samchain/econo-pairs-v1 huggingface dataset:
One measure of this is income dispersion, in 2003, the per capita GDP of Japan was about $ while that in the Philippines was less than $ Real convergence matters because complementarity and similarity in production and economic structure reduces the likelihood of so-called "asymmetric" shocks, or shocks that hit all member states in a different way calling for different monetary policy responses - something that is not possible under a monetary union. For emerging market economies, financial disturbances are an increasingly prevalent source of asymmetric shocks: the best illustration of this in recent years is the Asian financial crisis, and the differing effects - and the variety of responses - among the economies in the region may, for some, be the main argument against union. It is tempting to conclude that the lack of nominal and real convergence among Asian economies is a serious barrier to a viable Asian monetary union. However, it has been suggested that full convergence is not a necessary pre-requisite to successful monetary union, and that the act of forming a monetary union will, by itself, force greater convergence among its members. As Governor Noyer has just said in his presentation, the introduction of the euro has increased the correlation between the business cycles of European economies, and has led to a more homogenous monetary transmission mechanism.

We are therefore determined to double up our efforts to increase the use of electronic channels to send money. In November last year, Bank Negara Malaysia amended existing regulations to allow money services companies to complete customer verifications electronically, without the need for customers to visit a money services business premise. This is an important change that removed an existing hurdle for companies to support an end-to-end electronic process for performing remittance transactions. We expect this change to create significant momentum for further growth in electronic remittances, in particular among foreign workers. Today, foreign workers in several parts of Malaysia may still face difficulties getting to a MSB office to complete the customer due diligence process. Yet, nine in ten foreign workers have smartphones and use them to access the internet. With technology, we can tap into these alternative access channels to enable e-remittances. Two other important development are also coming together to encourage the use of electronic remittances. The first is the initiative by the Government to require employers of foreign workers to pay their salaries into bank accounts. This removes the need to deliver cash to remittance service providers. The second is the development of an interactive mobile application by the MSB industry that allows users to identify licensed MSB providers, compare services and communicate directly with MSB companies.
As we have seen in the last few years, the deterioration of the perceived solvency of financial institutions located in specific countries within the monetary union can have spillover effects across the financial sector as a whole, can contribute to a disorderly functioning of wholesale markets and can put great stress on the public finances of the countries affected. Consequently, the soundness of financial institutions is of systemic importance within the monetary union and should therefore be preserved through the appropriate integrated crisis prevention and resolution mechanism. Against this background, a consensus has emerged of unprecedented strength on the need to take steps to create a banking union. The first step would be the adoption of a single supervisory mechanism. A regulatory proposal for such a mechanism has been released this week by the European Commission. The proposal has three main features. First, the assignment to the ECB of supervisory responsibilities for all banks in the euro area, and possibly also for banks in countries outside the euro zone willing to enter into cooperation arrangements with the ECB. Second, the adoption of mechanisms to ensure that the ECB’s supervisory tasks are strictly separated from the conduct of its monetary policy. Third, the involvement of national supervisors in the preparation and implementation of decisions. The proposal is in my view well founded. In particular, it makes sense to subject all financial institutions in the euro area to a single supervisory mechanism.

Fernando Restoy: Remarks on banking union Remarks by Mr Fernando Restoy, Deputy Governor of the Bank of Spain, at the round table “Systemic risk and securities markets”, II International Conference on Securities Markets, held by the Comisión Nacional del Mercado de Valores (CNMV), Madrid, 14 September 2012. *  *  *  Let me first thank the organisers for their kind invitation to participate in this event held by the CNMV, of which I was Vice-Chairman from 2008 until my recent appointment in the Banco de España. I also had the privilege to participate in the highly successful conference organised in 2011. A glance at the quality of the papers and speakers in the programme of this conference is sufficient to confirm that the organisers have succeeded in maintaining the high standards achieved last year. Our Chairman today, Oscar Arce, deserves much credit for that. I am sure that the CNMV’s new top management – who will be taking over in a few weeks – will continue to support this event, as the President Julio Segura and myself did the first two editions. The current financial crisis has shown up numerous deficiencies in the functioning of the global economic and financial system. Many of those deficiencies are the consequence of imperfect rules, policy mistakes and inappropriate conduct by private agents. Some of those deficiencies are the subject of an on-going policy debate and of regulatory reform which, with varying degrees of ambition, is taking place in different jurisdictions.
MONETARY POLICY REPORT PRESENTATION BEFORE THE FINANCE COMMITTEE OF THE HONORABLE SENATE OF THE REPUBLIC∗  Mario Marcel Governor Central Bank of Chile 2 April 2018  See the March 2018 Monetary Policy Report at http://www.bcentral.cl. ∗  Mr. President of the Senate’s Finance Commission, senator Juan Pablo Letelier, senators members of this Committee, ladies, gentlemen, I am grateful for your invitation to present the vision of the Board of the Central Bank of Chile on the latest economic developments, their perspectives and implications for monetary policy. This vision is contained in detail in our Monetary Policy Report (the Report) of March 2018. First and foremost, let me introduce to you our new Board member Mr. Alberto Naudon, who became part of the Board only a few days back, after being unanimously recommended by this Committee and then his appointment approved, also unanimously, by the Senate. It is worth noting that this is the first time we present the Report under the new monetary policy scheme that we began this year and under which we have tied its release with the monetary policy meetings. With these changes, we have significantly increased the information we deliver, establishing its relationship with monetary policy decisions more clearly. The greater transparency required by this scheme makes it necessary for the dates of our Meetings and the subsequent publication of the Monetary Policy Report to be communicated to the market well in advance, so that there are no surprises in this regard.

For the same reason, as was the case with this Report, the time span between the Report’s publication and this presentation has been a little longer. Please note that we see this delay as a one-time thing and we are willing to attend this Committee to present our Monetary Policy Reports with all the haste that you may require. We have used this opportunity to add some information that came after the Report’s cutoff date to this presentation, plus some issues that have come up in the days following its publication. Thus, we look forward to an exchange with the Committee as enriching as it can be. Now let me share with you the main conclusions and projections of our Report. First, it is important to stress that this Report clearly marks a turning point in the business cycle that translates into higher growth and lower risks to both activity and inflation. The National Accounts figures we published two weeks ago showed two important developments. On one hand, the economy was quite weak between late 2016 and early 2017. In retrospect, these figures are consistent with other recent indicators such as labor market fundamentals, which were some of the reasons why we lowered the monetary policy rate (MPR) by 100 basis points, thus significantly boosting the monetary impulse in the first half of 2017.
This relationship between funding and market liquidity is also evident when we examine the relationship between the dispersion of Treasury yields relative to a fitted Treasury yield curve and Treasury bid-ask spreads (Exhibit 12). Large dispersions of Treasury yields from what is implied by a fitted yield curve may indicate funding liquidity strains, as market participants find it more difficult to arbitrage relative price distortions. 7 Again, we see a strong correlation between the sizes of the yield curve errors and of bid-ask spreads during a financial crisis, but not during non-crisis periods. The drop in the availability of dealer-funded repo financing also appears to have led to less efficient arbitrage between closely related asset pairs, such as on-the-run and off-the run Treasuries, corporate bonds and credit default swaps, and Treasuries versus interest rate swaps. The price differences or yield spreads between the more capital intensive and less capital intensive assets have widened. For example, we can see this in the difference between the fixed-rate paid on a 10-year interest rate swap and the secondary market yield on a 10-year Treasury note (Exhibit 13). Whereas historically this spread has been positive – reflecting the fact that an interest rate swap has more credit risk than a Treasury security – the spread has been negative since September 2015. Market participants suggest that this shift has occurred because the higher capital requirements have made it unattractive for dealers to arbitrage away this dislocation.

With the benefit of hindsight, we can see the introduction of the euro ten years ago as a prescient, forward-looking response by Europe to the challenges and risks of the present world. I would now like to consider my third question: What challenges lie ahead for the single currency? Despite all the achievements, this is not the time for complacency. There are important challenges. The most important and most direct is of course to tackle the financial market turbulence and the economic downturn. But there are also challenges which go beyond tackling the current situation. But they are related to it in part. I would like to consider three challenges briefly: the securing of sound government finances, structural reforms in the euro countries and the expansion of the euro area. Securing of sound government finances Sound government finances are critical. They complement the ECB’s stability-oriented monetary policy. They prevent the fiscal policies of one country in the euro area from having  6  BIS Review 16/2009  negative effects on other countries. Beyond that, sound finances make a national economy more flexible. They are part of a growth-friendly environment. The fiscal policies of the Member States should promote the smooth functioning of Europe’s Economic and Monetary Union. The Stability and Growth Pact is the instrument to guarantee this. The Pact is the most important pillar in the economic union. It supports the monetary union. The strict and credible implementation of the Stability and Growth Pact is essential.
After all, there is always a small risk that things can go badly wrong. If one is content to refer to this, one could justify more or less any type of policy. What one must try to make sufficiently credible is the risk that things will go badly wrong is sufficiently large that it needs to be addressed. One must also be able to show that the proposed changes have sufficient effect on the risks in relation to the costs of the measures taken. It is not enough, in my opinion, to express concern for high indebtedness and refer to the financial crisis. One must, as far as possible, make an assessment of households’ entire  12  This alludes to a book on financial crises from an historical perspective by Reinhart and Rogoff (2009), This Time is Different, Princeton University Press. The title of the book is ironic and refers to the fact that immediately prior to each financial crisis there has been a tendency to regard the current situation as special and quite different from previous crises. However, many who refer to the book appear to have missed the fact that monetary policy has a very obscure rule as reason for financial crises there. BIS central bankers’ speeches  5  financial situation, including their balance sheets with both assets and liabilities, as well as their debt-servicing ability, on the basis of the facts and analyses at hand.

And recognising we are secular, not religious, regulators, who cannot opine on Shari’ah compliance,9 and equally cannot disapply regulations either.10 To deepen our international engagement further, the Bank of England joined the Islamic Finance Stability Board as an Associate Member in 2015.11 That approach has paid off. Today, the UK is home to four exclusively Islamic banks with assets of over £ more than a dozen conventional banks offering Shari’ah compliant services, a host of investment firms, and a thriving advisory sector. Islamic finance and Covid Of course there have been many challenges over the years – but none perhaps quite as serious as the Covid pandemic. The human cost has been enormous – as has the economic impact,  7  https://www.bankofengland.co.uk/-/media/boe/files/speech/2003/edward-george-islamic-home-financeseminar.pdf?la=en&hash=D2C5BC0A2C057ACCD9A8F40F74A7EBB742FE6C58. 8 https://www.isfin.net/sites/isfin.com/files/islamic_finance_in_the_uk.pdf. 9 This point was made in the judges’ commentary to the 2003/2004 court cases of Beximco and others vs Shamil Bank of Bahrain: http://www.bailii.org/ew/cases/EWCA/Civ/2004/19.html. 10 So, for example, the basis of any assertion that a product is Shari’ah compliant must be communicated to the customer, as must all decision-relevant information, in a way that is clear, fair, and not misleading. 11 https://www.ifsb.org/membership_org.php?org=1. 5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  particularly in parts of the Muslim world. I know that some worry that Covid might slow the pace of growth in Islamic finance, as economic activity declines, and market participants revert to more conventional tools to meet the daunting financing needs of the crisis.
However, if developments in the real economy are to be satisfactory over time, real wage growth must be adapted to underlying productivity growth. A precondition for countering a possible downturn by means of monetary policy easing is slower growth in labour costs. Monetary policy cannot prevent an increase in unemployment that is caused by a significantly higher rate of growth in labour costs in Norway compared with other countries. Nor can an expansionary fiscal policy counter a cost-driven rise in unemployment. Growth in real wages is far higher than the underlying growth in productivity. If higher costs cannot be 1 passed on to customers, earnings decline and the wage share increases . Many businesses will have to adjust their workforces to maintain profitability. This leads to a fall in employment and increased productivity. For some companies, this may be a prerequisite for maintaining operations in Norway. The alternative is to close down or relocate production to another country. While the wage share has risen sharply in manufacturing, it has remained fairly stable in other industries. Import firms have wider margins, suggesting that the appreciation of the krone has not fully benefited customers. We also know that employment in some service industries has fallen. Many companies in the service sector have adjusted their workforces to maintain profitability. To some extent, higher costs can also be passed on to customers through higher prices in this sector. Manufacturing employment is declining.

Companies report a decline in production, employment and orders for both the export and domestic market. Many companies have moved abroad or are planning to move all or parts of their production out of Norway. In recent years, the shipbuilding and engineering industries have sustained the activity level in Norwegian manufacturing. Shipyards experienced a sharp increase in new orders before end-2000 prior to the elimination of support to the shipbuilding industry in Norway and many European countries. The level of new orders has since then been very low, and the order backlog is nearly exhausted. A sharp increase in petroleum investment could provide positive growth impulses to the offshore-related industry. The demand impulses from petroleum investment to the mainland economy may, however, be weaker than has been the case earlier. Construction and installations with a high import content will account for a large share of the increase in investment from 2002 to 2003. Due to the high cost level in Norway, a growing number of contracts are also being awarded to foreign companies. At the same time, Norwegian shipyards are increasingly using foreign subcontractors in low-cost countries. This is having an impact on the Norwegian engineering industry. Many service industries have had to adjust capacity in pace with changes in operating parameters. Investment in service sectors has fallen sharply, and is expected to continue to fall. There is considerable excess capacity in the commercial building market.
C J P Siriwardana: Financial sector consolidation – why and how? The Central Bank of Sri Lanka’s 64th Anniversary Oration delivered by Mr C J P Siriwardana, Assistant Governor of the Central Bank of Sri Lanka, Colombo, 24 September 2014. *  *  *  The Chief Guest, Honourable Senior Minister of International Monetary Cooperation and Deputy Minister of Finance, Dr. Sarath Amunugama; The Guest of Honour, Dr. P B Jayasundera;  Secretary  to  the  Ministry  of  Finance  and  Planning,  Governor of the Central Bank of Sri Lanka, Mr. Ajith Nivard Cabraal; Members of the Monetary Board; Former Governors; Deputy Governors; Former Deputy Governors; Members of the Consultative Committees of the Central Bank; Distinguished Guests; Ladies and Gentlemen, First of all, let me thank the Governor and the Organising Committee of the Central Bank Anniversary Oration for inviting me to deliver the oration on the 64th Anniversary of the Central Bank of Sri Lanka. I believe it is my great privilege to have this opportunity to speak to you today.

Before explaining how we designed and executed the consolidation process, I thought I should share with the distinguished audience, the basis and the background to this process, which was designed to re-organise the structure in the financial system within the existing legal framework, while taking into consideration some global experiences. In this regard, I will talk on four areas: the role of the Central Bank; evolution of our financial system; global experience in consolidation; and the transition of the burden of financial crises from shareholder to tax payer. Basis 1: Central Bank’s role in financial sector consolidation I would like to begin by explaining the role of the Central Bank in this process. As you all know, securing financial system stability is one of the core objectives of the Central Bank. In terms of Section 5 of the Monetary Law Act, the Central Bank is empowered to ensure financial system stability in the country. The importance of maintaining a sound banking system was also emphasised in the “Report on the Establishment of a Central Bank for Ceylon” by the Central Bank’s founding Governor, John Exter. There he said, I quote, “Banking is an economic activity which affects the public welfare to an unusual degree, it touches in one way or the other almost every phase of the country’s economic life. Sound banking is essential to a healthy and vigorous economic development”.
World output expanded at its fastest rate for 30 years in 2004, and this year growth looks like being as strong again. One obvious explanation is that both high oil prices and the strength in the world economy have reflected the rapid pace of development in  1  2  Data from OECD’s International Migration Outlook 2006. BIS Review 116/2006  China, where growth has been around 10% a year since 2004, and which last year was responsible for nearly half of the growth in total world oil demand. So the two have helped to offset each other. But the recent behaviour of oil prices has also reflected supply-side problems. The rapid growth in demand seems to have taken oil producers by surprise. The world is currently operating on a very thin margin of spare oil production capacity as a result of low investment in the 1990s. The result is that oil prices have also been volatile, as well as high, moving sharply in response to geopolitical and weather-related news, as well as changing expectations about world demand and supply. In time, both supply and demand will respond to higher prices, but the lead times for new production capacity are very long – around ten years to develop a new field. High and volatile oil prices pose a grisly challenge for monetary policy makers. But so far there has been no surge in inflation across the world as there was following the oil price increases in the 1970s.

But the extraordinary stability of the past decade may have given people an exaggerated idea of what to expect of monetary policy. While the Bank can deliver low inflation, we cannot reliably deliver rock steady growth in output and employment, still less falling unemployment. Whether or not that happens depends on events in the wider world – what economists like to call ‘shocks’ - and other economic policies, including taxes and regulations. All we can do is try to keep demand growing in line with supply. And in fact, most economists a decade ago would have said that the Great Stability, as we have experienced it in the UK, represented a pretty unlikely set of outcomes. The then Governor, Eddie George, said he hoped that low inflation would contribute to a more stable economy but warned: ‘We cannot hope to achieve that with any great precision’ 2 . The MPC’s formal remit from the Chancellor, originally drafted nearly a decade ago and still in force, seems to be predicated on a more turbulent world. It makes specific allowance for situations in which inflation might be thrown sharply off course. It reads: ‘The framework is based on the recognition that the actual inflation rate will on occasions depart from its target as a result of shocks and disturbances. Attempts to keep inflation at the inflation target in these circumstances may cause undesirable volatility in output.