samchain/econo-pairs-v1 huggingface dataset:
Christian Noyer: Banking regulation and the financing of the economy Introductory speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, to the Paris-Europlace Forum, New York, 26 April 2010. *  *  *  It is a great pleasure for me to be here in New York and address the audience of this ParisEuroplace Forum. As always, the forum is an opportunity for sharing experiences and perspectives. As we make progress in our efforts to strengthen financial regulation, such discussions are very valuable for confronting views and making sure that we are on the right track. To some extent, the ultimate aim of financial regulation has to do with financing the real economy. Sound regulation should enable the stable provision of financial services to economic agents as they strive to finance their activities. This is why I would like to discuss with you a few aspects of the current reforms of financial regulation that are critical in terms of the financing of the economy. More precisely, in the few minutes I have, I would like to share with you some thoughts on three important policy challenges. How can we make our financial systems more resilient and therefore capable of financing the economy on a long term basis? How can we reduce the procyclicality of financial systems? How can we address systemic risk?

To reap the benefits of financial innovation and reduce its risks, we need robust and resilient financial systems and infrastructures. In this respect, concentrating systemic risks in central clearing counterparties for the most important markets (such as interbank and derivatives markets) may bring us a long way towards reducing them, provided these CCPs are properly regulated. In this respect, I think that locating these infrastructures in the same area as that of the currency they deal in and allowing them access to central bank money are key factors. A last option which is currently gaining some international momentum concerns the possible taxation of financial institutions and activities. In principle, this idea seems quite appealing. However, the diversity of objectives that may be given to such a tax shows that the policy  BIS Review 57/2010  3  debate must be clarified. In a financial crisis prevention perspective, it is aimed at changing incentives and at forcing financial intermediaries to internalize the risks that their activities generate for the whole system. In a crisis management perspective, it should enable governments to recoup the costs of financial bailouts in a systemic crisis. My main concerns regarding this issue are twofold. My first point concerns the articulation with regulation. The added value of a tax over prudential regulation still remains to be demonstrated for countries, such as France, that have taken advantage of an effective regulatory and supervisory framework and in which public interventions in the financial sector have entailed no net costs to the government.
5  The young and already internationally renowned economist Jeffrey Sachs called on the then Secretary General of the OECD, Jean-Claude Paye, immediately after the collapse of the former Soviet Union. Sachs claimed that all that was needed to get the economy moving was to liberate Russia’s animal spirits. Paye demurred, saying that he thought that institutions would matter too. Sachs countered, saying “But you are French, and so you think that institutions are more important than they really are.” To which Paye replied “And you are young, and take your institutions too much for granted.” And then he added, almost as an afterthought, “If you do not have good, strong institutions, all you will get will be the mafia.” E-mail correspondence from John Llewellyn, former colleague of Paye’s, dated 3 November 2013. 6  Acemoglu, D. and J. Robinson (2012): Why Nations Fail: The Origins of Power, Prosperity and Poverty, Crown Publishers, New York. 7  Acemoglu and Robinson are not alone in attempting to capture institutional differences using concept pairs. In a historically based social analysis, North, Weingast and Wallis use the distinction between natural state and open access societies as reference for stage of development. The former was a strongly hierarchical society with tightly woven personal bonds with a clear social order. Collaborating elites had a monopoly on violence and dictated the allocation of resources. In an open- access society, on the other hand, the state holds power but there are institutional constraints.

For example, the price of hand soap in a pump dispenser is lower than the equivalent quantity in a refill package: http://www.nettavisen.no/okonomi/privat/article373382.ece. 23  According to the economist Stephen Quinn, secure central bank money triggered a spate of financial sector innovations. The central bank could offer notes with little risk regarding liquidity and public acceptance. On the other hand, notes were costly to use – an example is the considerable interest payments forgone when large amounts are held in cash. With the monetary system firmly anchored, private participants could offer more cost-effective payment solutions: deposit accounts, giro transfers, clearing and cheques. This system rested on confidence in central bank money. (Quinn, Stephen F., and William Roberds. 2005. “The Big Problem of Large Bills, the Bank of Amsterdam and the Origins of Central Banking.” Federal Reserve Bank of Atlanta Working Paper 2005–16). 24  Large-value payments between banks are settled continuously in Norges Bank. See also Lerbak, Marie N. (2013): “Om pengemengden” [On the money supply], Norges Bank Staff Memo no. 14. 25  A characteristic of money as a means of payment is its anonymous nature. Before the use of money became common among ordinary people, payments usually took place in connection with commercial transactions, whether for goods or services, via networks from which it might be difficult to extricate oneself. The farmer was usually indebted to a town merchant, which resulted in dependency and an obligation to deliver a portion of his produce.
Despite many challenges, I am delighted that exciting developments and initiatives are taking place in Thailand and around the region using fintech to address these problems. Allow me to highlight some of these initiatives. We have:  Accounting service applications for SMEs and start-ups on cloud platforms  Online mortgage refinance portals that help select the best refinancing option for mortgage clients  Real-time and low cost cross-border money transfer and remittance platforms  Biometric verifications for e-KYC to facilitate remote access to financial services  Machine learning using alternative data such as social media for credit scoring  Real-time invoice financing through common supply chain platform  Standardized QR Code for e-payments, which has reached nearly 1 million merchants within six months after exiting from the Bank of Thailand’s Regulatory Sandbox; and last but not least  PromptPay, a real-time payment infrastructure that has facilitated electronic payments for over 39 million registered IDs in Thailand 6-7  These are just some of the solutions available for SMEs and consumers in our market. To this end, I believe that over the next two days we will get to see many more exciting products and projects that can inspire innovation; broaden our understanding of the current technology landscape; and help set the policy agenda for strengthening Thailand’s and our region’s fintech ecosystems, especially to serve SMEs and consumers.

Before I do so, I would like to take a step back and focus on three key words, which I believe are imperative for formulating financial sector policy for Thailand and the region as a whole. These three key words are productivity, immunity, and inclusivity. First, an emphasis must be placed on productivity as uplifting productivity is a critical requirement for long term growth of an economy. For one, at current stage, many countries in our region are facing structural transformation of aging workforce. Shrinking workforce can dampen long term growth prospect. We must become more productive in order to increase output level and improve standard of living of our people. Productivity is also needed to boost competitiveness of businesses as expanding global trade network and emergence of large e-business platforms have introduced new competitors into our business landscape. Moreover, roles of banks could be challenged as sharing financial platforms gain prominence in the modern economy, and new fintech firms offer financial products unbundled from the long standing value chain of banking. Without meaningful adjustment—that is improving productivity, long term growth potential of an economy could deteriorate. Second, immunity becomes imperative in the current global economic landscape. We are living in the time of changes, where outcomes can be abrupt, unpredictable, and volatile. Amidst the fallout from the Global Financial Crisis of 2008, where unconventional monetary policies flushed global financial market with excess liquidity, we are now entering the cycle where major central banks have started normalizing their monetary policies.
The issue, amidst the challenging global financial markets, was highly successful, attracting significant interest from a wide investor base with Asia accounting for 60 percent of the issue. The combined size of the Petronas global sukuk and conventional bond issuances amounting to 4.5 billion US dollars is the largest global issuance in Asia (excluding Japan) for the year. The brief time-to-market for the issuance of the US dollar Petronas sukuk and bond took approximately one month, from structuring the instrument and date of submission to the authorities, to book building and the issuance date – reflecting the efficiency of the Malaysian market. Prior to this, Malaysia has also seen wide ranging ringgit-denominated issuances by nonresident issuers. Multi-nationals, foreign corporations and Multilateral agencies such as the International Finance Corporation, International Bank for Reconstruction and Development, and the Islamic Development Bank have successfully issued sukuk in Malaysia. All these issuances garnered overwhelming response from resident and non-resident investors as reflected by the oversubscription of these sukuk issuances. The liquidity and tradability of these ringgit issuances have been supported by the diverse range of players in the domestic Islamic financial system and the increasing demand from foreign investors. The establishment of CMH marks a further milestone in the development of the Islamic financial system under the MIFC initiative, sustaining the continued evolution and the development of Islamic finance.

Some economists have called for adjusting the inflation target, although in opposite directions: a few have argued for a higher target to avoid testing the Zero Lower Bound often (ZLB); others have called for a lower target, assuming lowflation is the New Normal. In both  2  BIS central bankers’ speeches  cases, hasty changes may only affect the CBs’ credibility and the expectation channel of monetary policy. We have more flexibility on the target horizon. This is the medium term and should not be confused with the 3-year horizon of the forecasts published by the ECB for instance, which may fall short of the target level; what matters is being on a path that is consistent with this medium-term mandate. Forward guidance and the announcement that rates will be “lower for longer” should provide reassurance over the CB’s determination to do “whatever it takes” to fulfill its mandate within this mandate. True, uncertainty about the causes of lowflation and low rates leads to uncertainty over the neutral rate and the need for accommodation; but the more uncertain our environment, the more important and useful it is that we be clear and predictable in order to reduce this uncertainty. According to simulations carried out within the Eurosystem and the BDF, clarifying that the future stance will remain accommodative for many years enhances the efficacy of Quantitative Easing (QE). Third challenge: how effective can non-conventional monetary measures be? The ZLB has proved not to be the effective lower bound.
So, I will elaborate briefly on the achievements in Turkey in the last four years. Since the 2001 crisis, a comprehensive stabilization program has been put with determination into practice. Tight monetary and fiscal policies along with an intensive structural reform agenda have been the three main pillars of the program. Thanks to these policies, firstly, disinflation has finally succeeded. Inflation targets have been reached in three consecutive years; the inflation rate of 73.2 percent in January 2002 is now down to single digits that is 8 percent as of September 2005 after three decades of high and chronic inflation. Furthermore, not only inflation fell to single digits, but also dynamics of inflation have changed significantly and that ensures the irreversibility of the disinflation process in Turkey. After so many failures in three decades, the turning point came when the Central Bank of Turkey (CBT) has been granted independence. In May 2001, the CBT Law was amended so that the primary objective of the CBT has been defined as to achieve and maintain price stability, and since November 2001, no credits are extended to the public sector. I should say that these developments have been the milestones of disinflation in Turkey. The change in inflationary dynamics also came as a result of a very transparent communication policy, which has been instrumental in changing the expectations of the public about stabilisation. Policies gained credibility; inflation inertia has decreased sharply; the volatility of inflation too has declined.

These highlights reflect, inter alia, the macroeconomic policies pursued over the course of this period. Monetary and fiscal policies have, in a concerted manner, aimed at fuelling aggregate demand and economic growth, ensuring at the same time the preservation of macroeconomic balances. July’s state budget revision put emphasis on the measures required to be taken in view of maintaining medium and long-term fiscal sustainability, hence implying lower budget deficit and lesser impact of fiscal stimulus on aggregate demand in the short run. This revision paved the way for pursuing an easier monetary policy. The key interest rate lowered by 0.25 p.p., hence yielding the most stimulating monetary conditions during the last decade. Nevertheless, complex challenges remain for the Albanian economy and the economic agents. Economic growth rate, albeit positive, seems insufficient to yield improvements in the labour market and to lower unemployment. In addition, the sustainability of economic growth remains frail in the short run. Its reliance on foreign demand and export growth may be insufficient against a background of a non-consolidated global economic outlook. The waning of fiscal stimulus also requires greater contribution of the private sector to economic growth, hence bringing consumer and business behaviour to the forefront and accentuating the role of bank credit to their financing. Setting proper equilibrium between  BIS Review 170/2010  1  short-term stimulus and long-term stability requires courage and diligence from the policy-makers. Ongoing structural reforms remain a priority in the long run.
The impetus towards carbon-neutrality is a case in point. Production in the export sectors must quickly adapt to comply with internationally accepted standards. Policy makers and the financial sector can and must help in this transition. Page 2 of 3  Part 3: The third challenge is digitalization and the erosion of national boundaries •  The rapid digitalization of trade and finance has transformed our economies in terms of who is participating, how business is done, how rapidly competition moves, and where economic benefits are flowing. Borders are being eroded and becoming more porous due to technology. Trade and financial services can increasingly be offered from entities residing offshore, or even by entities that do not exist as in the case of De-Fi. •  This creates potentially large gaps in our regulatory perimeters. Trade and services may be occurring without appropriate oversight and protection of consumers. The emergence of cryptoassets such as stablecoins and a plethora of digital tokens are a case in point. Many firms have innovative business models that existing regulatory structures might not yet have considered. •  The increased role of big-tech firms and globalized digital platforms raises important challenges in terms of data governance and competition. We have seen the unparalleled concentration of digital services in the hands of a few global Big Tech firms.

Governor’s Speech - the Budapest Eurasia Forum 2022 “Challenges facing small, open economies in the changing global landscape” Dr. Sethaput Suthiwartnarueput, Governor, Bank of Thailand Magyar Nemzeti Bank, Budapest, 19 September 2022  Excellencies, distinguished participants,  It is a great pleasure and privilege to be here at the Budapest Eurasia Forum. While the global landscape is constantly changing, the speed and scale of the changes happening now are particularly large and rapid. Many of these changes pose particular challenges for small, open economies. I would like therefore to focus my remarks on three key challenges facing small, open economies in this changing global landscape. Part 1: The first challenge is rapid and synchronized monetary policy tightening •  We are going through one of the most rapid and concerted monetary policy tightening cycles in recent memory. About this time last year, the Fed Funds rate expected for the end of this year was under 0.5%; markets now expect it to be around 4%. Almost all central banks have raised rates as part of what one might call the “Great Policy Normalization”. This reflects the rapid return of inflation. Two years ago, of the 60 countries tracked in the BIS database, 42 had inflation below 2%. Today, that number is zero. •  Adding to the challenge, the prevailing initial conditions under which the major economies are embarking on this “Great Policy Normalization” are far from ideal.
In the economic literature of recent years most of the references to the problem of global imbalances concern the phenomena described above. Therefore, for the purposes of this speech, I shall assume that whenever global imbalances are mentioned, the term will mean a joint occurrence of the following factors:  2  Ricardo Husmann, Federico Sturzenegger “Global imbalances or bad accounting? The missing dark matter in the wealth of nations”, Harvard University working paper, January 2006. 3  W. Buiter “Dark Matter or Cold Fusion”, Goldman Sachs Global Economics Paper, January 2006. 4  K.Lansing “Spendthrift Nation”, Federal Reserve Bank San Francisco Economic Letter, November 2005. 5  According to World Economic Outlook published by the IMF in September 2005, the forecasted US current account deficit will amount to USD 759 billion in 2005 and will increase to USD 805 billion in 2006. Both values correspond to 6.1% of the forecasted GDP. Some forecasts by investments banks, however, indicate an increase in the forecasted current account deficit to 6.5% of the GDP in 2005 and to 7-8% of the GDP in 2006 and 2007. 6  An extensive discussion of the real property market can be found in A. Ahearne et al. „House Prices and Monetary Policy: A Cross Country Study”, Fed Board of Governors, International Finance Discussion Papers, September 2005.

18  J.-M. Grether, M. Olarreaga, “Preferential and non-preferential trade flows in World Trade”, WTO Staff Working Paper, September 1998. 19  M. Bacchetta and M. Jansen, “Adjusting to Trade Liberalization – the Role of Policy, Institutions” and WTO Disciplines, WTO Special studies No 7, April 2003. 20  Based on the data of the IMF, Word Economic Outlook Database 2005. 21  Based on the data from national accounts, source: ONZ. 22  E.g. B. O. Sascha et al., “Location choice and employment decisions: a comparison of German and Swedish multinationals”, CESifo Working Paper No. 1374. BIS Review 19/2006  5  indicates that differences in remuneration constitute a significant factor that leads to relocation of jobs in manufacturing to the countries in our region. Hence, the result of production fragmentation is the optimal use of the advantage of location of particular production stages and the reduction of the average cost. However, its side effect are additional costs related to linking of the particular stages into one via activities that have the nature of services (e.g. transportation, co-ordination and management). The phenomena inseparable from all those mentioned above are offshoring and outsourcing. Offshoring consists in relocation of jobs and production or orders from the country where the company is based abroad – usually to countries with lower employment costs 23 . Offshoring does not have to necessarily take place within a single enterprise. Outsourcing, on the other hand, consists in relocation of a part of services outside the company. OECD calculations have shown that ca.
As a third country, the UK is no longer involved in the development of EU legislation and regulation. As new challenges emerge, as EU regulation no longer needs to cater for the greater complexity and scope of risk and activity in London, and as the complex processes and structures needed to manage the regulatory framework within the EU are no longer needed in the UK, there may well be divergence. The issue, from a financial stability perspective, is how we will manage that to provide the necessary assurance on the import and export of risk on both sides. The EU needs assurance on financial stability risk once the UK is no longer subject to the EU framework. Indeed, as an importer of risk from EU jurisdictions, the UK regulatory authorities have the same need. And the degree of assurance is related to the degree of risk. Equivalence assessments are, in the words of the EU/UK Political Declaration, ‘autonomous’ matters for each side. But if we want the relationship to work, the following considerations matter. First, and I think self-evidently, the UK cannot outsource regulation and supervision of the world’s leading complex financial system to another jurisdiction. That argues against a relationship built on textual alignment of our regulatory frameworks.

5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  One example is artificial intelligence. Ten years ago, the potential impact of AI and machine learning on financial firms was discussed in niche conferences as one of those things on the horizon. Today, 80% of firms we regulate use machine learning. The increasing use of AI will pose big societal questions – what kind of decisions can AI be allowed to make, how to protect against AI creating and amplifying biases/discrimination. These are debates which go much wider than the international financial regulatory community, but to which we must contribute. And there are also specific financial-regulatory issues that have cross border implications. For example, whether AI systems could contribute to procyclicality and risk amplification, whether and how they should be used in regulatory capital models, and what should be the standards for the appropriate governance and oversight of decisions made by AI. That is just one example. Use of the cloud by financial firms poses similar issues – as does the technology-driven changes that are happening in cross-border payment systems and that present new combinations of risk. The challenges go beyond new technology. Regulators and supervisors are increasingly working together to ensure the financial system is resilient to the risks posed by climate change and the transition to a low carbon economy. The regulatory response to this complex financial stability risk is, rightly, multi-faceted.