samchain/econo-pairs-v1 huggingface dataset:
This is especially the case in times of heightened uncertainty. Competitiveness and the strong Swiss franc But aren’t these two consequences of a stability-oriented economic policy at odds with each other? Or, to put it another way: does a strong franc really lead to a reduction in competitiveness? It is essential to differentiate between the short and long-term impact of a strong currency on competitiveness, and it is these differences which I will now examine in the second part of my remarks. In the short term, the answer is obvious: an appreciation makes Swiss companies less competitive on prices than their foreign rivals (cf. chart 8). It becomes harder for them to sell their products and services at a price that covers the costs involved. The increased pressure on margins forces many companies to make adjustments. Without a doubt, these adjustments are painful and require a high degree of innovative thinking, a willingness to take risks and flexibility, from both employers and employees. If need be, companies may have to withdraw  1  The Global Innovation Index is published by Cornell University, INSEAD and the World Intellectual Property Organization (WIPO), and covers 143 countries. The Innovation Union Scoreboard is a European Commission tool for evaluating the innovation performance of EU member states and other European countries such as Switzerland. 2  As part of its mandate, the SNB must also contribute to the stability of the financial system. A well-functioning system of bank lending is also an important pillar of macroeconomic stability.

When there is a fixed exchange rate target, one might even have to expect an uncontrolled expansion of the balance sheet. This is attached to a number of imponderables. 6 In addition to major financial risks, it should be noted that, as the balance sheet grows, it will become increasingly difficult to reduce excess liquidity during a subsequent normalisation of monetary policy, and to fulfil the monetary policy mandate – of ensuring price stability – sustainably. Second, it is important to bear the following in mind: pegging the franc partially or fully to another currency would mean that the SNB would have to adopt the monetary policy of the  6  4  Cf. also Danthine, J.-P. (2015): Swiss monetary policy facts ... and fiction, speech at the Swiss Finance Institute Evening Seminar, Geneva, 19 May 2015. BIS central bankers’ speeches  currency area concerned. However, it could no longer be guaranteed that this monetary policy would always be optimally tailored to the needs of the Swiss economy. Thus, the benefits of an active exchange rate policy need to be properly weighed against the costs for the economy as a whole. But there is no one-size-fits-all method of determining the need to intervene in the foreign exchange market, or the best way to do so. The points to consider will differ depending on the situation. Current SNB monetary policy In that regard, I would like to briefly describe the SNB’s current thinking.
Admittedly, 2011 is still going to be a difficult year for Spanish banks, with their net interest margins under pressure owing to the higher marginal cost of funding and to rather flat business volumes, and with the need to continue making loan loss provisions to write down assets. However, banks have room for manoeuvre to combat these negative pressures on profitability through acting on costs, which should begin to reflect the impact of the restructuring processes. If provisioning requirements persist along with pressure on the margin, the banks most affected should consider additional cost-containment measures. Looking ahead, resumption of notable economic growth for 2012 and successive years, in keeping with market consensus forecasts, together with the culmination of the savings bank concentration and restructuring processes, bringing about synergies, cost cuts, efficiency gains and a substantial reduction in the number of players, will all shape a positive scenario for the recovery of profitability in the Spanish banking sector. I should further point out that net interest income as a percentage of total assets in Spanish banking business has not changed much over the past four or five years, with a ratio of around 1.25%. True, there is more pressure on marginal rates, but their impact on average margins is fairly slow. The marginal cost of funding has risen, but the average cost in 2010 was lower than that observed in the five previous years. Sometimes there is confusion between new rates and average rates.

In Spain, neither conduits nor SIVs (Structured Investment Vehicles) were developed, because the Bank of Spain obliged banks to consolidate these vehicles and required capital of them for the attendant exposures, which eliminated at root any incentive to create these off-balance-sheet vehicles. Accordingly, Spanish banks had hardly any toxic assets. They did not use the originate-to-distribute model to distribute credit risk but pursued a retail banking strategy, in close proximity to bank clients, households and firms alike. On the liability side, when the mistrust and uncertainty worsened, European banks began to suffer the consequences, and their difficulties in raising funds increased. Nonetheless, the long-dated maturities on these products in the past (around 10 years) meant that Spanish banks did not undergo pressing short-term liquidity problems. The financial crisis passed through rapidly to the real economy, with output slumping heavily in late 2008 and over much of 2009. The economic downturn in Spain, and the subsequent recession, impacted banks and progressively raised their doubtful assets and, therefore, their provisioning requirements. Their volume of activity, and new lending in particular, decreased, and the high profitability of Spanish deposit institutions seen so far, began to be eroded. The impact of these developments was uneven, impacting with greater force those banks that had most grown in the expansion and, in particular, a group of savings banks that had concentrated a significant portion of their lending portfolio in financing real estate developers.
The success of the euro in its relatively early stage of life has led, in many places outside the EU, to suggestions that domestic monetary policy should be more closely linked to that of the Eurosystem. Suggestions range from pegging the exchange rate to the euro to the introduction of the euro as a parallel currency or even as a replacement currency. In principle, the ECB maintains a totally neutral position with regard to such developments. We will neither endeavour to strengthen the international role of the euro nor to prevent such developments from taking place. In this respect, I should like to emphasise that when formulating monetary policy the Governing Council of the ECB is bound by the mandate to ensure price stability in the euro area set out in the Maastricht Treaty. This means that developments in neighbouring European countries are taken into account to the extent that the outlook for these countries influences price developments in the euro area. However, the ECB cannot and may not assume any obligations with regard to monetary or general economic policies in other countries, irrespective of the role the euro plays in those countries or of the size of the economies concerned. I should like to point out that the Maastricht Treaty envisages a clear and transparent procedure which lays down the conditions for countries wishing to join the euro area. There are three stages. The basic prerequisite is that the country is a member of the EU which is linked to specific criteria.

Jean-Pierre Roth: Impact of the global crisis on Switzerland Introductory remarks by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the Schweizerisch-Deutscher Wirtschaftsclub, Frankfurt am Main, 2 March 2009. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  What started as a financial crisis has now become a global economic crisis. Although the Swiss economy was in a very sound state before the crisis set in, Switzerland’s standing as a financial centre, its real economy and its public finances have all been strongly affected by the global turmoil. Recovery will depend largely on the development of the US economy. Despite having reached worldwide proportions by now, the crisis was not triggered by globalisation itself. Rather, it is the result of a lack of discipline in the industrialised nations. Monetary policy today must contribute to the stabilisation of the financial system and the real economy without losing sight of its principal task, which is to maintain price stability. BIS Review 24/2009  1
This is supported by agreements that have been and are being entered into based on commitments made by the respective members of ASEAN. Financial integration in ASEAN has also adopted a more flexible approach that accords the member countries to participate in the process based on their state of readiness. This is to ensure that no countries will be adversely affected by the process. Additionally, significant efforts have focused on capacity building in a range of areas of banking and finance to promote an  2  BIS central bankers’ speeches  inclusive advancement of the integration process in the region. Regional cooperation among policy makers is as focused in regional surveillance and information sharing. This is to facilitate greater understanding of regional issues as well as the detection of risks and vulnerabilities. It is also to provide awareness of the implications and the experience of alternative the policy options to address the wide challenging developments confronting the region. This has improved capability in managing the implications of external developments and potential economic and financial crisis. What businesses can expect In period following the Asian Financial Crisis, the region has made significant strides in strengthening our resilience, agility and capacity of the banking sector. We also now have the emergence of ASEAN financial institutions in the region. While ASEAN commercial banks predominantly mobilise funds at the national level, greater regional financial integration is now being paved for financial institutions in our region to participate in a regional banking network.

For example, the inception of the Asian Payment Network (APN) seeks to create a new retail settlement mechanism for the participating states. It allows ATM cardholders to withdraw money in any of the other participating countries, thereby simplifying transactions. This could in due course contribute towards the growth of the tourism and the retail sector in our economies. With extensions being sought to include debit and credit cards, money transfers and mobile banking services, businesses will be able to leverage on these services to reduce transaction costs and improve efficiency for such transaction. Conclusion Let me conclude my remarks. Despite the distinct cultures, histories and languages that make each ASEAN nation unique, there is a common thread that runs through the region that keeps us cohesive – a unanimous and unwavering commitment to empower our people together. This solidarity will however also require the ASEAN business community to complement the efforts made by the regional authorities. Malaysia looks forward to being the chair of ASEAN in 2015 to build on the progress that has been achieved to further advance the regional financial and economic integration. This will also include the agenda of promoting ASEAN as a destination for global investments. ASEAN integration is a joint responsibility that has always been embraced. Let us demonstrate that in the case of ASEAN, the whole is greater than the sum of its parts. BIS central bankers’ speeches  3
However, as the financial stress intensified and the economic contraction deepened, policy rates rapidly approached the zero interest rate floor. With their economies still under acute strain, central banks in some advanced economies responded by implementing a series of unconventional measures. The goal of these measures was to provide markets with ample amounts of liquidity to help restore the health of financial systems balance sheets, and thereby to reactivate the provision of credit to the real economy. However due to stress in the financial sector, the effectiveness of the transmission mechanism of monetary policy may be hampered to some extent. And the usefulness of conventional countercyclical monetary policy may be relatively limited during financial crises. Distinguished Guests, The global economy is still in unchartered territories creating lots of confusion among the policymakers on the consequences of the monetary and fiscal stimulus steps taken so far globally. Most governments have taken fiscal measures to mitigate the effects of global turmoil either by decreasing tax rates or increasing public investment spending and expenditures. So far we see a consensus about the need for accommodative monetary policies around the globe. On the other hand, high public debt of the most developed economies has aroused serious concern on debt sustainability. According to the OECD projections, by 2017 gross public debt as a share of GDP is expected to rise sharply to 125% in the US, 160% in the UK, 125% in France, and over 100% in Spain.

Nevertheless, it should be stressed that the need for such a consensus is as great as before, since the reliance on accommodative policies of advanced countries has reduced their urgency for structural reforms and complicated the conduct of policies in emerging market economies. If the current stalemate were allowed to continue, there is a risk that the global recovery would not be sustained and the functioning of the IMS could become disorderly. In this context, the theme for this year’s IMFC Plenary, “Global Challenges, Global Solutions” holds special significance. Fund surveillance 3. We look forward to the upcoming 2011 Triennial Surveillance Review (TSR). To avoid duplication, an independent opinion of the gaps in the Fund’s surveillance framework can already be found in the IEO report on the Fund’s performance in the run-up to the crisis. The IEO has identified several weaknesses in the Fund’s culture that impedes effective oversight, such as a silo mentality amongst departments, fear of reprisals that inhibit candid views, and a lack of evenhandedness in the treatment of members. Instead of searching for a new legal framework for surveillance, the Fund should concentrate its efforts on how best to implement the IEO recommendations. While the IEO report focuses on dealing with risks in the financial sector, we wish to highlight that surveillance should also focus on fiscal and/or debt sustainability problems, from which the next crisis could emanate.
A primary focus of the new Prudential Regulation Authority will be on determining whether the business models, governance and systems and controls of firms will enable them to satisfy the public interest in financial stability in future states of the world. That requires both a macro and micro prudential view, and for the two to come together to reach forward-looking judgements on whether financial stability is likely to be preserved in a range of plausible future outcomes. This range of outcomes is important, and it also underlines the need to build up the role of stress testing. Such testing is an important mechanism for describing the forward-looking view though it should continue to evolve from a binary pass-fail world into one where it is a toolkit to test a range of possible future states of the world and thereby judge the wider resilience of firms. The PRA will exercise judgement in the supervisory actions it takes, so that firms are likely to be able to meet its objectives, policies and rules over the medium term horizon. Firms will need to demonstrate to the PRA that they are robust to a variety of states of the world, including unanticipated stress scenarios. However, since it is not possible for any forecast to cover all possible outcomes, there will always be some probability of firms failing.

Working with the Bank of England’s Resolution team, the PRA will need closely to integrate recovery and resolution planning within its supervision; and in my view should embed a proactive intervention framework akin to the US Prompt Corrective Action within its supervisory approach to deal with the inevitable situations where firms get into the danger zone. Above  2  BIS Review 121/2010  all, these tools should support competition in the industry, by accepting that there will be winners and losers. In two years’ time, we will have a new system of financial regulation in the UK. Those of us involved can assure you that the transition is not a small task, but I can also assure you that the Bank is fully committed to working with the FSA to ensure a smooth transition. There is a great deal to be done to implement the new system of regulation, to articulate and build the public interest in financial stability, and thereby to improve the stability of the system itself. Basel III, macroprudential tools, countercyclical buffers, are all things that Adair and I get excited about. They are important foundations of good policy. But on their own they don’t win the public interest argument for financial stability. To do that, we have to build the case that the industry will serve the needs and interest of the public. The authorities cannot do this alone. Building confidence in the financial system takes effort and time. It is a common goal and in the interest of everyone.
I am further informed that ATI has so far this year supported Zambian companies and businesses by offering insurance cover to some very large and essential projects primarily in the energy, mining, manufacturing and agriculture sectors valued at over $ million. The Agency has also continued to assist many African countries by facilitating foreign direct investments with its political risk insurance that protects investors. Ladies and Gentlemen, the role that trade plays in the economic growth and development of a Country cannot be emphasised. There are many regions and countries of the world that have been able to lift their peoples from poverty to prosperity through trade. However, although Africa in general and Zambia in particular has an economy which is characterized by a relatively high degree of openness, trade has not been utilized to an extent of achieving rapid and sustainable economic development necessary to eliminate poverty. This failure for trade to serve as a catalyst for sustainable economic development could be attributed in part to the nature of Africa’s export trade which is heavily concentrated on primary commodities that are characterized by relatively slow growth, price instability and long‐term deterioration of terms of trade. The need for African countries and Zambia in particular to participate in the dynamic sectors of global trade such as manufactures and services cannot be over-emphasised.

Established beliefs in efficient markets, asset price dynamics, and more, have all been called into question. Amid the flux in the global financial and economic landscape, Singapore also has its own challenges. Resource constraints mean that we have to restructure the economy to depend less on the labour force and more on productivity increases for growth. During this period of transition, important adjustments in domestic resource costs and consumer prices are taking place, alongside the usual cyclical developments confronting the economy. Dealing with the confluence of factors affecting domestic prices has been particularly challenging, for us at the central bank and equally so for consumers and businesses. CPI-All Items inflation, for instance, has been elevated coming out of the recent financial crisis, averaging 4.1% since 2010, much higher than the historical norm of below 2%. MAS Core Inflation, which excludes changes in accommodation and private road transport costs, averaged a lower 2.0% over the same period. Consumer price pressures have picked up more recently. CPI-All Items Inflation reached almost 5% in Q1 this year and households may face higher price increases for specific expenditure items. MAS is monitoring these and other cost indicators closely. Allow me to take this opportunity to highlight some conceptual issues concerning price adjustments in the  1  Phillips, P, Shi, S and Jun, Y (2011), “Testing for Multiple Bubbles”, Working Paper No. 03–2011, Singapore Management University. BIS central bankers’ speeches  1  economy and their implications for monetary policy.
But Denmark, too, has experienced problems in its housing market (see Figure 4). In Sweden, house prices have risen substantially since the middle of the 1990s, even compared with the countries where prices have since plummeted (see Figure 4). As house purchases are to a great extent funded by borrowed money, it is hardly surprising that this has also entailed a large increase in household debt (see Figure 5). I think that it is important in this context to try to clarify the actual risks for Sweden here. It is not very likely that a fall in house prices would lead to extensive loan losses from mortgages for banks and mortgage institutions. Both the experiences from the 1990s and the analyses  BIS central bankers’ speeches  1  we have made ourselves point to this not being the case.1 However, a fall in house prices can give rise to other effects, direct and indirect, on both the macro economy and financial stability. The most direct effects for the macro economy concern household consumption. Experiences show that the countries hit by severe falls in house prices usually experience long periods of very weak consumption. This is because households then tend to increase their savings to restore their wealth. Figure 6 shows developments in household consumption and real house prices in different countries. We can see that Sweden has had a much stronger growth in consumption than the countries affected by severe falls in house prices.

These criteria – combined with an important role for the central bank, which I have argued in favour of today – are also largely reflected in a recommendation from the European Systemic Risk Board (ESRB). The European macroprudential supervisory body ESRB was created in response to the financial crisis and began operating in 2011.12 The purpose is to contribute to preventing or reducing systemic risks in the EU. The primary instrument for doing this is the ability to issue warnings or recommendations if significant risks are identified. The ESRB  11  See, for instance, the Executive Board’s consultation response to the report Evaluation of the Riksbank’s monetary policy and work on financial stability 2005–2010 (2010/11:RFR5), published on 30 November 2011. In addition to the four criteria, it is also emphasises there that the Riksbank should play a central role in macroprudential policy, which I have argued in favour of today. 12  It is headed by ECB Chairman Mario Draghi and consists mainly of the central banks and financial supervisory authorities within the EU, with the first-mentioned having the right to vote. 6  BIS central bankers’ speeches  does not have any binding instruments of its own at its disposal; instead it assumes that the EU member states themselves will establish systems for this. Thus, an important part of the discussion on how macroprudential policy should be organised is the ESRB’s recommendation to the EU member states’ governments in this field, which was published in January 2012.