samchain/econo-pairs-v1 huggingface dataset:
Yet that should not mask the fact that belonging to a monetary union entails a series of constraints or commitments which, among other things, involve the necessary adaptation of economic agents’ behaviour and of the means of pursuing economic policy. In a monetary union, the control of two essential instruments usually at hand to combat crises passes to a supranational level and, therefore, they cease to be available to meet the specific needs of the member countries: both very short-term interest rates – the key tool used by a central bank when setting its monetary policy – and the exchange rate have been set in the European Monetary Union, since 1 January 1999, on the basis of the aggregate  BIS central bankers’ speeches  1  situation of the area as a whole. They cannot be managed to serve the specific needs of any national economy. It is the national economies that have to be in a position to live with the standards set for the whole. National authorities retain control of the other economic policies, which remain under their responsibility; however, the proper functioning of the area evidently requires that their handling should observe specific common principles, preventing misalignments in one country from prompting imbalances in the rest, or from destabilising the monetary union as a whole. The way in which these common principles have been implemented has differed depending on the specific economic policy tool in question.

Anita Angelovska-Bezoska: Macedonia’s current macroeconomic landscape and main challenges ahead Speech by Ms Anita Angelovska-Bezoska, Vice-Governor of the National Bank of the Republic of Macedonia, at the economic and financial dialogue on the Economic Reforms Programs on Western Balkan and Turkey, Brussels, 12 May 2015. *  *  *  Dear Ministers, Dear representatives of the European Commission, European Central Bank and Eurostat, At the beginning, let me express our gratitude to the European Central Bank, European Commission and Eurostat for their assessment of our Economic Reforms Program for the period 2015–2017. Let me mention that we appreciate very much this dialogue with the EU institutions and the overall feedback on our policies that we have received during the process and we believe that it is highly beneficial regarding our preparedness for joining the EU. At this point, I would like to address several important issues related to the current macroeconomic landscape of the Macedonian economy, as well as the main challenges ahead. The growth momentum was kept in 2014, with the real GDP growth accelerating to 3.8% p.a. As the external environment is not sufficiently “growth-conducive”, the strong performance of the domestic economy is explained by country-specific factors. Firstly, it is a reflection of the positive fundamental shifts, with growing foreign investments, mainly in the tradable sector.
This is because, after ten years of rapid expansion at a rate that has recently exceeded potential growth, the actual buoyancy of tax revenue has naturally been associated with the buoyancy of domestic demand and, in particular, with the vigour of the real estate sector, and therefore has a temporary component that would tend to disappear in an economic slowdown. It is therefore imperative to preserve the stabilising potential provided by the current state of public finances so that phases of less dynamic private spending can be faced with strength and the ability to react and, above all, so as to be prepared for unexpected contractionary shocks. This approach is especially valid in the current climate of uncertainty, in which a continued economic policy of rigour and budgetary stability is one of the most valuable resources when it comes to preserving internal and external confidence in our economy. Perseverance in the strategy of budgetary consolidation is also necessary from a mediumterm perspective so as to be in the best possible position to address the foreseeable impact of population ageing, aside from the required further progress in reform of the pension system. Regarding the co-ordination of this strategy, I would like to add two more comments. First, it is very important that all tiers of government contribute effectively, particularly the regional governments, whose weight in public spending policies has become most substantial.

As monetary easing in the euro area is likely to stay for quite some time, policymaking in the noneuro area countries affected by the ECB’s monetary policy needs to remain attentive. From a regulatory and a supervisory perspective, both positive and negative externalities from the euro area to our economies will need to be properly managed. The original text is published in English and can be read here . 1/1  BIS central bankers' speeches
In particular, market participants appear to be increasingly optimistic about the prospects for economic activity in the euro area. At the same time, expectations for inflation, as reflected by, inter alia, the signs emanating from index-linked bonds issued in the euro area, tend to indicate that markets still expect an evolution of consumer prices, which will remain compatible with price stability. Developments in the world economy continue to show signs of improvement. Growth in the US economy continues and some positive economic signals have been recorded for Japan. While the outlook for stronger growth in the global economy is also supported by recent developments in other regions, notably South-East Asia, some risks remain, primarily in relation to the strength of the recovery in Latin America. As regards economic activity in the euro area, industrial production data up to June point to a further improvement in output growth in the second quarter of this year, as has already been indicated by 1  BIS Review 96/1999  various survey data. Moreover, available evidence in terms of retail sales data and consumer confidence, while somewhat more mixed, suggests broadly sustained consumption growth. These developments are consistent with recently published forecasts which foresee an upturn in economic growth in the course of this year. The downside risks pertaining to these projections have tended to recede and real GDP growth might eventually turn out to be somewhat higher than currently forecast.

The experiences from the beginning of the 1970s and 20 years thereafter indicate that high inflation, devaluations that fuelled economic growth followed by austerity measures to prevent overheating, entailed weak productivity growth and a drop in the standard of living compared with other industrialised nations. The Riksbank can help to create a favourable environment for rapid economic growth but the growth itself must come from other sources than monetary policy. Nevertheless, the Riksbank has every reason to take an interest in these sources of economic growth since fast growth facilitates the Riksbank’s task. This task involves tightening or easing monetary policy to regulate demand, so that it keeps even pace with our country’s growth capacity. In that way inflation is stabilised. A higher potential rate of growth allows scope for higher aggregate demand without giving rise to inflationary pressures. Long-term growth and demand The Riksbank distinguishes between two concepts of growth: potential growth and demand-driven growth. Potential growth is the rate of growth that is sustainable in the long term, taking account of resource growth in the economy and how effectively these resources are employed. Thus, you could say that potential growth is determined by a combination of labour force growth, investment activity and scientific and technological progress. The latter determines how efficiently the labour force and capital can be utilised. None of these fundamental factors can be influenced by the Riksbank other than temporarily. The Riksbank’s work is, however, affected by potential growth.
Concerning contagion, it is clear that both contagion across sovereign bond markets and contagion between sovereigns bonds and banks distort the working of all three channels on top of any idiosyncratic market malfunctioning. Faced with the risk of profound impairments of the transmission mechanism of monetary policy, the ECB has adopted several non-standard measures in order to maintain a stable relationship between its monetary policy stance and the conditions actually faced by households and firms. I will focus here on the Securities Markets Programme (SMP) adopted by the ECB in May 2010, given its direct relevance for addressing the malfunctioning of security markets. The programme was designed in the form of interventions in the euro area’s securities markets. The liquidity provided by the central bank via SMP interventions is fully re-absorbed by other liquidity operations. The liquidity neutrality of the SMP interventions is one feature making them distinct from “quantitative easing”, which has the very purpose of increasing the liquidity provided by the central bank.9 In addition, quantitative easing programmes have a numerical target for the amount to be purchased. This is not the case for the SMP. Finally, quantitative easing programmes have a much larger size, given their intended aim of “flooding” the market with liquidity. A better-fitting analogy may therefore be drawn between the SMP and sterilised exchange-rate interventions, which likewise do not necessarily have an announced target and aim to correct a misaligned asset price.

A first characteristic of contagion is that the spread of instability would usually not happen without an initial trigger event – which often appears to be a relatively contained event. A second characteristic is that the transmission of instability is in some way abnormal, for example, in terms of its speed, strength or scope. Though spillovers are to be expected in an interconnected financial system, contagion is distinct in that it often reflects a market failure and a dangerously amplified transmission of instability. The underlying market failure consists of the fact that contagion often involves externalities.3 As a result, the private costs of the initial financial market failure, that is the costs to the actor triggering contagion, are lower than the social costs. In the specific case of the sovereign debt crisis in Europe, the trigger could, for example, be that a country in a precarious fiscal situation does not seriously implement the necessary fiscal consolidation measures. This could lead interest rates on this particular country’s government debt to rise and could in turn also constrain economic growth in that country. This is what I call the “private costs” of such behaviour. Although in this case the lack of fiscal discipline is something which is strictly related to one country, this circumstance may still lead volatile financial markets to also lower their expectations about fiscal consolidation efforts in other countries. As a result, those other countries also begin to face costs in terms of significantly increased interest rates on their government debt.
This will reduce transaction costs and mitigate exchange rate risks under today’s volatile financial market conditions. In addition, direct exchange rate quotations for currency pairs involving the Thai baht are now available including the Chinese Yuan, the Malaysian Ringgit, the Indonesian Rupiah, and, most recently, the Japanese Yen. On top of promoting local currency usage, the Foreign Exchange Regulation Reform implemented last year would further complement regional financial connectivity by making foreign exchange-related transactions more flexible and accessible. To give a few examples, foreign exchange transaction form was completely abolished; qualified companies are now allowed to conduct foreign exchange transactions and hedging based on their own risk management practices without having to request for approval on a transactional basis; commercial banks are also allowed to provide loans in Thai baht to non-residents investing in the region; and the coverage of qualified investors allowed to directly invest abroad has been expanded to include retail investors within a wider range of wealth. All in all, the outlook and prospect of digitalization and regional financial integration look very promising and the Bank of Thailand will continue to facilitate timely development of new financial innovations while also safeguarding financial stability in an efficient and business-friendly manner to ensure a smooth and successful transition of the Thai economy. 9/10  Ladies and gentleman, I have now come to the end of my talk and let me give you a brief summary of what I have said today.

These efforts should pave way for faster and cheaper transaction and validation due to less intermediation process needed compared to the current systems. So far, I have discussed the Bank of Thailand’s role as a catalyst for digital infrastructure development and as a facilitator of innovation. One should not forget that our core mandate is being a regulator to safeguard financial stability. To this end, we proposed the new Payment Systems Act which became effective earlier this April. The Act unifies previously fragmented payment laws and regulations under a single Act, and empowers the Bank of Thailand with the authority to both regulate and oversee development of Thai payment systems in a manner conducive to new 8/10  payment innovations. Beside the Payment Systems Act, supervisory practices are also being updated to improve and safeguard cyber security risks. The updated guidelines on management of information technology risks of financial institutions were released in December last year to ensure that banks have appropriate governance structure in place and can swiftly respond in the event of cyberattacks. Our efforts also extend to ensuring safety of the payment system, and awareness among both financial service providers and consumers. Let me now turn to another area that is important for our region, which is the promotion of regional financial connectivity. Over the years, the Bank of Thailand has made multiple arrangements with regional central banks to support the use of local and regional currencies in trade and investment.
The nature and quality of the financial services and the nature of the participation in the financial system is equally important. The poor are confronted with challenging circumstances, such as low and irregular income that makes monthly debtservicing difficult, or living in remote rural areas which have no financial services access points, or long working hours that prevent visiting bank branches within the conventional operational hours. As a result, many of the marginalised may have financial services made available to them, but it may not be at the needed conditions or quality that can provide the real promise of upward economic mobility. Access, therefore needs to be complemented by the quality of the financial services. Of importance is the innovation and design of consumer products which have characteristics  BIS central bankers’ speeches  1  that are linked to the goal of welfare improvements for the underserved. There is a greater need for features that are responsive to the constraints faced by those that have been marginalised. Flexible microfinance for the agricultural sector for example, addresses the cash flow mismatches between fixed repayments to banks and the irregular income flow of the farmers due to the seasonality of crops. A further innovation has also involved the creation of platforms for matching savers with those that need financing.

Zeti Akhtar Aziz: Advancing financial inclusion to its next level Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Alliance for Financial Inclusion (AFI) 2014 Global Policy Forum – “Advancing financial inclusion to its next level”, Port of Spain, Trinidad and Tobago, 10 September 2014. *  *  *  It is my very great honour to be invited to speak at this year’s AFI Global Policy Forum in beautiful Trinidad and Tobago. First of all, on behalf of Malaysia, let me express how greatly honoured we are to be given this opportunity to host the headquarters of AFI. Malaysia is strongly committed to the financial inclusion cause and will strive to the fullest and best of our ability to provide the necessary support to AFI towards achieving its objectives. This is an exciting time for advancing the global financial inclusion agenda, as the world economic recovery gains further progress and as there is increasing world attention and priority being accorded to achieving financial inclusion and to an economic progress that is more inclusive. While stability and growth has been restored in many parts of the world, all of us recognise that economic growth, no matter how stellar, will begin to fade when inequality sets in, and as income disparities widen. Additionally, experience has shown that financial crisis and economic recession entrenches the cycle of poverty.
These must be judged – and reformed or  BIS Review 126/2006  1  discarded – on their merits”. My argument is simple. Existing institutions were designed for a world radically different from that of today. The cost of closing them down and building new institutions is high. So we must work with our existing institutions and make them more relevant to today’s problems. Unless we do so it will be harder to defend an open and liberal international economic order which has brought benefits to hundreds of millions of people around the globe. The generic challenge facing all the post-war institutions is to find a role relevant to present circumstances, and to decide on the operational capabilities and instruments which that role requires. Holding meetings and issuing communiqués is not enough. As a central banker, I naturally focus more on the IMF, and I shall do that today. But the lessons are general. It is worth noting the scale of the challenge. The specific commitments made at the end of the Second World War are no longer relevant. The shared experience of the Great Depression, protectionism and two World Wars has faded. And the majority of current nation states were not “present at the creation”. The world has certainly changed since 1945, and it is the nature of those changes which underpins the case for reform. The world today is different from that at the creation of the post-war settlement in two important respects.

In the process of finalisation of Basel III, the Committee has also stated its intention to improve the standardised approaches for credit and operational risk. Broadly speaking, the aim is also to make them more risk-sensitive. The standardised approaches are important per se, since they are used by a great number of banks worldwide; but as restrictions on the use of internal models are introduced they will become even more important. Thus, discontinuing the use of internal models to measure operational risk would mean that all institutions, irrespective of size, business model or type of business, would have to use the same standardised approach to measure operational risk. Measuring such a heterogeneous risk using a standardised approach clearly presents considerable difficulties. 6/7  The proposal published for public consultation by the Basel Committee has a series of limitations that must be remedied before it is approved. Regarding the use of the standardised approach to measure credit risk, the Committee is striving to make it more risk-sensitive and, at the same time, to reduce its excessively automatic reliance on external credit ratings. This is no easy task either, and the final outcome may possibly be less ambitious than was initially intended. It is important, however, that the approach be robust and correctly calibrated. The impact assessments being performed by the Basel Committee will provide more information in this respect. In accordance with the guidelines we all subscribe to, as I mentioned earlier, this package of reforms should not produce a significant widespread increase in capital requirements.
It has a long history – more than three decades – of publishing documentation to facilitate FX transactions and market functioning and to articulate best practices. 9 The New York Fed is also involved in the BIS FXWG to help establish and promote adherence to an FX Global Code, a single set of guiding principles for the FX market. These groups have confronted collective action problems where an individual firm may want to raise concerns, but be unable to drive market-wide improvements. Second, when central banks partner with private-sector participants to develop best practices, it can send a powerful signal to the market. For their part, private-sector  in TMPG-covered markets and received feedback from firms active in electronic trading and an industry association of proprietary trading firms. This feedback helped refine the proposed best practice updates. 6  The OTC Derivatives Supervisors Group originated in 2005 when the New York Fed hosted a meeting of major OTC derivatives dealers and their domestic and international supervisors. The Alternative Reference Rates Committee was convened by the Federal Reserve in 2014 in a meeting with representatives of major OTC derivatives market participants, their supervisors, and central banks. 7  Outside of New York Fed-sponsored groups is the Group of Thirty (G30). The G30 was established in 1978 and is an international body composed of senior representatives in the private and public sectors and academia. It has a broad mandate and works on various issues relating to international economic and monetary affairs.

Today, I will focus my remarks on how best practice efforts can help support the integrity and effectiveness of financial markets. I will draw upon the New York Fed’s experience with the Treasury Market Practices Group (TMPG), the Foreign Exchange Committee (FXC), and the Bank for International Settlements (BIS) Foreign Exchange Working Group (BIS FXWG) in developing and refining best practices for financial markets. The markets covered by these groups are those for U.S. Treasuries, agency debt, agency mortgage-backed securities (MBS), and foreign exchange (FX). Segments of these markets have historically operated under an over-the-counter (OTC) trading model and, as a result, lack a formal central trading venue like an exchange with established rules. 2 These markets are of particular interest for central banks globally, because of their important role in the implementation of monetary policy. In light of these considerations, central banks have made extensive efforts to convene market participants to develop best practices that help cultivate fair and effective markets. 3 As a participant in these markets, the Desk has a direct interest in their integrity and effectiveness. I hope my remarks will reinforce why the New York Fed and primary dealers as a group should be interested in continuing to support best practices. Your engagement in  1  The “Desk” refers to the Federal Reserve Bank of New York’s trading desk, which implements monetary policy on behalf of the Federal Reserve System, as directed by the Federal Open Market Committee.