samchain/econo-pairs-v1 huggingface dataset:
We also have doubts about the existing deposit insurance system of full cover up to EUR 100,000 adopted at the start of the financial crisis. At the time, this measure certainly helped calm the public and prevent runs on banks. However, we feel that the time has come to consider a return to normal, to reintroduce the system where depositors are not fully covered, at least with respect to non-SIFI banks. I think the question that forms the title of this conference is very topical and relevant. We believe that the time has come to pause and try to discuss these issues seriously. BIS central bankers’ speeches  1  As to costs, supervisory authorities are also incurring high costs. On the European scale, we are recruiting hundreds of new employees to be able to meet the challenges of applying the new regulations. Mandatory impact assessments have been introduced, but these often sound like unconvincing or formal justifications for a result known in advance: “There will be costs, but the benefits will outweigh them in the long run”. As to complexity, we have plenty of evidence that the current sectoral approach to regulation does not make our life as supervisory authorities any easier. We are often creating three parallel but materially identical sets of basic requirements for banks, insurers and investment firms.

It would be simpler to have just one set of basic licensing requirements, one set of basic requirements for general managerial skills and one set of basic requirements for the trustworthiness of senior officers for the entire financial market. We would welcome a single, universally applicable set of assessed functions and requirements for sound internal control systems. Examples could include harmonised basic requirements for outsourcing and for the distribution of own and third-party products. It is impossible, of course, to unify all requirements across the financial market. However, the basic set could, or even should, be unified. Even if we succeeded in harmonising only onethird of all the requirements, the quantity of regulations would decrease sharply. This would substantially reduce the load on financial institutions, which are currently struggling with inconsistencies in the sectoral regulations applying to financial groups and with the sheer number of such regulations. It would also be of great benefit to supervisory authorities. The necessary sectoral specifics could then connect to this single common base. Let me make one last remark on safety versus growth. In recent years, we have witnessed on numerous occasions just how diverse the impacts of financial sector problems can be on national economies.
This increase in yields did not solely reflect an increase in credit risk; it also reflected a genuine loss of confidence and an accompanying increase in risk aversion. Yield spreads on even the very safest ABS obligations soared hundreds of basis points. This can be seen in the fact that AAA-rated student loan tranches, with underlying loans 97% guaranteed by the federal government, climbed to yield levels as much as 400 basis points over LIBOR. With the spike in yields, the economic incentives to issue evaporated – issuance was just too costly and there was no active market. After averaging around $ billion per quarter of new originations in 2007 and the first three quarters of 2008, consumer ABS issuance plunged to only $ billion during the fourth quarter of 2008. Issuance of commercial mortgage backed securities ground to a complete halt and this market currently remains closed. So why did the ABS market collapse? There are many reasons. One factor was that in some areas, the risk management incentives of banks and other issuers of ABS were misaligned with those of the end investors in these securities. This misalignment manifested itself in the overall deterioration in lending standards that took place across the economy beginning during the middle part of this decade. Some originators did not do an adequate job of due diligence because the underlying loans were swiftly moved off their balance sheets through the securitization process.

With mobile payments, the cost of travel to a financial service provider is reduced to pressing a button, the risks associated with carrying cash are managed by simply securing a pin number. Since the mobile telephone industry has seen tremendous growth in its coverage, mobile payments seems to be the inevitable retail payment method that reaches out to large segments of the population a way that the conventional ones do not. Chairperson, notwithstanding these advantages, mobile payment platforms are not without challenges. At the centre of these challenges is the need to protect the consumer or user of mobile payment platforms. Undoubtedly, the number of people with access to mobile payment services in Zambia has significantly increased since the early days of Celpay. However, for us at the Bank of Zambia, as regulators we have taken note of how growth has been accompanied by a change in the character of mobile payments. The line between a mobile payment product and a conventional banking product has now become a fine line. For this reason developing appropriate regulations that protect the consumer against fraud and such risks anti-competitive practices, is a critical and necessary response to the innovations brought about by the mobile telephone technology. But it is important to understand that by its nature technological innovation can achieve an overnight quantum leap by the sheer ingenuity of one person. Where this happens, there is a danger that the development of appropriate regulation can lag behind technological advancement.
Given that the target of imminent euro adoption is gone, and the large euro zone nations do not provide real leadership on fiscal soundness, there is less incentive for some of the new member states to stick to the consolidation of their public finances from today’s deficits above 5 per cent of GDP. The consolidation plans are already too dependent on a continued upturn. Whether in the old or new member states, there is an additional problem, as we are entering a period of intensifying structural changes. Old industrial patterns in Europe are being changed when confronted with both the boost to productivity from IT, as partly realised since the late 1990s in the US, and globalisation and enlargement, all of which supports this process. These trends will eventually help productivity and growth in Europe to start to catch up with the US again. But in the short term the structural changes will lead to higher frictional unemployment as old industries are more rapidly replaced by new ones. In addition, the recent downturn never led to a dramatic increase in unemployment or decrease in employment in the euro area; hence, the upturn is probably also less likely to lead to rapid job creation. Both factors create new incentives for fiscal policy to focus more on short-term job creation schemes and less on long-term fiscal soundness. So from this perspective, too, the hope that the recovery alone will “fix” the European deficit problem might be too optimistic.

It was then that inflation expectations among the public finally trended down to the target of 2 per cent, and that interest rate spreads against Germany were reduced to fractions of a percentage point. This fiscal tightening could in turn be based on the predictability of the new monetary regime that would eventually allow less severe monetary policies. This interaction is rather well understood, if not always acted upon, at the national level. But on the European level there is a twist, as the single monetary policy is now matched by a multitude of fiscal policies. The risk that is often discussed is that the ECB would in the end have to bail out a single fiscally undisciplined country from unsustainable debt. But as the Stability Pact crisis has shown, the more immediate problem might be more prosaic than a cataclysmic debt crisis: the problem might be a bias towards fiscal laxity that has to be counterbalanced by tighter monetary policy - hence a bad policy mix. With a single monetary policy the effect of fiscal stimulus in one country will be diluted in the whole area and will therefore by definition meet with less of a monetary policy response than it would if monetary policy had been national. Furthermore the nature of the political set-up makes it more difficult for the ECB to comment on individual national budgets. This means there will be a strong temptation to “free ride” by expanding the budget at the expense of fellow European nations.
Vahur Kraft: Challenges facing Estonian economy in the European Union Speech by Mr Vahur Kraft, Governor of the Bank of Estonia, at the Roundtable “Has social market economy a future?”, organised by the Konrad Adenauer Foundation, Tallinn, 19 August 2002. *  A. *  *  Introduction, review of the early 1990s and comparison with the present day  First of all, allow me to thank Konrad Adenauer Foundation for the organisation of this interesting roundtable and for the honourable invitation to speak about “Challenges of Estonian economy in the European Union”. Today’s event shows yet again how serious is the respected organisers’ interest towards the EU applicant countries. I personally appreciate highly your support to our reforms and convergence in the society and economy. From the outside it may seem that the transformation and convergence process in Estonia has been easy and smooth, but against this background there still exist numerous hidden problems. One should not forget that for two generations half of Europe was deprived of civil society, private ownership, market economy. This is truth and it has to be reckoned with. It is also clear that the reflections of the “shadows of the past” can still be observed. They are of different kind. If people want the state to ensure their well-being but are reluctant to take themselves any responsibility for their own future, it is the effect of the shadows of the past.

B.2  Challenges facing Estonian economy on its way to the European Union - internal policy - joining the EMU  Estonia’s entry into the euro zone is contingent on the fulfilment of economic criteria applicable to the single currency countries - on the other hand, one can say that only these economies that meet the requirements can benefit from the transition to the single currency. And Estonia’s monetary and exchange rate policy during the pre-accession period and immediately after the EU accession should be considered against this background. First, the fixed exchange rate of the Estonian kroon against the euro and the currency board system will remain unchanged before and after the accession to the European Union. The adoption of the euro will take place in three stages in accordance with the acquis - joining the European Union, joining the ERM2 exchange rate mechanism and, once the Maastricht criteria are met, joining the euro area. The condition of the Estonian economy and financial system as well as integration with the EU markets that I commented upon earlier in our view fully support this principle. Also the European Commission and the European Central Bank have affirmed us that the euro-based fixed exchange rate and currency board regime, in principle, are in harmony with the acquis and conform to the requirements set for the monetary policy of the non-euro zone economies.
Almost $ billion of bonds were issued in the first three quarters of this year, establishing a new high when compared to the previous record of about $ billion over the same period in 20114. Over the longer term, emerging Asia’s bond markets are expected to grow 18-fold from $ trillion in 2009 to $ trillion in 20305. 7. There is therefore great scope for financial intermediaries in Asia to play a key role in financing Asia’s future growth, channelling surpluses to meet the region’s needs, and facilitating closer integration of trade and financial markets in the region. DBS, with its extensive network in Asia, is well-poised to be at the forefront of these trends. DBS has done well in this respect - for instance, DBS ranks amongst the top 5 mandated arrangers of Asia Pacific syndicated loans (ex-Australia and Japan). In Singapore, DBS is also part of a bank consortium led by Temasek Holdings to provide long-tenor financing to Singaporebased corporates in infrastructure projects in Asia Pacific. Role of local banks in Singapore’s financial system 8. Even as our local banks like DBS expand into the region to ride on Asia’s growth, it is important that they remain deeply rooted in Singapore, their home market. They have been and will continue to be a crucial part of Singapore’s financial system. Local banks have an important role to play in safeguarding Singapore’s financial stability, particularly in times of crisis.

With policy rates reaching their effective ZLB in a number of jurisdictions and most of the central banks concerned having resorted to unorthodox monetary policy measures in order to inject additional monetary stimulus into their economies, the question naturally arises as to whether this conclusion still stands. Or should inflation targets be raised to, say, 4 per cent as suggested by Blanchard, Dell’Ariccia and Mauro (2010), providing another two percentage points of extra room to cut policy rates before reaching the ZLB? Some analytical evidence in favour of a higher inflation target comes from Williams (2009). With the help of the Federal Reserve’s macroeconomic model, he asks what policy the FOMC (represented as an appropriate Taylor Rule) would have chosen during the Great Contraction had it not been constrained by the ZLB and what the impact would have been on output and inflation; he then compares that with the outcomes when the ZLB bites. He finds that although the ZLB did not materially aggravate the US downturn in 2008 – essentially because the fall in activity after the collapse of Lehman Brothers was so sharp that, in the absence of perfect foresight, no monetary policy actions could have impacted fast enough – the ZLB does appear to have constrained the pace of recovery. In particular, if real policy rates could have been set around four percentage points lower, the recovery in output would have been significantly faster and the rise in unemployment mitigated.
But funding these investments by lifting the cap on petroleum revenue spending is a certain recipe for lean times. Many of us have perhaps driven along lightly trafficked roads of a strikingly high standard. Norway is already among the countries that invests most in education, without achieving particularly impressive results. 21 Norwegian companies that want to invest in profitable projects have access to a well functioning capital market, both at home and abroad. An absolute precondition for ensuring the sound management of our oil wealth is that investments in areas such as roads, education, cultural centres, hospitals and sports centres are prioritised within the NOK 1 trillion allocated through the central government budget each year. 22 In order to maximise the return on the substantial financial wealth owned by the government today, the oil fund must be invested abroad. But this gives rise to new trade-offs between risk, return and ethical considerations. Moderate risk First, let me look at the trade-off between risk and return. How should we invest our wealth without taking on excessive risk? When the oil fund is invested in other countries that are not as commodity-dependent as Norway, our overall national wealth will become more robust to oil price fluctuations. Diversifying wealth does not of course insulate us from upturns and downturns. In autumn 2008, stock markets plummeted worldwide. There was nowhere to hide and the value of the fund fell by close to 25 per cent.

Other requirements on maximum LTV ratio and debt-servicing ratio applicable to commercial and industrial property mortgage loans also apply to standalone carpark space mortgage loans. The above measures take effect immediately. However, loan applications in respect of property transactions with provisional sale and purchase agreements signed today or earlier will not be affected. The HKMA is also aware that the risk weight allocated by Hong Kong banks adopting the Internal Ratings-Based (IRB) Approach under the Basel Capital Accord to residential property exposures is at a relatively low level. This may not fully reflect the existing and future risks of property market volatility. To further enhance the risk management of banks in Hong Kong, the HKMA has decided to introduce a risk weight floor of 15% for residential mortgages approved by banks on or after 23 February 2013 under the IRB Approach. Mr Arthur Yuen, Deputy Chief Executive of the HKMA, will explain the above-mentioned measures in more details later. BIS central bankers’ speeches  1  Meanwhile, the Hong Kong Mortgage Corporation will introduce revisions to its Mortgage Insurance Programme in line with the latest developments in the property market and will announce the details later. I hope the public would understand that Hong Kong is facing an extremely unusual macromonetary environment. The ongoing quantitative easing by advanced economies is unprecedented in both scale and duration. Interest rates have been artificially maintained at extremely low levels, and we see huge volumes of liquidity flow into emerging markets like Hong Kong.
The initial step in that process was the FOMC’s decisions to first reduce, and then end, its net purchases of Treasury and mortgage-backed securities.2 These purchases pushed longer-term interest rates lower, making it less costly for consumers and businesses to borrow, and contributed to favorable overall financial conditions that supported spending. The next step will be to raise the FOMC’s target range for the federal funds rate the short-term interest rate at which banks lend to each other. In March 2020, the FOMC reduced the target range for the federal funds rate by 1-1/2 percentage points to near zero. This very low interest rate contributed to the sharp rebound in demand, which propelled the strong labor market recovery over the past year. But with today’s strong economy and inflation that is well above our 2 percent longer-run goal, it is time to start the process of steadily moving the target range back to more normal levels. In particular, I expect it will be appropriate to raise the target range at our upcoming meeting in March. Once the interest rate increases are underway, the next step will be to start the process of steadily and predictably reducing our holdings of Treasury and mortgage-based securities, which had grown significantly as a result of the purchases that began in March 2020. Last month, the FOMC released a set of principles that will guide that process.3 Assuming the economy develops roughly as I expect, I foresee this process getting started later this year.

But, the rapidly changing situation of the past two years has been extraordinary, and it is worth discussing in some detail. After the onset of the pandemic, Americans shifted their spending from services to goods, spending less on restaurants, vacations, and entertainment, and more on things like cars, appliances, and furniture. As businesses tried to meet the surge in demand for goods, distribution channels backed up. Supply-chain bottlenecks and shortages emerged, both here and abroad. Too many ships arrived at the ports—particularly those in California. When the ships were finally able to dock, there weren’t enough workers and drivers to unload and transport goods to stores—or to people’s homes. In addition, we have seen a large pullback in the number of people willing and able to work, in part reflecting the challenges and risks of working during the pandemic. Some businesses can’t hire people fast enough to help meet the strong demand. This has contributed to an acceleration in wages and higher prices for a variety of goods and services, including food and housing. High inflation is hardest on those already struggling to make ends meet. The Fed’s Response This brings me to the outlook for the economy and monetary policy. As I said earlier, demand for goods and some services is now far outstripping supply, resulting in elevated inflation. With the 2/4  BIS central bankers' speeches  labor market already very strong, it’s important to restore the balance between supply and demand and bring inflation down.
Regulatory cooperation in Asia These initiatives are being supplemented in Asia by regional cooperation on both a bilateral and multilateral basis. There have been a number of factors driving this. The aftermath of the Mexican crisis in January 1995, which saw speculative attacks on a number of Asian currencies, encouraged the view that there was a need for countries in the region to strengthen their defences in this area. We have thus seen the arrangement of an interlocking series of bilateral repo agreements using US Treasuries between Asian central banks, including the Hong Kong Monetary Authority. These agreements are intended to provide additional liquidity for exchange rate stability purposes. More generally, there has also perhaps been a feeling among the Asian countries that the existing arrangements for central bank cooperation were somewhat “euro-centric” and did not take adequate account of the growing importance of the Asian region where over 40% of the world’s foreign currency reserves are now held. This feeling has to some extent been addressed by the more participative approach now being adopted by the Basle Committee and the BIS. But there is nonetheless a view that greater regional cooperation among Asian central banks is both necessary and desirable. This has been summed up in the concept of an “Asian BIS”, though this is somewhat misleading as there are no immediate plans to move towards the BIS Review 55/1997  -4-  institutional structure which the name would imply.

Second, when trying to enforce new supervisory guidelines and rules on our local banks, one of the first questions they will ask is what is being done elsewhere. It is thus very helpful to be able to point to the relevant international standard in order to confer legitimacy on what we are trying to achieve. Of course, this presupposes that international standards are relevant to individual countries and territories. The Basle Committee on Banking Supervision has played a major role in setting standards which do have such relevance. In particular, the Basle capital adequacy ratio, which is still called the “Cooke ratio” in parts of Asia in deference to our chairman here today, has become the de facto capital standard in most supervisory systems around the world despite the fact that it was originally intended to apply only to internationally active banks. Despite this enormous achievement, however, it can be argued that the subsequent work of the Committee did become somewhat too narrowly focused on issues which are of principal interest to supervisors from G-10 countries. This is only natural since these are the people who comprise the Basle Committee but it perhaps left something of a vacuum in the setting and promulgation of standards with more global relevance. In particular, much of the work of the Basle Committee has been dominated in recent years by the formulation of its recommendations to extend the capital adequacy regime to cover the market risk arising from trading in derivatives and other financial instruments.