samchain/econo-pairs-v1 huggingface dataset:
Some of the Primary Dealers who are dealing outside the Scripless Securities Settlement System could have caused potential threats to the system. This may have been particularly due to the fact that using SWIFT was considered to be an expensive method of transferring data. Therefore, the Central Bank has now introduced a low cost method of transferring data using the Wide Area Network connecting them with the Central Bank. Accordingly, all Primary Dealers are now urged to use this method to ensure retail transactions are not proceeded outside the system. Two new laws, namely the Prevention of Money Laundering Act No. 5 of 2006 and the Financial Transactions Reporting Act No. 6 of 2006 have been enacted last year to prevent money laundering and terrorist financing and to strengthen the reporting mechanism for financial transactions. Arising from such initiative, the Financial Intelligence Unit has already been established to investigate and take action to combat money laundering and terrorist financing. The work of the FIU will be further expanded during the year 2007. In line with the global trends, we will be taking steps to further promote corporate governance in the financial sector by implementing several measures. Mandatory corporate governance rules covering important areas of corporate governance principles will be introduced in place of the existing voluntary codes.

The floating exchange rate system has served well in the conduct of monetary policy. As in the past, the Central Bank interventions in the foreign exchange market would be limited to building up the international reserve position and to stabilise any undue fluctuations in the foreign exchange market due to excess or shortage of international currencies. As per available international data, the global economy is projected to grow at around 5 per cent in 2006 and is expected to moderate to around 4.7 per cent in 2007. Sri Lanka’s major export markets such as the United States of America (USA) and the Euro area and other trading partners are also expected to grow at healthy rates. It is therefore likely that the continuation of favourable global economic conditions will generate healthy external demand for Sri Lanka’s goods and services. Based on the external and internal factors, the Sri Lankan economy is expected to grow by 7.5 per cent in 2007. Growth is also expected to be broad-based, with all three sectors, Agriculture, Industry  1  Broad Money (M2b) is complied consolidating the operations of the Central Bank and operations of domestic banking units and off shore banking units (OBUs) of commercial banks. 2  The money multiplier is the amount of money created by an additional unit of reserve money. BIS Review8/2007  7  and Services, poised to grow at healthy rates.
To explain this, allow me to draw your attention to developments in yields on bonds with a BBB rating, i.e. among the less high quality bonds in the Fund’s portfolio. The above chart shows the pronounced changes in the difference in yield between these bonds and government bonds, or the credit spread. This does not per se reflect a higher risk of bankruptcies. If this were the case, perhaps half of these solid companies would have to file for bankruptcy in the course of a few years. In this analysis from the Bank of England, risk premiums on corporate bonds are instead divided into three components. One component takes account of expected losses and another uncertainty with regard to expected losses – in other words, fear. The third primarily indicates that these bonds have become illiquid, or more difficult to buy and sell. These liquidity premiums, and perhaps also premiums for the initial panic and fear, do not pose a problem for a fund like the Government Pension Fund. On the other hand, a prolonged period of fear and liquidity shortages – if the authorities are not able to reverse these developments – could lead to higher future losses. The Fund’s fixed income portfolio is well diversified across different types of bonds and different regions and the active strategies had low correlation in normal markets. However, the financial crisis revealed that these strategies were exposed to more underlying, systematic risk.

Second, saving banks may well need a sound corporate governance scheme precisely because of the special ownership and control structure. Third, corporate governance that reinforces transparency is always an important contribution to increased efficiency. Fourth, we supervisors see corporate governance as a way not just to safeguard minority shareholders, but also depositors, arguably the weakest part of the banking framework. As regards the efficiency of institutions, we all know that the application of appropriate corporate governance rules improves the quality of their management, their reputation, their stability and, by extension, their risk profile. This is why the Banco de España is and has always been in favour of strengthening corporate governance and transparency in savings banks and will assign more resources to analysing both corporate governance requirements and the practical application of these requirements at each institution. Conclusions To conclude, let me add that the process of improving efficiency levels should not be viewed as a solution for times when the revenue arising on ordinary activity is adversely affected. Rather, it should be tackled as a process to be pursued over the medium and long term, in parallel to the improvement in risk management systems. BIS Review 31/2003  5
That is doubly unfortunate, as it means debtor discipline will be weakest among institutions for whom society would wish it to be strongest. Worse than that, bigger banks will then benefit from an implicit state subsidy, for cheaper debt means fatter profits. That might itself encourage further risk-taking. There has been considerable recent interest in the scale of this too-big-to-fail subsidy. Indeed, eliminating this subsidy has been taken as a bellwether of the authorities’ success in tackling the too-big-to-fail problem (Treasury Committee (2010)). Various attempts have been made to quantify this subsidy (Oxera (2011), New Economics Foundation (2011), Haldane (2010)). The two most popular approaches use credit ratings or option-implied distributions. The ratings-based approach looks at the difference between the standalone (“no support”) and “support” ratings of a set of banks. It uses this difference to determine how much higher funding costs would have been in the absence of support (Haldane (2010), New Economics Foundation (2011)). The options-based approach builds on Merton’s framework (Kou (2004)). A distribution is fitted to banks’ assets. Whenever assets fall below a certain threshold, the probability of government support can be estimated. Table 1 looks at some empirical estimates of the implicit subsidy using the two methods, for a sample of the four largest UK banks and 22 large international banks. The estimates are shown over the period 2007–2010. For UK banks, under either measure, the implicit subsidy amounts to at least tens of billions of pounds per year, often stretching to three figures.

This means that where the Accord treats exposures too harshly relative to their inherent risks, we expect to reduce the capital requirements. A good example would be the treatment of retail exposures, where the Committee found good economic evidence supporting a significantly lower requirement compared to earlier drafts of the new rules. But where the risk is greater, and where the existing rules fail to assign adequate capital, it should not be surprising that capital requirements are raised. We will continue to evaluate the assumptions in the New Accord and their relative degrees of conservatism in the final months ahead. Competition and consistency of application Conservatism in the framework raises concern in the industry partly because banks welcome the great flexibility they will enjoy in other areas of the New Accord. A key example would be the ability to develop their own risk measurement tools and use their own models to estimate the drivers of credit – or operational – risk. Yet the great flexibility banks will enjoy raises the concern among some that too much flexibility might allow competitors at home or abroad to employ methods subject to less rigorous supervision. This brings us to the final theme we noted in our consultations, namely the need to maintain a level playing field and promote competition. Ensuring the consistent application of the New Accord in its entirety is a critical concern for the Committee.
SPEECH  Monetary policy in the euro area Karl Otto Pöhl Lecture by Christine Lagarde, President of the ECB, organised by Frankfurter Gesellschaft für Handel, Industrie und Wissenschaft Frankfurt, 20 September 2022 I am honoured to deliver the Karl Otto Pöhl lecture this evening on the topic of monetary policy in the euro area. After a long period when inflation in the euro area was too low, it is now far too high. We are in the tenth consecutive month of record-high inflation rates and we may see this streak continue in the near term. Inflation is being caused by a series of unprecedented shocks, which have led to turning points in the global economy. As a result, price pressures have proven much stronger and more persistent than originally projected. In this setting, monetary policymakers must ensure that inflation does not become entrenched and that it returns to target in the medium term. And our policy response will need to account for the special combination of shocks that we are facing in the euro area. In my remarks this evening, I would like to address two issues. First, the nature of the inflation shock we are facing in the euro area today, and second, the implications this has for monetary policy now and in the future. The shocks hitting the euro area economy In our monetary policy strategy, the appropriate response to a deviation of inflation from our target depends on three factors: the source, size and persistence of that deviation.

Tarisa Watanagase: The Thai economy – challenges and prospects Speech by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the European Heads of Mission Luncheon, Residence of the Ambassador of the Federal Republic of Germany, Bangkok, 21 February 2007. *  *  *  Ambassador Brümmer, Your Excellencies, Ladies and gentlemen, At the outset, I would like to thank Ambassador Brümmer for inviting me to speak at this luncheon. It gives me great pleasure to share my views on Thailand's economic prospects with all of you. This talk is most timely for these are difficult times for Thailand. In the past year, Thailand under major political developments. We saw mass street protests against the previous administration, a military coup and the annulment of the 1997 constitution. The present government has promised an election and a new constitution but, as year-end bombings painfully show, political uncertainties remain. Economic uncertainty has also increased. In the past few months we saw rapid baht appreciation and declining consumer confidence. The threat of a disorderly unwinding of global imbalances still persists. In addition, the implementation of the reserve requirement and the introduction of the amended Foreign Business Act proved to be unpleasant surprises to investors and the global community. These are indeed difficult times. And difficult times require difficult choices to be made. Some of you may be concerned that Thailand may not be able to weather all these challenges. Some of you may fear that Thailand is turning her back on globalization.
That seems a very difficult task to work out in my opinion. It implies that such rules would need to be designed to treat broad issues, such as increases in financial system leverage or aggregate credit growth, rather than more limited sectoral issues. This may work well in some circumstances in which the financial excess is occurring broadly, but might not be very effective when the problem, while extreme, may be more narrowly based. Historical experience suggests that past bubbles in the United States that have threatened financial stability have taken many different forms and affected many different sectors of the economy. Often, the bubbles have occurred in response to some important innovation in the economy or the development of instruments that facilitated real estate lending to lowerquality borrowers. Examples of these include the development of the internet in the technology stock boom of the late 1990s, and subprime lending and mortgage securitization innovations prior to the financial crisis. These innovations, in turn, sparked changes in belief systems that turned out to be false – such as, the rise in home prices reinforced the view that housing is an excellent investment and that national home prices can never decline. When the assumption that widely supports a boom is revealed as false, the consequence is often a sharp reversal in behavior and prices as the boom deflates quickly. I think it is very hard to anticipate these episodes and put rules in place that would limit such excesses.

As a result, I suspect it would be difficult to get all the relevant regulators on board in a timely way to implement macroprudential tools successfully. In principle, the Financial Stability Oversight Council (FSOC) might be well placed to coordinate a response across different regulatory jurisdictions. But, I believe this is likely to prove difficult to do in practice. Each of the regulatory agencies guards its own authority and prerogatives, and may not always be responsive to pressure from other regulators or the U.S. Treasury. There is also the problem of responding to an emerging financial stability risk in a timely manner. First, the emerging problem needs to be identified. Then alternative policy responses need to be analyzed and debated. And, there is an understandable bias to start small and to escalate only as needed given the lack of understanding about how big an impact a particular tool may have on the economy. So, even if the FSOC could be effective in developing a consensus among the regulators, I wonder whether it could do this in a timely way. The housing boom in the U.S. that culminated in the financial crisis began in 2002 and 2003. By the time that it was broadly identified as an issue in 2005 and 2006, it might have been too late to do much to temper its effects, even with a sound macroprudential response by the regulatory community. In the remainder of my time, I will discuss two topics in more detail.
Against that background, a number of economists have recommended that inflation-targeting central banks should not only adjust interest rates on the basis of forecasts for inflation and the real economy but also should respond ”separately” to changes in assets prices. The debate on this subject has not been all that easy to follow, not least because the various conclusions from the debate are based on different models with their specific assumptions.2 However, I think you can say that the dominant view today, at least in the central bank world but – as I have understood it – also in academic circles, can be described as follows. A flexible inflation-targeting policy is a sufficiently good “tool” for dealing with problems that can arise via price developments in asset markets. A forward-looking central bank should keep in mind the long-term consequences of, for example, a prolonged rise in asset prices when making interest rate decisions, but there is no reason to take account of asset prices over and above their consequences for the ultimate objectives – price stability and real stability. On the other hand, in some situations it may be necessary for the central bank to attempt to look further into the future than normal in order to ”include” the impact on inflation and the real economy that asset price developments may give rise to in the long term. This is an important dimension of the flexibility in a flexible inflation-targeting policy.

This kind of speculation has likely pushed up house prices in above all Australia, but presumably also in the UK, the US and Ireland. BIS Review 88/2005  1  Another reason why the developments in the housing market and households’ high debt levels are unlikely to pose a threat to financial stability is that households’ ability to service debt is good. On the whole, households are judged to have financial margins that enable them to cope with rises in interest rates or a temporary loss in income without encountering payment difficulties. In addition, the banks’ earnings are good. Past experience also shows that it is unusual for the household sector to cause the banks’ particularly large loan losses. This is fairly natural in one sense. The decision to invest in a home is one of the most important a household makes, and when the decision has been taken the household is often prepared to make rather big sacrifices to meet its obligations. It is worth noting that during the crisis years at the beginning of the 1990s, losses on loans to the household sector accounted for only 7 per cent of the banks’ total loan losses. Instead, it was the commercial property market that accounted for the major losses in the banking system during the property crisis. This, too, has fairly natural explanations. An office building differs from a home in the sense that interest expenditure is intended to be covered by rental income, i.e. income that is generated by the investment itself.
The rule deals with provisioning for non-performing loans (NPL), taking into account the duration of the NPLs, and also calls for a specific buffer linked to the gap between provisions and NPLs. Safeguarding fiscal stability by expanding growth…competitiveness is key Economic and financial stability also require fiscal consolidation, so that the deficit progressively declines towards the Fiscal Compact target. The debt-to-GDP ratio is expected to reach a plateau and then start declining, as planned by the Government. Budget figures project the debt-to-GDP ratio at 73% in 2013, along with a deficit ratio of 2.7%. An exit from the Excessive Deficit Procedure is essential. BIS central bankers’ speeches  3  Indeed, the Fiscal Compact involves strict budgetary commitments and places limits on the Government’s deficit. Moreover, even in the absence of the obligations under the Fiscal Compact, public debt cannot be allowed to accumulate persistently as this could lead to unsustainable debt dynamics. GDP growth reduces the debt ratio first by automatically raising tax revenues and reducing Government spending. Second, it expands the denominator of the debt-to-GDP ratio. Obviously, resolving fiscal excess through an expanding GDP is less painful. To sustain economic growth, the economy needs to offer products and services with high value added and at competitive prices. The alignment of wages and productivity is crucial for competitiveness, particularly at a time when neighbouring economies are undergoing an internal devaluation.

In the four years since our last gathering, we were hit by a sequence of global shocks, unprecedented in their diversity and density of occurrence – first the pandemic, then the energy crisis, the full-fledged war on European soil and the refugee crisis, and all coupled with the long-standing and ongoing climate crisis. These shocks further triggered some major structural changes – the pandemic speeded up digitalization and changed the working habits all over the globe, but also led to severe global supply disruptions. On top of that, the war led to global trade and investment fragmentation,  1/4  BIS - Central bankers' speeches  and further exacerbated inflation pressures, thus forcing the central banks to aggressively raise interest rates. Quite a different world than when we last met here on a similar occasion. As stressful and demanding these recent years have been, for policymakers and economists they were also a lifetime opportunity for learning important lessons. In times like these we often say: "Don't waste a good crisis.". From each and every of them we can learn something and by doing that we can benefit. When it comes to these recent crises, I would highlight three key lessons we should take away – resilience, adaptability, and cooperation. First, on resilience. We live in an increasingly shock-prone environment in which unpredictability is becoming the norm. Who would have thought in 2019 that we would have a pandemics and major war in Europe in next three years?
Accordingly, we continue to estimate that the current high level of inflation will be temporary, a vision that is shared by market agents, as inflation expectations one and two years ahead have remained around 3 percent (figure 4). As I said at the beginning, the biggest news in several months comes from domestic demand and output, which posted a quite weaker performance than our forecasts. In the second quarter GDP grew 1.9 percent while domestic demand dropped 0.9 percent annually (figure 5). Expenditure’s poor performance permeated its every component, where worth noting was the fast deterioration of the most persistent ones, such as non-durable consumption and investment in construction and engineering works. By sectors, trade, especially wholesale, fell in annual terms, while a large number of manufacturing branches posted meager results. Only those most linked to the export sector show marginally more favorable figures. The evolution of expenditure has also driven a reduction in imports, causing a sharper adjustment to the current account (figure 6). In fact, while a year ago the annual deficit of the current account amounted to 4 percent of GDP and was expected to increase further, at the end of the second quarter it was at 2.4 percent of GDP and is now expected to end the year at 1.8 percent of GDP. This level, plus the peso depreciation and its effects on exports, mean that we can look at this variable’s future behavior with ease.

Trade liberalisation, political changes, technological advances, and a sharp reduction in transaction costs have fuelled a globalisation process that seems to have accelerated over the last 15-20 years. As a result, cross-border flows of goods, services and capital are growing at a markedly faster pace than world production. Few countries are benefiting as much as Norway – and losing as little – in the current environment of freer trade and increased cross-border labour mobility. Prices for goods we import are falling in relation to prices for goods we export. Norway’s terms-of-trade are improving. The Norwegian economy has experienced a strong positive income shock. Real national disposable income will increase by 25-30 per cent in the period from 2003 to 2006. The impact of the rise in oil and gas prices is particularly strong, but the terms-of-trade gains for the mainland economy have also been high. The situation in Norway differs from that of our Nordic neighbour countries. Sales of Swedish and Finnish high-tech products are growing strongly in volume terms, but prices are falling. Denmark has a diversified business sector, which is overall moving on a steady path. The terms-of-trade gains partly stem from a sharp rise in prices for oil, gas and other commodities. Strong global economic expansion in combination with rapid production growth in China, India and other newly integrated economies has led to a substantial rise in demand.