samchain/econo-pairs-v1 huggingface dataset:
I also believe that more can be done to deploy technology to untap the large business opportunities in trade, which includes the integration and digitalisation of trade finance as well as e-commerce. Let me now conclude. The issue of sustainability is a matter of grave concern for the global community. If sustainable development takes a backseat, the global landscape in the future will look very different. We might see the gains that we have built and enjoyed over the decades erased. The clock is ticking, and the world has to act now. On its part, Islamic finance must contribute towards generating solutions to this challenge. In this endeavour, steadfast commitment from the Islamic finance industry to innovate; to embrace fintech; to invest in talent; and to play a greater role in international trade is crucial. Islamic finance must be a force for global good, proving that the sustainability agenda isn’t just good for the world, but is good for 4/5  BIS central bankers' speeches  business. It must prove the dictum “doing well by doing good”. This is what Shariah calls us to do – to benefit the people and planet; and bringing greater prosperity to the ummah. 5/5  BIS central bankers' speeches

We have to find a middle way in regulation. Market participants should also be given adequate information to protect themselves from any problems related to new products, markets, or institutions and how to mitigate risks. This is a task for policy makers and regulators. More importantly, in finding a middle path, regulators also have to trust markets and institutions, but ensure that the innovations do not result in undue stress to the financial system. A more practical way to regulate financial conglomerates is the closer coordination among regulatory authorities. Another area that is difficult to be brought under regulation is the derivative trading by financial institutions. Fortunately, this trade has not expanded yet in Sri Lanka, but we may have to be mindful of their emergence, sometime in the future. The essence of financial regulations, therefore, is to encourage financial intermediaries to identify and manage risks without causing instability in their own institutions which can have riffle effects on the entire financial system which is heavily dependant on public confidence. A systemically important financial intermediary can cause serious threats to the wider financial system. Financial regulator helps to build that public confidence through regulation and supervision. That’s why regulators try to promote financial intermediaries to hedge against possible risks and prevent over exposure. In keeping with the world trends, the Central Bank as well as the other regulatory authorities will try to be proactive and avoid over-regulation, but at the same time take necessary steps to ensure system-wide stability. Let me sum up.
Even if inflation deviates from target – as will often be the case – it is expected to return to target, and so inflation expectations are anchored. 5 That is why since 2007 the UK has been able to absorb the largest depreciation of sterling since the Second World War, as well as very large rises in oil and commodity prices, with an increase in inflation to an average of only 3.2% over the past five years and without dislodging long-term inflation expectations. So the framework has been tested and has proved its worth. But the current crisis has demonstrated vividly that price stability is not sufficient for economic stability more generally. Low and stable inflation did not prevent a banking crisis. Did the single-minded pursuit of consumer price stability allow a disaster to unfold? Would it have been better to accept sustained periods of below or above target inflation in order to prevent the build up of imbalances in the financial system? Is there, in other words, sometimes a trade-off between price stability and financial stability? 6 The intellectual foundations of monetary policy The experience of the past five years suggests that we reassess the intellectual framework underpinning monetary policy. 7 The emergence of inflation targeting, and the successful results in the form of the Great Stability, coincided with the development of the so-called New Keynesian consensus on macroeconomic theory. This framework offered a theoretical foundation for flexible inflation targeting.

Second, crises typically reduce potential supply growth, for example by disrupting the supply of credit to productive firms. A failure to take financial instability into account creates an unduly optimistic view of where the Taylor frontier lies, especially when it is based on data drawn from a period of stability. Relative to a Taylor frontier that reflects only aggregate demand and cost shocks, the addition of financial instability shocks generates what I call the Minsky-Taylor frontier, shown in Chart 5. This reflects the influence of misperceptions, financial cycles and the search for yield. On the Minsky-Taylor curve, for a given degree of inflation variability, output is more volatile in the long run than on the simple Taylor curve. Ignoring financial instability might mean choosing a policy reaction function that is believed to imply a trade-off at point O in Chart 5. In fact, the true trade-off is given by point P. Once that is understood then the optimal policy reaction function might well change and correspond to a trade-off at point Q. 22 The examples I have given suggest the possibility that there is a trade-off between meeting the inflation target in the short run and reducing the risk of a financial crisis in the long run. To shed light on whether that possibility warrants a change to the way we implement inflation targeting, I want now to conduct a counter-factual thought experiment and ask whether monetary policy before 2007 might have moderated the crisis if it had not simply pursued a target for inflation.
There are serious political choices here, and they are not for the central bank to make. I have set out in this talk many of the things that a central bank can do with its balance sheet. It can create central bank money, and does so in implementing monetary policy. It can also support financial stability. The Bank can use its operations to distribute money around the banking system when the inter-bank market is not operating properly. And it can provide emergency short-term liquidity support for the system or individual banks under operational and market stress by changing the size, the maturity and the type of collateral taken in its operations. And can even supply foreign currency in extremis. But, being without access to private sector savings, the Bank can not provide sustained, medium-term funding for banks, nor lend directly in size to the non-financial sector on a sustained basis. 16  More information is available at http://www.fsa.gov.uk/pubs/international/uk_rcb.pdf. BIS Review 126/2010  7  Credit supply and syndicated loans Finally, and especially given the nature of this conference, I want to touch on the supply of credit more generally. Despite various forms of support from the Bank of England and from Government, it is clear that the lending capacity of the banking system, in the UK and elsewhere, is impaired and will take some years yet to recover. Some banks need to continue de-risking and de-leveraging. Others, including new banks, are likely to grow.

Exceptional circumstances still apply for monetary policy Clearly, exceptional circumstances still apply for monetary policy. This is the case not only for Switzerland and the euro area, but also for the US, Japan and the UK. As you know, the ECB reduced its refinancing rate by a further 25 basis points two weeks ago. In the US and Japan, current quantitative easing measures are giving rise to a further expansion in central bank balance sheets. The fact that monetary policy in the advanced economies is likely to remain exceptionally expansionary for some time to come can be seen in market expectations for reference rates (cf. chart 3). At the moment, the markets are assuming that the Federal Reserve will increase its key interest rate in the second quarter of 2015, the ECB in the fourth quarter of 2015 and the SNB in the first quarter of 2016. Last year, a number of central banks introduced the principle of forward guidance, in order to further increase the effectiveness of their expansionary monetary policy. Forward guidance involves the provision of information on the expected movement of short-term interest rates. To some extent, information of this kind has already been provided by central banks in the past. What is new with forward guidance is that some central banks give an explicit indication of how long they expect low interest rates to continue. For instance, the Federal Reserve and the Bank of England have tied the assessment of their respective reference rates to a threshold for the unemployment rate.
What is appropriate for all economies is all the more necessary at the euro area-wide level, where, in the absence of a federal budget, a credible framework ensuring fiscal discipline is a key component for the consistency and the cohesion of our monetary union. Sound fiscal policies implying safe budgetary positions in good times are necessary to ensure that fiscal policy has room to cope with asymmetric shocks, which can no longer be addressed by monetary policy. Not least for these reasons, it is a matter of concern to the ECB that in a number of Member States abnormally large fiscal deficits have persisted over years. The Commission has tabled some proposals and a discussion has been launched to consider how to strengthen and clarify the implementation of the Stability and Growth Pact. We can find common ground between some of the Commission’s proposals and our own thinking, namely, as regards the preventive arm of the Pact. We agree that the implementation of the Stability and Growth Pact should be improved. We agree that ownership and incentives for compliance need to be enhanced. And we agree that implementing the Pact in a way that best reflects its economic rationale should help to achieve this end. At the same time, making the rules exceedingly complex and contingent on too many circumstances would complicate the implementation of the framework to the point where rules would be de facto relaxed.

The European Union needs an economic and social model aiming at facilitating adjustments into new employment rather than the excessive protection of unproductive jobs. Investments are needed to build more efficient infrastructures. We need better support for research and development activities, and also improvements in our policies regarding human resources and education. All these measures are key for productivity in the European Union to pick up and are of utmost importance to make the single market work better to the benefit of all Europeans. Structural reforms that are designed to increase the flexibility of markets permit a higher level of sustainable long-run growth and employment. They furthermore enhance the capacity of the participating countries to cushion macroeconomic shocks. The more rigid labour, product and financial markets are, the higher will be employment and income losses experienced in response to changing domestic and external economic conditions. This is due, in particular, to the fact that with nominal rigidities prices and wages cannot adjust suitably and in a timely manner. Conversely, the speedier adjustments of wages and prices can take place in response to changes in macroeconomic conditions, the lower will be the burden of adjustment put on volumes and thus the lower the costs in terms of employment and output losses. We recognise that the implementation of structural reforms requires courage and leadership. Especially, they may temporarily be perceived negatively by some economic agents.
A third and more general reason why inflation has been high in the Baltic countries was that the economic impact of the pandemic was more limited in our region and the pandemic was followed by a very strong and swift recovery. Expansionary fiscal and monetary policies combined with strong domestic demand pressures therefore contributed to an increase in inflation. On top of this was a change in the Estonian pension system in the autumn of 2021 that allowed individuals to start withdrawing their  2/8  BIS - Central bankers' speeches  pension savings before they reached retirement age. Some of this money was used to fund private consumption, which further increased inflationary pressures. The substantial dispersion of inflation rates between the countries of the euro area poses the question of how harmful these differences are in a monetary union. Obviously there will always be differences between the structures of our economies, and so there will always be some differences between the inflation rates in different countries. Such differences have been around since the euro was first introduced, though for most of the time they have been minor. Large differences in inflation rates could however lead to problems with the smooth functioning of a common currency area. An obvious problem is that a common monetary policy allowing nominal interest rates to be similar in all of the euro area countries will lead to differences in real interest rates if there are differences in inflation.

Similarly, in our case, the Bank of Thailand recently launched the Financial Sector Master Plan 2, in which we outline the key principles and guidelines for further strengthening of the financial sector over the next five years. Chief among the agenda are our commitments to bring down financial transaction costs through further deregulation and promotion of more competition in the banking industry. The second element of financial soundness is the integrity aspect. That is, financial institutions must be sufficiently immune to “runs”, which I define loosely as correlated and large-scale withdrawals of deposits, triggered by sudden loss of confidence in the solvency of banks concerned. On this, a key lesson for emerging markets from the global financial crisis is that the push for financial market development must be accompanied by constant efforts to review and bolster as necessary the supervisory framework and standards, so that financial soundness can be ensured without compromising the financial system’s integrity. The third and last element of financial soundness is the stability aspect. The financial sector, while playing an important role in supporting the real economy, can at the same time be the source of risk and instability to the real sector. As we know, the spillover effects from financial to real sector can take many forms. For example, the tendency for financial institutions to extend more credit during economic upswings, and scale back lending precisely during downturns, can contribute to the amplitude of the business cycles.
Recent work using French data7 shows that the pass-through for a positive shock on energy costs is over 100%, while that for a negative shock is much lower: 58%. This asymmetry implies that the decline in energy and input  7  See R. Lafrogne-Joussier, J. Martin et I. Méjean Transmission des coûts importés et montée de l'inflation (caeeco.fr)  Page 11 sur 14 costs, currently occurring as tensions and bottlenecks in supply chains ease, may not fully translate yet into lower inflation. (ii) Besides, even though the external part of inflation is currently falling, core inflation remains high. Inflation excluding energy and food stood up at 5.6% in April, slightly below March (5.7%). External supply-driven price increases have spread to core inflation. Service inflation, in part fuelled by wage developments, has gradually but steadily increased over recent quarters. This deserves close monitoring. Historically, services are the most persistent component of both headline and core inflation, and their share in “core consumption” has significantly increased. Page 12 sur 14  Unlike for non-energy industrial goods, prices in the services sector will only get little relief stemming from decreasing international prices. Looking a few quarters ahead, services inflation is likely to become the dominant source of inflation in the euro area. Non housing services especially are less directly sensitive to interest rates; the dampening effect of monetary policy on aggregate demand will be felt but it will take more time. III. What conclusions can be drawn for monetary policy?

2  Estimation of an error-correction model in which the projection of the NFC lending rate depends on the lagged OIS3M and OIS2Y 3 April 2023 euro area bank lending survey (europa.eu), released on May 2, 2023  Page 7 sur 14  By the way, the growth of loans in France remains significantly higher than in the euro area average. Overall, evidence shows a quick and smooth pass-through of ECB decisions to broad financing conditions. But this is only the first part of the transmission to tame inflation. II. Transmission to the real economy and the decline in inflation In the textbook theory, tighter financial conditions moderate aggregate demand. Monetary policy also affect inflation through the exchange rate channel, but this is beyond the scope of my speech today. According to recent ECB work based on a set of models that complement each other,4 our policy tightening is estimated to lower inflation by around 2  4  Darracq-Paries, Motto, Montes-Galdón, Ristiniemi, Saint Guilhem and Zimic, A model-based assessment of the macroeconomic impact of the ECB’s monetary policy tightening since December 2021, ECB Economic Bulletin, issue 3/2023. Page 8 sur 14 percentage points as a mean over the period 2023-2025. But these estimates call for two caveats: - they vary substantially across models, and are lower in semi-structural models, which unlike structural or DSGE models, incorporate more inertia in consumption and less influence of forward-looking inflation expectations.
By contrast, the New York Fed affirmatively decided to continue extending credit to Lehman Brothers’ broker-dealer. This decision was made to facilitate the broker-dealer’s orderly winddown. Then, when Barclays returned to the negotiating table on Tuesday, September 16, with an offer to purchase substantially all of the assets of Lehman’s brokerdealer, the New York Fed used this financing to facilitate a transition of certain broker-dealer operations from Lehman to Barclays. Once Judge Peck of the United States District Court for the Southern District of New York approved the arrangement at the end of the week, those operations were in Barclays’ hands. While there was nothing truly “orderly” about the Lehman bankruptcy, the New York Fed’s overnight financing of the Lehman broker-dealer avoided further market disruption. This piece of the overall Lehman story is rarely told, and yet it deserves attention. In contrast, Lehman Brothers International Europe (LBIE), the U.K. broker-dealer, was immediately placed into administration, its employees were sent home without paychecks, and the U.K. broker-dealer had no opportunity to wind down its positions. As such, its counterparties’ positions were likewise frozen, which created liquidity problems and significant market exposures as asset prices moved in the wake of Lehman’s failure. Conclusion In conclusion, let me say a few words about regulatory reform and the tools we had to work with. I mentioned earlier the guarantee tool that the Congress added when the EESA was enacted. Another important development is the Dodd-Frank legislation, which promises more effective comprehensive consolidated supervision of systemically significant organizations like Lehman.

Since imbalances persist on the Swiss mortgage and real estate markets, it is important that banks take adequate account of risks when granting mortgages. We are confident that the banks are aware of these risks. We are also confident that they will not use the latitude afforded by this access to capital to pay dividends or buy back shares, but rather to fulfil their economic function. In addition to facilitating lending, the SNB is helping to stabilise the economic situation through its expansionary monetary policy. To ensure appropriate monetary conditions, we must counteract increased upward pressure on the Swiss franc. We have therefore decided to scale up our foreign exchange market inventions – a tried-and-tested instrument – to shield the Swiss economy. Ladies and gentlemen, within the scope of its mandate, the SNB is doing everything it can, in cooperation with the Federal Council and the authorities, to mitigate the economic impact of the coronavirus crisis on the population and on companies. Page 2/2
One of the more active SEPA communities, France, has already indicated an expected end date. This is a positive example, and other communities should follow. Should, however, banks need more preparation when they move to the new SEPA framework, the ECB and the European Commission stand ready to consider supporting measures, including regulation, if required. Let me now turn to the readiness of the industry for SEPA card payments. I will briefly present some of the ECB’s views on cards. Later today the panel will provide their views on the new cards landscape in SEPA and I am looking forward to an interesting discussion. Readiness of SEPA card payments? Card payments are closely monitored by the Eurosystem because they are now the most popular non-cash payment instrument in the euro area. According to our Blue Book statistics, more than 15 billion card payments were made in the euro area in 2006. 3 Between 2000 and 2006, we also noticed that the use of cards increased more quickly than the use of other instruments. The use of cards increased at an impressive rate of 15% per annum. The impact of any changes in the card market is significant for all stakeholders. Given that the overall cost of payments at a point of sale ranges between 0.4% and 0.65% of GDP 4 , it is clear that any development in the card market also has major implications for the economy. An increased use of cards will reduce some of the costs related to other payments, such as cash.

In Germany, for example, I have noticed that some of the larger banks have begun an advertising campaign on SEPA. I encourage other communities to follow these examples. Let me also be clear on one related point: Banks should not try “misusing” SEPA, and blaming SEPA for any unpleasant changes. In that case, we could end up with a similar debate on perceived price increases as we did after the introduction of the euro. This would help nobody – neither the industry nor the customers. Second, the industry should be clearer on the timetable for the “dual circulation” period of its instruments. The request for clarity on the end date also comes from end-user associations. Interesting in this respect is the ECB’s recent study in cooperation with the banking industry analysing the economic impact of SEPA. 2 The study confirms that two main forces will come to play. On the one hand, cross-border competition and new market participants could affect the revenue side of banks. On the other, automation and electronic processes will enable banks to achieve efficiency gains and cost reductions. The study concludes that the dual implementation phase of SEPA should be as short as possible. As initial investments and higher adaptation costs are necessary in the short run, it is for the banks to decide how they will adapt to the new environment in the medium to long term. Indeed, a shorter changeover to SEPA will allow banks to focus more on their offering of innovative products in the medium to long term.