samchain/econo-pairs-v1 huggingface dataset:
There was also some unease that small countries could be affected if the larger ones did not maintain discipline. Here, too, developments have given cause for concern, at least as regards the implementation of the regulations. Allow me to add a third argument. During the decades before the start of Monetary Union, economic policy in the EU was dominated by Germany. This was because of Germany’s size, of course, but it was also due to Germany’s economic success over several decades and its stable economic policies. There was almost a moral dimension to Germany’s actions. I still remember the meeting in the Monetary Committee when it became clear that Germany’s public finances in the coming years would be as weak as Italy’s. The dynamics in the room changed as if by magic. Since then no country has been able to take over the leader’s mantle. In such a situation peer pressure can easily turn into peer protection. Let me now turn to the future. In doing so I have tried to be constructive and limited myself to proposals I believe to be politically feasible. I will be happy to return to any of the subjects I will bring up. I. My first point concerns the division of labour and the cooperation between fiscal and monetary authorities. This is firmly established in the Treaty. The only uncertainty relates to the responsibility for exchange rate policy. Of course all parties must respect the existing rules.

•  Timetables could be improved - linking them more closely to national processes. •  Using the now more developed measures of cyclical balances could also be useful in this context. In general, I think it is important to enable the Commission to dig deeper into these areas and to increase the comparability between different countries. On the basis of this work the Commission’s role should be strengthened as regards giving “early warnings” and proposing measures. I also believe that the Commission should have the task of emphasising its analyses and going public more than it does today, thereby being more effective in the general debate in the individual member states. III. My third point has to do with consolidating the fiscal institutions and regulations at national level. Here a lot more can be done. One aspect that too often seems to be forgotten in the debate on the pact is that a balanced, countercyclical fiscal policy is not just a common European interest; it is in the individual interest of each country. Some politicians contribute to this misunderstanding when they depict the commonly adopted criteria as an unreasonable burden from “accountants in Brussels”. One manifestation of the same attitude is the recurring problems with the data that are sent to the Commission. Instead of having a transparent process, increasingly unrealistic figures are being delivered. There are several examples of governments reporting data before an election that after the election proved to be misleading.
Both banks and regulators need a proactive strategy to deal with social and political environment that will shift banking environment and regulatory paradigm. Thus, the strategy for banks going forward must also include proactive governance and accountability framework that seeks to restore trust in market mechanism, and improve the social and political environment in which they operate. Failing to recognize the powerful social forces will result in less than optimal regulations. Similarly, the strategy for successful global regulatory reform is to assure an inclusive process, to garner commitment and credibility for the reform. In concluding, the key strategy for dealing with this paradigm shift of known-unknown is based on 3 Cs. Coordination to deal with our interconnected financial stability. Commitment forged by inclusive global reform process. And, Communal responsibility, or governance, that can regain trust of society in market mechanism, so that we can rebuild market discipline as a key governance and pillar of the financial system. These are our best  BIS central bankers’ speeches  3  hope for striking the right balance between risk and return, growth and stability, and regulation and market discipline at a time of known-unknown. Thank you for your attention. 4  BIS central bankers’ speeches

In fact, at end-2021 a third of the banks under our direct supervision did not meet their internal targets for gender representation at board level. But, as I said, it is not just a matter of gender. The board of directors needs to have the appropriate knowledge diversity to be able to deal with the challenges facing the financial industry. I am thinking, for example, of digitalisation strategies and climate risks. This does not mean that members need to be experts on these topics, but they do need to have sufficient knowledge to understand these challenges in order to make sound decisions. At the end of 2021, only around a fifth of the largest euro area banks had sufficient IT expertise at board level. Increasing this ratio will be key if banks are to successfully navigate the digital era.1 Second, the involvement of board members is crucial. Members should exercise their duties responsibly and uphold professional standards. They should devote sufficient time to reading and understanding all the documentation in order to be well-prepared for their meetings. They should also have the opportunity to seek clarification in advance, if necessary, to ensure that they have sufficient knowledge to support or challenge decisions. Finally, as I mentioned earlier, independence is of course essential. Institutions should have a sufficient number of independent directors to contribute to decision-making in an objective manner and to ensure a neutral attitude within the board.
In Sweden, the banks have operated in a competitive environment since the deregulation of the 1980s and have been forced into a process of considerable rationalisation. Capitalisation is also satisfactory. There is reason to believe that the Swedish banks would be able to take advantage of the less expensive borrowing conditions in a single currency market and that they would be able to spread their risks over a greater number of counterparties, which would be positive for stability. In the long run, the banks’ customers may find it easier to come into contact with other European banks. This is an important aspect of increased  6  BIS Review 29/2003  competition, although wise lenders nevertheless respect the “church tower” principle, namely to lend only to those that you know well - those that you can see from the local church tower. I do not believe that a single currency in itself would increase credit risk in the banks. If monetary union in the long run were to result in a more integrated market for financial services, the current Swedish banks would most likely be rather small participants in this market, and each bank would be less important for the effective functioning of the payment system. Their significance for financial stability would decrease and the need for public intervention to safeguard stability in the financial system would therefore also be reduced.

In these cases, appropriate valuation techniques coupled with adequate guidance on the application of these techniques are needed in order to arrive at a reasonable estimate of the price at which an orderly transaction would currently take place between market participants. An entity should have in place adequate models that have been tested for accuracy in case the market is severely disrupted. Moreover, in rare circumstances, if the market dynamics are such that an institution may be forced to change its respective business model (i.e. shifting from a “day trading” to a “buy and hold” business model), then it should be able to reclassify financial instruments at amortised cost. These are important lessons to be learnt from the financial crisis. BIS Review 58/2010  1  Hence the ECB is of the opinion that fair value measurement should only be required if it is consistent with the institution’s business model and the characteristics of the particular underlying asset or liability. Which would be the worst drawbacks, if any, deriving from applying fair value in the light of the events happened in the last two years? Which are the positive aspects? In my view, the financial crisis has clearly highlighted the heightened pro-cyclicality stemming from two mutually reinforcing channels in the accounting framework: fair value accounting and the current loan loss provisioning practices (impairment methodologies). Fair value accounting – while certainly not being the “root cause” – served as an amplifier of stress in the financial system.
Short-termist behaviour among investors appears to have rubbed-off on companies. Poterba and Summers (1995) surveyed Chief Executive Officers (CEOs) at Fortune-1000 firms. They found that the discount rates applied to future cash-flows were around 12%, much higher than either equity holders’ average rate of return or the return on debt. This excessive discounting implied that some firms were rejecting positive net present value (NPV) projects. Echoes, here, of Pigou’s defective telescope. Graham, Harvey and Rajgopal (2005) surveyed 401 executives. They found three striking results. First, managers would reject a positive-NPV project if that lowered earnings below quarterly consensus expectations. Second, over 75% of the sample would give up economic value in order to smooth earnings. Third, managers said that this was driven by the desire to satisfy investors. Echoes, here, of Marshall’s plum pudding problem. 12  Fama (1970) provides a survey of the early papers. 13  Hicks (1937). 14  The important papers are LeRoy and Porter (1981), Shiller (1981) and Campbell and Shiller (1988). 15  Several other of the empirical finance “puzzles”, including the dividend smoothing and serial correlation puzzles, can also potentially be attributed to myopia (Haldane (2010)). 16  Cuthbertson, Hayes and Nitzsche (1997), Black and Fraser (2002). BIS central bankers’ speeches  3  Most recently, in 2011 PriceWaterhouseCoopers conducted a survey of FTSE-100 and 250 executives, the majority of which chose a low return option sooner £ tomorrow) rather than a high return later £ in 3 years). This suggested annual discount rates of over 20%.

In the fall and in early winter, the market also felt the weight of rapidly deteriorating global lending terms, which will undeniably support the Central Bank’s tightening measures and will reduce domestic demand and inflationary pressure, as was mentioned in the Board of Governors’ announcement of 14 February. It is possible that there will be a rapid drop in domestic demand as a result of high interest rates and a tightening credit supply. At this point, however, it is impossible to assert that this will be the case. Exactly when it will be possible to lower the policy rate will be determined by economic developments and outlook. Precipitate interest rate reductions would push inflation upward and standards of living downward. The suggestion that it is necessary to lower interest rates in order to control inflation is absurd. Indeed, it is astounding how carelessly many people seem to view inflation. Furthermore, it is appropriate to stress that the Central Bank believes it is impossible to choose between price stability and financial stability. If we were to relax our stance on price  BIS Review 25/2008  1  stability, it would surely undermine the credibility of monetary policy. Inflation – and no less important – inflation expectations would increase drastically, which could lead, in short order, to an upward spiral of prices and wages and falling exchange rate.
But it had taken a little time for interbank interest rates for term money to come back down, notwithstanding the fact that the crucial part of the monetary base, as represented by the clearing balance of the banking system, has in fact returned to a level which is a lot higher than before the speculative attack and that the HKMA had been accumulating more foreign reserves in the process19. I would attribute this to market sentiment being affected by the continuing financial turmoil in the region. There is now clearly an Asian premium in the interest rates for Asian currencies and Hong Kong, notwithstanding our currency having remained very stable throughout, is not immune. This Asian premium will remain, for as long as financial turmoil in the region lingers on and with uncertainties in the financial system of Japan looming large in the background. 24. The higher interbank interest rates for the Hong Kong dollar could also be attributed to a realization on the part of the banks of the need to be a lot more careful in their funding strategies. On the one hand, they might have mistakenly provided cheap funding to finance speculative shorting of the Hong Kong dollar by their customers. In doing so they put themselves in a difficult position when the interbank market tightened to beyond their expectations implicit in the pricing of their lending to the speculators.

Instead, it requires the monetary base, defined in the case of Hong Kong as the amount of Hong Kong dollar bank notes issued and the Hong Kong dollar clearing balance of the banking system held with the Hong Kong Monetary Authority (HKMA), to be fully backed by US dollars at a fixed exchange rate16. In other words, 14 Article 111 of the Basic Law provides, among other things, that “the Hong Kong dollar, as the legal tender in the Hong  Kong Special Administrative Region, shall continue to circulate”. 15 As a matter of fact, in the fourteen and a half years since the Hong Kong dollar’s link was established in October 1983, the  RMB has depreciated by a total 76% against the US dollar. 1616 Insofar as the banknotes are concerned, since the inception of the linked exchange rate system in October 1983, the issue  and redemption of bank notes, through the note issuing banks, are required to be made against US dollars at the fixed exchange rate of $ to $ However, at the time when the linked exchange rate system was introduced, there was no institutional arrangement whereby banks in Hong Kong maintained clearing accounts with the currency board.
As a result, we may only expect GDP growth to accelerate to 2-3% by the end of 2022, rather than in 2021. A higher economic growth rate should primarily be driven by the shift to a more extensive implementation of national projects and other governmental measures aimed at removing structural constraints. This will promote an increase in investment demand and a quicker rise in labour productivity, household income and, accordingly, consumption. Lending will sustainably expand over the entire forecast horizon supporting economic growth. Corporate lending will annually increase at a pace of 6-10%, and household lending will grow by 10–15% each year. Mortgage loans will account for the bulk of household lending growth. Meanwhile, macroprudential measures will gradually reduce the growth pace of consumer lending. We have updated the balance of payments to factor in the world economy dynamics, prices for oil and other Russian exports. We assume a gradual decline in oil prices to 50 US dollars per barrel in 2021 (as compared to 55 US dollars considered earlier). If external demand weakens, prices for other Russian exports will drop, too. In such conditions, the current account balance will shrink from 83 billion US dollars (5% of GDP) this year to 28 billion US dollars (which is about 2% of GDP) in 2022. Given the actual dynamics observed since the beginning of the year, we have also slightly lowered the 2019 forecast for the private sector’s financial account balance from 50 to 40 billion US dollars.

Elvira Nabiullina: Review of recent inflation developments in Russia and economic outlook Statement by Ms Elvira Nabiullina, Governor of the Bank of Russia, in the follow-up to the Board of Directors meeting, Moscow, 6 September 2019. * * *  Today, the Board of Directors has decided to reduce the key rate to 7% p.a. If economic conditions are in line with our forecast, we will look into further key rate reduction at one of the upcoming meetings. Let me dwell on the main factors behind the decision. First. Annual inflation has already approached 4%. Our estimates suggest that as of the year-end it will fall within the range of 4.0-4.5%. Meanwhile, inflation is forecast to stand at 3.5-4.0% in the opening months of next year. This is largely associated with the fact that the VAT rate increase will be factored out from the calculation of annual inflation. This may be considered as a purely technical factor. Sustainable trends point to inflation of about 4%. Second. Inflation expectations of households and businesses remain elevated. Therefore, we stay focused on their dynamics. Right now, I will not highlight the figures we released last week. However, I would like to note that previously we abstained from posting the results of surveys on household inflation expectations during ‘the week of silence’. We have discussed this issue and from now on we will publish these data as soon as they are released.
The FSR aims to set out publicly the FPC’s view on risks, its assessment of the resilience of the system and to explain its policy. In its new form, the FSR will focus on no more than a handful of risks, the ones the Committee judges are the most important and the most prominent. 2 And it will then set out what, given the level of resilience in the system, the Committee thinks should be done about those risks. The intention is that such a shorter, more focused report will create a discipline for the FPC’s thinking, help to communicate what the FPC is truly concerned about and make it easier for others to hold us to account. Second, the Committee is developing the use of stress testing to assess macroprudential as well as microprudential risk. Last year, the FPC, together with the PRA ran the first ever stress test of the UK banking sector as a whole. The aim was to test not just the resilience of individual banks but what happened to the system if all of the major banks faced a severe but plausible stress scenario at the same time. We are conducting a similar test this year. The Committee intends to set out later this year how we want to develop macroprudential stress testing to help us respond to the ever changing level of risks in the financial system.

The general trend in the market has been to charge SMEs with high interest rates relative to the large scale corporate sector because of the perceived high risk they are supposed to present. Distinguished Invited Guests, my view is that this presumed high risk profile associated with SMEs can be effectively managed by banks if they make the necessary effort to understand the sector and build expertise in dealing with its unique characteristics. I trust that you will double up your effort in building the expertise necessary for your bank to be a major lender to the SME sector. The issue of interest rates is of particular concern to us at the central bank. In response to the current situation, the Bank of Zambia recently took measures aimed at facilitating the reduction in commercial banks’ lending rates with the view to increasing access to credit by private individuals and business entities. Some progress has been made in this area and we are monitoring the situation in the market to ensure that borrowers are enjoying a reduction in their effective lending rates. We do not want the reduction in the base lending rates to be cosmetic, but should be reflected in lower effective lending rates for measures taken so far to be meaningful. Furthermore, with the reduction in the corporate tax rate for banks recently announced by the Minister of Finance in his 2012 Budget, the expectation is for a further reduction in lending rates by commercial banks going forward.
When setting up these transactions, firms should be prepared for questions from supervisors about the substance, as well as form, of their proposals. Treatment of liquid assets. Similarly, the letter of the regulation allows firms to account for the value of the liquid assets in their liquid assets buffer on a "hold to maturity" basis rather than on a trading basis, under which their reported value would be updated daily in line with market conditions. This is an important concession for firms who do not have a trading book but it means that market value gains and losses on the portfolio remain undeclared until the assets are sold. This practice raises the risk that – especially if gilt yields should rise – market price movements in liquid assets buffers could lead to unrealised losses. If this were to happen then the firm may be unwilling or unable to sell the assets. For which firm would want to sell liquid assets and declare unrealised losses at a time of liquidity stress? If the firm has access to the repo market, it may be able generate liquidity through repo. But there may be limited liquidity available in the repo market, so the liquidity of the liquid assets buffer would be impaired. Of course, if the assets in the liquid asset portfolio concerned carry very low risk, and their possible market value changes are small, "hold to maturity" accounting should not be of any concern to a well-run firm or a well-informed supervisor.

Norman T L Chan: Brief remarks on the development of the RMB market Opening remarks by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at the Second Hong Kong – Australia RMB Trade and Investment Dialogue, Hong Kong, 22 May 2014. *  *  *  Treasury Secretary (Martin) Parkinson, (Deputy Governor) Philip (Lowe), distinguished guests, ladies and gentlemen: 1. Good morning. It is my great pleasure to welcome you to the second Hong Kong – Australia RMB Trade and Investment Dialogue. I would like to especially extend a warm welcome to our friends from Australia. This Dialogue attests to the spirit of collaboration that we share, and indeed it is collaboration that will take us forward in the development of the RMB market. The seminar today will be a good opportunity for us to take stock of recent developments, exchange views and share experiences, and identify our priorities ahead. 2. I recall that three years ago, in March 2011, I visited Sydney on a roadshow to talk about Hong Kong’s newly created offshore RMB business platform. This was in fact the very first in a series of roadshows that I and my HKMA colleagues organised, covering key markets in South America, Russia, Middle East, Japan, Spain, the UK and the US.