samchain/econo-pairs-v1 huggingface dataset:
The existence of cross-border institutions makes crisis management more challenging, as it necessitates close cooperation between central banks, supervisory authorities and finance ministries in different countries. With one global financial market, one could wish there were one supervisory authority, one liquidity provider and one public treasury with a common script for handling crisis situations. We are far from this point. At the recent Davos World Economic Forum the head of the BIS, Malcolm Knight, stated that the “major challenge” for regulators was “the Balkanisation of regulation – fragmented across market segments, across national jurisdictions and yet we want to have a global financial system.” 3 A single financial market is one of the EU’s objectives. Against the background of growing integration, crisis management has been moved up on the agenda within the EU. Norway is participating in extensive discussions on this topic under the auspices of the EEA agreement and in separate talks with the other Nordic countries. As an example, the Nordic central banks have agreed on a Memorandum of Understanding on crisis management that provides guidelines for information sharing and gathering, coordination of decision-making and so on. The surprisingly wide dispersion of the subprime crisis has led to calls for an international overseer charged with keeping a complete account of the financial flows and pipelines that transfer contagion across borders in order to provide an early warning system to identify emerging crises.

Jarle Bergo: Nominal and financial stability in a new economic world Speech by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), Valutaseminaret, Sanderstølen, 1 February 2008. *  *  *  Thank you for inviting me once again to this venerable institution - Valutaseminaret. It is a pleasure to be here with you. This morning I will discuss with you some issues under the broad heading of “Nominal and financial stability in a new economic world”. Introduction The general economic environment has changed dramatically over the past 30-40 years. When I started my career as an economist in the late 1960s, a belief had evolved that the economy could and should be controlled and steered in considerable detail. A widespread view was that markets should be regulated and coordinated by authorities. Furthermore, the Phillips curve was embraced as proof that a long-run trade-off between inflation and unemployment existed. By merely accepting somewhat higher inflation, it was thought possible to reduce unemployment in the medium and long term. The economic policy of the 1970s and 1980s, which was based on these views, led to high and variable inflation and wide fluctuations in the economy. In the face of the disappointing experience from this period and advances in economic theory, put forward by among others the Nobel Prize winners Phelps, Friedman, Kydland and Prescott, views have now changed. We have learned that low and stable inflation is the best contribution monetary policy can make to high and stable growth.
The question of how the relationship between financial stability and supervisory responsibility might evolve is a big and difficult one. Still, it is dwarfed by and will be determined by the question of which will be the shape of the relationship between authorities – central banks and supervisors – in different countries in the EU. It goes without saying that since laws and regulations and the division of responsibilities between authorities are ultimately decided by the governments of the member states, the challenge of integration inevitably also concerns finance ministries. I will now try to give some thoughts on the alternatives before us. Back to basics What will be the roles of national supervisors and central banks in an integrated EU financial market? If central banks and supervisors haven’t done it before, cross-border integration will force them to think hard about their responsibilities, mandates and tools. In order to do this, they will have to go back to the beginning and find their “raison d’être”. What is special about the financial system and why are we regulating, supervising and monitoring financial markets and institutions? Who or what are we protecting and which tools do we need? Whether authorities want to defend the status quo or reform the regulatory framework, they will need to prove their case to politicians as well as to each other. By itself, this might very well improve the way supervisors and central banks work. You may call this a positive external effect of integration.

In all these examples host authorities have a legitimate interest in being able to influence supervision, share assessments and have a say in the event of a crisis situation. They have been given the task of protecting the soundness and stability of their financial sector and the general public in the host country will rightly expect their authorities to be able to do this. At the same time, the home authorities should have an interest in sharing resources in crisis prevention and risks and costs in crisis management and resolution with the host countries. In the current setting, however, this is only possible to a very limited extent. First, there is a need to share information between the home and the host. This should be the least difficult, but in practice everyone who has tried to share information between authorities knows it can  BIS Review 35/2005  5  be a complicated and cumbersome process, at least until there is an established routine. Even when there are no confidentiality concerns there are many practical obstacles to overcome. Information sharing is not only about sending data back and forth, but more importantly, it is about explaining information and sharing assessments. As long as hosts are under the impression that they know a lot less than the home, it will be very tricky to cooperate. Second, there is a need to cooperate on actions vis-à-vis the bank or the group and its components.
Islamic banking has strongly emerged as an efficient and effective financial intermediation channel, forming an integral part of the overall Malaysian financial system. Today, we have developed a comprehensive Islamic financial system covering banking, Islamic insurance, the money market and capital market, that operates in parallel with the conventional system. Islamic banking now accounts for 10 percent of the market share of the total banking system. There has been a rapid expansion in the development of Islamic financial instruments. At the global front, Malaysia was the first country to issue a sovereign Islamic financial instrument launched in the international financial markets. The capacity of the Islamic banking institutions to arrange and offer products with attractive features and competitive pricing, which are comparable to the conventional products has been enhanced. While Islamic finance was first introduced to meet the needs of the Muslim community, today, the Islamic financial products and services have wide appeal to both Muslim and non-Muslim customers. The Malaysian Islamic banking institutions operate under a robust regulatory and supervisory framework at par with the conventional banking institutions to ensure the soundness and stability of the system. At the international level, the establishment of the Islamic Financial Services Board will further harmonise the international prudential and regulatory standards for the Islamic financial institutions on a global basis.

Supporting Moldova’s first currency issues via technical support, expertise and professional training was the first area of institutional cooperation. This was followed by a more focused collaboration in almost all areas of professional training. I would like to mention, for example, the 2001 project in the field of banking supervision, then the provision of technical assistance in the field of inflation targeting in 2010, but also the 2015–2017 twinning project on banking regulation and supervision. Also noteworthy is the multilateral cooperation, within the joint constituency at the International Monetary Fund, or during the meetings of the Central Banks Governors’ Club of the Central Asia, Black Sea region and Balkan countries. Given the time span of more than 30 years of close bilateral institutional cooperation between the National Bank of Romania and the National Bank of Moldova, highlighted by the strategic partnerships for developing and broadening cooperation in areas of mutual interest, I would like to emphasize the positive synergies created over time. I express my firm belief that these synergies are a major factor in advancing this project as well, but also the future ones. Let me also underline the major role played by the successive top-management teams of the National Bank of Moldova in carrying out these numerous bilateral cooperation projects and I take this opportunity to thank them and express my appreciation to those with whom we have worked.
Christina Segal-Knowles: Stablecoins - what’s old is new again Speech by Ms Christina Segal-Knowles, Executive Director for Financial Markets Infrastructure of the Bank of England, at the Westminster eForum Policy Conference, 10 June 2021. * * * I’m going to focus today on what is sometimes billed as the next big thing in digital payments – stablecoins – digital tokens issued by the private sector which aim to maintain a stable value at all times, primarily in relation to existing national currencies. And to be clear from the start, today I will touch only on those stablecoins that aim to be used widely as means of payments. Stablecoins and other new forms of innovation in payments potentially offer benefits. They could reduce cost and offer new convenience and functionality. They could increase the resilience of payments – by offering alternative new ways to pay. And there could be potential long term financial stability gains from new forms of digital money. But these opportunities can only be realised if new forms of digital money are safe. So today I am not going to focus on what’s new about stablecoins. Instead, I am going to focus on why – even if the technology they are using is new – the basic elements of a stablecoin are very old. In fact, as old as money itself. This means that as financial regulators, stablecoins are not launching us off into some brave new world. We know what is required to ensure private money1 is safe for wide-scale use.

Despite the weakening of large emerging countries, the French and European economies should continue to benefit from an exceptional combination of three trends: (i) the significant drop in oil and commodity prices (–45% and–31% respectively, in dollar terms, between 1 January 2015 and 14 January 2016); (ii) the downward trend in the exchange rate of the euro against the dollar (–10% over the same period); (iii) and very low interest rates (–80 basis points in bank lending rates since June 2014). The non-standard monetary policy that we have conducted in Europe since June 2014 has done a lot for our economy. We now have reliable and concurrent estimates of its effectiveness: it has boosted growth prospects in the euro area by about 1% for the period 2015 to 2017, and those of inflation by 0.5 percentage point in 2016 and 0.3 percentage point in 2017. All this is a lot... and in this respect our growth performance remains insufficient, lower than what should be achieved thanks to these exceptional economic stimuli, and lower than the European average. b) We must now turn our too moderate economic recovery into strong, sustainable and job-creating growth. This shall notably be achieved by boosting business investment. The problem does not lie with the amount of French investment, since the investment rate of nonfinancial corporations, which stood at 22.9% in 2015, is slightly above its long-term average, i.e. 21.4% since 1980.
Andrew G Haldane: Turning the red tape tide Remarks by Mr Andrew G Haldane, Executive Director, Financial Stability, Bank of England, at the International Financial Law Review Dinner, London, 10 April 2013. *  *  *  Regulatory and legal frameworks share common roots. Both are complex, evolutionary systems, shaped by history. They are the result of a set of well-intentioned historical actions by technicians charged with filling cracks, creating certainty, shaping incentives for the common good. Both legal and regulatory frameworks have many of the characteristics of a classic public good. But the cumulative consequences of even well-intentioned actions may not always deliver outcomes which necessarily serve society well. That is because such actions are typically a response to events and circumstance. The resulting frameworks have a history of pathdependence (David (1985)). This history-dependence may “lock-in” sub-optimal technologies, such as QWERTY keyboards and VHS video-recorders. The financial regulatory framework may be another example of a locked-in technology. The events which have shaped the evolution of financial regulation include crises, scandals, innovation and liberalisation. Each has elicited a response, typically the addition of a new regulatory layer. The cumulative consequence has been a regulatory tide which has tended to flow in only one direction – towards a lengthier, more complex rulebook. In this respect, financial regulation shares many evolutionary characteristics with elements of the legal framework – for example, the tax code. It too has been responsive to events and circumstance including crises, scandals, innovation and liberalisation.

In 1913, US Federal tax rules summed to 400 pages. By 1945, this had risen to 8,200 pages, by 1974 to 19,500 pages and by 2000 to 46,900 pages. In 2013, US Federal tax rules amounted to 74,000 pages. That is almost a two hundred-fold increase over a century. Viewed through the lens of history, it is not difficult to explain this evolution. As cracks have emerged in the plaster – for example, regulatory and tax loopholes – they have been papered over. Like a bad painter and decorator, new layers have been applied to support the  BIS central bankers’ speeches  1  layers below. These were rational responses to real problems. And for a time they will have filled cracks, reduced uncertainties, corrected incentives. Yet this evolutionary path leads inexorably towards a framework – whether regulatory or tax – which is a patchwork of make-do-and-mend. History locks in the idiosyncrasies and complexities of the past, generating a steadily rising tide of red tape. As the regulatory and tax codes attest, the resulting frameworks can be Byzantine in their complexity and HeathRobinson in their design. For three distinct reasons, this patchwork may not serve society well. First, maintaining such a framework is a high-cost activity. In financial regulation, it makes for a steadily-rising standing army of regulators and compliance officers. In the US in the 1930s, there was roughly one regulator for every three banks. Today, there are roughly three regulators for every US bank.
But it would be disappointing if that debate degenerates into recrimination and antagonism. That would be to obscure the remarkable consensus that now exists - throughout the European Union and indeed more widely, and across a broad spectrum of political opinion within the countries of Europe, including this country, on the broad approach to macro-economic management. This unforced consensus extends to monetary policy directed to price stability, and it extends to budgetary policy directed to medium and longer-term fiscal sustainability. There is growing recognition, too, across the continent, of the importance of structural policy directed to supply-side flexibility. This strengthening consensus is fundamentally important - more fundamentally important, in terms of the economics of it at least, than whether these common objectives are pursued inside or outside the framework of monetary union. Pulling these thoughts together, it would be a mistake in my view for monetary union to go ahead without reasonable confidence of genuine, sustainable, convergence between its members; and it would be a mistake for any individual country to seek to join, or to be permitted to join, unless it had achieved genuine, sustainable, convergence. If there are serious doubts - generally or in any particular case - it would be in no-one’s interest to proceed. But it would be just as big a mistake, if monetary union does not go ahead, or for countries on the outside, if individual governments saw that as an opportunity to seek to take short-term advantage of the apparent macro-economic freedom that that gave.

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What happens now is that participants in CHIPS submit payment instructions throughout the day. But actual settlement, performed on a net basis, is deferred and becomes final only at the end of the processing day. In the new arrangement, which the New York Clearing House has announced it will put into operation in January, CHIPS participants will continue to submit payment instructions throughout the day. However, through the use of a bilateral and multilateral matching algorithm, the vast majority of payments will be settled and become final over the course of the day. By ensuring that final payment is made promptly, the new procedure will reduce settlement and operational risks and enable participants to manage their risks more effectively. A third major improvement to the U.S financial infrastructure that the Federal Reserve has already implemented deals with a new net settlement service for Fedwire. The net settlement service was  1  BIS Review 93/2000  implemented in 1999 in response to requests from major US clearing associations. These groups asked the Federal Reserve to help their members reduce settlement risk while improving operational efficiency. They noted that Fedwire itself is not an effective way to settle obligations among the members of a clearing group. We agreed and rolled out a new settlement vehicle. This new service helps clearing houses and related arrangements achieve their goals by offering Fedwire-like, immediate and irrevocable finality for entries that have been submitted in a convenient file format by a group’s agent.

Jamie B Stewart, Jr: Developments in the US payment and settlement system and the Federal Reserve’s interest in the securities settlement system  Remarks by Jamie B. Stewart, Jr, First Vice-President and Chief Operating Officer of the Federal Reserve Bank of New York, before the Securities Industry Association T+1 Foundation Conference held in New York on 24 October 2000. *  *  *  Good afternoon, ladies and gentlemen. I am pleased to join you at the SIA’s T+1 Foundation Conference. This conference provides an excellent opportunity to review plans that have been announced for converting to a T+1 settlement cycle for securities transactions. Implementation of T+1 would represent a significant change in the payment and settlement environment. Before commenting on this arrangement, however, I would like to stand back for a few moments and focus on some of the plans under way to improve the functioning of the payment and settlement system in the United States. In addition, I would also like to discuss briefly the Federal Reserve’s interest in the securities settlement system. There can be no doubt that a sound and effective payment and settlement system is critical to ongoing confidence in the US financial markets and to the continued health and competitiveness of the US financial sector. In an environment of rapid technological change and rising trading volumes such as we face today, it is essential to make certain that the integrity of the payment and settlement system remains intact.
But financial markets may not have been truly tested for the ability to absorb price moves or flows that persist for a prolonged period, or for a wider spillover between markets. As such, the “So what?” is that market participants need to take note of the recent periods of volatility and illiquidity and remain aware of the possibility of these events occurring more frequently, and the potential for them to have more persistent effects. As the Bank’s December Financial Stability Report concluded, “Adjustments will be more disruptive if investors’ pricing of liquidity risk does not fully reflect structural changes in market liquidity.” In conclusion, financial market conditions have changed quite noticeably over the past year or so. In part this is conjunctural: the macroeconomic outlook has changed and perhaps become less certain. Central banks have reacted, and in some cases pushed the innovation envelope further. Unsurprisingly these developments have been associated with more volatile financial markets. Given that policy-makers have previously been concerned that persistently tranquil financial markets could encourage excessive risk-taking, this development is not necessarily an unwelcome development. But recent months have also seen a number of short episodes of sharply-higher volatility which coincided with periods of much impaired market liquidity. There are good reasons to believe that the severity of these events was accentuated by structural change in the FICC markets. There must be a risk that future shocks could have more persistent and more widespread impacts across financial markets than has been the case in the recent past.

Chris Salmon: Financial market volatility and liquidity – a cautionary note Speech by Mr Chris Salmon, Executive Director for Markets of the Bank of England, at the National Asset-Liability Management Europe symposium, London, 13 March 2015. *  *  *  I would like to thank Andrew Butcher, Jonathan Rand, Allison Parent, Joseph Noss, Olga Cielinska, Liam Crowley-Reidy, Sebastian Vismara, Lu Liu and Yuliya Baranova for their comments and contributions. As Executive Director for Markets at the Bank of England it is my job to manage the balance sheet, implementing various policy decisions that the Bank makes. I am also responsible for ensuring that the Bank extracts as much “market intelligence” from financial market developments as is possible to inform those decisions. But it’s not my job to set policy. Given that, my remarks will focus on the key insights we have drawn from financial market developments over the past year or so, in the context of what has been quite a dynamic period for monetary policy. But I will not speculate on the future course of policy by the Bank of England or any other central bank, nor the likely effectiveness of the different strategies employed by central banks to achieve their targets. And my punch line will reveal me to be the central banker that I am: there are reasons to be cautious. In particular, recent periods of financial market volatility suggest that there are reasons to be cautious about the robustness of liquidity in core financial markets.