samchain/econo-pairs-v1 huggingface dataset:
This is essential in enabling it to react to new challenges, and to smooth the economy in the event of a crisis. Thus, budget soundness is not an end in itself, because it fosters employment and prosperity. Fiscal policy thus pursues a similar goal to monetary policy. By creating favourable conditions for lasting and balanced economic growth, they both foster a prosperous society. The economic policy goals of monetary and fiscal policy are closely intertwined – or even overlapping. In both of these economic policy areas, sustainability is key: Fiscal policy can only ensure the lasting achievement of its goals if public finances remain healthy over the long term. Monetary policy, for its part, should focus on the medium to long term, because any economic stimulus motivated by short-term considerations carries the risk of raising inflation expectations. To recap: The goals of fiscal and monetary policy overlap to a large extent, which means that in normal times there should be no tension between the two policies. Nevertheless, there is a strong complementarity between fiscal and monetary policy, as their operations have a reciprocal impact as regards both the financial markets and the real economy. Let’s look at the financial markets first (cf. chart 2). Monetary policy steers a reference interest rate on the money market, which is used as a basis for the valuation and trading of securities such as government bonds on the financial market. If monetary policy is credible and succeeds in ensuring price stability, inflation expectations are low and well anchored.

During the most recent crisis, the monetary policy authorities cut interest rates sharply and rapidly, and expanded the supply of liquidity. In response to the strong and rapid appreciation  12  Cf. FDF (2012). The Confederation acquired a CHF 6 billion stake in UBS in the form of convertible bonds. 13  Cf. Ilzetzki et al (2010). 14  Cf. SECO (2012). 15  Cf. art. 99 Federal Constitution, art. 5 para 1 National Bank Act and SNB, 92nd Annual Report, 1999. 6  BIS central bankers’ speeches  of the Swiss franc facing the Swiss economy in summer 2011, the SNB introduced a minimum exchange rate of CHF 1.20 against the euro, thereby helping to stabilise the economy. The excessive appreciation of the Swiss franc is a monetary problem, because it carries the risk of deflation. So it is a problem that has to be dealt with through monetary policy. The minimum exchange rate has met with the support of the general public and the political domain. However, it should be regarded as an extreme measure. It is not a panacea for all the problems facing the Swiss economy, and carries considerable risks. 16 We have seen that both monetary and fiscal policy in Switzerland are focused heavily on stability. Swiss economic policy stands out for having good rules and a stability culture that work through the political structures in a mutually reinforcing way.
Second, progress is being made to reduce the vulnerabilities intrinsic to the derivatives markets. We, regulators, tend to think that clearing and settling those derivatives through CCCPs will considerably reduce aggregate counterparty risk, limit the contagion channels, hence strengthening the whole financial system’s robustness. I am fully aware that there are doubts, in some parts of the financial community, on the opportunity of such an evolution. There are fears it will lead to greater standardization of derivative products and less flexible markets overall. This is clearly a case, where the optimum trade-off between efficiency and stability is different according to the market and regulator’s point of view. But, of course,  BIS central bankers’ speeches  1  regulators’ views are naturally finding their way into legislation, especially on this issue, as you know, in the United States. More generally, when any new financial regulations are designed, two polar views were expressed. One view is that regulatory reforms will take a significant toll on the economy. The argument is because they would raise, in this case, the cost of funding for the economy. It is feared that financial institutions will then pass this cost on to the private sector through an increase in lending rates or worse abandon certain financing segments. This would in turn have a negative effect on output growth.

Christian Noyer: The G20’s current challenges – combining new regulations and economic growth Introductory remarks by Mr Christian Noyer, Governor of the Bank of France, at the Paris EUROPLACE Conference “The G20’s current challenges: combining new regulations and economic growth”, Paris, 5–6 July 2011. *  *  *  Ladies and Gentlemen, It is my great pleasure to take part in this Paris-Europlace conference and I warmly thank the organizers for their kind invitation. I am very glad to introduce this roundtable dedicated to a major challenge, regulators and policy makers are facing at the current juncture, that is ensuring a smooth combination between new regulations and economic growth. The crisis has taught us that market economies may be intrinsically unstable. And the costs of this instability are considerable. Whether we look at unemployment, or public debts, it will take many years to deal with the legacy of those few months where the global financial system was on the verge of collapse. Long term consequences still need to be assessed, and, as you know, there are questions about whether the crisis has – or not – permanently affected the growth potential of advanced economies. Therefore, curbing the tendency of our economies to alternate phases of booms and busts and reducing the procyclicality of our financial systems, are legitimate public policy priorities.
Free international trade was supposed to open countries up and create prosperity, and democracy and Western values would then find their way in. The US Marshall Plan marked the beginnings of this policy, as we Icelanders know from our own experience. In past decades, almost all countries  were invited to enter into commercial cooperation even if they did not satisfy Western human rights criteria – and even if they had plenty on their conscience. The invisible hand would lead them in the right direction. The end of the Cold War after 1990 was considered virtually a total victory for this policy. There was an awakening of optimism that globalisation would guarantee world peace because war was so costly. This was best encapsulated in the Golden Arches Theory propounded in 1996 by columnist Thomas Friedman, who noted that no two countries would go to war with one another if both had McDonald’s franchises. But the Golden Arches Theory was debunked a mere three years later when NATO began bombing Serbia, where McDonald’s had opened in 1988. I went to the US to study for my doctoral degree in 1995, when optimism was at its high-water mark and the reigning belief was that we economists could solve the problems of the world with the help of the invisible hand. Many people probably have difficulty envisioning economists as idealists, given that the field is well known as the dismal science and has often been criticised for callousness and materialism.

It reads as follows: “We have met the enemy and he is us.” These words are a timely reminder of the responsibility we all share towards life on Earth. In response to the severe threat stemming from global heating, the Central Bank has taken important steps, some of which are described the new chapter on sustainability in our Annual Report. But this also has wider applicability. We have made a concerted effort to build up Iceland’s financial defences against external shocks. These defences certainly helped us to respond effectively to the pandemic, and they will help us to weather the economic repercussions of the war in Europe. But no one can rescue us from ourselves – from our own mistakes – except us. Iceland’s worst problems in terms of monetary and economic policy and financial stability – or rather, instability – have been self-imposed. It is therefore critical that we learn from the mistakes of the past, and that we do not repeat them. Because nothing other than our own mistakes can prevent a continuing period of prosperity in Iceland.
This underpins the relevance of the CMU agenda for the coming years and the importance of making CMU a reality. Revitalising the CMU agenda to face new challenges My second point today is that a revamped CMU agenda would help the EU to face up to new challenges. The departure of the United Kingdom from the EU is undoubtedly one such challenge. As a response, CMU should continue to aim to develop and integrate the EU’s capital markets in a context in which capital market activities throughout Europe are being reorganised. In the new post-Brexit reality, we could see one or more financial centres emerge in continental Europe, possibly in competition with each other, or perhaps each specialising in certain areas. CMU should facilitate this transition by creating a framework that supports the emergence of an integrated financial market and avoids a return to a fragmentation of activities. In this context, a successful CMU means that the continued expansion of the non-bank sector should be accompanied – rather than followed – by a revision of the prudential and supervisory 2/4  BIS central bankers' speeches  framework. Importantly, we need to develop macroprudential policies for the non-bank sector at the system level to ensure that the system absorbs shocks, rather than amplifying exuberance and stresses. Ultimately, this would warrant a discussion on a potential move towards more centralised supervision of financial markets. The recent reform of the European Supervisory Authorities falls short of adapting Europe’s supervisory framework to the ambition of CMU.

Let me take a few examples: steps have been taken in harmonising elements of insolvency frameworks, such as ‘early restructuring’ and ‘second chance’. But these do not cover the conditions for opening insolvency proceedings nor the ranking of claims. As such, they are not enough to facilitate cross-border investment. Similarly, more should be done to remove overlaps in cross-border withholding taxes and reduce home bias in investment strategies. In my view, we need a single rulebook in a wide range of areas also covering consumer protection, anti-money laundering, or accounting rules for a successful CMU. Another reason for a limited “CMU effect” is that some of the agreed initiatives were only recently implemented. Take the securitisation package, for example. Important technical regulatory acts are still pending which prevent the new framework from being applied in full and are a source of uncertainty for those who would like to use it. It is therefore too early to assess the success of this measure. More importantly however, some proposals will not deliver their full potential. In the case of the pan-European personal pension product, the recent agreement gave birth to a rather complex product for which key elements are left to the discretion of Member States. Lack of ambition in the cross-border portability of the instrument may limit its capacity to facilitate labour mobility and the mobilisation of savings across borders in the absence of geographical diversification requirement for investments.
Increased awareness of the risks and early reaction to problems is likely to lead to a smoother adjustment to new conditions or to the correction of mistakes, making decisions less abrupt and time-lags perhaps shorter. This early reaction will be supported by the supervisory second pillar and again by the transparency of the third, which will also reduce the temptation of supervisory forbearance. Let me add a few words on transparency. History has also taught us that some of the worst financial crises were ultimately unleashed by sudden bank crises, during which an upsurge of collective panic led individuals to withdraw their funding to banks. A vast amount of analysis and research on these issues has underlined the role of information asymmetries in financial intermediation. Indeed, it is no overstatement to say that the presence of asymmetric information between lenders and borrowers in financial markets can explain much of their inherent instability. Higher transparency in the information provided by banks on their balance-sheet and risk position, along the lines of that set out in Pillar 3, must undoubtedly alleviate such asymmetries, thus reducing the likelihood of an episode of profound disintermediation and, by fostering the public’s confidence in the banking system, easing the recovery of the financial pulse in the event of a downturn.

Moreover, such a contraction and even the closure of some firms in the industry can be understood, in some cases, as efficient outcomes on purely economic grounds. While concepts like full efficiency or maximum social welfare are “too grand” to be operative, I think we can still make some progress on this issue by posing the question in relative terms: will Basel II unduly exacerbate the tendency towards procyclicality inherent in banks’ business? In response, I find it helpful to focus on certain key determinants of bank capital supply and demand, for their interaction will ultimately determine the conditions under which banks may gain access to capital markets and withstand a general downturn. On the demand side, under Basel II higher overall uncertainty about debtors’ solvency during a recession will admittedly tend to put upward pressure on the regulatory capital. But we shouldn’t view this effect as economically artificial, since we know from basic contract theory that lenders, i.e. depositors, will optimally require a larger amount of own resources from investors, i.e. banks, whenever the former perceive higher risk in the projects to be funded. In plain terms, while regulatory capital is rising in such a situation, economic capital goes up as well. I firmly believe that the latter is the most relevant variable for understanding banks’ decisions about the amount of credit to be extended and its price. Nowadays, well-managed banks already allocate economic capital and take decisions on the basis of incurred risks.
While we have observed positive and progressive improvements by the DNFBP sectors, overall AML/CFT compliance, however, remains relatively inadequate, mainly attributed to the lack of awareness and understanding of AML/CFT obligations and risks. Bank Negara Malaysia has, increasingly over the years, taken more stringent enforcement actions on reporting institutions for non-compliances with AML/CFT requirements. While the focus so far has been on financial institutions, Bank Negara Malaysia will continue to pursue enforcement actions against all reporting institutions, where warranted. In this regard, it is of utmost importance for the DNFBP sectors to understand the vulnerabilities of its sector to ML and TF risks that its products or services may be exploited by criminals to advance ML and TF related crimes, and be vigilant in protecting themselves from being abused or inadvertently facilitating ML or TF activities. In this manner, the DNFBPs in general and legal professionals in particular, are in a position to detect irregularities in the transactions and discharge their obligation in submission of suspicious transaction reports to Bank Negara Malaysia, in a timely manner. So, how can we mitigate the risk of inadvertently facilitating ML and TF activities?

And the country most severely affected is the United States where the Federal Reserve today cut interest rates by 75 basis points – the largest reduction since August 1982 – to mitigate “increasing downside risks to growth”. The contraction in the US housing market has deepened and unemployment there is rising. I want tonight to explain the nature of the challenges facing us and why many of them originate outside our shores. Exactly five hundred years before the Bank of England was given its independence, an Italian migrant who had made his home in Bristol, Giovanni Caboto, or John Cabot as he was known, set sail from this great city in May 1497 and became the first European to land on the North American mainland since the Vikings. A seafaring voyage like Cabot’s is a good analogy for the challenges facing the British economy, which will have to navigate some distinctly choppy waters in 2008. The challenge to the Monetary Policy Committee’s ability to navigate our way through the next year reflects two strong economic winds; one from the west and one from the east. They correspond to what economists call demand and supply shocks. The former is the credit crunch which has blown across the Atlantic, and threatens a sharp slowing in output growth. The latter is the rise in energy and food prices, reflecting continued strong growth in Asia, that, together with rising import prices, threaten to lift inflation noticeably above target in the coming months.
On the one hand, some have argued that the Fed’s monetary policy is driving a global financial cycle.10 On the other hand, others have argued that the key driving forces of capital flows are global risk and uncertainty, with a much looser connection to US monetary policy.11 Another example of diverging views concerns the question of whether emerging economies have the tools to neutralise the spillovers originating from other parts of the global economy. As a result of our poor understanding of the types of shock and their transmission, establishing which policy responses are the best for each country seems to be rather difficult. Internalising the effects of one’s monetary policy on other jurisdictions would be even more challenging. Suppose the Fed had a mandate to internalise the global impact of its decisions, which it does not have, would the financial stability impact of cheap dollar funding in emerging market economies have called for a later, or for an earlier, normalisation of US monetary policy? Ultimately, there is necessarily a high degree of subjective judgement involved. As I already suggested, crisis times such as 2008–2009 are the exception, since the spillovers are at the same time less ambiguous and more visible. The scope of coordination This does not imply that regular dialogues between central banks as well as exchanges of views during meetings at the IMF, the BIS, the G20 and at regional level, are not useful. In fact, I believe that it is quite the contrary.

High-level lecture – College of Europe, 31 March 2021 Europe’s growth gap: reconciling Keynes and Schumpeter  Speech by François Villeroy de Galhau, Governor of the Banque de France  Press contact: Mark Deen (mark.deen@banque-france.fr), Déborah Guedj (deborah.guedj@banquefrance.fr)  Page 1 sur 14 Dear students, Professors, Ladies and Gentlemen, I am delighted to be with you today, and I extend my warmest thanks to Professor Béatrice Dumont for her kind welcome speech. For obvious and unfortunate reasons, I was unable to come physically to the magnificent city of Bruges, this architectural jewel of the Middle Ages. Bruges is also a highly significant place for a central banker, as it was the birthplace of stock markets in Europe, in the 14th century. I also stand before you as a committed European, born and raised at the FrancoGerman border, present in Maastricht 30 years ago, and the College of Europe reflects this fruitful European spirit that I particularly cherish. What I want to do today is to avoid "langue de bois". In these troubled times, we need to speak “truthfully” before acting positively. In this respect, I would like to address the following issue: why is Europe lagging economically behind the United States? In order to find the right cure, we first have to elaborate on the right diagnosis. I. The diagnosis: Europe is an economic heavyweight, but lacks speed I would like to start with our undeniable successes.
Concluding remarks In closing, I would like to return to our decision of 15 January. Discontinuing the minimum exchange rate and reducing interest rates further are monetary policy measures for which there are no better alternatives. As I outlined previously, since the introduction of the minimum exchange rate in September 2011, the international currency relationships have changed fundamentally. In view of this development, a minimum exchange rate of CHF 1.20 per euro was no longer sustainable. Over the long term, adhering to the minimum exchange rate would have jeopardised the SNB’s ability to conduct monetary policy and fulfil its mandate in future. This would have saddled the Swiss economy with longer-term costs that would have been out of all proportion to the benefits of continuing to enforce the minimum exchange rate of CHF 1.20 per euro. With the international low interest rate environment, monetary policy faces big challenges. Overall, the Swiss franc is significantly overvalued. Negative interest helps to make investments in Swiss francs less attractive and thereby correct this overvaluation over time. The SNB will continue to take account of the exchange rate situation, and its impact on inflation and economic developments, in formulating its monetary policy. It will therefore remain active in the foreign exchange market, as necessary, in order to influence monetary conditions. Ladies and gentlemen, thank you for your attention. 4  BIS central bankers’ speeches

139 of the 199 authorized institutions in Hong Kong are either branches or subsidiaries of banking groups incorporated outside of the territory. An important function of the new service is to enable financial institutions to make use of securities held in one of the partner systems as collateral to conduct secured borrowing in the Hong Kong dollar or renminbi in Hong Kong. As an example, a bank in Europe can make use of its securities held with Euroclear Bank or J.P. Morgan to borrow Hong Kong dollar to meet the liquidity needs of its Hong Kong subsidiary. The enhanced capability of authorized institutions to manage the liquidity needs in the local currency, no doubt, will help to maintain financial stability in Hong Kong. BIS central bankers’ speeches  1  The facility will also substantially strengthen Hong Kong’s role as the global hub for offshore renminbi business. Being the first mover in developing offshore renminbi business, Hong Kong has the largest offshore renminbi liquidity pool, amounting to RMB 674 billion at the end of April 2012, and has developed a vibrant CNH market and the largest offshore RMB bond market. More foreign banks are either choosing to have a base in Hong Kong or are using RMB correspondent banking services provided by banks in Hong Kong. As at the end of May 2012, there were 196 banks participating in Hong Kong’s renminbi clearing platform. Of these, 170 are foreign-owned or located overseas.