samchain/econo-pairs-v1 huggingface dataset:
To keep these experiments as transparent as possible, consider the simplest possible one-factor model of financial liberalisation. The one factor is the level of economic development of the G20 economies, as proxied by GDP per capita. Theoretically, we would expect financial liberalisation to be shaped by economic development. This is consistent with the economic growth literature emphasising the positive, two-way relationship between financial deepening and economic growth (Levine (2005)). The cross-section and time-series evidence presented here supports that hypothesis. To generate projections for the single factor – GDP per capita – we use a calibrated crosscountry convergence model, in the spirit of Barro and Sala-i-Martin (1992) and Mankiw, Romer and Weil (1992). These GDP per capita projections are then adjusted for expected future changes in population growth to give a set of cross-country projections for GDP from 2010 to 2050. Chart 7 shows the global distribution of G20 GDP at decadal intervals over this period. These projections are necessarily tentative, but are broadly in line with external estimates.3 Nominal GDP in the emerging G20 exceeds that in the advanced G20 by 2030. The advanced economies’ share of G20 GDP halves between 2010 and 2050, from 70% to 36%, while the emerging G20 economies’ share rises from 30% to 64%. Over the next 40 years, advanced and emerging countries will most likely swap GDP shares. By 2050, China’s share of G20 GDP is 22% and India’s 18%, with the US falling to 20%.

BIS central bankers’ speeches  17  Chart 13  Chart 14  Projected equity inflow to market capitalisation for G20 EMEs(a)  Projected annual gross equity inflows to G20 EMEs  Per cent of market capitalisation (lagged 1 year) Inflows (average 2010-2050) 20 Range (2010-2050)  $ trillions 20 18  15  16 14  10  12 10  5  8 0  6 4  G20 EME  Turkey  S. Korea  S. Africa  Russia  Mexico  Indonesia  India  China  Brazil  Argentina  -5  Source: Institute of International Finance, Thomson Reuters Datastream, GDP projections from Chart 7, home bias projections from Table 2 and Bank calculations. (a) Blue dots represent the average annual inflow over the projection period, as a percentage of the previous year’s market capitalisation. Bars represent the range of the highest and lowest annual inflows over the projection period, as a percentage of the previous year’s market capitalisation. 18  2 2010 2015 2020 2025 2030 2035 2040 2045 2050  Source: IMF International Financial Statistics, IMF World Economic Outlook October 2010, S&P Global Stock Markets Factbook (2010), updated and extended version of dataset constructed by Lane and Milesi-Ferretti (2007), Thomson Reuters Datastream, UN Census Bureau, Penn World Tables and Bank calculations.
On the other hand, the experience with models based fully on rational expectations sometimes shows that certain aspects or policy implications are at odds with what is considered reasonable. One example is the forward guidance puzzle, i.e. the unrealistically large responses of inflation, long-term rates and output to the announcement of the future path of interest rates. Therefore, we as macroeconomists want to reconsider the assumption of superrational agents and replace it with something more realistic. The second session on Friday will be devoted to two papers that may challenge our ideas about the economy and the way we think in terms of our usual models. It is always extremely useful to listen to new concepts and visions and to rethink our current approaches. Discussing thoughtprovoking and stimulating papers is the only way to avoid rigidity in ideas and opinions. Rigidity that will – sooner or later – lead to wrong attitudes and decisions. I believe that good policymaking will always benefit from cutting-edge research. I would therefore like to thank the participants of the high-level policy panel, the presenters and commentators in the individual sessions, and all other participants for coming to our event. Ladies and gentlemen, thank you for your attention. I wish you all an interesting conference, fruitful discussions and an enjoyable stay in Prague. 2/2  BIS central bankers' speeches

Despite all that, foreign exchange market participants and central banks in 1974 found Herstatt risk to be an intractable problem. All that was left to banks was to manage it. And so it went for 20 years. Then, in the mid-1990s, Bill McDonough, president of the New York Fed, identified the continued existence of Herstatt risk as a challenge to be met. As chairman of the Committee on Payments and Settlement Systems of the G-10 Central Bank Governors, he spurred the central bank community to take a fresh look. This time, the combination of new financial analysis and the rapidly expanding availability of raw computing power made the difference. •  In what today still stands as a landmark in analysis of the connection between operational and financial risk, the 1996 Allsopp report demonstrated in a straightforward manner just how much financial risk existed in the bilateral settlement of gross principal amounts of foreign exchange – an analysis that provided the insight into how a settlement facility could reduce that risk, and into understanding how settlement management could improve in the interim. •  Raw computing power was essential for the design and risk management of any proposed new settlement facility. Through scenario analysis and stress testing, CLS’s founders could determine the necessary capital and liquidity needs, default handling procedures, and the general benefits of multilateral vs. bilateral netting. The inherently multicurrency nature of foreign exchange settlement of course enhanced the challenge.
I would like today to express the views and expectations of the Eurosystem on the SEPA project. But let me first take a brief look at past achievements. The 2006 SEPA Summit focused mainly on building up all relevant stakeholders’ commitment to SEPA. Last year, the President of the ECB and myself underlined the opportunities which financial integration in general and SEPA in particular could bring to the economy. We also concluded that much more had to be done to reap these benefits. I specifically called for a closer involvement and dialogue with all stakeholders. Since then a lot of progress has been made and I am glad to see that, in general, the SEPA project is well on track. The basic SEPA components for euro payments have been developed, such as the SEPA credit transfer and the SEPA direct debit, as has the regulatory framework under the Payment Services Directive. Each national community has set up a forum for stakeholders to discuss the upcoming changes related to SEPA, and a European forum has been established. It is also impressive to see that many banks have made substantial preparations in order to launch the SEPA credit transfer in January 2008. It is expected that over 80% of banks representing the majority of credit transfer transactions (over 90%) will be operationally ready. The banks will demonstrate their commitment to SEPA at a signing event at the end of today. Financial integration is also progressing well in other fields.

Our reserves currently amount to $ billion, the third largest in the world, after Japan and the Mainland of China. They are equivalent to more than seven times the currency in circulation, one of the highest levels in the world. Secondly, we pursue a prudent fiscal policy, with small government and no external debt. We have a simple tax structure, a low tax rate, and a public sector expenditure that accounts for only 18% of GDP. Thirdly, our financial system is sound. The banking system is strong and solvent, and well able to cope with the interest rate movements necessary under the currency board system. Capital adequacy ratios among locally incorporated banks average around 18%, and their problem debt ratio is about 3.7%. Our standards of prudential supervision are among the highest in the world. Fourthly, Hong Kong’s economy is flexible and responsive. Because they are governed by free market principles, the markets respond quickly to interest rate changes and other variables, making the economy resilient in absorbing external shocks and capable of adjusting efficiently to validate the linked exchange rate. These are Hong Kong’s economic strengths. Not all economies have them, or would necessarily wish to have them, but they have enabled us to maintain a monetary system appropriate to Hong Kong’s unique needs and capable of withstanding the storms that any open and externally oriented economy must necessarily expose itself to.
The main financial indicators of banking sector soundness – capitalization, liquidity and profitability – show it has full capacity to withstand operational risks under normal conditions, as 4/8  BIS central bankers' speeches  well as good resilience against shocks. The share of banking sector assets in the Gross Domestic Product was 95.8% at the end of 2016, up by around 4.5 percentage points from a year earlier. Credit and deposits rose by 2.5% and 5.2%, respectively. In terms of capitalisation, the capital adequacy ratio stands significantly above the regulatory requirement. It stood at 15.7% for 2016, against the 12% regulatory requirement. Good capitalisation remains a characteristic feature of our banking system; it was maintained due to continued positive values in the net financial result. However, the financial result of the system fell slightly during 2016, mainly reflecting the increase in provisioning for the credit risk. The increase was a result of the conservative approach adopted by the Bank of Albania requesting banks to reclassify under non-performing loans those of certain large borrowers facing financial difficulties or a bankruptcy situation. The Return on Assets (ROA) of the system fell to 0.7% from 1.2% a year earlier, whereas the Return on Equity (RoE) fell to 7.2% from 13.2%. In terms of risks, the Bank of Albania deems that the banking system’s exposure to liquidity risk and market volatility is within acceptable parameters, but the management of such risk requires on-going attention by the banking industry.

Started in the previous year, the realisation of this project was finalised in 2016. Now, the Bank of Albania has an Operational Risk Management Policy, which sets out the core principles for the identification, assessment, control, management and follow-up of the operational risk as an integrated process at bank level. We 6/8  BIS central bankers' speeches  have also established a dedicated unit for evaluating and making recommendations for addressing vulnerabilities. The internal audit function acts also as a consultant service for the Supervisory Council. The audit engagements focused on: (i) issuing opinions on the sufficiency of internal audits established by the Management for audited functions/processes, including supportive applications for the activities; (ii) issuing opinions on the accuracy and completeness of financial data in periodic reports; and (iii) other audit and non-audit engagements, ad hoc, upon special request by the Administrators or other institutions outside the Bank. With added prudence on designing work processes by Bank units, at the beginning of 2017, a project started on the implementation of the Programme on the Business Continuity Management at the Bank of Albania. The realisation of this project ranks the Bank of Albania among the banks applying best practices on institutional good governance. 5. Medium-term strategy and strengthening of independence, accountability and transparency The medium-term development strategy of the Bank of Albania for 2016–18 was launched in 2016 to activate the entire potential of the Bank of Albania.
It fell from an unsustainable peak, of course, but the drop was spectacular nonetheless. BIS central bankers’ speeches  1  Where are we now, almost five years later? First, there is hardly any talk of a potential sovereign default any more: the public sector has a primary surplus, the overall deficit is estimated to have been around 2% of GDP last year, government debt as a share of GDP is on a downward trajectory, and Iceland has investment-grade ratings from all three major rating agencies. Second, we are far advanced in rebuilding a domestically oriented financial sector. The new domestic banks, which were built on the ashes of the three failing cross-border banks, are profitable, well capitalised, liquid, and with nonperforming loan ratios that, although still high due the crisis, are falling to normal levels as private sector debt restructuring progresses and the economy recovers. Third, the economy has indeed recovered, as can been seen on Figure 1a. The economy has been growing since the second quarter of 2010, and unemployment has fallen from a peak of over 9% to around 5½%. And as Figure 1b shows, this year Iceland is projected to be among the world’s five fastest-growing advanced economies, with growth estimated at 2.1%, although that is due in part to the recent slowdown in many other advanced countries.

Investors in these tokens are at risk of suffering significant losses. But MAS is also of the view thatblockchains and crypto tokens can bring many potential benefits. The blockchain is suited for applications where it is important to know the history of ownership and transfer of value but there is no trusted central party or reliance on a central party is too costly. A potentially strong use case of crypto tokens is to facilitate cheaper and faster cross-border payments and trade finance. But to be regarded as money, crypto tokens need to be more stable in value and have credible backing. Hence, the emergence of stablecoins. Stablecoins Stablecoins seek to combine the credibility of fiat currencies with the advantages of the blockchain. The more prevalent stablecoins are pegged to the US Dollar, promise to redeem at par, and claim to be backed by reserves. Will Juno accept stablecoins as money? An encouraging sign is that stablecoins are beginning to find acceptance outside of the crypto ecosystem. Some technology firms have integrated popular stablecoins into their payment services. Visa and Mastercard both allow transactions to be settled using USD Coin. Or are stablecoins more akin to the Chimaera, a monstrous fire-breathing hybrid creature in Greek mythology? Stablecoin issuers look like banks when they take money and offer to return it on demand, but if they do not intermediate credit, would bank regulation be appropriate for them?
I would like to assure you that depending on the nature of the recommendations, some will be implemented in a short period of time, while others will take more time and additional technical and human resources, and of course, further technical assistance in terms of experience and knowledge of the ECB and the national central banks of the EU. It is the creation of opportunities for further cooperation that I consider the second important benefit for the National Bank from the implementation of this project. Namely, the project involved a number of experts from various areas of central banking from the ECB and from 11 central banks of the European System of Central Banks. In the past nine months they had intensive communication and cooperation with their counterparts in the NBRM and conducted a total of 16 assessment missions within which they unselfishly transferred their whole experience and knowledge. The implementation of the project, further contributed to increasing the awareness and knowledge of the NBRM staff in the relevant EU regulations, standards and practices applied by modern central banks. Hence, I would especially like to emphasize the future prospects of our mutual cooperation that will hopefully continue in the same spirit and will further deepen. Finally, let me once again emphasize my satisfaction and give the credit for the successful implementation of the project, to the resident programme coordinator from the ECB, and to all participating experts from the ECB, the European System of Central Banks and the National Bank of the Republic of Macedonia.

Dimitar Bogov: Macedonia’s Needs Analysis Report concerning accession to the European System of Central Bank and the Eurosystem Address by Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, on the occasion of the closing of the IPA project “Needs Analysis Programme” with the National Bank of the Republic of Macedonia, Skopje, 10 July 2013. *  *  *  Dear Mr. Asmusen, member of the Executive Board of the ECB Dear Mr. Orav, EU Ambassador to the Republic of Macedonia Ladies and gentlemen, distinguished guests, media representatives, It is my great pleasure to inform you that today, at the meeting of the Steering Committee of the joint EU-funded project with the European Central Bank on the NBRM Needs Analysis in the process of its accession to the European System of Central Banks and the Eurosystem, we adopted the final Report, the Needs Analysis Report. Thus, I may conclude that the project, whose implementation took nine months, ended successfully. The success is primarily due to the commitment to the project and the good cooperation among all stakeholders over the past nine months.
Erdem Başçi: Recent economic and financial developments in Turkey Speech by Mr Erdem Başçi, Governor of the Central Bank of the Republic of Turkey, at the press conference for the presentation of the January 2015 Inflation Report, Ankara, 27 January 2015. *  *  *  Accompanying charts can be found at the end of the speech. Distinguished Guests, Welcome to the briefing held to convey the main messages of the Inflation Report of January 2015. We have been pursuing a cautious monetary policy stance for a year. We have witnessed some favorable outcomes of this approach. The downward trend in inflation will accelerate starting from this month. Therefore, we began cutting policy rates in January. Provided we maintain our cautious approach throughout these policy rate reductions, the end-2015 inflation will likely be the lowest we have seen in the last 45 years. I will now present an overview of the report, which will be published on our website soon. The report typically summarizes the economic outlook underlying monetary policy decisions, shares our evaluations on macroeconomic developments and presents our medium-term inflation forecasts, which were revised in view of the developments in the last quarter, along with our monetary policy stance. In addition to the main text, the report includes seven boxes entailing interesting and up-to-date analyses on various topics. The report presents boxes that analyze the effects of oil prices on consumer prices and the reflection of international grain prices on domestic prices.

We announced the outline of the monetary and exchange rate policy for 2015 through a press meeting on 10 December 2014. We also launched new macroprudential policies to limit macro-financial risks and to support prudential borrowing at this meeting. In this scope, to encourage the extension of maturities of external borrowing, we raised the required reserve ratios applied to non-core foreign exchange (FX) short-term liabilities of banks and financing companies. Additionally, we embarked on the remuneration of TL required reserves to encourage core liabilities in January 2015. Moreover, we implemented technical adjustments in reserve option tranches and coefficients to meet the FX liquidity to be required due to the changes in required reserve ratios. We envisage that the automatic stabilization feature of the Reserve Option Mechanism (ROM) will gain strength with these adjustments. Through these policy measures we announced, our final aim is to limit macrofinancial risks and contribute to balanced growth by supporting prudential borrowing. The rate of increase in the loans extended to the non-financial sector in the last quarter of the year maintains a reasonable course owing to the CBRT’s tight monetary policy stance and the macroprudential measures. Supported also by the actions of the Banking Regulations and Supervision Agency (the BRSA), consumer loans grew slower than past years, while commercial loans displayed a higher rate of increase (Charts 7 and 8).
The most recent example was ordering the more detailed material for assessing monetary policy which the Riksbank published about a week ago. I shall return to this assessment later. But first I would like to say a few words about current monetary policy. Our most recent assessment Our most recent interest rate decision was not an easy one. There is considerable uncertainty, for instance, on which direction international economic activity will take. And, as you are aware, we also had slightly differing opinions within the Executive Board. However, we must nevertheless make a decision and the majority of us reached the assessment that the repo rate should be raised to 4.25 per cent. We are forecasting that the repo rate will remain around this level over the coming year. This type of interest rate development will contribute to inflation falling back and being around the 2 per cent target a couple of years ahead, at the same time as production and employment develop in a balanced manner. Different forces are pulling in different directions In our decision we weighed together many different factors. A lot has happened; both events that could push up inflation and events that could hold it back. On the one side were conditions implying a higher interest rate. Inflation rose rapidly in 2007 and we are expecting it to remain high over the coming year. Expected inflation has also risen and cost pressures are high. Economic activity in Sweden remains good and the labour market is strong.

However, over a long period of time these errors offset one another and on average good forecasts should therefore not over-estimate or under-estimate the actual events. For shorter periods it may be interesting to study individual forecasting errors in greater detail to try to analyse their causes. But even if such an analysis is valuable it cannot be used to draw general conclusions about the forecasting performance. While accuracy is very important, even more is required for a forecast to be good in a monetary policy context. A good forecast for inflation, for instance, should correspond with the forecasts for other variables. And the driving forces behind the forecasts should be explained in a comprehensible manner. Why does the forecast look the way it does? What are the mechanisms acting as a motor for this development? These qualities are also required for a forecast to function as part of the decision-making base for practical monetary policy. BIS Review 22/2008  3  Consideration to the real economy Another factor to take into account in an assessment of monetary policy is that there may sometimes be reason to deliberately deviate from the inflation target. Normally we focus our policy on attaining the inflation target within two years. This is partly due to it taking time before monetary policy has its full effect. But it also has to do with the Riksbank thereby being able to contribute to a more stable development in production and employment. However, it does assume that the inflation target is not threatened.