samchain/econo-pairs-v1 huggingface dataset:
TARGET2, which is due to go live at the end of 2007, will further improve the degree of integration of wholesale payment infrastructures and will represent a major step forward in their consolidation. It will provide to its users fully harmonised settlement services and prices across Europe, supported by a single shared platform. An important issue which is now under consideration is how TARGET2, as “backbone” of the euro market infrastructure of the euro, can best contribute to the integration and consolidation of the securities settlement systems with which it is going to interact. Should TARGET2, as announced by the Eurosystem and implemented in the system’s specifications, support a wide range of interaction  BIS Review 53/2006  1  modes in order to foster competition between systems and let market forces select the most efficient one (i.e. the so-called no prohibition no compulsion principle) ? Or should TARGET2 influence that selection process by limiting the interaction modes to only one in a long-term perspective? It goes without saying that in the latter case the Eurosystem, given its statutory responsibilities, can only select the most efficient interaction model, namely a model of settlement of cash and securities, which is in real time as it is the case in the US for instance, and which is integrated in a single platform. In the segment of retail payment systems, the situation is quite different. Retail infrastructures are still separated by national borders and characterized by a high degree of diversity.

I will conclude my speech by addressing the thorny question of the choice of a monetary policy regime. After all, is it worthwhile for a country in the vicinity of a large monetary zone the euro zone or the dollar zone - to try to conduct an autonomous monetary policy? Switzerland’s tradition of financial stability Many people outside Switzerland think that financial stability should be added to the list of Swiss specialties like chocolate, watches and banks. Indeed, the fact that Switzerland is the only country that has been able to keep unchanged its set of coins in circulation since the franc was created in 1850 speaks for itself. Even more spectacular is the position of the Swiss franc, which has retained its international purchasing power over time. The Swiss franc has been devalued only once, in 1936, during the Great Depression, following the devaluation of all major currencies. Financial stability has contributed to shape Switzerland’s business environment and, to a certain extent, explains some of the typical features of the Swiss economy. For example, with about 32% of GDP, the Swiss saving rate is among the highest in the world. Some of these savings are channelled abroad via our banking system, and their proceeds guarantee us a very strong balance of payments position. As a matter of fact, Switzerland’s current account is almost endemically positive.
13  See, for example, Alessi and Detken (2009), “‘Real-time’ early warning indicators for costly asset price boom/bust cycles: a role for global liquidity”, ECB WP Series No 1039, March; Borio and Drehmann (2009), “Assessing the risk of banking crises – revisited“, BIS Quarterly Review, March; ECB Financial Stability Review, June 2009, Special Feature D “Estimating probabilities of hedge fund liquidation”. BIS Review 115/2009  5  Risk assessment Risk assessment relates to the evaluation of the relevance and potential severity of each risk identified as material in the surveillance phase. It should therefore include a quantitative evaluation of the likelihood that the potential risk scenarios could actually materialise, as well as an evaluation of the ability of the financial system to absorb the shocks (for example, through existing capital buffers or through the potential to increase buffers in the future through profit retention). It should also include cost estimates in terms of the failure of institutions, costs deriving from the malfunctioning of financial markets or impairment of the real economy. The product of these factors forms the basis for the ranking of risks. Quantitative methods and analytical tools (for example, macro-stress testing models) should support, together with expert judgement, the prioritising or ranking of these risks. The models will help in the conduct of quantitative impact assessments on the financial sector as well as in the assessment of the potential costs for the real economy, and thereby offer information about the relevance and severity of the risks detected in the surveillance phase.

Its tasks will be to identify and assess risks to systemic stability in the EU, issue risk warnings where risks appear to be significant  1  I would like to thank L. Cappiello, I. Cabral, P. Hartmann, and F. Recine for their contributions, and D. Clarke for reviewing the document. I bear responsibility for the views expressed and for any errors. 2  See, for example, European Shadow Financial Regulatory Committee (1998), “EMU, the ECB and Financial Supervision”, Statement No. 2, 19 October, which proposes a “European Observatory of Systemic Risk” as an initial step towards a European-wide supervisory structure. Aglietta and Scialom (2003), “The Challenge of European Integration for Prudential Policy”, FMG Special Paper, No. 152, October, provide an elaborate discussion of such a body. BIS Review 115/2009  1  and, where necessary, give recommendations on measures to be taken to contain such risks and follow up on their implementation. The Risk Board will have 33 full members: the 27 EU central bank Governors, the ECB President and Vice-President, a Commission member and the three Chairs of the new European Supervisory Authorities. To ensure close cooperation with supervisors, a representative from one national supervisory authority for each EU country may attend the meetings of the ESRB, but will have no voting rights. In addition, the President of the Economic and Financial Committee (EFC) will participate, but likewise will have no voting rights.
Jessica Chew Cheng Lian: Launch of FSPB Professional Code for the Financial Services Industry Welcome address by Ms Jessica Chew Cheng Lian, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Launch of FSPB Professional Code for the Financial Services Industry, Kuala Lumpur, 24 May 2018. * * * I am delighted to be here to witness the launch of the Financial Services Professional Board (FSPB) Professional Code for the Financial Services Industry. Thank you for allowing me an opportunity to offer some brief remarks this morning on the importance of this initiative from Bank Negara Malaysia’s perspective. Let me begin by saying that the launch of the Code comes at a time when issues of culture and conduct in the financial industry have become an important focal point for financial regulators. After a hive of activity largely focused on strengthening prudential rules and standards, there is an acknowledgement that behaviour is ultimately regulated by something that runs deeper than rulebooks. It is not an easy thing to put your finger on. Regulators have talked about “the way things get done” in an institution, or “the human element in everyday decisions”. We like to think of it as how one behaves when no one is watching. On this score, the financial industry could do better. Despite much publicity and widespread efforts to tackle the issue, incidents of misconduct continue to cast a dark shadow over the financial services industry across the world.

So, as long as monetary policy behaves about as it has in recent years, then there is no reason to expect supply shocks to have lasting effects. So is Fed policy behaving as it has since the mid 1980s? Interestingly, although Fed policy is perceived as exceptionally accommodative, because of hitting the zero lower bound the federal funds rate is actually higher – has come down less – than would be expected if the Fed behaved as it has over the last 25 years. The current level of the funds rate suggest that  4  BIS central bankers’ speeches  we have been less accommodative in recent years given that interest-rate reductions (policy easing) ran into at the zero lower bound.4 Why the different reaction to supply shocks over time? But how confident should we be that the relationship we have experienced over the past 25 years – little response in medium term inflation rates to supply shocks – will continue? The answer is rooted in why we are seeing different reactions to supply shocks – in other words a different interplay of total and core inflation – now versus in the past. There are a variety of reasons why medium-term inflation has not been significantly influenced by short-run supply shocks in recent years.
So what explains these large regional variations in levels of economic activity, income and spending? Plainly, many factors are at work, economic, geographic, historic, social. There is a large literature on the 7  determinants of growth, which suggests each of these factors is important. But let me focus on one which is I think key to understanding regional differences - levels of productivity among firms. A few years ago, the US economist Paul Krugman noted: “productivity isn’t everything but in the long run it 8  is almost everything”. Krugman was talking about the determinants of growth, and hence living standards, in the economy over the longer-run. He assigns productivity a central role. The raw numbers, looked at over long spans of history and large cross-sections of countries, suggest Krugman is right. Take a simple example. Since 1850, inflation-adjusted national incomes in the UK have risen around 9  20-fold. This is a massive rise in living standards. How much of that was the result of higher productivity? Well, in the absence of productivity growth, UK living standards today would only be around double their 1850 value – in other words, at late-Victorian levels. In the UK, productivity has not been everything but it has been almost everything. The same is true elsewhere around the world. 6 7 8 9  ONS Quarterly National Accounts 2016 Q2, available here See World Economic Forum (2016) for a summary. Krugman (1994). Hills et al (2016).

In addition, the SNB recruits and employs many economists itself. Maintaining close ties with the universities is a necessary prerequisite for SNB economists to remain on top of the latest economic knowledge and for the SNB to be an attractive employer. However, the SNB also considers itself a provider of research and teaching services. To the extent possible, it publishes its own research results and also makes available other economic expertise, e.g. in the area of statistics. An academic education is a privilege for which society justifiably expects something in return. For graduates, this presupposes an especially large commitment to making a contribution to Switzerland’s prosperity and success. The SNB also would like universities to make concrete and useful suggestions for Swiss economic policy, e.g. with regard to the pension system and healthcare. This is because convincing solutions in these areas make it possible for monetary policy to continue to take full effect. In addition to the economic function, the strong education system also has an eminent civic one, namely by providing the glue that holds the whole society together. First, a good allround education enables voters to form their own opinions about complex substantive issues. This is essential in order for the advantages of direct democracy to be fully realised. Second, an education system structured in a way to maximise labour market access for as many people as possible is a significant factor for integration. And third, owing to its high quality and flexibility, it prevents class mentality and elitism.
So one very important lesson in this is that traditional indicators of the business cycle cannot be relied upon to flash warning lights about vulnerabilities building up in the financial system. Where did the money go? If the total amount of UK private credit in the economy rose sharply in the 10 years before the crisis without much impact on private sector demand or the economy as a whole, where did the money go? Some went to business – around a third, much of it to commercial real estate. But the bulk, around two-thirds of the credit, was to households (Chart 3). Bank lending to households made a particularly large contribution to credit growth in the first half of the 2000s. And while unsecured lending grew strongly over the period, it only comprised about 10–15% of lending to households. The much larger part was, of course, secured lending for housing. And it is fair to call it a boom. Secured household debt relative to annual household income was stable at around 70% for much of the 1990s, before rising rapidly to over 110% by 2007. The stock of household debt secured on housing went in real terms from around £ billion to £ billion. The main driver of course was the increase in house prices relative to earnings over the period – from about 2.5 times climbing to 5 times. Households have of course a house on their balance sheet – to set against the debt.

Luis M Linde: Islamic finance – growing importance and regulatory challenge Welcoming remarks by Mr Luis M Linde, Governor of the Bank of Spain, at the European Forum on Islamic Finance, organized by the Islamic Financial Services Board (Madrid), Madrid, 24 May 2016. *  *  *  Mr. Jaseem Ahmed, Secretary-General of the Islamic Financial Services Board (IFSB); Mr. Guillermo de la Dehesa, Chairman of the International Advisory Board of IE Business School; colleagues, ladies and gentlemen: It is a pleasure for me to welcome you all to the European Forum on Islamic Finance. This is the fifth European Forum since 2005, after the previous fora in Luxembourg, Germany, France and Italy. Following the tradition established by other European central banks, we are glad to support this event, organised by the IFSB. I would also like to thank the IE Business School for their hospitality in hosting the Forum in Madrid today. The purpose of this European Forum is to gain a better grasp of the specifics of Islamic Finance and its development, which has been particularly noticeable in the last decade. In this respect, I would like to stress two relevant aspects of Islamic Finance in my opening remarks: FIRST, its growing importance in international finance; and SECOND, the ongoing regulatory efforts to facilitate its insertion in international markets.
It is usually said that when global production increases by 1 unit, international trade increases by two units and capital movements by four. The increased commercial possibilities that arise as countries become more economically integrated are perhaps the greatest driving force. Another force that is driving the internationalisation process is IT. In spite of the IT crash, there is still considerable potential afforded by information technology. While IT companies have suffered badly on the stock market, the use of the technology itself does not represent a "bubble". IT has resulted in better accessibility to both customers and markets as well as to information. For example, it enables mortgage institutions to find buyers of their services in several locations without having a physical presence there. Moreover, it reduces costs for administration, given the initial costs, and this ought to lead to better conditions for consumers. Yet another driving force is the growth of international organisations such as the EU. With 13 accession countries, the EU could soon be enlarged to include 10 new members, and this is leading toward the creation of a very large and important common capital market. Contacts with our neighbours in the Baltic States and Poland will be stimulated even further through co-operation in the EU. The euro area, which is now four years old, is developing and could include a greater number of countries in the future. Another important development that has affected the financial markets is the introduction of minimum standards in a number of different areas, e.g.

This systematic monitoring framework is then augmented by careful deliberation of the policy measures that integrates analyses from both our supervision and monetary policy groups. So far, our experience with such approach has been positive. Let me now turn to the second issue: Should the implementation of macroprudential policy be based on discretion or subject to rules? To me, this is a complex and is still an unsettled issue. On the one hand, given the complex nature of how financial instability develops, regulators may understandably wish to retain some degree of freedom in choosing the timing and instrument to address the sources of risks as they emerge. In this sense, there appear to be good cases for the use of discretion. On the other hand, there is also a danger that discretionary prudential measures can add to the multitude of shocks and exacerbate rather than absorb them. Therefore, a sound practice of macroprudential policy should at least be partially governed by rules, in order to minimize the chance of adverse outcomes and to ensure that policy is consistent with the promotion of long-term financial stability. As you can see, there are strong validities on both sides. The third issue is the international dimension of macroprudential policy. As I see it, going forward, the major source of risk to financial stability in Asian emerging markets is likely to be external.
The today initiative is a significant event, to sustain the growth of financing for this vital part of the economy and it will help to soften the negative impacts of the world economy slowdown. I encourage the banking system and the other players of the market to undertake similar initiatives in order to not impede the financing of small projects, which owns the possibility to be transformed into profitable enterprises. At the same time to maintain a stable and long-term progress of the country, in line with its European aspirations, the banking system should go on the way toward the perfection of service versus the clients, the intensification of communication and public education. Bank of Albania believes that the sources of the stable growth for the mid-term and long-term period consist not only on the encouragement of the work productivity increase or of the investments in industry and construction, but also in other strategic sectors. For the Albanian economy as a developing economy, domestic investments and foreign direct investments in strategic sectors as tourism and infrastructure shall be a real foundation to the economic growth. The positive chain effects are expected to be reflected on the preservation of the steady growth rhythms. Hence, the overall macroeconomic stability will be seen as a precondition in promoting the further intensification of the domestic and foreign investments.

Estimations carried out at the Bank of Albania reveal that the relative high growth of real GDP during the period 2003-2007 is endowed to the rise of work productivity as well as to the increase of investments in the economy. Simultaneously, banking system is expanded with detectable and confident steps. The situation appears also pleasurable regarding banking credit to the private sector. Business credit has played the main contribution to the enlargement of banking credit portfolio, by 66%. The augmentation of this portfolio is considered to have impacted positively the growth of economic activity for the main sectors. In September 2008, credit portfolio was dominated from the lending to trade sector (around 25%), to construction (around 15%) and to industry (over than 15%). The credit to small and medium-sized enterprises as at November 2008  BIS Review 7/2009  1  resulted at 60% higher than the year end 2006, based on the calculations of the Bank of Albania, hence being a ratio over the half of the bank total credit granted to the business. Thus, crediting activity of banking system has supported the growth in the main sectors of economy and has assisted to the further deepening of the financial intermediation. This support is identified in the larger geographic expansion of them as well as in the services gamma and the improvement of products supplied by the financial system.
And this will hopefully help us to avoid the type of situation I described earlier, when we failed to take remedial action to prevent the build up of risk in Swedish banks operating in the Baltic countries. But our Nordic-Baltic Cross-Border Stability Group was not built in a day. We have, in fact, held productive exchanges between our countries for years. One milestone was the NordicBaltic crisis management exercise we ran in 2007. We based this exercise on the scenario of a major crisis in a cross-border Nordic bank. By trying to handle an imaginary crisis using actual banks, and applying the institutional and regulatory structures of the different countries, we learnt many lessons on how to overcome stumbling blocks and clarify the distribution of roles and responsibilities. So what I am trying to say is that establishing a well-functioning cooperation structure takes time. So for those countries that have not done so, I recommend an immediate start. And do not be dissuaded by the fact that it is time-consuming. It is this process – leading to closer cooperation – that builds trust between the authorities involved. And when it comes to crisis management, this trust is the glue that holds everything together. Had we had better cooperation and a reasonable level of trust between the authorities concerned, I am convinced that many of the recent European cross-border banking failures  BIS Review 50/2010  3  would have been handled very differently.

Stefan Ingves: The importance of being savvy – lessons on European crisis management Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, at the Fundación Rafael del Pino, Madrid, 15 April 2010. *  *  *  Crisis management is messy, time-consuming and costly. Thank you for inviting me to this renowned institute. My talk today will focus on crisis management. I have seen enough crises to be able to draw a conclusion or two from them. I learned my first lessons from the Swedish banking crisis of the early 1990s. After this I worked at the IMF, assisting in crisis resolutions in many parts of the world. During my time at the IMF, I also benefitted from discussions with a Spanish colleague of mine – Aristóbulo de Juan. His experiences from dealing with the Spanish banking crisis of the 1980s, working at the resolution authority – Fondo de Garantía de Depósitos – proved a valuable source of knowledge and inspiration. As you all know, the IMF is located in Washington. And working there, you not only learn about crisis management, but you also pick up a few local habits. For instance, Washingtonians like to use the word “savvy” – it sort of means being a bit cunning and perceptive. On reflection, being savvy pretty much sums up how you should behave when handling a crisis. Lately, a lot of attention has been given to preventing the crisis we have just experienced from repeating itself.