samchain/econo-pairs-v1 huggingface dataset:
Future changes will not be simple at all, but all of us together, by exchanging experiences and necessities for change, will build a safer environment, which I hope will make future challenges somewhat easier. Granting independence to central banks represents one of the most relevant steps in the financial system reform in the countries of our region, as an important precondition for maintaining inflation under control and becoming an ESCB member. However, our endeavours for the consolidation of the institutional and real independence should be coordinated carefully by taking into consideration the specific features of our economies in transition, and not as a mere implementation of what may seem to be a successful model for the ESCB countries. In this framework, I consider today’s meeting as very important, since the Bulgarian economy and the Bulgarian National Bank have been going through substantial reforms in the context of EU accession. I believe that the challenges that we have faced and those that we will face in the future are more or less the same with those experienced by the Bulgarian authorities, including the Bulgarian National Bank. As a consequence, I think that the bilateral cooperation between our banks carries a high potential, and in the name of my institution, I avail myself of this opportunity to offer maximal guarantees with regard to the fruitful development of these relations. 1/2  Passing into a multilateral framework, I will return once more to the idea that focuses on the institutionalisation of the inter-regional cooperation between central banks.

We – the central banks of the region – should represent an example in this direction. As pioneer institutions of progress, the central banks of the region should cooperate with each other in order to expand the road for a further political, social and economic integration. I believe that the chances for a rapid and secure process of European integration could be accelerated if we will have – among others – a healthy and safe financial and banking system, which should be able to advance the economic development of the country. Nevertheless, in order to materialise the objective for the approximation of their model with that of the EU member states, we hold the opinion that the central banks of the transition countries have more difficult “homeworks” than the classical responsibilities carried out by a central bank. Speaking in more concrete terms, this has to do mainly with the challenges related to the development of markets, with the unification of different norms and standards and with enhancing credibility in the country, thus aiming at the creation of an atmosphere that inspires confidence to foreign investors. Even though they have passed into the consolidation stage, our banking systems still remain fragile, and as such, they require greater commitment and care. Regardless statistical developments, the scale of financial intermediation is relatively low, whereas time after time the shadow of shocks on the economic equilibra shows up itself in different countries.
The Financial Secretary recognized this by announcing in his Budget speech that he had asked the Secretary for Financial Services with the assistance of the Standing Committee on Company Law Reform to conduct a comprehensive study on corporate governance in Hong Kong this year. The objective will be to plug any gaps in the corporate governance regime and to become a benchmark in the region. Market bodies, professional organizations and regulators will be asked to help in this task. Your own Association may be able to contribute. I do however believe that sound corporate governance is particularly important for banks. The rapid changes brought about by globalization, deregulation and technological advances are increasing the risks in banking systems. Moreover, unlike other companies, most of the funds used by banks to conduct their business belong to their creditors, in particular to their depositors. Linked to this is the fact that the failure of a bank affects not only its own stakeholders, but may have a systemic impact on the stability of other banks. All the more reason therefore to try to ensure that banks are properly managed. It is true to say that banks in Hong Kong are already well managed by international and certainly by regional standards. The fact that they survived the financial crisis in generally good shape is a testament to this. However, during the financial crisis, the HKMA came across a few individual cases where the board of directors did not perform as well as might be expected.

Mr Carse: The importance of corporate governance in banks  Speech by Mr David Carse, Deputy Chief Executive of the Hong Kong Monetary Authority, at The Year 2000 Millennium Dinner of The Association of International Accountants - Hong Kong Branch, Hong Kong Bankers Club, Hong Kong, on 17 March 2000. *  *  *  Ladies and gentlemen, I am very pleased to be here this evening to speak to the Association on the subject of corporate governance in banks. I have chosen this as my theme both because it is highly topical for reasons that I will explain later and because it should be of particular interest to this audience. The Association plays an important role in the training and promotion of the accounting profession; and accountants are a vital component in corporate governance not simply in their specific role as auditors but also as a source of highly trained directors and managers. I will begin by giving you a brief situation report on the banking sector because this is relevant to the governance issue. Clearly, the situation is looking a lot better than it has done for the last two years. As the 1999 results released so far have shown, the performance of individual banks is by no means uniform. Some have done a lot better than others, depending on such factors as the mix of their business and where they are in the provisioning cycle.
After seasonal adjustment, employment has been increasing since the second quarter of last year. The unemployment rate, although significantly up from late 2008, did not go as far as some projections foresaw and is already descending (figure 11). Lately, the velocity of the creation of salaried jobs has outperformed that of total employment. Although aggregate employment has not restored the jobs lost between late 2008 and early 2009, the drop in employment in this cycle has been milder and shorter than it was in the late 1990s, with less social costs from lost output. The countercyclical stimulus from fiscal and monetary policies has been determinant in this behavior of consumption (figure 12). Baseline projections consider the fiscal policy scenario contained in the Budget Law. The drop in external demand has been reflected on the volumes of shipments abroad, which are forecast to fall by nearly 3% annually this year. However, it is worth mentioning, on one hand, the improvement in mining shipments and, on the other, the sharp deterioration of salmon exports in the past few quarters. Both factors, especially the reduced salmon exports, have affected GDP significantly. Thus, the baseline scenario of this Monetary Policy Report foresees the Chilean economy growing between 4.5% and 5.5% in 2010, after dropping 1.9% in 2009. This growth rate is not enough to fully bridge the gaps in the policy horizon.

Now, put yourself in the shoes of a business operator. On the revenue side, you have yet to see a robust recovery in demand; growing your top-line revenue is vexing. You have been driving profits or just maintaining your margins through cost reduction and achieving maximum operating efficiency. You have money in your pocket or a banker increasingly willing to give you credit if and when you decide to expand. But you have no idea where the government will be cutting back on spending, what measures will be taken on the taxation front and how all this will affect your cost structure or customer base. Your most likely reaction is to cross your arms, plant your feet and say: “Show me. I am not going to hire new workers or build a new plant until I have been shown what will come out of this agreement.”  6  BIS central bankers’ speeches  Moreover, you might now say to yourself, “I understand from the Federal Reserve that I don’t have to worry about the cost of borrowing for another two years. Given that I don’t know how I am going to be hit by whatever new initiatives the Congress will come up with, but I do know that credit will remain cheap through the next election, what incentive do I have to invest and expand now?
This is of course not the only news about the UK economy since May. And nor am I inviting too literal an interpretation of my thought-experiment. I offer it simply as a means of sizing the upside news to the economy since May, illustrating its presumptive implications for monetary policy and providing a baseline against which downside risks to the economy can be judged, including from higher unemployment. It was this judgement that lay behind my decision to leave the monetary stance unchanged at the June meeting. Looking ahead, risks to the economy remain considerable and two-sided. Although these risks are in my view slightly more evenly balanced than in May, they remain skewed to the downside. Of these risks, the most important to avoid is a repeat of the high and long-duration unemployment rates of the 1980s, especially among young people. Like the rest of the MPC, I stand ready to adjust monetary policy, at speed, if needed to support the economy and return inflation to its target on a sustainable basis. At the same time, it is important to recognise the limits to what monetary policy can achieve. Monetary policy can help to deliver the monetary and financial conditions necessary to support households and businesses – and is doing so. But monetary policy can do relatively little to avoid problems caused by structural or sectoral shifts in the economy, such as structurally high rates of unemployment.

As the furlough scheme tapers from August, however, there is a risk this greater number of furloughed workers are not hired back by employers, adding to the unemployment pool. The May MPR scenario had unemployment rising to 9%, but assumed the risk of workers not being re-hired was small. Recent survey evidence, from both households and companies, suggests this risk could be larger. For example, survey evidence of companies by the DMP suggests private sector employment could be almost 10% lower by the end of 2020, implying an unemployment path somewhat higher than in the May MPR scenario. If unemployment was to rise more than expected, it increases the risk of a negative feedback loop. Joblessness, or fears of it, have historically been a key driver of household savings. Higher unemployment, as well as lowering incomes, could cause households to increase precautionary savings. That higher saving would lower demand and negatively affect company revenues and employment, in a vicious cycle. John Maynard Keynes described this dynamic in the 1930s as the “paradox of thrift”.13 A paradox because prudent decisions by households, given the risks they face, have the perverse collective consequence of increasing risks to the economy and those same individuals. These dynamics might be particularly potent at  12  Cumulative loss calculated as the percentage difference in the four-quarter sum of quarterly GDP at the Year 1, 2 and 3 points of the January MPR, summed together. 13 Keynes (1936) described this pattern and Samuelson (1948) used the term ‘paradox of thrift’.
François Villeroy de Galhau: France and Germany facing European challenges in the crisis Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Bundesbank conference “Banking and Payments in the digital world”, Berlin, 11 September 2020. * * * Ladies and Gentlemen,  1. To this day, the coexistence and complementarity of central bank and commercial bank money as settlement assets has structured the payment landscape and preserved the stability of the monetary system. Yet this structure is increasingly being questioned. • Our payment landscape is based on the coexistence and complementarities of central bank money and commercial bank money as settlement assets. Their respective roles are clearly assigned: central bank money ensures the stability of the financial system while the multiplicity of issuers of commercial bank money preserves competition and innovation in the provision of financial services. Their interplay and their interchangeability at par value ensures the safety and efficiency of the financial system. • However, the balance between these two forms of money cannot be fixed once for all, as it depends on changes in payment habits, the evolution of the financial ecosystem and the emergence of new technologies. • In the retail space, the digitalisation of the economy and the development of cheap, highly effective digital payment solutions displaying innovative features (e.g.

Yet the press and the markets focus on them as though they were the writ of all-knowing, all-seeing monetary sages. On Monday night, for example, there was much ado made about Janet Yellen noting in Chicago that the central tendency of our best guesses was that full employment would be somewhere between a 5.2 and 5.6 percent unemployment rate. It is nonetheless helpful to contemplate what may be useful guideposts for deciding when to raise the base rate and how we may convey this to the markets. And so the FOMC is grappling with just what, in fact, we can provide the marketplace in the form of forward guidance about our future modus operandi. 4  Monty Python is the British comedy troupe known for its satirical skits. A parody about the FOMC’s “dots” could rank up there with the spoof about the argument clinic “intended to create grievous mental confusion among the general public.” A link is provided here for your enjoyment: www.youtube.com/watch?v=kQFKtI6gn9Y. BIS central bankers’ speeches  3  Odysseus or Apollo? Research papers have addressed this subject. For example, some academic economists draw on Greek mythology to distinguish different techniques for crafting forward guidance, making a distinction between Odyssean and Delphic forms of guidance. The Odyssean model involves committing to a policy rule or to a criterion for choosing between different policy alternatives.
This means that the credit granter is more protected than in the case of ordinary bonds. Covered bonds are therefore good collateral and many other central banks accept these bonds on a larger scale than the Riksbank. In our case the permitted share was raised from 25 per cent to 75 per cent. This measure means, put in very simple terms, that participants in the RIX system can use more collateral to borrow against if necessary. Another measure is that, for instance, the Riksbank and the central banks of Denmark and Norway, together with the US Federal Reserve, have reached an agreement for the purpose of increasing access to dollars in the Scandinavian financial markets, if necessary. For the Riksbank this involves the possibility to obtain access to US dollars in addition to the foreign currency reserve. This is what is known as a swap facility and amounts to a total sum corresponding to USD 10 billion. Our assessment is that it will probably not be necessary to use the money. It is nevertheless important to demonstrate that we are prepared to act if it should prove necessary. The agreement can be quickly put into operation if it should actually become necessary. Financial stability is satisfactory What is happening now has not come as a bolt from the blue. And it is not a question of the central banks sitting with their arms folded ignoring the risks taken by the commercial banks.

The word “expect” is doing more work in this sentence than you might have appreciated. In working out what returns firms should expect to receive from their assets, it is necessary to make assumptions about how many of those assets will go bad – for instance, how likely is it that a company in whose bonds an insurer has invested will go bust and stop paying interest? Or how likely is it that an insurer will get into trouble, be forced to sell its asset for less than it originally paid and recognise a loss? Due to these possibilities it would obviously be wrong to recognise all the returns on assets upfront, because some of them will not materialise – at the very least these need to be deducted. Under the MA this is done in a mechanical way, based on returns and losses experienced in the past. The problem with this approach is simply that expected losses based on averaging the past may or may not be a good guide to the future. [4] There are plenty of examples in finance and elsewhere where the past has not proved a good guide to the future – recent moves in some commodity markets is a topical example, and the performance of subprime US mortgages in the financial crisis is another which illustrates the serious costs that can be incurred when we get this wrong.
Even if the borrowing firm ultimately turns out to be solvent, there may be a delay in a lender getting its funds back, and this delay may prove to be unacceptably costly to the lender. This second cause of liquidity runs – the risk of untimely repayment – is significant because it means that expectations about the behavior of others, or their “psychology”, can be important. This is a classic coordination problem. Even if a particular lender judges a firm to be solvent, it might decide not to lend to that firm for fear that others might not share the same assessment. The less certain any one lender is about the willingness of other lenders to provide liquidity to a firm, the greater the risk that too few loans will be extended to prevent liquidation. In that case, even if the lender turns out to be correct in its judgment of the firm’s solvency, there still will be a cost in terms of delay in receiving repayment. A few pictures can help to illustrate these concepts. Figure 1 illustrates what a creditor’s assessment of the net worth of a financial firm might look like in normal times. Creditors have uncertainty about what that value is, thus, the valuation is represented by a probability distribution. The higher the degree of uncertainty, the greater is the degree of dispersion in the probability distribution.

Namely, during the last global crisis, our economy followed relatively quick and steady recovery from the trough at the beginning of the crisis that was supported by the financial cycle pick up. The banking sector has proven to be sound and stable all these turbulent years, with slowdown of lending relative to the pre-crisis period, yet with moderate credit growth rates supportive to the economic rebound. A related point to consider is the solid ground of the banking system taking into account not only the high capital adequacy and liquidity, but also the relatively moderate level of non-performing loans, especially compared to the peer countries of the region. Besides the high foreign capital in the banking system, cross border effects have remained contained, mainly due to the simple framework of banking operations and strict banking regulations. Last but not least, sound economic recovery also transmits positive spillovers to the financial sector developments. Regarding the economic cycle upward movements, we should underline the strong fundamentals of the Macedonian economy that have been obviously fighting off challenges from the trembling global environment as well as domestic political instability since the beginning of the previous year. The main reasons behind these economic performances were the structural changes in the economy in recent years, which supported export diversification and reduction of unemployment. Improved country’s economic fundamentals are expected to continue providing support to the financial cycle picking up, although both domestic and external risks are still being present.
The APP guidance At its meeting in December last year, the Governing Council updated its forward guidance on net asset purchase by stating in particular that “From October 2022 onwards, the Governing Council will maintain net asset purchases at a monthly pace of € billion for as long as necessary to reinforce the accommodative impact of its policy rates; [it] expects net purchases to end shortly before it starts raising the key ECB interest rates.” The forward guidance on net asset purchases since September 2019 differs from that which prevailed until December 2018. The APP is no longer considered as a separate instrument from the interest rate instrument, but hierarchically subordinated to it, both in terms of its purpose (‘reinforce’) and its timing (‘shortly before’). This subordination was a change: from their inception in 2008, the so-called non-standard measures had always been presented, as distinct and complementary and not as an extension of the rate cuts. The main advantage of this new APP guidance was to reinforce the guidance on rates and to support the “low for long” strategy at the time. The coupling of the two instruments strengthened the impact on the whole yield curve. However, given the change in the inflation context (from a situation where inflation has been too low for too long to a situation of uncertainty), the challenge for the APP guidance today is to move from persistence to optionality.

Beyond experimentation, such exploration may also require testing of use cases in the market to assess their technical functionality and commercial viability in a production environment. To this end, regulatory sandboxes have come in useful over the past few years. Tailored relaxation of regulatory requirements within well-defined parameters has allowed opportunities afforded by new technologies to be explored, while maintaining the overall soundness of the financial system. But central banks’ role in innovation goes further than this. . Moving on to my second point; beyond embracing and facilitating innovation; central banks can play an important role in leading innovation, by being at the centre of experimentation. 7  The private sector is good at leading innovation, subject to the return on investment providing a clear incentive. When this is the case, they do an excellent job. They drive applied research, apply technology in an agile fashion, and deploy solutions to markets quickly. However, private sector firms are less incentivised to innovate in cases where the return on investment is unclear and the benefits may not accrue primarily to them. 2/5  BIS central bankers' speeches  Hence, when there is a need for innovation to develop essential industry infrastructures that benefit the entire financial system, central banks can step in to provide these public goods. We are able to leverage our unique position in the ecosystem to drive collaboration within the local financial sector community, and act as bridges to facilitate collaboration across borders.