samchain/econo-pairs-v1 huggingface dataset:
By clarifying that the Governing Council expects its key policy rates to remain at their present levels at least through the summer of 2019, we increased transparency around our near-term policy intentions, which investors could then reflect in their asset allocation strategies.6 It may therefore not be surprising to see capital flows by euro area residents being rather unreactive to the nearing end of the APP, thereby limiting any abrupt and adverse spillovers from policy normalisation in the euro area to global financial conditions. I would call this the “international stock effect” of our APP. Moreover, the benefits go both ways, meaning that our forward guidance is also likely to have contributed to reduce the sensitivity of euro area rates to foreign spillovers. On my last slide you can see that ECB researchers, using the Diebold-Yilmaz methodology, find that spillovers from US Treasury bonds to German Bunds – the yellow line – have remained remarkably stable, at low levels, over the past year or so, despite the continued upward pressure on long-term US Treasury yields.

5/7  BIS central bankers' speeches  ECB forward guidance, and clear communication more generally, may therefore have helped insulate the euro area from unwarranted foreign tightening pressures and comfort its monetary autonomy, at a time where the independence of monetary policies under floating exchange rates and freely mobile capital has been challenged by international financial integration.7 And if communication indeed provides an effective shield, then further changes in our forward guidance, if warranted in the future, may help us remain in control of financing conditions along the policy normalisation path.8  Conclusion Overall, therefore, and with this I would like to conclude, it is fair to say that much clearer communication, not only by the ECB, but also by other major central banks, together with a commitment by central banks to handle changes to the size of their balance sheet with care, have contributed to substantially reducing sudden and sharp directions of change in cross-border capital flows. This is despite the notable divergence in the pace of policy normalisation across advanced economies. As a result, policymakers have been able to pursue their domestic objectives without sending shock waves across global financial markets. None of this is to say that markets are immune to foreign spillovers. In an integrated global financial market, central banks need to calibrate their policies according to their domestic mandates. In the euro area, this means that significant monetary policy stimulus is still needed to support the further build-up of domestic price pressures and headline inflation developments over the medium term.
A single regulator Alongside this macro framework, there was a consensus that industry and commerce was best left to the market with market failures and externalities controlled by independent regulators, like OFGEM, OFCOM and OFWAT, rather than through ownership. In the case of the financial services sector, responsibility was given to the FSA and banking supervision moved out of the Bank. The new FSA inherited from the Bank an approach to prudential supervision in particular which was based as far as possible on principles rather than a detailed rule book . There were positive and negative reasons for that move. The positive were that a single financial regulator would be more effective at a time when the lines between banking, insurance and securities dealing were breaking down. It was efficient for the firms to have just one regulator to deal with and good for the regulator to be able to look at all aspects of their business. On the negative side there was a worry that responsibility for supervision even of banks could unbalance the Bank and distract it from its monetary role. So while the Bank retained a role in promoting financial stability and monitoring the vulnerabilities in the system as a whole, it was not given any statutory objectives or powers in the new legislation. This piece of the UK system was controversial in some quarters but it definitely topped the international best buy tables in 2006.

Jean-Pierre Roth: Real estate crisis in the United States – similar risks in Switzerland? Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Banque Cantonale Vaudoise, Lausanne, 9 June 2008. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  In the past few months, developments in the mortgage and real estate markets have attracted increasing attention. Europe, and Switzerland in particular, have been indirectly affected as a result of commercial bank activities in US mortgage markets. Over the past few quarters, the European real estate market has also been affected, with a number of countries experiencing a downturn in prices similar to that in the United States. By contrast, other countries, such as Switzerland, have seen real estate prices rising at a steady pace. In some respects, what the United States went through is a classical property crisis of the type that Switzerland experienced in the early 1990s. However, the US real estate crisis spilled over to encompass the international financial markets, endangering their stability and prompting the intervention of several central banks. These events confirm the importance of sound real estate market developments for the economy. It is important to recognise that the Swiss mortgage and real estate markets are very different from their US counterparts.
Uncertainty is part of the cause as well: the exact date of the euro adoption is not known and there is no time to look deeper into the matter against the background of everyday life. Nevertheless, Estonians are one of the most pro-EU nations in the whole Union. More than 70 per cent of us hold positive or very positive views on the EU. However, the origins of euro scepticism and EU optimism are the same. The European Union and EU membership represent common European values, economic prosperity and security for our citizens. Our own currency stands for the same values: credibility, prosperity and economic security. The Estonian kroon represents these values for a very specific reason. Namely, our currency has been pegged to the euro for already 15 years. I cannot resist joking that from the monetary policy perspective we are one of the oldest members of the euro area. A whole generation of Estonians has grown up without having to ask what the interest rate of Eesti Pank is. Instead, they know that the value of the kroon will not change and interest rate changes come from Europe. Most probably, what matters for Estonians is that while being part of Europe we still wish to retain something our own. This is not the most convenient situation for Eesti Pank. On one hand, we should be proud of the trust we have earned at home. On the other hand, we know that joining the euro area is beneficial and necessary for the whole country.

As transactions are processed, the machine learning applications assigns a risk score and  Page 6  this allows card issuers to block potential fraud losses before the transaction proceeds. The Bank, PRA and FCA will publish a Discussion Paper later this year on how the current UK regulatory framework applies to artificial intelligence and machine learning. The paper will also explore how policy can best support further safe and responsible adoption and whether additional clarification of existing regulation may be helpful. Financial market developments: a real-time case study Let me return from the possible futures represented by the adoption of AI to the here and now and the financial market developments we have seen this week in the UK which have meant that I haven’t been able to join you in Vilnius. As is the case for all central banks the Bank utilises various data to provide detailed coverage of financial market developments, ranging from real time quantitative data from wholesale markets through to qualitative market intelligence (MI). We complement the views of external market contact base with the views of our own specialist experts among Bank staff[12]. The Bank’s focus is primarily around those financial markets closest to our mission. The backdrop to the latest events is that financial markets globally have been volatile in recent months, with increases in government bond yields and falls in risky asset prices. While largely orderly in most markets, pressures were observed in parts of the financial system, including challenging liquidity conditions across some markets.
The current inflationary wave will undoubtedly give a new impetus to this debate. How did one rather narrow and quite technical approach come to dominate macroeconomics? It's hard to say. Personally I think it mainly reflects psychological factors. From my experience of more than 30 years in both the academic and financial sectors, I see a rather strong conflict between the exact scientific thinking in the ideal of the natural sciences and the excessive uncertainty associated with the unpredictable behaviour of social systems. I have met many very smart people, including winners of what is inaccurately referred to as the Nobel Prize in Economics, and I have observed that even extremely intelligent people tend to simplify situations dramatically in the face  2/5  BIS - Central bankers' speeches  of high levels of uncertainty. They simply cling to a highly stylised economic model, abstract from many theoretical and practical inconveniences, and then offer a clear answer that can be claimed to be "scientifically" derived. Without this, they would probably have to say, "I don't know, it depends on this, that and the other". Trying to simplify things through highly stylised models would not matter in itself if their users were fully aware of this and understood that they were dealing with a partial presentation of the economy that needs to be complemented by other modelling or analytical approaches. But my experience is that even top economists tend to be timeinconsistent.

But at others it was questionable, because credit and asset prices were rising rapidly, demand was at a decent level and the labour market was tight. And in some periods it was quite obvious that an inflationary potential was building up, i.e. that hidden inflationary pressures were accumulating which might one day come to light. The NK-DSGE models were unable to cope with such situations, nor could they detect them in time. As long as CPI inflation was low, they failed to recognise that the economy was dangerously overheating and that monetary policy needed to be tightened significantly. Some economists are now able to admit this thanks to the bitter experience of the last two years. They are equally able to admit that monetary policy decision-making should not ignore developments in financial markets and growing financial imbalances. New lending to households and businesses, the conflicting trends in asset markets and the nature of fiscal policy are rightly an important part of the debate on the appropriate setting of interest rates in the present situation of high inflation. Central banks in developed countries, especially in Europe, have lost price stability in the last two years. We now need to assess why this happened and how to prevent it in  4/5  BIS - Central bankers' speeches  the future. One reason is probably an over-reliance on recommendations based on narrow models.
This is precisely why it is the job of the authorities to “take away the punchbowl as the party gets going”. I just cannot see how we could calibrate ex ante rules for the increase in capital requirements or whatever that would be needed to do that, but we would of course need somehow to find a way of sensibly constraining the discretion at the core of the alternative approach. Even if we could resolve all those issues, a fifth big issue is how far individual national authorities would be able to operate in this field on their own, given free flows of capital internationally and cross-border banking. These big questions are, of course, inter-related. Most obviously, how far we could get in designing an instrument(s) and a process for its deployment will affect whether the objective should be to ameliorate the effects of economic shocks on the banks or also the effects of the credit-creation process on the economy. And the objective will have a bearing on whether it is host or home authorities who need to constrain a bank’s lending growth. That is a formidable agenda, and it underlines just how much there is to do. Macroprudential: markets and infrastructure as part of the transmission mechanism But if we are to deliver and maintain stability, a macroprudential agenda cannot focus only on countercyclical capital (or margin) requirements. We need to focus on how large shocks might be transmitted through the financial system. Again, there is an analogy with monetary policy.

Erdem Başçi: Global finance in transition Keynote speech by Mr Erdem Başçi, Governor of the Central Bank of the Republic of Turkey, at the conference on “Global finance in transition”, Istanbul, 7 May 2013. *  *  *  Esteemed participants, distinguished guests, Welcome to the conference on “Global Finance in Transition”, held under the Russian G20 presidency and hosted jointly by the Reinventing Bretton Woods Committee (RBC) and the Central Bank of the Republic of Turkey (CBRT). In this conference, we will be analysing and discussing with experts, the structural changes in global finance experienced as of 2008. In these opening remarks, I would like to briefly point out the impact of these changes on emerging market economies. Three fields have undergone significant changes in the aftermath of the 2008 crisis: fiscal policies, monetary policies and financial sector policies. These changes have had significant subsequent impacts on global finance. As for the fiscal policies; those of the emerging market economies differ considerably from the fiscal policies of the advanced economies. Automatic stabilizers did cause emerging market economies to have wider budget deficits temporarily in 2009. Yet, EME’s sovereign debt has been very low compared to that of advanced economies, and still on a downward trend since 2010. Emerging market and advanced economies diverge in terms of monetary policies as well.
It should also be pointed out that in practice, not all goods and services will be objects for cross-border trading and that competition will not therefore be completely all-inclusive, even when the single market has been implemented. The actual introduction of euro banknotes and coins will not noticeably increase competitive pressure in Sweden, as prices here will continue to be expressed in krona and prices in the euro countries will be expressed in euro. This will probably continue to give some scope in the future for specific pricing adapted to Swedish conditions. I stated earlier that the role of the krona as unit of account and means of payment in Sweden is unlikely to be affected by euro banknotes and coins becoming legal tender in the euro area as of 1 January 2002. The krona is also likely to continue to play an important role as store of value for Swedes, as least uncertainty over real growth in net wealth, i.e. future real purchasing power, will be achieved if households save and borrow in assets and liabilities in their domestic currency, as long as price stability is maintained. Hence, a large part of Swedish households' assets and liabilities are held in krona today. Those Swedes who now choose to build up their future purchasing power by buying euro bonds are probably intending to pay for their future consumption in euro, either by moving to a euro country or because they assume Sweden will adopt the single currency at some point in the future.

The 40 or so legislative proposals taken up in the plan should come into force by 2005. In an attempt to hasten this process, the Lamfalussy Committee has illustrated how legislation in the financial field within the EU could be adapted more simply. The Committee also identified a number of areas in the action plan that ought to be given special priority. The Committee's proposals were approved at the EU summit meeting in Stockholm in the spring, and the first proposals for directives are now being discussed. I would like to emphasise the importance of this work. Well-formulated, flexible legislation is necessary to enable the financial sector to provide a positive contribution to economic growth. This is made through enabling payments to be made more cheaply, risks to be distributed better and savings to be  BIS Review 85/2001  3  more easily channelled into profitable investments. The comparison with the USA also indicates that there is great potential to be realised in this respect in Europe. The securities market has particular importance in this context. Firstly, as we have seen, the securities markets have gained greater importance as sources of financing for companies, both with regard to risk capital and borrowed capital. Their significance for savers is growing correspondingly, which is clearly illustrated by the rapid development in households' mutual fund savings. As the markets develop they, and more specifically pricing on them, also take on greater significance with regard to resource allocation in society. In other words, improved measures are extremely important.
There is a need for the major stakeholders to align with some form of regulatory approach or framework which would provide a basis for assessing risks, and to implement regulations  2  BIS Review 162/2009  that are proportionate to the risks identified. In this Forum, some of the key elements of such a regulatory framework will be dealt with, such as Know Your Customer, compliance with Anti-money Laundering regulations, Consumer Protection and achieving greater levels of system interoperability amongst service providers. As such, branchless banking will require an inter-disciplinary approach given the different types of expertise needed to drive this important agenda. The third area of policy concern I would like to touch on relates to the issue of accountability with cross-sector regulatory requirements. There must be clarity over the accountability for the integrity of transactions, security of information transmitted, adherence to a consistent set of regulations and proper maintenance of the system. And it is important to note that higher standards of control will also result in higher costs to the service providers. Cross-sector policy issues must be resolved, and clear accountability with respect to the operations of the system must be established. Systems of governance to engage with different legislative requirements, from capital requirements to anti-money laundering regulations, must be in place. Players need to have the requisite skills and knowledge to address issues promptly with different stakeholders, such as customs, immigration, police and international agencies like Interpol.

This is further complemented by the proliferation of payment cards, particularly electronic money, which enables banking and payment services to be conducted without a bank account or visits to traditional bank branches. According to data from the Consultative Group to Assist the Poor, or CGAP, there will be more than 120 mobile money schemes in developing countries by the end of 2009, more than double the number in 2008. CGAP estimates that by  BIS Review 162/2009  1  2012 some 1.7 billion people will have mobile phones but no bank account, and 20 percent will be using mobile money. A key challenge, to implement a commercially viable and workable mobile banking solution, especially where population density is low, is to achieve a critical mass of users required to reap economies of scale to keep transaction cost low. This is even more relevant if the aim is also to promote financial inclusion as financial services would have to be offered at affordable costs. Thus, a requirement for an open and interoperable mobile platform that facilitates the participation of many service providers and that offers a broad range of services is critical in developing a sustainable and efficient solution for both providers and users. The other type of branchless banking is the use of non-bank financial service providers, also referred to as Business Correspondents in certain jurisdictions.
I shall therefore refer solely to the State and Social Security budgets. The draft State budget for 2014 is set against a macroeconomic background in which real GDP is forecast to grow by 0.7%. This macroeconomic scenario, whose central forecast is export growth above 6%, is prudent and in keeping with the forecasts of most national and international agencies. It outlines a gradual recovery in activity and employment in a setting in which the ongoing budgetary adjustment and the deleveraging of households and firms will continue, and in which the competitiveness regained in 2012 and 2013 will not be lost. In step with our European commitments, an overall general government budget deficit target, in National Accounts terms, has been set at 5.8% of GDP, against the figure of 6.5% forecast for 2013. In terms of the different agents, a National Accounts deficit target of 3.7% of GDP has been set for central government, against 3.8% in 2013, and in the case of the social security system and the regional governments the figures mark an improvement of 0.3 pp of GDP, taking the respective deficits to 1.1% and 1%. Local governments should maintain in 2014 the balanced budget already forecast for 2013. As in previous years, three expenditure items – the public debt interest burden, pensions and unemployment benefits – will continue to condition budgetary programming.

Price and wage developments repeatedly came on a collision course with the fixed exchange rate and Sweden suffered cost crises. To rectify the situation,  BIS Review8/2007  1  the krona was devalued a total of five times during a period of seven years. But the trend increase in domestic prices and wages continued to rise. The fundamental problem still remained. The result was modest economic growth, poor productivity growth and more or less stagnant growth in real wages. The performance was markedly weak both compared with earlier periods and in relation to other countries. During the crisis years at the beginning of the 1990s the situation got even worse. Unemployment increased fourfold in the course of a few years and the central government finances deteriorated dramatically. Long-term interest rates rose and the interest rate differential towards, for example, Germany occasionally came to several percentage points. The fixed exchange rate lost its credibility and finally had to be abandoned, following large currency outflows and extreme interest rate hikes in attempts to defend the krona. The nominal anchor that was to hold down inflation and inflation expectations in the economy had loosened. To secure it again and bring the Swedish economy onto a better track required drastic measures. The solution was what one might call a stabilization policy change of regime. The tasks of both monetary policy and fiscal policy were fundamentally redefined and we were given a clear allocation of roles in economic policy.