samchain/econo-pairs-v1 huggingface dataset:
But this disentangling is done, or is at least attempted in this paper, and the pieces of evidence that are provided in it point precisely to the importance of the financial reform. Let me give you some results that in my opinion are relevant: i) we find that banks with higher capital ratios suffered less in terms of, for example, increases in CDS spreads; ii) we also find that strongly capitalised banks showed greater increases in lending than other banks, and, iii) a third result is that the uptake of the public support measures was higher precisely in those banks that had higher capital ratios. The interesting thing about this evaluation is that at the same time there might be some lessons to learn. We are already highlighting some pieces of the regulatory reform that might not be working as intended and let me focus on one issue on which Claudio has also worked in depth in recent years, which is to understand whether capital and liquidity buffers are  2  usable as envisaged. We wanted banks to have higher levels of capital precisely to be used in a situation of crisis. So, if in the end we observe that this capital is not being used, there is a problem, and we might need to modify some parts of the legislation. The evidence is that banks might have been hesitant to use the regulatory capital buffers had it been deemed necessary in practice.

A possible solution to this coordination problem could be to establish a central mechanism entrusted with setting the euro area’s overall fiscal policy stance and responding to tail events, with national authorities focusing on medium-term goals and placing debt sustainability as their primary objective (see slide 7). This fiscal policy tool could be automatic, such as a common unemployment insurance scheme or a more general stabilising instrument dependent on the cyclical position. In any case, risk sharing must be accompanied by an incentive system that prevents negative cross-country externalities and moral hazard, something of utmost importance in a monetary union. Furthermore, I believe that such a central instrument would also be suited to tackling global challenges, such as climate change or the process of digitalisation, and might be a better option than national “golden rules”. These rules exclude specific types of public expenses from deficit calculations, on the grounds that these could be growth-enhancing and thus need to be protected. This option is attracting much attention in current EU debates. In particular, it is argued that in the current context, with countries having to expend a great deal of effort in the fight against climate change, such investments should be excluded from the expenditure target or budget balance in order to safeguard them from EU fiscal rules. However, a golden rule would add an additional layer of complexity to an already intricate system (see 6  slide 7) and would require the definition of the types of spending to which it ought to apply.
On top of that, as we said in our press notice last Thursday - announcing that we had not changed interest rates - we recognise “that deterioration in the international economy could increase the risks of inflation falling below the target”. That is still not the most likely outcome in the eyes of most of us and given the real world uncertainties we can anyway never sensibly tie our hands. But there is no doubt in my mind that recent international developments have at least reduced the likelihood that we will need to tighten policy further. BIS Review 71/1998

In the past 10 years, customers have become accustomed to accessing financial services through websites or mobile apps of banks and other institutions. In future, instead of waiting for customers to come to their platforms, institutions must reach out to customers in cyberspace. The technologies are there, such as open APIs. But as I mentioned before, the technology has to be a means to an end that the consumer finds useful. And of course it must be secure and stable. 37. The second trend is that financial services will become increasingly real-time. Gone are the days when we were able to handle everything with batch mode operations. Customers are already expecting real-time execution in payment services, remittances, investment advice, and insurance applications – and this list will grow. This will require not only faster data connections or more computing power, but a whole range of new processes for assessment, risk controls and regulatory compliance. As banks upgrade their analytics and procedures to provide speedier customer services, regulators like the HKMA will need to 4/5  BIS central bankers' speeches  work with them to adopt new SupTech and RegTech solutions to better meet these new challenges. 38. The third trend is the rising importance of cross-border applications of Fintech solutions. Technology offers ways to overcome some of the long-standing inefficiencies in financial services, like cross-border payments or trade finance. The use of blockchain technologies comes to mind. We have conducted pilot schemes with our peers in the region to try out blockchain solutions.
Auditors are appointed by the shareholders, but their prime responsibility should be to ensure that the company can function as a going concern and pay back the depositors’ funds as and when needed. The auditors’ opinion lends credibility to the financial statements and promotes confidence in the system. Auditors generally cover their opinion with a statement in which they certify accounts of the company as true and fair on the basis of information made available to them. While recognizing this clarification, in the interest of wider financial system stability, it is important that external auditors find out the true position of the company and alert regulators, even though it is beyond audit ethics. The audit profession should be independent and they must win confidence of the investing community and the general public by providing accurate and timely audits. In that sense, external auditor also performs the “watchdog’s” and the “whistleblowers” role in the financial system. The new Companies Act, which came into being just a month ago, is somewhat explicit in the role of the auditor in the following areas: 1. Fair judgment: An auditor shall ensure that his judgment is not impaired by reason of any relationship with, or interest in the company or any of its subsidiaries. While regularizing the company under audit, as its client, the auditors must distance themselves in judging the true financial status of the company. 2.

There are experts to discuss these topics in this Forum and let me not pre-empt them. I hope the deliberations today will bring such issues into light and that there will be a meaningful discussion. I wish the seminar a success. 2  BIS Review 64/2007
The same is true if a rise in infection rates is expected to be permanent. If the future looks exactly like the present there’s no reason for saving – or therefore total consumption – to change. These conditions are obviously unrealistic. Some things are good substitutes for risky activities during the pandemic. Perhaps it’s not much harder to buy things online than in a shop. At a stretch, watching a film on a screen at home can replace a trip to the cinema. But going out with family or friends to a pub or a restaurant, listening to live music or watching a play – for many of the things we’ve been denied for much of the past year, there is no good proxy. As for the dynamics of the pandemic, one thing they’re not is permanent or even slow-moving. Infection rates went up very rapidly in the spring and, once lockdown was in place, they fell almost as rapidly in the early summer. With the promise of looser restrictions as that happened, it would make sense for people to hold off on some spending until the day itself arrived. Nevertheless, it’s clear that a fair degree of expenditure switching took place: some areas of consumption fared unusually well last year, even as others declined extremely sharply. Because it’s hard for economic resources to respond to large and rapid shifts in demand this may have softened somewhat the immediate impact of the downturn, enormous as it was, on inflation.

During the Governing Council meeting held in Malta last October, President Mario Draghi stated that “Monetary policy should not be the only game in town”, indicating that monetary policy could not solve the euro zone’s economic problems alone, and that “…all countries should strive for growth-friendly fiscal policies”. 8  BIS central bankers’ speeches  In the current state of affairs, an efficient budgetary policy must be built around structural reforms, fiscal responsibility and productive public investment. With the Maltese economy operating close to its potential output, it is the appropriate time to create fiscal buffers that could act as a cushion against any future need. Conclusion The single currency has proved to be a challenge to various countries in the euro area. Instead of exploiting the opportunities offered by the single market, some Member States have been impacted by the fixed nominal exchange rate and their inability to correct macroeconomic imbalances through internal adjustment. This made them more vulnerable in times of crisis. One fundamental lesson to be learnt is that, with a fixed exchange rate, it is of utmost importance that the rest of the economy is as flexible as possible to correct imbalances. In this regard, the Maltese economy has been nimble enough to adapt to the new realities of the single currency. Yet, the challenges that lie ahead will require further structural changes that increase flexibility and strengthen economic fundamentals. To this end, Government has identified health and education as new sectors with growth potential that could be transformed into exportable services.
Worldwide, major banks continue to consolidate, though the process is not yet complete, especially in Europe. We also anticipated needing to open up our banking sector because we intended to negotiate FTAs with major trading partners. Since our goods sector was already almost completely open, our partners would surely make requests in services, and especially financial services. Therefore our local banks had to be ready. The banks would have preferred that we slow down the pace, but we had an overriding need to conclude a wide network of FTAs, including one with the US. The banking reforms enabled us to do this. Now that we have done so, we are reassured that our banks are holding their own, and can take the increased competition in their stride. Adjustments to liberalisation measures It is now three years since the last package of banking liberalisation measures in 2001. Having assessed the state of the industry, MAS has decided to take a few further steps to liberalise the banking industry. These are incremental adjustments to the earlier major liberalisation packages: a.  Firstly, from 1 January 2005, QFBs will be permitted to establish up to 25 service locations from the existing 15. The 25 locations can either be brick-and-mortar branches or offsite ATM locations. With 6 QFBs permitted to share ATMs amongst themselves, this could result in a QFB shared ATM network of about 150 locations across Singapore. This provides QFBs with significant scope for expanding their presence in the domestic market.

Challenges still remain. For example, we have to work out and implement efficient solutions across countries that have different start points, practices and regulatory frameworks. But it is encouraging that governments are more seized with this problem, and more ready to collaborate with one another, than ever before. Singapore has taken the lead in several of the regional initiatives. Financial institutions here should also take part actively. This is the time to engage regulators and government officials in the region, to enter their growing markets and position yourselves for the business opportunities that the initiatives create. As a leading foreign exchange centre with a critical mass of global fixed income and equities expertise, Singapore can service international investors operating in Asia. Our market is well placed to facilitate the hedging activities that are essential for risk management and improving market efficiency. BIS Review 39/2004  5  These will complement the domestic markets in the countries of the region. Our strong legal system and the availability of international legal expertise and product structuring teams equip us to structure complex cross-border transactions. The growing wealth management industry will also generate a steady source of funds for regional investment products. Human capital A major issue that concerns all parts of the financial sector is human capital. A distinguishing characteristic of a successful financial centre is that it attracts talented and dynamic professionals from a broad range of disciplines and experiences. They make the financial centre what it is.
Would you like to be able to inspect Member States’ budgets prior to their adoption by national parliaments as the Commission proposes to do? Each institution has its own responsibilities. The ECB is very closely involved in the work of the Commission and the Eurogroup. I support the Commission’s proposal, which I consider to be perfectly aligned with the goal of improving governance in the euro area. I have noticed some negative reactions, in particular in France, and I don’t understand this, especially in a country that has a tradition of favouring a strong “economic governance”. 2  BIS Review 76/2010  Can non-democratically elected bodies grant themselves a supranational inspection right? The governments of the Eurogroup all stem from a democratic process! They are the ones who, following any clarifications from the Commission – and where necessary from the ECB – take the decisions. Economic and Monetary Union includes a very close supervision and, when necessary, injunctions and sanctions imposed collectively by the governments participating in the Union. We are interdependent, which means that bad management on the part of a single member leads to problems for all of the others. Austerity plans are multiplying in Europe but certain economists are warning against an overzealousness that could jeopardise growth. What is your view on this? When a household systematically spends more than it earns, so that its debt rises exponentially, its situation is clearly untenable. Correcting this situation demonstrates both wise and sound judgment.

It is also wise and sound judgment for a country to return to a sustainable fiscal situation in the medium term. There is a semantic issue here. What you call austerity plans I call plans for a progressive return to a sound fiscal situation. In any case these wise policies are favourable to growth since they increase the confidence of households, businesses and investors. Today this confidence is – as I have said – essential for the recovery. The OECD has just raised its growth estimates for 2010 and 2011. Do you share this view? At the global level we are seeing very robust growth among the emerging economies. This is true of China and Asia in general, but also of Latin America, in particular Brazil and Mexico. Africa is also performing better than expected. All these emerging economies are driving global growth. Within the euro area, some recent data suggest a phenomenon of a recovery in growth in the second quarter of 2010 that is slightly higher than expected. But we must remain very cautious. Our future growth is nowhere set in stone. It depends on all of us and on our ability to strengthen confidence as quickly as possible. When the ECB decided on 9 May to purchase government bonds that had found no takers in the market – a decision criticised notably by the President of the Deutsche Bundesbank – did it endanger its independence? Does it run the risk of becoming a kind of “bad bank”?
This is also crucial. As these restructured loans, which were totally necessary, did not deplete banks, they were able to ramp up lending. Last year, the corporate loan portfolio expanded by 9.9%, which is nearly twice as much as in 2019. In turn, the Bank of Russia pursued a policy making it easier for banks to address these two tasks — restructure loans and issue new ones. We introduced regulatory relaxations to ensure that the volatility of various financial indicators in the market did not affect banks’ balance sheets. These measures included short-term easing providing more time to banks to adjust to the situation for them to avoid camouflaging problems and toxic assets. Looking at other nations, we know how all this might affect lending conditions. Incidentally, many banks did not even use these relaxations, which also confirms the stability of the system as a whole. Nonetheless, this provided them more comfort to continue restructuring and expand lending. In addition, we released buffers — capital cushions accumulated over previous years — for consumer and mortgage loans, which increased capital for lending. In our opinion, these measures were sufficient. What is the situation in the banking sector now? By the beginning of 2021, 75% of loan repayment holidays ended. In other words, restructured loans now pose objectively lower risks to banks’ financial standing. Moreover, the absolute majority of borrowers have managed to resume their scheduled repayments. This means that they really needed loan repayment holidays and easing for that period (which was not writing-off, but easing).

In addition to such macroprudential buffers, we would like to have an opportunity to restrict highrisk lending not by raising the requirements for banks’ capital, as banks need capital for lending and, moreover, it is distributed unevenly across the system. These buffers are very efficient and might become a problem for some banks, whereas they are wholly useless for other banks and do not influence lending growth paces. We have prepared proposals for the Bank of Russia to be entitled, just as regulators in many other countries, to set direct quantitative limits for consumer loans. The relevant draft law has been submitted to the State Duma. We also hope for your support in this regard. In our opinion, this measure is absolutely essential and beneficial in all respects. Considering the current state of the banking system and our policy aimed at preventing the accumulation of systemic risks (this is an area we are closely monitoring to avoid a build-up of systemic risks in the financial area, and the financial area is an infrastructure, the circulatory system of the entire economy, as it is often called), the banking sector will maintain its stability further on and continue to provide lending to the economy. This makes it possible for us to start discussing the next step in the protection of depositors’ rights: jointly with the Deposit Insurance Agency, we are studying opportunities for expanding insurance for not only individuals and small businesses, but possibly medium-sized enterprises as well, and also social, educational and healthcare organisations.
In the course of 2015 it will decline further, reaching values around 3 percent in the first half of next year, to stay there until the end of the projection horizon, this time the second quarter of 2016. Core inflation, which is now below headline inflation, should also fall in the coming months, hovering around 3 percent as from the first half of 2015 (figure 7). The baseline scenario assumes that the economic slowdown will reduce domestic inflationary pressures, thus helping inflation to return to 3 percent within the forecast horizon. Accordingly, the Board estimates that this year the economy will grow in the range of 2.5 to 3.5 percent, less than foreseen in March (3 to 4 percent). This revision responds to the weakening of domestic-demand-related sectors in the first quarter of this year. Private expectations have seen a similar change during the period. According to our Economic Expectations Survey (EES), the growth estimate for the year dropped from 3.7 percent to 3.0 percent between March and June. The baseline scenario assumes that the economy will slowly regain strength towards the second half of this year, with annual expansion increasing towards the latter months of 2014. This projection assumes some degree of investment payback, given the costs of internal and external financing. The MPR has been lowered by 100 basis points over the past few quarters and, as already mentioned, long-term interest rates are at their lowest in recorded history, even below those that prevailed in the 2009 recession. Also risk premiums have diminished.

Figure 4 Current account (*)  (percent of GDP)  6  6  4  4  2  2  0  0  -2  -2  -4  -4  -6  -6 05  06  07  08  09  10  11  12  13  14  (*) Accumulated in one moving year. Source: Central Bank of Chile. 8  BIS central bankers’ speeches  Figure 5 Interest rates on Central Bank of Chile bonds (*)  (percent)  8.5  8.5  7.5  7.5  6.5  6.5  5.5  5.5  4.5  4.5  3.5  3.5  2.5  2.5  1.5  1.5 03  04  05  5-year BCUs  06  07  08  09  10-year BCUs  10  11  10-year BCPs  12  13  14  5-year BCPs  (*) Monthly averages. Source: Central Bank of Chile. Figure 6 Domestic companies' funding cost (*)  (percent)  6  6  5  5  4  4  3  3  2  2  1  1  0  0  Jul.05  Abr.07  Feb.09 Base  Nov.10  Jul.12  May.14  Spread  (*) Considers UF-indexed private AA companies' bonds at about 5 year maturities. Dotted vertical line Source: Central Bank of Chile based on information from the Santiago Stock Exchange.