samchain/econo-pairs-v1 huggingface dataset:
The new framework will feature two objectives – price and financial stability – which, based on standard economic analysis, means that we will need two separate set of instruments to achieve them. Further, based again on standard analysis, the assignment of instruments to objectives ought to be based on the principle of comparative efficiency: monetary policy is the natural instrument for pursuing price stability, whereas macroprudential policies – defined as a set of policies aimed at limiting both excessive credit growth and the build-up of systemic risk within the financial system – will have to take care of preserving financial stability. II.2. Monetary policy and financial stability  During the years leading up to the crisis, the dominant doctrine was that monetary policy should not attempt to lean against bubbles as they inflate by raising interest rates, and it should rather only “mop up” the consequences of their eventual bursting by cutting rates aggressively. There were three main rationales behind such a position. First, it was argued, it is impossible for central banks to identify a bubble in real time: if it were possible, markets would have identified it too, and the bubble would not have developed in the first place since central banks have access to the very same information as market participants. To be sure, this argument did not go unchallenged.

With the strong economic fundamentals and the positive growth prospects of Asia, international and regional financial institutions are also now shifting their focus into the region. With the high savings rate in Asia, and of its massive requirement for infrastructure development, the region would benefit significantly from more effective and efficient intermediation of Asia’s surplus funds. Indeed, intra-regional cross-border portfolio investments have already increased to 28 percent of total assets holdings in 2011 compared with 21 percent in 2001. The gains from greater regional financial integration will be farreaching as it will not only bring about a more efficient allocation of resources in the region but it will act as a catalyst for greater regional economic growth. Over the coming years, as  BIS central bankers’ speeches  1  growth experienced in the developed economies is expected to remain slow in the aftermath of the financial and debt crisis, the growth performance of Asia is expected to continue resulting in the region becoming a more important component of the global economy. Asian funding markets have also remained highly accessible during this period with Asian names enjoying strong demand and attractive funding costs at a time when the developed countries funding markets have tightened. During this more challenging time, Asian sovereigns such as Indonesia, Philippines, Thailand, Sri Lanka, Vietnam and Malaysia continue to successfully tap the market and to issue bonds with tenure up to 30-years.
A broadly common statutory framework will help home and host authorities work together on resolution planning. To that end, Crisis Management Groups (CMGs) are now in place for nearly all global systemically important firms (or G-SIFIs as they are now commonly called), with the goal of reviewing firms’ proposed recovery plans and developing resolution strategies for them. Firm-specific cross-border cooperation agreements (or CoAgs) are also  2  BIS central bankers’ speeches  being developed, setting out roles and responsibilities of the home and host authorities, clarifying how they will share information, and how they will cooperate to implement their preferred resolution strategy. If home and host authorities are not going to cooperate, we need to flush that out ahead of time, rather than stumble into it in the moment of desperation. There’s a good deal of cultural change entailed here. In the past, supervisors have sometimes seemed during peacetime to be more committed to cooperating than they have been prepared to live up to when it most mattered. A forthcoming FSB consultation paper on developing resolution strategies But we – the FSB – realise that more guidance is needed. Although not of central interest to this audience, resolution isn’t just about banks, and so we are planning to elaborate on how the Key Attributes should be applied to, for example, central counterparties, insurers, and the client assets held by prime brokers, custodians and others.

The distinguishing characteristic of bail-in, as a resolution tool, is that it applies losses upfront based upon a valuation rather than at the end of a liquidation of assets. As such, it prospectively avoids an unnecessary destruction of value. For those groups that issue debt from the holding company and downstream the proceeds to operating subsidiaries, it should be possible to bail in debt at the holding company and recapitalise distressed parts of the group. Where necessary, those distressed subsidiaries could be recapitalised by bailing-in – ie writing down and/or converting into equity – intergroup debt owed to the parent. The host authorities of those operating companies should in principle be prepared to go along with that kind of operation provided that the home country engenders the necessary trust and takes account of the need to maintain stability around the world not just in its immediate neighbourhood. Deposit insurance schemes and bail-in: multiple point of entry resolution We should not, however, assume a monolithic approach to resolution. It is not a case of one size fits all. What I have described could work for banking groups that issue plenty of debt out of a top company. It would not work so easily for groups operating commercial banks around the world that are funded to a very large extent from insured deposits. In a hypothetical extreme case, if they haven’t issued bonds, then there would be no bond holders to bail in.
There is an evident risk that the crisis management can be prolonged by political negotiating games. When the stakes are high, there is a risk that many countries will choose to play their cards close to their chest as long as possible. In the worst case scenario, this could lead to crisis measures not being taken in time, which could have devastating results for all those involved. In September 2007 a Nordic-Baltic crisis exercise was organised around a financial crisis scenario. Taking part in this exercise were the central banks, financial supervisory authorities and finance ministries of all of the five Nordic countries and the central banks of the Baltic states. Without going into any details, I can reveal that the exercise brought to light many deficiencies in coordination – both between authorities within individual countries and across national boundaries. In particular, it showed that measures taken unilaterally by the authorities in one country can easily have disastrous consequences for financial stability in other countries. It also further emphasises the importance of continuing to develop the cooperation and ensuring that national regulations do not form an obstacle to cross-border crisis management. In a crisis it is essential that the authorities in different countries understand one another’s assessments of the situation and preferable that they can reach a common view. This makes demands for common criteria and joint terminology. It must also be possible to coordinate various measures across borders, such as emergency liquidity assistance and payments of deposit guarantee funds.

Let me briefly outline some of the biases we need to take into account in the context of our economic and financial assessment. For the sake of simplicity, I will distinguish two main categories of biases: technical biases and institutional biases, leaving aside the treatment of risk aversion considerations, which tends to introduce an upward bias in the break-even inflation rate. Technical biases The compound and the convexity biases: the definition of the break-even rate as the difference of the conventional nominal bond yield and the inflation - indexed bond yield is a first order approximation which does not take into account interest rate compounding. Consequently, the break-even rate is an upward biased estimator of expected inflation - provided that inflation expectations are positive4. Interest rate compounding has also another implication as it implies that bond prices will respond in an asymmetric manner to changes in the yield: indeed, bond prices are more sensitive to a fall in yields than to an increase in yield, and therefore, will also rise when the volatility of the yield increases, therefore pushing down the forward rates5. The net convexity adjustment will therefore bias the breakeven inflation rate either upward (the most likely) or downward. The inflation lag: by construction, bond cash flows can not be adjusted instantaneously for actual inflation. This implies that the break-even inflation rate includes another bias reflecting the discrepancy between the lagged and the contemporaneous inflation rate.
  Could otherwise hit inflation and growth hard   M onetary policy can alleviate the effects   12  Other measures required to solve the problems entirely  BIS Review 138/2008  Financial turmoil and the inflation target     Situation changes rapidly in mid-September Repo rate has been cut to 3.75 per cent Further cuts over the coming six months  To: …alleviate the effects of the financial crisis on economic activity and… …manage the inflation target of two per cent  Behind the interest rate decision Financial turmoil important          BIS Review 138/2008  Impact of interest rate cuts (initially) Credit crunch Falling wealth Deeper economic downturn Uncertainty and falling exchange rate Falling commmodity prices Lower inflationary pressures  13  Pessimism among households… Net figures 80  80  60  60  40  40  20  20  0  0  -20  -20  -40  -40 The Swedish economy  -60  -60  Own finances Labour market  -80  -80 98  99  00  01  02  03  04  05  06  07  08  09  Source: National Institute of Economic Research  … and in the business sector Seasonally-adjusted index and net figures, manufacturing industry  65  15  60  10  55  5  50  0  45  -5  40  -10  35  -15  30  Purchasing managers’ index (left scale)  -20  Confidence indicator (right scale)  25  -25  01 02 03 04 05 Note.

When goods are transported to consumers via our physical infrastructure, such as the road network or by air, the payment for the product is sent to the end recipient by means of the “financial infrastructure”. If the financial infrastructure did not function, the economy would more or less grind to a halt. The financial system also makes it possible to manage various risks that can arise in the financial markets. This is important to both households and companies. Another important function is to be able to save and borrow money via the financial system. This gives households and companies the possibility to distribute incomes and consumption over time. The funds that are saved can be borrowed by companies and households to finance various investments which can then create employment and growth. When there is distrust and disturbances in the financial system, this function may be impaired, which can  BIS Review 138/2008  1  lead to a credit crunch. First the financial sector is affected, but then it gradually becomes more difficult for households and companies to borrow, too. Consumption and investment then decline, which can lead to a substantial economic downturn. A credit market that functions well is thus an important condition for good growth. To summarise, one can say that the financial system’s functions are very important for economic development. It is important that the system is stable for our society to function properly on the whole. But financial stability is something that most people probably often take for granted.
Just as important as the level of income is: how we produced it, and what resources did we use? •  Output per hour worked has increased considerably. BIS central bankers’ speeches  1  o  In 2015, Singaporeans worked 2,300 hours. o  But we are now generating nearly three times as much income as 50 years ago. o  •  This year Singaporeans are expected to work only 1,400 hours. The carbon intensity of our economy has fallen sharply. o  o  In 2015, we emitted 0.2 kilograms of carbon to produce a dollar of output. Today, we emit just 0.05 kilograms. Third, the distribution of income. •  •  Income distribution has become more equal, thanks to heavy investments in building human capital and skills as well as a tax and transfers system that has become more progressive over the years. o  In 2015, the Gini coefficient after taking account of taxes and transfers was 0.41.  o  Today, it is 0.36. Wealth inequality has remained more stubborn though. o  Today, the top 1% and 10% of wealth holders in Singapore own around 20% and 60% of total wealth respectively. o  This is little changed from 30 years ago, when we first started to collect this data. 1965–1984: Export-led industrialisation through multinationals In 1965, when Singapore left the Federation of Malaysia, few expected it to survive let alone prosper.

4  BIS central bankers’ speeches  •  Foreign labour, which had driven Singapore’s labour force growth since the late 1970s, was already one-third of the total workforce. •  It was neither economically efficient nor socially desirable to allow the foreign workforce to expand much faster than the local workforce. By 2020, average total labour force growth was down to 1% per annum. The central thrust of economic strategies in the 2010s and early 2020s was therefore to shift to a productivity-driven growth model. The aim was to increase productivity growth to at least 2% per annum, from the 1.4% averaged during the 2000s. •  The growth of lower-skilled foreign labour was curbed through increases in the foreign worker levy and reductions in the foreign worker dependency ratio ceilings. •  Financial incentives were given to firms to undertake capital deepening and adopt technology solutions to raise productivity. •  Programmes were put in place to help Singaporeans develop and master skills in new growth clusters. While the manufacturing sector had continually undergone restructuring and moved up the value chain in the preceding five decades, this was the first time the entire economy was undergoing such a transition. •  It proved particularly challenging for many traditional domestically-oriented services like retail, hospitality, construction, real estate, and social services, which had come to be heavily dependent on cheap labour over the decades.
With limited exposure to international financial markets, Algeria has not been directly affected by the global financial turmoil. However, the sharp decline in oil prices over the second half of 2008 significantly impacted export and budget revenues. Despite this external shock, macroeconomic performance remained robust in 2009 with: –  strong external financial position with comfortable international reserves $ billion146, end September 2009 ) equivalent to 3 years imports of goods and services, and low external debt;  –  the real effective exchange rate around its equilibrium level;  –  continued high growth in the non-oil sector, expected to exceed 9% in 2009 against 6.1% in 2008;  –  sizeable savings in the stabilization fund despite the expected first budget deficit for several years;  –  contained inflation, notably on account of continued absorption by the Bank of Algeria of the excess liquidity. The strong economic performance in 2009, in line with the performance of the past several years, reflects continued prudent financial policies, sustained efforts to anchor monetary stability, and progress in strengthening the resilience of the banking sector, which have supported macroeconomic stability since 2000. 2. Savings and investment financing structure  Following a period of external financial imbalances and related adjustment programs during the nineties, Algeria has entered, since 2000, a period of sustained increase in savings, leading to a situation of excess savings over investment.

Furthermore, the general liberalisation of capital controls on domestic residents will take place once the largest obstacles have been successfully removed or neutralised and when certain economic criteria have been fulfilled, such as adequate FX reserves, market access for the sovereign and the banks, a wellbalanced and growing economy, etc. The aim is to minimise the risk of capital flight. 2  BIS central bankers’ speeches  The Icelandic authorities have emphasised public disclosure and transparency of relevant information about the liberalisation strategy. Last year, the solution to the failed banks’ estates, as well as the economic analysis on which it was based, was presented in a comprehensive manner. A few days ago, a bill of legislation on the treatment of offshore krónur was passed by Parliament. An English translation of the bill was posted on the website of the Ministry of Finance and Economic Affairs, along with the Explanatory Notes and a Q&A (with links on the Central Bank website). Yesterday the Central Bank published terms of a foreign currency auction directed at offshore krónur, to be held on 16 June. This speech is, of course, part of the process of disclosure and explanation. Furthermore, in a week or two, the Central Bank will issue a special publication on the economic analysis of capital account liberalisation in Iceland.
All this will make the next meeting of the MPC interesting, particularly since the February meeting will include our quarterly review of the two year MPC Inflation Forecast, in which we will try to calibrate the effects of the various changes I have mentioned. Proposed Revisions to the Basel Accord Compared to the last US recession in the early 1990s, a source of strength to the global financial system as the US economy slows is the much stronger capital position of most major international banks. The 1988 Basel Accord and its market risk amendment were intended both to set a floor to the capitalisation of the world's major banks, and to smooth out competitive inequalities between banks from different countries. Bank capital ratios have increased significantly in the last decade. Between 1988 and the end of the 1990s, the ratio of capital to risk-adjusted assets of major banks in the G-10 rose on average by around 3 percentage points. Of course, introduction of the Accord was not the only factor involved but studies agree it played a significant role in rising bank capital. However, by the second half of the 1990s, it became apparent that the Accord required a radical overhaul to take account of changes in the nature of banking business and risk management since 1988.

A fundamental change within the first Pillar - capital levels - compared to the original Accord is that improved risk management in banks has allowed the proposed new Accord to incorporate greater sensitivity of credit risk capital charges. There will be a menu of approaches, depending on the sophistication of the bank. A 'standard' approach differentiates between credit exposures on the basis of external ratings. A 'foundation' internal ratings based approach will allow banks to differentiate between credit exposures on the basis of their internal estimates of borrower default probabilities; and an 'advanced' approach allows other inputs required to assess credit risk also to be provided by the bank, rather than the regulator. In addition to all this, there will be for the first time an explicit capital charge for operational risk. Systemic Implications of the Revised Accord What I have described so far is how the Accord is intended to be applied to individual banks. But given the Bank of England's responsibilities for the stability of the financial system as a whole, our principal concern is with the overall impact on the system. The Basel Committee has said that the new Accord is intended broadly to deliver the same level of bank capital on average across banks as at present. How should we assess the adequacy of this from the viewpoint of overall financial stability? As I suggested earlier, the role of bank capital is to provide a buffer sufficient to cover unexpected losses.
Christian Noyer – The main issue being discussed in the G20 – raised moreover by Nicolas Sarkozy – is how to reduce the large global current account imbalances, which weigh on world growth and generate dangerous capital flows. Monetary policy alone will not provide the solution. Each economic area should move towards a better balance between savings, consumption and investment. And, we would all benefit from reforming the international monetary system, but in a structural, orderly and calm manner, and certainly not in a hurry. It  BIS Review 152/2010  1  is a long process to move from a system in which only the currencies of major industrialised countries counted to the multipolar world in which we now live. Le Figaro – This G20 should also provide the opportunity to validate the new prudential framework (Basel III). Do you find it adequate? Christian Noyer – We have reached a balanced agreement. It is out of the question to be confronted with a situation where States fly back to the aid of banks. That is why we are enhancing both the quantity and quality of banks’ capital requirements. But we have also provided for a very long adjustment period to avoid an artificial reduction in funding. This agreement is universal and is intended to extend to the United States and to all developing countries. This too is a balancing factor. Le Figaro – Has the project been completed? Christian Noyer – We have factored in a long observation period for some aspects.

Christian Noyer: No one should, nor can, manipulate their currency – interview in Le Figaro Interview with Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, in Le Figaro, Paris, conducted by Ms Isabelle Chaperon, Ms Bertille Bayart and Mr Jean-Pierre Robin on 9 November 2010 and published on 11 November 2010. *  *  *  Interview – On the eve of the G20 in Seoul, the Governor of the Banque de France advocates an “orderly and calm” discussion on the international monetary system. Le Figaro – Last week, the US Federal Reserve pumped USD 600 billion into the economy. This decision has been harshly criticised. How do you view it? Christian Noyer – We raised this issue last weekend at the Bank for International Settlements in Basel. Fed officials explained this action in the light of their mandate, their goal of reviving the US economy and the risk of deflation. They assured us that they had no deliberate intention to devalue the dollar. And I have no reason not to believe them. Le Figaro – The Fed seems much more accommodating than the ECB ... Are the economic situations so different? Christian Noyer – Saying that the Fed is very accommodating and the ECB very stringent does not reflect reality. In Europe, our monetary policy is still marked by the non-standard measures tailored to the structure of our economy.