samchain/econo-pairs-v1 huggingface dataset:
So “yes, sir”, the euro is there. The euro area faces a lot of challenges, as is the case for all major advanced economies. All their central banks have a lot of challenges today, and this is no time for complacency for any of us, but the success of the euro, measured as I just suggested, is obvious. Financial Times: What would you describe as the main challenges facing the euro today? Jean-Claude Trichet: I would say that we have all the challenges of major central banks in the advanced world. There is the challenge of coping, in terms of our own responsibility, with the “turbulent episode” in which we find ourselves since three years. We have to cope with the challenge of globalisation. We have to cope with the challenges of science and technology, which is developing so rapidly that it creates for the central bankers a lot of additional challenges, in particular in terms of assessing correctly productivity and the impact of IT on the financial sector. Population ageing is also a big challenge for all central banks. We have two other challenges that other major central banks do not have. One is the deepening and overall implementation of the single market with a single currency, which has been Europe’s ambition since the very beginning. We are the only central bank which is transforming, by virtue of its own activity, the economy under its jurisdiction. The second challenge is enlargement. We were 11 countries at the beginning.

I should like to highlight this latter aspect of price-setting policy at the level of products or services since, traditionally, services that are not explicitly charged and whose cost has been covered by the net interest margin have been provided to customers. I believe it is important to introduce transparency and rigour into price-setting. Without it, the reality of the business is distorted as is, consequently, the attendant analysis, and informed decision-  1  “SSM thematic review on profitability and business models. Report on the outcome of the assessment.”, September 2018. 3/8  making is hampered. Not in vain, in the aforementioned thematic review price-setting is included among the areas where the SSM recommends making improvements. I would further stress that, in this comprehensive analysis of the bank’s accounts, there should be some thought on the weight of operating expenses. Unquestionably, Spanish banks have made a great effort in terms of capacity adjustment in recent years. Numbers of staff and offices have fallen approximately by 32% and 40%, respectively, from their 2008 peaks. It is necessary to continue paying attention to these expenses, so as to ensure they are in step with developments in lending activity and in revenue. Against this background, progress in new technologies, and the alternatives these offer to the traditional means of providing bank services, may prove an opportunity to cut costs and come into line with the change under way in the customer-bank relationship.
What is good for the client is presumably good for the bank as well. The structure of internal incentives also needs to be adapted to encourage a longterm relationship. It seems reasonable to suppose that some newspaper managements are likewise thinking about how their readers’ interests can best be served. Without in any way claiming to be exhaustive, these examples illustrate the major forces that are at work in many parts of our society with a view to making things function better than they did in the recent stock market boom. In addition there are of course the deliberations of economic policy decision-makers, authorities and international institutions. The message I want to put across today is primarily that there are no simple solutions that would prevent a repetition of what we have been through. We must also realise that the spontaneous healing mechanisms in a market economy can take time to work. They probably need the support of better institutional rule systems, for example in accounting practice. At the same time, I would be cautious about intervening too much, for instance by complicating matters with rule systems or unduly detailed supervision by authorities. It is a question of striking a balance so that the sound forces in the economy are free to act while tendencies that may develop into a crisis are held in check. How this is to be achieved is something that market players and the competent authorities continuously have to consider and try out in the light of experience.

Erdem Başçi: Global finance in transition Keynote speech by Mr Erdem Başçi, Governor of the Central Bank of the Republic of Turkey, at the conference on “Global finance in transition”, Istanbul, 7 May 2013. *  *  *  Esteemed participants, distinguished guests, Welcome to the conference on “Global Finance in Transition”, held under the Russian G20 presidency and hosted jointly by the Reinventing Bretton Woods Committee (RBC) and the Central Bank of the Republic of Turkey (CBRT). In this conference, we will be analysing and discussing with experts, the structural changes in global finance experienced as of 2008. In these opening remarks, I would like to briefly point out the impact of these changes on emerging market economies. Three fields have undergone significant changes in the aftermath of the 2008 crisis: fiscal policies, monetary policies and financial sector policies. These changes have had significant subsequent impacts on global finance. As for the fiscal policies; those of the emerging market economies differ considerably from the fiscal policies of the advanced economies. Automatic stabilizers did cause emerging market economies to have wider budget deficits temporarily in 2009. Yet, EME’s sovereign debt has been very low compared to that of advanced economies, and still on a downward trend since 2010. Emerging market and advanced economies diverge in terms of monetary policies as well.
Finally, I shall elaborate on the new National Bank Law. Economic activity In Switzerland, a turnaround in economic development emerged in the third quarter of 2003. Real GDP exceeded the previous quarter’s level for the first time since the third quarter 2002. Nevertheless, it still fell short of its year-earlier level. The Swiss economy recovered largely in line with our expectations as communicated in our September assessment of the situation. The recovery is attributable to the pickup in global economic activity, low interest rates and generally more favourable exchange rate conditions. This benefited primarily exports, which rose markedly in the third quarter. Equipment investment, too, picked up slightly following a long phase of decline. Private and government consumption continued to have a stabilising effect. The economic situation in Switzerland should improve further in the next few months. We are expecting exports to continue developing favourably, coupled with a robust increase in equipment investment. In this way, the economic upswing in Switzerland will become increasingly broad-based and strengthened. In the course of 2004, unemployment should also fall, leading to a pickup in private consumption. On average, a moderate decline in economic activity will be recorded in the current year, while for 2004, as already stated, we expect the economy to grow by slightly over 1.5%. This will, however, not yet suffice to close the production gap. Production capacities will therefore still not be fully utilised in the coming year. Even though the overall prospects have clearly improved, the situation in a number of industries remains difficult.

The new Law vests specific responsibilities in the SNB with respect to the oversight of payment and securities settlement systems. Up to now, our oversight of the SIC interbank payment system was based on a contractual relationship. As from next year, our responsibilities in this domain will be based on the Law and will extend to the oversight of all major payment and settlement systems. My colleague, Niklaus Blattner, will discuss this subject in more detail in his remarks. The new Law also provides that the SNB shall issue implementing regulations in the area of minimum reserves, statistics and the oversight of payment and settlement systems. The draft of an ordinance has already been submitted to the interested parties for consultation. In the field of minimum reserves and statistics we intend in principle to take up the provisions already existing in the Federal Law on Banks and Savings Banks and the Federal Law on Investment Funds. As regards the oversight of  BIS Review 58/2003  3  payment and settlement systems, we are advancing into totally new territory, where for the time being only the main principles have been defined. This implies pioneering work in the implementation. 4  BIS Review 58/2003
The share of borrowers taking up multiple housing loans has declined from about 30% of new housing loans in 2011 to about 13% as of Q2 2014.The average tenure of new private housing loans has also shortened to about 25 years, compared to a peak of 30 years in 2012. BIS central bankers’ speeches  1  8 The measures are also playing a healthy role in cooling the property market. We can never get rid of cycles in the property market, with the upswings in some years being followed by corrections. Our cooling measures cannot eliminate the cycle, but they aim to temper it. What this means is avoiding a bubble during the upswing, and allowing for a correction in prices subsequently. If we do not get a meaningful reversal after each upswing, property prices will run ahead of the growth of household incomes over the long term, which we should avoid. We have seen some correction in both private property prices and HDB resale prices over the last 4–5 quarters, but there is some distance to go in achieving a meaningful correction, after the sharp run-up in prices in recent years. 9 Apart from housing loans, MAS has also introduced new rules on unsecured credit facilities and credit cards to help individuals avoid unsustainable borrowing. Credit card borrowing situation in Singapore 10 Globally and in Singapore, the use of credit cards has become more commonplace. Credit cards when used prudently offer convenience in day-to-day transactions, overseas travel and online purchases.

Macroprudential tools such as the countercyclical capital buffer are an additional means of strengthening our financial system. But a liberal economic system entirely devoid of crises is an illusion. To prevent crises altogether would ultimately mean to constrain the economy to such an extent that our prosperity would be significantly impaired in the longer term. However, it is possible to limit macroeconomic risks to an acceptable level using appropriate regulatory measures. This is where we have directed our efforts since the financial crisis and we are continuing to work closely on this with other parties at national and international level. ‘Debt-free’ payments to the Confederation, cantons or citizens  The initiative is likewise not able to deliver on its second promise to reduce the burden on citizens through ‘debt-free’ payments by the SNB to the Confederation, the cantons or the people. Although ‘debt-free’ payments seem attractive at first glance, they will not bring any financial benefit to the people in the long term, despite what the initiative’s authors would have us believe. A sovereign money system will not turn the SNB into a cash cow. Page 4/8  Switzerland’s prosperity is determined not by the way money is created but by the output the country generates. What is meant by ‘debt-free’ payments? In the current system, the SNB creates money by purchasing foreign currency and investing it, or by granting banks loans. Every franc of central bank money which enters circulation in the economy in this way therefore has a countervalue that yields profit over time.
That will depend on whether we persist in seeing through the regulatory reforms that began a few years ago. It will depend on  BIS central bankers’ speeches  1  whether we keep to a sensible balance in regulation – and that includes not over-doing bank regulation and under-doing the oversight of shadow banking. It will also depend on whether we all stay intensely alert to the risks of the future, including especially the risks that we do not yet see or know, rather than focus only on the last battle or on preventing the last crisis from recurring. 7. What of global capital flows? There too we see shifts, as global finance responds to a two-track world of economic growth. The prospect of sub-par growth in the advanced economies for a number of years, together with central bank actions to keep interest rates very low, have led to what is becoming a furious search for yield. Pension funds and insurance funds need better yields badly, and they are putting more monies in the emerging markets and other risk assets. 8. This is likely to be more than a cyclical trend. We are seeing a secular shift in assets towards the emerging markets. Advanced country funds in fact remain significantly underweighted in emerging market assets, and are gradually correcting for this. At the same time, sovereign debt ratings have been raised in several emerging economies, in Asia especially1, at the same time that a number of advanced economies2 have seen their ratings lowered.

Evidently, the situation we are in calls for a whole set of thoroughgoing reforms and measures, in step with the scale of the challenges facing the economy. And if the adoption of structural reforms always requires a particular effort on the part of the industries involved in economic, social and political terms in order to achieve the highest degree of consensus possible, such effort is evidently all the more necessary in the current exceptional circumstances. Now on to the last matter I shall address today: the situation of the Spanish financial system. The Spanish financial sector has been affected by the financial crisis since it began, although its effects have undoubtedly heightened since last summer. The current crisis has two characteristics. Firstly, it is an international crisis on a large and widespread scale, affecting different markets, numerous institutions in various countries, a wide variety of assets and the real economy. In a further manifestation of the process of globalisation, the problems generated in very specific geographical markets have ultimately spread to most countries, and it is not very realistic to believe that isolation from the crisis may be an option. Secondly, the crisis is going to cause an across-the-board reduction in the financial and banking business in particular. The excesses seen in financial innovation and in overly expansionary credit policies have caused many of the current problems, whereby there will foreseeably be a back-to-basics movement entailing a clear reduction in total turnover in the financial sector.
The very favourable conditions that prevailed on the global financial markets  BIS Review 41/2009  3  meant that the premiums for credit risk were generally extremely low for a long period of time. The explosion in asset prices was fuelled by a rapid expansion in credit. Money was lent more carelessly than previously. Housing bubbles developed in several parts of the world. In the USA, the development of such bubbles was reinforced by the inadequate regulation of the mortgage market and a political agenda that aimed to promote house ownership among people on low incomes. The search for yield drove investors to borrow more in order to achieve greater leverage in the investments. Financial innovations also helped to drive this development. A steady flow of new and increasingly complex instruments were created to satisfy the demand for investments with a higher yield. Advanced techniques arose for the securitisation of different forms of credit, including mortgages for less creditworthy borrowers. Many banks around the world – although this applies to a lesser extent to Swedish banks – thereby changed their business model. While previously they had specialised in developing long-term customer relations and in evaluating and monitoring credit risks, the banks now increasingly went over to repackaging and selling their credit risks as quickly as possible. One might think that the banks used securitisation to get rid of a large proportion of their credit risks. Unfortunately, this was largely an illusion.

First, we want to be assured that there are no glitches operationally with somewhat higher transaction volumes than in previous tests, that we can accept cash from a larger array of counterparties, post collateral in the tri-party repo system and reverse the transactions each day smoothly. Second, while the limited size of the operations during this exercise will prevent the operations from having a significant impact on market rates, we will observe how the facility impacts individual  6  During the testing phase, a ceiling will be placed on the maximum amount that can be invested per counterparty. BIS central bankers’ speeches  7  investor demand relative to other market rates. Additionally, we can see how sensitive that demand is to changes in market conditions such as quarter-end that increase the demand for safe assets. These observations will give us some insight into how the facility could affect the entire constellation of money market rates. Only by testing and learning will we be able to assess how best to use the facility. In conclusion, let me turn back to the economic outlook and the role of monetary policy. I do believe that we are making progress towards our objectives of maximum sustainable employment in the context of price stability. The economic fundamentals are improving and I expect that the healing process will continue in the coming months and years. At the same time, it is important to recognize that the financial crisis generated significant headwinds that are only slowly abating.
It can be seen in events in the gilt market I described earlier. The concentrated and correlated nature of pooled LDI funds’ exposures meant that their forced selling behaviour represented a sudden and profound shift in supply-demand dynamics. Indeed the self-reinforcing spiral it led to meant that around £ billion of pooled LDI funds[10] threatened the £ trillion traded gilt market, which itself acts as the foundation of the UK financial system, underlying around £ trillion of lending to the real economy through wider credit markets. [11] As such, it was a timely reminder that large concentrated exposures and correlated behaviours can strain market functioning so much that financial stability can be threatened. The counterparty channel  Now let’s turn to the counterparty channel ‒ where leverage increases the risk of an entity’s default and so brings losses for their counterparties, threatening the resilience of systemically important firms and so the real economy. Margins are at the core of bank and CCP toolkits for managing these counterparty risks. They are essential to stop cascading counterparty losses around the system broadly. But margins will only be adequate if counterparty credit risks can themselves be adequately assessed. And assessing the risk of a leveraged institution can be challenging ‒ perhaps because its exposures are in the form of synthetic or “hidden” leverage or because its exposures are more concentrated or correlated than the counterparty is able to understand.

We have also increased the forecast range of the annual average key rate for the next year by 1.3 percentage points, as compared to July. Considering such policy, inflation will decline to 4.0–4.5% next year. I will now speak of the economic situation. Except oil production subject to the OPEC+ cuts, the economy generally bounced back to its long-term growth trends in the second quarter and even exceeded them in a number of industries. Growth slowed down in the third quarter, which is evidence that the recovery had completed. It should be noted that the third quarter GDP was affected by a decrease in harvest and the worsened epizootic situation. Excluding agriculture, we estimate that GDP growth quarter-on-quarter was positive. Consumer demand remains the main contributor to the growth. One-time payments to households also supported consumption. The surveyed companies expect a further expansion of demand. According to the data on GDP for the second quarter and recent statistics for the third quarter, gross fixed capital formation also grows fast this year, and even faster than we assumed in our July forecast. The oil industry is a large sector where there is still a substantial space for the recovery growth. The OPEC+ is gradually easing the oil production cuts. Furthermore, the environment in the global markets of energy commodities has improved considerably. We have raised the forecast oil price for 2021 and 2022, specifically to 70 and 65 US dollars per barrel, respectively. I will now briefly talk of the situation in the labour market.
Even if some progress has been made, it is likely that no comprehensive measures will be implemented until we have in principle left the crisis entirely behind us. We should not wait for this work to be completed in all areas. In several cases we should instead remedy deficiencies as quickly as possible and improve our own financial regulatory framework. More tangibly, we propose, for instance that the Sveriges Riksbank Act should be reviewed. This is with the aim of clarifying the Riksbank’s responsibility for financial stability and what tools the Riksbank needs to manage this task. There are several important issues in this field. For example, should it be explicitly stated in the Instrument of Government or the Sveriges Riksbank Act that the Riksbank has a responsibility for financial stability? I hope that we will fairly soon have the answer to this and other related questions. Another area concerns investigating how the allocation of responsibility and coordination between the Riksbank and Finansinspektionen can be improved. Moreover, the distribution of responsibility between the Riksbank and the Swedish National Debt Office with regard to loans to the foreign currency reserve should also be made clearer. A further question is the one I raised just now, namely that an efficient regulatory framework is needed for managing banks in distress. Concluding remarks Let me finish where I began. We are on safer and firmer ground now than we were a few months ago. The acute crisis is behind us.

These have included the change of competition law and the regulatory framework, the reform of the judicial system, and the reform of regulated professions and of the housing market. Finally, programme targets for privatisation were achieved ahead of time. Structural reforms need a long-term commitment As I said at the start of my remarks, an improvement of the underlying prospects for these economies has moved expectations. Perceptions about the sustainability of the recovery path in Portugal, in particular, have been reflected in persistent improvements in confidence and associated reductions in risk premia. Over time the economic and social pay-offs of reforms will be high, in terms of higher wealth and employment. High and sustainable GDP growth will in turn bring about improvements in fiscal positions and sizeable reductions in debt-to-GDP ratios in the medium to long-run, contributing therefore to long-term debt sustainability. However, to reap these benefits implies a long-term commitment. The reform process is a continuum. A reform that has just been legislated does nothing for the citizens of a country, if it is not followed-up with effective implementation. Making sure that reforms transfer from the statute book to the real economy requires painstaking monitoring, as well as a prompt reaction in case outcomes deviate from expectations. When countries exit adjustment programmes, such an orientation will help prove to markets that reforms have been undertaken not only due to external pressure, but also out of a genuine recognition of their benefits.