samchain/econo-pairs-v1 huggingface dataset:
Accountability and transparency are essential counterparts of independence, and the media play a fundamental role in ensuring that they are put into practice, which is why our participation in events such as this one is so important. So I should like to thank the APIE for organising this event and inviting us to participate. This look back reminds us that, more than 10 years ago now, an international financial crisis hit Spain particularly strongly, arriving at a time when the economy was suffering from significant domestic and external macro-financial imbalances. Spain’s banking system was clearly excessively large at the time, over-concentrated on lending funds to real estate and residential construction activities and highly dependent on international wholesale financing. These significant vulnerabilities meant that the cost of the crisis in terms of GDP and – even more importantly for society – unemployment, was very high and much larger than for our main competitors. In fact, Spain’s GDP returned to its pre-crisis level only two years ago. As regards the labour market, the unemployment rate is still five percentage points higher than in 2008 and more than 10 percentage points higher than in countries like the United States and Germany. And that is a reminder of the importance of strengthening mechanisms to analyse and diagnose promptly the risks and vulnerabilities facing the economy and, in particular, the financial system.

Jean-Pierre Roth: Switzerland - a financial centre in the heart of the euro area Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the Belgian Financial Forum, Brussels, 16 February 2004. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  Switzerland is not a fortress. In relation to the rest of Europe in particular, it is an economy that is very much open to mutual exchanges - notably with regard to trade and finance. It is not by chance that Switzerland has become a major financial centre. This can be ascribed to a number of positive factors, including specialist knowledge, a long-established banking tradition, the quality of the financial infrastructure, and customers’ confidence in the soundness of the country’s financial institutions. Switzerland’s political stability, its high level of savings and the international standing of the Swiss franc have also enhanced the appeal of its financial system. Increasingly, however, Switzerland is not alone in offering such advantages. Moreover, the Swiss financial centre - like all the others - has to face the challenges of globalisation and the fight against financial crime. As banking secrecy does not afford any protection to funds of dubious origin, the Swiss authorities are able to combat money-laundering with a reasonable degree of efficacy. In this area, Switzerland has implemented measures that have received international recognition.
When the prices of some goods fell, such as imports in the late 1990s, people had more disposable income to spend on other goods and services. That pushed up demand in those sectors and encouraged companies to raise prices. Conversely, when some prices rose, as with energy prices over the past two years, the resulting squeeze on income available to spend on other goods and services helped to bear down on inflation in those sectors. With steady growth of money spending, a change in relative prices can be consistent with stable inflation overall. Monetary policy – a credible commitment to the inflation target and a broadly stable growth of total money spending – was then, and is always, the key to low and stable inflation. That point was made forcefully in a speech in February by the late David Walton, whose untimely death in June was a great loss to the Monetary Policy Committee. Over the past couple of years our economic performance has not been quite as “nice” as in the NICE decade, but it was “not so bad”. 2 In 2005, output growth slowed to 1.9% and inflation rose to 2.5%. Back in 1976, to describe this as “not so bad” would have been the understatement of the year. It followed a period of rather strong nominal domestic demand growth which, by placing pressure on the supply capacity of the economy, accounted for some of the subsequent pickup in inflation.

The decision on whether monetary policy measures in the form of foreign currency purchases are necessary is based on an evaluation of the threat of deflation and the monetary policy expansion needed in order to counter this. Monetary policy inaction during the dramatic phases of 2009 and 2010 was not an option. The primacy of monetary policy applies, and the top priority of monetary policy is to ensure price stability. The SNB’s legal mandate is explicit in this regard. This is the contribution which the SNB can and must make to economic prosperity in this country. BIS central bankers’ speeches  1
The higher level of foreign participation in the Islamic financial markets which has resulted in the increase in cross border flows in the international Islamic financial system thereby, enhancing international financial linkages between financial systems. Liberalisation has also brought greater foreign institutional presence in Islamic financial systems resulting in greater diversity of players and strengthening further the international financial linkages. Malaysia has very much been part of this process. In 2003, the Islamic financial system was liberalised to allow for increased foreign presence. In 2007, the sukuk market was liberalised to allow the raising of funds by eligible corporates from any part of the world in any currency. And this year, the first foreign currency sukuk of USD1.5 billion was successfully issued by our petroleum corporation with a significant over subscription by investors from Europe, Middle East and Asia. As the international dimension of Islamic finance gains momentum, it is necessary to facilitate the potential for liquidity management across borders. As part of an international collaborative effort, a Task Force on Liquidity Management was set up by the IFSB and the IDB early this year to develop solutions to enhance the efficiency of Islamic financial institutions in managing liquidity at both the national and international levels. A further area of international collaboration is towards promoting value-added investment in human capital building as a long term solution to sustainable growth of the Islamic financial industry.

And now, in Iceland, financial supervision and other central bank activities have joined forces again, after a separation of 22 years. Now we have a single institution that is responsible for financial stability and has information on the financial system and developments in systemic risk within that system. The reunified Central Bank has far more explicit authorisations to intervene when events warrant it. It now has to power to affect the behaviour of financial institutions and market agents for the better. Unfortunately, the Icelandic language, rich though it is, still lacks a good enough translation of the English word “prudence”, which encompasses all that we hope to elicit in supervised financial market entities’ behaviour. We need a word that captures the concepts of foresight and thrift. I would like to reiterate what my predecessors said in the aforementioned letter to the Minister of Commerce: Supervision is a normal and appropriate part of the Central Bank’s activities. This supervisory role benefits just as much from its partnership with the Central Bank as various other Bank activities do from partnering with banking supervision. We have seen this in action. The year or so since the merger took effect has been a busy one, but it has proven the value of joining forces – in case anyone was in doubt before. For example, the integration of data and intelligence has been demonstrably beneficial during the pandemic, allowing increased oversight, improved analysis, and harmonised responses.
I am referring to the development of FinTechs and the growing role of Big-Techs in the financial scape as they ride the digital revolution underway, and to the fight against climate change. On the former, regulators have become far more active in order to understand the risks and concerns associated with this ever expanding industry. At this stage, we need to consider consistent regulation across the board, with an extension of the coordination  perimeter beyond financial authorities to competition authorities, AML-CFT ones, data and cybersecurity agencies. This would be useful to ensure adequate surveillance, an even level playing field and to limit the potential risks for financial stability including the ones stemming from cyber-incidents and crypto-assets with network effects of potentially international magnitude. On the latter, the fight against climate change, disclosure and standardization are key elements to close the data gaps and ensure adequate incentives for corporates. I therefore consider that disclosure should become mandatory, at least as a first step for financial institutions, as it is already in France, and for large corporates. Ensuring consistency and comparability of disclosure around the world is essential, and relevant authorities, including sometimes the ones we are not so used to talk to as central bankers or supervisors, need to converge on these new challenges.

In that context of extended need for cooperation and coordination among regulators and supervisors, my last comment is related to the levers at hand to promote trust and reliance on foreign supervisors to prevent the development of a trend towards ring fencing and the risk of market fragmentation. Let me say first that I don’t think that promoting mutual trust and reliance among supervisors can move us to a world free of ring fencing. This is because it has its root and it is the result of the trade-off each regulator and supervisor has to face, in normal time and during crisis, between the need to preserve the stability of financial intermediaries or the financial system as a whole for which it is accountable and the need to preserve their competitiveness through their integration to the global financial system. For instance, for banks with cross-border activities, regulators and supervisors need to balance requirements for pre-positioning of capital and liquidity in their jurisdiction and the need to leave to those banks enough flexibility in the management of those resources at group level. And this without mentioning the development of idiosyncratic financial stability risk which might call for macroprudential approach and specific additional capital requirements at a country level, and might add to the complexity to maintain this delicate balance.
Ongoing financial sector reform will also build financial sector resiliency. Thailand’s financial master plan, now in its second phase, continues, and focuses on liberalization through increased competition, raising efficiency, and strengthening the financial infrastructure. On the third issue, global current account imbalances remain problematic, as they did before the global crisis. As long as structural problems remain in the US and Euro economies and China retains its present economic policies, it is likely global imbalances will persist into the medium term with the risk of a disruptive correction down the road. Such a correction may be particularly painful for small open economies. Firmer policy coordination between large economies is needed to ensure a smooth resolution of global imbalances. Ladies and Gentlemen, I am close to the conclusion of my talk today. I have given you my assessment of the global economy, my thoughts on our policy options going forward, and how monetary policy should be poised, pre-emptive and perceptive. One theme I emphasized today was the global environment of fluid capital and its attendant risks. As a point of departure, let me address how you, as the investor, can thrive in such a world of risk while investing in Thailand. There is no easy answer. Different investment strategies face different risks. Investors themselves are the most qualified for evaluating and managing their own risk exposures given their investment opportunities.

With effort and sacrifice our society has overcome problematic situations, some not so distant in time. And the pandemic will certainly be no exception. As in other previous crises, it is vital that we should be able to draw lessons allowing us to improve those aspects that have fallen short, that have not worked as foreseen or that need to be strengthened. Naturally, this need to draw lessons applies to banking regulation, but also to health, social insurance and economic aspects that have evidenced shortcomings. As you know, the banking supervisory and regulatory frameworks were overhauled to include the lessons we learned from the previous financial crisis. While unrelated, we could say that the situation caused by COVID is the first test for this global reform and, almost inevitably, we will be assessing the functioning of the different components of the new framework after facing this global, exogenous, severe and totally unexpected shock. Let me begin with a very swift reference to the supervisory framework. I believe we will all agree that the launch of the Single Supervisory Mechanism (SSM) after the financial crisis entailed a major transformation for all euro area supervisors and banks. 1  As you know, I was involved in the creation and early working years of the SSM, so objectivity may fail me; we all tend to defend that which we have helped create. But I honestly believe that, in spite of its defects, we now have a truly European supervisory powerhouse.
Unlike some of its peers, the Turkish banking system did not require any rescue packages or other forms of government support throughout the crisis. The robustness of the Turkish financial system was to a large extent a consequence of the financial reforms implemented in the aftermath of the 2001 financial crisis we experienced in Turkey. Therefore, in contrast to many other countries that have recently revised or put into practice restructuring, supervisory, and regulatory frameworks, many of these were already established in Turkey several years ago. Furthermore, leading into the recent crisis, the Turkish financial system was well capitalized – with capital adequacy ratios exceeding 18 percent – and had relatively low loan-to-deposit and leverage ratios, as well as low levels of foreign exchange rate exposure. Relative strength of the financial sector enabled the implementation of rapid and front loaded rate cuts. No bail out scheme or other forms of public support needed during this period. This has provided room for expansionary fiscal policies. In addition to the sound structure of the financial system, low levels of household indebtedness relative to other emerging economies also contributed to the resilience of the Turkish economy during the crisis. Monetary tightening implemented by the Central Bank between 2006 and 2008 played a critical role in curbing the lending growth and checking the rise in household debt. Prudent and preemptive measures taken by the Banking Regulatory and Supervision Agency in the last 7 years prevented the spread of exchange rate risk among households.

This is an uncomfortable basis for a forecast of a benign adjustment process, not least because at some point the interests of those on one side of the balance may change. I think this mix of challenges in our fiscal and external positions deserve concern and attention. They may end up being diffused gradually and benignly, but they necessarily bring with them a greater risk of higher risk premia, a more adverse investment environment and poorer growth outcomes. Under some circumstances, this could undermine an important foundation of the environment for innovation that has delivered our productivity acceleration. What can we do to mitigate the risks in this constellation of forces? We can work to keep monetary policy credible, to preserve confidence we will act to keep inflation and inflation expectations stable at moderate levels. We can act to raise public sector savings, begin to bring our entitlement commitments and our resources closer into balance and build a greater financial cushion into our financial future against the risk of a less benign world. We can make sure we keep our markets open, and to support rather than resist the integration of China and India into the world economy. We can work to make sure that our financial system remains strong, with a substantial capital and liquidity cushion, a more resilient infrastructure and continued rapid innovation in financial intermediation. And we can work to improve educational opportunities in this country, to improve educational achievement and to improve public awareness of economics and finance.
This ‘fire sale’ pressure can matter. It can help to drive asset prices down and tighten credit conditions during downturns. It is therefore striking that, the more illiquid (that is, difficult to trade) are the assets held in an open-ended fund, the more aggressively its investors withdraw their funds as the prices of the assets held in the fund fall. See ‘The FPC’s assessment of the risks from leverage in the non-bank financial system’, Financial Stability Report, November 2018. See FSB, ‘Policy Recommendations to Address Structural Vulnerabilities from Asset Management Activities’, January 2017. 15 See IOSCO, ‘IOSCO Report: Leverage’, Consultation Paper, November 2018. 16 See FSB, ‘Global Monitoring Report on Non-Bank Financial Intermediation 2018’, February 2019. 13 14  17  All speeches are available online at www.bankofengland.co.uk/news/speeches  17  When a fund holds assets traded almost instantly on exchange – like blue-chip equities – investors tend to sit on their hands. At the other end of the spectrum, investors in open-ended funds holding commercial real estate – which, on average, takes 298 days to sell – take out 0.6% of their money for every 1% fall in the value of their funds. Investors in corporate bond funds behave similarly (Chart 18).

Chart 2 Highly indebted companies cut investment  Chart 3 UK current account balance as a  and employment more than unleveraged  percentage of GDP since 1955  companies in the global financial crisis Investment  Employment  Percentage change in crisis  % of GDP 6  15 10 5 0 -5 -10 -15 -20 -25 -30 -35 -40 No leverage  4 2 0 -2 -4 -6  High leverage  -8 1955  Sources: S&P Global Market Intelligence and Bank calculations. 65  75  85  95  05  15  Source: ONS  Notes: Change in investment and employment in the financial crisis for unleveraged companies and companies with high leverage ratios. Percentage change reflects the average log change in investment and employment between 2007 and 2009. High leverage companies are those with net debt/EBITDA ratio higher than four in 2006. See, for example, Olivier Blanchard and Gian Maria Milesi-Ferretti, ‘(Why) Should Current Account Balances Be Reduced?’, IMF Economic Review, April 2012 and Julián A. Caballero, ‘Do Surges in International Capital Inflows Influence the Likelihood of Banking Crises?’, Economic Journal, March 2016. 5  5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  Recent developments  What, then, has been happening in the UK to these drivers of underlying economic vulnerability? Developments are summarised in the ‘heat map’ below (Chart 4). The colours represent how high each indicator is relative to past outcomes.
For further details see: www.bankofengland.co.uk/about/Documents/smr.pdf 10 11  5  All speeches are available online at www.bankofengland.co.uk/speeches  5  Now consider the Bank’s response to Charlotte Hogg’s case:   She was formally warned in the strongest – and most public – of terms.   There were consequences for her compensation. While she couldn’t forfeit a bonus as Bank of England Governors cannot receive one, she waived her salary increase this year.   Court reassigned her COO responsibilities.   Court reconfigured reporting lines and internal structures in order to improve governance, compliance and disciplinary processes, including reassigning the SMR responsibility for implementing our Code.   And, on the basis of this one incident, the independent directors of Court have initiated a widespread review that will draw on the expertise of the Independent Evaluation Office, Internal Audit and the National Audit Office. Its results will be made public. In other words, consistent with our higher standards, the Bank planned a tougher response than we would expect in the private sector, but one that, in our judgement, was still proportionate to an honest mistake that was freely and transparently admitted. The Treasury Select Committee (TSC) reached its own judgement, which in turn triggered Charlotte Hogg’s decision to resign. 12  I fully respect both the TSC’s judgement and her decision.

Two-thirds of staff now feel encouraged to try new ideas, three-quarters indicate that their managers act on their suggestions, and 60% are comfortable speaking up on an important issue. All of these metrics have significantly improved in the past few years. 13  We have comprehensively overhauled our governance, openness and accountability in recent years. With the arrival of Anthony Habgood as Chair, Court has been strengthened and now acts as a unitary board and meets the best practice found in the private sector. Its independent members now have more tangible influence on the Bank, including through formal powers to observe the meetings of the Bank’s policy committees and to commission independent reviews into the Bank’s performance. Its minutes are now published after a lag of six weeks rather than a hundred years. It regularly releases reports on matters of  13  ‘Reflecting diversity, choosing inclusion’ speech given by Mark Carney, 9 February 2017 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  concern ranging from policy, such as economic forecasting, to conduct, such as the Grabiner report into the FX market. 14  We know we have more to do. That’s why the independent non-executive directors are reviewing the Bank’s response to recent events. That’s why our next strategic plan will focus to even greater degree on changing how we work. To maximise the potential of our people, the Bank needs to embrace fully collaborative working in diverse teams that value robust debate.