samchain/econo-pairs-v1 huggingface dataset:
Figure 7 shows developments in Sweden’s current account and in the real exchange rate in Sweden. As we can see, there is a clear correlation. The devaluation at the end of the 1970s and the beginning of the 1980s only led to short-term surpluses in trade. The devaluation was instead followed by higher inflation in Sweden than abroad, which led to an appreciation in the real exchange rate. The deficit in international trade returned. However, when the krona was allowed to float in November 1992, the real exchange rate immediately weakened by almost 25 per cent and has since then remained weak. Sweden has for the most part had large surpluses in foreign trade since then. How should we then view future developments? Our assessment is that the surplus on the current account will decline from almost 10 per cent in 2008 to around 7 per cent at the end of the forecast period (see Figure 7). An important factor in this assessment is that households are expected to reduce their saving in the future. During the financial crisis, confidence indicators showed that households had a very pessimistic view, which probably led to an increase in precautionary saving. As the economy recovers and households’ confidence is restored, which economic survey data now indicates, it is reasonable to expect that saving will fall. As we saw in Figure 7, a reduction in the surplus on the current account is usually connected to a real strengthening of the exchange rate.

With that in mind, policymakers should follow the general principle of “same business, same risks, same rules”. That is important. As banking supervisors, we focus on risks related to banks. In that regard, we are working on a number of projects. Take bank licences, for example. We see a rising number of applications related to fintechs. In response to this, we have teamed up with the national supervisors to work on a joint policy approach. It will ensure that applications are treated in the same manner across the entire euro area. Risks that are specific to fintechs will be assessed appropriately and proportionately. We are also seeing more and more supervisors exploring and setting up mechanisms to facilitate the authorisation process for fintech banks. Innovation hubs and sandboxes are two of the key words here. And we too are seeking to implement a euro area-wide hub for fintechs. We are also assessing the risks that might arise when banks or fintechs outsource data or even entire IT systems. We already carried out some work in this regard; in 2015, we did a cybercrime survey, which was a unique project at the global level. As a follow-up we implemented a data base to track and analyse cyber incidents in large euro area banks. And last but not least, concerning the business models of banks, we will explore potential 2/3  BIS central bankers' speeches  risks that emanate from fintechs and other non-bank competitors. In that regard, fintechs are among our supervisory priorities.
On the contrary, it is important to deal with these issues on an international level. But the overall framework has not been drafted with the specific situation in the banking sector in mind. It may therefore be difficult to find suitable solutions in a crisis situation without running the risk of breaking a number of regulations. It is not acceptable that decision-makers should have to fumble in an acute crisis situation, trying to steer clear of this risk. It is also important that the action by the authorities in such a situation is evaluated against a regulatory framework fit for its purpose. A framework which makes it possible to maintain a proper balance between the different parties involved also in a crisis situation. There is a need for a special insolvency and resolution framework for banks In my opinion, all this points in one direction. A special insolvency regime is needed for banks and other institutions that are covered by the safety net. In this country it has long been said that banks should be covered by the ordinary corporate bankruptcy legislation, at least as long as there is no direct threat to the system. This is because government intervention over and above the existing safety net for the banks should be avoided. I believe that this is the wrong way to look at it. The ordinary bankruptcy regime does not sufficiently recognise the need for speed when dealing with banking problems.

This will remove a reliance on Libor benchmarks, which have long-standing weaknesses, and replace them with a robust alternative. In readiness for that, from July, the Solvency II risk-free discount rates for Sterling will switch from Libor to SONIA. We know this interacts with potential changes coming from the Solvency II review in the areas that I have been talking about today. So we are going to use the QIS as an opportunity to get granular data to allow us to understand the likely impact for different firms and sectors, and the interaction with the Solvency II review. Stress Testing The Solvency II review is a chance to build a regime that is strong, robust and meets the needs of policyholders, the UK market and the broader economy. As prudent regulators we want to ensure that whatever is built will be able to withstand the high winds and earthquakes which it may be hit by over the years. One of the ways we look to do that is through stress testing. Helping supervisors and firms 5/6  BIS central bankers' speeches  understand the effect on their balance sheets of real-world events. We have run a stress test every other year since 2015, and we plan to do so again next year. Over the slightly longer term, we have aspirations to use stress testing increasingly centrally in our supervisory approach. We do not intend some radical departure from the current ways of setting capital requirements.
In brief, these involve raising the international requirements regarding the capital and liquidity the banks must hold. For instance, a larger share of the capital must be real equity capital. Another example is that the EU has established a special body, the European Systemic Risk Board, which is to identify risks in the financial system and to provide warnings and recommendations to the countries and authorities concerned. Public finances an acute but difficult problem The two other challenges are rather more difficult. The problems with public finances entail a difficult balancing act for the countries concerned. On the one hand, it is desirable that the  2  This and the third challenge are taken up by, for instance, Olivier Blanchard in the foreword to the IMF’s World Economic Outlook, October 2010. BIS Review 149/2010  3  savings do not increase too much too soon thereby withdrawing public sector demand while private sector demand is still weak. This could lead to a negative spiral, with falling demand and production, where public finances are weakened rather than strengthened. On the other hand, the deficits and the government debt must not continue to grow to the extent that doubts arise regarding the ability to repay the debt at all. Such a situation would hardly be preferable. A further complication is that this time there are many large countries who need to save at the same time. The effects on the global economy could then be substantial, particularly if the balancing act is not successful.

Shanghai Futures Exchange (“SHFE”), one of China’s largest commodity futures exchanges, established a representative office in Singapore in June this year. Shanghai International Energy Exchange (“INE”), an international futures exchange set up in the Shanghai Free Trade Zone, has been authorised by MAS as a Recognised Market Operator in November 3/5  BIS central bankers' speeches  this year. SHFE and INE chose Singapore to be their first overseas outpost, given Singapore’s position as a key global commodities trading and financial hub, and an important link in the BRI. b. Fullerton Fund Management and APS Asset Management received their private fund management approvals in June 2017 and July 2018 respectively, allowing these asset managers to offer onshore investment products to institutional and high net worth investors in China. c. UOB has reinforced its commitment to China by opening a new headquarters building in Shanghai in November this year. UOB Plaza is the first Grade-A office building owned by a foreign bank in the Lujiazui Financial District. FinTech Collaboration between Shanghai and Singapore  Fourth, nurturing a conducive ecosystem for FinTech companies and start-ups. Together, Shanghai and Singapore can increase the potential for technology and innovative solutions that increase efficiency, improve risk management, create new 9  opportunities, and improve people’s lives. We are pleased that FinTech companies and payment service providers from Shanghai and Singapore are entering into commercial arrangements, bolstering FinTech linkages between both cities. a.
It is not just a more efficient distribution and marketing channel. It is opening up new financial applications and business models, and breaking down national barriers separating financial markets. Bill McDonough, the President of the New York Federal Reserve Bank, has described the internet as the most important strategic issue facing financial institutions today. The best way to package and deliver financial services over the internet is not yet clear. In share trading, the success of discount brokers like eTrade, and ECNs like Island, is obvious. There is also promising potential for trading fixed income instruments and derivatives online. But for other financial services, institutions are still experimenting with different business models and approaches. They all know that a new generation of customers will want to do business over the internet, and banks will have to meet this demand or lose business to new players. The internet has also created new roles in the financial services value chain, e.g. infomediaries, or intermediaries which gather and present information on financial products offered by different financial institutions, so that consumers can compare prices and quality at the click of a mouse before committing to a specific product like mortgages, insurance packages and loans. Financial institutions will need to gear up to participate in electronic commerce. For them, the internet means not only new business opportunities, but also fiercer competition, including across borders. It will create new risks, which they must recognise and manage. Financial supervisors need to understand the nature of the new internet based activities.

But it can have a stabilising effect in the short run, particularly if inflation expectations are well-anchored so that temporary changes in inflation are not perceived as permanent. However, this means that a conflict may arise between the short run and the long run. A central bank prefers inflation expectations to be stable and low, as this is best in the long run. The central bank may then prefer to conduct a policy that is perceived as sufficiently tight for inflation to remain low, as this creates low inflation expectations. But once inflation expectations are low, it may be tempting to allow the market to be ”surprised” by a more  1  Phillips actually studied the relationship between wages and unemployment, but later studies indicated a similar relationship between inflation and unemployment, Phillips, A. W, (1958) “The relationship between unemployment and the rate of change of money wages in the United Kingdom, 1861-1957”, Economica, 25, s. 283-299. 2  Friedman, M, (1968). “The role of monetary policy”, American Economic Review, p. 58, 1–17. 2  BIS Review 38/2009  expansionary policy that leads to lower unemployment, as it takes time before individuals and companies adapt their behaviour. In this way the central bank risks finding itself in a vicious circle of periods where inflation is allowed to soar, followed by periods where inflation expectations have to be brought down again at a large cost to the real economy.
23  Kose, M, Prasad, E and Taylor, A (2010), Thresholds in the process of international financial integration, Journal of International Money and Finance. 24 The G20 has previously discussed these issues, for example see Report of the G20 Eminent Persons Group on Global Financial Governance (October 2018) and G20 Action Plan on the Development of Local Currency Bond Markets (July 2013) 25 Coman, A, Lloyd, S (forthcoming) In the Face of Spillovers: Prudential Policies in Emerging Economies. 18  All speeches are available online at www.bankofengland.co.uk/speeches  18  Chart 17: The impact of macroprudential policy on Capital Flows-at-Risk Probability density 0.10  Average macro-prudential stance  0.08 0.06 0.04  Tighter macro-prudential stance  0.02 0.00  -8  -6  -4  -2  0  2  4  6  8  10  12  14  16  18  Capital flows as a % of GDP Sources: IMF, Cerutti et al (2015) and Bank staff calculations Notes: Chart shows conditional distributions of capital flows to EMEs under an average macro-prudential stance and a one standard deviation tighter macro-prudential stance, as measured by Cerutti et al. (2014). The unconditional distribution differs from others in the speech given data on macro-prudential actions only starts in 2001 rather than in 1996 as the rest of our data. See chart 5 and annex for further details.

1  Comparison is between medians for the high and low groups of the sample shown in Chart 1 and 2, with high and low groups defined as those above and below medians of the sample. 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  Time and again, waves of investment into EMEs are sharply withdrawn (Chart 3). And more generally, financial openness has tended to amplify domestic imbalances and leave EMEs more vulnerable to foreign shocks.2 As a consequence, a fifth of all surges in capital flows to EMEs have ended in financial crises. And EMEs are at least three times more likely to experience a financial crisis after capital flow surges than in normal times. 3 Chart 3: Net private capital flows to emerging market economies and incidences of crises Number of EM crises (rhs) Net private capital flows to Non-China EMEs (lhs)  % of GDP 6  Number 6  Crises tend to occur when capital flows slow  5  5  4  4  3 3 2 2  1  1  0 -1  1980  1985  1990  1995  2000  2005  2010  0  2015  Source: IMF. Notes: Excludes China.
In the euro area, because the banking system has a more dominant role in the financing of the private sector than the capital market, compared with other economies, the implementation of such measures would be more focused on the banking system. Potential measures could include an extension of the maturity of the central bank liquidity provided to banks and purchases of private debt securities in the secondary market in order to improve its liquidity and reduce the cost of funding of the real economy, thus helping its recovery. Could a further easing of monetary policy contribute to containing potential disinflation risks and provide further support to economic activity? I would like to make two general remarks concerning the role of monetary policy in fostering the economy’s recovery and sustained growth at this juncture and more generally. First, as we have emphasised in the past, the ECB’s monetary policy should ensure that inflation expectations over the medium to longer term remain firmly anchored in line with the Governing Council’s aim to keeping inflation below, but close to, 2%. This anchoring of inflation expectations supports sustainable growth, employment creation and contributes to financial stability. Second, the monetary policy stance should be determined so as to also contribute to a smooth exit strategy from the current exceptional circumstances of historically low rates and unlimited provision of central  BIS Review 38/2009  3  bank money to the banking system.

The policy strategies pursued need not be identical across countries and regions and the required size of the economic stimulus and the nature of the other measures taken need not – and should not – be the same, as structural and conjunctural conditions differ. Nevertheless, a similar orientation and consistency is warranted. 1  See International Monetary Fund, Global Financial Stability Report Market Update, 28 January 2009, p.2. 2  Based on data available up for January 2009. BIS Review 38/2009  1  Since the intensification of the financial crisis in September 2008, central banks and governments globally have acted in a decisive and concerted manner to contain the adverse effect of the financial crisis on the real economy and promote its recovery. In the euro area, the actions taken by the ECB and the Eurosystem are unprecedented in size and scope. Government support for financial institutions in the form of recapitalisations, guarantees on bank debt and, more recently, asset relief schemes, have been significant and the pertinent measures are progressively being implemented. And the fiscal stimulus packages of euro area governments are substantial, amounting to a total of about 2% of euro area GDP over this year and the next. The immediate priority of macroeconomic policies and bank support schemes is to promote the economy’s recovery and preserve price and financial stability.
Rising income levels and the presence of a young demographic structure with a high propensity to consume has resulted in a huge consumer market and the development of an extensive modern retail sector across the region. The potential sustainability of this trend is supported by the absence of inflationary trends, of large scale unemployment, or of high levels of indebtedness. The second fundamental trend is the intensification of regional economic and financial integration. This has been facilitated by the ability to leverage on complementarities in the region arising from diversity and differences in comparative advantage. Intra-regional trade has been a major contributor to the recent recovery in Asia. Intra-regional investment flows have also gained momentum. Businesses in the region are increasingly leveraging on regional complementarities and taking advantage of the growing markets in the region through regional trade agreements to achieve the aspiration for ASEAN to become an Economic Community by 2015. As high saving economies, it is recognized that there is an important need for a more efficient intermediation of the surplus funds in the region. This is to not only effectively channel these funds into productive investment opportunities in the region, but also to finance the massive development of infrastructure required by the region. As part of the increased regional financial integration, there is now increased regional presence and participation in the domestic financial systems of the region.

The resolute pursuit of structural reforms in line with the Lisbon process, which are decisive in order to raise the long-term growth potential of Europe. And the lucid monitoring of the national competitive indicators, including unit labour costs. 2  BIS Review 69/2008  Mr President of the Parliament, Mr President of the Union, Mr President of the Commission, Mr President of the Eurogroup, Europe can count on the ECB and on the Eurosystem to implement in this century the historic task which was assigned to us at the end of the last century. We will be faithful to the primary mandate given to us by the Treaty. We know that our fellow citizens are asking us to deliver price stability. We know also that price stability is a prerequisite for financial stability, a very important objective at the current juncture. All the members of the Governing Council make their decisions taking into account the interests of the whole of the euro area, of 15 countries. We do not consider any particular country, but all 15 of them. Sehr geehrte Frau Bundeskanzlerin, This year in Aachen, upon receiving the Charlemagne Prize, you quoted Konrad Adenauer: “Gerade in Aachen wird man die Mahnung verstehen, dass Europa uns heute Schicksalsgemeinschaft ist. Dieses Schicksal zu gestalten ist uns übergeben”. “In Aachen, above all, people will understand the call: that Europe, for us today, is a community with a common destiny.
The Developments in Interest Rates 31 29  ISE Bonds and Bills Market Interest Rates (Benchmark, Compound Yield)  27  CBT O/N Interest Rate (Compound)  25 23 21 19 17 15  27-Jan-06  04-Mar-06  22-Dec-05  11-Oct-05  16-Nov-05  31-Jul-05  05-Sep-05  25-Jun-05  14-Apr-05  20-May-05  01-Feb-05  09-Mar-05  27-Dec-04  16-Oct-04  21-Nov-04  10-Sep-04  30-Jun-04  05-Aug-04  19-Apr-04  25-May-04  14-Mar-04  02-Jan-04  07-Feb-04  13  Source: ISE, CBRT. Analyzing the yield curve that shows interest rates in the ISE with different maturities, the interest rates have been realized at a lower level in each maturity as of 24 April 2006 compared to the end of the previous year. This development stems from the expectations that the downward tendency in inflation will continue in 2006 as well. Nevertheless, the more horizontal course of the longer maturity end of the yield curves compared to the previous periods confirms the cautious attitude of economic agents towards their future risk perceptions in the said period (Graph 20). Graph 20. Yield Curves  30 September 2005 30 December 2005  Interest Rates  24 April 2006  14.45  12.00 1 Month  2 Months  3 Months  4 Months  6 Months  9 Months 12 Months 18 Months  Months to Maturity  Note: Line 14,45 corresponds to the composite interest rate of the overnight interest rate of 13.50. Source: ISE.

Encik Adnan Zaylani Mohamad Zahid: A way forward for the Malaysian Renminbi market Speech by Mr Encik Adnan Zaylani Mohamad Zahid, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the RMB Conference, organized by Bank of China "A Way Forward for the Malaysian Renminbi Market", Kuala Lumpur, 1 November 2016. * * * It is an honour to be here this morning to speak at the Renminbi Conference organised by Bank of China. Over the last seven years since the internationalisation of renminbi took off in earnest, we have seen the progress and evolution of the currency from its primary use in trade settlement to become a currency of choice for investment and financial instruments, reflecting China’s growing presence in global finance as well as various economic initiatives related to its ‘One Belt One Road’ vision. To this effect, it is important for Malaysia, being a key partner for China in the ASEAN region, to strengthen the renminbi connectivity not only to facilitate our bilateral trade but also to become a launch pad for China’s initiatives in this region. Today also marks one month since the inclusion of the renminbi into the Special Drawing Rights (SDR) currency basket, which is undoubtedly a watershed moment for renminbi given its relatively recent internationalisation over the last seven years. I have no doubt that with the inclusion, more central banks will be adding renminbi into its international reserves.