samchain/econo-pairs-v1 huggingface dataset:
Two differences stand out between Asia and Europe. The first is policy flexibility. The devaluation of the exchange rate helped restore export competitiveness of the Asian economies. However, this freedom of flexibility might not be practical for Europe given its single currency setting and political complexities. The second is the supportive global economy, which provided the necessary market for Asia and allowed Asia to export our way out of the crisis. Global GDP registered a 4.7% growth in 2000 with advanced economies, the world’s largest consumer, growing at 4.1%. In contrast, the global setting of the current European sovereign debt crisis is not  1  BOT’s staff computation from CEIC data. 2  Malaysia’s policy mix started out with an initial fiscal and monetary tightening, a conventional IMF-like measure, followed by a reversed loosening of macroeconomic policies. The insufficiency of these policies to restore confidence led the country to resort to exchange and capital control which yielded positive result. 2  BIS central bankers’ speeches  as favorable. Global and advanced economies growth turned to a negative territory of 0.6% and 3.4% respectively in 2009. Emerging and developing economies, increasingly feeling the pinch of the global slowdown, witnessed the continued slowdown of their GDP growth from 8.7% in 2007 to just 2.8% in 2009. I believe that there may be other success factors for the European story. But, we have to bear in mind that some of the success factors are not without costs that remain to be addressed.

Going forward, I view that there is a need for international institution that oversees all finance-related conducts to ensure strict compliance of rule, implementation of ethical codes and avoid double standard across nations. Lastly, continuous and collective reforms are vital. Crisis is a recurring phenomenon and no lessons from previous crisis will ever fully prevent the next one. But through the process of reform after each crisis, the market grows and becomes more efficient. Crises provide a window or “political feasibility” to undertake needed structural changes that  3  International Labor Organization (ILO). BIS central bankers’ speeches  3  may be hard to sell to the public in normal circumstances, so one should not waste a good crisis. I am pleased to see numerous improvements in key areas of finance and supervision such as the use of macroprudential measures to complement traditional monetary policy tools. It is also more acceptable to require banks to provision in good times against losses in bad times, for after all most bad loans are made in good times. In addition to structural reforms, change in “mindset” is probably the most important. In order to keep up with the dynamic global environment, we may need to challenge and correct some of our old beliefs.
Current economic and monetary policy outlook Today, a mild recession in the euro area around the turn of the year is quite plausible, as ECB President Christine Lagarde recently highlighted.1 Today, we face euro area inflation that continues to be far too high, having reached double digits in October. Today, long-term interest rates in the euro area are around 2.5 percentage points higher than when I was first due to speak to you last year. Today, as Bundesbank President Joachim Nagel said just last week, - "muss die Geldpolitik auf der Hut sein".2 Monetary policy must be on its guard. And monetary policy is not just on its guard but is taking action. The increase in interest rates reflects several steps in the monetary policy normalisation which the ECB started in December 2021. These were the phasing-out of our pandemic support measures, the subsequent full phasing-out of our net asset purchases, and three consecutive policy rate hikes across our July, September and October monetary policy meetings totalling an unprecedented 200 basis points. Today, it is not evident that the observed turn in macroeconomic sentiment will substantially alter the inflation outlook, even if a mild recession were indeed to materialise. Against this backdrop, we have communicated that we will continue to promptly withdraw monetary policy support and move policy rates further to a level that is consistent with inflation reverting back to our 2% target in the medium term.

It means that, in our ongoing supervisory interactions with banks, we will be perceptive with our eyes, receptive with our ears and – whenever necessary and appropriate – insistent with our mouths and intrusive with our presence and through our actions. Attentive to risks. Always promoting prudence. To make sure that my future speaking notes can continue to refer to healthy and resilient banks in the euro area, irrespective of the tides and currents that come to our shores. Vielen Dank für Ihre Aufmerksamkeit. 1 Lagarde, C. (2022), "Monetary policy in a high inflation environment: commitment and  clarity", lecture organised by Eesti Pank and dedicated to Professor Ragnar Nurkse, Tallinn, 4 November. 2 Nagel, J. (2022), "Die Pandemie und ihre ökonomischen Auswirkungen", speech at  the Wirtschaftsclub Karlsruhe, 10 November. 4/5  BIS - Central bankers' speeches  3 Enria, A. (2002), "Better safe than sorry: banking supervision in the wake of  exogenous shocks", speech at the Austrian Financial Authority Supervisory Conference 2022, Vienna, 4 October. 4 ECB Banking Supervision (2020), "Guide on climate-related and environmental risks",  November. 5 ECB Banking Supervision (2022), "Thematic Review on Climate and Environmental  Risks 2022 – Final Results", 2 November. 5/5  BIS - Central bankers' speeches
Given the parliamentary recess as of May next year in view of the upcoming elections to the European Parliament, it is of utmost importance to have a political agreement on the Single Resolution Mechanism in the ECOFIN by the end of this year. To make this happen, all need to move. The following are the main open issues that need to be solved: First, the legal base: Article 114 of the EU Treaty on the establishment and functioning of the internal market is a possible legal base from our point of view, but it could also be based on the flexibility clause of Article 352. Second, the scope: The Commission proposal foresees that all banks in countries participating in the SSM should be covered by the SRM as well. My personal view is that a compromise should be possible here. Why not start with the systemic SSM banks, ie the 130 for which the ECB will be the direct supervisor, and progress further over time? Third, the resolution authority: It must fulfil three criteria. It has to be in a position to take decisions quickly, if needed during a weekend. That said, it is obvious that the Council cannot be the resolution authority. The resolution authority must be established quickly. That means there is no time to wait for a treaty change to establish a new institution. The new authority must take a European perspective on financial stability. Let me be clear that I do not see the task of the resolution authority with the ECB.

If such a bank makes losses on loans in one state it can offset them with gains  BIS central bankers’ speeches  3  in another – thus at least in part internalising the costs. In the euro area, however, banks tend to have a more domestic focus, meaning losses in one country are more likely to exhaust the capital of the domestic banks. In the capital markets, the US has integrated equity and debt markets, allowing losses from bank failures and corporate insolvencies to be dispersed across the whole market. In the euro area, by contrast, cross-border capital markets are only partially developed, which means the effect of a negative economic shock is fully concentrated at home. In Germany and France, for example, around 85% of equity is held domestically. One should not underestimate the importance of this: it has been estimated in a paper that two-thirds of economic shocks in the US are absorbed via the integrated financial market.1 While the launch of the euro seems to have encouraged more private risk-sharing between EMU countries, it remains at much lower levels than between US states, and markets are vulnerable to fragmentation.2 This point underscores that the private and public banking unions are to a significant extent interdependent. Having a strong set of federal institutions can stop market failures such as a fragmentation during a crisis.
In other words, just as new apps are constantly being developed for smartphones, so too will we be able to add new functionalities to the platform to meet emerging market needs and requirements. These functionalities will benefit from being designed for a single, harmonised platform. As we consolidate the financial market infrastructure in Europe, another area requiring further attention is that of collateralisation. With increased regulation following the financial crisis, collateral requirements are higher than ever. This is why it is so important that banks and  BIS central bankers’ speeches  1  financial institutions are able to manage their collateral in an efficient way and why the optimisation of liquidity-saving measures presents such a benefit to market participants. With T2S, it is now possible to have a single, centralised, pool of collateral, making it much simpler and faster to move collateral from where it is to where it needs to be. This then brings to the fore the issue of harmonising our own collateralisation techniques and procedures. As we look to the future, the Eurosystem will seek to drive harmonisation forwards, particularly as regards Eurosystem operations for the mobilisation of marketable assets, as well as the handling procedures for non-marketable assets. We live in a fast-paced world, and customers have come to expect instant services in all aspects of life, including from their banks.

This growth in money was accompanied by robust lending on the part of banks. Although the rate of growth of mortgage loans to households has declined since mid-2012, it is still at a high level. Most recently, mortgage lending to companies, in particular in residential construction, has increased significantly. Overall, lending has been growing faster than nominal GDP for several years. In addition, prices for owner-occupied apartments and single-family homes have risen strongly in the past few years. Given the sustained period of exceptionally low interest rates, there is a risk that the imbalances on the mortgage and real estate markets will increase further. This development jeopardises financial stability and, in the event of an abrupt correction, can have wide-reaching consequences for the real economy. SNB monetary policy Ladies and gentlemen, the SNB continues to face major challenges. In particular, the threat that the Swiss franc could suddenly come under upward pressure again has not been averted. In the current low interest rate environment, therefore, the minimum exchange rate remains the focal instrument for ensuring appropriate monetary conditions. The financial crisis has shown that for balanced economic development more than just price stability is required; financial stability must also be guaranteed. In Switzerland, the fact that the SNB is required to contribute to ensuring financial stability was already laid down in the National Bank Act of 2004. Our annual Financial Stability Report is an important instrument in this respect.
The law responded with a number of measures to protect shareholders. These included the requirement for companies to disclose information about their operations, such as through company accounts, and powers for shareholder to sue directors (Bryer (1993)). These were augmented with shareholder General Meetings (GM), the forerunner of today’s Annual General Meetings (AGMs). Initially, shareholders’ voting powers at these GMs varied significantly. In a sample of pre1850 companies, 233 different shareholder voting systems were found. The Companies Clauses Consolidation Act of 1845 set as the default voting structure a graduated system of shareholder rights, in which rights reduced according to the scale of shareholding. But during the course of the 19th century, the “one share, one vote” voting model familiar today gradually came into the ascendency (Freeman et al (2012)). Shareholder primacy Accompanying this rise in shareholder rights was a steady rise in acceptance of shareholder primacy as the key objective of a company, at least in the UK and US. A number of legal case decisions, on both sides of the Atlantic, saw this objective enshrined. In the UK, the case of Hutton vs West Cork Railway Company in 1883, the company had been wound up and yet still resolved to pay directors for their past service. Shareholders successfully challenged these awards on the grounds that they did not benefit the company which, crucially, was interpreted to mean its shareholders (Mukwiri (2013)).

This can be achieved by requiring bonus payouts to be deferred for a period (“deferral”) and subsequently not paid out if performance is poor (“malus”) or clawed back after payment. If deferral periods broadly match the duration of a typical risk cycle, incentives to risk-shift through time are likely to be significantly reduced. Incentives to act in a shorttermist fashion should also be reduced. These proposals have an element of back to the future about them too. Deferral and clawback in some respects mimic 19th century company practices, when shareholders and managers remained liable for losses that occurred on their watch, even after they had sold their stake. Recently, these ideas have been resurrected in some countries, at least for banking firms. For example, CRD IV in Europe requires that the variable portion of senior bank executives’ pay be deferred for 3–5 years. Last July, the Bank of England consulted on a minimum deferral and clawback period of 7 years for Senior Managers and earlier this year these proposals were finalised. These rules now allow for clawback of up to ten years from award, providing a material incentive to reduce excessive risk taking by executives. 24 In finance, you generally reap the risks you sow over that horizon. This new policy aligns risks and horizons. 22  Bennett, Güntay, and Unal (2012). 23  See Bailey (2014) for further details. 24  The PRA and FCA published their Policy Statement, ‘Strengthening the alignment of risk and reward: new remuneration rules’ in June 2015, available at: http://www.bankofengland.co.uk/pra/Documents/publications/ps/2015/ps1215.pdf.
One circumstance that may also play some role in the effectiveness of macroprudential policy is that it may be the case that macroprudential policy measures are perceived as more dramatic, not least for the banks, and as a larger intervention than an increase in the policy rate. The pressure not to act may thus be particularly strong in the field of macroprudential policy, and it may be fairly difficult to resist, particularly if the financial supervisor does not have a high degree of statutory independence. This could lead to an “inaction bias” – that one waits so long before taking measures that it is already too late by the time they are implemented.14 Hopefully, these are problems that will decline as macroprudential policy becomes more established and perceived as less dramatic – roughly in the same way as inflation-targeting gradually became more established and accepted. A further reason why macroprudential policy may need support is that monetary policy could in itself contribute to the problem. If monetary policy is very expansionary over a long period of time, this could contribute to distorted expectations of how high interest rates will be in the future and how the housing market will develop, and lead to an increase in risk taking in the economy.15 This could set in motion forces that macroprudential policy may find difficult to counteract on its own.

The second task of macroprudential policy is to manage structural risks, or cross-section risks, which could for instance mean that close links between different parts of the financial system at any given time will affect the risk of a crisis affecting the system as a whole. Here, I will primarily focus on the cyclical dimension of macroprudential policy. However, it is not so easy to draw any clear boundary between structural and cyclical problems on the financial markets, just as in other areas, such as the labour market. 1  2  For a few examples, see Geanakoplos (2009), Aikman, Haldane and Nelson (2010) and Borio (2012). BIS central bankers’ speeches  In Figure 1, the red line represents the normal cyclical fluctuations in the economy, the business cycle. The second curve in the figure represents the financial cycle. As I noted, the economic cycle and the financial cycle need not coincide, but can develop differently. Often, the financial cycle is assumed to have a lower frequency, fluctuate more slowly, than the business cycle, as illustrated in the figure.2 Links between the financial cycle and the business cycle can create problems A situation where both cycles definitely coincide is when the financial cycle shows a rapid downturn, as at the end of the figure. This was what happened in many countries during the financial crisis, and in Sweden during the crisis at the beginning of the 1990s.
We are keen to understand industry’s view on the priorities, costs and benefits of the various ingredients of the roadmap and which they would like to invest in. At the same time we will be publishing a consultation on a revised framework for recovering the build and run costs from industry (the RTGS tariff). To whet your appetite I will highlight the three key themes of the consultation. First, creating new ways to connect to RTGSthat are cost-effective, based on open standards and compatible with a wide range of technologies. This includes creating new channels to submit payment instructions, alongside the established SW IFT network. We will also continue to evolve our API platform to automate and streamline data exchange with participants. Secondly introducing a range of flexible and innovative settlement services to address the changing needs of our users. The specific options include: improving liquidity efficiency, extending operating hours of our system and introducing a new settlement model to enable payment synchronisation. Synchronisation would enable the cash movements in RTGS to happen if and only if a corresponding asset on another ledger is transferred. It would create a way for the private sector to build new services for their customers using central bank money. We believe that this model can boost the speed of settlement, reduce risk, and enable further innovation.

In addition, the monetary policy normalisation we have embarked on has established the premises for controlling inflation and safeguarding the economic and financial stability of Albania. In this view, I would like to welcome the positive role played by the banking industry over 2022, by maintaining a positive approach towards lending to private sector and taking the necessary measures to manage added risks in your balance sheets. I am confident that these measures, and others we may take in this regard, will pave the way for a rapid return to normality. Though risks remain present, our projections suggest inflation will return to target within the first half of 2024 and the Albanian economy will continue to maintain a positive growth pace throughout this period. As important actors in the economic and financial life of Albania, I would like to reemphasise that our decision making should be forward-looking, decisive and courageous. Albania has a solid economic growth prospects in both medium and long term. They have enabled the continuous expansion of economy and of the banking and financial system in the recent years, and should feed your confidence in the Albanian economy in the future. These prospects will further benefit in the framework of Albania's membership process in the European Union and from the agenda of structural reforms. 1/4  BIS - Central bankers' speeches  For this reason, I kindly invite you to stand up for these processes.
An important element of this step was a switch from a forecast with a fixed-interest-rate assumption to an unconditional forecast that includes a reaction-function of the central bank. Our current quarterly projection model is a small-scale model belonging to the first generation. It is thus fairly simple and arguably misses many important links in the economy. Nevertheless, it is already quite close to the state-of-the-art among the inflation-targeting central banks around the world, and intense work is in progress to build a higher-generation model. The good standard of our current forecasting know-how is reflected, among other things, in our ability to start providing technical assistance in the forecasting field to some other central banks in transition and emerging market economies. In line with the transparency philosophy of inflation targeting, the Czech National Bank published a book called “The Czech National Bank’s Forecasting and Policy Analysis System” last year. This book describes not only the core forecasting model itself, but also the whole process of creating the final integrated forecast. The model has also been published in a professional journal, the Czech Journal of Economics and Finance. To conclude, I would like to emphasise that the development of our forecasting and analysis system has been part of a wider evolutionary process that the Czech inflation targeting regime has gone through. During the first years, many of the details were adjusted in response to the changing needs, challenging experience and evolving thinking of the central bank.

Constantinos Herodotou: Central Bank Challenges in a world of growing uncertainties - the conduct of monetary policy and the evolution of traditional banking Speech by Mr Constantinos Herodotou, Governor of the Central Bank of Cyprus, at the ICPAC Mediterranean Finance Summit, Limassol, 5 May 2022. *** Dear guests, dear co-speakers, it is a pleasure to have the opportunity to speak to you here today. These days our thoughts are with those affected by the tragic events of the Russian invasion in Ukraine. Beyond the human loss, Russia's war against Ukraine has disrupted further the global supply chains and in effect growth and inflation patterns around the world and the euro area economy. Europe faces both supply disruptions and surging prices for commodities and raw materials, problems exacerbated by the region's dependency on Russian oil and gas. How the euro area economy performs will greatly depend on the magnitude and time length of the conflict, the side effects of current sanctions on the euro area and on possible further measures. I will first describe the current economic developments in the euro area as regards growth and inflation outlook and the ECB's monetary policy stance and challenges under the prevailing uncertain geopolitical situation. As the supply disruptions from the acute phase of the pandemic were easing, the war and the consequent sanctions imposed on Russia are causing a new negative shock that is weakening the pace of the post pandemic recovery, creating new supply-side bottlenecks and increasing inflationary pressures for longer.