samchain/econo-pairs-v1 huggingface dataset:
Central banks can do this by anchoring inflation expectations through establishing a good track record and by demonstrating that the central bank adjusts its policy rates appropriately in response to the changes in the inflation outlook. This behavior is known as the central bank reaction function. That is to say, in order to keep the inflation in line with the target, the central banks react to economic news in a more or less predictable manner. As economy changes over time, the available data set also changes. We get some of our guidance from the analysis of these data by using models or econometric tools. Models are useful but they are not sufficient; in formulating our decision we do and must put some weight on judgments as well. This is known as the art side of the monetary policy. Central Bank of Turkey has been able to bring down inflation from 70 % in 2001 to 7.7 % at the end of 2005. Although the structural reforms over the last five years have been critical in the fight against inflation, the new monetary framework of inflation targeting also played an important role. Inflation expectations have somewhat been successfully anchored to the target, notwithstanding some deviations and deteriorations lately. At the end of May 2007, the Central Bank of Turkey is faced with a considerable credibility gap.

(b) Role of Financial Integration 1/3  BIS central bankers' speeches  The private sector’s role in enhancing shared prosperity in ASEAN must be facilitated by an enabling environment for efficient cross-border business transactions. This has been achieved through greater financial integration in ASEAN including deeper banking integration; smoother capital mobility; and efficient payment and settlement systems. ASEAN central banks have made significant strides towards this end, but by no means will we coast on by. We will continue to champion financial integration that benefits all. An Asian Development Bank study in 2013 has shown that banking integration mobilises savings towards more productive investment, thereby increasing productivity and accelerating growth. This study also showed that smoother capital mobility will facilitate more competitive and productive cross-border lending and borrowing, while promoting financial sector and capital market development. Lastly, an efficient cross-border payment and settlement systems promotes cost-effective transactions by reducing the cost of doing business. Hurdles faced by ASEAN Like it or not, the path to achieving the strategic objectives of the ASEAN Economic Community (AEC) 2025 will be filled with hurdles. The pace of convergence within ASEAN would be shaped by members’ different levels of development. It is harder for countries with resource constraints to shoulder the high costs involved in undertaking structural and institutional changes, which are required for effective integration. In overcoming such hurdles, I stand proud in acknowledging that ASEAN adopts a gradual and phased-in approach that ensures a win-win situation for all.
All told, there was a broad-based decline in the bank debt-to-total asset ratio, particularly in the lower net wealth deciles.3 In the top net wealth decile, debt continues to far exceed the value of assets (by around 50%), thus signalling the financial vulnerability of this segment. 3  Average debt- and debt burden-to-GDI ratios increased in 2020 owing to the decline in GDI. The recovery in GDI drove down these ratios in 2021. 4  In the public sector, the government debt-to-GDP ratio fell by 1.6 pp in 2021, but it remains very high and approximately 20 pp of GDP above the pre-pandemic level. Likewise the budget deficit which, despite falling by 3.4 pp in 2021, still amounted to 6.9% of GDP. These high government debt and budget deficit levels suggest that the Spanish economy is vulnerable to a possible deterioration of financing conditions. They also limit the fiscal space available to respond to new risks, should they materialise, and to mitigate their effects. The possible impact of these considerations on sovereign funding costs would also have consequences for the funding costs of other sectors, including the banking sector. 5  Second, as regards the impact of these developments on bank balance sheet credit quality, non-performing lending to the resident private sector fell by 5.4% in 2021, to € billion, a larger drop than in 2020 but well below those recorded in the pre-pandemic years. This downward pattern confirms the differential performance of non-performing loans (NPLs) in this crisis.

24  As President Draghi recently noted, “In other political unions, cohesion is maintained through a strong common identity, but often also through permanent fiscal transfers between richer and poorer regions that even out incomes ex post. In the euro area, such one-way transfers between countries are not foreseen…”  BIS central bankers’ speeches  9  Chart 1:  Chart 2:  House prices(a) rose significantly during the boom years across euro area periphery countries and in the UK  UK private sector swung sharply into surplus when the crisis hit but now back close to balance…  (a) Nominal house price indices. Source: OECD. Source: Eurostat (ESA 95 definitions). Chart 3:  Chart 4:  … while Irish private sector surplus endures  Aggregate euro area debt has not fallen relative to GDP since 2007  Non-financial private sector General government  30  Other (incl rest of world)  20 10  Net saving  Per cent of GDP  0  -20 -30 2002  2004  2006  2008  2010  2012  Source: Eurostat (ESA 95 definitions). 10  -40  Net borrowing  -10  Source: Buttiglione, L, Lane, P, Reichlin, L and Reinhart, V (2014) “Deleveraging, what deleveraging?”, Geneva Reports on the World Economy, 16, Centre for Economic Policy Research.
In addition, wage and salary demands in some euro area countries caused us serious concern that there could be broad-based second-round effects. The interest rate decision enabled us to bring medium to long-term inflation expectations back under control in line with our definition of price stability. And this regained control of expectations was, by the way, the precondition which allowed us to cut rates strongly from October when the crisis worsened. Do not forget: our definition of price stability in the medium term is “less than, but close to, 2%”. The interest rate increase in July must be related to the “less than 2%” part. Our recent decrease of rates after the intensification of the crisis in September must be related to “close to 2%”. Question: Since then rates have been cut drastically around the world. The US central bank, the Federal Reserve (Fed), has now de facto cut rates to zero. The conventional weapons of monetary policy are fast being exhausted. What unorthodox options does the ECB have at its disposal? Answer: First, let me remind you that we have, in all circumstances, to deliver price stability in line with our definition “less than, but close to, 2%”. Question: And second? Answer: Second, the present unlimited provision of liquidity at a fixed rate and with a oneweek, one-month, three-month and six-month duration can certainly be described as an unusual measure. The extension of eligibility in our collateral framework is also an exceptional measure, particularly as it was already very broad and flexible.

With regard to nominal exchange rates, it is a matter of some satisfaction that none of the NMS participating in ERM II have experienced undue volatility since their entry into the Mechanism. This to a large extent confirms the appropriateness to date of the chosen central parity rates. It is also a reflection of positive market sentiment. The long-term interest rate is another important indicator of the suitability of economies to participate in ERM II and eventually adopt the euro, as it reflects the judgement of the financial markets regarding  9  4  Busetti et al (2006)  BIS Review 53/2006  the credibility of this process. All the NMS that are in ERM II currently satisfy this criterion, having achieved a consistent track record of downward trends in long-term interest rates over the past five years. Conclusion In conclusion, I think it is important in this case to look to the future with an eye on the recent past, and recognize that the ten NMS have come a long way in honouring their commitments to achieve the established macroeconomic targets and implement significant structural reforms, often against heavy odds. The magnitude of this undertaking must indeed be viewed not only in terms of the difficulty of the task itself, and the economic and social costs involved, but also against the background of an unfavourable global environment. At the same time they have striven hard to narrow the gap in living standards between themselves and the euro area member countries.
In other words, an international financial centre is an international meeting place between those with surplus funds and those in need of funds. Thus when Hong Kong provides a significant platform for investors from, for example, Europe and America to invest their money in financial instruments issued by fund raisers from the Mainland of China, or provides the window for investors on the Mainland to access investment opportunities in the rest of the world, we qualify for the status of an international financial centre. With this definition in mind, the crucial pre-requisites for an international financial centre are first the existence of sizeable overseas demand for international financial services – the mobilisation of savings overseas and the attraction of foreign capital – and secondly the willingness for such demand to be satisfied there. Of course, there are also the ability to provide those financial services and the many attributes that go along with that ability, including the protection afforded by the rule of law, an efficient financial infrastructure, a quality environment, and so on. But I think it is the existence of substantial demand for financial services from a large hinterland that comes first. New York, of course, has the largest economy in the world that is free and open to support its status as an international financial centre, providing financial services that mobilise US savings to the rest of the world and attracting foreign investments, and servicing domestic financial intermediation at the same time.

Joseph Yam: Competition and cooperation among global and regional financial centres Speech by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, at the Concurrent Panel Sessions of the Lujiazui Forum, Hong Kong, 9 May 2008. *  *  *  There are two points that I would like to make. First, given that many jurisdictions claim to be or wish to develop as international financial centres, we need to be clear about what actually defines an international financial centre. We in Hong Kong have given much thought to this, principally because Article 109 of the Basic Law of the Hong Kong Special Administrative Region requires that "The Government of the Hong Kong Special Administrative Region shall provide an appropriate economic and legal environment for the maintenance of the status of Hong Kong as an international financial centre". We obviously do not wish to fail in this legal responsibility. I do not believe that being the nth largest foreign exchange trading centre or the presence of many of the largest international financial institutions are good definitions for an international financial centre. Indeed, with the advancement of information technology, there may be a tendency for the market place to migrate into cyber space. In my opinion, an international financial centre is a centre in which the function of financial intermediation, which is so important for supporting economic growth and development, takes place on an international dimension.
Maureen O’Hara: Well, I think, I hope you’re right that we’re reaching a new awareness of the fact that some behaviors just can’t be accepted. You know, I don’t care whether they’re legal or not. They’re over any kind of ethical lines. And we shall see, it’s a new world, isn’t it? President Dudley: Yeah. It’s very important that people understand that the idea is not to just perform to the regulation and the legal law. And one of the things we have, because we have a very legalistic system with lots of regulations with banks – people sometimes feel like, “Oh, well, given that, I can do anything within those parameters." Well, the world changes faster than the regulations and law can sort of keep up. And so, using that as your guide in terms of what’s good behavior, permissible behavior, I think is a very bad, bad guide. Maureen O’Hara: Well let me turn to one last question, and then we’ll open it up to all of you. Would repeal of parts of Dodd-Frank, the Volcker Rule, be a good thing for the financial system? Any predictions about what’s going to happen with financial regulation going forward? President Dudley: Well, I think that it’s certainly going to be looked at, and obviously we’ll have to see how it makes its way through the House of Representatives and the U.S. Senate.

There is a case that we should take some notice of this in the way the regime operates, rather than just ignore it. In summary, our experience of operating the MA suggests to us that the broad mechanism works but that the EU design makes insufficient allowance for uncertainty, the difference in riskiness between assets, and signals from the market. As a result of this, we are concerned that it overestimates the portion of future returns which can confidently be assumed to be free of risk for insurance companies and therefore safely banked as capital up-front. Some might suggest that this is fine, because insurance capital requirements are set to cover a 1in-200 year stress. [6] But that mixes up capital requirements and capital resources. The risk of a weak MA is that capital resources could be over-stated, and strong capital requirements are no defence if the capital being used to meet those requirements is not sufficiently solid. [7] The system as currently set up provides a particularly strong incentive for insurers to hunt out assets which happen to have a high return relative to their credit rating. Here is an intuitive way to think about the risk in this if taken too far, which our team calls the “high-spread-for-rating assets” – or more colloquially the “too-good-to-be-true assets” – issue. Imagine you have two bonds. [8] Both mature at the same time, both are in sterling and both have the same credit rating.
In full accordance with our mandate, we emphasise that maintaining price stability in the medium term is our primary objective and that we are resolute in our determination to keep medium and long-term inflation expectations firmly anchored in line with price stability. This will preserve purchasing power in the medium term and support sustainable growth and employment. On the basis of our assessment, the current monetary policy stance will contribute to achieving our objective. We will continue to monitor very closely all developments over the period ahead. Allow me to explain our assessment in greater detail, starting with the economic analysis. According to Eurostat’s first estimate, following strong quarterly growth of 0.7% in the first quarter, euro area real GDP contracted by 0.2% in the second quarter of 2008. In terms of quarter-on-quarter growth, private consumption declined by 0.2% and there was a perceptible weakness in investment, which fell by 1.2%. Growth in both euro area imports and exports declined by 0.4%. Taking into account all available information, the euro area economy is currently experiencing an episode of weak activity characterised by high commodity prices weighing on consumer confidence and demand, as well as by dampened investment growth. We expect this episode to be followed by a gradual recovery. In particular, if persistent, the fall in oil prices from their peak in July will help strengthen real disposable income, with the level of employment remaining high and the unemployment rate low by historical standards.

Turning to structural policies, measures that reduce adjustment costs and promote moderate unit labour cost growth are of the utmost importance in the current economic circumstances. While this is crucial in all euro area countries, it is particularly pressing in those that have experienced a significant loss of cost and price competitiveness over recent years and where unemployment has already started to rise. Moreover, fostering productivity  BIS Review 105/2008  3  through enhanced investment in innovation and education enlarges the scope for increases in real incomes in the longer run. We are now at your disposal for questions. 4  BIS Review 105/2008
It is interesting to note that before the 1990s the predominant view was that a floating exchange rate regime is not suitable for a small open economy. Today, I believe that experience has been exceptionally good among those countries that are explicitly targeting a low rate of inflation. In fact, some emerging market countries are now building the same kind of regime. In recent years countries such as South Africa, Brazil, the Czech Republic, Poland and Thailand have been inspired to introduce a similar strategy. Consequently, explicit inflation targets have been introduced in quite a number of countries. The challenge during the 1990s for the inflation targeting countries has been to build a rigorous analytical framework around the new regime. Questions such as the choice of rate and index to be targeted, the usefulness of tolerance intervals around the target and the degree of transparency in the monetary process all needed to be answered. It has also been important to formulate a monetary policy reaction function; in particular, to define the balance between inflation variability and output  BIS Review 42/2001  1  variability. The reason why central banks do not aim for maximum short-term stability in either inflation or output is that attaining only one of the targets would be costly for the economy. On the one hand, the central bank's legitimacy among the general public could suffer if short-term interest rates have to move sharply, causing output to fluctuate widely while inflation is held stable and exactly on the target.

This time, banks have shifted from being part of the problem to part of the solution: they provided the vital liquidity shield needed by businesses during the acute phase of the crisis. Page 4 sur 11  Unfortunately, financial stability is not a steady-state that can be reached once and for all. It is a permanent task that requires constant awareness. And today, we are indeed facing growing concerns. We have entered a new phase of extremely rapid asset repricing and high volatility on financial markets, reflecting the uncertainty surrounding the macroeconomic and geopolitical environment. The Russian war in Ukraine casts a shadow over the economic outlook, while aggravating tensions on energy and commodity markets. Page 5 sur 11 The resurgence of inflation and the rising fears that it will become more entrenched, is motivating central banks around the world to normalise and possibly tighten monetary policy. As a result, financial conditions have tightened, and could tighten further. Against this background, the bottom line is: yes, we are facing rising threats to financial stability. But being gloomy and excessively alarmist across the boardi may prove to be inaccurate and even counterproductive, and result in selffulfilling financial distress. Our prime role as guardian of financial stability is to remain objective, vigilant, and to differentiate the various situations. These short-term developments exacerbate more structural and long-standing sources of financial vulnerabilities. First differentiation: although we “did the job” for banks and insurers, we didn’t do it for other non-bank financial intermediaries.
This regulatory framework was incorporated into Swedish law and in many other countries at the beginning of 2007. One of the main differences with regard to Basel I, was that Basel II made it possible to apply different methods to calculate risk-weighted assets and capital requirements. As you probably know, some banks were able, after approval by the financial supervisory authority, to use so-called internal models to calculate their risk-weighted assets. This reform was intended to increase the link between the banks’ capital requirement and their actual risks, which was also largely the case and thus generally improved the banks’ risk management. 4 [12]  However, the use of internal models also entailed a risk that the banks’ calculation of the capital requirements would not reflect the actual conditions. The risk that the banking system would not have sufficient capital to manage the risks arising from the banking operations thus increased. As the banks themselves were given the opportunity to influence their capital requirements, their incentives to underestimate the risks and thus reduce the capital requirements, increased. It is also difficult to determine how much capital a bank actually needs to manage a crisis situation. Soon after the Basel II Accord had been reached, the major international financial crisis broke out with the bankruptcy of the US bank Lehman Brothers. It then became clear that many banks lacked sufficient resilience to the sudden changes in the financial markets.

It is this excessive credit cycle – the risk of “go and stop” seen during financial crises – that a moderate capital buffer must seek to smooth out. It should be noted in passing that a clear majority of Member States of the European Union have adopted other macroprudential measures  Page 3 of 6 to specifically limit residential lending, constraining households: in my view it is out of the question in France. II. To reduce fragmentation and improve private risk sharing in Europe, we must now complete the Banking Union. We must now resolutely work towards completing the European Banking Union. I would first like to explain why. The finalisation of the Banking Union should, alongside the Capital Markets Union, contribute to improving private risk sharing within the euro area. Private risk sharing fulfils an economic stabilisation function: in the United States, for example, private financial flows between the federal states are a more powerful damper than budget mechanisms involved in public risk sharing. Furthermore, this private risk sharing should help to channel the euro area’s large savings surplus – EUR 390 billion in 2017 – towards European companies, within a real Financing Union for Investment and Innovation at the European level. We have taken a step forward with the agreement of 25 May at the Ecofin Council meeting on the "banking reform package" set out in the Commission's legislative proposal of 23 November 2016.