samchain/econo-pairs-v1 huggingface dataset:
An important part of our new supervisory approach is a focus on business model analysis. This might come across as a bit of a fad, but it isn’t meant to be. Instead it is grounded in such basic questions as: where does the firm make money; are the revenue streams sustainable; how well does the firm stand up to tests of stresses on its balance sheet; does it generate cash flow to cover dividends; is the leverage of the firm sustainable; what are the risks from competition on premium income; are there conduct risks which could pose a prudential threat? These are basic questions, but in another field, if the answers to such questions had prompted action in the past by banks, history would be different. What I have just described is judgemental supervision that must be forward-looking to the risks that may arise. This is crucial, and was not properly a part of the pre-crisis approach to supervision. Let me give a few current examples of this for insurers. We are focused on the impact of very low interest rates staying with us for a protracted time, and when I say this I am offering no view whatsoever on the likely course of monetary policy. Likewise, we want to know that the prudential position of firms also captures the possible impact of an unexpected upward shift in the slope of the yield curve, and again I am offering no view on monetary policy.

In addition, foreign direct investors have placed more importance on factors other than just the exchange rate alone. In managing exchange rate policy, no amount of exchange rate manipulation would satisfy the interests of all parties at all times. Indeed, it is a stable and fundamentally sound exchange rate system that will best serve the overall economic interests of the country. This will continue to be the objective of our exchange rate policy. Ladies and Gentlemen, Dr. Yilmaz Akyüz’s lecture today would provide an international perspective on managing financial instability and shocks in a more globalised world and touches on some of the issues I have mentioned. Although the regional financial crisis occurred more than six years ago, the issues it raises are not history. They are still very relevant and important. Emerging economies need to continue to evolve approaches and solutions on how best to manage the vulnerabilities and to promote and preserve stability. In this endeavour, there is potential to not only consider what individual economies can do but also the opportunities for regional arrangements or regional solutions. As the region becomes increasingly more integrated in terms of trade and investment flows, the potential for this will be  2  BIS Review 8/2004  greater. The desired outcome is to achieve stability, which in turn, will contribute to the overall stability of the international monetary system and thus, enhance the prospects for shared global prosperity. BIS Review 8/2004  3
Solid bars show change from December 2019's statistical cutoff; hollow bars show changes with respect to max and min. (2) Increase (decrease) indicates depreciation (appreciation). (3) Multilateral exchange rate. Source: Bloomberg. 9  Figure 3 Change in 5-year CDS and EMBI since December 2019 MP Report (*) (basis points)  5-year CDS spread Sudáfrica México Brasil Colombia Rusia Indonesia Chile Perú España Portugal Grecia Italia Francia Australia Reino Unido China Japón N. Zelanda Alemania EE.UU. Rep. Corea Hungría Noruega Polonia -100  EMBI spread 245  Sudáfrica  151 149 148 148 121  México  0  50  100  338  India  75 65 63 61 44 38 22 21 21 21 20 18 15 9 7 6 5 3 -50  385  254  Colombia  203  Indonesia  191  Hungría  177  Malasia  173  Chile  165  Brasil  159  Perú  153  Rusia  153  Polonia  88  China 150  200  250  300  -100  64 0  100  200  300  400  500  (*) Green bars stand for emerging economies; orange bars for Latin America; blue bars for developed. Solid bars show change from December 2019's statistical cutoff; hollow bars show changes with respect to max and min. Multilateral exchange rate. Source: Bloomberg.

However, more prolonged damage and a slower recovery cannot be ruled out if containment measures are kept for too long, beyond the authorities’ strengthened efforts of impact mitigation. Thus, during the last week of February and the first half of March, the growing fear in the financial markets triggered an increase in demand for safe assets, which contributed to a widespread fall in stock markets, a compression of long-term interest rates, an appreciation of the dollar and across-the-board falls in commodity prices. Towards the second half of March an increase in the demand for liquidity in dollars was observed, to the detriment of practically every other asset class. This reflects the strong preference for cash as households, businesses, banks, and financial intermediaries anticipate significant cash needs for the coming months. Emerging economies have suffered from currency depreciation, capital outflows, sharp falls in stock prices and rising risk indicators. In any case, in recent days there has been a partial reversal of these phenomena, as a reaction to the measures announced by various policymakers (Figure 1). Chile has also felt the effects of the global financial turbulence. Our currency has depreciated, the stock market has deteriorated markedly, sovereign risk spreads have widened, and long-term interest rates have risen. Even so, these movements have been more moderate than they have been in comparable economies, which seems to recognize our stronger macroeconomic fundamentals, the role of the exchange rate as a shock absorber and greater policy space to tackle the crisis (Figures 2 and 3).
To begin with the strategy was notably successful; high profits were obtained with a low capital input. In 1995 and 1996 the annual profit was over 40 per cent. This performance and the confidence that the fund management enjoyed made many banks willing to provide loans or invest in the fund. In time, however, the financial markets moved in the opposite direction to what LTCM—and others—had expected. Russia’s debt moratorium on 17 August was followed by markedly increased financial turbulence as investors became more nervous and withdrew from other markets that could be perceived as risky. A uniform tendency developed, with falling share prices, widening interest rate spreads, growing unrest and decreased liquidity. There was a flight to quality of a kind that had not been observed before in the financial markets. Instead of narrowing, interest rate differentials became markedly wider. The diversity of risks on which LTCM had relied ceased to provide protection. The market movements were such that, if anything, it was a source of increased losses. The rumours of problems in LTCM contributed in turn to even greater turbulence in the financial markets. In that market prices would be depressed by a winding-up of positions, investors tried to close positions in those markets where they feared that LTCM was also involved. It can be mentioned, for example, that Risk Magazine estimated that LTCM’s positions in the interest swap market totalled 5 per cent of the global market, which says something about the size of the fund’s positions.

B  The introduction of the euro has increased the homogeneity of European economies and limited the risks of macroeconomic disequilibrium inside the euro area  The convergence process, the homogeneity of European economies and the synchronization of business cycles have increased since the introduction of the euro •  Regarding business cycles, some recent work presented by a working group joining the CEPR (Centre for Economic Policy Research) and the Eurosystem shows that the correlation between business cycles as a whole and also consumption and investment in most euro area countries has increased since 1999. A common European component seems to play a more important role in these economies than the national components do. The  degree of correlation between national cycles and the euro area aggregated cycle varies between 0.70 and 0.92. •  Concerning inflation, the research conducted by the Eurosystem shows that the degree of dispersion of inflation rates inside the euro area is not significantly superior to that observed in the USA, where the federal budget and the much more unified market of goods and services constitute additional room for manoeuvre. The standard error of the annual growth of prices in the 12 euro area countries is in the vicinity of 1.1, compared with 0.8 in the 14 regions of the USA. •  Finally, the updating of the vast work on monetary transmission mechanisms led by the Eurosystem shows that Member States’ economies are more homogeneous as regards the transmission of monetary impulses since the introduction of the euro.
Moreover, the investment environment in Saudi Arabia has improved, and the Kingdom has obtained the eighth rank at the global level for attracting foreign direct investment (FDI), according to the UNCTAD’s report. On the other hand, Saudi Arabia has recently been lauded by FATFS’s report issued at the end of last June for its commitment to the nine Special Recommendations related to Terrorism Financing combined with the forty Recommendations on Anti-money laundering. As a result, Saudi Arabia occupies the first rank at the Arab level, and one of the G-20’s top  2  BIS Review 128/2010  ten positions. The tribute paid to the Kingdom is as an appreciation by the international community of the Saudi efforts in combating the crimes of money laundering and financing of terrorism, and it highlights the soundness of the Saudi stance stemming from its adherence to the tolerant Shari’a, implementation of the resolutions of the UN and Security Counsel and implementation of the best practices in this field. All these achievements have been accomplished by the grace of Allah Almighty, and then thanks to Your diligence and guidance, may Allah safeguard You. The Kingdom of Saudi Arabia is one of the first countries giving priority to combating the phenomenon of money laundering and financing of terrorism. In addition, it has been in the lead in combating this phenomenon due to its security, social and economic repercussions.

In the area of monetary and banking policies, SAMA followed monetary policy aimed at achieving stability in the financial sector and providing the necessary liquidity to meet domestic demand for credit, by taking a package of proactive measures to enhance the liquidity position and reduce the cost of lending in order to ensure that banks continue their financing role in the development process in the Kingdom. The most prominent measures were: reducing the Statutory Reserve requirements ratio, the Repo and the Reverse Repo Rates several times, enhancing the liquidity position in the banking system by placing long term deposits in local currency and US Dollar with local banks on behalf of government institutions and organizations, reducing the pricing of treasury bills, facilitating foreign exchange swaps in order to provide the necessary liquidity in US Dollar for the local banking system. As for fiscal policy, the government continued the expansion in public expenditure and increasing the pumping of funds to specialized lending institutions by an estimated amount of Rls 40 billion during 2009. Custodian of the Two Holy Mosques, In spite of the adverse impacts of the successive financial crises, they clearly resulted in combining international efforts to review the global financial system and commence taking reforming measures to perform its role effectively and positively in the global economic activity and international external trade.
Finally, I would like to explain how at the Banque de France we address them in order to strike an appropriate balance between, on the one hand, the objective of fostering innovation and the overall efficiency of financial services and, on the other hand, the objective of ensuring a secure and level playing field for all suppliers and their customers (3). 1. From Fintechs to Bigtechs: a decade of digitalisation of the financial intermediation’s value chain Understanding how the Fintech sector emerged and has been structured (A) is critical to assessing its impact on the future of intermerdiation (B). (A) The concept of Fintech, contraction of Financial Technology, designates both a structural shift – the digitalisation of finance – and the main actors of this shift: the Tech firms. The digitalisation of finance is prospering on the grounds of cutting-edge technologies. The combination of big data analytics, cloud computing, artificial intelligence and blockchain is transforming the way financial products are designed, processed and distributed. For its advocates, this transformation promises: better consumer experiences; more diversified financing of the economy; and greater efficiency of the financial system. In addition to these promises, cutting-edge technologies also lower the entry barriers to the financial sector for early adopters: the Tech firms. This should not come as a surprise: internet and smartphones have lowered the distribution costs, big data technologies have lowered production costs and the shrinkage of banks’ balance sheet in the wake of the Great Financial Crisis has given space for new players to conquer market shares.

Bigtechs already have a material footprint in financial services, and not least in payment services: Amazon Pay operates in 10 countries, Google Pay in 22 countries and Apple Pay in 25 countries. Facebook Messenger allows peer-to-peer payments in 3 countries and a Facebook wallet is reportedly in preparation. Moreover, Bigtechs like the GAFA companies have competitive advantages in terms of expanding their activities further in this area, including massive financial resources, strong brand recognition, a worldwide customer base and privileged access to cutting edge technologies. Therefore, Bigtechs, more than Fintechs, have the potential to fundamentally redefine financial intermediation by integrating the entire landscape of financial services into their own digital ecosystems. This does not mean that banks will be disintermediated; but rather that banks may be interfaced with Bigtechs’ platforms. Such a move is already gaining considerable traction in China. So, digital finance driven by Tech firms may not lead to a more decentralised system as the centripetal forces of network effects may benefit large conglomerates the most.
We have absolutely no signs of this in France. But, in all countries, banks have been (or will be) exposed to a triple shock: unwanted expansion of their balance sheets through reintermediation; higher cost of capital as a consequence of the decrease in share prices; and, finally, a deterioration in the quality of their assets if the credit cycle turns downward or valuation problems appear for some securities (all this, according to Basel II, would mobilize additional capital). Tighter credit conditions might be desirable. Repricing of risky assets, better risk compensation and more attractive yields may ease some of the restrictions and bring in new investors into the markets. However, quantitative constraints on credit distribution could be very damaging – especially if corporate bond issuances were to stay, as they are now, extremely low. Challenges for central banks The most immediate was to restore the orderly functioning of the interbank market. This has been done by providing liquidity to the market. Actions by Central banks have raised some concerns about so called "moral hazard": would liquidity provision lead to "bailing out speculators"? In fact, we have responded to an exogenous and general increase in demand for Central Bank money and ensured smooth management of liquidity conditions. No more, no less. This is the job of Central Banks. Clearly, as experience in some countries has shown, it is not an easy one and we may have to think, in the future, about our modalities of intervention. I am personally very satisfied with the way we have operated.

Overall wage growth may then be lower than projected and provide the basis for an easing of monetary policy. The global economy appears to be vulnerable to new disturbances. Since summer 2002, international financial market developments have been marked by increased optimism concerning the growth outlook. Equity prices and long-term interest rates have risen. The increase has been uneven, however, and there have been wide fluctuations between major currencies. This may be a reflection of the uncertainty about the strength of the global economic recovery. Developments in the krone exchange rate represent a source of considerable uncertainty. The relationship between the krone exchange rate and the interest rate differential against other countries  6  BIS Review 50/2003  is not necessarily stable over time. Themes in international financial markets shift. We may not yet have seen the full effects of the interest rate reductions on the krone exchange rate. Even though Norges Bank is forward-looking in its conduct of monetary policy, thorough knowledge of the current economic situation is extremely important. An up-to-date and correct picture of the current situation is necessary to make accurate projections for the period ahead. In autumn 2002, Norges Bank established a regional network as a tool to gauge the level of activity in the Norwegian economy. Official statistics and evaluations of developments in financial markets will continue to be the main basis for our assessments, but due to the time lag and revisions of such statistics, supplementary information is useful.
Although hikes were seen in these indicators, which edged up again in  BIS central bankers’ speeches  3  November and December, the main trend of inflation remained in line with medium-term targets (Figure 7). Against this background, medium-term inflation expectations declined significantly (Figure 8). While near-term inflation expectations declined in a higher ratio compared to the previous quarter, the longer the maturities, the less was the decline in expectations. 12 and 24-month ahead inflation expectations remained above the figures implied by the targets for 2011 and 2012 year-ends, however, the difference went down slightly in the last quarter (Figure 9). 4  BIS central bankers’ speeches  2. Monetary policy response  After commenting briefly on inflation developments, I would now like to cover the policies pursued by the Central Bank during the last quarter. The second round of quantitative easing initiated in the last quarter of 2010 by some advanced economies and the attendant ramp up of capital inflows to emerging markets has required significant modifications to the CBRT’s strategy. Macroprudential measures were needed because short-term capital inflows have strengthened the divergence between domestic and foreign demand causing the current account deficit to widen rapidly. Since core inflation trends were in line with medium-term inflation targets, the monetary policy was able to focus on financial stability. The new monetary policy strategy envisions the use of multiple instruments to manage both internal and external balances.

And considering that this $ trillion represents perhaps as little as one-fifth of the amount of ready liquidity in the U.S. financial system – that being held not just on deposit at the Fed Banks but also by nonfinancial corporations, private equity funds, other investors and households – there is a lot of inflationary tinder available should the Fed mismanage its exit from the hyper-accommodative policy we have pursued and augmented with QE3. Thus, only time will reveal the efficacy of the policy we have pursued and whether the risks that I and other observers (among them my mentor, Paul Volcker) fret over are as substantial, or whether we have made much ado about nothing. My former colleague, the wonderful ex-banker and much-admired Fed Governor Betsy Duke, was quoted on Oct. 28 in The Washington Post as saying this about QE3: “It’s still important to see what the ultimate costs are going to be. You can’t really judge those until it’s completely unwound.” 4 Betsy is spot on. Channeling Shakespeare In June of last year, I gave a speech in Toronto in which I likened the post-zero-bound monetary policy to a Shakespearean drama with five acts, suggesting we were then in the last scene of the third act of a play titled “The Grand Experiment in Modern Monetarism.” 5 I posited we will not know until the final act whether the play will end felicitously or otherwise. I thought I would update that analogy here today.
The history plays also a significant role in the formation and development of institutions. The declaration of independence introduced a new era for Albanian state institutions, paving the way for the establishment of a central bank, a unified Albanian monetary system, and the administration of economic life through the monetary policy. Despite its short life, the National Bank established in 1913 is a cornerstone in the history of the Albanian state. The then Prime Minister, Ismail Bej Vlora said about it: “I say the affair of the Bank is praiseworthy; for Albania, it is a second victory, after freedom, from both the economic and political perspective.” The events that followed the declaration of independence, in the national and international aspect, have played a crucial role concerning the nature and character of these institutions and, at the same time, determined the nature of the monetary policy. Economic and political partnerships, and the charisma of the Albanian statesmen to build a modern society, led to the establishment of the first functional national bank in 1925, with the characteristic and distinctive profile embodied in the building that was constructed in the centre of Tirana. Historic developments in early 1990s became once again determinant factors for the financial system and the central bank. Introduction of modern economics concepts led to the creation of the Bank of Albania as a bank with all the attributes of a modern central bank. Its institutional evolution led to the development and modernisation of monetary and financial policies.

What is more, the Swiss franc has only seen a moderate rise against the euro. As Swiss households and companies are on a solid financial footing, they are shielded – so to speak – against a tightening in credit conditions. Lastly, the stronger Swiss franc vis-à-vis the US dollar has limited the impact of higher commodity prices. Several other factors, like a robust labour market and a competitive industrial sector, could cushion the negative repercussions of the financial crisis in Switzerland. Against this backdrop, the SNB is expecting real GDP to grow between 1.5% and 2% this year. Inflation should be below the 2% mark again in the course of 2008. These forecasts still involve substantial uncertainties. Given the present state of the economy, the current interest level seems to be appropriate. However, the SNB will keep a close eye on further economic developments and inflation so that it is able to identify when action needs to be taken and react in a quick and flexible manner. BIS Review 51/2008  1