samchain/econo-pairs-v1 huggingface dataset:
Large current account imbalances, in particular deficits, pose significant risks for external debt sustainability and raise the possibility of sudden stops.6 Gross positions are now 3 to 4 times larger than their 1995 level, ranging from 150–300% of GDP (150% in the case of the US and 300% in the case of France, for example). Net positions are considerably smaller [Slide 8, table on right-hand side], but have widened by a factor of 5 to 10 with respect to their level in 1995. The counterpart of persistently large current account imbalances is large net external asset positions [as already shown in Slide 3], but also continued accumulation of external assets and liabilities. In this respect, the composition of the financial account (FDI, equity and debt portfolio flows as well as the other investment category, which largely comprises banking flows) matters. Examining the different financial instruments, one notices that the volatility in overall flows is largely driven by banking flows [Slide 9]. Given the large pre-crisis expansion in cross-border banking flows, especially within the euro area, the “low” level observed in recent years could 2/5  BIS central bankers' speeches  simply be interpreted as a return to normal. Indeed, in the aftermath of the Great Financial Crisis, banking flows retrenched the most, followed by debt portfolio flows.7 Portfolio equity flows have been much more resilient than debt flows, which have halved between the pre- and the postcrisis periods.

Second, the timing of this sequence will depend on the inflation outlook and its progress towards our target of close to but below 2%. We will accordingly monitor the impact of the exchange rate evolution – which is a source of uncertainty –, and be ready to reassess if necessary. Fiscal devaluations have also been considered by countries aiming at boosting competitiveness through changes in their tax system, typically by cutting labour and/or capital taxes, while rising consumption taxes.9 This shift in the tax system increases the competitiveness of domestic firms with respect to foreign ones, both in domestic and export markets. In practice, however, 3/5  BIS central bankers' speeches  there are empirical limits to this strategy. A race to the bottom on corporate tax rates also raises increasing challenges about the social fairness of globalisation – and hence its sustainability – as President Macron stressed in Davos… and as is even pointed out sometimes in debates about Ireland. Recent research has put emphasis on the noticeable influence that fiscal policy can have on variations in imbalances, including in the US and Germany. In this respect, the recent US tax reform adopted by Congress is expected to significantly boost the US economy, which is already at full employment, leading in turn to increasing imports and a widening external deficit. So, it clearly risks increasing global imbalances.10 Symmetrically, within the euro area, some countries with large positive current accounts recently experienced budget surpluses (e.g.
19 Singapore already offers an excellent ecosystem of financial institutions, professional services like legal and accounting, credit rating agencies, and market infrastructure for Asian companies to issue, market, list and trade their bonds. To make it more attractive for Asian issuers to raise international capital in Singapore and benefit from the ecosystem here, we will introduce an Asian Bond Grant scheme next year. The scheme aims to broaden the base of issuers in our bond market, which will add to the breadth and diversity of debt instruments for the 4/7  BIS central bankers' speeches  investing community. Qualifying Asian issuances will be able to offset up to 50% of one-time issuance costs such as international legal fees, arranger fees and credit rating fees. We have consulted with local market participants on various aspects of the scheme to ensure a smooth implementation. I am glad to say that the industry has been supportive of this initiative, and together we are confident that this will enhance Singapore’s value proposition. Encouraging rated issuances 20 Even as we draw Asian issuers to Singapore, we want to encourage these issuers to be rated. Credit ratings improve general market transparency by providing independent and comparable assessments of the credit worthiness of issuers. Together with business and financial information provided in the offering documents or company announcements, credit ratings can assist investors to better understand the issuer’s business and financial health.

A well-functioning bond market serving a broad spectrum of international issuers and investors needs to be supported by a deep foreign exchange market, and Singapore is the largest foreign exchange market in Asia and the third largest globally. Based on the triennial survey by the Bank for International Settlements, average daily turnover reached USD 517 billion in April 2016, a 35% increase from three years ago. Our share of global market has increased from 6% to 8%. Singapore exchanges offer a suite of 21 Asian FX currency futures and option contracts. The Singapore Exchange’s Indian Rupee and Renminbi futures contracts are amongst the most liquid globally. The next decade 13 As we chart our next lap in developing Asia’s capital markets, we need to take into account trends and driving forces that will shape capital markets in the years ahead. Let me highlight three of them: 14  First, technology is transforming capital markets in significant ways. a. This is most obvious in foreign exchange, which is the most advanced in contract standardisation and market practices. New electronic trading platforms are blooming alongside mature systems, and are beginning to enter emerging markets. Technology is also enabling OTC platforms to clear on exchanges, and for exchange3/7  BIS central bankers' speeches  traded futures to be distributed on OTC platforms. b. Even in bond markets, technology is being used to improve premarket price transparency by pulling price feeds from traders directly.
A surplus of more than 3 % of GDP, for an economic area which still has a negative output gap of more than 2%, is clearly suboptimal. In sum, all these figures point to a significant cost of non-coordination, of at least 2% of the EA GDP at present. C.  To take the debate forward, three principled choices have to be made. These principled choices are needed: (i) to resolve the debate between coordination and reforms; (ii) to simplify rules and embrace institution-based policymaking; in order (iii) to achieve full coordination. First, we do not have to choose between coordinating economic policies and domestic reforms. This is the cornerstone of any French-German agreement: breaking the political gridlock on coordination versus reforms, and making parallel progress on both domestic reforms and European coordination. This requires overcoming distrust and putting both aspects under the same umbrella, namely a common institution. Second, institutions with a mandate are superior to rules without institutions. To bolster policy consistency and coordination, we admittedly need simpler rules. For instance, the complexity of the reforms of the Stability and Growth Pact (SGP) and the so-called “Fiscal Compact” is such that Finance ministers privately admit they do not know whether their country is completely abiding by the rules. But we learnt in real life that we cannot rely simply on rules. They should be supported by strong institutions with discretionary powers.

François Villeroy de Galhau: Europe at a crossroads – how to achieve efficient economic governance in the euro area? Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, recorded for the event at Bruegel, Brussels, 22 March 2016. *  *  *  Summary There is a growing perception of the need to rethink the economic governance of the euro area. Compelling ideas have been put forward to that effect; yet their implementation is tricky, especially in the present climate of Euroscepticism. Shifting from ideas to action has become urgent if monetary policy is not to remain the only game in town. Clearly, the single monetary policy cannot be a substitute for the coordination of national economic policies or the lack of reforms. To be sure, the debate over EMU reform is politically loaded; but for euro area citizens the poor coordination of national policies involves a high cost in terms of growth, of several points of GDP. The economic case therefore needs to be made: this discussion is not about “more Brussels”, it is about more growth and jobs in Europe. In addition, it is not a choice between domestic reforms or European coordination; we need both. Between complete integration – of the monetary-policy type – and monitored national policies, as currently conducted, the missing link is “full coordination” of fiscal and structural policies. This is clearly shown in a matrix crossing these three degrees of integration and the four policy dimensions (monetary, financial, fiscal and structural).
Low interest rates affect the cost for debt-service, thus being conducive for additional leverage in certain segments of the global economy. On the global map, sovereign debt levels remained elevated in some countries, euro area inclusive. As for the private sector debt, data do reveal that in some countries which were more resilient at the beginning, and entered the crisis with lower debt levels, vulnerabilities started to accumulate afterwards. This holds for the household debt, in particular, that proceeded to grow in some countries, raising concerns on the possible financial stability risks (Sweden, Norway, and Switzerland). Hence, it seems that in the global context, leverage issues seems to be on board, exposing some of the countries to risks in case of sudden tightening of financial conditions. In this case, debt level matters, as high levels can exacerbate the impact on growth and stability. How do countries from the CESEE region fit in the image? To answer the question we will dissect the debt data by providing perspective on both sovereign and private sector. In the matter of the sovereign debt, few years ago, it was diagnosed as one of the most vulnerable segments in the economies of the region. In most of the countries, the fiscal response to the crisis was countercyclical, asking for additional borrowing of the government and leading to sharp rise in the government debt level. The cumulative increase in the debt level since the beginning of the global crisis in 2007 until 2015 was close to 25 p.p. of GDP.

We have tried to transpose these challenges to the countries in the region, as in some of them economic boundaries for the monetary policy are lesser compared to the ECB, given positive policy rates. Our simple analysis shows that financial vulnerabilities, observed through the leverage of the public and private sector, seem to be contained, despite the loose financial conditions. Sovereign  17  debt has decreased in the last couple of years, indicating that countries use the benign financial conditions for creating more fiscal space. Private leverage is well below some of the accepted benchmarks. Yet in many of the countries, given the low interest rate environment, household credits are on a rising path, and potential risks are addressed through macro-prudential measures. Hence, some vigilance is needed, with respect to build-up of financial vulnerabilities, though they seem to be much lesser in the region compared to the more advanced economies. Inflation dynamics and its drivers seem to resemble those in the euro area, asking for more profound scrutiny of prices, before proceeding with monetary loosening. At the current juncture, it seems that despite the monetary policy space which exists in part of the region, further policy cuts should be carefully calibrated and considered in the context of country specific assessment of future financial and inflation risks. References: 1. Aleksandra Riedi “Household debt in CESEE economies: a joint look at macro- and micro-level data”, Focus on European Economic Integration, 2019, issue Q1/19. 2. Bank of Spain. 2019.
The success of this strategy has positioned TeamBank as the country’s third largest consumer finance provider. Equally commendable is Westpac Banking Corporation, the first Australian bank that has incorporated environmental filters in its day-to-day business decisions. In Malaysia, I believe Islamic financial institutions are now at the right stage of development to drive this important change. It is expected that Islamic banks would take the lead in the VBI initiative and to embrace the new principles in their business strategies and operations. Given the universal nature of VBI, the application and adoption of similar strategies by financial groups which comprise conventional financial institutions would be the next phase of this evolution as we move forward. In time, I believe that the underpinning thrusts of VBI will also be expanded to enhance its relevance to the takaful industry. 2/4  BIS central bankers' speeches  Realising the tangible impact of VBI is more of a journey than a fixed destination. However, it is encouraging to note that a number of our Islamic banks have already started applying principles of VBI in one way or another. What is needed now are strategies to realise the full potential and amplify the impact of VBI in creating positive outcomes for shareholders as well as broader stakeholders in Islamic finance. I would like to suggest three critical areas that require immediate attention, for this momentum of change to be sustained. First, VBI calls for a “transformation of the mind”, a change in how we think and how we act.

The more sustainable banking practices that would be developed based on VBI concepts encourage the creation of new business opportunities and provide the foundation for more sustainable returns for Islamic banks over the long term. Customers, particularly businesses and entrepreneurs would benefit from the opportunity to be more involved, in the design of more innovative products and services, that are best tailored to meet their needs and circumstances. Business propositions from new sectors such as the SMEs, would also benefit from VBI-based practices where financing applications would be assessed by Islamic banks based on their potential value creation, not just their credit scores. Society at large also stands to gain from reduced negative externalities as any activities that damage the community and environment would be reduced overtime. The practice of Islamic banks in giving back to society, such as by integrating waqf and sadaqah within Islamic financial transactions, can also create positive socioeconomic impact in communities. VBI should not be mistaken for corporate social responsibility (CSR). In fact, VBI goes beyond the concept of CSR with a pervasive approach to reconfiguring the way Islamic banking works. Globally, we can also see value-based concepts being demonstrated in the banking sector, where value-based practices have emerged to restore the role of finance in acting for the greater good. TeamBank in Germany for instance, capitalises on the concept of fairness in its dealings with customers to market its EasyCredit as its primary product proposition.
Since then, we have motored ahead and put in place that new regime for credit unions. But we have not forgotten about banks. In fact, despite the huge pressures of the Covid crisis we have taken care to preserve one vital part of our work programme: our plans to bring in a simpler prudential regime for small banks and building societies. A new style of regulation  The reason we have kept up work on this topic is that our exit from the EU provides us with the first opportunity we have had in a long time to make real progress on it. 1  But before coming to that, let me make a few brief points about the broader regulatory scene as we exit the EU. I should say first that, despite the fears sometimes articulated by politicians in the EU, we have absolutely no intention of weakening prudential regulation in the UK. It would be mad for us to do any such thing only a decade or so on from a crisis in which the British taxpayer footed the bill for one of the biggest banking disasters in history, with a financial sector around ten times the size of our economy, and with clear evidence in front of us that the post-2008 reforms have allowed the banking system to support the economy through the Covid crisis so far. You only have to ask yourself the question “How would the financial system have fared if Covid had hit in 2007?” to appreciate this point.

First, Regtech benefits banks: In today’s sessions, banking leaders have told us how Regtech is important to their institutions. It enables banks to achieve higher quality risk management and compliance outcomes. It reduces costs. It frees up staff from repetitive manual tasks for more value-adding work. The use of Cloud-based Regtech technology, for example, gives banks the flexibility to adapt to changes in regulation and risk management, while maintaining superb quality in risk management and compliance activities. 6. Secondly, Regtech benefits customers: In our “Path Forward” panel, Mr Deniz Güven from Mox Bank spoke of how Regtech had significantly speeded up the bank’s end-to-end account opening process. Mr Victor Lam also cited how iAM Smart, a personalised digital services platform in Hong Kong, can support Regtech use cases such as remote onboarding. That was echoed by Mr Tat Lee of WeLab Bank and Mr Werner Schlossmacher of Credit Suisse in the “Pulse of Regtech” session. They talked about how banks can leverage alternative datasets to improve the loan application process and enhance the evaluation of product suitability. We also heard how they have designed solutions that put customer experience at the centre – by respecting customer needs, eliminating duplication, offering the most suitable products and, most importantly, keeping customers protected. The use cases discussed in those sessions showed that Regtech offers exciting opportunities that go beyond a compliance tick-box exercise and greatly improve customer experience and satisfaction. 7.
And, the central idea came with a coalescing around a view on the institutional  BIS central bankers’ speeches  1  structure of monetary policy, that an independent central bank, with a clear objective and target emanating from the public via Parliament was the best way to achieve and sustain the public good. I have absolutely no doubt that in the UK this change has been an outstanding success. Moreover, the benefits of the public good are not challenged – there is a difference between a healthy debate on what the setting of policy should be at any point in time and an unhealthy undermining of the fundamental public good. We have seen the former, and the record of the last nearly twenty years shows that this important distinction has been robustly maintained, all for the good. It is therefore easy to conclude that another crisis, the financial crisis, has made the same mark. Likewise, it is easy to conclude that a stable financial system is a necessary condition of stable economic growth. So far, so good. But it has been less easy to describe simply what constitutes financial stability. It doesn’t reduce to a single measure, like the rate of inflation. It has many heads. There is nothing wrong with this per se, but it may help to explain why it has taken longer to arrive at a stable institutional structure for achieving it.

It is also the case, I think, that the success of the innovation in monetary policy obscured the need to develop complementary tools to achieve macro-economic objectives in financial stability, what is today known as macro-prudential policy. That meant too much dependence was placed on monetary policy and too little was done to develop macro-prudential policy. I say this because you should interpret the changes to the Bank’s strategy and structure as very intentionally pushing the other way, to ensure that we are One Bank integrating our public policy objectives for one Public Good. I want to spend a bit more time on this whole issue, and in doing so reflect on the first year of the PRA, and then what lies ahead. My experience tells me that we have had to work harder, and still have to do so, to embed the idea that a stable financial system is a necessary condition for economic growth and other economic welfare benefits. Let me give some examples. The most obvious one is that if we want a stronger recovery of bank lending, then we need a well capitalised banking system. If we want the banking system to be able to fund that lending, it needs to be well capitalised. I believe that the last year has seen good news on this front for the UK banking system.
What Do We Do to Get to a “Good” Culture? 1/3  BIS central bankers' speeches  The second thing is we need to understand what contributes to a good culture, and what allows a bad one to flourish. What fosters an organizational culture where people feel empowered to speak up? And what leads to a work environment where employees feel emboldened to commit fraud? That’s one of the things I’m most looking forward to in today’s conference. I can’t wait to hear the insights from such a variety of voices. Looking beyond our own narrow frame of reference to other fields of study, like organizational psychology, will help us understand how to achieve the progress that’s so desperately needed. Behavioral science really gets to the root of how human nature interacts with an organization’s processes. Everything from how we set goals to how we motivate our staff to achieve those goals has an effect on culture, for better or for worse. This is where the rubber hits the road for most organizations, in the financial services industry, and beyond. We’re also going to hear from experts on the role technology plays, including the ethics of data handling, and what artificial intelligence means for relationships with customers. And I’m particularly looking forward to hearing about how diversity, something that’s a strategic priority for me and this Bank, affects cultural norms. This includes diversity not only in terms of race and gender, but diversity of thought and experience, which also affects an organization’s culture and decision-making.

As an academic at heart, I have a self-confessed bias toward research. But in this case, there’s real value in understanding the full breadth and depth of these issues. One of the most important reasons is that we can debunk some of the myths that have acted as a security blanket to the industry. Too often, when things go wrong, business leaders blame a single “bad apple” as the cause of the problem. But focusing on an individual bad actor can obscure a culture in which people feel that misconduct in the pursuit of profit is tolerated, or even condoned. The “bad apple” theory acts as an excuse for not doing the hard work of cultural reform. In this process of blaming bad apples, leaders fail to look at what’s happening to the rest of the barrel. What kind of environment has let the rot set in? Understanding the full complexity of what forms a culture is important, but our unique position within the financial system means the Federal Reserve Bank of New York must do more. Our Role in Achieving Progress Three principles—“connect,” “convene,” and “catalyze”—guide my thinking in this area. Connecting people with the latest data and research—and sharing experiences—gives them the insights and tools they need to make change. Conferences like this one are critical—as is our online research hub, which acts as a clearing house for the latest information and initiatives from a wide range of organizations. But, that’s not enough.