samchain/econo-pairs-v1 huggingface dataset:
Ravi Menon: Myanmar must open up at a measured pace Keynote address by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at High-Level Seminar on Financial Sector Liberalisation, Nay Pyi Taw, Myanmar, 10 January 2014. *  *  *  His Excellency U Win Shein, Union Minister, Ministry for Finance and Revenue, His Excellency U Kyaw Kyaw Maung, Governor, Central Bank of Myanmar, distinguished guests, ladies and gentlemen, good morning. A defining moment I am pleased to be here for this high-level seminar on financial liberalisation. This collaborative event is a clear testimony to two things: •  first, the commitment and resolve of the Myanmar government and central bank to modernise and develop the financial sector; and  •  second, the warm relationship and close co-operation between the central banks of Myanmar and Singapore. Myanmar is at a defining moment. There is a distinct sense of optimism, as the country rejoins the global economy. A strategic location at the intersection of China and India, a generous endowment of natural resources, and a large, youthful and literate population – Myanmar is poised to be the next economic frontier in Asia. Finance is a handmaiden to the economy. As Myanmar opens up its economy and seeks to achieve sustained growth, it is important to liberalise and develop its financial sector in concert. But it must do this in a progressive and calibrated manner, step-by-step, making sure the fundamentals and preconditions are in place.

Thus, in the year to date, the 12-month EURIBOR has increased by around 290 bp, while the 10-year OIS rate, which acts as the euro area long-term risk-free interest rate, has risen by almost 250 bp. The cost of corporate debt issuance has also risen significantly, in line with risk-free interest rates. The increase in market interest rates has also started to pass-through to the average rates applied on new loans to households and firms. In the coming months, this passthrough is expected to continue. The rise in market interest rates is also gradually increasing the average cost of outstanding debt for both households and firms. The speed of this process depends on the maturity of the instrument (short vs long-term) and the type of contract (fixed vs floating rates). For the euro area as a whole, the share of short-term and floating-rate loans in the stock of loans is much higher for firms than for households. This means that outstanding debt is repriced faster for firms than for households. Besides the tightening in financing conditions in terms of cost, the credit standards for new loans to the nonfinancial private sector also tightened across the board during the first half of 2022, according to the July Bank Lending Survey (BLS).6 This is attributable to banks’ heightened risk perception and lower risk tolerance. In July banks expected a further contraction in credit supply for the third quarter. So what can we expect for the financial system in 2023?
The economic crisis, continuing into 2010, only confirmed these expectations of mine. Banks not only did not become the reason for deepening the problems in our economy, but they were also the main pillar of stability and driver for overcoming the problems. The Bulgarian banking system continued to be a paragon of stability and predictability in the face of the unprecedented slowdown in over a decade. As regards the blatantly provocative “projections” of some domestic and foreign “analysts”, just a few days ago I reminded you of their fantasies in a sort of a chart of “unfulfilled black predictions” about the Bulgarian banking system. The coming year 2011 is a year of elections. We at the Central Bank are well aware that it could be possible for some of the local candidates for glory – the eternal candidates to come back on the big political scene – to actively try and “sell fear” during the elections year 2011. So watch out! The situation is very complicated, and yet the banking sector stays flexible and efficient; while the number of non-performing loans is on the increase, the system goes on generating current profits. Despite the deteriorated quality of loan portfolios, Bulgarian banks did manage to keep considerable capital buffers, given the provisions of over BGN 4.5 billion allocated only by October. Is there any other country among the 27 EU member-states, apart from Bulgaria, that in these circumstances could be proud of the remarkable 18% capital adequacy and total liquidity ratio of nearly 22%?

That is why in the case of essentially technical judgments it is sensible to rely upon collective wisdom, and there are other areas in which we do precisely that. The Law Lords, for example, reach their decisions by aggregating individual judgments, and the same is true in the United States Supreme Court. The MPC is based on the same principle. For such a system to work it is crucial that the individual members of the MPC give their best judgment and do not try to reach an artificial consensus. When policy is clearly off-track, as in the spring of last year, it is not difficult to reach unanimous decisions, as the Committee did through 1997. But when policy is finely balanced, disagreements about the precise level of interest rate are not only likely but an indication that policy is broadly on-track. That is why the motto of the MPC should perhaps be “divided we stand, united we fall”. Some commentators have been unable to resist labelling members of the Committee as either “hawks” or “doves”. There is a fundamental problem with this labelling. It makes no sense in the new system to describe individuals as hawks or doves. Each member of the Committee has the same inflation target. Unlike some other central banks, MPC members cannot entertain closet views about the attractions or dangers of slightly higher or lower inflation. Their task - to which they will be held personally accountable - is to hit the Government’s inflation target.
In particular, increased trade openness and stronger international competition from low  2  BIS Review 74/2007  cost suppliers in emerging economies has resulted in lower prices of imported goods and limiting pricing power of domestic firms. In addition, higher international wage competition in labour markets, as well as upward pressure on productivity growth (albeit this is difficult to distinguish from effects of technological developments), have provided downside risks to inflation. On the other hand, higher commodity prices due to stronger demand for energy related commodities and industrial raw materials pose an upside risk for inflation. Secondly, the monetary policy transmission mechanism has been changed by financial globalization. Policy interest rates influence short-term interest rates. But recently, the response of long-term rates to changes in the policy instruments has become less apparent. This raises concerns of whether central banks’ monetary policy is becoming less effective, particularly given that savings and investment decisions are more influenced by long-term rates. Additionally, the conduct of monetary policy has become harder in light of financial globalization. A policy rate increase to tame inflationary pressures may induce further capital flows, thus bringing more liquidity into the domestic market. Thirdly, domestic financial stability is to a greater extent affected by global liquidity conditions. For instance, growth in cross-border financial flows increasingly influences domestic asset prices. However, this effect can be broken down into two main scenarios. The first is through changes consistent with fundamentals.

The SSM is the fruit of all these lessons… and, under your responsibility, the best guarantee for the future. Thank you for your attention. 3/3  BIS central bankers' speeches
Second, financial system transformation affects the implementation of monetary policy. I will give you an example. Our weekly main refinancing operations with money market counterparties are conducted on the basis of repurchase agreements ("repos"). This requires a list of eligible collateral for such operations. In a changing financial environment, a central bank has to ensure that eligible collateral allows market participants to have efficient and equal access to central bank liquidity. My third example of the importance of financial system transformation to central banks relates to the payment systems function. Most central banks in industrialised countries run a large-value payment system and are involved in the oversight of other payment and securities settlement systems. For reasons of efficient liquidity management by private banks, the Eurosystem's TARGET system allows for intra-day overdrafts that are fully collateralised. For TARGET to perform efficiently, it is therefore very important that securities settlement systems are interlinked or consolidated in a way which allows a smooth flow of collateral across the euro area. Fourth, past experience has shown that structural change in financial systems may have an impact on financial stability. Hence, the structure and modus operandi of the authorities responsible for supervising financial markets and institutions must be designed to prevent any instability from arising. This is, as you are aware, quite a topical issue in the European Union. Central banks have a genuine interest in this issue, which clearly has its origins in the Treaty on European Union.

Our speaker in the third session, Jean-Pierre Danthine, will illustrate the benefits from the discipline that economic theory can impose on our thinking when analysing European equity market integration. He will also present a generalised approach to estimating the importance of country and sector effects in portfolio allocations. One of his discussants, Bruce Carnegie-Brown, will draw on his experience as a market expert to interpret for us recent developments in bond markets. Finally, as already mentioned, the policy panel, which will be the final session of the conference, will discuss the role of central banks in the maintenance of financial stability  2  BIS Review 60/2002  against the background of the transformation of the European financial system. I am particularly pleased to see that we have been able to bring together such highly esteemed policy-makers and academics for this purpose. Ladies and gentlemen, I should like to finish at this point and hand over to our first speaker. I sincerely thank you again for coming here today. I wish you a very interesting and stimulating discussion, and I look forward to hearing about the results of the second ECB Central Banking Conference. BIS Review 60/2002  3
There is also evidence of them arising from coordination failures, which generate spillover effects across banks and countries. 1  See IMF (2010). BIS Review 168/2010  1  Drawing on this evidence, Section 5 identifies some implications for the design of public policy. It suggests that neither monetary nor micro-prudential policy may be well-equipped to tackle the credit cycle. Instead, some new policy apparatus may be needed which (unlike monetary policy) targets bank balance sheets directly but which (unlike micro-prudential policy) does so systematically. This is one key dimension of so-called macro-prudential policy. 2 Various international macro-prudential policy committees are, or are about to be, put in place – in the US the Financial Stability Oversight Committee, in the euro-area the European Systemic Risk Board and in the UK the Financial Policy Committee. These provide one element of a macroprudential policy framework. Other elements remain to be put in place. Knowledge of the sources and dynamics of the credit cycle will be important in assembling those missing pieces. This paper is intended to be a contribution towards that goal. 2. A model of the credit cycle  We begin by sketching a model which captures some key features of past and in particular the present, credit cycle. There are a number of existing models of the credit, or leverage, cycle. In all of these models, cyclicality in financial variables is aggravated by various microeconomic frictions. These frictions typically then amplify fluctuations in the real economy.

The reason for the figure of 2 per cent was not that research had determined that this was the absolutely most appropriate level; it was probably more because this was the approximate level of inflation in most of the countries that began to introduce inflation targets and it appeared to be a reasonable figure in general. And until the financial crisis there was no real reason to question whether an inflation target of 2 per cent entailed a sufficient buffer for monetary policy. However, since the crisis, many countries have cut their policy rates to the “near zero lower bound” and been forced to change over to other, more unconventional means of conducting monetary policy, sometimes for several years. If the inflation target had been set higher from the start, there would have been a greater possibility to stimulate the economy in the normal way, through lower real interest rates. It is possible that the effects of the crisis would then have been less and it would have been easier to emerge from it into a more normal situation, some people argue. 15  Examples are Blanchard et al (2010), Ball (2014) and Krugman (2014). Representatives of central banks have also taken up this issue recently, see Rosengren (2015), for instance. BIS central bankers’ speeches  7  Many say that the motives for a higher inflation target have recently been reinforced and are not merely linked to the fact that it would be easier to extricate oneself from crises.
As new liquidity-providers enter the market, execution certainty and price efficiency might be expected to improve. Inventory and information risk would thereby fall and, with it, bid-ask spreads. Some of the early empirical fingerprints suggest just such a pattern. For example, Brogaard (2010) analyses the effects of HFT on 26 NASDAQ-listed stocks. HFT is estimated to have reduced the price impact of a 100-share trade by $ For a 1000-share trade, the price impact is reduced by $ In other words, HFT boosts the market’s absorptive capacity. Consistent with that, Hendershott et al (2010) and Hasbrouck and Saar (2011) find evidence of algorithmic trading and HFT having narrowed bid-ask spreads. Chart 8 plots a measure of bid-ask spreads on UK equities over the past decade, normalising them by a measure of market volatility to strip out volatility spikes. It confirms the pattern from earlier studies. Bid-ask spreads have fallen by an order of magnitude since 2004, from around 0.023 to 0.002 percentage points. On this metric, market liquidity and efficiency appear to have improved. HFT has greased the wheels of modern finance. But bid-ask spreads can sometimes conceal as much as they reveal. For example, by normalising on volatility, Chart 8 air-brushes out what might be most interesting: normalising volatility might normalise abnormality. It risks falling foul of what sociologists call “normalisation of deviance” – that is, ignoring small changes which might later culminate in an extreme event. 8 So is there any evidence of increasing abnormality in market prices over the past few years?

By that metric, the contribution of equity markets to economic growth in the US, Europe and Asia has been static, at best mildly positive, during the course of this century. Yet that picture of apparent stasis in equity markets conceals a maelstrom of activity beneath the surface. To see this, Chart 2 plots stock market turnover in the US, Europe and Asia over the same period. It shows a dramatic rise, especially in the world’s most mature equity market, the United States. Equity market turnover in the US has risen nearly fourfold in the space of a decade. Put differently, at the end of the second World War, the average US share was held by the average investor for around four years. By the start of this century, that had fallen to around eight months. And by 2008, it had fallen to around two months. What explains this story? Regulation is part of it. Two important, and almost simultaneous, regulatory developments on either side of the Atlantic changed fundamentally the trading landscape: in the US, Regulation NMS (National Market System) in 2005; and in Europe, MiFID (Markets in Financial Instruments Directive) in 2004. Though different in detail, these regulatory initiatives had similar objectives: to boost competition and choice in financial market trading by attracting new entrants. Central exchanges for the trading of securities evolved from the coffee houses of Amsterdam, London, New York and Paris in the 17th century.
Traditional backward-looking models based on historical trends may no longer be reliable, so the development of forward-looking 4 1/4  BIS central bankers' speeches  approaches grounded in scenario-based analyses may be necessary. 4 Perhaps even more importantly, physical and transition risks will likely introduce new strategic risks associated with the challenges and opportunities of sectoral reallocations of economic activity, new production patterns and evolving industry exposures. Range of Practices Given these emerging risks, what are large financial institutions actually doing to identify, monitor, and manage them? This is a new and rapidly evolving field, so we are far from coalescing around best practices or industry standards. Nevertheless, some emerging themes are emerging from the largest, most complex financial institutions. I will touch on governance, risk identification and management, scenario analysis, and transparency. I’ll begin with governance. Boards of directors and senior management are increasingly attuned to the risks posed by climate change as pressure from various stakeholders intensifies. For example, some firms are establishing internal climate-related working groups to develop enterprise-wide climate frameworks and to ensure climate considerations such as geographic concentrations or regulatory changes are better integrated into strategic decision-making. Some senior leaders are discussing risk materiality in geographic and sectoral reviews and results of forward-looking climate scenario analyses. Few firms, however, have formally modified or qualified enterprise-wide risk appetite statements to acknowledge climate to date, although some are considering this. Based on our observations, information flows and detailed climate reporting appear more prevalent at the management committee level rather than boards of directors.

‘Too large’, and central banks may find themselves accused of usurping the role of financial markets, harming innovation and inducing imprudent behaviour; fuzzying the boundary between monetary and fiscal policy, providing a ‘dangerous temptation for … the political class’1; or giving unmerited financial rewards to reserves holders.2 ‘Too small’, and central banks may be criticised for being asleep at the wheel3 at times of crisis; failing to play their part in ensuring an adequate supply of risk-free assets in the economy to maintain financial stability during peacetime4; or hampering the effectiveness of monetary policy transmission.5  Chart 1: Central bank balance sheets compared  Source: Individual central banks’ published data, IMF  The Bank of England has found itself on both ends of this debate in the past 10-15 years. Before the financial crisis, our balance sheet was modest, at 4% of GDP. Since then, and in direct response to the crisis, that figure has risen to around 30%: a more than seven-fold increase. Other regions have seen similar, or in some cases much larger, expansions (Chart 1). But by the UK’s own standards this is truly exceptional. You have to go back to the end of World War 2 or the early 18th century to find anything even approaching the same highs (Chart 2).
As emphasised in our Financial Stability Report published last May, the first of these risks is that derived from the possibility that asset prices may undergo a downward adjustment as a result of rising risk premia. The potential triggers of this situation are a slowdown in economic activity and geopolitical uncertainty. 13/17  Trade tensions indeed seem to have grown and the risk of a hard Brexit now seems greater. In addition, the economic situation in the euro area has deteriorated more than in other areas, particularly in some countries such as Italy and Germany. Meriting special mention are some emerging economies where Spanish banks operate, which are undergoing difficulties associated with their high net borrowing in foreign currency and lack of a substantial cushion of international reserves. Thus, Turkey, which went through a recession in the second half of 2018 and has shown weak momentum in recent months, is moreover facing a complicated political situation which has given rise to significant depreciation of the lira in the past year. Meanwhile, the economic plan implemented in Argentina as part of the financial support programme agreed with the International Monetary Fund is helping to reduce its fiscal and external imbalances at the cost of a sharp recession, but has not altered the deterioration on the inflation front. Additionally, much uncertainty persists mainly in relation to the results of the presidential elections to be held at the end of the year and which will define the economic model for the coming years.

Sunil Mendis: Creating a challenging and stimulating work environment New Year Message 2005 by Mr Sunil Mendis, Governor of the Central Bank of Sri Lanka, to all employees of the Central Bank of Sri Lanka, Colombo, 1 January 2005. *  *  *  I issue this traditional New Year message at a time when the whole of Sri Lanka has been engulfed by a national tragedy caused by “tsunamis” that hit the country on 26th December, 2004. I take this opportunity to express our deepest condolence to the members of the families of bank employees who have lost their lives and to our employees and their loved ones who have suffered by this calamity. At the same time, I wish to share the sorrows of those employees who have lost their property. Words are insufficient but hope that they would move forward from this tragedy. With the magnitude of the disaster, there is no question that our nation needs to be rebuilt. Hence, as employees of a state organization which is at the apex of the country’s financial system, we have an invaluable task to perform. In this context, I place my message before you with the plea that we take part in the nation-building task by offering our maximum efforts. I have been greatly encouraged by the positive response which all the employees have demonstrated towards the provision of relief to victims and rebuilding of the nation.