samchain/econo-pairs-v1 huggingface dataset:
Their trading has a range of positive effects but also poses a  4  BIS Review 60/2007  risk of heightened volatility and fluctuations in exchange rates and interest rates. Icelandic financial companies have expanded rapidly overseas, and too rapidly in some people’s view. Meteoric growth tends to raise questions anyway, and when small institutions are involved from a country that has not had a high profile in the banking world, these questions may be more aggressive and critical than otherwise. Icelandic banks discovered this last year. They have learnt a valuable lesson and clearly realise the importance of transparency and open communication, and the need for leeway in their funding and good credit ratings. This experience must not be forgotten. General market discipline and scrutiny will help to prevent that from happening. For government authorities, it is important to pursue balanced and credible economic policies and ensure that the administrative and financial infrastructure remain solid, including strong and efficient financial supervision. The Central Bank tightened its monetary stance sharply last year, one result of which was a lower rate of inflation than otherwise. The Treasury has shown a surplus for many years and privatisation proceeds were deployed to retire debt. Today, the Treasury’s foreign debt is not higher than the Central Bank’s foreign reserves, i.e. roughly 15% of GDP, and its domestic debt only 10% of GDP. Financial supervision has been boosted and will be strengthened further. It is in line with best European practice.

Ingimundur Fridriksson: Turbulence in Iceland's financial markets in 2006 Keynote address by Mr Ingimundur Fridriksson, Governor of the Central Bank of Iceland, at the UBS conference “Annual Reserve Management Seminar for Sovereign Institutions”, Thun, Switzerland, 4 June 2007. *  *  *  Where is Iceland? What is it? Why do we want to know about it? In the first half of 2006, hardly a day passed without Iceland and Icelandic banks being mentioned in newspapers and financial journals around the world. Although attention is often welcome, this was not necessarily true of all the discussion about Iceland and its banks a year ago. The coverage was highly critical, in some ways rightly so but in other ways not. When I was asked to address this conference, the turbulence in the Icelandic financial markets in the first half of 2006 was doubtless fresh in the organisers’ minds. So I was asked to discuss that episode and how the Central Bank of Iceland monitored it and responded. As well as covering this topic I shall add some comments on recent developments and prevailing conditions. But first a few facts and a brief description of the background are needed. Iceland is an advanced industrial economy with one of the highest national incomes per capita in the world. Through membership of the European Economic Area, Iceland is part of the European single market and has the same financial infrastructure as in the European Union.
In the press release referred to as “The General Framework of Inflation Targeting Regime and Monetary and Exchange Rate Policy for 2006” dated 5 December 2005, the annual auction program for 2006 was announced in consistence with the aforementioned general framework. The maximum  6  BIS Review 1/2007  daily amount that can be bought was determined as USD 60 million, with USD 20 million of auction amount and USD 40 million of optional selling amount (200 % of the total amount sold), to be effective as of the 2nd of January 2006. However, in line with the decline in foreign exchange supply due to global liquidity conditions, the depth of the foreign exchange market was lost and volatilities were observed in exchange rates. Therefore, the Bank decided to suspend daily FX buying auctions for a certain period of time, starting from the 16th of May 2006. Moreover, as a response to the excessive volatility in exchange rates observed in 2006, the Central Bank directly intervened in the market via one FX buying intervention and three FX selling interventions. These interventions were as follows: (i)  Following the increase in foreign exchange sales due to developments in international markets, the Central Bank decided to directly intervene in the market by buying a total amount of USD 5.4 billion foreign currency on 15 February 2006, in order to prevent actual and expected excessive volatilities.

One of the difficulties faced in trying to encourage this business is that the major providers, such as the so-called “monoline” insurance corporations in the United States, may not find it profitable to work on what for them may be relatively small, plain vanilla deals, when compared to the fees available from larger and more complex deals in North America. Another problem is that such companies tend not to look to enhance securities with original ratings below triple B. This in turn raises questions about fundamental credit quality in the region as well as about the potentially wider role for rating agencies. Another area where we might expect to see further innovation is the securitisation of pools of assets such as mortgages or receivables. We have recently witnessed the resurgence of the mortgage-backed security market in Hong Kong, spearheaded by the Hong Kong Mortgage Corporation. This market has the potential to develop even further if the property market recovers buoyancy. But there is also probably scope for more activity in the securitisation of such things as credit card receivables, leasing receivables and the like. These could form attractive debt securities, although, as we have seen with so many issues of securities, the existence of the securities does not necessarily mean that there is an active market in them after the initial placement or sale. Thus, we are by no means standing still.
My colleagues and I at the New York Fed have commented previously on the essential role of good culture in a bank’s reputation, financial condition and performance, and in customer confidence and trust.12 As we have argued, “cultural capital”—through its ability to limit misconduct risk—can be an important bulwark to a firm’s financial capital.13 Culture is often viewed as a “soft” topic, but I would disagree. The financial penalties associated with misconduct are anything but soft—with bank fines since the crisis estimated at more than $ billion as of year-end 2016.14 The hit to a bank’s reputation from misconduct can also be quantified through, for example, the associated impact on its share price or funding costs. Culture should be about concrete incentives and behaviors that help achieve specific goals, implying that it should not be viewed as a “soft” issue. I have argued on several occasions that bank leaders could get a better view into their firms’ progress on conduct and culture by doing more collectively. 15 For example, major banks in the United States could participate in an industry-wide survey of their employees conducted by an independent third party, with the results anonymized to encourage respondents to be candid in their assessments. I suspect that these results would create a more accurate picture of how banks are doing, and would likely underscore how much work continues to be needed to improve bank cultures.

Another idea that I have discussed is the creation of a database of banker misconduct to combat the problem of “rolling bad apples.” In these cases, employees who are dismissed due to suspicion or proof of misconduct are unwittingly hired by other firms in the industry, where they 5/8  BIS central bankers' speeches  have the opportunity to repeat their actions. Understandably, firms are concerned about legal risk if they share information about banker misconduct, but there may be ways to address these concerns through legislation. Once again, I invite the industry to take the initiative on these issues, and to look to the public sector for support. For their part, I believe that supervisors have a special role to play in assessing incentives at the firm level and their possible implications for bank behavior and misconduct. Supervisors can mitigate misconduct risks by supporting the development of effective corporate governance regimes, prudent risk management policies, and strong compliance and control structures—all within a framework of effective oversight from the firm’s board of directors. Ultimately, establishing and maintaining an effective culture with appropriate risk governance and controls is the responsibility of individual firms and the industry, but the official sector can help by highlighting best practices and addressing collective action problems and other market failures. Areas where further work on incentives is warranted I would like to briefly touch on some areas where further work on incentives may be warranted, including regulatory changes that might address certain incentive and first-mover problems.
To quote Federal Reserve Chairman Ben Bernanke “…the very substantial shift in the current accounts of developing and emerging-market nations … transformed these countries from net borrowers on international capital markets to large net lenders.”2 Indeed, it is interesting to observe that, in the late 1990’s, in the aftermath of the Asian crisis, several Asian central banks started accumulating significant foreign exchange reserves in efforts to stabilize their capital flows and their exchange rates, or to be in position to do so, should that prove necessary in the future. Meanwhile, some conjectured that mature economies with ageing populations would experience a peak in their savings rates. The “savings glut” hypothesis is contested, however. A first point of contention is that the impact of demographic change on savings and investments may be limited, compared to that of other factors.3 Indeed, the savings rates of industrialised countries did not appear to increase in this period (slide 5). In some cases, they even decreased. A second discrepancy, asserted by John B. Taylor and others, resides in the observation that the US savings gap, and the surge in savings in the rest of the world effectively cancelled one another out.4 Finally, despite the significant increase in savings rates in China and other emerging countries, there was no clear upward trend in global national savings.

Let me first discuss the roots of some of the longer-term trends, before focusing on post-2007 developments. Long-term trends Central banks’ credible commitment to price stability could well explain the downward trend in nominal interest rates experienced by most mature economies in this period. As we see in slide 3, inflation in G7 countries declined from particularly high levels in the mid-1970’s, and again in the early 1980’s, to relatively low and stable levels since the mid-1990’s. Given the decreasing levels of inflation and inflationary expectations, the inflation premium included in nominal interest rates should have been reduced accordingly. Nevertheless, slide 4 shows that this explanation does not suffice. Real interest rates1 also show a declining trend, as represented here in the average real return on the 10 year bonds of G7 countries. What is behind this evolution? Some attribute the low interest rate environment to a so-called savings glut. The crux of this argument is that there has been an excessive accumulation of global savings relative to the demand for fixed capital formation since the mid-1990’s.
This meant that it became expensive and difficult for the banks to fund themselves. In this situation the Riksbank began to lend money to the banks at longer maturities to secure their funding. During three months in autumn 2008 the Riksbank increased its lending to the banks by more than around SEK 450 billion. To begin with the Riksbank granted loans in kronor at three-month and six-month maturities, but gradually the maturities were increased to twelve months. Lending at a variable interest rate has declined over the past six months, but has been supplemented by the previously-mentioned lending at a fixed interest rate of almost SEK 300 billion (Figure 7). Figure 7 The Riksbank’s lending in SEK and USD SEK billion 600  500  600  SEK, Commercial paper USD SEK, variable rate SEK, fixed rate  500  400  400  300  300  200  200  100  100  0 Jul-08  0 Oct-08  Jan-09  Apr-09  Jul-09  Oct-09  Source: The Riksbank. The Riksbank has also granted loans in US dollars. During the crisis there was a shortage of dollars around the world and the banks experienced difficulty in obtaining funding in dollars. At most, lending in dollars corresponded to around SEK 250 billion in spring 2009. Since then the banks’ interest in borrowing dollars from the Riksbank has declined.

In this context, I would like to start my speech by once more underlining that inflation developments in Turkey in the first quarter of 2009 should be considered in the light of these global conditions. In the first quarter of 2009, consumer prices increased by 1.05 percent and annual consumer inflation became 7.89, remaining within the limits of the uncertainty band. Backed by the significant slowdown in economic activity and improvement in cost-based effects, the decline in inflation gained ground and spread across all subgroups. In addition, the short-term exchange rate pass-through on consumer prices remained limited in the previous quarter. The contribution of all main groups excluding tobacco and gold, which posted high-rated price hikes to annual inflation weakened in the first quarter of the year. While the contribution of food and energy to annual inflation decreased especially due to the marked decline of annual inflation in energy prices, the contribution of services prices also continued to diminish owing to the fall in costs and the slowdown in domestic demand (Figure 1).
Understanding that inflation will be close to the target, banks will not set excessively high mortgage rates. This situation was observed before the pandemic, when interest rates were low. Mortgage lending started to expand extensively even before the pandemic. This is control over inflation that helps generate long-term money, long-term loans, and mortgage loans. Other challenges existing today are associated with the changes brought about by the pandemic. We could see that remote services were crucial during the pandemic. They included both financial services, e.g. bank apps, as well as non-financial ones, such as taxi hailing apps and ones dealing with large purchases. Many such services are integrated into ecosystems that are forming, so to say, around large banks and technological companies. This creates a lot of advantages for consumers as everything they need is close at hand. However, this also poses risks. It is thus crucial to ensure personal data protection and limit the risks of investment in non-core assets. Therefore, we are currently drafting principles for regulating and controlling ecosystem risks and will discuss this topic. We will certainly need lawmakers’ support in this regard. Speaking of a digital ruble, this initiative is strategically important for the task I have addressed today: lower costs for households and businesses. Digital currency will make it possible to transfer payments more cheaply and better protect transactions. A digital ruble is a very promising project, but it is only one of the elements of the national financial infrastructure.

Ardian Fullani: A brief look at the Albanian banking system Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the Black Sea Business Day, Yerevan, Armenia, 6 June 2005. *  *  *  Distinguished Ladies and gentlemen, Dear participants, It’s a great pleasure for me having the opportunity to participate in this regional meeting of Black Sea countries. I have always appreciated this initiative as a special opportunity for all the countries being involved in. In my long career, I have realized that the success of this business consists generally in the ability it has to gain public confidence. Nevertheless, the overall economic, political and social environment of the country is playing also an important role. During my career, I have been witness of many events which directly or indirectly have damaged the banking system. The monetary collapse of the banking system at the end of the communist era, the flourishing and degenerating of the fraudulent investment schemes, as well as many other social, political and economic problems that have associated the Albanian transition, made the banking system “suffer” for a long time. However the reputation of the Albanian Banking system is in place recently. It’s enough if I just refer to the latest problematic episode occurred in Albania, in early spring of 2002, when due to the lack of public information and to political speculation with the introduction of the deposit guarantee scheme, the confidence of households was traumatized, leading to a considerable deposit run from the banking system.
Part of the initiative must begin at home, since without effective domestic management international initiatives will lack a sound foundation. The Asian crisis has demonstrated that the approach towards capital account liberalization in some Asian economies was clearly inappropriate, given the weaknesses in domestic financial sectors. Poor supervision, lax accounting standards, close relationships between lenders and borrowers, and inadequate prudential safeguards all conspired with “hot” capital inflows to fuel the crisis. Again, it is worth pointing out that this is not purely an Asian problem, as the LTCM episode revealed. Prudential regulation begins at home, but it must also be extended into a global prudential and regulatory framework, which would be an aid, not a hindrance, in the general trend towards a more liberal financial environment. A third part of the reform must address cross-border manipulative practices in financial markets. Rules exist against the cornering of domestic financial markets. The blatant collusion and coordination in the various recent attacks on Hong Kong’s markets, and the phenomenal financial resources the manipulators have been able to muster, underscore the need for domestic anti-trust principles to be applied to cross-border financial speculation. These are matters of some urgency, and there is already a clear international consensus that they are necessary. Measures of the kind that I have just outlined are under active discussion in various international forums, including, at the latest count, the IMF, BIS, APEC, EMEAP, G7, G10 and G22 or G26.

Since the Asian crisis erupted in mid-1997 we experienced a number of speculative attacks aimed at toppling the Hong Kong dollar and breaking its fifteen-year-old link to the US dollar. This link is successfully maintained by a strict and automatic currency board system, backed by more than adequate foreign currency reserves. During the attacks speculators took out large short positions against the Hong Kong dollar with the aim of destabilizing the linked exchange rate. On all these occasions the attacks activated the autopilot mechanisms under the currency board and drove up interbank interest rates to such high levels that the speculators (who had to borrow locally to fund their short positions) were forced to unwind their positions and incur heavy losses. The speculators failed, the currency board worked, and the link survived. But the interest rate volatility, and the consequent additional pain imposed on the community, was extreme: during one attack, on 23 October 1997, the overnight interest rate shot up to nearly 300%. In August we faced a much more complicated situation, in which speculators launched coordinated and well planned attacks across our financial markets. Speculators had discovered that by intensively selling Hong Kong dollars over a short period they could temporarily drive up interest rates under the currency board system, which would exert a downward pressure on stock prices. By pressuring the currency and selling stocks short, they could realize a profit on stock index futures contracts, even if they could not break the exchange rate link.
Over time, it should also reduce the risk of local and regional crises and their contagion effect on the rest of the world. There is still a long way to go. As far as Norway is concerned, we must act on the assumption that we will continue to live in an unstable world. The financial crises have shown that a small country is vulnerable to international turbulence. The Norwegian economy is fragile and vulnerable. Stability and buffer against financial shocks Norway has also experienced a banking crisis. If nothing else, we learned from it. Laws, regulations and supervision have been tightened. Financial institutions place greater emphasis on risk management. The debt burden of households is lower than in the 1980s, and for a long period the business sector was also more cautious about incurring new debt. BIS Review 20/1999  4  Losses at Norwegian financial institutions have been low since the banking crisis. There is greater uncertainty now as the economy is approaching a turning point. The sharp growth in fixed income business has led to a substantial increase in corporate debt, which has been reflected in the high level of credit growth in recent years. The rise in interest rates has made it more demanding for households and enterprises to service their debt in the short term, but has had a restraining effect on credit growth.

In the process, the private sector gets to mitigate the climate risks of its own assets while at the same time seeking reasonable returns. By doing well, we also aim to do good. As an international financial centre and a green finance hub, our vision is to play a big role in harnessing the power of finance to support the transition efforts in the region. The vision is underpinned by our strong commitment and concrete actions that help create a conducive ecosystem where climate financing can scale, and bring about desirable opportunities and outcomes for the financial sector. A vibrant and competitive climate finance ecosystem needs to be underpinned by a few other critical elements: standards, data and, above all, talent. The work requires leadership from the public sector and partnership with the private sector. In all these areas, the HKMA is joining hands with Government agencies, fellow regulators as well as stakeholders from the financial sector, academia and business community. Much of our joint effort is coordinated through the Cross-Agency Steering Group on Green and Sustainable Finance co-founded by the HKMA and the SFC. 1/4  BIS - Central bankers' speeches  First, on standards. A common set of green standards, to the extent possible, is important to enhance the transparency, comparability and efficiency of climate finance. Hong Kong is a front runner in setting regulatory requirements for the financial sector.