samchain/econo-pairs-v1 huggingface dataset:
BIS central bankers’ speeches  9  Figure 4 Lending interest rates (1) (2) (percent) 18  40  12  30  6  20  0  10 02  04  06  08  10  14  12  (1) Weighted average rates for all operations performed each month. (2) Dashed horizontal lines show ten-year average for each series. (3) Interest rates on credits in UFs. Source: Central Bank of Chile based on SBIF data. Figure 5 Sovereign risk premiums in emerging economies (1) (2) (basis points) 300  Latin 300 America (3)  250  250 Europe (4)  200  200  150  150 Asia (5)  100  100 Chile  50 13  14  50  15  (1) The dotted vertical line marks the statistical cutoff date for the September 2015 MP Report. (2) Measured by 5-year CDS premiums. Simple average of countries in each region. (3) Includes Brazil, Colombia, Mexico, Panama and Peru. (4) Includes Bulgaria, Croatia, the Czech Republic, Hungary and Turkey. (5) Includes China, Indonesia, Malaysia, the Philippines and Thailand. Source: Bloomberg.

Two new specialist bancassurance players have established operations in Singapore, and contributed significantly to this trend. Increasing resilience Amidst these new opportunities, more than ever, we now need to strengthen the resilience of the insurance industry. The MAS has for some time, been working with the insurance and reinsurance industry to raise standards of corporate governance, internal controls and professionalism. Many of our companies are already at international best practice standards. However, as in all countries, practices vary, and we aim to have all our insurers to attain best practice standards by 2005 if not earlier. 2  BIS Review 44/2002  Risk-based supervision In 1998, MAS embarked on a strategic change in our regulatory philosophy. We moved from a bottomup, audit-based inspection approach to a top-down, risk-based supervisory approach. This approach, being prospective in nature, is well suited to today's world of new and increased risks. Risk-based supervision evaluates the major risks faced by an institution and assesses how well these risks are being mitigated. This will help both regulators and companies to identify and, importantly, to pre-empt problems. Well-managed institutions will be given greater flexibility, while less well-managed ones will be subject to closer scrutiny. Singapore's risk-based supervisory framework for insurers The basic framework for risk-based supervision of insurers in Singapore has been set up. MAS is now developing risk profiles for each Singapore-based insurer. We have devised a five-step "supervisory ladder of intervention", and will use it to classify insurers according to their risk rating.
The outcome of these measures would appear to be useful without being decisive, and the illusion of NPM has gradually dissipated. In particular, measuring the performance and quality of certain public services sometimes runs into intrinsic measurement difficulties. v More than twenty years on from this research, twelve years after Philippe Aghion and Alexandra Roulet called for a "Rethinking of central government”, vi it is  Page 9 of 19 regrettable that macroeconomic analysis is still of so little assistance to public management. Research literature focuses almost exclusively on assessing the success of fiscal adjustment strategies, omitting the fundamental aspects of the quality and effectiveness of public spending. Certain questions have barely even been tackled. I would like to mention three, beginning with measurement of the output of public services. How to measure the output of public services? The inherent lack of a selling price for non-market public service output has never really been overcome, and national accounting uses a simplistic arrangement to get around this, consisting of measuring it as the sum of production costs vii - in other words, mainly public employee remuneration. This basically means that the only way to increase public service output today is to increase costs and the number of public employees. But how can we gauge the effectiveness and quality of public spending and public services without having any visibility over their 'real' output?

France has risen from 7th to 1st place, replacing Sweden as the government expenditure record holder. Shedding light on government spending differentials But there is a positive lesson here: the German and Swedish examples, along with many others, demonstrate that recovery is possible... in other countries. After the crisis of the early 1990s, Sweden for example, introduced a new  Page 4 of 19 governance framework and conducted a strategic review of its spending. This brings me to the composition of our expenditure when compared with Germany and the euro area as a whole. What sets France apart in particular is the level of its social protection expenditure, which amounts to 34% of GDP, compared with a euro area average of 29.5%. This additional cost applies to spending on pensions, healthcare and unemployment benefit. Another example is housing benefit, which amounts to 0.9 points of GDP in France, compared with an average of 0.2 points in the euro area excluding France. Consequently, France's spending has risen much more sharply since the early 2000s than that of its euro area counterparts. If we wish to get public debt back down to below 100% of GDP its pre-Covid level – there is only one solution, and that is stablising public spending in volume terms, after having increased it by more than 1% a year on average for 20 years.
I believe it is possible to do that while being proud of our institution and all the good things it has done through the last four centuries. Second, while improving ourselves we also need, together with Nikhil and his team at the FCA, to help the financial sector do likewise. In the case of the PRA, this is both because, in common with other public authorities, the PRA has a legal duty to promote equality, and also because there is a clear and direct linkage from a lack of diversity and inclusion in firms through to groupthink and from there through to financial disasters. I’m pleased that we’ve managed to advance the debate on this, and other very important aspects which the FCA is also interested in, through our recent discussion paper, and look forward to moving on to next steps once we have considered all the responses. Conclusion Now I can imagine that at this point the more jaded amongst you may be eyeing the prudentist somewhat sceptically as she points out these various new features of her surgery. Where is the tooth-pick marked “asset quality”, the drill called “liquidity management”, the dreaded waterscaler known as “governance review”, and that nice whizzy little polisher thing she uses at the end in order to test firms’ cyber defences? Fear not, they are all still safely there in the tray and are all being used very thoroughly.

First, we need to ensure that our own institution is sufficiently diverse and inclusive. The clear finding from our recent review is that currently we are not making sufficient progress, or moving quickly enough. Of course it is likely to be true that the sorts of issues which emerged in our review are present in many other institutions, and that they are part of a wider set of challenges which are not entirely within our power to tackle. That does not mean that we should not make strenuous efforts to improve our performance in this area, both because greater diversity and inclusiveness will aid the quality of our work and because as a national institution which relies on trust and confidence it is appropriate for us broadly to reflect the public we serve. Put at its simplest, for me the experience of our review highlighted the many ways in which coming from a white, middle-class background – and arguably also being a man – can make it easier to navigate an institution with the sort of heritage the Bank naturally has. In general I don’t believe it is a single or small number of big issues which create that difference – it is mostly many, many smaller things repeated day in day out in people’s experience of working life. We should iron those differences out, which will take a focused effort over time because changing attitudes and rooting out biases is not an easy task.
The flipside is that market prices respond more to asset sales than they did, to draw in buyers in a short timeframe. 15  Post-crisis limits on bank leverage may be a driver of this. If so, then a generally lower level of market-making activity may be the price paid for greater resilience of systemic institutions and their critical activities. 16  The issue is not whether or not to row back on those regulatory standards, it’s to make sure the system adapts fully to corporate bond markets being generally less liquid and able to absorb asset sales. In that context, the second development is the growth in the share of corporate bonds held in open-ended mutual funds, particularly those offering the possibility of redemption at just one day’s notice. The share of corporate bonds held in open-ended funds in the UK and the Euro Area has increased by 70%, and in the United States by 150%. 17  The question here is whether structures with the shortest redemption notice periods could create a ‘first-redeemer advantage’ that encourages greater asset sales during market adjustments. Why might that be a possibility? Typically investors are offered the ‘net asset value’ (NAV) of the fund when they redeem. This is calculated on market prices for the assets held in the fund. But the market prices of some assets are based - implicitly - on their typical sale period rather than on the period the fund might need to sell them over.

The four are: (i)  the provision of official finance should be linked to the involvement of other creditors, including the private sector, in the resolution of crises. This can be achieved by the IMF setting a floor for the minimum level of foreign exchange reserves a country is required to maintain;  (ii)  the aim of resolution is to find a cooperative solution negotiated between a debtor and its creditors. No particular class of creditor should be in a privileged position, unless the instrument in question explicitly gives it preferred creditor status;  (iii)  the use of temporary standstills – possibly sanctioned by the international community – would allow time for a country to negotiate with its creditors. In the absence of a formal mechanism to achieve this, the IMF can indicate its endorsement of a standstill by being prepared to provide new money to a country which has temporarily suspended payments to its creditors (often referred to as IMF lending into arrears). By making standstills part of the furniture – or one of the bricks – they would be seen not as an ad hoc response, which might lead to contagion in other emerging markets, but part of an approved process;  (iv)  measures, including perhaps strictly temporary capital controls, to prevent capital flight by domestic residents in exceptional circumstances. It would be odd to sanction a standstill of payments to foreign creditors while allowing domestic residents to move assets overseas without restriction.
Indeed, the PRA has found that despite the sophistication of insurers in modelling climate risks, there are still gaps in their own risk management. The PRA is increasingly focused on cognitive dissonance in some insurers whose careful management of climate risks on the liability side of their balance sheets is not always matched by similar considerations on the asset side. And the PRA’s banking survey last September found that, although almost three quarters of banks recognised the risks of climate change, only one in ten were taking a long term, strategic approach to them. With that in mind, we expect firms to consider scenario analysis as part of their assessments of the impact of climate risks on their balance sheet and broader business strategy. An important question is the form these scenarios should take. Climate scenarios aren’t forecasts, but datadriven narratives that help companies think through different possible futures. The scenarios should be comprehensive, rigorous and challenging. The assumptions and methodologies in the models – such as the assumed global temperature rise, the energy mix, or whether the transition happens smoothly or abruptly – should be sufficiently transparent to allow for comparisons and external challenge. And finally, scenarios should be implemented consistently across the business, linking identification of risks and opportunities to both strategy and disclosure. To do this, firms will need either to develop their own transition scenarios or build on commonly available models.

These are:   a better access for exports to EU Member States and to other countries with whom the EU has negotiated trade agreements;    heightened competition in the domestic market due to the removal of protectionist measures;    the free flow of factors of production, including labour and capital, between Malta and other EU Member States;    a greater availability of external financial resources; and    an enhanced degree of policy co-ordination between Malta and the other EU Member States, especially in the area of macroeconomic stabilisation, the promotion of economic growth and trade policy. Of these, the free flow of goods, services and capital are the factors that are most likely to have an impact in the short term. They have, indeed, already left their mark on the Maltese economy over the past year. The freedom of movement of labour, together with funding programmes and policy co-ordination are more likely to have medium- to long-term impacts. I shall therefore focus initially on the main opportunities and threats attendant upon the first set of factors. The longer-term consequences of EU accession will be dealt with in the context of the proposed policy orientations.
Market conditions is certainly one such challenge, as we all just witnessed some roller coaster rides of yield volatility in the past months. And securitising a pool of highly bespoke infrastructure loan asset pool presents a vastly different proposition to traditional investors who are more used to investing in a highly homogeneous asset pool such as mortgage loans. For this reason, there are limited successful precedents in the market globally, presenting additional challenges for investor to benchmark a relevant issue. 22. Notwithstanding these challenges, we do see that it is a meaningful market development opportunity. If successful, it will help mobilise capital market liquidity into an attractive alternative asset class and help fill the market gaps in infrastructure financing. 23. Ladies and gentlemen, I notice from the agenda of this conference that there will be a lot more interesting discussions in the important subject of fixed income market generally and structure credit products specifically. Such discussions are very important to further enhance the understanding of regulators and market practitioners alike about the opportunities and impediments relating to further development of these products. 24. We in Hong Kong are eager to work with you all to further enhance our financial services platform in order to offer more exciting opportunities for all. This is clearly demonstrated by our continuous efforts in making legislative and regulatory changes in the past few years relating to open ended fund companies, corporate treasury centres, aircraft leasing, limited partnership regime, and many more.

More relevant to today’s conference, following the FSB’s recent Plenary meeting in Tokyo we announced that in the next few weeks we will issue a consultative paper on resolution planning and, in particular, on resolution strategies. The paper, drawn up by a subcommittee led by Christine Cumming of the New York Federal Reserve Bank, will cover three areas. The first is Recovery Triggers and Stress Scenarios used in recovery planning. Firms need to ensure that triggers are not linked mechanically to metrics that lag behind their true financial condition – a problem with some previous earlyintervention frameworks. Recovery actions must start sufficiently early. But care must be taken to avoid markets overacting to the fact of such actions being taken. That is not easy. Second, the consultative paper will outline a possible framework for national authorities to use when identifying the critical functions and support services of firms that need to be sustained in distressed conditions. What matters here is focusing on those services that are vital to the economy. The third, and most important, area of consultation is about the development of Resolution Strategies and Operational Resolution Plans. This guidance aims to capture the main issues that authorities should address.
The problem is not the idea of the euro. It is much more about repeatedly reviving citizens’ awareness of the benefits of a united Europe and a single currency. And about creating a solid and sustainable economic basis. I have shared with you some proposals on how monetary union could be designed so that it responds to people’s wishes and durably fulfils its objectives. Are these proposals new? No, these and other proposals for the further development of monetary union have been around  4  4  Asdrubali, P., Sørensen, B.E. Yosha, O (1996), “Channels of Interstate Risk Sharing: US 1963–1990”, Quarterly Journal of Economics, 111(4), 1081–1110. BIS central bankers’ speeches  for quite some time. This shows that we have no problem understanding, but we do have a problem implementing. It’s up to politicians to create a framework that is appropriate for the idea of a single currency – at national as well as at European level. The longer politicians stand still, the more people will lose faith in Europe. One sign of this is that political parties which want to move backwards have recently been gaining support. At the same time, the European Central Bank is being pushed into a role for which it was not created. Monetary policy can neither solve structural problems at national level nor institutional problems at European level. On the contrary, the more that is expected from monetary policy, the more likely it is to be overburdened. The ECB alone cannot create growth and prosperity for all.

Many countries are now on the right track. Ireland, Spain and Portugal, for example, have implemented a series of reforms; they have become more competitive and their economies are recovering. And yet, in some euro area countries, unemployment remains very high, especially among young people. In addition, many countries still have large public deficits and high levels of debt. So further reforms are necessary here. The same applies to goods markets and the general business environment. In many Member States bureaucratic hurdles have to be overcome in order to start a business, and not only in the crisis countries. Removing such administrative barriers is much  2  BIS central bankers’ speeches  less expensive than national recovery plans, and can contribute significantly to sustained growth and increasing prosperity. 2 It is all the more worrying that the OECD in its recent “Economic Policy Reforms” report notes that particularly in the euro area countries the pace of reform is slowing. It would be disastrous if necessary reforms cannot be implemented or, if implemented, reforms were even to be withdrawn. That would slow down, or even totally impede, the necessary economic upswing. Central banks would then come under pressure to counteract this by pursuing an exceptionally loose monetary policy. A stable monetary union rests on the shoulders of individual Member States. Sound economic and responsible fiscal policies at national level are an essential basis for a stable monetary union.
As a consequence, demand for credit expanded rapidly: households and firms in the periphery sought to borrow, so as to reap the available growth opportunities via investment and enjoy the benefits of prospective wealth gains immediately. BIS central bankers’ speeches  1  This surge in the demand for borrowing was met with a relaxation of the credit supply (Chart 5). Financing conditions eased significantly as real rates fell. Country risk premia diminished, as peripheral countries adopted a credible and stable currency. Spreads between government bond yields of euro area countries narrowed to very low levels. Financial institutions could borrow more easily abroad, as currency risk diminished. Deeper and more integrated capital markets facilitated greater opportunities for cross-country diversification. And greater competition spurred rapid adoption of financial innovations, with securitisation and risk transfer markets playing an important catalytic role in expanding the loan supply. 1 Credit growth surged dramatically. No doubt part of the rapid expansion of credit was justified on fundamental grounds. After all, studies by the European Commission during the 1980s and 1990s had promised a sizable growth dividend from the Single Market and Monetary Union. 2 But, in an environment of large-scale structural change in peripheral economies and their financial systems, distinguishing the impact of improved fundamentals from that of “bubble-like” behaviour proved a formidable challenge.

In the fiscal policy domain, the elements of a good rule are: It is clear and easy to understand; it is binding, i.e. has a basis in law – ideally at the constitutional level; and it is equipped with a specific sanctioning mechanism. Finally, it must make provision for exceptions, and these should be clearly defined. In the monetary policy domain, too, there are certain requirements regarding what makes a good rule. First, it must set out how the central bank should use its policy tools to achieve the goal of price stability. It defines criteria according to which monetary policy measures are taken. For many central banks, inflation forecasts play an important role. On the one hand, they serve as the main indicator for the interest rate decision. On the other, they are an important communication tool. A good rule creates a certain degree of transparency vis-à-vis the public, and makes monetary policy more predictable. It provides an anchor for inflation expectations and helps to improve the credibility of monetary policy. Second, we need a culture of stability which is well anchored in the minds of both politicians and the general public – part of the national mentality (cf. chart 6). Economic literature has repeatedly demonstrated that certain political structures and a culture of stability are mutually reinforcing. 7 For fiscal policy, these structures can be, for example, fiscal federalism (tax competition), the subsidiarity principle, direct democracy structures and political continuity (e.g. the concordance principle).