samchain/econo-pairs-v1 huggingface dataset:
This development demonstrates the bank’s strong and long term commitment to be a significant player and contributor to the development of our financial sector, and the growth of the economy as a whole. The Bank of Zambia wishes to commend the Board of the Bank, Managing Director and his Team for these commendable developments. Ladies and Gentlemen, you will no doubt be aware of the crucial role that banks play in financial intermediation. The real challenge therefore is for all financial sector players to play their honest part in enhancing savings mobilization and to effectively channel the public’s savings to support financing of viable economic activities. as our economy continues to grow and per capita incomes increase, demand for financial services from both the corporate sector and the general public will continue to grow rapidly. Therefore, Zanaco’s wide branch network will strengthen its capacity to meet this growing demand for financial services. Managing Director, Distinguished invited Guests, Ladies and Gentlemen, the Bank of Zambia is always pleased to be invited to occasions such as the one we are witnessing today, because it gives us an opportunity to share with you and the public some of the key developments that are taking place in our financial sector and the economy at large. In this regard allow me to say something about what is currently the most topical issue not only in the financial sector but in the national economy as a whole.

A fiscal capacity for the euro area There are many ways a euro area fiscal capacity could be implemented, ranging from simple macro insurance or an unemployment benefit scheme to a fully-fledged euro area budget that could include the provision of public goods. Each of these options entails its own technical and political challenges and opportunities. In the end, the choice as to which option or combination 2  BIS central bankers’ speeches  of options should be adopted will need to be a political one. This is in fact an opportunity to have a debate about Europe’s collective goals; such a debate is more necessary than ever and goes beyond the economic sphere alone. 3 From the perspective of the economist and of the central banker who has a keen interest in making EMU as a whole work better, the crucial question behind the discussion about a fiscal capacity for the euro area is how to maximise its positive effects on the functioning of EMU, while at the same time preserving incentives for sound fiscal policy-making and addressing structural weaknesses at the national level. To start with, we should all be able to agree that the objective of the fiscal capacity should be to make EMU more resilient by increasing the capacity for automatic stabilisation in the euro area. The aim should not be to actively fine-tune national economic cycles or to equalise revenues.
The target range for our reference interest rate, the three-month Libor for Swiss franc investments, thus remained unchanged at between –1.25% and –0.25%, and we confirmed the interest rate on sight deposits at the SNB of –0.75%. We also reaffirmed our willingness to intervene in the foreign exchange market as necessary. The SNB’s policy of negative interest and foreign exchange market interventions – measures that are intended to relieve upward pressure on the Swiss franc – is helping to stabilise price developments and 4  BIS central bankers’ speeches  support economic activity in our country. The SNB thus continues to take account of the exchange rate situation in formulating its monetary policy. Conclusion The SNB – like the ECB and many other central banks – has been deploying unconventional monetary policy measures in recent years. These were prompted by the financial and debt crisis, which caused the central banks to reduce short-term interest rates to near zero and significantly expand the monetary base. In Switzerland, the crisis led to a very substantial appreciation in the Swiss franc, particularly against the euro. The SNB thus took targeted unconventional measures to ease upward pressure on the Swiss franc. Between September 2011 and January 2015, it maintained a minimum exchange rate against the euro. Since the discontinuation of this measure, monetary policy has been based on negative interest and the willingness to intervene in the foreign exchange market. Logically and quite rightly, the central banks were major economic protagonists during the financial and debt crisis.

As a result of the Maastricht convergence criteria, the central banks of these countries were increasingly aligning themselves with the Bundesbank. Exchange rates between the affected currencies, as well as exchange rates to the Swiss franc, consequently stabilised. This phase of low exchange rate volatility continued in the years immediately following the launch of the euro. The most recent period of exchange rate volatility against the euro has its roots in the international financial and debt crisis, which rapidly evolved into a euro crisis. Doubts about the viability of some euro area member states’ sovereign debts caused markets to lose confidence in the euro. As in past crises, the mounting uncertainty triggered substantial upward pressure on the Swiss franc. Why Switzerland doesn’t have the euro Considering its close economic ties to the euro area, why didn’t Switzerland ever seriously contemplate joining the single currency? Politically and legally speaking, the answer is simple: a country can only join the Eurosystem if it is already an EU member state. Swiss voters and cantons rejected accession to the European Economic Area in a referendum in 1992, and in 2001 followed this up by voting against a popular initiative favouring a “Yes to Europe”. These decisions settled the question of whether Switzerland should join the EU for the foreseeable future. Quite apart from these political and legal factors, the economic case for joining the euro had always been weaker for Switzerland than for many other European countries.
These would include reforming the treatment of debt under corporate income tax, and advances in the capital markets union project that would help provide for the integration and development of capital markets in the EU. The growth of equity markets can afford various benefits to the business sector and the economy in general. The resort to equity funding strengthens the soundness of firms’ balance sheets, given that a greater proportion of these capital instruments reduces firms’ vulnerability to adverse shocks such as an increase in interest rates or a decline in revenues.8  8  See, for example, A. Kraus and R. H. Litzenberger, (1973): “A State-Preference Model of Optimal Financial Leverage”, Journal of Finance. 28: 911–922. 8  Conclusions  I should like to conclude by pointing out that the COVID-19 pandemic has prompted an unprecedented economic contraction in Spain and in other economies. Non-financial corporations have been seriously affected, although the forceful measures adopted by the national and supranational economic authorities have prevented the materialisation of a wave of defaults stemming from short-term liquidity problems. However, some firms have seen their solvency impaired as a result of a decline in their revenues and an increase in their debt. The current phase of the crisis, marked by an incomplete and uneven economic recovery, warrants continuing public support to firms. Nonetheless, these policies should be adjusted so as to focus more on firms in sectors that continue to be severely affected by the crisis, and through means other than the accumulation of greater debt.

These firms tend to find it more difficult to access credit, especially in periods of high uncertainty and growing credit risk concerns. Overall, these results suggest that the pandemic is generating substantial liquidity risk for Spanish firms. In this setting, national and supranational economic policies in the different (fiscal, monetary and financial) areas responded rapidly and robustly to address these risks. After the initial stress, this resulted in an improvement in financing conditions recorded in both bank lending and debt securities markets. In the fiscal policy area, two public guarantee programmes managed through the Official Credit Institute (ICO) are noteworthy. The first, with a total of € billion, was designed to finance firms’ liquidity needs, while the second, with up to € billion, was mainly focused on investment in fixed assets. The aim of both these programmes was to encourage financial institutions to grant funding to firms and the self-employed, in a setting in which these agents were facing high liquidity needs, against a backdrop of rising uncertainty and growing credit risk concerns among lenders. Since the Royal Decree approved on 17 November came into effect, the maximum term of loans granted under these programmes has been extended to eight years and the maximum grace period, which was initially 12 months, has been extended to 24 months. Similarly, the deadline for granting of guarantees, which was originally 31 December 2020, has been extended to 30 June 2021.
The activities will be largely focused on drafting of the new law and the new bylaws on payment services and payment systems – in cooperation with the Ministry of Finance. The new regulation will entail transposing the latest European legislation in this area and setting grounds for significant changes to our payment landscape. Opening the door to fintech companies will provide opportunities to strengthen competition in the payment services market, and thus to enrich the offer of new, innovative and easily accessible products at a competitive price. Reflecting on the scope of this project, we have had in mind that, inter alia, the recent global economic crisis has clearly demonstrated that macroeconomic stability does not necessarily 1/2  BIS central bankers' speeches  ensure financial stability. It acknowledged though that financial instability has long-term adverse effects on economic growth and macroeconomic stability. This explains the large step taken by the EU - a banking union set up on two pillars: the single supervisory mechanism and the single resolution mechanism. Undeniably, countries heading towards the EU and the European Monetary Union will have to work hard to harmonize the supervisory setup as well as other institutional and structural elements relevant for the smooth financial sector functioning. Therefore, the second component addresses the banking regulation and supervision and aims to improve our supervisory capacities.

For us at the National Bank, the achievement in the fourth component - research, knowledge and skills in policy analysis - will be of immense importance. Emphasis will be on assessing the relationship between real and financial cycles and identifying the implications of financial factors for the economic fluctuations in the Macedonian economy. This topic has been particularly relevant since the outbreak of the global economic crisis, and undoubtedly, analyzing it will improve the recommendations of decision makers. Distinguished guests, It is a great pleasure for us to partner with the central banks of Germany and Croatia in delivering such a large and significant project. I thank them for being part of this project and for supporting us in the process of European integration. I also thank the central banks of Belgium, Lithuania, Portugal, Romania and the Netherlands who have also accepted to support our way towards European values. I believe in the not too distant future we will be partners not only in implementing projects, but also equal partners in the creation of European standards in central banking. Finally, let us remember what Robert Schuman said in the 1950 Declaration, “Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity.” I hope that the achievements we make during the project delivery will reaffirm our readiness to be active and beneficial participants in the further construction of Europe. Thank you for your attention.
We have received similar concerns about conservatism in the securitisation proposals and in the treatment of “double default” risk, which is the risk that both a borrower and a guarantor would default on the same obligation. Other questions have been raised on the incentive structure and on the recognition of insurance within the operational risk proposals. It is perhaps natural that the majority of comments address the minimum capital requirements, or pillar 1. This section of the New Accord defines the capital charges in monetary terms for banks’ exposures and activities. But one should not forget that the New Accord is premised on three pillars, not just one. So I would like now to turn to the other two pillars, beginning with the importance – and benefits – of the proposals for the supervisory review of capital and home/host issues. Afterwards, I would like to spend a moment on another topic which has been raised in the comments, namely the New Accord and harmonisation of accounting standards. Finally, I will conclude my presentation with some remarks about the current status of our discussions and our future work. Supervisory review & home/host issues  As you know, under the New Accord the Basel Committee will recognise formally the role that supervisors play in ensuring that banks manage their risks and their capital needs appropriately. In the past, supervisors in each jurisdiction found their own ways to evaluate capital.

For instance, albeit with an orientation to the specific conditions of the US economy, the academic contributions to the June conference at the Federal Reserve of Chicago show the vibrancy of current international research on meeting the challenges of low inflation. Some of these themes were also identified in President Draghi’s recent Sintra speech. There should be no doubt that the ECB is committed to ensuring that our monetary policy is built on frontier-level and robust theoretical and empirical analysis. Conclusions Together with the extended nature of macro-financial adjustment in the wake of a major financial crisis, we have seen a substantial downward shift in the realisation of shocks to inflation in recent years. In the context of the euro area, the ECB has been active and creative in deploying nonstandard measures, in addition to extending the range for the policy rate into negative territory. Our assessment is that this policy package has been effective and further easing can be provided if required to deliver our mandate. At the same time, an extended phase of below-target inflation poses a communication challenge in maintaining focus on the medium-term inflation goal. It is obvious that it is easier to demonstrate commitment to the target if the actual track record of inflation outcomes corresponds more closely to the declared objective. Accordingly, it is essential that a central bank shows consistency in its monetary policy decisions by proactively responding to shocks that might delay convergence to the target or move inflation dynamics in an adverse direction.
Another important area is to raise the professional standards of the industry that reflects the highest standards of professional conduct, knowledge and competence. In this regard, the grand design of the industry, the Financial Sector Blueprint, clearly emphasized on the need to develop talents across all levels of an institution, spanning from the entry level to senior management and the board of directors. Indeed, a holistic talent development and management is a good example of an initiative that combine art with science which a visionary institution must be able to master to achieve its goals. The second imperative is the ability of the industry to effectively leverage on technology to build strong, innovative and competitive businesses. This includes developing a deep understanding of how changes in technology impact people’s lives and transforming how consumers and investors behave and view the value proposition of businesses. For instance, mobile phone penetration in Asia alone makes up 52 per cent of total global penetration. The highly developed telecom markets of Asia with 3.6 billion people across Asia having mobile phones spread across a diverse range of markets, capitalising on mobile data/wireless broadband services would mostly likely chart the way of the future. Growth across Asia in high speed access to the internet by mobile wireless devices has been largely driven by highly competitive markets combined with a general population who are prepared to embrace new mobile technologies.

It goes without saying that it is not only a quantitative issue and that at the same time the efficiency of research and development in terms of industrialisation  12  See P. Hartmann, F. Heider, E. Papaioannou and M. Lo Duca (2007), “The role of financial markets and innovation for productivity and growth in Europe”, ECB Occasional Paper forthcoming. 13  Some authors have calculated that if the average size of capital markets in the EU was bigger - in the US for instance this size is around 450% of GDP instead of 220% in the EU (based on an overall indicator measuring total financing in the economy by aggregating bank credit to the private sector, stock market capitalisation and the outstanding amount of domestic debt securities issued by the private sector) - then annual GDP per capita growth in the EU could be positively influenced (see G. Favara (2006), “An empirical reassessment of the relationship between finance and growth”, mimeo). 14  See the European Commission’s Green Paper entitled “Entrepreneurship in Europe”, 21.01.2003. 6  BIS Review 82/2007  is crucial. In the longer term, GDP could be up by 4.2% in 2015 and 7.0% in 2020, equivalent to an additional growth rate of nearly 0.5% per year 15 . Finally, to make these measures most effective, they need to be accompanied by efforts to improve the labour force’s level of education and expertise.
If assets market are booming and perceived returns are high, banks will always find the necessary capital. Conversely, capital dries up during downturns, when it is most necessary. Introducing counter cyclical capital requirements will certainly help. But we may not have looked enough into the interrelated dynamics of stock and credit markets; or, put differently, on how capital flows in and out of the financial sector during different phases of the economic cycle and what are the consequences on credit flows. Finally, tailoring capital requirements to the definition of economic capital by banks themselves strengthens the incentive function. But from, a macroprudential perspective, by replicating closely private risk management methods and metrics, this encourages uniformity in behaviour, which, by itself, is a source of instability. It is becoming increasingly clear, it seems to me, that if we want prudential supervision to effectively pre-empt the build up of imbalances, it has to act more directly on individual and collective incentives. This should push us to look more closely at the "accountingcompensation" nexus. When looking at revenues drawn from a financial investment, it is generally impossible to distinguish excess return from additional risk taking. Ignorance of tail risk fits perfectly in this framework. This points to a possible solution: regulatory systems should force the pricing of risk in all its dimensions, including liquidity risk. Again, there is a clear analogy with tax theory: "internalizing" the risk eliminates market failures. The conceptual challenges in quantifying, for instance, liquidity risk, are enormous.

Further, retail deposits cover a very significant portion (75%) of the total stable funding needs (60% for European banks as a whole). Assets - The Spanish banking industry’s consolidated assets grew by 2.1% in 2022. Financial instruments in Spain declined by 7.7% and those stemming from business abroad (expressed in euro) increased by 9.6% to 53.7% (up 4.3 pp on a year earlier). - Much of the decline in financial instruments in Spain owed to the reduction in balances held with central banks (-31.9%) and, to a lesser extent, to the drop in loans to the resident private sector (-2.5%). Meanwhile, the increase in financial instruments abroad was due to the growth in lending to the resident private sector in third countries (10.3%) and in debt securities (16%), against the background of a depreciating euro. - Debt securities grew by 11.7% and represented 13.6% of total assets at December 2022.3  3  At consolidated level, more than 80% of debt securities have a general government counterparty. 3  - As for the reduction in the stock of lending to the resident private sector in Spain (down by 0.7% in 2022), the results of the Bank Lending Survey (BLS) indicate that both supply and demand-side factors contributed to these developments. The decline came despite the larger volume of new loans (+8.9%) and the increased drawdown on existing credit lines (+12.9%). - The stock of loans to households was down by 0.2%, essentially due to lending for house purchase, while other lending to households held stable.
All empirical studies confirm that much can be gained by embracing good governance and it is an essential component of crisis prevention efforts. Good governance is equally vital in both the public sector and the corporate world, and its merits are relevant in all countries. Recently, corporate governance issues have been prominent on the world economic agenda as financial markets have been recovering from scandals that came to the fore following a period of excesses in equity markets. In order to increase confidence in the markets, it is imperative that the corporate world adhere to the principles of good governance. Good governance in the public sector is also an essential tool for strengthening institutional capacity, which is fundamental  BIS Review 42/2003  1  for economic and social development. The Fund has an important role to play in this field and we welcome the increased emphasis it has given to the issue of governance. Transparency and International Standards With the world economy having suffered a confidence crisis, it is important to continue to promote greater transparency and accountability. Various studies have demonstrated that transparency and adherence to international standards lead to easier market access and lower borrowing costs. There is much to gain by applying these simple principles. It is also important to continue developing international standards and codes that enhance transparency and facilitate comparison between countries and regions.

The situation only got worse when the sovereign crisis – that started in Greece in late 2009 – progressively spread to other euro area countries with vulnerable fundamentals. As we have seen in our discussions today, the trigger of the crisis in the euro area shows, to a certain extent, similarities to those that affected Latin America in the past: a stop in  2  BIS central bankers’ speeches  foreign capitals inflows, which induced severe financial stress and real adjustment. But also differences, due to the fact that this reduction of capital flows took place in a highly integrated monetary union, with its own peculiar adjustment mechanisms, leading to the segmentation of the euro area capital markets. These peculiarities also contribute to explain the huge magnitude and depth of the crisis. The scale of the imbalances and adjustments surpasses those in Latin American past experience. Correspondingly, the challenges that individual countries and the area as a whole are facing are daunting. Indeed, the policy response to the crisis – both at the national level and at the level of the EU and the euro area authorities – has been substantial, particularly in the structural and institutional dimensions. The euro area authorities have realised that, in parallel to the management of the crisis, a reshuffling of the European governance and a strengthening of the institutional framework are necessary for the long term sustainability of EMU.