samchain/econo-pairs-v1 huggingface dataset:
All this understandably poses a huge challenge to the entire financial system which, however, will emerge much stronger from a process of adaption that will, in all likelihood, make it sounder and more efficient. This will contribute to the sustainable recovery of Spain’s economy in an increasingly integrated Europe. Thank you. BIS central bankers’ speeches  5

This, combined with a business model in which the loans were packaged, turned into securities and sold on the market, meant that the incentive for lenders to correctly assess and subsequently monitor the risks was very low, since they did not retain the risks of the loan. Not only were the advantages associated with a model of this kind – which allows the risk assumed by the institutions to be managed with greater flexibility – not correctly harnessed, but the model eventually gave rise to transactions in which institutions had no incentive to select borrowers correctly. They became mere intermediaries for the credit granted by the system, mere commission earners, interested solely in the volume of operations. Many institutions also made mistakes in their management systems, such as their staff remuneration arrangements. The remuneration of the managers of many institutions was linked to short-term profits, without any consideration of the levels of risk being assumed to obtain them. Other banks, especially in central and northern Europe, made mistakes not so much in their lending as in their securities investments, using very unrealistic, or unjustifiably optimistic, risk assessments. In a context of abundant liquidity at the international level, many financial institutions sought higher profits by investing in this type of complex instrument associated with the subprime segment as a mechanism to compensate for the fact that lending margins were narrower than in the past, relying excessively on the assessment of their credit quality by rating agencies.
Singapore is home to many foreign nationals and migrant workers who send money back to their home countries frequently. If we can make cross-border remittances cheaper and faster, our migrant workers can provide better and more timely support for their families. 2 / 10  BIS central bankers' speeches  Three years ago, the Monetary Authority of Singapore (MAS) embarked on a pioneering journey with the Bank of Thailand: to link our respective national faster payment systems – PayNow in Singapore, and PromptPay in Thailand. I am happy to say that the PayNow-PromptPay linkage will go live by mid-2021. Anyone who registers for PayNow or PromptPay will be able to send money directly from Singapore to Thailand, or vice versa, using just their mobile phone numbers – instantly, securely, at competitive rates, and at any time of the day. This linkage between two countries’ national faster payment systems will be the first-of-itskind in the world. We will start off with a small group of banks on both sides, and scale up participation to include more banks and non-bank providers over time. MAS is keen to partner other central banks in the region to expand the linkage, so that more people across Southeast Asia can benefit. Timely Health Insurance Claims Next, pain points relating to making an insurance claim for hospitalisation. Today, an individual being hospitalised may face uncertainty over his claimable insurance amount. Hospitals have to access multiple systems to request for or provide information to different insurers; and some of these processes are still paper-based.

The Government calculates that in 1997 the deficit will be 2.1 per cent and that the target of eliminating it in 1998 will be achieved. •  With the improved confidence in budget and monetary policy, together with the tighter interest rate policy from the second half of 1994 up to the end of 1995, it has been possible to check the earlier inflationary tendencies and bring inflation expectations down appreciably. Sweden is now among the countries in Europe with the lowest inflation rate regardless of which measure one uses. This, in turn, paved the way for a gradual lowering of our main instrumental rate - the repo rate - in 1996. •  What used to be an almost chronic deficit on current account has now been turned into a substantial surplus. This is reducing Sweden’s external debt, which also contributes to greater financial stability. •  Many structural measures have been implemented since the late 1980s. There are signs that, together with economic policy’s focus on stability, this has reduced the economy’s inflation propensity and raised potential output. Against this background, the direction of Sweden’s economic policy contrasts sharply with the unstable, inflationary path we experienced in the 1970s and ’80s and which contributed to the recession in the early ’90s, which was the worst for over sixty years.
So we therefore need to form a judgement on where the economy is likely to be heading. But to do that, we need to start by figuring out where we are now. The great Danish physicist Niels Bohr is supposed to have observed that “Prediction is very difficult, especially about the future.” But I don’t think he realised just how tough economic forecasting is. Not only is the MPC unsure of the prospects for commodity prices, how the credit crunch will play out and a myriad of other future events, but we don’t even have a precise picture of the current state of the economy. As a result, controlling the economy has been likened to driving along a winding road looking only in the rear-view mirror. Indeed, it’s worse than that as we don’t even have that good a view of where it has been in the past either! It is as if the rear window is also a bit misted up. Our primary signposts are, of course, the official data provided by the Office for National Statistics for the key macroeconomic variables, such as output, spending, employment, prices, wages and so on. However, we do not rely on the official data exclusively, for a number of reasons. First, it takes time for the official data to be collated and published. For instance, the preliminary estimate of GDP growth in Q2 only appears tomorrow, almost a month after the quarter ended.

The surveys are also useful in forming an assessment of the prospects for capital spending, as this is an area where statistical models are particularly poor – and I should know, having spent some of my formative years at the Treasury unsuccessfully trying to build econometric models to predict investment! Both the CBI and BCC surveys collect information on investment intentions, and it is also something we ask our Agents to take a view on, based on their contact interviews (see Chart 4). We look closely at this information when assessing the outlook for business investment. Other forward-looking questions can also prove valuable. For instance, at the current juncture, with CPI inflation well above our 2% target, we need to judge how much further it will rise and for how long that might persist. Past experience gives us some guide as to the speed at which higher commodity prices pass down the supply chain and the extent to which those movements are amplified or attenuated by movements in other costs and prices. But the questions on pricing intentions contained in the business surveys represent a valuable additional source of information on near-term inflation pressures. A third use of surveys is in helping the MPC diagnose the causes of recent developments. Here, the quarterly Industrial Trends survey stands out as particularly useful because it has a rich set of questions that explore companies concerns. For example, it has questions about the factors limiting investment, exports, and output.
The question is how much of the slowdown in the industrial activity will have time to spread to other parts of the economy before there is an upturn in industrial activity. For the future we see a very good development in disposable income, some recovery in household wealth and continuing low oil prices, which should provide a stronger growth in consumption both this year and next year. The situation on the labour market gives mixed signals. Open unemployment rose somewhat between December 2001 and January this year. Employment levelled off during the second half of last year, but the increase was still 80,000 persons, between 2000 and 2001. Wage rises were slightly higher than expected last year, despite weaker economic activity. However, developments on the labour market are divided in two parts. Employment in the manufacturing industry has fallen since the beginning of last year, while it is only now possible to detect a slowdown in the services sectors. Similarly, the number of redundancy notices has been highest in the manufacturing industry. In the public sector, healthcare and welfare, there have been no notices of redundancy and the number of new vacancies registered has increased. The fact that the weak growth in the manufacturing industry has not spread to the private and public services sectors is probably due to the expansive economic policy. Forward-looking economic indicators, such as confidence indicators for households and companies, imply that the downturn in activity is abating and that developments are beginning to stabilise.

The Basle Capital Accord of 1988 was a landmark document for the banking industry. It helped increase the capital held by internationally active banks, and created a more level playing field for banks under different jurisdictions. However, there were some weaknesses in the Accord. The most important of these was the practice of assigning the same risk weight to all counterparties in each class, irrespective of the differences in their credit-worthiness. These issues led regulators to propose a more risk sensitive framework. The proposed new Capital Accord will have a great influence on the risk management practices of banks. The new Accord, however, poses challenges to Asian banks and regulators alike. Banks will have to develop more sophisticated risk management capability while regulators will need to build up technical knowledge as well as supervisory resources to validate banks’ risk management systems. As financial markets progress towards greater transparency, the market disciplinary mechanism will reward banks that manage their risks effectively, and penalise those that do not. Good risk management practice is thus even more essential for banks to maintain their competitiveness over the long run. The frequency of shocks has increased. In the past 10 years there has been an average of one shock every year starting from the Gulf War in 1991 to the Latin American crisis of the early nineties and so on down to the Asian Economic Crisis in 1997, the Russian Bond Default Crisis in ’98 and most recently last month, Argentina’s default. The causes of these stress events are wide-ranging.
Most have accumulated massive international reserves, well in excess of what would be needed for precautionary reasons. All in all, this paints a very different picture as compared to past episodes of global turbulence, when these economies used to be not only “influenced” by the ups and downs of the changing risk preferences in global financial markets, but simply “driven” – even “drowned” – by them, sometimes regardless of their economic fundamentals. In my view, this separation from the main stream of the turbulence constitutes an achievement in itself. From other stand point, it is certainly striking that in this period of global financial turbulence inflation is identified as the key economic challenge for emerging economies. Indeed, the rise of inflationary pressures on food prices derived from the commodity boom, is becoming a very worrying concern. The large change in relative prices that underlies this prolonged boom is having a stronger impact on developing economies, with very negative and substantial effects on the well being of the poorest portions of their populations. Therefore, as inflation creeps up the concern of policymakers deepens, not only in the sphere of macroeconomic stability, but beyond. In connection with this, the fact that monetary policies have remained focused on inflation stability in most emerging market economies is an additional novelty to mention in the context of the present turmoil.

As mentioned before, a good number of banks were established, in the main with industrial interests, but on a fragile basis, and most of them became insolvent. Second, banks did not follow prudent and appropriate policies to set in place a comprehensive risk management process to identify and control all risks with proper valuation standards. At that time the assessment of capital adequacy, as in many other countries, was based on a badly designed leverage ratio (capital on deposits) which was totally inappropriate in terms of the risk profile of the banks. Third, the supervisory system was not equipped with appropriate human, technical and organisational tools to ensure a thorough understanding of the operations both of individual banks and banking groups and to monitor them. Additionally, the supervisor did not have corrective and remedial powers to apply timely and efficient surgical measures. Ensuing this episode, the Spanish authorities embarked on a thoroughgoing process of liberalisation, modernisation, de-regulation, re-regulation and promotion of competition. Although there was much ground to be covered, Spain comprehensively reformed the regulatory and supervisory framework in a relatively short period, during the 80s. Supervisory powers and the more detailed banking regulations were placed within the remit of the Banco de España. Among the wide array of measures taken I would like to highlight the following: •  Interest rates and fees for banking operations were fully liberalised and the compulsory investment ratios were gradually lifted.
He found, for instance, that the US economy needed to grow by at least 3 per cent to avoid an increase in unemployment. Okun’s law can thus be interpreted as a short-term relationship that expresses the link between changes in economic activity and changes in activity in the labour market. As the relationship between growth and employment is dependent on factors such as labour market policy, productivity, social norms and demography, the relationship varies between different countries and different periods in time. 1  Okun, A. M. (1962), “Potential GNP: its measurement and significance”, American Statistical Association, Proceedings of the Business and Economics Statistics Section, pp. 98–104. BIS Review 58/2010  1  A recently-published Economic Commentary on the Riksbank’s website 2 estimates this relationship using Swedish data. 3 The study shows that there is a relatively strong link between GDP growth and unemployment, a link that has also varied over time. The connection has increased over time and between 2004 and 2008 it was relatively high, which indicates that unemployment was more sensitive to changes in GDP during this time. However the relationship has weakened over the past year, when GDP fell heavily without unemployment rising as much as one would have expected, given the historical relationship. According to the study, a GDP growth of more than 2.8 per cent is now needed for unemployment to decline, which can be compared with the historical average of 2.3 per cent.

The Riksbank’s calculations show that employment in the manufacturing industry has been slightly stronger than the historical pattern implies during this economic downturn, given the large fall in production, while employment in the services sector has been much stronger than one might have expected given historical relationships. As mentioned earlier, it appears as though the Okun coefficient has declined during 2009. I mentioned earlier that GDP fell by almost 5 per cent last year. According to the estimated Okun’s law, unemployment in the economy as a whole should have risen by around 3 per cent, but the increase was only around 2 per cent. Although cuts in staff have been made, companies have not adjusted their workforce to the falling demand to the same extent as they would have if the historical pattern had applied. Many companies have instead chosen to retain existing personnel to a much greater extent than during earlier downturns. In some cases, they have instead introduced measures such as freezing wages or shortening the working week. One explanation might be that companies expect demand to be restored quickly and that they want to be prepared to quickly increase their production again. Another explanation as to why production has fallen more than employment, which is mentioned in the IMF’s latest World Economic Outlook 4, could be that production has fallen most in those sectors of the economy with the highest productivity level. 2  Aranki, Friberg and Sjödin, 2010, “The relationship between the business cycle and the labour market in Sweden”, www.riksbank.se.
These same precautions have permitted macroeconomic policies – both fiscal and monetary – to be clearly countercyclical, helping to cushion the effects of the world crisis on our economy. 1  2  Central Bank of Chile (2009). BIS Review 35/2009  The transmission of MPR reductions to lending interest rates One important element in the diagnosis of how this countercyclical effort is actually working is the evaluation we perform on a permanent basis to the way our decisions are affecting the borrowing conditions facing households and firms. This issue is not new, and was the subject of analysis several years back when the Central Bank’s monetary policy was on a sustained expansionary path. 2 The evidence we gathered then can be summed up in that the Central Bank’s monetary policy decisions are reflected in the banks’ financial cost very quickly, but in the overall cost of credit only after a few months. This response pattern was similar to that in other economies. Lately, we have reviewed that information, 3 and we have found that, even in moments of great uncertainty as we experienced in recent months, reductions to the MPR are translating into reduced borrowing costs for both businesses and consumers. One good example is the trend of the interest rate on commercial loans at 30 to 89 days, which can be linked to the funding of working capital. This rate was very high in October last year, but this year so far it has fallen substantially.

But we need to recognize that this ambition to achieve social justice is no longer sufficient. We cannot be content with an ex-post "repair" of inequalities. xvii We have to create equal opportunities for all ex ante, and this is the second requirement, that of individual autonomy through education. Page 7 of 10  2.2  The major requirement: aspiring to autonomy through education  It is clear that education must be the absolute priority: to offer all citizens the same opportunities for success, regardless of their social background. It is the best way to prepare each and every citizen for the knowledge economy and the technological transformations that he or she will have to face. It is the prerequisite for social mobility, in order to reduce the “longitudinal” inequalities between generations. And hence, it increases growth by raising the “human capital” of a country. In Europe, we have some of the best education and vocational training systems. For example, the effective Finish education model and the quality of German and Swiss teaching. The skill levels of European students are on average higher than those of OECD countries xviii in terms of mathematics and science scores and of understanding written texts. As well as performing better, our education systems are more democratic thanks to higher enrolment rates xix – 90% in Europe compared to 84% in the United States xx – and lower average tuition fees.
For financial institutions, it can reduce the need for manual intervention and help detect fraud. Our transition to ISO20002 will also pave the way for consistent adoption of enhanced data in payment messages, including Legal Entity Identifiers (LEIs) and Purpose Codes. We will then introduce in spring 2024 a new RTGS core settlement platform, offering greater resilience and enhanced user functionality. The new core platform will be modular, flexible and based on open standards. It has been designed to enable continuous evolution of our platform, which will keep it resilient to new threats and flexible to evolve in line with industry innovation. We are working closely with the payments industry to develop these exciting changes, and to ensure they are ready to implement them on time. But with the payments world continuing to evolve, we are not going to stop with the launch of the new platform. We are planning how to make the most out of the possibilities of the new platform and how best to meet the needs of industry in the future. In the next few weeks we will consult the industry – not just the current users of RTGS – on proposals for continued evolution of the new platform beyond 2024. The proposals can offer a menu of options each designed to maintain and enhance the resilience of the platform; and create new opportunities for the industry to innovate.

While we are developing it on centralised infrastructure, it will be able to interface with innovative payment systems and providers, including those based on Distributed Ledger Technology.6  2/6  BIS central bankers' speeches  How central banks can influence the outcomes of innovation The role of central banks in providing core payments infrastructure is crucial. Central bank money is a public utility that underpins our financial system and supports the key mission of central banking: monetary and financial stability. Economic history demonstrates that across many sectors reliable, modern and harmonised public infrastructure is essential for private innovation to thrive. Payment systems have often been described as the “plumbing” of the financial system: both a reflection of how essential they are and perhaps of how little most people think about them. Another comparator could be the road network. Efficient road networks underpin supply chains and move goods and services across borders. Governments develop the road network to fit the needs of businesses and consumers that use the roads. But they have a bigger social purpose too: they allow children to get to school, ambulances to pick up patients and friends and family to meet. At the same time, the design of the road network also affects the behaviour of users and businesses – the quality and directness of particular roads will impact on the routes chosen. And governments set the traffic laws and regulations to ensure everyone can travel efficiently, but safely, and use technology such as speed cameras to check compliance.