samchain/econo-pairs-v1 huggingface dataset:
Miroslav Singer: Regulatory earthquake Welcoming remarks by Mr Miroslav Singer, Governor of the Czech National Bank, at the Basel Consultative Group Workshop on the impacts of Basel III on emerging market and smaller economies, Czech National Bank, Prague, 26 August 2013. *  *  *  Dear participants of the Basel Consultative Group Workshop, Ladies and gentlemen, Let me warmly welcome you to the Czech National Bank, which is proud to host this workshop on the impacts of Basel III on emerging market and smaller economies. I am very glad that my institution is involved in this workstream because I believe it is important for emerging economies not to be merely passive recipients of the regulatory “earthquake” in the banking industry which is spreading from advanced countries. Emerging economies should not and cannot blindly adopt new regulatory measures, as their financial markets have their own specific features. What is a priority for regulators in the most developed economies may not be a priority for regulators in emerging economies. On the other hand, the proposed measures within the Basel III framework may have unintended consequences for these countries, so it is worthwhile either to be prepared for them or to try to mitigate them if they are negative. Let me start by underlining what I consider to be the two fundamental difficulties of the current regulatory push.

Tarisa Watanagase: Current topics of the economy and monetary policy of the Kingdom Dinner talk by Dr Tarisa Watanagase, Governor of the Bank of Thailand, to the Japanese Chamber of Commerce, Bangkok, 24 March 2010. *  *  *  Good Evening, Ladies and Gentlemen, First of all, I would like to thank the Japanese Chamber of Commerce for the invitation to speak again at this annual event. It is indeed a great pleasure to be back here for the institution that has, for a long time, been playing a key role in promoting a closer cooperation and better understanding between the Thai authorities and the Japanese business community in Thailand. Tonight, I would like to focus my remarks on three issues. The first is Thailand’s current economic conditions and outlook. The second is the key challenges for policymakers going forward. And the third is the Kingdom’s policies to ensure a sustained growth recovery along with price and financial stability. Many of you may recall that my speech here last year took place during the most testing time for both the global economy and policymakers. In the western economies at the core of the crisis, the financial and real sectors have been severely impacted. And for Thailand, it was the first time in ten years that the Thai economy registered negative growth, as the collapse in global demand led to a sharp contraction in the Thai exports. Fortunately, the global economy has now turned the corner and recovery has continued to gain stronger momentum.
History has shown that countries that suddenly gain access to an abundance of resources have a tendency to deplete the values rapidly and then fall into decline. 9 Since the introduction of the fiscal rule in 2001, oil revenue spending in Norway has been increased by close to NOK 110 billion. Oil revenues now fund about 1/6 of government expenditure. Without a fiscal rule, spending  9  The Paradox of Plenty. Oil Booms and Petro-States by Terry Lynn Karl (1997) provides a good description of the problems facing oil-exporting countries. 6  BIS Review 109/2010  would probably have been higher. In the 1950s, 60s and 70s, the tax burden was steadily increased to finance higher government expenditure. The return on our oil wealth has now taken over as the source of funding for increased public consumption. Chart 2 Oil revenue spending1 In billions of NOK, 2002–2010  1  Structural non-oil deficit. Source: Ministry of Finance. But looking ahead, funding Norway’s welfare system will be demanding. Increases in oil revenue spending cannot be sustained for much longer. Oil production will decline. At the same time, we have been through a period in which the need for welfare services has been fairly stable. The age-dependency ratio has shown little change. The demographic landscape will not be as auspicious in the decades to come. Even though sound institutions have been built for the management of Norway’s oil wealth, it is too early to assess the effectiveness of our management.

Denis Beau: What role should banks play in the twin digital and climate revolution? Speech by Mr Denis Beau, First Deputy Governor of the Bank of France, at the conference at the Jean Monnet University, Saint-Etienne, 15 April 2022. * * * Accompanying slides can be found on the Bank of France website. [SLIDE 1] Students, faculty, ladies and gentlemen, We now have sufficient distance to say that, if the health crisis unleashed by Covid-19 was not compounded by a financial crisis, this was in part because our prudential framework has made banks considerably more resilient. The new framework, coupled with the exceptional support measures introduced by governments and the European Central Bank (ECB), enabled banks to continue financing businesses during the health crisis. Today, it is enabling them to cope with the economic and financial impacts linked to the war in Ukraine. That being said, for this new architecture to be consolidated, the Basel III Accord still needs to be fully implemented in a manner that is fair, reasonable and definitive. Yet this strengthened abilities to withstand shocks cyclical crises must not blind us to more structural vulnerabilities, which the health crisis has helped to amplify, I am thinking in particular of digitalisation and the transition to a sustainable economy.
Lower interest rates should contribute to easing current tensions in the financial markets and also to facilitating the flow of credit. But monetary policy alone cannot resolve the financial and economic crisis. Corrective actions at other levels of policy are required, and these have indeed been taken by national governments and central banks as well as by international institutions. It will, however, take a while for confidence to return to a level that would permit the financial system to fully service the needs of a globalised economy. So why did the ECB increase rates in the first place in July? Consistently with its interpretation of the mandate, at that time the ECB perceived that there were strong upside risks to price stability. Decisions are always based on the latest information available and on a full analysis at a given point in time. The slowdown in economic activity has been very sudden, and projections for inflation have in the meantime been revised downwards. 2  BIS Review 152/2008  Do you think the cuts should always be passed on to the customer? In some cases the local banks have refused to do so, or they didn't reduce them to the full extent. In Malta, banking practice has generally been to set interest rates with reference to the official policy rate. Where such is the case, we would expect most of the ECB's interest rate cuts, one percentage point in the past month, to be passed on to customers, particularly at a time of weakening growth prospects.

This is evidence that we have not experienced a spike in inflation directly attributable to the euro. A lot of people would tell you that everything went haywire after March... Yes, we have since had an increase in inflation but this is largely attributable to the delayed higher international energy prices and the spike in food and cereal prices. We have been importing inflation, and the way we have administered prices in the energy sector has not helped. We have tried to protect ourselves for too long from market prices, and then when you make changes they tend to be bigger than if you had allowed the gradual movement of prices to take place. To what extent has the introduction of the euro helped to cushion the impact of the financial crisis? Where would we be with the Maltese lira? I was one of those who always expressed the belief that Malta's small open economy in a liberalised global environment and with its own currency was becoming increasingly vulnerable. That is why I was an advocate of EU membership and of early euro adoption. We only need to look at the example of Iceland, which stayed out of the EU, and the financial disaster it is now experiencing. Look at Denmark – an advanced stable country which is also pegged to the euro. Because of this turmoil, the Danish central bank has had to increase interest rates. This is the price of going it alone in times of stress. How much Maltese lira remains in circulation?
UK banks have roughly doubled the proportion of assets they fund with equity since the end of 2007, and they have cut the share of total funding accounted for by shortterm wholesale funding from nearly 30% in 2007 to 10%. They have tripled their liquid asset holdings. Trading assets have been reduced by a third and inter-bank exposures have shrunk by two thirds. In addition, the major UK banks have demonstrated they are resilient to severe but plausible hypothetical stress tests designed by the Financial Policy Committee and PRA Board, and to recent real stresses in global financial markets – which saw UK bank debt spreads increase by much less than in previous episodes of stress. (ii) Resolution tools and powers The second plank is making sure the authorities have the necessary powers and machinery to manage the failure of a bank. Astounding though it may seem, the UK went into the crisis with no single institution formally responsible for dealing with failing banks. It was assumed the Governor of the Bank of England’s eyebrows would deal with such problems as they had done it in the past. But the Bank had always relied on informal methods – it had no statutory powers in this area. Nor was there any special insolvency regime for banks that gave priority to the needs of depositors and ensured they did not lose access to their accounts for an extended period.

They need to challenge themselves to think through how a crisis might unfold and how they would respond – as there may not be the luxury of time or discretion to prepare when it is occurring. Resolvability also cannot be a static concept – firms’ capabilities may need to be improved or refined, and will need to be in step with the changing nature of their businesses. Therefore it is important that these are kept ‘live’. The more that firms can truly embed these capabilities into their management processes, the more confidence we and they can have that they are ready. The UK is now much better placed to deal with the failure of a UK bank. We have a resolution regime built on robust and coherent principles. As of now the UK banks are on track, as they should be 12 years after the end of the Global Financial Crisis, but it is vital that momentum is sustained. As and when – for it is ultimately not likely to be an ‘if’ – we are called upon to use our powers to address a bank failure, we can be confident that the options available and outcomes arising will be superior to the alternatives and past experience. In the UK through establishing the RAF, we hope to embed the lessons that were so hard learnt to be able to demonstrate that banks are resolvable in a transparent manner.
Paul Fisher: Managing liquidity in the system – the Bank’s liquidity insurance operations Speech by Mr Paul Fisher, Executive Director, Markets, and Member of the Monetary Policy Committee of the Bank of England, at the Loan Market Association Syndicated Loans Conference, London, 30 September 2010. *  *  *  The Bank of England uses its balance sheet to support its core objectives of both monetary and financial stability. The financial crisis over the past three years has clearly placed more emphasis on the latter. So, this morning, I want to set out how the Bank has developed its “Sterling Monetary Framework” in order to support financial stability: in particular what we refer to as the “liquidity insurance” operations. Since the liquidity of the banking system is crucial to the functioning of financial markets, this should be of direct interest to the LMA’s members. I intend to briefly describe the main facilities as they now stand, including changes made during the past three years. I then want to address some topical issues that have arisen. Central bank money and monetary policy The balance sheet of a Central Bank plays a crucial role in the implementation of its policy objectives. In a Quarterly Bulletin article earlier this year, we set out an analysis of how the Bank of England’s balance sheet evolved during the financial crisis. 1 Let me briefly spell out the main elements.

If an institution cannot meet its target through the inter-bank market, it can use the Bank’s standing deposit and lending facilities. Under these facilities, reserve account holders can deposit with, or borrow from the Bank overnight for unlimited amounts at a fixed penalty to Bank Rate. So in practice, these facilities impose a narrow corridor on either side of the Bank Rate. For example, if it becomes cheaper for a commercial bank to borrow under the standing facilities than to borrow in the  1  Cross, Fisher and Weeken (2010), Quarterly Bulletin, 50, 1, pages 34–42. 2  For the rest of this speech I will take references to “banks” to include building societies. 3  Exceptionally at the current moment, the main asset is a loan to the Bank of England Asset Purchase Facility Fund. BIS Review 126/2010  1  market, then it will do so, providing a natural ceiling to short-term market interest rates. That in turn ensures that overnight interest rates 4 remain close to Bank Rate set by the MPC. Exceptionally, to fund the programme of asset purchases in 2009/10, the Bank unilaterally increased the size of commercial bank reserves on a massive scale – from around £ at the start to a peak of around £ Since that level was far in excess of the commercial banks’ own targets we suspended the reserves averaging system and agreed to pay Bank Rate on all reserves held with us.
To complicate matters, we must not forget the geopolitical risks in the Middle East, terrorism and other surprises. This year, we have already had several reminders of the risks in the system. The Chinese stock market has experienced a few incidents of volatility following expectations of and actual government action. It remains vulnerable to further corrections. In the US, the sub-prime market has imploded. More recently, US treasuries have come under severe selling pressure, causing interest rates to rise and generating unease in stock markets. Nevertheless, the financial system has been resilient so far. Have we learnt our lessons from past crises and are now better prepared? Or are we just plain lucky? Whichever the answer, we should remain vigilant. As bankers, you will be familiar with the saying that bad loans are made in good times. This saying is particularly worth repeating when the environment appears rosy and serves as a reminder that vigilance is our constant responsibility. With this in mind, MAS initiated a survey of risk managers and traders, many of whom are based in Singapore, about their key risk concerns. This poll was conducted between April and June this year. A roundtable discussion was also held with risk managers. Let me now share with you some of the findings from this survey. The feedback received was open and honest and many views were shared. Most respondents believed that asset prices were frothy and that a big shock could happen. Some speculated that this could happen before the end of 2008.

Banks should pay attention to consumer feedback for early warnings of potentially larger issues and proactively take steps to address emerging customer concerns early. The ABS Code of Consumer Banking Practice is premised on four key principles – fairness, transparency, accountability and reliability. These principles are a good foundation for building a trusting and open relationship between customers and their banks. As members of ABS, we encourage you to uphold and observe these principles. You are best placed to raise standards through market discipline, industry codes and guidelines. Together, ABS and banks can do more in monitoring consumer feedback on industry practices and taking steps to manage consumers' concerns at an earlier stage before they become broader public issues. For example, ABS could initiate measures to identify emerging issues, conduct research to better understand consumers' concerns and work with member banks to address them. Individual banks could also do more by reviewing their customers’ feedback, sharing their observations on concerns regarding industry practices and working with ABS to manage these issues. MAS will continue to share with the industry our observations from feedback received from members of the public. We will also continue to work with the industry to encourage best practices by banks, with the aim of achieving good consumer outcomes. This more collaborative and consultative approach, we believe, is more desirable than formal and often more prescriptive regulation. Conclusion The Singapore financial services sector looks set for another year of good growth.
The first is that we are striving to attain high GDP, high employment and low unemployment, and resource utilisation is related to these targets. But we should only do this when it is compatible with the inflation target. The inflation target takes precedence. This differs from the United States, where the central bank has the double target of achieving price stability and maximum employment. In addition, the preparatory works for the Sveriges Riksbank Act only refer to “high” employment (as compared with the United States’ ”maximum” employment) and not to any particular level of unemployment.3 The other reason to care about resource utilisation is that it serves as an indicator of future inflation. The positive relationship between resource utilisation and inflation is illustrated in Figure 3, which shows the correlation between three different measures of resource utilisation and CPIF inflation 1–12 quarters ahead.4 The connection is fairly strong 3–8 quarters ahead. The connection is stronger and faster for the hours gap than for the GDP gap and the RU indicator. This may be because the development of the labour market usually follows behind output and because it is very important for the development of prices and wages. Of course, it is difficult to draw any conclusions from the covariation of two variables, but the same type of relationship also exists in more developed empiricallyestimated models.

Here I am thinking about variables like the economy’s potential growth rate, the output gap and the NAIRU etc. Why should identifying asset market misalignments, excessive credit growth and a rapid decline in private financial balances be more difficult than forming an opinion about variables such as these? My view about monetary policy in this respect is of course closely bound up with my experience of the Swedish banking crisis, but it is also in line with a central bank’s mandate to achieve long-run price stability. If anything, a financial crisis substantially increases the risk of outright deflation after some time. The central bank could manage this risk in two ways: by at least trying to prevent the bubble from building up by tightening monetary policy at an early stage, and then by loosening monetary policy aggressively if a bubble builds up and bursts anyway. To my mind, both such actions would be in line with focusing on long-run price stability, whether the central bank follows an explicit or an implicit inflation targeting approach. Although I will be leaving my job as governor of the Bank of Sweden towards the end of this year, I have no qualms about forecasting that financial stability will remain on the agenda and be a key challenge for financial authorities for many years to come. 2  BIS Review 68/2002
However, it is first when private consumption has accelerated in recent years that GDP growth has increased so strongly that unemployment has also fallen. Many factors have led to households starting to consume: Cuts in public finances no longer burden household budgets – instead lower taxes have increased disposable income. Unemployment has fallen at the same time as real wages have risen markedly. Finally, household net wealth has increased due to increasing property and share prices up to summer last year. However, household’s expectations about the future seem to play a crucial role for household’s propensity to consume. In the last few years, investments in the business sector have increased quite strongly in volume while it is only just recently that investments in housing construction have started to increase. The strong growth we have seen in recent years is higher than that sustainable in the long term. The Riksbank makes the assessment that annual increases in production of 2- 2.5 per cent are possible in the long term. The amount that GDP can increase is determined by the increase in productivity and by how much employment can increase. The larger increase in production in recent years is primarily due to there being a lot of unused resources in the economy after the problem years in the early 90s, when there was a substantial drop in production. While the productivity of the business sector has increased, it has primarily been increased employment that has created scope for growth.

Estimates of unfunded pension liabilities range up to several trillion dollars. While widespread, underfunding of public pensions is not universal. Many states have found ways to keep their public pensions reasonably well funded, demonstrating that pushing today’s costs into the future is not an inevitable outcome of a democratic government. Nonetheless, we have seen evidence that high debt levels combined with diminished services provision can, in cases such as Detroit and Stockton, make the public sector finances unsustainable. At a certain point, the debt service burden clashes with maintaining a sufficient ongoing provision of services to forestall people from voting with their feet. This may occur well before the point that debt service capacity appears to be fully exhausted. In other words, the prioritization of cash flows to debt service may not be sustainable beyond a certain point. While these particular bankruptcy filings have captured a considerable amount  2  BIS central bankers’ speeches  of attention, and rightly so, they may foreshadow more widespread problems than what might be implied by current bond ratings. We need to focus our attention today on addressing the underlying issues before any problems grow to the point where bankruptcy becomes the only viable option. So, I am especially pleased to see that your agenda today focuses, in part, on helping cities and states avoid such levels of fiscal stress, where the risks of going past such a tipping point become significant. In summary, state and local governments have enormous financial obligations, as well as critical service delivery responsibilities.