samchain/econo-pairs-v1 huggingface dataset:
We do not know to what extent the present course of events is affecting how households and firms appraise both their own and their country’s economy. A good many people and businesses will no doubt become more cautious about buying a car or making investments for the future, for example. Here we have a potentially larger effect that must be monitored very carefully. Some guidance is to be had from various countries’ survey data. A number of the results point to a fall in consumer confidence. Neither can one draw any precise conclusions about the magnitude of the effect that may come from increased prudence in banking around the world. The global unrest has left its mark. No one foresaw that Malaysia would introduce foreign exchange controls. Nor did any banker believe that Russia would go so far as to suspend payments on debt denominated in roubles. People BIS Review 83/1998  -3-  seem to be thinking that if such things could happen in Malaysia and Russia, perhaps they can happen elsewhere. The problems with the hedge fund Long-Term Capital is another matter that has made international bankers more wary. Although their loans to this fund were secured, the total stock of loans from all banks and the total amount of collateral were too large for direct disposal in the market; that would have caused prices to fall, leading to losses for the banks. Under such circumstances it is hardly surprising that international banks also review their lending commitments to other funds.

In strengthening the resilience of our economy and promoting the sustainability of growth, the role of policymakers go beyond managing short-term fluctuations in business and financial cycles. Equally important are structural reforms and institutional building that would increase the capacity and flexibility of the economy to absorb shocks and to improve the competitiveness and inclusiveness of the economy. The resilient and ability of an economy to face a crisis depends as much on  BIS central bankers’ speeches  1  what has been done throughout the years to strengthen the economic fundamentals and the financial system. However, the implementation of structural reforms is not without risks. In this regard, reforms that are undertaken in an environment of growth and stability would have a higher chance of success, as it would cushion the potential disruptions to economic activity and dislocations to vulnerable segments of society. The formulation of appropriate and consistent short-term and long-term policies, in turn, requires policymakers to have a holistic understanding of the domestic economy and financial system. From experience, a broad macro-level understanding of issues alone may not be sufficient, as issues at the sectoral level may be obscured at the aggregate level. This highlights the importance of having a firm understanding of micro-level behaviour and reaction patterns of households and businesses, which would reinforce the design of macrobased policy strategies. In this regard, the World Development Report 2014 is useful in facilitating policymakers in making more informed policy decisions.
I also think that it is important to point out that the Riksbank is constantly working to improve its strategy and system and in this I include everything from forecasts and reports on which decisions are based to how we communicate our decisions and our strategy. This is a constantly ongoing process. Our present system has served us well during the crisis. It remains to be seen what lessons will be learned once the crisis is over and has been analysed. At the same time, it is important that any discussion on potential changes is based on a correct description of the system and of how monetary policy is in fact conducted. If anything should need to be changed, the decision must be based on the right grounds. I also believe that one should be cautious with regard to remaking the foundations of our monetary policy regime, that is, the inflation target and how it is formulated – and this applies especially in a sensitive situation like the present one. But this of course raises questions regarding the present system and monetary policy strategy and why they are designed in this way. Quantified inflation target as nominal anchor In Sweden we had for a long time a fixed exchange rate as the norm for monetary policy and as the nominal anchor for the economy, that is, a means of anchoring inflation expectations so that they do not drift away.

1 These are flows of equity, not of credit: the former are much more effective at absorbing shocks as they are a genuine means of cross-border risk sharing. A large part of the solution lies at European level, with the European Commission’s plan for a Capital Markets Union (CMU). However, the goals and ambition of this project need to be more clearly defined if it is to be a success. I prefer to talk instead about a Financing and Investment Union, for two reasons: first, because capital markets are merely a tool – the main objective is the sound financing of investment; second, because our channels of funding need to remain diverse – capital markets must coexist alongside bank lending, as well as private equity funding from insurers and asset managers. This Financing and Investment Union should be a consolidation and synthesis of the CMU, the Banking Union and the Juncker Plan. It would allow us to foster even greater cross-border capital flows, and share the burden of risk through innovative mechanisms, such as European venture capital schemes. Let me conclude with a more general remark. It’s tempting sometimes to be fatalistic: to say our growth depends on China, and that innovation can only come from the United States. Admittedly, the international environment does play an important role; but our economic destiny depends primarily on us, on our ability to innovate and to reform. Financing is merely a part of our current transformation, one that lends support to the economy and to our businesses.
2  In just a couple of days, the exchange rate weakened according to the TCW index by just over 10 per cent, which increased to around 20 per cent after a few months. 2  BIS central bankers’ speeches  ... to a floating exchange rate, inflation target and independent Riksbank When the krona fell, there were probably not many people who believed that Sweden would change its monetary policy regime entirely. Most people probably expected that we would eventually return to a fixed exchange rate. However, it was clear that such a return would take time and during a transition period a new strategy would be necessary. At the end of the 1980s, the Reserve Bank of New Zealand had begun to aim its monetary policy at trying to directly govern inflation and in 1990 they introduced an official inflation target as a means of creating a nominal anchor in the economy. Canada and the United Kingdom soon followed suit and Sweden joined the group in 1993. On 15 January, the Riksbank announced that its monetary policy objective would be to hold inflation around a quantified target: 2 per cent, measured as the change in the consumer price index. This target would begin to apply from 1995. Twenty years have now passed. With hindsight, we know that it actually took a very short time for the inflation target to become credible and for inflation expectations to become anchored around 2 per cent.

As an industry, banking institutions should continue to share infrastructure cost and compete on providing quality products and services. Basic payment infrastructure should not be a tool for competitive edge but rather as a means to reduce cost and adopting common standards. Migration to E-Payments to achieve cost savings Accelerating the migration to e-payments is one of the key strategies in the Financial Sector Blueprint. On numerous occasions we had highlighted that a successful migration has the potential to drive further efficiency gains and cost savings. It will improve the country’s competitive position. Research has suggested that successful migration to e-payments can save the country in terms of costs (of about 1% of GDP annually). Today, cheques and cash remain prevalent in Malaysia. Based on the last 3 years data, an average of 205 million cheques totalling to about RM2 trillion were issued on an annual basis. Our preliminary estimates showed that at RM2.70 cost per unit, the banking industry spends at least RM544 million annually on extending cheques issuing services. This is an expensive way of doing business. In terms of cash, over the last 3 years, an average of 547 million cash withdrawals at ATMs were made amounting to RM276 billion per annum. This represents 93% of the total financial transactions conducted at the ATMs, while only 7% of the ATM transactions were for noncash withdrawal.
The events of recent weeks have confirmed that the crisis is far from over and that imbalances persist in the developed world that keep financial markets under stress. The reappearance of risks and the tensions we have seen are a reflection of that, and have deepened the differences between the behavior of the world economy and our own (table 1). Thus, today we are again facing significant risks. After some improvement in the first quarter of the year, conditions in the Eurozone relapsed and their financial markets have experienced tensions in the levels of last December or worse. The baseline scenario of our March Monetary Policy Report assumed that temporary, limited frictions would occur, although it warned about existing risks. In recent months those risks have resurfaced. There  BIS central bankers’ speeches  1  is new debate about a possible disorderly resolution of the Eurozone crisis. Several economies are questioning the political support to the fiscal austerity measures. Economic and financial conditions in Spain have worsened further and its risk premium is in record highs, despite the announced capitalization of its banking industry. In addition, there are still doubts whether other countries will be needing similar action. Financial markets respond with increased risk premiums and greater appetite for safer assets. Stock prices are falling across the board, volatility is up, the dollar has appreciated again and the interest rates of government bonds from economies perceived as safe have dropped to record lows. At the same time, commodity prices have fallen sharply, especially oil.

In this respect, the Bank looks forward to a code of conduct for the industry to be established and implemented by the industry this year. The code of conduct should comprise a set of key principles and guidance for proper business practices that instil greater market discipline and confidence, and to create a culture of healthy competition within the industry. This should be complemented by a process that ensures that individuals responsible for managing money services business operations have the relevant knowledge and experience to meet the minimum professional standards set by the industry, and are able to offer quality services to the public. In relation to this, the association should consider implementing a certification or qualification process, for example, by conducting entrance examinations for its members sometime in the future. We also expect the association to play a proactive role to improve the image of the industry players and weed out the black sheep within the industry, through the effective implementation and enforcement of the code of conduct, and by working with the relevant authorities to help combat illicit transfers of funds and unauthorised activities. Secondly, the association will also serve as the central platform to drive and implement development initiatives to enhance the capacity of the industry.
In particular, interest rates on safe assets fell since the build up in foreign assets were invested mainly in government bonds. 14 That both discouraged saving and boosted asset prices. In order to maintain their traditional returns, the private sector sought higher yielding strategies and were too ready to  11  IMF (2007) ‘Exchange rates and the adjustment of external imbalances’ IMF WEO April, Chapter 3. 12  Bernanke, B (2007) "Global Imbalances: Recent Developments and Prospects", speech delivered for the Bundesbank Lecture, Berlin, and Bernanke, B (2005) "The Global Savings Glut and the U.S. Current Account Deficit", speech delivered for the Sandridge Lecture at the Virginia Association of Economists. 13  A fall in desired investment (investment ‘strike’) in some countries also contributed to the decline in global real interest rates. For example, investment-GDP ratios fell sharply in the Newly Industrialised Countries in the wake of the east Asian crisis a decade ago. 14  For example FE Warnock and VC Warnock (2006) (‘International Capital Flows and US interest rates’, NBER Working Paper, 12560) estimate that foreign official flows reduced US 10-year Treasury nominal yields by about 100 basis points lower than otherwise in the year to June 2005. BIS Review 31/2008  5  believe that these could be attained through new products without running bigger risks. We are now dealing with the consequences of that mistake.

11 Of course, there are a number of practical and legal challenges inherent in this, such as integrating such measures into an operational monetary policy framework and ensuring an appropriate division of responsibilities between the central bank and the government or parliament. It is also probably something that should not be tried until other possibilities have been exhausted. However, considering the difficulties that are still weighing many of the world’s economies down, I think that it is wise to discuss the different possibilities, without closing any doors. If monetary policy in the period ahead will be less effective, it may be that fiscal policy in general may have to play a greater part in a wider stabilisation policy role than has been the case in recent decades. Of course, this primarily means more traditional fiscal policy, not funded with helicopter money. 10  See, for example, Rachel and Smith (2015) and Laubach and Williams (2015). 11  See, for example, Bernanke (2016) and Turner (2015). 8  BIS central bankers’ speeches  Higher inflation target? One suggestion that has also been discussed but which no country has yet implemented is to raise the inflation target. 12 The average level of the policy rate largely depends on how high the inflation target is. The higher the inflation target and average inflation are, the higher the average policy rate is too.
Fourth, the Governing Council will have to decide whether we ought to rely more on our own judgement about the quality of assets and counterparties and to further expand Eurosysteminternal credit assessment systems, steps which would require additional resources. It means further enhancing the due diligence on external credit ratings, for which sufficient transparency on the judgement underlying these ratings is essential. And it means using supervisory information to ensure an efficient implementation of monetary policy operations – the introduction of the European single supervisory mechanism has brought about fundamental improvements here, as it allows for the sharing of relevant information within the legal limits of the separation principle. To conclude, I believe the Eurosystem’s risk management framework has successfully weathered the financial storms of the past few years. The reason is that we followed stable principles when the size of our operations, the assets accepted as collateral or the types of operations changed. Looking ahead, we can already start thinking about a financial risk management framework that will be appropriate for a central bank that has returned to a more conventional environment for the conduct of monetary policy, while still following these principles. I now look forward to the panel discussions, which will pick up on some of those issues in more detail, and to hearing your views. 1 Treaty on the Functioning of the European Union. 4/4  BIS central bankers' speeches

Mr George looks at past, present and future challenges for the City of London  Speech given by Mr Eddie George, Governor of the Bank of England, at a City University Conference at the International Maritime Organisation in London 7 December 1999. *  *  *  Mr Chairman, Ladies and Gentlemen, As we approach the end of every year we naturally tend to look back at the past, to take stock, and to look forward to the challenges ahead. The temptation to do that this year on the brink of the new Millennium, is almost irresistible. But take courage - I will at least try not to dwell upon the historical origins of the City this morning. Instead, I will start from where we are now - which is a good place to start because by and large the City is in pretty good shape. It is, of course, the hub of the financial and business services industry of this country, which, broadly defined to include shipping and real estate as well as other forms of intermediation, and the accountancy and legal professions, contributes directly something like a quarter of total national output - with some 7-8% coming from the financial services sector alone.
Your Excellency, the Zambian Government recognises the importance of expanding financial services to our rural areas, as part of its overall strategy to reduce poverty. The importance of the agricultural sector to the economy, in general, and small-scale farmers in particular, has made provision of financial services to rural areas a priority on the Government’s agenda. The need to improve financial services in economically disadvantaged areas also comes in light of the reduction in the presence of a number of banks in these areas over the last ten years. These areas need banking services from both commercial banks and non-bank financial institutions. Distinguished Ladies and Gentlemen, although this has been the case, the Microfinance Institutions (MFIs) have risen to the occasion to fill-up the gap in the provision of financial services such as small loans and savings facilities in the periurban and rural areas. In addition, the National Savings and Credit Bank (NSCB), formerly known as Postal Bank, which has a rural network has been providing financial services to the remote parts of the country. Your Excellency, coming to economic developments, I wish to state that the Zambian economy has performed relatively well in recent years. Inflation and interest rates have been coming down while the exchange rate of the Kwacha against major currencies has relatively stabilised, following a steep appreciation in 2005. Distinguished Ladies and Gentlemen, in 2005, the economy registered growth of 5.0% in real terms, marking the seventh consecutive year of positive real growth in output.

I don’t want to meddle in a decision that is for the British people to make. However, as a citizen and a European, of course I want the United Kingdom to remain in the European Union, to which it brings so much. That said, it is normal for us to prepare for any possible scenario, and its impact on euro area banks. If the other scenario prevails and the United Kingdom remains in Europe, were you reassured by the results of the Brexit negotiations between London and its partners? We had two main concerns. One was to make sure that the discussion would not make further euro area integration more difficult. The second was that it wouldn’t fragment the single market for financial services and strip the capital markets union project of its substance, notably the single rulebook for financial regulation. The final agreement is a balanced one and we have been reassured, even though ambiguities remain, of course. BIS central bankers’ speeches  3
Against this backdrop, as economic and supervisory authorities, we must step up monitoring of the risks to financial stability and continue to adopt measures to mitigate them; naturally, we must be prepared to take forceful action should such risks materialise. Today I will outline the recent developments in the main risks in this area, based on the analysis of the effect of the crisis on the different agents in the economy (non-financial corporations, households, the real estate and financial sectors, and general government), and the most appropriate economic policy measures for addressing them. The impact of the crisis on the financial situation of firms Spanish firms faced this shock in a more favourable financial position than that before the global financial crisis. Specifically, they had substantially reduced their debt levels in recent years, to below the European average in late 2019, and had the support of higher liquidity buffers. Moreover, the sectoral distribution of activities was more balanced than in the runup to the previous crisis. 2  That said, despite the overall better position, there were certain segments of the Spanish corporate sector in a vulnerable position at the outset of this crisis. The scale of the shock triggered by the pandemic is also most significant and long-lasting, prompting a sharp decline in income for a large number of firms.

In Bulgaria popular and political support for further deepening European integration “remains above the EU average, despite, and probably, to some extent, because of recent developments,” Radev said. "It is becoming a rational rather than an emotional choice, and this is good news." All original text can be read here. 2/2  BIS central bankers' speeches
The role played by governance failures in the recent crisis is well documented, particularly in respect of incentive systems,  4  BIS central bankers’ speeches  accountability structures and controls. More broadly, there is also a strengthened emphasis on the softer aspects of governance such as behavioural norms, corporate culture and ethics. We should not forget these lessons or else history will repeat itself. Malaysian financial institutions should be the gold standard for good governance practices. Because of their important role within the economic system, banks have the added responsibility of maintaining public trust and confidence. In addition, we also expect the banking industry to take the lead in promoting good governance practices more broadly across corporate Malaysia, through financing and investment activities, or professional advice to clients. An important regulatory priority for Bank Negara in this regard is to align incentives with a sound risk culture and ethical conduct, underpinned by effective independent oversight by the board. On this, Bank Negara recently published several proposals to enhance the corporate governance framework for financial institutions in Malaysia to address these issues. While proposals on board composition appear to have generated more attention in the media, the most significant enhancements actually relate to expectations for the board and senior management to set the right “tone from the top”, and the explicit responsibilities placed on them to play a more critical role in shaping the core values and culture of the institution. This includes expanded requirements on compensation practices and disclosures to strengthen market discipline.

What is more important that the core purpose of banking remains intact – that is to provide reliable passage for resources to move to productive use, including under the most challenging conditions. I thought I would close these remarks by quoting Machiavelli ‘There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things’. Ladies and gentlemen, the future is about a new order of things. Thank you. 6  BIS central bankers’ speeches