samchain/econo-pairs-v1 huggingface dataset:
Over the next years, supervision and regulation within EU will change and improve significantly with the ECB and NCBs playing an important role. Being part of ESCB, BNB is going to take an active part in the process. Third, the next six years will be crucial to accomplishing one of the country’s major commitments stemming from the EU accession Treaty, namely the adoption of the euro as a national currency. The preparation for this has been a priority for the BNB over the past six years with a significant part of the work in legal, technical and operational terms having already been completed. This task will continue as a major priority in the next six years. Adopting the singe currency by an EU member state is not and cannot be a unilateral decision. In addition to fulfilling the Maastricht criteria, we should also be able to convince all our EU partners of our readiness and capacity to be part of the euro area. This is why the BNB and its Governor need the utmost confidence; this is why I resigned to make it easiest for the Parliament to take a decision. In conclusion, demonstrating effectively compliance with the principle of predictability, I am going to submit to the Office of the Speaker of the National Assembly a nomination for the election of a Deputy Governor in charge of the Issue Department as this Deputy Governor’s term of office expires on October 22.

Every one of you is welcome to the Central Bank to discuss any issues as long as this is in the interest of the stability of our country, and the banking system in particular. Dear Ladies and Gentlemen, finally and in the context of everything said by me and by the speakers before me during this debate, I believe that now the most important thing as regards the country’ macroeconomic and financial policy is preserving stability and ensuring predictability; predictability, because the global financial and economic crisis has shown that countries, which follow stability-oriented and consistent macroeconomic policies are going less painfully through this difficult for all countries period. The BNB’s role is to secure the country’s price and financial stability and the soundness of our strictly regulated banking system. Over the next six years the focus of my work will be on preserving and maintaining the macroeconomic stability in the country by keeping the fixed exchange rate and the currency board arrangement. The currency board will continue as the foundations underlying the stability and economic growth in Bulgaria. Second comes preserving and maintaining the stability of the banking system. Over the last two years, we have been witnessing globally the catastrophic consequences of poorly regulated and supervised banking and financial institutions. Bulgaria too was affected, but unlike some other countries it stayed outside the centre of the storm due to the consistently implemented conservative model of licensing policy, supervision and regulation of the banking sector.
It continues to record robust activities in the financial market, reaching daily volume as high as USD16.1 billion compared to USD14.1 billion recorded in 2016, The onshore market volume on forwards and swaps alone has surpassed the observed offshore forward market volume which now records an average of USD1.0 billion a day. In addition, there is a narrowing of bid-offer spreads that would indicate an improvement in liquidity. Anecdotal evidence suggests that market participants, including corporates, continue to access the market to meet their business needs; Risk exposure from high non-resident participation in the onshore market has effectively reduced. Risks from high non-residents holding have significantly subsided as footloose short term positions have exited the market in the early part of the year. The non-resident investors that remain in the domestic market comprise mostly of long term investors. They are less affected by short-term market dynamics. Their investments tend to remain stable and at times act counter cyclically to short-term investors, providing stability to the overall bond market; 4/7  BIS central bankers' speeches  On reserves, our level is sufficient to meet our needs. A point often overlooked, is that the central bank’s international reserves is not the only source to meet external liabilities. The availability of external assets and also currency denomination of the external liabilities are alternative sources of funding. In fact, BNM holds only 25 percent of the system’s foreign currency reserves. The rest is with the financial system itself.

The Role of Sentiment Other than perception, the ringgit is also driven by sentiments, mostly adverse. These are commonly cited through the various sentiment indices, for example as measured by MasterCard or the Financial Times. Sentiments are shaped over time by analysts and interestingly, there are three factors that consistently drive market sentiment. One of these is the high level of external debt, frequently cited by international rating 3/7  BIS central bankers' speeches  agencies and analysts alike. The discussion on external debt has driven market sentiment negatively as it is being touted as a source of vulnerability. The fact is that some of these analysis ignore the evidence of more granular data and worse, only skim the surface without the discipline to deep dive into the available data; Market sentiments also play out based on the government financial position and the issue of governance. Sentiments can be easily affected if new issues or indicators are published on the Government’s financial position. This is further exacerbated by the perceived governance challenges that give rise to further negativity; Market sentiment is also affected by a string of negative news headlines. While there were a number of news headlines on ringgit this year, about 30% of the articles by foreign and local media were written in a negative light or perspective. This make it difficult to ensure a realistic view of the country and hence on the ringgit. Realities and Facts Let’s examine these perceptions, or rather misperceptions.
In any event, the preamble to Law 11/2015 establishes that these arrangements for the allocation of functions should be assessed once – within two years – the implementation of the restructuring plans currently under way has been completed, in light of the experience acquired, with a view to achieving greater efficiency. 4  BIS central bankers’ speeches  All told, as regards the organisation of the traditional supervisory functions, namely solvency, conduct and investor protection, Spain retains a sectoral approach which, as indicated earlier, was abandoned some time back by our peers. Hence, the Banco de España retains supervisory competencies for the solvency of credit institutions and also for their conduct, as regards the marketing and selling of loan and deposit products. The CNMV, meanwhile, in addition to overseeing the functioning of markets, supervises the solvency and conduct of investment firms and other capital market intermediaries (such as investment fund management companies), and the commercialization of financial products classified as securities. Finally, the Directorate General for Insurance and Pension Funds oversees the solvency and conduct of companies in the insurance sector, along with the operations of pension funds and their management companies. These authorities also manage enquiries and claims services in their respective areas and are empowered to issue reports on disputes between the different institutions and their customers, although, as you know, such reports are not binding.

This sectoral supervisory model, which – I insist – is an oddity in the European arena, does not take on board the key lessons from the financial crisis as regards the most suitable means of preventing potential conflicts of interest and of ensuring that the synergies existing between the different oversight functions are harnessed. Moreover, it establishes different supervisory regimes – entailing investor protection arrangements that are not uniform – as regards the marketing and selling of financial products, based on categories that classify them, sometimes somewhat artificially, as a security, banking product or insurance product. Finally, the institutional framework in place in Spain has always kept a segment of the financial system – that comprising insurance companies and pension funds – under the surveillance of an agency reporting directly to the Government of the day, contrary to what is predicated by supervisory standards and best international practices. The situation is somewhat similar regarding audit firms, which also play a key role in the proper functioning of the financial system and capital markets, and whose supervision has, historically, also been exercised by an agency that is not independent from the Government. The need to modernise the organisation of supervision, in order to adjust it to the twin peaks model prevailing in Europe, was at that time widely defended by the public authorities. For example, for the 2008 general elections, the two main political parties advocated in their respective electoral programmes very similar plans to reform the supervisory model along the lines indicated above.
Should the situation change, nothing has been done that would impair our ability to fulfil our primary mandate and preserve price stability. Many tools are available to absorb liquidity, if it proves necessary. Concerns are also expressed in the euro area about purchases of government debt as a form of “monetary financing” of the government. As you know, such purchases are explicitly allowed for in the Treaty. There is no legal issue, here. What about the economics? This question can be broken down into two. First, the market impact. True, these purchases may lead to lower interest rates. This is their purpose. OMTs will only take place if and when the Governing Council has determined that bond markets are no longer functioning properly, hence interest rates are distorted. A last, serious, concern is moral hazard. Lower interest rates triggered by secondary purchases could give rise to bad incentives, impede market discipline and delay necessary fiscal adjustment efforts. This is the very reason why strict and explicit conditionality is attached to OMTs. 4. Central banks have been active; they have been audacious; but they do not have unlimited power. This may be a good time to reflect upon what monetary policy can and cannot do. I will concentrate on one specific question: the so-called “decreasing returns” of non-conventional monetary policy. The argument goes as follows: balance sheet expansion and low interest rates create potential imbalances in the financial sector.

Most, but not all, non-conventional measures have led central banks to use and expand their balance sheet in order to influence a broader set of financial parameters: long-term interest rates, credit spreads and credit volumes. In the euro area, the bulk of interventions have aimed at providing unlimited liquidity to the banking system, first through the “fixed rate full allotment” procedure adopted in 2008, then through a progressive extension of maturities, culminating in the two three-year LTROs decided on in December 2011. Other central banks, and more recently, the Eurosystem, have resorted to asset purchases, both private and public, sometimes on a large scale. So-called “forward guidance” on interest rates has been  BIS central bankers’ speeches  1  used, especially in the United States, to influence interest rate expectations and bring down the yield curve. Most recently, additional innovations have been introduced in the United Kingdom and Japan, where central banks have taken actions to directly stimulate private credit to the economy. These actions have involved a mix of regulatory measures and targeted liquidity providing operations, such as the “funding for lending” scheme implemented in the United Kingdom. 2. It is important to note that none of these developments were imposed on central banks by governments. In all countries, non-conventional measures and the consecutive expansion of balance sheets were a deliberate and voluntary response to financial market developments that threatened their integrity, their functioning and overall economic stability. Nor were these measures planned in advance.
During this period the deficit to GDP ratio only shed two percentage points to 12%. In contrast, the second half of the 1980s featured an emphasis on reducing expenditure. In the process the deficit was slashed to 2% of GDP. A perceptible dividend of this policy was an acceleration in the growth rate to an annual average of 8.6% in the 1990s. At this stage, therefore, there can be no doubt about the urgent need to reduce the fiscal deficit primarily through better expenditure management. Broad policy statements of intent will no longer do. The budgetary allocation process must be radically changed so as to ensure that expenditure is minimised and delivers value for money. Perhaps the greatest obstacle to an effective implementation of such an approach is the negative short-term economic impact which expenditure cuts are likely to entail. It is thus crucial that the private sector be in a position to take up the slack as the State reduces its role in the economy. And for this to happen, there have to be the best possible conditions for the attraction of local and foreign investment. There are indications, however, that our performance is not quite up to standard in this regard.

First is a relative shift of dependence on foreign savings, as against domestic savings, as a source of funding domestic (fixed and portfolio) investments. Second is reduced availability of such funding, as evidenced by Asia being a net exporter  2  BIS Review 66/2004  of capital. To be sure, there has correspondingly been more efficient allocation and use of scarce funding on a global basis, made possible by the freer mobility of capital and the freer convertibility of currencies. But there has also been a change in the dynamics of financial intermediation in Asia, in that there is a process of recycling of Asian funds through the developed markets back into Asia that has become quite significant. And not only is it significant, it is also quite potent and demanding. Whether we like it or not, the behaviour of foreign savings in the hands of foreign financial intermediaries is quite different from that of domestic savings. To start with, they are more volatile than domestic savings and more sensitive to shifts in market sentiment and in macro-economic policies, to a degree that has proven, in the Asian financial crisis of 1997-98, to be brutally destabilising. Given also the existence of some forbearance, in terms of, for example, the disclosure of activities and the maintenance of concentrated positions, in the interest of sustaining the presence of foreign financial intermediaries and foreign savings, there is a much greater likelihood of market overshooting.
Paul Tucker: Solving too big to fail – where do things stand on resolution? Speech by Mr Paul Tucker, Deputy Governor for Financial Stability at the Bank of England, Member of the Monetary Policy Committee, Member of the Financial Policy Committee and Member of the Prudential Regulation Authority Board, at the Institute of International Finance 2013 Annual Membership meeting, Washington DC, 12 October 2013. *  *  *  By way of setting the scene for this morning’s discussion, I shall make five broad and big points about where the international community has got to on addressing the Too Big To Fail problem through planning for orderly resolution. Before continuing, I should stress that these are my views and do not necessarily represent the views of any of the UK and international bodies of which I have been a member. (1)  The US authorities could resolve most US SIFIs right now  First, I repeat what I said in London recently. I cannot see how the US Administration could persuade Congress to provide taxpayer solvency support to – ie bailout – some of the biggest US banks and dealers. In short, the US authorities have the technology – via Title II of Dodd Frank; and, just as important, most US bank and dealer groups are, through an accident of history,1 organised in way that lends them to top-down resolution on a group-wide basis.

Employment is growing sharply in the public sector and the construction industry. In recent years, consumer price inflation has been higher in Norway than among our trading partners. The year-on-year rise in prices was 2.4 per cent in September. Stable prices for imported consumer goods is contributing to containing inflation in Norway. The rate of increase in prices that is primarily influenced by domestic costs is high. It is not a new phenomenon that Norway is at a different stage of the business cycle than the euro area countries. One reason for this is that changes in the external environment often have a different impact on the Norwegian economy than other European economies. For example, a sharp rise in oil prices has a dampening impact on purchasing power and the activity level in the euro area. In contrast, this tends to boost petroleum investment and household confidence in Norway. The development of a national oil industry and restructuring in the 1980s and 1990s have also contributed to a cyclical path that is specific to Norway. For example, petroleum investment was probably one of the main driving forces behind the booms in the mid-1980s and in 1997-1998. 4  BIS Review 90/2001  BIS Review 90/2001  5  Norwegian labour costs have risen by 5-6 per cent annually in recent years, while labour costs in the euro area countries have increased by less than 3 per cent annually. When cyclical developments are not synchronised and labour costs are at different levels, interest rates will also vary.
15/11/2019  Opening remarks 11th edition of the European SSM Roundtable/International Bankers Forum Margarita Delgado Deputy Governor  Good Morning and welcome to Banco de España for this 11th edition of the European SSM Roundtable, organised by the International Bankers Forum (IBF). The topic for today’s roundtable is the management of non-financial risk. This is an issue which is always in the spotlight and, at the same time, is quite hard to tackle. The concept of risk is continuously used in banking regulation. A quick search in the CRR1 or CRR2 text will reveal that it is mentioned nearly 1,500 times in each. Banks are certainly familiar with the regulatory requests to understand, measure, hedge, control, assess, address or mitigate risk. I believe it is fair to say that any firm that has survived the crisis and its long aftermath, without public support, has been largely successful in fulfilling these risk-related tasks. Of course, supervisors are also permanently concerned about risk; to some extent, it is what we are paid for. Still, I believe both banks and supervisors tend to feel rather comfortable when we assess financial risk. Don’t misinterpret me. We are perfectly aware of the consequences that a mismanagement of financial risk can entail, but we tend to look at financial risk in a more natural and intuitive way. Things get a lot stickier when we look at non-financial risk. What is the nature of non-financial risk? And what makes it different from more traditional financial risk?

This kind of change is doomed to fail unless there is full commitment and support from banks’ senior officers and management. Indeed, without adequate governance and a clear ‘tone from the top’ there is no chance of success. 4/6  As I like to point out in many of my interventions, governance is always a precondition for any significant change to occur within an organisation, but of course it is just a precondition. Evidently, other elements must be implemented in order to tackle appropriately the management and control of non-financial risk. One initial element relates to the involvement of the Board, which should consider nonfinancial risk management as part of their regular monitoring, instead of simply reacting to emerging issues if controls fail. Just like in the case of traditional risks, the Board must include non-financial risk inside their risk appetite framework; obviously this implies that they should be able to understand the nature of these risks, in order to discriminate and rank their importance. Of course, the role of the Board cannot function without the right input from both first and second lines of defence. In this regard, it is important that, apart from owning and managing risk, the first line assesses key infrastructure areas, such as IT and operations, where most operational failures occur. The culture of the bank should also emphasise that first-line areas should also take responsibility for non-financial risk management, rather than focusing entirely on revenue or cost management.
This is important because the chances of the monetary union functioning properly are better if rates of inflation are much the same initially and government finances are under control. Besides the matters behind the Maastricht criteria, with monetary union imminent there are somewhat different issues that need to be considered. Even when the Treaty was being drafted, many economists pointed out that the criteria by no means constituted the only, perhaps not even the most important, requirements for an efficient monetary union. There are now two other matters that seem to be particularly important and they will no doubt receive more attention, both in the European economic debate and in the EU decision-making processes in economic policy: •  One has to do with the degree of uniformity in cyclical activity and the possibility of using judicious fiscal stances in different parts of the monetary union to make up for the absence of national discretion in monetary policy. •  The other concerns the participant countries’ economic structures, not least how their labour markets function and to what extent they are sufficiently flexible both to cope with any shocks to stability and to bring unemployment down to more acceptable levels. If the various political systems fail to prevent large imbalances in government finances, internally as well as between countries in the monetary union, then the ECB will be under strong pressure to consider other objectives than average European inflation. The same applies if unemployment were to remain high or become even higher.

Higher domestic inflation eventually weakens competitiveness; with exchange rates irrevocably fixed, once a cost crisis is there, it may be difficult to rectify. Improved productivity can provide a remedy but achieving it is not easy. In practice, this presumably leaves either fiscal tightening at a later stage to retard the rate of wage increases or an adjustment of labour taxes, neither of which is simple. For the credibility of the EMU project it is important that no country is already in such a situation at the start. Countries with a risk of high inflation are therefore likely to experience strong pressure in various processes, for example in Ecofin. On the whole, it seems to me that the question of adjusting fiscal policies to the ECB’s monetary policy will be a major issue. The same applies to how any fiscal adjustments are to be allocated across countries. Labour market problems It is an established fact that the functioning of the labour market is a problem in many Member States. A solution to the employment question clearly presupposes that the European labour market is made to work more smoothly than before. The matter is also directly connected with monetary union. There will no longer be any possibility of using a national monetary policy to deal with labour market shocks. It is then all the more important that the labour market functions properly.