samchain/econo-pairs-v1 huggingface dataset:
First, I will summarize the recent inflation developments, and then continue with the domestic and foreign demand outlook upon which we based our projections. In the second quarter of 2015, annual consumer inflation declined by about 0.4 points from end-first quarter to 7.20 percent, nearing the forecasts of the April Inflation Report (Charts 12 and 13). This improvement in inflation was mainly attributed to declining food inflation, while core inflation increased mostly due to exchange rate developments. In this period, the contribution of the food category to annual inflation was down to about 2.3 points amid a correction in food prices. Yet, the depreciation of the Turkish lira limited the decline in inflation. The ongoing cautious monetary policy along with prudent fiscal and macroprudential policies are having a favorable impact on inflation, especially inflation excluding energy and food (core inflation indicators). However, the lagged effects of the recent exchange rate developments delay the improvement in the inflation outlook. In fact, compared to the first quarter there was a notable deterioration in the underlying core inflation trend in the second quarter (Chart 14). This outlook was largely due to exchange rate-driven cost pressures that became stronger than that of the previous period. The cautious monetary stance and the moderate course of domestic demand continued to limit the spillover from cost pressures into prices. As we projected in the April Inflation Report, food prices exhibited a remarkable correction amid the climatic conditions that accommodated supply in the second quarter.

José Manuel González-Páramo: Rethinking risk management – from lessons learned to taking action Speech by Mr José Manuel González-Páramo, Member of the Executive Board of the European Central Bank, at the Risk and Return South Africa conference, Cape Town, 4 March 2011. * 1. *  *  Introduction  Good afternoon, I was very pleased to accept the organisers’ kind invitation to participate in this conference and to speak about a topic that at the European Central Bank (ECB) we consider of utmost relevance: How to adjust our financial risk management frameworks in the light of the lessons learned from the crisis. Indeed, the ECB has always placed a great importance on the design, development and implementation of sound risk management practices. The financial and economic crisis that started in 2007 and that continues affecting the global economy has prompted us to rethink and further strengthen the risk management function at the ECB and within the Eurosystem (consisting of the ECB and of the national central banks of the seventeen countries that have adopted the euro). Therefore, it is a pleasure to have the opportunity to share our recent experience with distinguished professionals from the financial industry, such as those present in this room. My intention is to comment upon a number of issues that may have probably been already touched upon in the previous sessions. More specifically, I will first summarise some of the general lessons for risk managers that we have learned from the financial crisis.
Voting power in the IMF is a balance of creditors’ interests, borrowers’ needs and that all members should be able to exercise influence. Membership of the IMF is open for all countries that meet certain criteria. Today, 182 countries are members, which means that very few countries do not take part in the IMF. This broad membership is one of the organisation’s strengths. The IMF’s head office is in Washington DC in the USA. Around 3,000 people work there. The major part are economists specialising in macroeconomics and international finance. The IMF board which decides on the day-to-day policy in the organisation is also located in Washington DC. The board meets at least three times per week. It has 24 seats, where all countries are represented, most of them in geographical groupings. The IMF’s purpose is to work for financial stability. In simple terms, this means ensuring that the various macroeconomic variables in a country – the exchange rate, inflation, the budget deficit, for instance - are dealt with in such a way that the economy can run smoothly and efficiently. A stable economy allows people to think in a long-term way when they invest and consume. Without stability, it is not possible to create sustainable growth. In Sweden, we have recent experiences of the opposite. The financial crisis here at the beginning of the 1990s increased unemployment and reduced production at the same time as government finances were dramatically weakened and Sweden entered the deepest recession since the 1930s.

This means that we, together with the Ministry of Finance in the Government Offices, coordinate and conduct Swedish policy in this forum. This evening, I am intending to talk about globalisation - as an opportunity and a challenge. I am going to discuss what the International Monetary Fund is and the role that it has in an increasingly globalised world. To conclude, I will take up Sweden’s participation in the IMF, and what we can expect from the meetings in Prague next week. Globalisation and its benefits Before commenting on critical remarks often presented on globalisation, let me first begin by noting that prosperity in the world has improved dramatically during the past decades. Never before in history has the situation of so many people improved so much so quickly. Since the beginning of the 1980s, purchasing power per capita in the world has more than doubled. In the poor developing countries, this has meant that purchasing power correlated GDP per capita has increased by almost 350%. In the rich industrialised countries, the corresponding growth was 220%. In certain cases, developments have been particularly spectacular, not least in Asia. In 1975, six out of ten Asians lived in absolute poverty - under a dollar a day. Today, the figure is two out of ten. In China alone, the number of poor has fallen from 60 to just under 30% in less than twenty years. There are many factors that explain this development.
12 See for exampleWilliam C. Dudley, Enhancing Financial Stability by Improving Culture in the Financial Services  Industry, Remarks at the Workshop on Reforming Culture and Behavior in the Financial Services Industry, October 20, 2014. William C. Dudley, op. cit. October 20, 2016. William C. Dudley, Remarks at the Culture Imperative – An Interbank Symposium, January 11, 2017. William C. Dudley, Reforming Culture for the Long Term, Remarks at the Banking Standards Board, March 21, 2017. Michael Held, Reforming Culture and Conduct in the Financial Services Industry: How Can Lawyers Help? March 8, 2017. Kevin J. Stiroh, op cit. December 7, 2017. 13 See Stiroh, op. cit. December 7, 2017 and Chaly et al op. cit. 14 Boston Consulting Group, “Staying the Course in Banking,” March 2, 2017. 15 See e.g., William C. Dudley, op cit. October 20, 2014 and William C. Dudley, op. cit. March 21, 2017. 16 For related discussion, see Mehran and Tracy, Deferred Cash Compensation: Enhancing Stability in the  Financial Services Industry, August 2016, and Mehran and Tracy, Performance Bonds for Bankers: Taking Aim at Misconduct, November 9, 2016. 8/8  BIS central bankers' speeches

The national plan for the reduction of non-performing loans established a regulatory criterion, as an important task for/to the Bank of Albania. Starting from 2018, lending activity should take into account only tax declarations. This is one of the key elements for addressing informality, also for the significant share of the banking activity in the domestic economy. The Bank of Albania has previously dealt with this phenomenon from a regulatory point of view, but only with large 1/2  BIS central bankers' speeches  borrowers. The coordination of efforts with government bodies and appropriate actions taken in this regard have created the necessary space for taking this regulatory measure further to include a broader base of borrowers. The Bank of Albania is confident that this measure will bring long-term benefits for all parties involved in the process. - For the banking industry: crediting based on tax declarations facilitates significantly the lending process by putting banks on a common denominator in reading financial data. This eases the lending activity, providing banks with more clarity in the process of financial analysis and selection of borrowers, as well as exchanging information for common borrowers. - For Albanian enterprises and households: this process promotes transparency, which will be translated into reduction of credit risk and, most importantly, lowering of financing cost. Also, by providing a level playing field, this process fosters competition and efficiency, which, ultimately, contributes to the overall economic development of the country.
Measures will also be taken to increase awareness and educate the public on important information such as comprehensive lists of financial institutions authorised to accept deposits by the public and particulars about those that are being regulated by the Central Bank. Share ownership of banks will be broad-based to promote better corporate governance and to reduce the concentration of ownership and to address conflicts of interest that may arise due to large shareholdings. New policies on share ownership will be issued shortly, where a single entities’ material share ownership would be generally limited to 15 per cent of a bank’s share capital. A revised format for publication of banks’ financial statements in their annual reports will be introduced so as to improve disclosure requirements and provide more information to market participants. The Central Bank will also facilitate the adoption of the internationally accepted accounting and reporting standards such as IAS 32, IAS 39 and IFRS 7 by banks. A continuous dialogue will be maintained with the external auditors and other relevant institutions with respect to the operations of banks, the publication of accounts and adoption of international accounting standards. The Central Bank’s currency management policies are also being formulated to ensure that Sri Lankan Rupee notes and coins are available to the public in required denominations upon demand. In achieving this, the Bank will forecast the currency demand and maintain a buffer stock of currency to meet the seasonal and any contingent demand.

In the recent past the velocity has been declining, while multiplier has hovered between 5.0-5.2. In 2007, this trend is expected to continue. 8  BIS Review 8/2007  Table 1 Quarterly targets for reserve money Rs. billion Dec. 2006  Reserve Money Point to Point Change %  2007 Targets  Target  Actual  Mar  Jun  Sep  Dec  227.6  239.8  254.6  250.4  257.8  267.6  15.0  21.2  17.3  17.9  16.1  11.6  Table 2 Indicative targets for broad money (M2b) Rs. billion Dec. 2006  Broad Money (M2b) Point to Point Change %  2007 Targets  Target  Estimates  Mar  Jun  Sep  Dec  1,175.6  1,221.6  1,274.9  1,291.4  1,315.9  1,383.2  15.0  19.5  19.2  19.0  17.9  13.2  The programme also allows for a Broad money growth of 17.6 per cent from the targeted level of Broad money at end 2006. This will reflect an increase in Net Foreign Assets of the banking system of US dollars 200 million, and increase in private sector credit by Rs 147.3 billion (15.5 per cent) and net credit to Government by Rs 16.7 billion. To maintain the overall increase in net credit to the Government at Rs 16.7 billion, net credit to the Government from commercial banks would need to be maintained at Rs 5.2 billion.
This is, so to speak, one specificity of our approach in this country. We believe in strong and efficient supervision. We don’t think that bigger cushions are a substitute for competent supervisors. We are strong supporters, in our jargon, of the “Pillar 2” approach, whereby the supervisor is in charge, at any single moment, to check the adequacy of capital buffers with the effective level of risk in the system. Needless to say, we also strongly support the development of macro prudential tools allowing authorities to detect and prevent systemic risks. Given that all economic cycles are not simultaneous, to be fully efficient, those tools should be set and implemented at each jurisdiction’s level and not a regional one, in order to take into account national cycles and the level of risks of individual economies. Overall, I can assure you we are very keen to monitor in real time the economic impact of financial regulation. For the first time, economic and systemic assessments have been made of the new projected Basel 3 framework. We will continue to update them permanently. A good example of our constant vigilance relates to projected liquidity ratios, where the systemic impact and implications for monetary policies are being thoroughly reviewed at this time. *** To conclude, let me emphasize that policy makers are fully aware of possible macro consequences of regulatory reforms and will be eager to limit the economic costs.

Indeed, with a strong impulse from the G20 and the French Presidency, we have embarked into an ambitious financial reform agenda whose explicit objective is to prevent any recurrence of such intense episodes of financial turbulence and instability. On the other hand, growth cannot occur without efficient and developed financial systems to allocate savings, redistribute risks, and provide liquidity to the economy. There is ample evidence that financially repressed economies are penalized in terms of investment and economic growth. The challenge, therefore, is to find the right balance, as suggested by the title of our session. Looking at our achievements to date, my sense is that we are definitely moving in the right direction. But, of course, this is still work in progress: regulators and policymakers are constantly looking for additional evidence and insights on how to best reconcile stability and efficiency in the developments of our financial systems. The thrust of our efforts has been to increase the robustness of financial institutions and infrastructures. It is not in our power to eliminate financial shocks and volatility. It is our duty to make sure that they can be absorbed without undue consequences for the institutions themselves and the whole economy. Building up appropriate cushions was therefore a priority and a necessity to protect tax payers from the consequences of future turbulences. First and foremost, a robust system needs strongly capitalized banks. Basel 3 will make essential contributions in this regard, by increasing both the quantity and quality of banks’ capital.
In the face of the global pandemic governments have taken significant fiscal actions to maintain incomes and preserve economic capacity. At the same time, central banks have aggressively eased monetary policy. Because these things have occurred alongside each other some commentators have suggested that central banks are engaged in “monetary finance” of government deficits. However, one of the points I want to make today is that the coincidence in time of easier monetary policy and a higher government deficit doesn’t really tell you anything about this question. That’s because both are naturally cyclical, especially when the central bank is targeting inflation. Economic slowdowns push up the government’s deficit. Because they’d otherwise depress inflation they also tend to result in easier monetary policy. Depending on how persistent the downturn is expected to be – and, because capital markets are global, on how widespread it is – you might even expect to see lower longer-term bond yields as well, even as the government is obliged to sell more debt and even without any extension of QE. There is nothing intrinsic in the nature of these transactions, or in the co-movement of these various economic series, that constitutes “monetary finance”. What really lies behind that term is instead an institutional question: who is doing what and why? Is monetary policy controlled by an independent authority, using its tools solely in pursuit of a fixed nominal objective?

Many consider the lack of cross-border mergers as proof that much remains to be done in terms of market integration and diversification. In any event, scant cross-border consolidation, particularly in a setting of clear overcapacity of the European banking sector, is symptomatic. On this matter, the ECB, in its latest stability report7, published a study on the degree of overcapacity of the sector in Europe and the potential implications for bank business. In keeping with the conclusions of the study, excess capacity may lead to operating below margin in the face of heightened competition. That would preclude making the necessary investments for the future of banks and their adaptation to new technologies and new operators (e.g. in systems), creating “zombie”-like banks that weigh down even further on the sector’s profitability. The study details those banks with a return on equity (RoE) that is lower than the median of 6% over three years, but the most worrying group would be that of banks with an RoE of less than 3%, no less than around 25% of the total. The study concludes with the need to address restructuring and mergers, showing a clear preference for cross-border as opposed to national mergers. On the ever-controversial matter of mergers, I have stated on several occasions that our role as supervisors is not to decide which mergers are desirable and which not.
Risk can be measured. Cases where the course and results of the events neither cannot be measured nor predicted are not referred to as risk but uncertainty. In other words, the intangible aspect of events is defined as uncertainty. Due to the intangible nature of uncertainty, its results and the extent of its effects cannot be predicted. Probability cannot be attributed to uncertainty. Uncertainty is inevitable and its results are unmanageable. There exists no market that can avoid uncertainty. 1  Knight, F.H. (1985), “Risk, Uncertainty and Profit”, Chicago, University of Chicago Press, Chapters 2 and 7. BIS Review 17/2005  1  On the other hand, risk refers to the part of the future effects of events which can be measured. Risk can be calculated; results of risks can be explained by certain probabilities. In this context, risk is predictable and we can manage its results. There exist markets for risk management. In Turkey, high and volatile inflation has been the main source of uncertainty for the last 30 years. Concepts of uncertainty and risk have become indistinguishable. Hence, it has been impossible to implement risk management or to establish risk management agents on this slippery slope. At this point, I would like to emphasize on a technical matter. As it is known, volatility is priced in derivatives markets. When uncertainty is high, volatility increases significantly. This makes pricing difficult and in these circumstances prices reach very high levels. Hence, risk management becomes almost impossible.

At the outset of this process, many people severely objected to the establishment of derivatives markets claiming that they would encourage volatility and increase speculations and manipulations on the markets. This very much reminds me of the “it is not possible in Turkey” or “it is not the right time,” comments I hear whenever we try to implement something new. The Nobel prize winning economist Milton Friedman’s speech at the opening of the foreign exchange options market at the Chicago Mercantile Exchange in Autumn 1971 contains some very important information for us2. As Friedman pointed out, financial instruments relating to foreign trade are all complementary and the British case shows that financial services may well become a very profitable export item. Within this framework, he argued that the development of a derivatives market, which is normally expected to exist in the natural evolution of markets, not in another country but in the USA is important not because it increases trade and investment here but it enables export of these services as well. Thus, he claimed that the development of derivatives markets would support the development  2  Friedman, M. (1971), “The Need for Futures Markets in Currencies”, in The Futures Market in Foreign Currencies, Prepared for the International Monetary Market of the Chicago Mercantile Exchange, Inc. pp. 6-12. BIS Review 17/2005  3  of other financial activities in the country, would bring additional income through exports in services sector and enhance the effectiveness of monetary policy.
More recently, the current issue of speculation surrounding the renminbi - and one which is far more grounded in reality - is the question of whether its exchange rate will be given greater flexibility in the near future. This revives the old question of how far the Hong Kong dollar will be affected by movements in the renminbi, which has some connection with China’s prospective WTO accession, and it is therefore worth examining the rationale behind it, and the implications. First, however, since there is some confusion on this point, it is helpful to clarify the difference between flexibility and convertibility. Convertibility means the ability of a currency to be freely exchanged into foreign currencies, either for trade (current account convertibility) or for investment (capital account convertibility). The renminbi enjoys current account convertibility but is not freely convertible for capital account transactions. Flexibility means the degree to which the exchange rate is allowed to fluctuate before there is intervention by the central bank. At present, there is flexibility in the exchange rate of the renminbi, in that the exchange rate is determined by “market” supply and demand, although the central bank remains the ultimate banker in the market. The renminbi has indeed been trading within a very narrow band in the past few years. The narrowness I think reflects China having acted responsibly, against the background of financial turmoil in Asia, in not allowing greater flexibility in the renminbi exchange rate to add destabilising volatility to Asian currencies.

Philipp Hildebrand: The Swiss National Bank’s monetary policy strategy in the financial crisis Summary of a speech by Mr Philipp Hildebrand, Chairman of the Governing Board of the Swiss National Bank, at the University of St. Gallen, St. Gallen, 23 March 2010. The complete text in German can be found on the Swiss National Bank’s website (www.snb.ch). *  *  *  To contain the financial crisis, central banks all over the world have chosen to take advantage of the room for manoeuvre afforded by their monetary policy strategy. The major central banks were only able to act in a flexible way – at least in part – due to their high degree of credibility with regard to their goal of pursuing price stability. The monetary policy strategy of the Swiss National Bank (SNB), too, has made it possible for the Governing Board to take conventional and unconventional measures to counter the crisis. The SNB’s approach has proven viable in the crisis. But this does not mean that we can sit back now. We must first find ways to withdraw smoothly from the measures taken to contain the crisis. In addition, we need to be sure that the Swiss economy is back on a sustainable growth path. After all, the crisis has shown that imbalances in the global financial system can occur even in an environment of price stability and macroeconomic stability. The main way to counter imbalances in the financial system is through better regulation.