samchain/econo-pairs-v1 huggingface dataset:
Bearing in mind what we have learned about the importance of financial markets in a highly integrated monetary union, taking measures to ensure a stable and well-ordered financial system in the euro area has to be our first priority. What does this imply in practical terms? First of all, a single supervisory mechanism for banks. As I outlined above, a single financial market combined with national supervision is not sustainable. Before the crisis, it led to a lack of oversight of cross-border activity. Since then, it has facilitated a retrenchment of bank lending behind national borders. A single system of supervision can reduce these risks by allowing for an aggregated view of the euro area financial market; by providing a safeguard against regulatory capture; and by ensuring that national interests are not put ahead of the European interest. With this in mind, the Commission has presented a proposal for the establishment of a Single Supervisory Mechanism, entrusting the ECB with specific supervisory tasks. This is a welcome development and the ECB is ready to assume these tasks. However, it is essential for the credibility of supervision, and for the ECB’s reputation, that the legal framework allows us to implement these tasks in an effective and rigorous way.

Már Guðmundsson: Financial integration and central bank policies in small, open economies – what are the key lessons from the crisis? Remarks by Mr Már Guðmundsson, Governor of the Central Bank of Iceland, in a plenary session on monetary policy and policies of central banks at the Singapore Economic Review Conference, Singapore, 5 August 2015. *  *  *  A revised and extended version of this talk will be published in a forthcoming Singapore Economic Review. Chairman and participants, I would like to thank the organisers for inviting me to speak at your conference here in Singapore, a country that I have long respected for its economic management. My remarks today bear the title Financial integration and central bank policies in small, open economies: what are the key lessons from the crisis? They are motivated by my experience as a policy-maker from a very small, open, and what used to be financially integrated economy, and my tenure at the Bank for International Settlements. 1 There is a widespread sense that global financial integration can be problematic for the conduct of monetary policy in small, open economies. Why is that? It is well known that the transmission mechanism of domestic monetary policy evolves as domestic financial markets develop, and that this in turn affects the relative effectiveness of different monetary instruments. The same applies to external liberalisation of domestic financial systems and the cross-border financial integration it gives rise to. Initially, it can give a boost to domestic financial market development.
The other is how difficult most of us in western Europe find it to understand how rapidly things are moving and how much has already occurred in these countries. The image of a west European with shopping bags full of aid to the poor neighbours in the east still remains, while we are incapable of seeing how much we can pick up from the new member countries. How poor are the candidate countries? I should like to begin with a critical examination of the picture we normally give of the applicant countries. Two common illustrations of the economic side of the EU enlargement eastwards are graphs showing the development of production since the fall of Communism and a table of the income differences between east and west. If we look at the statistics summed up in the European Commission's reports, GDP per capita adjusted for purchasing power (PPP), the gap certainly looks huge. The riches of the 10 central and east European candidate countries, Slovenia, with 72 per cent of the EU average, and the Czech Republic, with 60 per cent of the EU average, are around as poor as countries like Greece, Portugal and Spain were before they joined the EU. However, the poorest countries in the applicant group, Bulgaria and Rumania, have only approximately 25 per cent of the EU average. The graphs for production levels since 1990 look equally gloomy, only at the end of the 1990s do they reach the same level as at the fall of the Berlin Wall.

Might it be preferable in select cases for a systemic infrastructure to declare a settlement holiday, unpalatable as that may be, or to work with relevant industry associations to declare that select markets are closed? Are the operational challenges of conducting manually activity that is fundamentally dependent upon automation a bridge too far? Do reconciliation challenges that become exponentially more complex as a disruption event extends in duration risk prospects for an orderly return home? Might industry dialogue to agree on the accepted circumstances and corresponding practices for dealing with a settlement holiday in a pre-meditated manner prove to be a superior course? These questions are not easy to answer, but it is very important in the present evolution of industry discourse that they are asked. Provocative Question Number 4: To what extent do measures to address endpoint security risks, such as anomaly detection and assurance regimes, compel a new paradigm for the attribution of liability in the end-to-end payment transaction flow? The reality that endpoint security breaches can undermine confidence in a network even when an operator’s infrastructure has not been violated has spawned a novel body of work, including initiatives to enhance assurance that external endpoints are operating in adherence with an operator’s strict security requirements, and the development of application tools such as anomaly detection to enhance a participant’s management of fraud risk.
And for the new challenges to be met and the new opportunities to be exploited, there is often the need for new approaches and new initiatives, at both the national and international levels. There is a view, for example, that trade integration in the region has not been adequately served by financial integration, given restrictive controls on capital mobility still being practised in selected jurisdictions. As a result there is some doubt as to whether the long term development potential of the region has been maximised and whether the rapid economic growth the region is experiencing is sustainable. There is further concern from the point of view of the maintenance of monetary and financial stability. New approaches and new initiatives are indeed necessary to promote greater financial integration in the region. I am sure there are many other areas concerning development of the region in which new approaches and new initiatives may be desirable. Being a regional financial institution of strategic importance, it is obvious that the ADB has a significant role to play. I would argue that this should be a role of increasing significance, or even a pivotal role, given the increasing interdependence among jurisdictions within the region and therefore the greater need for regional co-operation. The ADB has the right institutional framework for promoting such co-operation, and I am glad to see that under the leadership of the President there has been increasing involvement of the ADB in regional financial cooperation recently.

The Financial Mediation Bureau aims to serve as a one-stop center for the resolution of retail consumer complaints against financial institutions regulated by the Central Bank. The Central Bank is also establishing a one-stop service centre in the Bank that will function as a Public Information Centre for the promotion of financial literacy among the Malaysian public. The service centre will provide advisory services on financial matters to small and medium enterprises. Ladies and Gentlemen, Concluding remarks Financial literacy among women is all about having sufficient awareness of financial matters to enable women to protect and prosper for themselves and their families in a world that is becoming increasingly more complex and uncertain. To be an effective participant in this modern economy, we cannot take financial literacy for granted. It is a knowledge and skill that must be deliberately pursued. From a national and institutional perspective, promoting financial literacy must be an integral part of the overall agenda for financial and economic reform and development. Let me conclude with the words of Jawaharlal Nehru, “We talk of revolutions, political and economic. And yet the greatest revolution in a country is the one that affects the status and living conditions of its women. It is in so far as our revolution has affected our women that it is basic.” Thank you. BIS Review 64/2004  5
Turkey has a good record for structural issues. We have liberalized the trade and capital accounts of the balance of payments for about two decades. We have a flexible labor market. High domestic savings is one of the main characteristics of the economy. Market oriented economy is another aspect of the structural component of Turkey. Right now, Turkey has four important structural reforms on its agenda, not only as a part of the disinflation effort but also because they are essential for changing the environment. Thus, these structural reforms are vital for adapting to the changing global environment. They consist of reforming the banking sector, the social security system, agricultural subsidies, and privatization. Some of these reforms have already been approved by parliament, and the others are in the pipeline. The new Banking Act which was approved by parliament in June has the following four general objectives: •  to close the legal loopholes;  •  to implement the international supervisory regulations;  •  to assign the supervision of banking organizations to an independent agency; and  •  to make some adjustments regarding the process of founding and operating banks. In particular, the twenty-five Core Principles for Effective Banking Supervision drawn up by the Bank for International Settlements in 1997 have been endorsed in the amendments to the Banking Act. As a result, the amendments are consistent with modern principles of effective banking supervision.

11  The Way Forward  The mutually reinforcing relationship between the regulatory framework and market good practice should help the FMSB, and other market standard-setters, maintain their ambition and momentum even once memories of post-crisis misconduct fade. It could sharpen collective incentives to address, more conclusively, outstanding ambiguities that act as obstacles to real markets. And it should help mitigate emerging vulnerabilities. The Bank of England encourages the FMSB to consider where additional guidance and worked examples could buttress its existing standards, to guard against the risk that certain principles mean different things to different parties. The City’s special responsibility, given its pre-eminent position in global markets, is why it has brought so many ideas and such energy to advance reforms to address the misconduct risk that has plagued global markets. 10  See page 16, Financial Reporting Council (FRC), “Corporate Culture and the Role of Boards: Report of observations”, July 2016. In light of its responsibilities for conduct and market integrity, the FCA is consulting on an approach under which it would formalise that in supervising to, and enforcing, SMR rules for unregulated markets and activities, it would consider whether firms and individuals are meeting “proper standards of market conduct” with reference to “recognised” industry codes.
Our assessment however raised some important questions around how the system operates – particularly whether calling cash variation margin intraday can be made to work more effectively. The frequency and timing of these intraday calls, particularly when issued ad hoc, was not always sufficiently clear to all participants, further complicating liquidity management issues for some. In some instances, unexpected or late-in-the-day margin calls posed operational challenges to making timely payment for some participants. These challenges around the predictably of variation margin calls reflect a wider issue of transparency in the margining process. Most CCPs provide tools that allow clearing members and clients to calculate margin requirements for existing portfolios as well as changes to portfolios that participants expect to make. Some CCPs also provide additional functionality allowing participants to calculate margin requirements under “what if” scenarios. On the other hand, many banking and non-banking participants reported to us that margin calls were insufficiently predictable, with considerable uncertainty over the scale and the speed of increases they were likely to face over a given time period, or for a given level of volatility. Participants reported that the availability of more information on how the models are calibrated and the wider provision by CCPs of high quality margin calculators and other tools, would enable them to generate forward-looking predictions of margin requirements at portfolio level. The surveys also revealed a picture on whether market participants were prepared adequately for margin calls in a severe stress.

I have, since those events, heard two views that, as a central banker responsible for financial stability, give me considerable concern. The first is that there was ‘nothing really to see here’. After a brief period of disruption, understandable given the nature of the shock, markets returned to normal and indeed were able to support the economy through the pandemic. Implicit in that view, of course, is that absent central bank intervention markets would have returned to order and stability. I simply do not believe that is the case. One cannot of course know for certain what would have happened if central banks had stood aside. But by the time central banks were forced to step in, market flows had become almost entirely one way. In a period of huge uncertainty, once the flight to safety had become a dash for cash, there was no-one other than central banks able and willing to step in to catch the falling knife. Absent the massive intervention I described above, core markets would have continued to seize up and the liquidity crunch would have become worse. Indeed, though concerned with bank rather than market liquidity, the experience of the Great Financial Crisis was certainly that once powerful and adverse liquidity dynamics set in, they do not go away by themselves. The second view that gives me some concern is that in a severe shock, in a tail event, it is the role of central banks to underpin market liquidity.
Svein Gjedrem: The outlook for the Norwegian economy Address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), for Norges Bank’s regional network, Region East, Oslo, 25 September 2009. *  *  *  Please note that the text below may differ slightly from the actual presentation. The speech is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 23 September and Monetary Policy Report 2/09. It has been a year since financial turbulence developed into a full-blown crisis. The result was the most severe downturn in the global economy since the Second World War. Key rates were set at historically low levels both in Norway and abroad. Government spending has increased considerably to support demand for goods and services. Global economic activity is now picking up, albeit from a very low level, and unemployment is high. Financial market conditions have improved, although liquidity remains tight in many markets. The financial crisis eroded confidence in banks, counterparties and contractual partners. Access to export credit came to a halt, international trade slowed sharply and manufacturing sales stalled. With financial markets improving over the past six months and an increase in the credit supply, global trade is now picking up slightly. Manufacturing output has recently increased in the US, the UK, Japan and many emerging economies, while it continues to fall – albeit at a slower pace – in Sweden and the euro area.

Our togetherness in the EMU gives us “a greater say in international negotiation” and enhances our “capacity to influence economic relations” – to quote the Delors Report.2 Over the past 20 years, the euro has become the second most important currency in the international monetary system. Somewhere between 20% and 40% of global foreign reserves, foreign exchange transactions, international debt and international trade transactions are denominated in euro. And over 50 countries or territories use or link their currency to the euro.3 This global standing brings benefits. For one, it lowers the transaction costs of trading internationally, making euro area firms more competitive. It also adds breadth and liquidity to euro area financial markets, allowing domestic and international investors to allocate economic resources more efficiently. And it lowers the cost of global capital market financing for euro area borrowers, including corporations, financial institutions and public entities, thus benefiting firms, households and taxpayers. Of course, the international role of the euro also brings challenges, such as greater exposure to global foreign financial developments and potential changes to the monetary policy transmission process. The international benefits of sharing a currency go beyond the monetary sphere. In a world with deep economic and financial interlinkages, international cooperation is essential and we can more effectively promote European ideas and interests by speaking together. Indeed, the euro area’s voice has been crucial in strengthening the international financial regulatory framework after the global financial crisis.
The ECB Governing Council has increased its policy rates by 200 basis points since July: we have moved closer to the neutral rate which we estimate to be around 2%, and which we should reach at our next meeting on 15 December. Let us be clear: this rate rise is good news for banks and insurers, who have long been critical of low rates. Financial institutions want the rise to be orderly: it is, very much so; but this does not mean it should be too slow, or predetermined. It is still too soon to talk about a "terminal rate": we will decide what is necessary following a meeting-by-meeting approach; and we do not steer market rates, which are sometimes excessively volatile. The return of volatility in the markets, starting with commodity markets where margin calls reached historic highs this summer. In equity markets, after the corrections observed since the start of 2022, valuations remain relatively high. Fixed income markets are also showing strong volatility, with one extreme example being the September UK sovereign debt crisis: aside from a few specific factors, this was a reminder to everybody of the crucial importance of credible fiscal policies. In light of this market volatility, it is more important than ever that we protect customers. I would just like to say a word here on the increased transparency and justification of life insurance fees: in a speech to you alongside Jean-Paul Faugère, I called for progress to be made this year, with a particular focus on dialogue with insurers.

It is high time therefore that we made progress on reinforcing the regulatory framework for NBFIs, both on a micro and macroprudential level. As an example, in the case of money market funds, in times of extreme liquidity stress, the competent authorities should be able to release liquidity buffers for funds that are in difficulty, but should also be able to activate appropriate liquidity management tools. I would also like to draw your attention to three other non-bank risks: cyber risk, the frequency and cost of which are very likely to rise with the war in Ukraine. In the EU, the DORA regulation will come into force in 2025 and will at last provide a solid and common framework for making the financial sector more resilient to cyber attacks and for monitoring critical third parties such as cloud platforms. real estate markets, where housing prices had risen by close to 9% (year-on-year) in June 2022 in the euro area, much faster than household income. At this stage, the risks linked to a turn in the cycle are limited in France, thanks, among other things, to our macroprudential measures to make housing loan production sounder. We remain very vigilant, however, including with regard to the other segments of the market such as commercial real estate. crypto currencies, with the successive collapses, the most recent being FTX, that have triggered sharp market corrections and a "crypto winter" that has lasted for nearly a year: their recurrence shines a stark light on the need for stronger supervision.
The current financial crisis is unprecedented in terms of its scale, complexity, and speed of transmission. While the series of coordinated actions by financial authorities and Governments have helped to stabilise the markets somewhat, sentiments remain fragile, and many of the underlying problems remain. Many reasons have been offered about the root causes of the current crisis. Let me just highlight a few of these. The first is the unprecedented levels of leverage taken on by global financial institutions coupled with very loose lending standards in the credit markets. Consumers in the US were also highly leveraged. The high leverage enabled asset values and consumption to be raised to unsustainable levels. When sentiments finally turned, there was massive deleveraging. The second is that complexity magnifies risks. The proliferation of complex securities and derivatives had not diversified risk amongst different counterparties as was originally intended, but instead increased aggregate systemic risk throughout the financial system. Not only banks and investment banks were affected but a whole range of players including credit insurers, hedge funds and investors in asset-backed commercial paper have also suffered major losses. 1  Source: CBB website, http://www.cbb.gov.bh. AAOIFI - Accounting and Auditing Organisation for Islamic Financial Institutions; LMC - Liquidity Management Centre; IIFM - International Islamic Financial Market; IIRA Islamic International Rating Agency; WIBC – World Islamic Banking Congress. 2  CBB was then known as the Bahrain Monetary Agency. BIS Review 147/2008  1  The third is the inadequate assessment of risks and compression of yields.

Theoretical models often assume the existence of a central bank reaction function. A well-known reaction function can be a powerful tool in stabilizing output and inflation because yield curves can adjust in anticipation of future policy in line with the evolving outlook for the economy. To return to my football theme, Mervyn King referred to this as the Maradona theory of interest rates. But credible reaction functions don’t fall from the sky and need to be earned by communicating and acting consistently through time. We are and will remain predictable for our stakeholders. Through its forward guidance, the Governing Council has also indicated its intention to move gradually and in accordance with the data. Faced with uncertainty about the strength of the transmission mechanism, we should be guided by pragmatism - the level of inflation relative to the medium-term objective and gradualism. The final C is for clarity. Central bankers should try to spell out what they will and won’t do as much as possible. On the first part, we were clear in Riga; on the second part, let me stress that we cannot fully compensate for the uncertainty created by other policy-makers; nor can we fully offset their effects. We have shown in the past few years that monetary policy is flexible, and we have been willing to use every instrument within our mandate to respond to too low inflation.