samchain/econo-pairs-v1 huggingface dataset:
I do not intend to use my remarks this evening to recall our many private conversations – they shall remain private – nor your many achievements: we all know what they are. I would like instead to focus on three of the qualities that I have personally witnessed, and that have marked you out as one of the pre-eminent leaders of your generation: your commitment, your rigour and your statesmanship. Wolfgang is receiving this award tonight in recognition of his commitment to a unified Europe and stable democracy in Germany. Commitment is a quality that has run like a thread throughout your public life. On this very day 30 years ago, only a few blocks from here, a million people demanded reform, democracy and freedom in the largest demonstration East Germany had ever seen. The fall of the Berlin Wall ushered in a profound transformation of German and European history, and you, as Minister of the Interior, were at the heart of this process. Your commitment to your own country was always matched by a commitment to Europe – and you understood that each made the other stronger. You saw immediately that German reunification could trigger optimism at home but anxiety abroad. You knew that the best way for Germany to demonstrate the strength of its historical responsibility to Europe was to share a currency with its neighbours. At the same time, a single currency would safeguard the single market against the risk of competitive devaluations.

You are notorious for your ability to pick apart shallow arguments and for your intolerance of superficiality. Your brilliant mind has often put you at the forefront of European debates. In the 1990s you were already writing about how to build a more deeply integrated European framework around the countries that would go on to share the single currency.3 You understood very early on that a monetary union comprising different sovereign states can only be sustainable if there is mutual trust. And you realised that trust does not emerge through declarations or treaties: it is built through actions that demonstrate the commitment of states to abide by the promises they have signed up to. You saw, in other words, that rules are not an end in themselves. I have so often heard you mention the words “implementation, implementation”, because you knew that it is through faithful implementation and respect for the rules that trust builds up between countries. And it is once trust has developed that more sharing of sovereignty can follow, which reinforces the strength of the Union and each of its members. In the face of changing reality, the challenge, of course, is how to ensure that governance is both credible and flexible. As you have said yourself, “sticking to rules […] does not mean a lack of creativity or originality.” 4 And it is this spirit that we will need to channel in our efforts to deepen our Economic and Monetary Union.
And I will explain why, earlier this month, the Committee voted to use unconventional policy measures: how they will work and how we will monitor their effectiveness. I am delighted to have the opportunity to discuss these issues at the Association of British Insurers. The insurance industry is a key part of the UK economy and of the financial sector in particular. Indeed, it accounts for a third of all the jobs in the UK financial sector. Your industry, like virtually every other sector of the UK economy, is being affected by the recession. And given your members’ significant holdings of gilts and corporate bonds, it will have a key role to play in the transmission of the unconventional policy measures recently begun by the Committee. 1. The economic outlook  The causes of the current recession can be traced back to at least the summer of 2007. The fallout from the sub-prime mortgage crisis and the resulting pressure on banks’ balance sheets led to a sharp tightening in the price and availability of credit. And the first stages of what became a renewed and prolonged surge in oil and other commodity prices began to erode households’ spending power and eat into companies’ profit margins. As a result, the UK economy gradually slowed through the end of 2007 and into the first half of 2008. But the economic outlook took a dramatic turn for the worse in the autumn of last year.

Spencer Dale: Tough times, unconventional measures Remarks by Mr Spencer Dale, Executive Director and Chief Economist of the Bank of England, at the Association of British Insurers Economics and Research Conference, London, 27 March 2009. I would like to thank Rohan Churm, Alan Mankikar and Tim Taylor for their considerable help in preparing these remarks. The views expressed are my own and do not necessarily reflect those of other members of the Monetary Policy Committee. *  *  *  The UK economy is in a deep recession. Output in the United Kingdom fell at its fastest rate in nearly thirty years in the final quarter of last year, and a similar fall in output in the first quarter of this year appears likely. We are in the throes of a synchronised global downturn, which has spread far and wide. But the darkest hour is just before the dawn. Although immediate prospects appear bleak, the substantial economic stimulus that is underway means that there are grounds for thinking that economic conditions may start to improve later this year. An important part of that stimulus stems from the extraordinary measures taken by the Monetary Policy Committee over the past six months, including our decision to start using unconventional policy measures. Today, I will describe my view of the economic outlook and outline the factors that I believe will spur a gradual turnaround in our economy.
Since the global financial crisis, the euro area banking sector has been going through a gradual restructuring process, which involves the search for new business models, the adjustment to the revised regulatory regime, consolidation and the resolution of nonperforming assets3. In fact in 2020 the number of completed mergers and acquisitions in the banking euro area increased even though this type of M&A had been decreasing since 2010. In an effort to further contain costs and consolidate the banking sector, the number of euro area banks and branches has continuously declined by approximately 30% since 20084. Incumbent banks must restructure and improve on technology and efficiency simultaneously with the entry of new competition also from Bigtech. Technology giants are entering financial services as their next related business. Global technology giants have built extraordinary market advantages: large and engaged  2/4  BIS - Central bankers' speeches  customer network; huge data enabling robust and increasingly precise understanding of individual customers, experience in scaling innovative technologies and because of their size, access to low cost of capital. BigTech players have already gained a foothold in financial services in select domains such as payments and in some cases lending and insurance. However, digitalisation also poses significant financial and operational risks, both in the banking sector and in the Fintech / BigTech companies, themselves. The Financial Stability Board5 has recognised a number of operational risks, including: 1. Operational risks of third-party reliance that are transferred to banks.

Constantinos Herodotou: Fintech Evolution in the Banking System and Managing Consequent risks Address by Mr Constantinos Herodotou, Governor of the Central Bank of Cyprus, at the Annual General Meeting of the Association of Cyprus International Financial Firms (ACIFF), Nicosia, 8 December 2021. *** The pandemic has highlighted the importance that technology plays in allowing the financial system to continue, as smoothly as possible with its operations. Global Fintech investment continued its remarkable growth, rising from $ billion in H2'20 to $ billion in H1'21. Global Fintech deal volume also hit a new record of 2,456 during H1'21. Data also shows that consumers worldwide are adopting Fintech services much more quickly than anticipated. In 2017 it was predicted that 52% of consumers worldwide would have adopted Fintech services by 2019, but the estimate proved to be too conservative as the actual figure overshot it by 12 points. This overshooting happened before the pandemic. Although data is not yet available, the recent health crisis must have accelerated further this figure. The growth in the Fintech market is also obvious from the number of Fintech startups. As of November 2021, there were 10,755 Fintech startups in the Americas, making it the region with the most Fintech startups globally. In comparison, there were 9,323 such startups in Europe, the Middle East, and Africa and 6,268 in the Asia Pacific region. Cyprus is no exception to this global trend.
These criteria are necessary because our models are uncertain and because confidence in monetary policy cannot always be taken for granted. The criteria do not conflict with Svensson’s monetary policy research, but can be regarded as a bridge between the model and reality. Allow me to show you how the criteria were used in the work on the March Monetary Policy Report by outlining the thought process involved. Although the charts I will be presenting are a simplification , they serve to illustrate our working methods. Norges Bank’s assessment of the current situation and the forecasts – with below-target inflation and a considerably negative output gap – might, under criteria 1 and 2, indicate in isolation that the interest rate should be set very low and even be negative towards the end of 2009. This is illustrated by the green line. However, the Executive Board chose to take a less drastic course of action on the basis of the other criteria taken into consideration. Criterion 3 states that previous methods of operation should be taken into account and that the interest rate should normally only be changed gradually. With emphasis on interest rate smoothing in the loss function (i.e. criteria 1+2+3), the result is the black line. This interest rate path is still low, and lower than the path that was in fact chosen. Criterion 4 states that monetary policy should be robust and criterion 5 that cross-checking should be carried out.

As you remember, around this period of last year, one of the issues that had attracted a lot of public attention was the continued influx of fund flows into the emerging markets including Thailand. But this theme has suddenly changed when the US Federal Reserve signaled in May its intention to scale down, and eventually terminate, its asset purchasing program. The signaling immediately sparked turbulence in capital and currency markets in emerging economies and certainly serves as a recurring reminder that the linkages in the international economy are as psychological as they are mechanical. From June to August, Thailand, like other economies in the region, continued to witness further episodes of outflows as investors continued to reform their expectations towards the exact tapering timeline. 4. In the recent months, turbulence in the markets seems to have somewhat been moderated. This possibly reflects the fact that much has been priced in during the earlier outflow episodes, as well as the fact that it has been clearer to the markets now that any further tapering by the Fed will likely be done in an incremental manner. This is, however, not to say that short-term volatilities are no longer with us. The challenges going forward for policymakers are, therefore, not only to have the right set of policy responses in place to deal with these short-term volatilities, but also to make sure that all the market participants are well prepared for the scenarios that could be expected. 5.
And according to the Bank’s baseline forecast, the outlook is good: continued strong GDP growth and full employment; a current account surplus throughout the forecast horizon; the prospect that Icelanders will soon own more assets abroad than foreign nationals own in Iceland; and inflation at target for the entire period. One can ask, in view of this, why some observers are so dissatisfied with monetary policy. I will discuss this in more detail later on. But there are significant risks, and we must be on the watch for them. There is an obvious risk of economic overheating. The labour market could spiral out of control. Economic policy mistakes could take place – for instance, if fiscal policy begins to pull too strongly in a different direction from monetary policy. We have seen the repercussions of this before. I will now turn to the main topics of my speech today: the level of interest rates in their long-term context, the foreign exchange market, and possible changes to the monetary policy framework. Level of interest rates During the run-up to the recent Parliamentary elections, there was considerable discussion of the level of interest rates in Iceland. If we are to come to a sensible conclusion on whether the nominal interest rate set by monetary policy is appropriate or not in terms of inflation, inflation expectations, the business cycle, a plausible estimate of the equilibrium real rate, and foreign interest rates, it is important that the discussion be based on facts.

In the case of the eurozone, that is the European Central Bank. The pros and cons of such cooperation were outlined in detail in a report published by the Central Bank in autumn 2012, and I do not have time to cover them here. 1 If we continue with our own currency, the question of exchange rate policy arises: should the króna be pegged against one currency or a basket of currencies, should it float freely, or should it be somewhere in between? If the exchange rate is pegged, it is not possible to apply monetary policy to mitigate economic fluctuations by responding to shocks. The adjustment will therefore take place more through fluctuations in employment and output and less through fluctuations in real wages than is the case with independent monetary policy and a flexible exchange rate. What do we want in this context? A good stylised example of how independent monetary policy and a flexible exchange rate could mitigate the impact of shocks on employment and output can be found in the most recent issue of Monetary Bulletin, which describes what would happen if the past few years’ improvement in terms of trade should reverse with  1  http://www.cb.is/publications-news-and-speeches/publications/special-publications/specialpublication-7/  9  a reduction in marine product prices. 2 There are many things to consider in this respect. Experience shows that in small, open economies with unrestricted capital flows and a freefloating currency, the exchange rate has a tendency to fluctuate excessively and irregularly, with possible negative implications for financial stability.
Since 1973, international trade has been growing on average by 11% per annum (from 22% of the GDP in 1973 to over 40% of the GDP in 2002), whereas the capital flows 1 increased from 7% of the global GDP in 1973 up to over 20% of the GDP in 2002. 1  Capital flows are defined here as a total of the FDI, portfolio investments and other investments recognized in the financial account of the balance of payments statement, exclusive of changes in receivables and liabilities of monetary authorities and the central government.

More recently, Brexit brought to the forefront the concerns over the health of the European economy, leaving the rest of the world with less hope of a broadbased economic recovery. Furthermore, 6 central banks have implemented the negative interest rate policy resulting in irregular financial market structure1. An extraordinary amount of the world’s sovereign debts carry negative yields. Meanwhile, major currencies have been volatile. Relative to the USD, the Japanese Yen appreciated by 18%, whereas the British Pound dropped 1/5  BIS Central Banker's Speeches  by 12% year to date. As for a small open economy like Thailand, domestic financial markets inevitably felt the ripple effects of the developments and growing anxiety at the global level. Once again, risk appetite has turned towards emerging markets – and Thailand is no exception. While last year, we saw a net portfolio outflow of around 7.6 billion USD, the first 7 months of this year already recorded a net inflow of over 5 billion USD into bond and equity markets combined. 10year bond yield hit a record low at 1.54%, while the Stock Exchange of Thailand index has marked about 20% gain to date, compared with a 14% fall just one year earlier. Despite volatile asset price movements, the Thai financial system remains resilient thanks to our sound external position and sound financial system. As in the past, foreign participation in the Thai bond market remains at less than 10 percent, while that in the stock market is around 30 percent of the market capitalization.
If we wish to shore up this resilience, we must proceed further with the design and application of reforms that tackle the main longterm challenges: productivity, a reduction in structural unemployment and tackling the consequences of population ageing. These are reforms whose positive effects can only fully crystallise following a lengthy period of time. This is precisely why it is desirable that we should set about them as soon as possible. Among the challenges outstanding, I would highlight that of population ageing, owing to its far-reaching consequences, the effects of which will make themselves felt in numerous areas. These include most notably, and primarily, the compatibility between the sustainability and sufficiency of the public pensions system, against the background of the progressive rise both in life expectancy and in the number of pensioners relative to current employees, but also other potentially adverse effects on productivity and the capacity to develop and adopt technological innovations. As we all know, reversing demographic trends is very difficult owing to various cultural, sociological and economic reasons; and, in any event, any policy along these lines requires  4  time to produce appreciable effects. Accordingly, without abandoning policies in the medium and long term that seek to alter or alleviate such adverse demographic trends, in the short term the means of tackling the situation involves growth in employment and productivity.

As regards national demand, a moderate slowdown in private consumption may be expected, against the backdrop of smaller increases in employment, following several years of strong growth as a result of pent-up demand during the crisis. Investment in housing will continue to grow notably, boosted by job creation and the availability of credit under favourable conditions. Also, business investment will remain robust, in line with the expected course of final demand, against a background of most notable headway in the ongoing restructuring of corporate balance sheets and of persisting easy financial conditions. Turning to external demand, the cumulative gains in competitiveness that I referred to and the sound outlook for the international economy as a whole and, in particular, for the euro area, are expected to continue making for a dynamic Spanish export performance. Risks This predominantly favourable scenario is subject to various sources of risk. For example, developments on global financial markets. In February we saw how the high valuations attained by certain financial assets can give rise to bouts of price corrections and notable rises in volatility. Any future intensification of these episodes, which to date have originated in US markets, might have adverse consequences for economic activity and for financial stability. 3  Furthermore, it is complicated to anticipate how Brexit, and its consequences in terms of trade in goods and services or in movements of people and capital, will unfold. But, in any event, protracted uncertainty over the final agreement intensifies the risks of an adverse impact on activity.
No single key figure, taken alone, is capable of providing a comprehensive picture of the risks involved. Therefore, our risk assessment is based on a range of key figures developed to measure risk, each of which has its own justification along with certain limitations. In order to evaluate the overall risk of our investments, we use the value at risk method (VaR). Additional risk analyses are also necessary because of the method-related limitations of VaR (it provides no information about possible extreme losses; moreover it tends to underestimate the risk of large losses, particularly in times of low volatilities). We therefore conduct a number of additional stress and scenario analyses. For all of these risk calculations we take account of the SNB's tendency towards a long-term investment horizon. The methods used to assess and limit the risks linked to our active management of investments include the 'tracking error' method. This shows us the extent to which our actual investments deviate from the given benchmarks. Our Risk Management unit has a complete and up-to-date picture of all investment positions. This is based on a dedicated IT solution which aggregates all positions from different supplier systems on a daily basis and evaluates them according to different criteria. This permits any critical developments to be identified in good time. Within the bounds set by monetary policy, we work to achieve the greatest possible diversification of financial risks and to attain adequate compensation for the risks we enter into.

The purpose of these meetings is to enable the HKMA to get to know the future directors and chief executives better and to make clear the HKMA’s expectations of the roles and responsibilities their appointments will entail. It is important for all of us to appreciate that the ultimate responsibility for ensuring the safety and proper functioning of a financial institution rests with the institution itself. Regulation and supervision can only supplement or reinforce the process and cannot replace sound control and governance within the institution. (c)  Culture: the latest Global Financial Crisis and the subsequent developments have exposed clearly the fact that uncontrolled greed can and did generate highly undesirable outcomes. Not only were financial firms badly hit by these outcomes, but in some instances the reputation or brand of well-established financial centres has also been tarnished by these events. Of course, after the events many people sought to apportion blame. Obviously, the institutions concerned must take the bulk of the blame. Inadequate regulation and poor supervision were also culprits. But to me there is a much more fundamental issue that needs to be tackled if we wish to reduce the risk of similar events recurring. That is the culture and values of the financial firms and the market practitioners.