samchain/econo-pairs-v1 huggingface dataset:
However, they soon realized that there was a serious issue that was brewing; some danger lurking. Then, gradually people realized that a major calamity was taking place in the financial markets of the world. The crisis gathered momentum and then people also realized that the problem was highly complex; little by little, the major triple A rated banks also started to feel the impact. Banks realized that they have to change positions, and they started doing that. Some of the biggest banks in the world, who were highly rated for many many years, and held in esteem all over the world as being institutions that could never be in danger, began to feel the pinch. Then, we heard about the European Central Bank, the Federal Reserve and the Bank of England pumping money into the mortgage markets in order to save the markets. We also heard about Northern Rock. The Bank of England had to put in well over 30 billion pounds, that is, more than double the GDP of Sri Lanka, just to save this one institution. The rescue even led to the nationalisation of the Northern Rock Bank: an outcome unthinkable just a few months ago! Then came Bear Stearns, and the writedowns of the major banks.

When the bubbles burst after the global financial crisis of 2007, governments stepped in to support growth and some of them were called to rescue ailing banks. In this way, private indebtedness turned into public indebtedness, with disastrous fiscal consequences even for countries that had run fiscal surpluses prior to the crisis, such as Ireland and Spain, and even more for those that had not, such as Greece. A further shortcoming of the Maastricht framework was the inability to deal with what is now being called the “bank-sovereign nexus”. When systemically important banks run into trouble, governments are expected to step in and provide fiscal support to contain the spillovers. Beyond that, banks are typically the largest holders of government debt from their respective sovereigns. These ties, or nexus, between banks and their governments can lead to a dangerous downward spiral Another effect of this downward spiral, under way since the euro area crisis erupted in 2010, is the fragmentation of capital markets. The bank-sovereign nexus has led to a situation whereby cross-border lending of banks has gone down significantly, as banks retreat more and more to their domestic markets, encouraged by their shareholders and, sometimes, by  BIS central bankers’ speeches  3  national banking supervisors. The crisis is undermining a key achievement of the euro, the integration of capital markets. A fundamental problem of the Maastricht Treaty was its over-reliance on the assumption that market discipline and peer pressure would provide sufficient incentives for national policy-makers to conduct sound fiscal and economic policies.
And, of course, the need to communicate more frequently has also reflected the deviation from standard liquidity management practices. By extensively communicating about future refinancing operations and the general orientation of our liquidity policy, we have aimed to facilitate and accelerate the process of learning by banks about how we intend to implement monetary policy under the current conditions of market stress. Challenges for monetary policy implementation under stress As I will explain below, the current turmoil has also confronted us also with more general communication challenges, but let me first elaborate on some of the challenges that our liquidity management policy has faced during the recent turmoil. In normal times, the soundness of a central bank’s operational framework and the experience of both the central bank and market participants ensure that the implementation of monetary policy works smoothly. However, as I mentioned earlier, under stress conditions some of the principles usually guiding the implementation process may function differently. In this respect, particularly important for a central bank is the case of changes in the determinants of short-term interest rates. In normal times, the behaviour of the overnight rate is fairly well understood. In a system with reserve requirements, the possibility to average reserve holdings over a maintenance period supports a stabilization of short-term interest rates, because day-to-day fluctuations of liquidity conditions can be smoothed out over the remainder of the period.

I recall that not too long ago (about 18 months or so) Stanbic Bank took the very bold step of entering the community banking sector by adding Matero Branch to the bank’s network and thereby brought superior banking services to the bottom end of the market. This was later followed by the opening of the Solwezi Branch, in what is now regarded as the new Copperbelt. Ladies and Gentlemen, what has particularly caught my attention is that Stanbic Bank expansion has gone in tandem with the introduction of ATM services to these markets via the ‘state-of-the-art’ Stanbic Auto Bank to improve service delivery to our people. This is commendable. Mr. Chairman, Ladies and Gentlemen, one of the major concerns that the Financial Sector Development Plan, and the Bank of Zambia in particular, have identified is the spectre of the unbanked public that hangs over the Zambian economy. The problem with having a greater number of our population being left out of the banking system is that it discourages the culture of saving and removes the un-banked population from the formal structure of the financial system. This ultimately leads to reduced funds being available in the economy for investment purposes. Mr Chairman Sir, The opening of Mazabuka Stanbic branch is therefore particularly significant because it will not only address the problem of catering for the un-banked population, but also tap the tremendous business growth potential that this town offers.
What this means is that we now have, in this time zone, a robust financial infrastructure for US dollar transactions that can accommodate, among other things, a US dollar bond market in this region. You do not have to wait until New York opens before you can achieve finality of settlement of your US dollar transactions in bonds or, indeed, in any US dollar denominated financial assets, if they are lodged with our CMU in Hong Kong. Furthermore, any Asian currency with an RTGS payment system, if it is linked up with our system, will be able to achieve PvP or payment versus payment for the two currencies in real time. We already have PvP for Hong Kong dollar versus US dollar transactions the first in the world. I have, as you are probably aware, drifted into the positioning of the Hong Kong bond market for meeting future challenges. We have, through our efforts in the development of the financial infrastructure, put ourselves in a position to play the ideal host to the bond market of the region, or of this time zone. I hope members of our financial community can leverage on this position of strength and bring issuers and investors of US dollar bonds to Hong Kong. Further development of the bond market is largely in their hands. As central banking officials, we in the Hong Kong Monetary Authority have done what we can appropriately do, in the provision of this public good a robust financial infrastructure.

In fact, the unemployment rate in Spain for persons with only a primary education has increased in 2008 by almost 8 pp, as against 5 pp in the case of those with a secondary education and only 2 pp in that of persons with a further education. The data also show that not only are the largest increases in the unemployment rate among groups with lower levels of education, but that these groups also have the highest unemployment rates. BIS Review 18/2009  5  Yet we should not only strive to improve the educational attainment of our workers before they start working. We should also promote training within the firm. If we managed to make our labour market institutions more like those of other developed countries, we would also do away with labour market arrangements that hinder workplace training and do not give employers any incentive to improve their firms’ human capital. We urgently need a debate between all political, economic and social agents to convince them of the need for reforms. The government and the parties who support it, the opposition parties, trade unions, employers, academics, researchers and the media should all participate. And we should not forget those who the reforms would benefit most: unemployed workers and employers who still do not exist, but who would be able to if there were a significant structural change in labour market institutions.
Subsequently, the SNB had to make very substantial interventions in the foreign exchange market to enforce the minimum exchange rate. In order to support the minimum exchange rate, we introduced negative interest on sight deposit account balances at the SNB. At first, the situation quietened down again. However, this proved to have been the calm before the storm. Due to growing expectations that there would be a further substantial  BIS central bankers’ speeches  1  relaxation of monetary policy in the euro area, the euro weakened again significantly in the first half of January 2015. In the wake of this downturn, pressure on the minimum exchange rate increased enormously. Unlike the situation in 2012, when the monetary policy stance in the US and the euro area remained unchanged, it became evident that this time the minimum exchange rate could only be enforced through permanent currency interventions of rapidly increasing magnitude. In other words, the minimum exchange rate of CHF 1.20 per euro was no longer sustainable. Adhering to the minimum exchange rate would have led to an uncontrollable expansion of our foreign currency holdings and, thus, of our balance sheet, potentially to a level several times Swiss GDP. The risks associated with a balance sheet expansion of this scale would have been out of all proportion to the benefits of the minimum exchange rate for the Swiss economy. In particular, an expansion of the balance sheet would have severely impaired the SNB’s ability to conduct monetary policy in future.

Andres Lipstok: Monetary policy will not become a prisoner Article by Mr Andres Lipstok, Governor of Bank of Estonia, published in the newspaper Postimees on 24 March 2011. *  *  *  Governor of Eesti Pank and member of the Governing Council of the European Central Bank Andres Lipstok says that avoidance of excessive inflation in the euro area and alleviation of inflation expectations are the best measures that the Eurosystem’s central banks can take to support the economy. Estonia has been a full member of the euro area for almost three months now. The adoption of the euro in Estonia was technically smooth and the society’s approval of the changeover has increased. The smooth changeover created suitable grounds for paying attention to what really matters – how to help ensure the stability of the euro in the future. In other words, the focus is now on the key issue – maintaining price stability in the euro area. Euro-area price stability is not an abstract and foreign concern for us. We were aware of how the reference interest rate on housing loans or the euro’s exchange rate against the dollar influence our daily lives already before the changeover. However, what people have not realised is how much the general inflation developments in the euro area affect the society’s behaviour on the whole. Surveys indicate that general developments in the euro area have a greater impact on the inflation expectations of people who live in the single currency area than one might assume.
Compared with those published in September, the December staff projections contained an appreciable upward revision in the average inflation rates for 2023 and 2024 to 6.3% and 3.4%, respectively, and also envisaged inflation averaging 2.3% in 2025 (the last year of our projection horizon), above our 2% medium-term target. Importantly, the ECB/Eurosystem staff projections incorporate a number of financial indicators that reflect market expectations of our future monetary policy. A key indicator here is the risk-free yield curve, which is strongly influenced by investors’ views o n the future path of our key interest rates. The risk-free yield curve also plays a central role in the transmission of monetary policy to the economy, because the financing conditions of economic agents (households, firms, governments) are often linked to medium and longterm risk-free interest rates. This is why the staff projections use as an input the path of both short and long-term interest rates implied by the curve. It is also why the ECB, like many other central banks, typically accompanies its decisions on (short-term) interest rates with communication on how it intends, or expects, to set the latter – and other policy instruments – in the future, as this improves its ability to steer the yield curve and thus attain the desired overall monetary policy stance. Therefore, the inflation path in the December staff projections was a clear indication that the financial conditions prevailing before that meeting were inconsistent with a timely return of inflation to our 2% target.

However, China’s reopening may temper inflation through its impact on supply bottlenecks. Indeed, the end of the zero-COVID policy will avert production distortions caused by restrictions. In the recent past, the COVID-induced production stoppages in China were key factors behind the bottlenecks and inflationary pressures and, therefore, the reopening could be seen as net deflationary. All in all, it is difficult to disentangle the net effects of all these factors on inflation and close monitoring will be needed. The resilience of euro area growth and its composition In the second half of 2022 the euro area economy proved more resilient than expected and the slowdown in the fourth quarter of last year was less severe than anticipated . This has occurred in a context on which a significant reversal of previous supply shocks (bottlenecks and energy prices) was observed, households and firms had plenty of buffers (in particular the household savings built up during the pandemic), the post-COVID rebound in demand continued to generate positive effects and monetary policy had not yet been fully transmitted. However, there is much uncertainty about the continuity of these factors. In particular, the sharp decline in European gas prices reflects unusually mild weather, energy-saving measures and strong inventory levels, which mitigate supply risks for next winter. However, 12  Ko lerus, Diaye and Sabo ro wski (2016) “China’s Footprint in Global Co mmodity Markets”. International Mo netary Fund.
Interest rates must be raised before overly large imbalances accumulate. The motive would be to reduce the risk of a recession and low inflation during the period following a fall in asset prices. If the central bank is successful, it is not possible to demonstrate afterwards that one has been right. A further argument is that it is difficult to determine what change in the interest rate is required to achieve the desired objective. However, the advocates of the more ambitious strategy, where monetary policy more explicitly takes asset prices into account, claim that although it is difficult to judge whether a bubble is involved, this is not more difficult than estimating potential growth, for instance. If one extends the target horizon, the inflation target may in itself motivate tightening monetary policy, despite the fact that this would mean that inflation fell below the target level for a period of time. Based on purely theoretical reasoning, the target horizon is the entire future. The problem is that forecasts become more uncertain the further ahead they look. Many central banks with a strict inflation target policy therefore talk as though the forecast and target horizon were the same. It is difficult to take a clear stand in favour of one of the strategies. None of the arguments can be dismissed. As always, this proves that monetary policy is more of an art than a science.

Japanese companies can also take advantage of Singapore as a hub for knowledge and market intelligence. Over the years, we have developed a network of institutions that have a deep reservoir of knowledge on China, India and Southeast Asia. Our businessmen are also familiar with these countries. We are now building up links with the Middle East. 46. Japanese companies based in Singapore can enjoy not only benefits from the JSEPA, but also 10 other FTAs that Singapore has concluded with major economies like the US, South Korea and Australia. I would like to highlight the Comprehensive Economic Cooperation Agreement (CECA) between Singapore and India as it is the first comprehensive FTA that India has signed with any country. Conclusion 47. The rise of China and India will shift the global economic centre of gravity from West to East. Remaking our economies cannot be an occasional exercise. Governments must respond boldly and continuously to the imperatives of our changing times. Likewise for companies. This is the only way to ride the rising Asian tide. 48. Thank you. I will be happy to take your questions. BIS Review 83/2005  5
Perhaps the most important part of this deregulation process was the Second Banking Directive, which became effective in 1993 and which introduced the single banking license, enabling European banks to operate in any EU member state without the need for local authorisation. In fact one of the first European institutions that benefited from this regulation was the Nordic financial institution Nordea, which was established through cross-border mergers in 1997. Today, Nordea has substantial activities in four of the Nordic countries, and also constitutes a significant part of the financial system in all these countries. Measured in terms of lending, Nordea constitutes the largest bank in Finland, the second largest in Denmark, the third largest in Norway and the fourth largest bank in Sweden. The transformation of the banking sector towards a more globalised one has become apparent in the current financial crisis. We have experienced several severe financial crises also before cross-border banking became a notable feature of the financial sector, including the Swedish banking crisis in the early 1990s. But this time around dealing with the crisis became even more challenging because of the banks’ presence in several jurisdictions, creating a need for cooperation between several national authorities. Why do banks become multinational? How can we explain the increase in cross-border banking, in particular in retail banking? The deregulation of previously strictly-regulated markets made crossborder banking possible.

Recent bank surveys also show that following clients abroad is still an important element in banks’ internationalization strategies. 14 Another issue is what determines the location choice of a bank that has decided to expand abroad. From what has already been said it is quite clear that we see a similar pattern as in all international transactions – geography matters. Presumably this is mainly due to the fact that geographical proximity is related to familiarity with language and customs, which puts foreign bank at less of a disadvantage vis-à-vis local banks. But it could also be due to the higher costs associated with operating activities that are located very far apart. 15 One might expect, however, that recent advances in communication and information technology would change the premises for cross-border banking. New technology allows banks to provide financial services over the Internet and would therefore seem to reduce the advantages of local presence, at least for certain services. Take for instance the online savings accounts by which banks can attract retail deposits from foreign markets without any physical presence at all. At the same time, improvements in communication technology may lower the costs of operating activities located far apart and therefore reduce the advantages of geographical proximity between headquarters and the foreign branches or subsidiaries. Whether this is likely to lead to more or less local presence by foreign banks is difficult to say, but it clearly is a factor that contributes to making banking more globalised.
There is, of course, also the ESRB’s role in the new regulatory framework connected to the CRD/CRR. In addition, I also think that the ESRB more or less by construction is well  |8  placed to help its members tackle mainly national problems, by using peer pressure and working against inaction bias in various ways. This may be very important, not least when vulnerabilities emerge due to problems that are mainly beyond an individual authority’s own control. One may wish that we would have come even a little bit further in this area at this point, but it is important to realize that it takes some time to set up the necessary internal framework and processes. But by now the ESRB has that kind of machinery in place. The next step is to start using it. Even if we have a much more complete supervisory framework in place today, both nationally and at the EU and euro area levels, I think the role for the ESRB as the EU’s macroprudential overseer is becoming more and more important. At a high level, there is in particular an increasing need to keep a truly systemic perspective, capturing all financial sectors, their interlinkages and dynamics. The EU banking sector is facing structural problems, non-bank financial institutions are becoming more important, CCPs have taken on a systemically important role and the low interest-rate environment is, among other things, challenging the insurance industry, and the EU financial sector does not seem to become less interconnected.

It is about innovation, inclusion, and inspiration. Everything we do in FinTech must always have a larger purpose – to improve the lives of individuals, to build a more dynamic economy, to promote a more inclusive society. This is the FinTech spirit. And over the next five days of this Festival, may you find that spirit and may you be inspired to break new ground, and seek a better, newer world. Thank you all for your support. Have a great FinTech Festival! 9/9  BIS central bankers' speeches