samchain/econo-pairs-v1 huggingface dataset:
There is a term for it – mutualism, describing a mutually beneficial relationship between living things. And let me explain why I am talking about biology in a financial forum to begin with. 3. I have always longed to find an appropriate way to describe the financial relationship between Hong Kong and the Mainland. In my view, Hong Kong’s dynamic with the Mainland is truly unique in that it is a dynamic which no other pair in the world shares. In the financial world, our win is their win and their win is ours. As financial competition amongst the world’s hubs continues, Hong Kong and the Mainland have long enjoyed a mutually beneficial relationship. Sounds familiar? Yes, perhaps neither of us are exactly the same as a bee or a flower, but Hong Kong and the Mainland share a very similar dynamic as them in the financial world – one of mutual benefit. RMB internationalisation: Hong Kong stands out 4. And that brings me to the topic that I want to discuss in more detail today, which is the internationalisation of the RMB. With the continuing growth of the Mainland economy and its increasing financial integration with global markets, it is natural that RMB will be increasingly used in international transactions. The 14th Five-Year Plan has made clear that promoting RMB internationalisation should be conducted in a prudent manner, based on a marketdriven approach. 5.

However, given that vulnerabilities on these markets are still high, the resilience of the banking system remains crucial. In January 2022, the Federal Council approved the SNB’s proposal to reactivate the countercyclical capital buffer. This buffer will come into effect at the end of September and will contribute to maintaining banking system resilience. Page 1/1
The Riksbank is therefore less able to handle losses than other central banks (see Figure 12).40  38 Archer and Moser-Boehm (2013) also mention the central banks in Chile, Israel and Mexico. The position of the  Central Bank of the Czech Republic is shown in Figure 12. 39 Stella and Lönnberg (2008) call this ‘policy insolvency’. In a formal model, Del Negro and Sims (2015) show how a central bank can lose control of monetary policy if its financial position becomes too weak. 40 I have discussed this earlier in Flodén (2016, 2018). 21 [30]  Figure 12. The Riksbank's non-remunerated capital is small Per cent of GDP  Note. Refers to data as of December 2021 for the Bundesbank, Czech National Bank, Federal Reserve, Norges Bank, the Riksbank, Swiss National Bank; February 2022 for the Bank of England and June 2022 for the Reserve Bank of Australia and the Reserve Bank of New Zealand. Sources: National sources, national central banks and the Riksbank  Not straightforward to ask for capital injections To avoid scenarios where monetary policy is affected by the weak financial position of the central bank, financial support from the principal may be needed. The Riksbank would in that case have to apply for a capital injection from the Riksdag.

However, Figure 4 shows that the difference between these rates and the Riksbank's policy rate does not appear to have been affected by the asset purchases.14 Government bond purchases thus appear to have pushed down the interest rate on government bonds to a certain limit. However, there are no signs that this caused households and companies to encounter lower interest rates. It is therefore very unclear whether the result was that the economy was stimulated via the interest rate channel.15  13 The market is dominated by so-called FRN-bonds, where the coupon follows STIBOR 3 months. 14 Erikson and Vestin (2021) show a similar figure. Some larger companies also finance themselves through the  bond market. However, when the Riksbank began purchasing government bonds, this form of financing was fairly unusual and accounted for only 22 per cent of the companies' total borrowing (see the Riksbank, 2014). Moreover, it is common for companies' bond loans to have variable interest rates. As turnover in the market is small, it is difficult to follow price developments. Nevertheless, the statistics indicate that rates on corporate bonds fell less than those on government bonds in 2015 and 2016. 15 However, the lower interest rates could reasonably contribute to a lower central government borrowing cost, something I will return to in a moment. However, this was not the purpose of the Riksbank's purchases. 7 [30]  Figure 4. Lending rates have followed the policy rate Per cent  Note.
Let me now say a few words about Iceland’s financial crisis, as it puts the issues raised so far into sharp focus, but then lead us into the crisis in EU banking. Iceland was already on its way into a recession when its three cross-border banks failed in the first week of October 2008. This was partly unrelated to the banking collapse and followed the turn of the domestic economic cycle, after an unsustainable boom and serious overheating during 2005–2007 and a currency crisis in the first half of 2008. . The proximate cause of the demise of the banks was the post-Lehman run on foreign exchange liabilities, which amounted to 7.5 times Iceland’s GDP, while their total balance sheets were 10 times GDP. The banking collapse and the associated wealth loss and further depreciation of the currency deepened the recession. Two separate but interrelated sub-stories of the large Icelandic saga were converging in a tragic grand finale that autumn. These were: 1. Iceland’s boom-bust cycle and problems with macroeconomic management in small, open, and financially integrated economies. (Net capital flow problem and fundamentally nothing new). 2  BIS central bankers’ speeches  2. The rise and fall of three cross-border banks operating on the basis of EU legislation (the European “passport”). (Gross capital problem and unique in Icelandic history – and, at the time, in EU history).

Már Guðmundsson: Capital flows and fragmentation of the international financial system Speech by Mr Már Guðmundsson, Governor of the Central Bank of Iceland, in Session I in the conference “Fragmentation in the international financial system – can the global economy become one again?”, organised by the Central Bank of the Republic of Turkey and the Reinventing Bretton Woods Committee, Cappadocia, Turkey, 14 July 2012. *  *  *  For the most part, I will discuss some flaws in the international monetary and financial system(s) (IMFS) and in the European Union (EU) framework for cross-border banking and financial stability as they relate to both net capital flows and vulnerabilities in gross capital positions. My perspective on these issues is that of a policy-maker from a very small, open, and what used to be financially integrated economy, but it is also informed by the work I was involved in during my tenure at the Bank for International Settlements. The current international and monetary and financial system is in some sense a non-system, a hybrid of miscellaneous exchange rate regimes and diverse rules on cross-border capital flows and activities of financial institutions. This opens the door to country choices that, in the aggregate, cause and perpetuate global current account imbalances. This problem and its solution have been discussed extensively, and I will not dwell on that topic here.
The Bank of Albania has been emphasising constantly that their concentration in the last quarter of the year tends to reduce the effectiveness and increase the volatility of financial markets. In this context, we deem that further efforts should be made to improve the distribution of expenses and borrowing throughout the year. The anchoring of the budget implementation and monitoring in quarterly plans could be a valuable instrument in this regard. Thank you for your attention! 5/5  BIS central bankers' speeches

Cases in point, to name a few, are the defence of competition and the regulation of specific industries, such as energy and telecommunications (under the responsibility of the National Markets and Competition Commission – CNMC – in Spain), the auditing of public sector accounts and economic management (carried out by the Spanish Court of Auditors) and, a more recent development, effective compliance by the general government sector with the principle of budgetary stability (the preserve of the Independent Authority for Fiscal Responsibility, AIRef). As I stated, the ultimate aim of assigning these functions to independent agencies is to obtain an institutional design that ensures a greater level of collective well-being. In this respect, allow me to begin by recalling the main reason why the control of inflation was assigned to independent monetary authorities in a large number of economies. The argument is what the economic literature calls “time inconsistency”, which highlights the role of expectations in agents’ behaviour. I believe price stability unquestionably enhances economic growth and improves well-being in the long run. However, if the monetary authority is not independent and, having regard to other more short-term goals, uses monetary policy to stimulate demand repeatedly and above what would be consistent with its inflation objective, an inflationary bias is generated. In the short run higher levels of economic activity and employment can be attained, but the costs emerge later. The inflationary bias is ultimately anticipated and incorporated into agents’ expectations and, therefore, into price-setting and wage bargaining.
Looking ahead, one can see potential risk factors. One of them is production clustering. If the recently observed trend for country specialization (e.g. Slovakia specializes in producing cars, India in business process outsourcing) holds on, it may increase the risk of asymmetric shocks in the future (De Grauwe 2003). Another example of a possibly distant future asymmetric “shock” is global warming. A recent report cited by Financial Times (FT, 6 January 2007) shows that the Northern members of the eurozone are likely to profit and the Southern members to suffer from the climate change. Nevertheless, whatever the likelihood of shocks, it remains of crucial importance to maintain a balanced fiscal perspective and flexible labor market which can absorb shocks, should they arise. Now let me move to the possibility of rising micro- and macroeconomic imbalances. They can take the form of lending booms, current account deficits or increasing inflation pressure. Such a set of symptoms in a monetary union member country reveals in most cases one common cause – too low a level of real interest rates. Economists have for a long time argued that each economy has an appropriate, long-run level of the real interest rate called the natural rate of interest (Wicksell 1898). Keeping interest rates at this (unfortunately unobserved) level should guarantee that the economy will remain in equilibrium – output will not exceed production capacity and inflation will remain stable (Woodford 2003). This is what implicitly or explicitly most inflation targeting central banks are trying to achieve.

Notwithstanding the fact that people might derive utility from the pure fact of having in their wallets banknotes with Polish kings instead of European bridges, I have no idea how to measure this utility and how to compare it to the utility derived from more standard arguments of preference functions like consumption. For this reason I will speak in terms of standard macroeconomic variables, bearing in mind that this is certainly not the whole story. If economists speak about the advantages and disadvantages of joining a common currency area, they ultimately end up comparing the costs and benefits of accession. This is also the way I would like to proceed. However, bearing in mind that many issues have already been described in several voluminous reports (NBP 2004 for Poland, Csajbok, Csemerly 2002 for Hungary, HM Treasury 2003 for the UK), I will try to focus on issues which are less familiar to the general public or which are potential risk factors. The nature of these issues is that they are mainly concentrated on the cost side of the analysis. Thus, it might seem from my lecture, that I mainly care about the costs or that costs outweigh benefits. Let me, in the very beginning, stress that this is by no means the case.
Since the outbreak of the financial tensions, this Group has solidly worked to gather and share information on developments in the euro area money market and has also provided us with useful feedback on the effect of the ECB’s money market operations. Statistical information. The ECB has also benefited from the wealth of harmonised area-wide financial, banking and monetary statistics that the Eurosystem has developed over the last decade as well as from the recently released quarterly integrated accounts. In addition, very useful information has been collected through surveys (notably, the Bank Lending Survey). Information exchanges with other central banks. During the current turmoil information has been extensively shared and discussed within the central banking community on a wide range of issues, from very technical and operational to more policy-relevant considerations. Especially at the onset of the tensions, the consultations among the relevant central banks were very intense and particularly useful to assess the extent of the turmoil accurately and rapidly. Information exchanges among European authorities. During a market turbulence like the one we have recently witnessed, it is crucial to assess in a timely and comprehensive fashion the implications of the turmoil for the banking and financial industry and, ultimately, for the economy as a whole. In this context, it is important to ensure that the responsible public authorities, notably central banks and supervisors, have the adequate procedures and infrastructure in place to share the relevant information among them.

Thus, in order to satisfy the banking sector’s demand for liquidity buffers on particular days and for fulfilling reserve requirements earlier in the maintenance period, the ECB has (1) occasionally provided liquidity to the market through exceptional operations, 2 and (2) it has changed the time patterns of liquidity provision within the reserve maintenance period. In addition, from the start of the market turmoil the ECB has intensified its communications with market participants so as to indicate its alertness and readiness to act in order to reduce the volatility of the very short term interest rates around the target rate and to contribute to the smooth functioning of the money market. For instance, last Friday we published a press release pointing out that the ECB’s Governing Council has noted that market participants are concerned about conditions in the euro money market in connection with the upcoming end of the year; and announcing the decision to lengthen the maturity of the main refinancing operation settling on 19 December 2007 to two weeks so that it matures on 4 January 2008. In this refinancing operation, we will aim to satisfy the banking sector’s liquidity needs for the entire two week period, covering both the Christmas holidays and the end of the year. This example provides a good illustration of the importance that the ECB has attached in recent months to intervene in money markets through a combination of flexible liquidity management operations and regular communications.
With the new Executive Board, it is also a matter of combining six individuals’ personal perceptions of this picture and of policy’s formulation into a joint picture and a joint interest rate decision. There is no reason for me to anticipate matters. The result of our deliberations and joint assessment will be present on Friday next week. 5  BIS Review 6/2000

Krzysztof Rybiński: Global imbalances and implications for emerging markets Address by Mr Krzysztof Rybiński, Deputy President of the National Bank of Poland, at the Panel Discussion on Scenarios for Emerging Markets at the OKB Roundtable, Vienna, 14-15 December 2006. Views presented here are my own and they do not represent the official position of the National Bank of Poland. Here I only sketch the key arguments, extensive discussion of issues related to global imbalances is presented on my blog www.rybinski.eu. *  *  *  ‘Hard’ and ‘soft’ landing are aeronautical terms. Many decades ago plane crashes were so alarmingly frequent, that some believed that every flying plane was an accident waiting to happen. Today, the advance of technology makes the past concerns look ridiculous; plane crashes are rare and require exceptionally adverse weather conditions, human failure or a terrorist attack. Likewise, large current account deficit in the United States and large current account surpluses in China and oil-exporting countries, jointly labeled as global imbalances are considered as unstable just as planes used to be several decades ago. Similar aeronautical vocabulary – hard landing, soft landing, crash etc. – is also used to describe the range of possible outcomes for the global economy, which embarked on a global imbalances journey about ten years ago 1 .
Looking ahead: the longer term financial stability policy agenda Perhaps I can turn now to some observations for the longer term. These go beyond Basel II and what its architects had in mind for it. But they nonetheless require us to think in terms of the same combination of evolving best practice within the financial services industry on the one hand and public policy needs on the other. I  The challenges of an increasingly integrated financial sector  Firstly, the new Accord is mainly designed for credit risks and hence essentially for banks. Yet we are all becoming clearer that the process of intermediation of risks is itself changing mightily. The silos that were securities, lending, and insurance, are no longer silos. Instead we are seeing the increasing development of a single financial network embracing not only these areas, but also many organisations which fall outside today's definitions of what is a bank, what is a securities house, or what is an insurance company. This process has gathered pace in recent years, and has accelerated since the Basel II process itself began. A couple of examples can illustrate what I mean. First is the growth of the credit risk transfer market. Alan Greenspan has recently noted that this may have benign effects, recently arguing that: 'If risk is properly dispersed, shocks to the overall economic system will be better absorbed and less likely to create cascading failures that could threaten financial stability'. But new forms of contract tend to bring uncertainty.

And any review mechanism must take careful account of the implementation costs incurred by banks when the rules change. But it is costly, too, to persist with regulatory standards where they are clearly out of line with market practice. Real effort has been made to tie the Accord to best market practice and thus to changes that banks will need to introduce anyway. Going forward, the guiding principle, difficult I know to achieve in practice, should be to keep to a minimum the difference between expenditure that banks would be incurring in any event and that required by regulators. Part of the trick is to ensure sufficient continuity of core aspects of the standards, so that changes to basic IT systems etc are minimised or at any rate can take place over time. Time is, after all, a major help in this respect. Implementing systems changed as part of the software obsolescence cycle may involve only modest marginal cost. More immediate and discrete changes are always going to be more costly. These issues will clearly need further discussion. In the EU context, however, it is particularly important that the arrangements for revising any Directive reflect, if not the letter, at least the spirit of Lamfalussy. It would be wholly inappropriate to try to hard code all the detail of the pillar one rules in an EU Directive, as if these can necessarily stand for a long period of time.
Figure 26: Contribution to GDP Growth Figure 27: Consumption of Resident and from Spending by Periods Non-resident Households (Percentage Point) (Seasonally Adjusted, at 1998 Prices, Billion TL) 8 7 6 5 4 3 2 1 0 -1 -2  19  7.1  14  5.9  13.5 18  13  3.8  12.5  17  12 16  11.5 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2  -0.1 GDP  -0.4  -1.0  -1.1  P riv. Stoc k Expo rts Public Privat e Imports Cons . Change Spending Inv. Source: TURKSTAT, CBRT. BIS Review 143/2009  2005  2006  2007  2008  2009  Co nsumption Co nsumption excl. Furniture, Housing Goods and Services, Trans portatio n, Communicat ion  Source: TURKSTAT, CBRT. 11  Recently issued data indicate that this trend continued in the third quarter as well and consumption demand has adopted a weaker course following its marked increase during the second quarter. Although private investment is expected to increase slightly in the third quarter, the low capacity utilization rate and the high uncertainty in demand is expected to hold back the recovery in investments. Accordingly, total aggregate domestic demand is expected to stay flat in the third quarter, after increasing significantly in the second quarter (Figure 28).

Figure 15: Interest Rate Developments (Percent) 26  21  16  BondTahvil yieldsve Bono Piyasası Faiz Oranı IMKB (gösterge niteliğinde, bileşik)  11  CBT Policy Rate (compound)  0909  0709  0509  0309  0109  1108  0908  0708  0508  0308  6  0108  TCMB Gecelik Faiz Oranı (bileşik)  Source: ISE, CBRT. 6  BIS Review 143/2009  Market interest rates in all maturities are declining. It is noteworthy that long-term yields declined more than shorter-term yields and displayed a flatter yield curve (Figure 16 and 17). Figure 16: Yield Curves*  Figure 17: Difference Between LongTerm and Short-Term Interest Rates*  (Percent)  15  28.July.2009  10  01.October.2009  9  Release of the July Inf lation Report  13  7  Yield  8  6  11  5 4  9  3  0.5  1  1.5  2 2.5 Term  3  3.5  1009  0909  0809  0709  0609  0509  0409  0309  7  0209  0109  2  4  * Estimated by using the compound yields on the bonds in the ISE Bonds and Bills Market, based on the Extended Nelson-Siegel (ENS) method. *Difference between interest rates with 4-year and 6month maturities of the yield curve estimated by ENS method, 5-day moving average. Source: CBRT. Source: CBRT.