postponing the weak recovery we are expecting to see in the euro area. Since the monetary policy meeting there has been considerable focus on Spain. Standard & Poor’s have downgraded the credit rating for Spain and GDP has fallen for the second quarter in a row.
12.12.2019  High Level Panel on Climate Change COP25/Naciones Unidas Margarita Delgado Subgobernadora  Good morning: Thank you very much for the invitation to be here today on this panel on the climate-related role of the financial sector. It is obvious that climate change, associated with global warming, is an all-encompassing concern that is translating into initiatives ranging from the most supranational scope possible down to the most local level. In my view this is because it is one of the few issues affecting each and every one of us and, at the same time, the planet as a whole. The fight against climate change has traditionally been a top-down process. The starting point was always an international agreement that had to be transposed into supranational and national regulations; but what we are currently witnessing is a strong bottom-up movement occurring in parallel with this top-down process. People, in particular the young, are increasingly demanding their Governments act immediately and decisively, even if this affects their lives or pockets. Another revealing feature of this movement is that these efforts are being undertaken jointly by the public and private sectors. Many of the official initiatives currently under way are in collaboration with the private sector. For instance, the EU High-level Group on Sustainable Finance, created by the Commission in December 2016 to provide advice and contribute to the implementation of these clean policies, comprises 20 senior experts from civil society, the finance sector, academia and observers from European and international institutions.

Although it has already been activated due to the special situation we find ourselves in regarding the process of lifting capital controls, for the longer term we see it very much as a third line of defence after macroeconomic policies, and micro and more usual macropru. It is no panacea and comes with distortions. All of this remains a work in progress, and history will tell whether it will be sufficient to preserve monetary and financial stability in the rougher seas of freer capital movements that we intend to embark upon. 2/2  BIS central bankers' speeches