samchain/econo-pairs-v1 huggingface dataset:
They also include the fact that the distribution of income and productivity across regions has been uneven: the pie has been unequally sliced. The opportunities flow from these challenges. Given these sharp regional differences, if a way could be found of raising the productivity of lower-performing regions, this could have a material impact on aggregate productivity and hence national income. For example, if all of the regions in the lower part of the productivity distribution were lifted to the UK average, this would raise average levels of UK productivity by around 6%. If all regions were lifted to the average level of London and the South East, this would raise the average level of UK productivity by 20%. Levels of UK productivity would then rival those in France and Germany. But how is this to be achieved? At least over the longer run, it is reasonably clear that monetary policy is ill-equipped for the task of either expanding the economic pie or altering the way it is sliced. Over those horizons, nominal things like money and monetary policy cannot affect real things like productivity, skills and investment. In the language of economics, money and monetary policy are neutral in their impact. 14  You do not have to be an economic theorist to see why. If printing money or setting interest rates had a durable impact on activity, incomes and living standards, economic policy would be simple and we would have long since cracked it.

Operations may be contracted on the basis of an exchange rate negotiated with financial institutions or the SML rate itself, calculated based on the average real-dollar rate published daily by the Central Bank of Brazil, and the Argentine reference peso-dollar rate. At the closing of both markets, the SML rate will be announced daily. Financial settlement of operations carried out through the system will take place in three business days (d+2). Banking institutions that have Reserve Accounts at the Brazilian Central Bank may be accredited to operate in the system. Authorization to operate on the exchange market is not a prerequisite. The SML is a highly promising initiative for small and medium businesses that have less access to derivative mechanisms to neutralize foreign exchange risk. At the same time, large companies have also shown interest in the system, primarily those that already have mature operations in the two economies. BIS Review 124/2008  1  There is no doubt whatsoever that the system we have just inaugurated will not only stimulate trade transactions between Brazil and Argentina but also enhance competitiveness in both countries. This initiative is a first and important step forward toward greater integration of our economies and of Mercosul. Congratulations to all of those who have played a role in making this historic moment feasible. Thank you. 2  BIS Review 124/2008
Banks should be ready to offer SONIA loans by Q3 2020, and stop using sterling LIBOR in loan products by Q1 2021.4 In the US, the Alternative Reference Rates Committee (ARRC) recently recommended5 that firms should cease using USD LIBOR in: new consumer loans maturing after end-2021 by September this year; new floating rate notes by end of this year; and new business loans and derivatives contracts by June 2021. B SORA is the focal point in the new SGD interest rate landscape 5 Our industry has embarked on a similar reform journey, to ensure that our SGD interest rate benchmarks are credible, reliable and transparent: In 2013, ABS and Singapore Foreign Exchange Market Committee (SFEMC) transitioned SOR from a poll-based to a transaction-based methodology. In 2017, ABS and SFEMC consulted on a new waterfall methodology to make SIBOR more transaction-based, and transitional testing was carried out from July 2019 to validate this new methodology. In August last year, ABS and SFEMC recommended a transition from SOR to the Singapore Overnight Rate Average (SORA). This is necessary as SOR relies on USD LIBOR in its computation, and will not be sustainable when USD LIBOR ceases. In addition, SORA is a robust benchmark underpinned by actual transactions in a deep and liquid overnight unsecured SGD interbank funding market.

In fact, central banks’ role in times of financial instability is not a new issue for the economic literature. The term “lender of last resort” originated in the writing of Sir Francis Baring in 1797. In his book, “Observations on the Establishment of the Bank of England”, Sir Baring referred to the Bank of  3  Aninat, Eduardo. (2003). Foreword. Challenges to Central Banking from Globalized Financial Systems. IMF. 4  Schuerman T. (2004). Why Were Banks Better off in the 2001 Recession? Current Issues in Economics and Finance. FEDNY. Vol. 10. No: 1. 2  BIS Review 38/2005  England as “the dernier resort” from which all banks could obtain liquidity in times of crises. But the concept of lender of last resort had been described and used in a more comprehensive manner by both Henry Thornton in 1802 and Walter Bagehot in 1873. Distinguished Guests, I will add a point to the discussion that the benefit of having a strong financial system in an economy eliminates the ground for conflict in policies between financial stability and price stability. Since a strong financial system increases the efficiency of monetary policy on one side, it also provides elasticity for the economy to overcome external shocks easier on another. On the other hand, it is almost impossible to attain financial stability in the long run without maintaining price stability. Furthermore, price stability attained through credible monetary policies is an advantage in times of increasing uncertainty in the financial system and financial imbalances.
On many occasions these are syndicated operations, or operations performed by several banks from various countries. We should highlight here the role played by export credit companies. This activity is subject to the rules set under the OECD Arrangement on Officially Supported Export Credits, or the OECD Consensus, as it is usually called. The OECD Consensus The OECD Consensus, signed in 1976, has regulatory status in the European Union and seeks to prevent financial facilities granted by a State to an exporter from distorting BIS central bankers’ speeches  3  competition and giving an exporter an unfair advantage against competitors from other countries. The Consensus also works on the assumption that official support is warranted only if there is a “market failing” that prevents the private sector from properly meeting its task as a financier. The Consensus sets common rules for exports in the medium and long term, understanding as such terms over two years, and specifies that official support may take the form of either direct public financing of the export, or the underwriting by the public sector of the refund of the export financing granted by private institutions. In Spain, CESCE (Spanish Export Credit Insurance Agency) pursues its activity on behalf the State, complementing that of the banking system. Among its operations, what affords the greatest value added is the coverage of credit risk arising from a Spanish export, of a relatively high amount, at a term of over two years, habitually financed by a bank.

But it is those very things that make intelligence from the Townhalls distinctive and valuable. Statistical surveys cannot capture narrative in a way conversations can. The Townhall visits have been one of the most enlightening things I have done in my almost 30 years at the Bank of England. The Bank has recently expanded and deepened its range of local initiatives. One of these is Citizens’ Panels.63 After a couple of trials last year, the Bank recently began rolling-out Citizens’ Panels across each of its regional agencies. These panels have an independent external chair, drawn from the local region, to facilitate discussion. Each is attended by a senior Bank policymaker. Messages from the panels will be drawn together periodically and published externally. Complementing Citizens’ Panels, the Bank’s direct engagement with community groups is now being expanded through a set of “Community Forums”, working in partnership with local charities and community groups. The Governor recently launched these forums with events in Tower Hamlets and Glasgow. Other Governors and Directors have their own Community Forums planned through this year and beyond. The Bank’s education programme also has strong local presence. The educational materials developed by the Bank for 11-16 year olds, econoME, have been taken up by a third of schools across the UK. Last year, staff ambassadors visited close to 300 schools across the UK to deliver talks on the economy and economic policy. These are examples of a central bank acting locally.
Kerstin af Jochnick: Monetary policy and macroprudential policy Speech by Ms Kerstin af Jochnick, First Deputy Governor of the Sveriges Riksbank, at a meeting at Länsförsäkringar AB, Stockholm, 25 January 2013. *  *  *  Today I intend to talk about monetary policy and the new policy area, macroprudential policy, and how these two areas are interlinked. My message today can be summed up in a few points. First: in the absence of a clear framework for macroprudential policy, we have taken into account in our monetary policy the risks linked to the high level of household debt in Sweden. This is because we have wanted to avoid the consequences that many other countries have experienced as a result of high indebtedness and falls in house prices. Second: I believe that macroprudential policy, once it is up and running, will be in a better position than monetary policy to manage these risks, as it offers tools that are more effective than the repo rate for these purposes. Third: The Riksbank has an important role to play in macroprudential policy in Sweden, partly because we have long conducted analyses in this field, and partly because there are strong points of contact between monetary policy and macroprudential policy. The Riksbank has two main tasks: price stability and financial stability. I think that a clear and efficient framework for macroprudential policy – where the Riksbank plays an important role – would give us better conditions to carry out these tasks.

5  For a more detailed description of macroprudential policy, see for instance C. Nordh-Berntsson and J. Molin (2012), “A Swedish framework for macroprudential policy”, Economic Review, no. 1, Sveriges Riksbank, and my colleague Karolina Ekholm’s speech “Macroprudential policy and clear communication contribute to financial stability,” published on 30 March 2012. BIS central bankers’ speeches  3  focus for macroprudential policy is the risks in the financial system as a whole (see Figure 9). The supervision of individual institutions is, of course, also important to the stability of the financial system, not least as financial institutions are regarded as “systemically important”. But to capture the build-up of risks that could threaten the stability of the financial system – what are known as systemic risks – it is not enough to keep an eye on individual institutions. One needs to supplement this with a systemic, or macro, perspective. Macroprudential policy also requires appropriate tools. Let me discuss some of the macroprudential tools that could be useful to specifically manage the risks linked to house prices and household debt.6 Countercyclical capital buffers are one of the most discussed tools, and are a part of the Basel III international regulatory framework.7 The idea is to vary the capital requirements made of the banks; when there is strong credit growth, the requirements will be increased, while they will be reduced during financial stress, when there is otherwise a risk of a credit crunch.
Among his many achievements was the time he steered the country during the 1997 – 98 Asian crisis. His unorthodox policies then have become mainstream now. Under his leadership, Malaysia experienced modernisation and economic prosperity, a development most profound for my generation. That modernisation included the early development of Islamic financial system. From the seeds planted during Tun Mahathir’s time, we are now seeing the maturing of the Islamic financial system in Malaysia that is innovative, competitive and increasingly internationalised. What was once a novelty has become an alternative means of conducting business. We owe this very much to Tun Dr. Mahathir’s foresight and wisdom. Not many people today realised that one of the first actions that Tun Dr. Mahathir took when he came to office in 1981 was to set up a National Steering Committee to implement Islamic banking in Malaysia. The report of this committee on the viability and strategy of the Islamic banking, was the impetus for the creation and robust development of the Islamic financial industry in Malaysia. The rest they say is history. Global economic challenges and Islamic finance The world is transforming and its transformation is way beyond what we had seen before. This is an era of radical change, new rules are being formulated, standards and best practices that were in vogue hardly 5 years are now considered insufficient.

Staying connected with Main Street is also important because the effectiveness of our policy actions is enhanced when private actors have a clear understanding of what our actions are intended to accomplish. For these complex policy decisions, the Federal Reserve System needs accurate and timely information on business and financial conditions, and the perspectives of participants in markets throughout the United States. Economic conditions often differ in various parts of the country, and it is important that the Fed takes all of this into account when it formulates policy. This input is particularly important for the Second District of the Federal Reserve, where we sit today, because the forces that drive economic conditions here often do not mirror the forces driving other regional economies. BIS Review 49/2010  1  In order to monitor and understand the various aspects of local economic conditions, we utilize a number of different measures. Two of these measures we have developed here at the New York Fed – a survey of manufacturers and indexes of economic activity. We regularly produce the Beige Book and report information on local credit conditions. These measures supplement and extend the understanding gleaned from public data sources. We also seek input from regular meetings with several advisory groups representing different facets of the District’s economy – such as our Small Business, Upstate New York and Thrift Institutions panels – and from interactions with key academic researchers at local universities and public policy organizations.
In this respect, at the international level, the Basel Committee on Banking Supervision (BCBS) decided to delay by one year (from 2022 to 2023) the implementation of Basel III. In the accounting sphere, certain aspects relating to how the existing regulations should be applied to calculate credit risk have been clarified, to ensure that potential temporary delays  2  in loan repayments by borrowers are not treated as if they were a case of permanent impairment of loan quality. The authorities have also ruled that institutions may make effective use of their available capital buffers to absorb unexpected losses. It was further announced that institutions will have sufficient time to subsequently restore any capital buffers used. In addition, financial authorities have recommended that institutions temporarily eliminate dividend pay-outs and apply prudent criteria in their variable employee compensation schemes, so that they may channel their resources into shoring up their capital positions. All in all, we can say that this response from the prudential authorities, accompanied by the fiscal and monetary policy measures adopted, has enabled the initial impact of the shock to be absorbed. It has prevented the materialisation of a systemic risk in the financial system that would have exacerbated the crisis and made it more persistent. What about the current situation? We are living a recovery that is still partial, full of uncertainty and uneven, both at the country and sectoral level.

In particular, the crisis has already generated an increase in the level of indebtedness of many firms. Thus, it would make sense to assess the possibility of actions to support firms that do not involve an increase in financial obligations, such as, for example, by means of direct assistance or, in some cases through temporary capital injections. 3  Furthermore, for companies that have difficulty meeting their financial obligations, streamlined debt restructuring procedures need to be available to avoid such difficulties leading to the disappearance of heavily indebted firms whose business model is nonetheless viable. And, in parallel, for firms with non-viable business models, an orderly market exit should be available, since this would result in a more efficient allocation of resources. Apart from these short-term actions, an ambitious structural reform agenda is urgently needed, to increase the economy’s potential growth, which was already low before this crisis. And this is also true for European policies. In this case, for example, it is crucial that the European fund be converted into a permanent, common fiscal stabilisation instrument for the euro area. This would allow a joint fiscal response to macroeconomic shocks and provide a larger supply of safe European assets, facilitating the general functioning of financial markets and the specific conduct of monetary policy. Completing the Banking Union is also a priority, with the approval of a fully pooled European Deposit Guarantee Scheme. Further, we must move towards lowering the barriers to a genuine Capital Markets Union.
On an uncertain basis, the normal interest rate for Norway is now estimated to lie in the lower end of this range. If we return to long-term interest rates, it might therefore seem as if they have been lower in recent years than the normal level determined by growth and inflation prospects. The cause of the low level of long-term interest rates has been a theme of discussion in the international financial literature in recent years.3 One reason that is cited is the high level of saving in some Asian countries, particularly China, and in oil-exporting countries. Moreover, it has been pointed that investment has been low in several regions of the world, possibly as a result of previous periods of over-investment. A preference for higher saving and a preference for lower investment both contribute to lower interest rates. Moreover, monetary policy in China and other Asian countries is oriented towards exchange rate stability. In order to ensure that exchange rate developments are in line with the objectives of monetary policy, the Asian central banks buy US dollars and invest large portions of their purchases in US government bonds. This contributes to keeping US long-term interest rates at a low level, which in turn have a considerable impact on developments in long-term interest rates in other parts of the world. In addition to these conditions, new accounting and solvency rules are being introduced in many countries.

Let me attempt to illustrate the gains of committing to a response pattern rather than pursuing a purely discretionary policy. We have developed tools that allows us to find interest rate paths that minimise the loss function, given a model of the economy’s functioning and given economic shocks. Within the framework of a small macroeconomic model, we have estimated the magnitude of the shocks to which the Norwegian economy has been exposed over the past 10-15 years. Under the two assumptions about monetary policy, discretion and commitment, we have estimated how large the variance of output and inflation will be over time. We have assumed that the economy is exposed to the same shocks as in history. Let me emphasise that this exercise is only meant as an illustration based on a stylised economic model. 10  BIS Review 10/2007  The chart shows the variance of inflation on the vertical axis and variance of the output gap on the horizontal axis. By minimising the loss function that I presented above under discretion and commitment respectively, we obtain different combinations of the variance of inflation and the variance of the output gap. By varying the weight on the output gap, lambda, in the loss function, we obtain a line for each strategy. The lines represent the minimum loss that can be achieved under commitment and under discretion.
The countries of the euro-area periphery have also made progress in restoring competitiveness and rebalancing the composition of demand, though there is still quite a way to go. Member states are working towards the creation of a functional banking union, which has the potential to break the link between sovereigns and banks. And in preparation for becoming the euro-area banking supervisor, the ECB is planning a rigorous review of the quality of banks’ assets, to be followed by a set of stress tests and, if necessary, recapitalisation. Provided these carry credibility with the market, this could do much to restore confidence in the euro-area banking system. But while some headwinds are abating, others remain. The need to restore the public finances to sustainability means that fiscal consolidation will continue for some years yet. And, for some households, the past accumulation of debt may weigh on spending. Finally, even though the cloud of uncertainty may be lifting, businesses are likely to remain cautious about increasing their investment spending until it is clear that the recovery in demand will be sustained. So the pace of the recovery is likely to remain fairly modest by historical standards. That will mean that it is likely to be some time before the economic slack that built up during the recession has been brought back into use. I will say a little more about that later.

In France an important contribution comes from the “Observatory for payment cards security”, which I have the pleasure to chair. Its recommendations have facilitated the recognition by stakeholders, who are all represented in the Observatory, of the importance of strong customer authentication for Internet payments and facilitated its wide adoption. This has significantly contributed to limit the impact on fraud rates, at least for national payments, and it has helped foster the dramatic expansion of e-commerce that we currently see. But beyond the development of card payments via the Internet, other innovations such as mobile and contactless payments or online banking services also raise important issues. These issues notably include the protection of sensitive payment data. To address them, the Banque de France has been working with the banking community, which translated into an agreement in 2011 to promote the protection of bank account identifiers and card numbers. This issue of protection of sensitive data appears all the more important to address that we  BIS central bankers’ speeches  1  witness the entry of newcomers in the payment chain like third party payment services providers, who may contribute positively to foster innovation and potentially competition in the retail payments market but whose modus operandi should not lead to lower the current security level of online banking services. What lessons can we draw from that experience to promote best practices in the field of security for retail payments on a larger scale?