samchain/econo-pairs-v1 huggingface dataset:
This “bail in” principle is embodied in the proposal of the Bank Recovery and Resolution Directive which was approved by the ECOFIN last June; we expect that it will be approved shortly by the European Parliament. Obviously, this Directive will enter into force in all EU member countries, independently of their participation in the Banking Union. However, the Regulation establishing the framework for a Single Resolution Mechanism or Authority and a Single Bank Resolution Fund is just beginning to be negotiated, after, as I said before, a draft was presented by the Commission in July. Ideally, the Regulation should be in force by January 2015, but we all know that there are difficult political and technical problems, in particular in relation to the Single Resolution Fund and the role of the European Stability Mechanism. Deposit guarantee scheme A functioning banking union also needs to properly address depositors’ protection. A first step was made in the middle of the crisis to harmonise coverage of European deposit guarantee schemes up to € per deposit. Later on, the Commission presented in July 2010 a Draft Directive on deposit guarantee schemes. This reform mainly deals with harmonisation and simplification of protected deposits, faster payout and improved financing of schemes. After a controversial first reading in the European Parliament in February last year, the legislative process was delayed pending agreement being reached for the Resolution Directive. At a later stage, we will have also to move on this.

(ii)  The preparation of the organisational framework, which will include the practical arrangements for cooperation between the ECB and the National Authorities, within six months of the entry into force of the Single Mechanism Regulation. (iii)  The drafting of the ECB Supervisory Manual, which will address procedural and methodological matters, including the risk assessment system that the Single Mechanism will implement, on-site inspections and other processes that form an integral part of the supervisory review process. (iv)  The introduction of the Technical Standards on prudential and accounting Supervisory Reporting, which will allow a significant degree of cross-country consistency to be achieved regarding the periodic confidential reports that banks file with supervisory authorities. (v)  A comprehensive assessment of the credit institutions of the participating Member States, including a balance-sheet assessment at a given point in time. I will elaborate on this in a moment. Integrating seventeen national supervision systems (some of them made up by two authorities) along with the ECB in order to set up the Single Supervisory Mechanism is, indeed, a major challenge. The centrepiece of this integration has been the concept of Joint Supervisory Teams (JSTs), which are going to take care of the direct supervision of the significant banks. These teams will be made up of supervisors from the ECB and from the National Authorities; under the guidance of an ECB coordinator, they will be entrusted with the supervision of each of the  BIS central bankers’ speeches  3  significant banks.
This calls for an iterative approach to stress-testing in which banks’ first-  11  Knight (1921). 12  For example, Epstein and Wang (1994). 13  FSA (2008). See also Counterparty Risk Management Group (2008) for other useful suggestions. 8  BIS Review 18/2009  round results and management actions influence second-round stresses facing firms – for example, the effects of asset sales and liquidity hoarding. In effect, what we would then have is a hybrid stress test-cum-war game. This will better enable firms to assess the spillover and contagion consequences of their own and others’ actions, so helping internalise to some degree the network externality problems which have been prevalent through this crisis. This dynamic, collective approach to stress-testing has already been attempted in one or two countries; it would be desirable if it became standard practice more widely. The recent Geneva report on financial regulation proposes greater use of such systemic stress testing. From the authorities’ side, the Bank is developing a framework which will enable us to capture such network effects – for example, the effects of liquidity contagion and asset price disposals – on other firms in the network. The results from that framework could be used alongside firm-specific results to gauge network risks. 14 •  Fourth, translation of results into firms’ liquidity and capital planning. The results from these exercises need to influence management outcomes if they are to be useful; the internal incentive problem needs to be overcome.

I argued then that it made no sense to use these descriptions because each member of the Committee had the same objective. Members of the MPC cannot entertain closet views about their desired inflation rate because they will be held personally accountable for their judgments about the level of interest rates necessary to meet the inflation target. No matter. A good argument will never beat a good headline. Hawks and doves it was, though there were also references to ostriches, foxes and hedgehogs, and headless chickens. No doubt there were even less flattering comparisons made in private. Still, unlike England football managers, we have not – yet – been compared with root vegetables. And we have made progress. As Chart 4 shows, press references to “hawks and doves” reached a peak in mid-1998 and have declined markedly since. As I predicted in a speech in May last year, “as circumstances change, it is easy to imagine that the ‘hawks’ shall be ‘doves’ and the ‘doves’ shall be ‘hawks’”. But we were also criticised for not being open enough about differences of view. The early minutes were thought to be too bland and to conceal expressions of individual points of view. Much of that criticism was indeed fair. And we have tried to respond by making the minutes a more accurate expression of the range of points of view that are expressed at the meeting.
I myself am a member of the Economic and Financial Committee (EFC), where senior officials from the finance ministries and deputy governors of the central banks in the EU discuss economic issues. The fact that there are now 25 countries instead of 15 and therefore considerably more at the table implies changes, of course. On the one hand, there is less scope for each country - the central banks, for example, don’t participate as often in the EFC after the enlargement and the speaking time per person places greater demands on concise, brief contributions. On the other hand the discussion has been vitalised by the new countries, which in some ways are less bound by tradition and which have new angles of approach, sometimes for the simple reason that many leading decision-makers in the new member states are much younger than their colleagues in the old countries. An important point is that it is not just the new member states that have to learn from the old ones; they can also give the old countries something to think about. For example, several of the former planned economies today are in some areas better adapted for EMU than the present EU countries. Their wages and prices have been more in line with their economic performance, which could be one reason, for example, that the Baltic States have been able to pull through the Russian crisis and the breakdown of the Russian market with only a brief loss of growth.

4/7  BIS central bankers' speeches  The second occasion came later in 2012 when we had to prevent a self-fulfilling bad outcome that threatened to occur as a result of the sovereign debt crisis. Investors had begun pricing redenomination risk into sovereign debt and interbank markets, as they worried about the possible break-up of the euro area. However, as I said earlier, the pricing of such risk led to a breakdown of money markets, a fragmentation of banking systems along national lines and threatened the unity of monetary policy transmission across the euro area. Moreover, expectations fuelled a vicious cycle. Tightening monetary conditions in countries affected by perceptions of redenomination risk put downward pressure on economic activity, exacerbating the perceived risk. Such moves are a classic example of expectations leading towards an outcome that is non-optimal for social welfare. This is why we announced Outright Monetary Transactions (OMTs) as an instrument that can support our monetary policy. The idea was for the ECB to purchase the sovereign bonds of countries affected by panic-based redenomination risk. By breaking the link between perceptions and downward pressure on economic activity, OMTs would aid in restoring the proper transmission of monetary policy across the whole euro area and support the recovery. OMTs were not used. That the ECB had the tool at its disposal was sufficient to anchor expectations at the “good” outcome. Once unwarranted fears of redenomination were removed, sovereign spreads fell and banks were once again able to raise debt and equity funding.
Ardian Fullani: Overview of Albania’s latest economic and financial developments Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the joint press conference of the IMF mission, Albanian Ministry of Finance and Bank of Albania, Tirana, 2 October 2012. *  *  *  Dear journalists, During the last two weeks, intensive discussions have taken place between the IMF mission and Albanian authorities. As a key player in drafting and implementing macroeconomic policies, the Bank of Albania has been active in these discussions, sharing its vision on current and expected developments in the Albanian economy and concerns surrounding it, as well as optimum measures to address them. The Albanian economy is increasingly facing the economic growth challenge. While the Albanian economy enjoys consolidated macroeconomic stability and sound financial foundations, aggregate demand has been weak during the first nine months of 2012. Both domestic demand and foreign one suffer from high uncertainty, relatively tight lending standards, and limited space for discretionary and stimulating policies. In the global context, the Albanian economy encountered a difficult setting, characterised by economic growth problems, high risk premiums in financial markets and decreased appetite of these markets to invest in emerging economies. In the domestic context, the economy continues to face relatively low consumption and private investments, as well as an absent stimulus by the public sector as a result of the increasing orientation of the fiscal policy towards maintaining long-term stability of the public debt.

However, the experience of the subsequent waves of the pandemic has proven that restrictions are impacting demand increasingly less, whereas supply contracts when enterprises are forced to suspend operations. We consider that restrictions rather have a proinflationary influence now. The industries that directly depend on restrictions, primarily services, will be affected most considerably. The Government has introduced support measures to aid the most vulnerable industries, first of all small and medium-sized enterprises and their employees. The Bank of Russia, on its part, has allocated a limit of 60 billion rubles within a special 4% refinancing programme for the banks that would issue loans on preferential terms to small and mediumsized enterprises affected by restrictions. We have also recommended that banks and microfinance organisations should approve 3/4  BIS central bankers' speeches  restructuring applications for those individuals and entrepreneurs who need this. I will now speak about our future decisions. It has become more probable that the level of the key rate will be higher, and the period during which the key rate might stay at this elevated level will be longer than we assumed in our previous forecast. According to our baseline forecast, the key rate will average 7.3–8.3% per annum next year, and 5.5–6.5% per annum in 2023. In other words, the key rate will return to its long-term neutral range no earlier than in the middle of 2023. Thank you for attention. 4/4  BIS central bankers' speeches
But the severity of the crisis increased dramatically following the failure of Lehman Brothers in the autumn of 2008. Confidence in the very essence of banking – as well as in individual financial institutions – was shaken to its core and the most severe banking crisis for almost a century was triggered. As we now know, this led to a deep and highly synchronised global recession. Output in virtually every corner of the world fell sharply. Global trade flows contracted by a staggering 15% in the two quarters following the failure of Lehmans. Over the same period, output at home is estimated to have fallen by 4 1/4% – the largest fall in UK GDP over a two-quarter period since quarterly records began. The speed and severity of the downturn cannot be explained solely by the tightening in credit conditions. The impact of the banking crisis was greatly amplified by the accompanying collapse in business and household confidence. Firms’ concerns about their ability to access the working capital needed to run their businesses was compounded by the bleak and uncertain prospects for demand. In response, production was slashed and business spending was severely curtailed. Stock levels were run down at an unprecedented pace, as companies met demand from existing inventories and economised on working capital. Faced with growing spare capacity there was little incentive for businesses to invest in new plant and machinery, and capital expenditure contracted by almost 20% in the first six months of 2009 alone.

And deposit protection schemes ensure that transactional balances up to £ remain interchangeable with cash even if that happens. This model is relatively recent. It was not ever thus. And as we think about new forms of digital payments, it is important that we do not take this for granted. A large number of financial crises of the last century have featured a loss of confidence in the reliability and safety of the money people rely on for transactions. Money that is usually considered safe. Money that people normally do not think about very much. In the emerging market financial crises of the 1990s and early 2000s, people and businesses lost faith in the state’s ability to maintain the value of their local currency against the dollar4. Other crises have had at their heart a loss of confidence in the ability of private issuers – commercial banks – to fulfil their IOUs with depositors and lenders and maintain the interchangeability and reliability of the money they issued. Think of the Great Depression-era bank run depicted in ‘It’s a Wonderful Life’. Think of the Northern Rock example – where worries about the Northern Rock’s funding led to a crisis of confidence; first from wholesale lenders and then from retail depositors – who suddenly worried that their deposits would no longer be interchangeable with cash or other bank deposits. Remember the queues outside of branches in 2007, as depositors rushed to exchange their deposits before – they believed – it might be too late5.
Joseph Yam: The link - 20 years on Graduate talk by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority; at the Alumni Link Launching Ceremony, at the Open University of Hong Kong, Hong Kong, 14 October 2003. *  *  *  Professor Tam, Ladies and Gentlemen, It is always a pleasure to attend Open University events. It is a particular pleasure to be here to participate in the launch of Alumni Link in the presence of so many fellow graduates. Alumni Link will provide information, organise events, and help nurture a sense of community among graduates of the Open University of Hong Kong. It will also, I note, play its part in stimulating the Hong Kong economy by arranging discounts and other privileges. So Alumni Link is very obviously a good thing. This new facility underlines two fundamental principles behind the work of the Open University: first, that education is a lifelong process, which does not end with final examinations or the award of degrees; and secondly, that education is a matter of teamwork and fellowship, and not a solitary pursuit. I congratulate all those involved on having established this useful and imaginative resource. I should also like to take this opportunity to pay tribute to the work of Professor Tam Sheung-wai, who will, I understand, be retiring as President next month. Professor Tam has made enormous contributions to the development of open and distance education within Hong Kong and beyond.

I have already mentioned the doubtful argument about changing the Link to jump-start the economy, and there have been other ideas put forward - all of them well intentioned - for example, that the Government should dig further into the foreign reserves to stimulate growth. One very specific suggestion which comes up periodically, and which gained currency once again over the summer, is the proposal that the HKMA should relax the guideline that says that banks should not lend more than 70% of the value of a residential property for which a mortgage loan is taken out: this is known as the 70% loan-to-value guideline. The idea behind the suggestion was that relaxation of the guideline would make it possible for prospective homeowners to borrow more and that this would help stimulate property purchases  4  BIS Review 44/2003  and thus stabilise the property market. I think the idea has now passed, partly because the property market appears to have stabilised, but mainly because it seems that public opinion accepted the reasoning that we and others put forward for maintaining the guideline. Setting aside the question of whether relaxing the guideline would have had any effect at all on demand for property, let us go through this reasoning. It is, in fact, quite simple. The guideline exists to prevent banks from excessively exposing themselves to the risks posed by an extremely volatile property market.
They show the MPC's central projections at Year 2 and Year 3 respectively for CPI inflation on the vertical axis against those for spare capacity (the opposite of excess demand) on the horizontal axis from successive Inflation Reports between August 2016 and November 2017.18 Chart 10: MPC managed the trade-off19 a) Trade-off in successive Inflation Report projections at Year 2 3.0 November 2016  Inflation (%)  February 2017 2.5  August 2016  November 2017 May 2017 August 2017  -1.5  -1.0 August 2016, no stimulus  Excess demand (%)  2.0  -0.5  0.0  0.5  1.0  1.5  Preferred trade-off if λ=0.1  1.5  Preferred trade-off if λ=1 1.0  b) Trade-off in successive Inflation Report projections at Year 3 3.0  Inflation (%)  August 2016 November 2016  -1.0  August 2016, no stimulus  2.5 May 2017 February 2017 November 2017 August 2017 2.0 -0.5 0.0  Excess demand (%) 0.5  1.0 Preferred trade-off if λ=0.1  1.5  Preferred trade-off if λ=1 1.0  18  The projections are conditioned on the market yield curves prevailing at the time the forecasts were made. Each observation shows the central projection for spare capacity or excess demand at the end of the second / third year of the forecast period on the horizontal axis against the central projection for four-quarter CPI inflation at Year 2 / 3 on the vertical axis from successive Inflation Reports.

Much hinges on the speed with which domestic confidence returns. As is entirely appropriate, there is a debate at the MPC over the relative merits of near term stimulus to reinforce the expected recovery in UK growth and inflation. 19  All speeches are available online at www.bankofengland.co.uk/news/speeches  19  On the one hand, there is a modest but rising degree of spare capacity in the UK and core inflation remains subdued. There are downside risks from global growth and the possibility that uncertainties over future trading relationships could remain entrenched. With the relatively limited space to cut Bank Rate, if evidence builds that the weakness in activity could persist, risk management considerations would favour a relatively prompt response. On the other hand, global growth is showing tentative signs of stabilising. The global manufacturing PMI has returned to expansionary territory, helping push the composite to a six month high in December. Past global monetary policy stimulus is gaining traction and global financial conditions are supportive. Early indicators, from financial market prices and the limited number of business surveys since the election, suggest that there has been some reduction in Brexit-related and domestic policy uncertainties. The labour market remains tight and domestically generated inflation remains generally firm. And total monetary policy space is larger than conventional measures would suggest. In the coming weeks, the MPC will watch closely surveys of business and consumer confidence (including intelligence from our Agents) as well as global developments. We will also undertake our annual supply stocktake.
For example, during the periods of export booms particularly in the early 1950s, the fixed exchange rate regime worked well, as foreign exchange earnings, which arose due to external factors rather than domestic export promoting policies, were not only sufficient to meet current expenditure but also helped build up foreign reserves so that currency peg could be maintained without foreign grants or borrowings. The necessary condition for any country to maintain a currency peg with a strong reserve currency like sterling pound on a sustainable basis is the country’s ability to earn sufficient foreign exchange. In other words, such a country would require a strong set of export oriented policies. In technical terminology, a country should run at least a balanced current account in the balance of payments on a long-term basis for it to be 5  able to maintain a peg with a strong foreign currency. Economies like Japan early on, and later Hong Kong, Singapore, Taiwan and even China, given their strong export oriented policies, were able not only to generate current account surpluses on sustainable basis, but as a result, also saw the value of their currencies appreciating against major currencies like the sterling pound and the US dollar. During the period of Sri Lanka’s fixed exchange rate regime, successive governments did not pursue export oriented policies continuously. There were short episodes where policies focused on export promotion, but there were more times of policy reversals towards encouraging import substitution and inward looking polices.

When countries experience hyperinflation, domestic prices of goods and services will rise every minute. In such a situation, no one will 1 I would like to note that the views expressed in this oration are my own as an economist and do not  necessarily reflect the views of the Central Bank of Sri Lanka. I also would like to acknowledge the technical support received in preparing the oration from Dr Chandranath Amarasekara and his team at the Economic Research Department of the Central Bank of Sri Lanka. 1  want to hold the local currency, and people will rush straight from the bank to the shops to buy goods, fearing that their currency holding will lose value along the way. In fact, the banking system itself will collapse. As people lose faith in local currency, the barter system, or the exchange of goods for goods or services will become the norm, making transactions significantly more difficult. Hyperinflation will also cause adverse redistributive effects, destroying real value of middle class savings in local currency and real incomes of fixed income earners such as workers and pensioners. One can read horror stories of hyperinflation in Germany and Australia in the 1920s, and more recently in several Latin American countries and also in countries like Zimbabwe. The episode of hyperinflation in the inter-war Germany is said to have facilitated the rise of Hitler and the global destruction that followed.