samchain/econo-pairs-v1 huggingface dataset:
If the slightest exchange rate movement will prompt an intervention persistently, the market’s perception of this greater stability of the exchange rate may limit the power of monetary policy. For example, fighting an asset price bubble, by raising the interest rate while intervening at the same time to prevent a larger appreciation, may be counterproductive, because the incentives for carry trade positions may exacerbate the bubble and the exchange rate appreciation itself. 3  3  This may explain the results about exchange rate instability presented in Batini and Nelson (2000), when the exchange rate is subject to bubbles which are dealt with via the interest rate. BIS Review 68/2009  5  Final remarks Financial stability must be preserved with an adequate regulatory system. Agencies must analyze the strength of institutions, while central banks must evaluate the system’s overall stability. Regulators and central banks must closely cooperate and work in the effort of maintaining the integrity of the financial system. Regulating specific institutions is not enough, because interconnections exist that could derive in a systemic crisis. The current crisis proves that the regulatory scope must encompass every agent with a systemic importance. So a proper macro-prudential regulatory system is needed. This is a system still in debate, particularly regarding the instruments that must be applied to achieve this function. A first set of instruments has to do with capital adequacy. However, this is not enough, and it is no trivial to judge the soundness of the financial system by its capital and leverage levels.

It is important to allow securitization, but establishing incentives for both credit screening and monitoring of payments to remain at the banks and that the process of transferring credit risk away from individual institutions’ balance sheets does not escape the authority’s eye. The current crisis should not become a hindrance to financial development, but a sign of alert in favor of prudence and rigor when assessing the innovations. Thank you very much. References Batini, N. and E. Nelson (2000), “When the Bubble Bursts: Monetary Policy Rules and Foreign Exchange Market Behavior,” mimeo, Bank of England. Bernanke, B. and M. Gertler (1999), “Monetary Policy and Asset Price Volatility,” in New Challenges for Monetary Policy, Proceedings of the Jackson Hole Symposium 2005, Federal Reserve Bank of Kansas City, pp. 77-128. Blinder, A. and R. Reis (2005), “Understanding the Greenspan Standard,” in The Greenspan Era: Lessons for the Future, Proceedings of the Jackson Hole Symposium 2005, Federal Reserve Bank of Kansas City, pp. 11-96. Calvo, G. and C. Reinhart (2002), “Fear of Floating,” Quarterly Journal of Economics, Vol. 107, No. 2, pp. 379-408. Cecchetti, S., H. Genberg, J. Lipsky y S. Wadhawani (2000), Asset Prices and Central Bank Policy, Geneva Reports on the World Economy No, 2, ICMB and CEPR. 6  BIS Review 68/2009  Ellis, L. (2008), “The Housing Meltdown: Why Did It Happen in the United States?,” BIS Working Paper No. 259. Keys, B., T. Mukherjee, A. Seru and V. Vig (2009), “Did Securitization Lead to Lax Screening?
One angle of this issue is how the membership might impact the overall economy, and hence what challenges as policy makers we could face. The second angle is more specific, as the economic integration is the stepping – stone towards the monetary integration, and the adoption of the Euro as a single currency. Observing the first angle, one should probably try to draw conclusions from the experience of other peer economies that already went, through this process. Entering the EU, for these countries provided confidence anchor and significant reduction of their risk premiums. It enabled strong influx of capital, which underpinned their real and financial convergence. In some of these countries, the finance flows went to productive and tradable segments, making the economies more resilient to shocks and less vulnerable. But, in some of them the allocation of capital was less conducive to sustainable growth, it created excessive imbalances, high leverage and less room for policy makers. The occurrence of the global crisis was a “natural halt” and painful correction of this unsustainable economic matrices. At this juncture, with the global crisis behind us and all the lessons learned, I think as policy makers we are more knowledgeable to reap the benefits of the EU entrance more wisely, and to better deal with the challenges ahead. At this point I must say, that Macedonian economy is already well integrated both in terms of trade and finance with the EU.

As the banking industry goes through a radical transition, banks will need to widen their talent pools and attract  Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬  - 13 -  a broader range of skills, in line with their shifting business models and changing customers’ preferences. Staff at banks of the future will no longer be limited to mostly finance professionals. Instead, the role of data scientists, visual designers, digital marketing and media experts, software developers and customer experience professionals will become more significant. Banks might even need to recruit psychologists, philosophy majors and other professionals with diversified skills that can bring in new perspectives. These people will be very different from traditional bank recruits, with different expectations for their roles, work environments and contributions. And banks will be in direct competition with technology firms, leading corporates and start-ups to hire them. Banks will need to overhaul their entire process around acquiring, managing, deploying and retaining talent. Like technology companies, they will need to invest in their talent pools to leverage their expertise and creativity. They will also need to transform their corporate culture into one which promotes agility, collaboration and responsible risk-taking when it comes to delivery of solutions. The banking industry needs to succeed on all of these battle fronts: customer loyalty, value, efficiency, resilience and talent. Failure to win on any front could have dire consequences, regardless of a bank’s size or market share.
The basic problem was that our models do not capture the various financial links that played a major role during the financial crisis, and we therefore underestimated the risks. You might think that in such situations we should tone down the model analysis and instead rely on assessments of various indicators, which in fact the Riksbank did, but we could have performed better here too. We made substantial downward revisions in the figures for GDP, but we did not expect the fall to be as great as it actually was. When assessing GDP during the fourth quarter of 2008 we should, in my opinion, have attached more weight to the alarm signals that came from our company interviews, especially as data from the business tendency surveys, the statistics on redundancy notices and falling share prices all pointed in the same direction. On the other hand, the underestimation of the fall in GDP did not affect  9  See the minutes of the Executive Board's monetary policy meeting from 10 February 2009. BIS central bankers’ speeches  9  the conduct of monetary policy as the repo rate was still reduced substantially, by several percentage points, over a short period of time. Nor do I believe that the conduct of a less restrictive monetary policy earlier in 2008 would have had much effect on the course of the crisis. That is not the point. The point is that the misjudgements made by the Riksbank were partly due to shortcomings in the analysis.

(2020), “Do shareholders benefit from green bonds?” Journal of Corporate Finance, Vol. 61; Zaghini, A. (2020), “The Covid pandemic in the market: infected, immune and cured bonds” (2020), Covid Economics, Vetted and Real-Time Papers, Issue 50, CEPR Press. 42. At present, seven countries in the euro area issue green government bonds. In total, green debt (also including green bonds issued by suprananational institutions, regional bonds and agencies) currently only represents 1.4% of the ECB’s PSPP portfolio. This share is in line with its market capitalisation. 43. Forward-looking metrics, including measures of sovereign issuers’ alignment with the Paris Agreement, are still being developed for commercially available sustainability data. Furthermore, the  methodology for analysing and reporting the carbon impact of sovereign bonds is comparatively less advanced than for other types of fixed income instruments (including corporate bonds). Currently, data providers mostly follow a production-based approach. Under this approach, a country’s greenhouse gas (GHG) emissions are aggregated based on a territorial definition of production. This definition solely considers where the emissions are originally generated, regardless of the final destination of goods and services. The production-based approach therefore ignores the impact of carbon leakage, whereby richer and highly regulated countries “export” GHG emissions to jurisdictions with less stringent regulation. 44. See NGFS (2021), op. cit. CONTACT  European Central Bank Directorate General Communications    Sonnemannstrasse 20     60314 Frankfurt am Main, Germany    media@ecb.europa.eu  +49 69 1344 7455  Reproduction is permitted provided that the source is acknowledged.
More recently, the region has woken up to the reality of extremist groups linked to Al Qaeda, using terror to undermine countries and bring about an Islamic state in Southeast Asia. Meanwhile China surged ahead, largely unaffected by the crisis. South Korea launched vigorous reforms, cleaning up its banks and restructuring its chaebols. For a few years, the US economy, with its insatiable appetite for imports, was the world’s solo engine of growth. This helped the region to begin recovering from the blow it had suffered. But then the dot-com bubble burst, and far from the V-shaped recovery confidently predicted by many experts, the US economy has shown persistent weakness, weighed down by high levels of household and corporate debt. These upheavals have taken their toll on the global financial industry. After the dot-com bubble and the crash in global equity prices, finance is no longer a hot industry on the go. Profits have fallen, and bad assets have had to be written off. Deals have dried up, and investment banks are slashing payrolls. The excesses of the boom years are now manifesting as corporate scandals, putting the industry on the defensive, both with the public and with regulators. Singapore’s financial sector has been affected by all these developments. Despite all our efforts to liberalise and grow the financial sector, it only grew by an anaemic 1.1% per annum from 1998 to 2001. Many jobs have been lost. However, these disappointing numbers do not tell the whole story.

But at the same time our policy should be both proactive and pre-emptive, to sustain non-inflationary growth despite volatile market conditions. We therefore need good financial market intelligence to keep abreast of market dynamics, shifts in market sentiment as well as large-scale capital flows that are potentially destabilising. We have had a fairly easy ride managing our exchange rate so far. However, this does not mean that the markets will never try to attack the Singapore dollar, or that if they do it will not gravely harm our economy. Strengthen partnership with industry Second, we must strengthen our partnership with industry. The industry plays an important part in all of MAS’ initiatives. MAS needs a good understanding of how the market works, whether in supervising the financial sector or in managing the exchange rate. We must always be able to see our policies from the private sector’s point of view. What does it mean to them? Does it reflect how the market really works? How burdensome will our requirements be? Can players get around our policy intent? And how do we prevent that? But however hard we try, we will still be at one remove from the market practitioners themselves. The private sector will have the best knowledge of industry developments and emerging trends. MAS would continue to tap into this wealth of knowledge through systematic and constructive consultation with industry. For a start, MAS has introduced guidelines to formalise public consultation as a standard procedure whenever significant changes in our regulatory framework are planned.
For economists who did not have the opportunity to observe the panic up close as I and most of my colleagues had, the developments in this four week period must have been bewildering given how widely events on the ground and theory diverged.15 At the time and at times since, some academic economists have questioned whether bank lending to nonfinancial corporations and individuals was really declining during this period in ways that posed a threat to the real economy. It is a fact that weekly measures of the stock of bank loans were increasing in this panic period. But for those following financial markets closely there was a keen awareness of the importance of securitization prior to 2007 and its collapse in 2008. More revealing than the stock of bank loans was the amount of loans being securitized, which with the exception of mortgages eligible for securitization by Fannie and Freddie fell effectively to zero. The TALF was designed to support the return of new securitization in certain markets.

Two facilities created earlier in 2008, the TSLF and PDCF, were set up to deal with the unwind of repo and other trades between private counterparties as doubts about the underlying collateral had increased.16 As discussed by Gary Gorton this unwind was similar to a traditional bank run.17 Since much of the credit boom leading up to 2007 was financed by  14  These experiences also, however, underscore the need for robust statistics on the financial system, and efforts are underway at numerous task forces and agencies to improve these statistics. For example, the Committee on the Global Financial System (currently chaired by New York Fed President William C. Dudley) created an ad-hoc group for the review of statistical proposals in 2010; see Committee on the Global Financial System (2012), “Improving the BIS international banking statistics” CGFS Papers No 47 (Basel: Bank for International Settlements, November). Similarly, the Financial Stability Board and International Monetary Fund are currently undertaking an effort endorsed by G20 finance ministers and central bank governors to address financial market information gaps; see IMF Staff and FSB Secretariat (2011), “The Financial Crisis and Information Gaps” Implementation Progress Report (June). 15  An example of this bewilderment is V.V. Chari, Lawrence Christiano, and Patrick J. Kehoe (2008), “Facts and Myths about the Financial Crisis of 2008” Federal Reserve Bank of Minneapolis Research Department Working Paper 666 (Minneapolis: Federal Reserve Bank of Minneapolis, October). Note that the current posted version is updated from the version as initially published.
In addition, new labour market statistics show that seasonally-adjusted unemployment amounted to 8 per cent in August. The next Monetary Policy Report will not be published for a while yet, but at the Riksbank we are already working with new analyses and forecasts. Ahead of the monetary policy meeting on 23 October I will weigh these factors against each other, but also take account of any additional information that becomes available before then in order to arrive at a new assessment. 10  BIS central bankers’ speeches  Figure 8 Low but gradually increasing inflation CPI and CPIF, annual percentage change 5  5 CPIF  4  4  CPI  3  3  2  2  1  1  0  0  -1  -1  -2  -2 07  09  11  13  15  Note. The CPIF is the CPI with a fixed mortgage rate Sources: Statistics Sweden and the Riksbank  Good development in the short term, sustainable in the long term I hope that in my speech today I have been able to convey my thinking on monetary policy at the two latest monetary policy meetings and how I view the current situation. The repo rate is low at present. The Riksbank’s forecasts show that inflation will reach 2 per cent within the forecast period at the same time as resource utilisation will improve. Although the global economy is weak at the moment, the preconditions for a recovery are in place.

The former savings banks that exceeded a specific size have had to convert into foundations, whose main function is the management of their welfare projects drawing on the  1  See “Background note on public financial assistance in the restructuring of the Spanish banking sector (2009–2015)”. BIS central bankers’ speeches  3  return on their assets. Likewise, the Law provides for various mechanisms – such as the requirement, where appropriate, for a management protocol, a financial plan and the settingup of a reserve fund in foundations – to safeguard the independence and professionalism of bank management and to generate incentives for the orderly reduction of the stake of these foundations in banks, to levels compatible with the absence of control. I believe the new regulations – soon to be complemented by a Banco de España circular – point the way for a new organisational model for the sector more in keeping with the current demands which include ever-stricter prudential and corporate governance requirements. Under this model, and after a suitable transition period where necessary, significant banks would generally adopt the form of a listed public limited company, so that they are able to compete in the market to raise the capital and funding required for the orderly pursuit of their activity in the new regulatory environment. I believe that in this forum – sponsored by La Caixa – I need not insist on the viability and reasonableness of this model for the former savings banks.
As you all know, Commissioner Barnier will present the Commission’s proposal for a banking supervision in Europe tomorrow and it is no secret anymore that the ECB will be tasked with an important role. The ECB and the national central banks have made it clear that they stand ready to take over responsibilities in banking supervision. However, we have made it also very clear that certain conditions have to be fulfilled: •  8  6  Firstly, any new task in banking supervision may not prejudice price stability as our primary objective. Monetary policy and banking supervision have to be kept separate. This calls for separate decision making bodies and Chinese Walls within the institution. 14 out of 17 national central banks in the euro area engage in  http://www.fdic.gov/bank/individual/failed/banklist.html  BIS central bankers’ speeches  banking supervisory today already without any negative impact on their monetary policy mandate. •  Secondly, the ECB’s independence may not be impaired by the new task. Monetary policy by definition is independent. Banking supervision by its very nature is not. It must be subject to parliamentary and judicial control. We’re open to this request to show accountability to the European parliament and the council of ministers. •  Thirdly, the ECB must be equipped with all instruments it needs to perform banking supervision effectively and efficiently. The ECB will only engage in banking supervision if it gets a comprehensive tool box, because the reputational risk lies only with one institution, it lies with the ECB.

That is why in its monetary policy strategy, the Committee has interpreted “high employment” to mean the highest level of employment consistent with price stability over time. This level may vary over time and is primarily determined by structural conditions, such as labour force composition, the tax and social security system and wage formation. If we had attempted to use monetary policy to keep employment over that level permanently, inflation could have accelerated rapidly. An even higher policy rate may then have been required at a later stage, which may in turn have increased the risk of an economic downturn. In the Norwegian wage formation model, the social partners put weight on employment and firms’ profitability in wage negotiations, which is also an assumption underlying our economic projections. Over time, the system of coordinated wage determination has likely contributed to greater real wage flexibility and to keeping unemployment low by international standards. Experience nevertheless shows that there is a clear tendency for wage growth to increase when the labour market is tight and competition for labour intensifies. Similarly, wage growth tends to edge lower when the unemployment-to-vacancy ratio is high. Monetary policy trade-offs in the event of a cost shock Let me now turn to how we are seeking, in the current high-inflation environment, to strike a balance between the aim of low and stable inflation and the aim of high and stable employment. Over the past year, the policy rate has been raised from a very low level.
Even though we could not change the international environment (and as I say the exchange rate actually rose despite our interest rate cuts), we could cushion its negative effect on the economy as a whole by providing an offsetting stimulus to the domestic economy. Had we not done so, we might well have suffered recession in the UK. But the hard question for us is could we - and should we - attempt to shelter internationally-exposed businesses even if that were to mean putting our objective of sustained low inflation at risk. In fact I’ve not heard anyone argue openly for that - and I would be surprised if they did. The reality is that if we were to put the economy as a whole at any significant risk of accelerating inflation notwithstanding our mandate - we would not succeed in providing the intended protection to the internationally-exposed sectors other than possibly in the very short term; and in the medium to long term our overall economic performance would almost certainly be worse. The more hopeful news is that we have more recently seen strong signs of recovery - of both economic activity and exchange rates - in a number of emerging markets and transition economies. And we are seeing a strengthening of domestic demand and of output in the Eurozone, where the currency is commonly acknowledged to have considerable potential for appreciation.

MAS will set up a new Shanghai Representative Office in August this year. The Shanghai Representative Office will be MAS’ second office in China, in addition to its Beijing Representative Office. This year will also see the launch of the Singapore-Shanghai Comprehensive Cooperation Council Financial Working Group, which will facilitate financial institutions in our two cities to participate in various areas such as cross-border RMB business and product innovation. Let me suggest one important area where Shanghai and Singapore can work together for the greater good – and that is to harness the power of finance to promote a greener, more sustainable economy. Using Finance to Green the Economy The world needs to take urgent actions to reduce the risk of catastrophic climate change. Finance can be a powerful tool to promote a more sustainable economy and society. Both China and Singapore are committed to meeting their sustainability goals under the Paris Agreement. Both countries have embarked on ambitious green finance agendas. China issued a Green Industry Guiding Catalogue last year to harmonise differing standards for green activities, and is in the process of updating its taxonomy on green bonds to align with international practices. Chinese companies led the world with $ billion of green bond issuance last year. Singapore launched a Green Finance Action Plan last year, built on three core pillars: building the financial industry’s resilience against environmental risks; developing green financial products and solutions; and leveraging technology to support the development of green finance.