samchain/econo-pairs-v1 huggingface dataset:
In particular, due to the still exceptionally low interest rates, there is, however, a considerable risk that these imbalances continue to build up, and the risk of an abrupt correction over the medium term keeps increasing. Under these circumstances, the SNB is carefully monitoring the developments in mortgage and real estate markets. It periodically assesses the necessity to activate the countercyclical capital buffer. Issuance of the new banknote series in 2015 at the earliest In February 2012, the National Bank informed the public that the new banknote series would be postponed. Today, I would like to provide some background information on our decision. The National Bank is committed to putting banknotes into circulation that are state of the art in terms of both their design and their technological aspects. In order to meet this standard, such a project must be launched at an early stage. Integrating and combining security features involving new technologies that have not previously been used for banknotes presents a special challenge. Since the development phase for new security features is very long, launching a new series is likely to take several years for the technical feasibility assessment alone. Certain insights can only be gained during the actual serial production. 2  BIS central bankers’ speeches  The development of the new banknote series began in 2005 with a design competition.

Finally, where appropriate, the ECB can take direct action. I will later give several examples of these different roles. I would like to discuss now the three major components of the financial system, namely the institutions, the markets and the infrastructure. I will address both the wholesale and retail aspects of these three components, and will touch upon developments that can be deemed a success, as well as areas where more effort is required. Institutions Following the adoption of the single currency, the Financial Services Action Plan (FSAP) represented the next major stage in the integration process. Now that the FSAP is nearing completion, I see the post-FSAP period as a “window of opportunity” for further enhancing financial integration. At the same time, I am convinced that further progress is inextricably linked to the improvement of the regulatory and supervisory framework and the financial stability arrangements. In particular, institutional  BIS Review 18/2005  1  arrangements must respond to the need for greater cross-border cooperation, with a view to both supporting further integration and at the same time preserving financial stability. In the area of financial regulation and supervision, a key objective is to achieve a high degree of regulatory and supervisory convergence across countries. This will help reduce the compliance burden on financial institutions, thus addressing one of the largest remaining obstacles to enhanced cross-border activities.
Charles Bean: Sustaining the recovery Speech by Mr Charles Bean, Deputy Governor for Monetary Policy of the Bank of England, at the North East Chamber of Commerce President’s Club Talk, Darlington, 10 March 2014. *  *  *  Good afternoon! The past six years have been a difficult time for businesses across the country. But at last there are unmistakable signs that a robust recovery is under way. According to the present vintage of official data, output has risen in each of the past four quarters, taking the four-quarter growth rate to a healthy 2.7%, the highest since early 2008. The message from business surveys, such as those produced by the Chambers of Commerce, is that growth has, if anything, been even stronger. Over the same period, around 400 thousand more people have found work. And consumer price inflation has fallen back to just below our 2% target. So more growth, more jobs, and stable prices – a conjunction we haven’t seen since before the financial crisis. But though the economic climate has certainly improved, it is still early days. So today I want to discuss what needs to happen if that recovery is to be sustained and what the Bank’s Monetary Policy Committee will be doing to support it. To date, much of the recovery has been on the back of higher consumer spending and housing investment, stimulated by a revival in confidence and improved access to secured credit.

So we promised not even to think about raising Bank Rate until the unemployment rate had fallen to at least 7%, subject to the risks to price and financial stability being contained. Unemployment is not a comprehensive measure of economic slack. It ignores: the underutilisation of capacity inside businesses; the scope for labour force participation to rise as the labour market strengthens; and that some employees would prefer to work longer hours. But these different components of slack do broadly tend to move together. Now, as I indicated earlier, employment growth has been stronger and productivity growth weaker than anticipated last summer. That means the unemployment rate – currently 7.2% – is likely to reach that 7% threshold earlier than expected. So, although – and contrary to some newspaper reports – our August guidance still remains in place, we thought it helpful in February to say more on what would happen after the threshold was reached. In particular, recognising that the date at which Bank Rate would need to rise was drawing nearer, we thought we ought to say more not only about that, but also what would happen thereafter. At the current juncture, the central view on the Committee is that total slack in the economy is equivalent to around 1–1½% of GDP, though there is necessarily a lot of uncertainty  BIS central bankers’ speeches  3  around that estimate.
With respect to the agricultural sector, the favourable performance is, largely, on account of the affirmative Government agricultural policy that is supportive of expansion activities in the sector as well as good weather conditions. For instance, the continued improved performance in cash crops such as tobacco, sugar, cotton, groundnuts, floriculture and horticulture, among others, all point to increased economic activity in the medium term. In addition, improved investor confidence in the Government’s economic policies has also contributed to increased production in the sector. In the mining sector, the prospects are buoyant, mainly, due to favourable international metal prices as well as the increase in production due to the recapitalisation of the existing mines. Further, the coming on-stream of greenfield mines, such as Kansanshi and Lumwana, are expected to boost production in this sector. This will further enhance economic activity in the country since growth in the mining industry positively affects several sectors of the economy, such as manufacturing and construction. With regard to the tourism sector, the potential for growth is immense, as long as Government support to the sector through tax incentives and, most importantly, infrastructural development, such as improvement of access roads and airports, continues. If well nurtured, this sector could be a major employment generating and foreign exchange earner in the country.

Heng Swee Keat: How the Monetary Authority of Singapore had responded to the crisis and its challenges ahead Acceptance speech by Mr Heng Swee Keat, Managing Director of the Monetary Authority of Singapore, on receiving The Banker’s “Central Bank Governor of the Year in Asia-Pacific” Award, Singapore, 11 February 2011. *  *  *  On receiving the award and paying tribute to MAS’ staff 1. I am deeply honoured and humbled to receive the “Central Bank Governor of the Year in Asia-Pacific” Award by The Banker. 2. This award is a tribute to the collective contribution of the staff of the Monetary Authority of Singapore (MAS) who had worked hard to ensure that our monetary policy stance was appropriate for the economy during the downturn and the eventual recovery; and to foster a sound and progressive financial system, which overall stood well under stress during the global financial crisis. Several of our key management team members are here: Edward Robinson, Andrew Khoo and Ng Nam Sin. This is also a testament to the collaborative efforts with the industry to build a resilient financial sector. I thank members present here for the roundtable, and in particular Mr J Y Pillay, who as former MD of MAS, laid a strong foundation of sound central banking and regulation. How MAS had responded to the crisis 3. As a small and open economy with strong linkages with the rest of the world, Singapore was severely affected by the financial crisis through a sharp falloff in global trade.
The new PvP link will eliminate this principal risk by enabling the Thai Baht delivered in Thailand and the US dollar delivered in Hong Kong to be done at the same time in a coordinated manner within the Asian time zone. The linkage of the two RTGS systems will enhance integration of the financial markets in Thailand and Hong Kong, and provide a win-win solution that will bring significant benefits to the banks on both sides. For the banks in Thailand, the USD RTGS system in Hong Kong, with its low cost and operating hours that are fully synchronized with its Thai counterpart, will provide a highly flexible and cost-effective solution for them to manage the settlement risk of their US dollar FX transactions. There are more than 90 participating banks in the USD RTGS system in Hong Kong, of which 18 have significant presence in Thailand. This extensive network will provide ample USD liquidity and easily accessible correspondent banking service to the Thai banks for the PvP service. For banks in Hong Kong, the link will provide them with new correspondent banking opportunities of serving Thai banks in settling their US dollar FX transactions in Hong Kong. Over time, this new relationship will also create opportunities for commercial cooperation on other fronts.

The Committee cautioned that many banks underestimate their principal risk by not taking into account the duration of exposure between trade execution and final settlement, which may create significant concerns during times of market stress. A key recommendation of the Committee is that banks should reduce its principal risk as much as practicable by settling FX transactions through the use of financial market infrastructures that provide PvP arrangements. Banking supervisors worldwide are incorporating the updated guidance into their supervisory requirements. For example, banking supervisors in Hong Kong are now bringing their supervisory manuals in line with the guidance, and have reminded banks to take actions to address any gaps and deficiencies. The decision of the Bank of Thailand to implement the PvP link will certainly facilitate banks in Thailand to meet the Basel Committee’s recommended standards in good time. The new PvP link will be the third cross-border PvP link for Hong Kong’s USD RTGS system. The successful experience of the established links with Malaysia and Indonesia clearly indicates that the arrangement can be fully integrated into the operation of the partner RTGS systems, tailored to meet local requirements and made easily accessible by local users. Since 2010 when both links have been in operation, the combined average daily turnover has almost doubled, equivalent to an annual growth rate of close to 20%. Last month, the daily turnover generated by the two existing PvP links reached a new record of $ billion.
The debate regarding the extent to which monetary policy should attempt to counteract the unsustainable development of credit growth and asset prices – a policy often called “leaning against the wind” – has been spurred by the current crisis. Those who have doubts about such a policy maintain that it may entail an unnecessarily tight monetary policy, with costs in the form of a low utilisation of resources and low inflation, at the same time as monetary policy is deemed to be a blunt instrument to use against financial imbalances. According to this assessment, it would require excessively large and costly interest rate increases to prevent these imbalances from arising. Such imbalances, of course, frequently build up in  3  Lars E.O. Svensson discusses this in more depth in his speech ”Flexible inflation targeting: Lessons from the Financial Crisis”, held on 21 September 2009 at De Nederlansche Bank, Amsterdam. times of great optimism and excessive future confidence, and, in such a situation, increased interest rates may have a limited effect on lending and asset prices. It is entirely possible – and, in my opinion, perhaps even likely – that this assessment is correct, but I would like to emphasise that there exists a significant degree of uncertainty at this point in time. So far, research has not had much to say about the ability of monetary policy to counteract financial imbalances. Naturally, this observation also implies an argument against any policy that strongly advocates a monetary policy actively aimed at preventing financial imbalances.

Imported inflationary pressures remain subdued; inflation in Albania’s trading partners and the rise in commodity prices are at low levels, while the exchange rate is stable. Inflation expectations and the liquidity situation in the economy are in line with the low inflation rates for the period ahead. Indirect available data on economic activity signal for positive growth rates in the first months of the year. Aggregate demand improved, driven by both private domestic and foreign demand, while the consolidating fiscal policy pursued during this period did not contribute to an increase in demand. Incoming data for June have not changed our assessment on the performance of private consumption and investments. While these important components of aggregate demand were upward during the period, their performance remains weak. Their steady recovery continues to be impeded by uncertainties faced by households and businesses and reflected in the greater risk aversion of the real and financial sectors of the economy. The Bank of Albania expects further improvement in private consumption and investments for the rest of the year, reflecting, among others, its easing monetary policy. The pace of recovery of these two indicators will determine the short and medium-term dynamics of the country’s development. Data on public sector performance show a consolidating fiscal policy over the first five months of the year. This policy materialised in a budget deficit of about 68% lower than the previous year. The tightening fiscal policy is evident both on the revenue and expenditure side.
Effective fiscal measures are necessary in order to prevent monetary policy from bearing the brunt of these pressures, since this would have an excessive impact on the traded goods sector. The firmer the fiscal stance is at the peak of construction activity, the smaller is the increase in the real exchange rate that will inevitably will accompany it, with a correspondingly beneficial effect on current export and most competing industries. Ladies and Gentlemen The global economy is shrouded in uncertainty. A low rate of growth has been attained in most industrialised countries since 2001 and the recovery is slower than had been hoped. The war in Iraq heightens this uncertainty. Favourable economic conditions among main trading partner countries is important for Iceland’s terms of trade. A special cause for concern is therefore the deteriorating outlook in the euro region, which is important for Iceland’s foreign trade. The situation in Iceland is quite different. A prolonged growth phase was followed by one year, 2002, of a minor contraction, but at present we foresee a new period of growth when our task will be to maintain economic balance. Expectations of greater prosperity are already clearly visible. I would like to conclude by thanking the Office of the Prime Minister and other government authorities for their pleasant cooperation. I also thank the financial institutions for their good collaboration. Last but not least, I would like to thank the employees of the Central Bank for their fine work, without which the Bank could not have achieved such impressive results.

The adjustment of costs and relative prices, albeit with some delay compared with what would have been desirable, has ultimately placed the Spanish economy in a much more competitive position. The reduction in unit labour costs has allowed virtually all of the losses in competitiveness that had built up in the first ten years of the euro to be absorbed. The process has not, however, been free from difficulties, since it was initially based, as I stated earlier, almost exclusively on job destruction. From 2010, the contribution of the adjustment in wages progressively became more prominent, a trajectory which stepped up following the 2012 labour market reform. The gains in competitiveness and Spanish firms’ greater export-geared thrust are providing for the growing penetration of our products in foreign markets, against a background of increased geographical diversification and higher goods and services exports. The marked decline in imports during these years also reflects the gains in competitiveness, although the weakness of domestic demand has likewise helped contain purchases from the rest of the world. Set against these developments, the least favourable aspect of our foreign trade continues to be the high dependence on imported energy. As a result of the foregoing, our economy posted – for the first time since 1997 – a balance of payments surplus, i.e. net external lending, of 1.5% of GDP. This trajectory will foreseeably continue over the coming years, meaning that Spain’s high level of foreign debt will be declining.
The foreign banks do not themselves usually have any natural access to Swedish kronor. They therefore fund part of their lending in kronor by borrowing kronor in the short-term from other Swedish banks. However, the risk is that foreign investors will leave the Swedish market if problems arise, as the Swedish krona is a small currency. There are also reasons for believing that the number of foreign banks that act as counterparties to the Swedish banks is limited. Moreover, participating in the swap market is often not a central part of the operations of the foreign banks. This in turn has consequences for liquidity and pricing on the swap market. We saw an example of this when the last extraordinary loan that the Riksbank had offered the banks during the crisis matured in the autumn of 2010. Uncertainty then arose on the money market, and consequently swap counterparties abroad who had acquired short-term funding in kronor through Swedish banks became less willing to enter into swap agreements with Swedish banks. It thus became both more expensive and more difficult for Swedish banks to convert foreign currency into Swedish kronor at long maturities. To a certain extent, Swedish banks also act as counterparties to each other in the swaps. However, from the perspective of the Swedish banking system this is really only a matter of redistributing the maturity risk. The fact that the banks act as counterparties to each other also forges the links within the Swedish banking system even tighter.

This progress is the result of policy improvements that have reduced the imbalances and fragilities that fed past boom-bust cycles; greater openness to international trade and deeper economic and financial integration; and, for commodity exporters, some good fortune in the form of strong prices. Nonetheless, while trend growth in the emerging market economies has substantially outpaced that in the mature economies, the emerging market economies generally continue to accelerate and decelerate in step with the mature economies. So much for decoupling. This continuing close correlation reflects the fact that stronger emerging market growth has been built upon deeper economic and financial integration with the mature economies...as well as with each other. Against that backdrop, spillovers from the mature economies clearly played a part in the recent slowdown across the emerging world. But something more appears to be going on as well. As a general matter, the emerging market economies appear to be operating closer to capacity than the mature economies. Emerging market economy labor markets generally look somewhat tight by historical standards, and while emerging market inflation is down, it is still an issue for a number of countries. This suggests that capacity constraints and structural issues have been playing a role in the recent sluggishness, and that somewhat slower growth may be part of the new normal for the emerging market economies as well. How much slower will in part depend on policy choices in the emerging market economies.
Experience shows that banks’ losses on residential mortgage loans, which are highly collateralised, are lower than on corporate loans. Risk weights are therefore lower for residential mortgage loans than for corporate loans. The financial crisis has revealed shortcomings in the definition of the minimum Tier 1 capital requirement and changes will be made in both the numerator and the denominator. The quality of Tier 1 capital will be subject to stricter requirements. Risk weights for some exposures will be higher, with improved risk coverage for trading book and off-balance sheet exposures. The minimum Tier 1 capital ratio may also be changed. There is no simple answer to the question of the correct capital level for a bank. In order to quantify risk, banks have developed risk models. Risk can be calculated using advanced methods, but the figures on which the calculation is based too often reflect the current economic situation. The possibility that the situation can change abruptly is not sufficiently taken into account. It became evident during the financial crisis that risk measured beforehand in a model can differ substantially from the actual outcome observed. Due to risk model uncertainty, many investors prefer to take account of a bank’s ratio of equity capital to total assets. The Basel Committee has proposed the introduction of such a simple, non-risk based measure, i.e. a maximum leverage ratio requirement (minimum equity ratio requirement). A minimum equity ratio requirement also limits the number of times banks can leverage their equity.

The interlinkages between financial institutions amplify risk in the financial system. In our assessments, it is important to be aware of any build-up of systemic risk. Residential mortgages provide a good illustration of the difference between the individual risk for a bank and systemic risk. Even during the 1990s banking crisis, Norwegian banks’ losses on residential mortgages were low. Today’s low risk weights for residential mortgages provide strong incentives for banks to extend these mortgage loans. However, housing market fluctuations, which go hand in hand with shifts in saving behaviour, are nonetheless a source of business cycle fluctuations and substantial losses when banks have to write off loans to firms selling goods and services to households. 8  BIS Review 131/2009  The Norwegian housing market is vulnerable. Both a high level of tax incentives for house ownership and a large volume of adjustable-rate mortgages contribute to wide fluctuations in activity and prices. 8 The rise in house prices in the past two decades has also been very strong compared with countries where housing bubbles have burst. To finance strong growth in residential mortgages, banks have to rely to a great extent on borrowing, thereby increasing their vulnerability to a liquidity squeeze. Thus, low risk weights for residential mortgages also lead to higher liquidity risk in the banking system as a whole. It is important to be aware of the similarities between developments in the Norwegian housing market and bank lending and developments in the countries most severely affected by the crisis.