samchain/econo-pairs-v1 huggingface dataset:
We are witnessing the emergence of new business models, services and solutions that create value, save time and effort, but at the same time are accompanied by new risks and challenges – both technological, This trend in the development of the financial sector is particularly visible in the dynamic and customer-oriented area of payments. Undoubtedly, the catalyst for these processes is the European legislation in this area, namely the Second Payment Services Directive, known as PSD2. As the main innovations in it we can highlight two aspects – opening access to payment accounts (the so-called “open banking”) and increasing the requirements for the security of electronic payments. These were the areas in which in 2020 the efforts and attention of both the business and the regulator continued to be focused. As part of the first aspect, the directive introduced two new types of payment services provided entirely on the Internet – payment initiation and account information services, and regulated the activities of providers offering them. The provision of new services requires interaction between payment service providers who maintain customer accounts (most often banks) and the respective providers that offer new services. Most payment service providers holding accounts in our market have chosen to achieve this interaction by creating special interfaces for automated access to their managed payment accounts (so-called application programming interface – API). Despite the created interfaces, the offer of the new services in Bulgaria, as well as in a number of other countries of the European Union, is still limited.

The project of Borika AD for immediate payments in BGN, based on the requirements of the SEPA scheme for immediate credit transfers, is in an advanced stage of development. As an operator of the real-time gross settlement payment system (RINGS), the BNB assists in the implementation of the project. The company’s ambition is in 2021 for payment service providers in Bulgaria to start providing their customers with immediate credit transfers in BGN. In order to develop innovative, affordable, secure and convenient payment solutions both in the online environment and in physical stores, it is important to provide an interoperable infrastructure that allows the smooth execution of cross-border immediate payments within the EU, as well as the achievement of additional standardization to ensure compatibility between final payment solutions offered to payment service users (eg common standard for QR codes, provision of access to NFC chips in mobile phones, etc.). These, as well as other aspects related to technological changes in the field of payments, including the risks arising from unregulated services, especially technical ones, which are ancillary to the provision of regulated payment services, I wish interesting and fruitful work to the participants in the videoconference. 1 Opinion of the European Banking Authority on obstacles under Article 32 (3) of the RTS on SCA and CSC  2/2  BIS central bankers' speeches
Together with Finansinspektionen, we are currently working on producing better and more detailed statistics on the mortgage market with the aim of gaining a better insight into potential causes of future problems. Because although – as I mentioned earlier – we will never obtain a clear, objective indicator that tells us when it is time to take action, there is every reason to reduce the uncertainty in our assessments of the situation. The second priority concerns a serious discussion of the level of risk weights for mortgages in Sweden. 3 Our risk weights are actually among the lowest in Europe (Figure 3). The risk weight of a loan determines how much capital a bank needs to hold per krona lent. Lower risk weights thus mean that the banks need to hold less capital. But the less capital a bank holds, the less resilience it has to loan losses. The low risk weights also contribute to some extent to the credit boom in the mortgage sector, as lending to buy housing thus becomes cheaper for the bank in relation to other lending. Why do we have such low risk weights? The reason is that the current risk weights are based on actual data on historical losses on mortgages. And these were not particularly high even during the crisis of the 1990s. Despite this, I believe that there are two reasons for questioning the low risk weights for mortgages.

But we do this for partly different reasons, as we have different tasks. The risks now building up in the mortgage market concern individual banks. But risks are also building up that threaten financial stability – what are known as systemic risks. Ultimately, the macro economy may also be affected. This means that the division of responsibility is unclear. The problem with the division of responsibility can be illustrated as follows. If we assume that the trend in household indebtedness and housing prices does not slow down, despite all efforts, and continues at an alarming pace. Which authority should be the first to take action and on what grounds? Is it a question of consumer protection or of inflation and resource utilisation? Then the answer is simple. But what if it is a question of risks that threaten the financial system? Or perhaps everything at once? We in Sweden are not alone in struggling with these issues. Around the world there is intensive debate on the management of systemic risk – what is usually known as macroprudential supervision. As I have already mentioned, we in the EU have agreed to establish a European Systemic Risk Board to monitor the build-up of systemic risk in the member states and to recommend measures to deal with it. It is of course necessary that we in Sweden have a framework ready to respond to any such recommendations, in the form of allocation of responsibility and tools.
In this context, the approach has varied both across time and across states. Shortly after the new Member States’ accession to the European Union, the assumed target dates for euro adoption were very ambitious, although the fulfilment of some of the Maastricht 1/4  BIS central bankers' speeches  criteria was still a long way ahead at the time. The more prudent stance manifest afterwards does not necessarily point to the inability or difficulty in complying with the nominal convergence criteria. Rather, it occurred after the beginning of the global crisis, when some of the benefits of euro adoption faded away, while the related costs became increasingly visible. We are therefore witnessing a substantially revised and more comprehensive approach to the euro accession process overall. As regards the actual differences in countries’ strategies, for some it might be puzzling that Bulgaria is thinking of joining the euro area sooner than Romania. It is true that these neighbouring countries have a lot in common, but there are also other things that set them apart (not only the Danube!). Bulgaria has a currency board in place and it is natural for it to contemplate euro adoption as a sound exit from this monetary policy arrangement (the adoption of which, two decades ago, meant half a step towards the euro area).

However, this central scenario is not free from risks. The international environment has not only deteriorated recently, but it has also become more vulnerable due to the extent of the slowdown of the global economy -in particular, of some emerging economies, as far as they may affect world growth and international tradeand the evolution of commodity prices, in a context where there are doubts about the reaction of markets to the normalization of US monetary policy. On the Spanish domestic political front, it is obvious that the uncertainty regarding the formation of a new government may affect investment and consumption decisions. So far, the impact on the Spanish financial markets has been limited. In any case, I take it for granted that any new government will show respect towards European Union commitments and the general framework of the European Union fiscal governance. Thank you very much for your attention. BIS central bankers’ speeches  5
We have not met the high standards we have set for ourselves. AML/CFT is like cyber security. Those who seek to abuse our financial system are getting smarter and more sophisticated. That cannot be a reason for failing to detect and deter them. As the threat grows, so must the effectiveness of our risk management. MAS is determined to fix the problem, working together with the industry. We need to draw lessons from the failings we have observed in the FIs and see how we can further bolster our AML/CFT regime. We will work hard with the industry to ensure that Singapore offers neither safe haven nor safe passage for tainted money from anywhere. Let me share our preliminary thoughts. Our AML/CFT regime comprises four key prongs: •  one a robust legal and regulatory framework that sets the rules;  •  two, active supervision of FIs to check for compliance with the rules and adequacy of controls;  •  three, strict enforcement to punish non-compliance; and  •  four, good cross-border cooperation. First, regulation. AML/CFT rules in the financial sector are strict. It is mandatory for all FIs to perform proper due diligence to know their customers. FIs are required to assess the risks and perform enhanced due diligence where the risks are higher. FIs are also required to monitor transactions on an on-going basis so as to identify and report any suspicious activities.

Uncertainty prevails over exactly when and how Brexit will take place; we can expect recurrent bouts of market volatility in the months ahead. Central banks across the world have said they will do what it takes to safeguard financial stability and maintain smooth functioning of their markets. We expect the global financial system to stay resilient, given ample liquidity and the generally stronger balance sheets of banks. But the UK economy is expected to take a hit and there will be some fallout on the EU. Uncertainty, especially over the terms of the UK’s exit from the EU and its future access to EU markets, will weigh on business confidence and investment spending. Growth in the EU will be weighed down by Brexit, on account of its significant trade and financial linkages with the UK. This in turn is likely to have a small dampening effect on global growth. The political and social implications of Brexit could have more significant economic consequences over the medium to long term. But it is too early to tell what these implications might be. There are several key elections taking place in Europe next year. They will determine the ability of governments to maintain support for structural reforms as well as for the European project. Destabilisation of politics in Europe could impact global markets and global growth. The US is expected to stay on a moderate expansion path. The consensus growth forecast for 2016 is 1.9%.
BIS central bankers’ speeches  9  Chart 4 Average headline and core inflation (PPP-weighted) and the price of oil Percentage change on a year earlier  100 80  7 6  60  5  40 20  4  0  3  -20  2  -40  1  -60 -80 2005  2008 2011 2014 Global PPP-weighted core CPI inflation Global PPP-weighted CPI inflation Oil price (LHS, YoY)  0  Notes: Weighted average (with PPP-GDP weights) of headline and core year-on-year inflation across a balanced panel of 18 countries (solid lines) and Brent Oil price (dashed line). Source: DataStream, ONS and Bank calculations. Chart 5 Index of participation in global supply chains Forward participation (2009) Backward participation (2009) Total participation (1995)  Global supply chain index  80 70 60 50 40 30 20 10 0  Note: The participation index adds together two components: the share of foreign value added embedded in a country’s exports (backward participation) and the share of exports made of domestic value added which is then subsequently used by an importing country to produce their exports (forward participation). For more information please see: http://www.oecd.org/sti/ind/global-value-chains.htm. Source: OECD and Bank calculations.

After adjusting for unconventional policy there’s greater monetary policy divergence than implied by a simple eyeballing of the currently highly synchronised global rates cycle. And there remains the prospect of a further widening. In other words, domestic economic conditions – conditions affected by domestic monetary policy – still very much matter. None of this diminishes the considerable challenges of returning inflation to target in the face of global developments. There are profound secular and cyclical disinflationary forces at work in the global economy, and for economies like the UK their impact is being reinforced by exchange rate movements which will drag inflation down further at the policy horizon. Moreover, as events of the past few weeks have reminded us, a variety of global factors can affect global financial conditions and influence the neutral rate of interest. Central banks must take these Disparate Confounding Dynamics (DCDs) into account when setting policy. 2 Even for those economies with the strongest recoveries and the best functioning financial systems, they mean that the policy rates consistent with returning inflation to target will likely need to rise in a gradual fashion and to a limited extent despite robust domestic demand and firming domestic costs. For the UK at least, global DCDs influence but do not dictate policy. 1  Subramanian, A and Kessler, M (2013), “The hyperglobalization of trade and its future”, Global Citizen Foundation working paper 3, June.
The second similarity we may expect to see between Europe and the United States is that, with EMU, external considerations -- such as the trade balance or the value of the exchange BIS Review 109/1997  rate -- will over time impinge less and less on the conduct of monetary policy, as now is the case in the United States. Once monetary union is in place for all 15 countries, the openness of Europe’s unified economy -- as measured, for example, by the share of exports in relation to GDP -- is likely to be quite similar to that of the U.S. economy, on the order of 10 percent. While the conduct of monetary policy in Europe may increasingly resemble that in the United States, the conduct of fiscal policy will continue to differ significantly in the two regions, largely reflecting the different paths Europe and the United States have taken to monetary unification. In the United States, political union came well ahead of a common monetary policy. The Federal Reserve was not created until 1913, when political unification had been long in place. The situation is, of course, quite different in Europe, where EMU member countries plan to retain substantial political and fiscal independence. Despite this independence, EMU may well foster fiscal coordination among the member countries.

Employees shall usually work in the best interests of the company, but can in some contexts have interests of their own that are in conflict with the company’s best. Divisional managers within a corporate group may have an interest in promoting their own division rather than the group as a whole. Company management does not always have the same aims as the shareholders. Many of these conflicts of interest are common and quite natural elements of real life, and rarely cause problems. It is important to bear this in mind when discussing methods of dealing with them. This does not mean that conflicts of interest in financial operations are irrelevant, quite the reverse. The relevant question here, however, is which conflicts of interest are real problems and which are not. The conflicts without problems are those where there is little incentive to improperly favour one interest over another. For instance, most employees are usually loyal to their employer - otherwise they risk losing their jobs. A company that does not take into account the interests of its employees and its customers risks gaining a bad reputation and losing its competitiveness. Other conflicts of interest are more problematic. When an agent has a considerable incentive to favour one party at the cost of another, there could be scope for some form of regulations. Many companies also have ethical guidelines and rules for dealing with the cases where there is most incentive to take other interests into account.
The second important factor is understanding the nature of the largest shock to the economy in the recent term and how it interacts with the countercyclical role of the exchange rate. The surge in tourism has been one of the main drivers of GDP growth in recent years. In part, the tourism industry utilises infrastructure and capital that were underutilised before growth in tourism took off; therefore, the impact on the level of domestic demand was less pronounced than it would have been if the surge had necessitated an immediate increase in investment. Now, however, we have probably reached the endpoint as far as this is concerned. In addition, increased tourism brings with it foreign currency inflows that, other things being equal, will push the exchange rate upwards. This will cut into activity elsewhere, shift demand outside the domestic economy, and reduce inflation. To a degree, then, after full employment is reached, an automatic counterweight develops, offsetting the pressures caused by growth in tourism. Third, global economic developments have remained favourable to us. Terms of trade for goods and services have improved in recent years, and foreign currency prices of imports have fallen. Fourth, a larger share of income is being channelled towards savings than has often been the case in the past. Last year, gross national saving – the share of GDP not used for private or public consumption – was nearly one-third of GDP, one of the highest national saving rates in our history.

Capital inflows from non-residents are much less important, and in the latter half of the year, when the króna was appreciating the most, carry traderelated inflows were virtually non-existent. Estimating the equilibrium real exchange rate is very uncertain, however, and as a precaution, the Central Bank has leaned against potential overshooting of the exchange rate by buying large amounts of foreign currency. In this light, it is difficult to conclude otherwise than that the appreciation of the króna has been largely benign, in that it is based on economic fundamentals and contributes to a better balanced economy. The Central Bank’s scenario analysis indicates that if the Bank had used policy instruments to halt the currency appreciation in recent years, economic imbalances would have been much greater and inflation considerably higher. It has been a long time since the Central Bank of Iceland could fix the exchange rate unilaterally on a day-to-day basis. The exchange rate is determined in the interbank market and reflects underlying supply and demand for foreign currency. But the Bank can affect the exchange rate through interest rate decisions, foreign exchange transactions, and the application of capital flow management measures such as the one currently in place: the special reserve requirements on certain types of capital inflows. The exchange rate would have been much higher if the Bank had not applied these instruments and bought large amounts of foreign currency.
As the interest rate gradually increases to a more normal level, growth in private demand will probably ease, and capacity utilisation may be brought down and stabilise. There is uncertainty associated with developments in demand and output in the near term, partly because the interest rate has been low for a long period. Higher growth may rapidly trigger stronger pressures in the economy. Output growth in Norway is high, and capacity utilisation is rising. It may appear that growth has become more self-driven. The low interest rate will probably contribute to an increase in the output gap and inflation ahead. The operational objective of monetary policy is inflation of close to 2.5 per cent over time. In the conduct of monetary policy, emphasis is also placed on curbing fluctuations in output and employment. The objective of stabilising developments in output and employment implies, in isolation, a higher interest rate. This will reduce the risk that capacity utilisation in the Norwegian economy will become too high. High capacity utilisation could give rise to bottlenecks in some sectors of the economy and lead to a higher rise in property prices and household borrowing. This could be a source of instability in demand and output in the somewhat longer run. The objective of bringing inflation back to target and anchoring inflation expectations nevertheless implies a continued expansionary monetary policy. International interest rates are rising, albeit slowly and from a low level. There are prospects of continued low inflation for a period ahead.

Thank you for your attention. BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13
Strengthen the quality of capital Under the current rules, up to 50 per cent of a bank’s Tier 1 capital can consist of hybrid instruments, which are a combination of debt and equity. The remainder must comprise common equity only. Perpetual capital securities and other hybrid instruments cannot be used as easily as equity capital to absorb losses on a going concern or at liquidation. The possibility of limiting Tier 1 capital to common equity is now being considered. Hybrid instruments make up a large share of Tier 1 capital in many European banks and many banks must strengthen the quality of capital. There is therefore a risk that political processes will prevent any significant increase in the minimum Tier 1 capital requirement. The Norwegian authorities have been restrictive in their approval of hybrid instruments. The Financial Supervisory Authority of Norway – with strong support from the Ministry of Finance during the last 20 years – has ensured that banks have been required to fully consolidate all  BIS Review 131/2009  7  assets when calculating capital requirements. Since established practice in Norway is already strict, the new rules may not in themselves affect banks to any great extent. Capital and macroprudential supervision  A lesson learned from the financial crisis is that regulation of financial institutions should seek to limit risk not only in each bank, but also in the financial system as a whole. Banks’ growth strategies seldom take into account that one bank’s behaviour can affect other banks and the financial system.

Developments in technology, both to enhance resilience of existing payments and to innovate in new forms of payments, are important to support the Bank in advancing its objectives. This is equally true for physical and electronic payments. In my previous role as Chief Cashier, I led our work to issue banknotes printed on polymer. We harnessed innovative technology both in the security features selected, and in introducing a tactile feature on the new £ polymer banknote to help blind and vision impaired people identify our notes. This meant we exploited technology to produce banknotes which are not only secure, but inclusive. And now we are assessing how we can embrace diverse technologies through RTGS Renewal. Although the Bank has concluded that Distributed Ledger Technology (DLT) is not yet sufficiently mature to provide the core for the next generation of RTGS, we still place a high priority on ensuring the new service is capable of interfacing with DLT. In summer 2018 we ran a Proof of Concept12 with four firms to develop payment arrangements using innovative technologies. Importantly, the results demonstrated that participants using such technologies could connect to and settle in RTGS. This has informed our thinking on how RTGS could support settlement in a more diverse range of systems, and provided broader insight into the range of functionality the Bank might need to offer to support this sector.