samchain/econo-pairs-v1 huggingface dataset:
One key consequence was that the EFSF itself was downgraded, since the EFSF ultimately derives its rating from the countries that fund it. Global safety nets may well be necessary as a complement in situations like these. 16. Second, Asian countries will play an increasingly prominent role in international financial institutions like the IMF as the centre of economic gravity moves eastwards. Asia will over time make contributions to the IMF commensurate with its larger role in the global economy. It is therefore in the interest of Asian countries to have the IMF continuing to play  2  BIS central bankers’ speeches  an active role in the region, and to effectively complement regional financing arrangements like the CMIM. 17. Indeed, in today’s precarious situation, it is in Asia’s interest that the resources of the IMF are enhanced. Asia will not be immune to an escalation of the sovereign debt crisis and any ensuing protracted slowdown in Europe. In such a scenario, a well-resourced IMF will reassure markets, by helping to dampen any spillover effects and mitigating the risk of an excessive contraction in economic activity. 18. In short, a robust response to crisis can entail three concentric layers of defence:    a first layer of credible economic policies backed by national resources;    a middle layer of regional mechanisms to provide added credibility, minimise spillovers, and foster regional stability; and    a third layer of multilateral support through the IMF. 19.

That we live in an increasingly connected world is well known and understood. I will not bore you with statistics on the growing linkages in trade and finance that bind our countries together. Economic and financial integration in Asia has produced significant benefits for our economies. But increased connectedness also means greater potential for contagion – for the transmission of economic and financial shocks across countries within the region. 9. This does not mean we should roll back the tide and become more insular. But it does mean that we have to watch closely developments in one another’s economies, assess potential spillover effects, exchange views on policy responses, and, at times of stress, pool our resources to restore confidence in our markets. 10. In an environment of increased uncertainty and volatility, it is incumbent on each of our economies to build strong buffers. This includes financial buffers in the form of a healthy foreign reserve position and a well-capitalised banking sector. It also includes policy buffers in the form of prudent monetary and fiscal stance in good times that gives scope for a more accommodative posture during times of slack or crisis. 11. But sometimes we cannot do it alone, despite having good fundamentals. At times of crisis, markets may be slow in discerning progress made in national policies. This is where external validation and resources can help build credibility and restore confidence. While the role of the IMF and multilateral organisations remains critical in this regard, regional arrangements can be a useful complement. 12.
The group is made up of senior line supervisors – that is, the people who actually assess banks’ risk profiles – and is led by Nick LePan, the Canadian Superintendent of Financial Institutions. Applying the Basel Accord in the non-G-10 countries Many other countries are similarly preparing for the final leg of our journey, and I applaud your persistence and dedication to this endeavor. At the same time, the Committee recognizes that some countries have only recently adopted the original 1988 Accord and may still be working to ensure a basic level of capital adequacy. I would like to take a moment to address the supervisors of those countries and emphasize that the Basel Committee’s efforts to revise the Accord are focused on the international banks that compete in the global capital markets and that have the greatest potential to create systemic risk. The need for a common approach to capital adequacy regulations for such banks is what drove the Committee to create the 1988 Basel Accord. As I have noted, however, the original Basel Accord has in some sense become the victim of its success, having been adopted in a number of countries and applied to entire banking systems, including banks both large and small. Now, as the Basel Committee is clearly moving away from a single approach to capital, it is important for the Committee and supervisors worldwide to reflect on the choices available to regulate the capital of banks that are neither highly complex nor internationally active.

Stress testing should help banks to maintain adequate capital buffers in advance of potential downturns in the economy. The treatment of operational risk Beyond those two broad concerns expressed about the potential for complexity and procyclicality, some respondents have called for changes to more specific capital charges in the proposals. One of the most interesting discussions centers on whether – or how – the New Accord should treat a bank’s exposure to potential losses that result from inadequate or failed internal processes and systems, or from external events. The endeavor to manage operational risk, as this group of risks has become known, has sparked significant research in the industry and beyond. Supervisors, like more and more banks, have adopted a view of operational risk management as a comprehensive practice comparable to the management of market or credit risk. While operational risk cannot be quantified with the same degree of precision as market or credit risk, the Committee believes that introducing a separate charge for exposures to  4  BIS Review 52/2002  operational risk will bolster efforts to find better ways to address it. Failing to include an operational risk charge in the new minimum requirements could inadvertently derail the ongoing work to identify and manage this exposure. Although we’ve seen encouraging progress in measuring operational risk – within both individual firms and industry working groups – the Committee recognizes that the industry has not settled on particular methodologies or principles.
It seems unlikely, however, that the upswing could be derailed entirely for this reason. As regards inflationary pressure, there are a number of question marks as I mentioned earlier. We don’t know how long the recent rise in productivity will last. In the inflation outlook that I have presented, some consideration has been given to the new data. At the same time, there are good arguments pointing to both higher and lower productivity growth. The same applies to our view of international inflation. As regards wages, there are also risks on the upside, which are essentially related to the way in which wage formation in Sweden is conducted. It can still not be ruled out entirely that the wage bargaining round will be derailed. Should the outcomes prove higher than expected, it is likely to have an impact on the future level of interest rates. So far I have not said anything about the exchange rate. There may be reason to touch upon this. For a long time, we have expected a krona appreciation that over the course of the forecast period would bring us to levels approximately in line with what we believe to be appropriate in the long term, given mainly the competitiveness of the Swedish economy. During the period 2002-2003 as a whole, the krona strengthened roughly as expected. Recently, however, this strengthening has been curbed. One reason for this appears to be expected relative interest rates, where there has been a certain shift since the autumn.

One-fifth of world population is still living in poverty, with the majority of them in Asia. How to address the poverty issue and the uneven distribution of income amid globalisation has become your biggest challenge. Mr. President, I believe more wealth could be generated if savings in  BIS Review 32/2005  1  the region could be recycled to finance investments in the region, if intra-regional trade could grow faster, and if investors could move funds easily from one economy to another in the region. Mr. President, I am confident that under your leadership, the Bank will play an even greater role in the integration of trade, finance and investment in the region. You have our unremitting cooperation and support. Thank you. 2  BIS Review 32/2005
Because the Basle Committee’ s jurisdiction is limited to matters of banking supervision and regulation, its primary emphasis has been on ensuring that the major banks prudently manage their risk exposures to HLIs. The best way to achieve this is through the adoption of sound practices by the industry, perhaps supplemented by incentives created through capital requirements. While it is primarily the responsibility of each banking organization to manage its risks, sound practice standards give banks and supervisors a tool to measure industry progress. If banks themselves do not follow sound practices, then supervisors must step in and take the necessary action. The Committee’ s report revealed a number of deficiencies. In particular, the Committee observed an imbalance among the key elements of the credit risk management process, with too strong a reliance upon collateral. This undue emphasis, in turn, caused many banks to neglect other critical elements of effective credit risk management, including in-depth credit analyses of counterparties, effective exposure measurement and management techniques, and the use of stress testing. Credit Approval Process For a bank to make sound lending decisions, it needs to obtain sufficient information about the borrower. Supervisors routinely stress the need for banks to have an effective credit approval process consisting of formal policies and procedures, accompanied by documentation of actual credit decisions. When dealing with an HLI, a bank also must obtain comprehensive and timely financial information about that HLI’ s risk profile and credit quality, and it must engage in an ongoing credit analysis of that HLI.

The format will be the following: after her presentation we will allow three questions from the media and three from our guests. Madame Lagarde, s’il vous plait…the floor is yours. BIS central bankers’ speeches  1
In view of the existence of political barriers to international trade, the flow of capital and goods was equally as possible one hundred years ago as it is today. It goes without saying, however, that as a result of the rapid development of technology, especially in the ICT area, which drastically lowered the cost of the said exchange, the international integration of trade, investment, financial and other services is now more advanced than it has ever been before. In recent years globalization “tail wind”, mainly through increasing competition, productivity and growing imports from low-cost countries, helped to reduce inflation in CEE countries. HICP inflation in the region 2 fell from average 7.7 percent in the years 1997-2000 to 3.8 in 2001-2006. It led to a prolonged period of very low nominal and real interest rates. Nominal interest rates (average for CEE countries with flexible exchange rate regimes) have fallen from 8.8 percent during 2002-2005 to 5.4 during 2006-2007. Real rates decreased from 3.0 to 1.7 in the same period. This in turn helped to accelerate credit growth and fuelled asset bubbles. The amount of loans granted to households increased 3.5 times since 2004 and almost 10 times since 2000. Low deposit rates and economic upturn in CEE after EU accession encouraged both financial institutions and individuals to move toward more risky forms of investment. As a result, real estate prices soared after 2004 and equities listed on stock exchanges reached historical highs.

Many forecasters suggest that this trend will not end in the nearest future. There are several explanations of such situation. Firstly, rising oil prices increase demand for alternative sources of energy, biofuels being high on the agenda in many regions. In effect industrial demand for food commodities will further rise. By the way, it is worth to mention what may be the ecological consequences of growing biofuels production. Spiegel online on 26th September 2007 described a research led by the Nobel-price winning chemist Paul Crutzen which had found that biofuels emit even 70 percent more greenhouse gases than fossil fuels. In effect, global warming may accelerate and lead to further increase in frequency of disasters such as floods, droughts, and unexpected weather changes that may have negative effects on crops. Secondly, food prices will be lifted up by an increasing demand for agriculture products in the emerging markets, especially in Asia, as the catching-up process progresses. It is worth keeping in mind that the share of food in the CPI basket is some 10 pp. higher in CEE countries than in the eurozone, so agflation, if it materializes, will lead to inflation divergence. 2. Other commodities prices. Demand for commodities, just as for agricultural products, has substantially risen in recent years. The “problem” lies again in the emerging markets. Fast growing economies create still growing demand for all sorts of commodities, especially metals and fuels (for example: oil consumption in China has doubled within last 10 years).
If housing prices are considered a problem, instruments such as loan-to-value restrictions, amortization requirements, a property tax, or restrictions on the tax deductibility of mortgage rates are examples of instruments that have much lower real costs and hence a considerable comparative advantage compared to the policy rate in affecting housing prices (Svensson 2010b). Flexible inflation targeting with mean square gaps (MSGs) – another step towards increased transparency The adoption of numerical inflation targets has entailed great progress for practical monetary policy and made it possible to measure and evaluate the target fulfilment of monetary policy  2  Such considerations could include evidence of the “risk-taking channel” as in Borio and Zhu (2008). Adrian and Shin (2010a, b) argue, in a model with such a risk-taking channel, that short interest-rate movements may have considerable effects on the leverage of securities broker-dealers in the market-based financial sector outside the commercial-banking sector. If we assume that the risk of a financial crisis increases as this leverage increases, and that policy rates affect leverage, then policy rates would affect the risk of a financial crisis (Woodford 2010b). However, new regulation is likely to limit excess leverage and limit the magnitude of these affects. The size of the market-based financial sector may end up being smaller after the crisis. In Europe, Canada and the Nordic countries, commercial banks dominate the financial sector. BIS central bankers’ speeches  3  in a much more efficient manner than before.

Philipp Hildebrand: (The) productivity (imperative) Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at Avenir suisse, Zurich, 24 September 2007. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  Just a few years ago, the weak growth of the Swiss economy was a dominant topic in public debate. For four years now, the economy has been advancing strongly. Is this merely a cyclical boom? Or has structural change taken place, affecting both productivity and the associated potential growth path? This would have far-reaching implications, not least for monetary policy. A number of factors indicate that structural change is indeed occurring and that this could ultimately result in an increase in the underlying productivity trend. However, time lags and cyclical distortions make it difficult to identify such changes. BIS Review 104/2007  1
But it may also be the case that relatively large changes in the exchange rate have minor or no effects on consumer prices, depending on what are known as composition effects. Firms can choose to import other products or to import from other countries.9  7  See, for example, Campa and Goldberg (2005) and Sveriges Riksbank (2001, 2004). In the long term, the pass-through will be higher – estimates vary between 80 and 100 per cent (Sveriges Riksbank, 2001, 2004). Full pass-through is a reasonable assumption over the very long term, when permanent exchange rate changes are considered. 8  See, for example, Ekholm (2010). 9  See Marazzi et al. (2005) for a more detailed discussion. 6  BIS central bankers’ speeches  The effects on the economy of the real exchange rate When the general public discusses exchange rates, this usually means the nominal exchange rate. However, economists are more focused on the real exchange rate, which shows the price of foreign goods expressed in Swedish kronor against the price of Swedish goods in kronor. In other words, the real exchange rate reflects Sweden’s purchasing power and competitiveness. The stronger the real exchange rate becomes, the greater purchasing power a Swedish krona will have abroad. At the same time, a stronger real exchange rate means that Swedish-produced goods will be more expensive compared with foreign goods, and competitiveness will thus decrease.

A mix of standard and non-standard instruments, intensified communication with the public, a broad overview of financial stability risks and the effects of macroprudential regulation, regular monitoring of the external factors’ potential spillovers to the domestic economy, are probably the best options for securing effective implementation of the monetary policy. Although being far away from the acute stage of the crisis, the current global environment is marked with relatively weak and uneven growth outlook, especially in the advanced economies, which led to different paths of their monetary policy stance. While ECB has just started its large-scale quantitative easing program, FED is just about to exit the accommodative monetary policy stance. These contrasting growth prospects of the leading economies underpin the risk of global financial markets volatility in view of eventual rebalancing positions between the main world currencies. On the other hand, there is a group of emerging economies with better growth performances and prospects for the future, including the Macedonian economy, which in the recent years has shown sound recovery, taking into account the significant ongoing structural changes in the economy as well as the fiscal space from the previous years. A common feature for the current surroundings are disinflationary or deflationary pressures around the globe in light of the fall of oil prices, with potential impact on the monetary policy cycle, additionally increasing uncertainty about external environment.
But in certain cases I believe that some tax claims can be of a higher value and more liquid than in others. In other countries, doubts about the situation in the public sector may be greater and the question arises as to whether or not tax claims are actually liquid or have the capacity to absorb losses in real time. Because if you want them to be accepted as liquid assets, they must be immediately available. And call me old-fashioned, but I think that hard cash is the best form of capital. Where does Spain sit on the spectrum that you have described? The European Commission will comment on that from the perspective of public aid in its evaluation. In our Comprehensive Assessment last year we were not very enthusiastic about it (DTAs) but in the end we accepted it on legal grounds. But the most important thing for me is to have a level playing field and, as such, any legal clarification that arises as a result of the European Commission’s assessment will be welcome. The Spanish government states that this was designed in collaboration with the EU institutions, given that we were under the financial assistance programme for banks, and it appears to be rather calm. That’s what I said, we have to look at how things were done, under what circumstances and what its real liquidity is; it will depend on government liquidity, tax revenue etc… And there are very different tax arrangements involved.

These spreads narrowed continuously from mid1995 onwards and their volatility was also noticeably reduced during this period. Factors contributing to this favourable pattern included increased convergence towards low rates of inflation across the euro area during Stage Two, the gradual reduction and finally the disappearance of exchange rate risks, the commitment of governments towards improving the sustainability of public finances, and the increase in the depth and liquidity of government bond markets. As I have already said on a previous occasion, I believe that the interest rate markets of the euro area will increasingly provide an accurate reflection of the differences in credit quality between various issuers as well as differences in liquidity between bonds, while divergences purely related to the location of market participants within the euro area will become less and less relevant. It seems highly likely that the capital markets of the euro area will become even deeper and more liquid over time, and hence more efficient. The number of market participants is likely to increase as the cost of financial market transactions is lowered, and the sophistication of position-taking activities is likely to increase further as market participants equip themselves with more refined methods of adjusting their portfolio exposures. One particular area of the capital market in which the markets in euro area countries have traditionally been a lot less active than in the United States is the corporate bond and commercial paper market.