samchain/econo-pairs-v1 huggingface dataset:
I am glad to say that my colleagues Ben Broadbent and Martin Weale are now working with Bank staff on just that. While we cannot yet tell whether a clear message will emerge, it is the kind of work that is needed when the real economy is undergoing a degree of structural change. Policy The uneven and unavoidably difficult path for rebalancing in the real economy makes it harder than usual to read the signals of cyclical conditions. But, by the same token, our monetary accommodation can help to ease the costs to firms and households of adjusting. By smoothing the path of aggregate demand, the impact on capital resources and on human livelihoods can be limited somewhat. In the Committee’s latest forecasts, the central projection is for inflation to be under the 2% target in two-to-three year’s time. But it also has inflation rising back towards target through that period as monetary stimulus gradually helps the economy to achieve escape velocity, reducing slack in firms and the labour market. Given the ferocity of the shocks that have already hit the economy, and the pervasive uncertainty that persists about global economic and financial conditions, these are circumstances where taking longer than usual to reachieve the 2% target is warranted. It will help to mitigate the risks of the economy’s supply capacity being impaired. But that is to look ahead to the most likely path of inflation in a year or two.

Spain seemed to be in a different position with a positive fiscal balance, though this was mainly due to unsustainable high growth in the construction sector. This illustrates the first question, which is how to solve time inconsistency in fiscal policy. It is easier to follow the prescriptions of Keynes in bad times than in good times. This asymmetry may lead to an increase in budget deficits and sovereign debt over time, also referred to as the fiscal bias. As a result, many countries are forced to tighten policy in a period when the real economy would certainly benefit from further stimulus. The crisis caused fiscal balances to deteriorate by 8–10 percentage points of GDP. There is an immense difference between encountering a shock of this magnitude from a positive fiscal balance of 4 per cent and encountering it from a negative fiscal balance of 4 per cent. A similar time inconsistency problem, the inflation bias, has been a much debated issue in monetary policy. The solution has been central bank independence. The results have been fairly good. The question remains, is there a lesson to be learnt in the fields of fiscal policy and banking regulation? This crisis has been very benign to the Norwegian economy. One of the reasons, I believe, is that we had a national banking crisis only 20 years ago. Many of the executives in banks, corporations and government this time, had experienced the previous crisis. Hopefully, they had learned some useful lessons.
Some research has shown that in Latin America public banks are less procyclical than private banks (Micco and Panizza, 2006), but this could be for good or bad reasons. If public banks are prudent and avoid jumping on the bandwagon of optimism during the upturn this is good – they may even soften credit constraints during the downturn. However, public banks may also be an instrument to pay back supporters of politicians, and certainly this is unfair and inefficient. Public banks may also be subject to capture by the electoral cycle (Micco et al., 2007), or used as an instrument to implement industrial policy. Given the lack of other instruments, providing credit for selected economic activities may be a way to promote specific sectors. There are certainly better tools for promoting specific sectors, especially from efficiency, fiscal, transparency and accountability points of view. An issue that has been on the agenda in most countries is financial consumer protection. This is, of course, a welcome development, and is a clear demand from society. Transparency in financial charges and the nature of the contracts, the ability to change across financial agents, assigning clear responsibilities in this area to regulators, and improving financial literacy are among the issues being discussed. It is important, however, for consumer protection to form an integral part of the regulatory infrastructure in order to avoid inconsistencies among agencies and risks to depositors and overall financial stability in the name of protecting consumers.

They may arise, for example, because large parts of the system rely on the same sources of funding, or because they have similar exposures – to rising financial imbalances, to currency mismatches and to widespread mis-pricing of risk. We have also seen that turbulence can arise from relatively modest initial shocks. The system is so interconnected that what looks stable can turn out to be “meta-stable”, which means potentially highly instable. Snow on mountain slopes can be meta-stable, looking pristine and tranquil yet turning into an avalanche after only a minor disturbance. For all these reasons, we have established a new framework of macroprudential supervision as have our counterparts elsewhere, including in the United States with the new Financial Stability Oversight Council. In the case of Europe, there is still one more reason for macroprudential oversight, and that is the single European market. Cross-border and cross-sectoral financial integration within the EU is fostered by competition, freedom of establishment and the free flow of capital. The single financial market is a crucial component of the overall single market project, and macroprudential supervision should enhance the resilience of this market. So how exactly will the new discipline of macroprudential oversight be conducted? Financial stability is not an issue exclusively for central banks. Micro-prudential supervisors have a key role, because stable institutions are an essential and necessary condition for achieving financial stability.
For many years already, significant action has been adopted on the EU level with a view to establishing an efficient and safe European market, where those transactions will be executed with similar effectiveness both on domestic and cross-border levels. Those activities, undertaken both by the public authorities and by the market, are aimed at achieving: 1.  legal harmonization,  2.  systemic standardization and harmonization,  3.  subjective consolidation,  4.  systemic integration, and  5.  technical integration. It is extremely difficult to predict future developments in each of those domains. Apparently, the harmonization and integratory action which I have just mentioned and which has been undertaken recently, will lead to a situation that can be predicted to some extent. What changes will the future bring in comparison to what we have now? As regards the securities settlement system, a new large player is about to appear in a couple of years. TARGET2-Securities operated by the European Central Bank will integrate the settlement function which is now executed by domestic systems of securities settlement. It may also be assumed that owing to consolidation processes, the number of central depositories in the EU will diminish. I would venture the claim that in the context of the development of TARGET2-Securities and CCBM2, the number of deposits maintained at central banks is going to decline 15 . As regards the payments systems, in a month, the TARGET2 system will be established to take over RTGS systems in individual EU Member States.

So there is a lot you can feel positive about in the past year’s achievements and in the start you have made to 1999. But, looking ahead, the world prospect remains uncertain. Notably, the emerging markets crisis has had an immense impact on international financial flows, and the economic adjustments that those shifts will bring in their wake are likely to have important impacts on the bond markets and on your business activity. As a measure of the impact of the emerging markets turbulence, the Institute of International Finance recently published data which show that total net private capital flows to the emerging markets (broadly defined) fell from some $ billion in 1996 to around $ billion last year. Within this, nonbank lending and portfolio equity inflows also fell back by around $ billion (to around $ billion). Although direct investment in the emerging market countries held up pretty well (at around $ billion), and despite a big increase of nearly $ billion in official lending, there was a sudden huge decline in the overall availability of finance to the emerging market economies. And that left many of them with sharply weakening exchange rates, and little choice but to contract their domestic economies. The immediate international priority last year was to contain the financial contagion – and there was some progress in this direction following the initial shocks in Asia.
Encik Abu Hassan Alshari Yahaya: Towards a more inclusive financial system Speech by Mr Encik Abu Hassan Alshari Yahaya, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the OKU Awareness Programm “Towards a More Inclusive Financial System”, Kuala Lumpur, 26 May 2015. *  *  *  Bridging the understanding on the needs of OKUs and preparing for the changing landscape due to higher expectation and enhanced legislation As the Malaysian financial sector matures and with the long term vision for an inclusive financial system, today’s program with the objective of enhancing awareness and understanding of the rights and requirements of the community of the OKU and how the financial industry could serve them better, would mark the beginning of this important journey at industry wide level. As mentioned by Yang Berhormat Senator Puan Bathmavathi earlier, currently there are about 338,000 registered OKU in Malaysia or 1.1% of Malaysia’s total population. While the official data may be small, the actual number of Malaysians with disabilities is deemed to be more than what is reported. In addition, this number will increase as more Malaysians may fall into this category with the ageing process, becoming casualties of accidents and those suffering from chronic diseases.

Strong human rights legislation that changed the banking system I would also like to share a landmark case in Canada in 1991 where two blind customers were frustrated with their bank when they could not access information about their mortgage BIS central bankers’ speeches  3  and the bank’s other services. Since they were both blind, they could not read banking information that was only available in printed brochures. They filed a complaint under the Canadian Human Rights Act. The case inspired Canada’s banking system to make important changes such as offering brochures in Braille and offering Talking ATMs. Canada became the first country to offer “Talking ATMs” in 1997. Talking ATMs have been around in other countries for almost 20 years, easily available in countries like the UK, US, Australia, Japan and Canada. Countries like the Philippines, India and Turkey have also introduced Talking ATMs. In the United States, The ADA (Americans with Disabilities Act) requires that ATMs be equipped with innovative technology to enable the visually impaired customers to use the machines without assistance. In India, it is a requirement for its banking industry that all ATMs installed from 1 July 2014 should be Talking ATMs with Braille keypads. For the hearing impaired, Barclays Bank in the UK provides hearing induction loop fitted at the counters which act as transmitters for hearing aids users. Professional sign language interpreter are available by camera to facilitate video communication.
It would thus possibly tolerate a certain deviation from its price stability objective in the shorter term in exchange for enhanced prospects of preserving price and economic stability in the future.”23, 24 Yet, were evidence of financial imbalances to reappear, we would have to reflect carefully on whether standard monetary policy would be the right tool to use in response. This is for two reasons. First, there is some uncertainty as to what interest rate path would be required to prick an emerging credit bubble. Some studies find that in a leverage-driven boom profits are very sensitive to even small interest rate changes, implying monetary policy could provide a powerful offset.25 However, other evidence suggests that quite large interest rates movements would be needed to offset the financial cycle, which would in turn create collateral damage for the economy and price stability.26 Second, there is still heterogeneity between the financial cycles of individual countries within the euro area. While it is true that aggregate euro area money and credit growth before the crisis was high, that growth was concentrated in specific regions. In the catching-up economies, growth in credit in the pre-crisis period was 10 percentage points higher than in more productive countries. In such circumstances, it may well be the case that hiking rates at the aggregate level would be too strong a response for regions that are not subject to financial exuberance.

Plans put forward from time to time from the early-1990s, which proposed dropping zeros from the lira continually had to be postponed as the structural economic problems could not be solved, nor could the rate of inflation or the inflation expectations be brought down to acceptable levels. The chronic and high inflation experienced during this period gradually took its toll on banknote denominations and monetary values. As you all know, this process eventually not only led to the Turkish lira having the highest denominated banknote numerically all over the world, but also adversely affected someof its functions, namely as a medium of exchange and a store of value. Following the program under implementation, the distance covered in terms of economic stability prepared a suitable environment for monetary reform, and six zeros were dropped from the Turkish lira as of 1 January 2005 when the New Turkish Lira was put into circulation. 8  BIS Review 36/2005  The experiences of other countries that dropped zeros from their currencies differ in those which suffered from hyperinflation and those , which had relatively, lower rates of inflation. In the former, it can be seen that monetary reforms were generally carried out as part of the stability program, without waiting for inflation to go down considerably. Whereas, in the case of the latter, reforms were implemented after inflation was brought down sufficiently. In other words, reforms were carried out after a certain distance had been covered in the fight against inflation.
But they had to do so after a group of actors had given an incorrect answer.4 About one third of participants went along with the majority, even though it was readily apparent their answers were incorrect.5 When asked why they went along with the group they said it was because they wanted to fit in, or because they believed the group was better informed than they were. Does the junior banker drop the issue in an effort to fit in? Does she raise the issue in private, or does she call a company hotline? The answer depends on the complex relationship between the individual and the culture in which they work. I’m particularly looking forward to hearing from Celia Moore. She spoke at the New York Fed last 2/4  BIS central bankers' speeches  year and discussed how organizations set goals and motivate people to achieve them. Praise, penalties, and rewards all influence an individual’s behavior. Signals from the organization’s leadership also have a major role to play: do the higher echelons of management value divergent views? Do they foster a culture where people feel empowered to speak up?6 All of these things shape how an individual will respond to an ethical dilemma, whether they will acknowledge it as such, and how they will lead others as they move up in an organization. As financial services professionals with great technical expertise, we often fall into the trap of thinking we can solve all of our problems on our own.

In effect, the mere existence of a digital euro would offer a fallback solution in the event of geopolitical tensions. Moreover, when carefully designed, a digital euro could be a catalyst for innovation at a wider scale in that it could support intermediaries’ role in developing new types of services on top of it while enjoying Pan-European reach. 1  Negroponte, N. (1995). “Being Digital”, Vintage International. Random House, New York. Cunliffe, J. (2022) “Some lessons from the Crypto Winter” (https://www.bankofengland.co.uk/speech/2022/july/joncunliffe-speech-on-crypto-market-developments-at-the-british-high-commission-singapore). 2  1  A digital euro does, however, exhibit a number of non-trivial risks as well. If, for example, anonymity was to be allowed as a means to provide the highest possible level of privacy, we would be compromising our commitment with fighting money laundering and the financing of criminal activity. What’s more, this setup would put into question the effectiveness of the tools to limit the use of digital euro as a store of value, a point on which I will come back later. In that respect, a balance needs to be struck between minimizing the Eurosystem’s and intermediaries’ involvement in the processing of users’ data and still ensuring compliance with the law. A digital euro is likely to increase as well the Eurosystem’s general operational responsibilities over the payments channels irrespective of the role it ultimately intends to play in the settlement of these transactions.
Indeed, while the risks of investing in different types of banks do not differ substantially under low volatility conditions, such as the one that prevailed until recently, the risks from investing in large euro area banks increase considerably when market volatility goes up. Overall, however, forward-looking market indicators provide a positive assessment of the outlook for the euro area banking sector, although the uncertainty surrounding this assessment has increased since the publication of the December 2005 Review. The chart on the right on slide 11 depicts the broadly based contraction of a standard measure of credit risk – the expected default frequency –  4  BIS Review 50/2006  across banks with different levels of risk. Notable in this regard is the substantial improvement in this indicator for the most risky banks. 5.3  Other euro area financial institutions – insurance companies and hedge funds  Allow me now to turn to non-bank financial institutions, focusing on insurance companies and hedge funds, two sectors that have been at the centre of attention during the past year. Despite significant losses incurred by the reinsurance sector following the damage caused by natural catastrophes, the financial performance of the euro area insurance sector as a whole improved in 2005, owing to stronger investment income, improving underwriting income and rising equity prices. Market-based indicators suggest that the outlook for the sector remains favourable in the immediate future. However, there are a number of risks facing the industry in the period ahead.

The price-earnings ratio of the euro area stock market (shown on the left of slide 8) indicates that despite the rather elevated level, this valuation measure remains well below its peaks reached in 2000. However, should corporate earnings growth unexpectedly slow down, the consequent rise in price-earnings ratios could make stocks look relatively expensive to other assets. The chart on the right plots the implied volatility of euro area stock prices and corporate bond spreads which both gradually declined throughout the first five months of the current year, despite rising longterm bond yields. The rather sharp jump in these indicators during the last two weeks, suggests that there was room for adjustment to a higher pricing of risk in the context of changing views regarding the future macro-financial environment. Before discussing the developments in euro area financial institutions, let me first highlight an important dimension of the market-based intermediation process: the rapid development of structured finance products. Although the risk-transfer that this market has facilitated has very likely led to efficiency gains and a better management of risks within the financial systems, there are several concerns which mostly arise from the fact that relatively little is known about how this market has effectively spread risk and how it would function in a situation of extreme stress. Since June 2002, the size of the global credit default swaps market has increased nearly exponentially (see chart on the right on slide 9).
Add to this the persistence of the expansionary impulse from monetary policy, as can be seen by simple observation of the interest rates of consumer, commercial or mortgage loans, which are all at or very near their all-time lows. Moreover, different qualitative measures produced by the Bank, such as the Banking Credit Survey or the Business Perceptions Report, coincide in their favorable evaluation of the cost of credit, considering its low interest rate. Another way to measure the expansionary nature of monetary policy is to review how far or near the MPR is from its estimated neutral level, which we place between 4% and 4.5%. Therefore, a 2.5% MPR is clearly expansionary and, in our baseline scenario, we assume that we will come near the neutral level only by 2020. Furthermore, beyond the comparison with market rates or their neutral levels, Chile's monetary policy rate is among the lowest when compared to its Latin American peers or with other commodity-exporting countries with a similar macroeconomic framework (figure 3). The better prospects for 2018 growth also rely on the recovery of non-mining investment, including construction and other works, whose decline seems to be ending after one and a half years, which combines with a moderate growth in consumption (figure 4). All this is backed by improved consumer and business confidence indicators, which becomes all the more evident when referring to expectations about the future. These factors are not necessarily independent of each other, so it is difficult to quantify the importance of each one precisely.

This is the component of demand that lags the most and, at the same time, contributes to increase potential growth, helping to avoid price pressures and thus generating a more gradual convergence of inflation. Although the latest data shows an improvement in investment, and our projections assume that this variable will increase more than GDP in the 2018/2020 triennium, this is not assured. For it to materialize, some conditions are necessary, including an efficient financial system and authorities maintaining a favorable climate, helping projects to meet the environmental, urban and social standards adopted by the country. It is always important to be aware that investment is very sensitive to changes in the external and internal scenarios and depends strongly on having favorable conditions for projects to develop. In a more medium-term view, even in a scenario where the economy behaves as expected in the coming quarters, the fact that activity grows steadily at a faster-than-expected pace requires some changes of a more structural nature. Under current conditions, it is not possible to think that the Chilean economy can sustain growth rates above 3% to 3.5% in the long term, which is our estimate for trend growth in the medium term. In September of last year, we presented the Senate a document in which we gave an account of the factors producing this estimate of potential growth and possible ways to improve it.