samchain/econo-pairs-v1 huggingface dataset:
At the risk of generalizing too much, I would say that CEE economies shared broadly the same development model and problems. We benefited from large capital inflows mainly in the form of FDI, remittances and cross-border loans. Western European banks penetrated our financial system, increasing financial intermediation and facilitating capital inflows. This  BIS Review 173/2010  1  process resulted in fast credit and economic growth based on a consumption lead model. While inflation has been generally under control financial imbalances and vulnerabilities were increasing, in the form of rapid growth in real estate prices and balance sheet exposures in liquidity and foreign currencies. Our economies were hit by the crisis since the first week of October 2008. The fear of contagion was enhanced further by a sharp decrease in the market value of the EU banking groups that operate in the region. It affected negatively the public trust in the system, resulting in widespread deposits withdrawals. Later, as the financial crisis progressed and transformed into a global economic recession, the effects extended to real economy and exchange rate depreciation. Most of the countries in the region faced a rapid liquidity shortage caused by the deposits run, lower remittances and FDI outflows. The balance sheets across the region suffered from both liquidity problems and exchange rate depreciation. This was negatively reflected in consumption and investment, which further deteriorated the financial stability outlook with the possibility of a balance sheet deflation and economic contraction mutually supporting each other in a vicious spiral.

And I see it as my responsibility, as the ECB President, to report back to you, and engage in further discussion, once the Governing Council moved forward on the content and timeline of our exercise. The two way street communication principle will apply. Shaping the future of money The other topic you have asked me to discuss today is the future of money. Indeed, as central banks navigate a complex and changing landscape, we should not only aim to anticipate future trends, but also seek to shape them. In doing so, we should be particularly attentive to risks and perform a thorough analysis of their costs and benefits. The financial services environment is evolving as new entrants shake up the market. So are the public’s needs and demands. The ongoing discussion around so-called stablecoins offers a glimpse of the changes that might come. This phenomenon could disrupt the current payments landscape, with spillover effects for monetary policy transmission, financial stability and the international monetary system more 3/5  BIS central bankers' speeches  broadly. But the ECB is not standing still in the face of these challenges. Last year, the ECB launched TARGET Instant Payment Settlement (TIPS), an instant payment service that allows money to reach the recipient within seconds, 24 hours a day, 365 days a year. TIPS responds to the growing user demand for instant payments and helps ensure that any bank account holder in Europe can be reached.
First, it was geared to supporting banks which, while viable, required restructuring to ensure their ability to resume a path of sustainable profitability, by reinforcing their solvency with public funds. Significantly, in certain countries where the need for a similar instrument has been acknowledged, this has not yet been created. Second, the FROB involved giving the Banco de España wide-ranging powers to swiftly and effectively take control and resolve the problems of those banks that are not viable. Rounding off the remit of the FROB has been the approval of the reform of the legal regime for savings banks. To date, the limitations inherent in their legal status had prevented savings banks from reinforcing their core capital, except through the capitalisation of profits. The reform opens the way for savings banks to tap private capital by enabling them to issue core equity instruments, it provides for improvements in their management and it subjects them to greater market discipline. Restructuring was considered on the basis of two criteria that have proven to be most useful. The first is the requirement that those banks applying for public aid should reduce capacity. 2  BIS Review 171/2010  During the expansion, our banking system became excessively big in parallel with the growth of the construction sector. If aid had not been conditional upon the presentation of a capacity-adjustment programme, the profit and loss accounts of all banks would have continued to perform poorly, not only in conjunctural terms but also structurally.

This might be particularly appropriate for meeting settlement needs in central bank money between financial intermediairies. Indeed, asset tokenization initiatives have proliferated among financial players, with the the risk that such developments may lead to disorderly approaches and heterogeneous adjustments of settlement processes, which are currently mainly handled through market infrastructures. The Eurosystem, as a major provider of critical wholesale clearing and settlement services in euro, should therefore be open to experimenting the conditions under which it makes central bank money available as a settlement asset. To that end, we, at the Banque de France, have started gaining experience with innovative solutions, including in particular recourse to DLT. Experimentation is key in this area and this is why, as already announced by Governor Villeroy de Galhau, the Banque de France will launch a call for projects before the end of the first quarter of 2020. Indeed, we wish to work with industry innovators and 3/4  BIS central bankers' speeches  start running experiments rapidly to possibly integrate a “wholesale” CBDC into innovative procedures for exchanging and settling tokenised financial assets. Another contribution from central banks could be to help address one of the major failings of the current payment systems which is cross-border retail payments. This is one of the drivers of the development of crypto-assets such as stablecoins, and we believe we could help identify and support other concrete, useful and possibly complementary solutions.
The European Commission is currently reviewing the European fiscal rule framework. In my view, this review should include simplifying the framework, by establishing a public expenditure growth rule and a debt-to-GDP ratio anchor, and reinforcing the capacity to build up fiscal buffers in good times for use in crises. In the case of Spain, shoring up the sustainability of public finances calls for a medium-term strategy. This should be based on immediately setting out a multi-year fiscal consolidation plan for implementation once the economic impact of the pandemic and of the war in Ukraine has been overcome. The plan should have broad political consensus and be accompanied by an efficiency review of public spending and the tax system, including all tiers of general government. Defining the plan early on would generate greater certainty and trust, which is particularly important against the backdrop of the monetary policy normalisation I have described. The course of the war in Ukraine has laid bare the EU’s vulnerabilities and dependencies in key sectors, such as energy, as well as the disparities between Member States in their exposure to such tensions. A challenge of this magnitude underlines the importance of a joint response to common risks. The response to the war in Ukraine must, once again, be more Europe. These common decisions must apply both to short-term measures, to address potential energy supply problems in the years ahead (in line with the recent European Commission proposals), and to medium and long-term reforms.

Lifting the health restrictions has also resulted in some of the demand for services being released, prompting an acceleration in recreation, hospitality and tourism prices. In addition, changes in practices, such as the rise of working from home, have led to higher spending on household appliances, exerting further pressure on their prices. In the case of the euro area and Spain, analysing the disaggregated data reveals the following stylised facts: 1. The magnitude of the increase in inflation is unprecedented in recent times. In the euro area, August saw the harmonised index of consumer prices (HICP) reach 9.1%. In Spain, it has risen from slightly negative rates at end-2020 to 10.5% in August 2022. For context, to encounter a similar rise we need to go back to 1977. 2. This inflationary episode is characterised by its high persistence. In Spain, inflation has stood above 2% for 16 months. The last time this happened was in 2010-2011. You also have to go back to that period to find such a persistent episode of inflation above 2% in the euro area. 3. In terms of its components, the role of energy stands out. 40% of actual inflation in Spain in August was attributable to electricity (2.3 pp) and other energy (1.9 pp). The percentage is very similar in the euro area (43%). 1  4. The persistence and intensity of the rises in electricity and gas prices have been surprising.1 As a result, they lie behind a highly significant portion of the inflation forecasting errors in recent quarters.
Securitizations were structured so that any losses were first borne by lower-rated securities built from the pool of underlying mortgages. Given the structure, the assumption was that lower-valued securities would take all potential losses if borrowers defaulted. Many – but not all, of course2 – assumed that home-price declines and related defaults would have to be very extreme before the highest rated, Triple-A securities were impacted. Under this assumption these securities fully deserved the Triple-A rating given by the rating agencies. I should note that making this assumption about Triple-A rated mortgage backed securities (MBSs) proved less problematic than making this assumption about the recombined lower  2  Boston Fed researchers note some examples of contrary analysis of Subprime ABS structures written in 2005 suggesting vulnerability to even a 5 percent fall in house prices. See “Making Sense of the Subprime Crisis” by Paul Willen with Kristopher S. Gerardi, Andreas Lehnert and Shane Sherlund (Brookings Papers on Economic Activity, Fall 2008). BIS central bankers’ speeches  3  tranches of mortgage-backed securities that were billed as Triple-A rated collateralized debt obligations (CDOs).3 But many investors focused not on the security’s underlying components, merely on the ratings. Figure 8 shows that Triple-A securities remained at par values as the securitization boom gathered steam. However, Figure 9 shows that when the severity of the decline in house prices manifested itself, even the Triple-A rated mortgage securities collapsed in value.

5  Others have called the approach “originate to hide.”  4  BIS central bankers’ speeches  were other banks, money-market funds, and hedge funds. As questions about the value of the collateral became more prominent, and the solvency and liquidity of investment banks became a greater concern, many short-term lenders abandoned the market. Figure 11 shows the dramatic change that occurred. The inability to finance large securities holdings made the traditional model of investment banking unsustainable, and this contributed to the failure of investment banks and the merger under duress, or conversion to bank holding companies, of others. What can we do about financial myths, going forward? We plumb this history to help us understand what we can do about financial myths, going forward, and how we can avoid their damaging impact. As the previous slides have shown, taking too much confidence in historical data repeating in the future can be dangerous – to the financial health of institutions and the financial system. That said, we are probably not likely to see a sea-change in the tendency for overconfidence in and reliance on recent statistical regularities. However, there are a variety of market participants that could better protect their own interests – and the financial system – if they spend more time understanding the key assumptions being made in financial modeling, and have a clearer understanding of what could happen if those assumptions were invalid. Properly done, stress testing should provide valuable information to organizations on key risk drivers.
It is a great satisfaction to see the BIS Innovation Hub pushing ahead with several wholesale CBDC projects such as Jura and Dunbar, in which the Banque de France is an active participant. And more broadly, it also a satisfaction to see that more and more central banks, notably some from Asia, show an interest for wholesale CBDC. I will conclude by quoting Zaha Hadid, the Iraq born architect who was the first woman to receive the Pritzker prize in 2004. Her iconic buildings, all swooping curves and flowing space, never featured any right angle. “There are 360 degrees, so why stick to one?” Zaha Hadid used to say. What an inspiring thought for us today. I thank you for your attention.

Now I do wonder if some of you expected me to give a speech about what we can’t do. You might have expected a lecture about how sustainable growth is impossible without financial stability. You might have expected warnings that undermining our primary objectives will increase the probability and severity of crises, whilst decreasing the ability of finance to support economic recoveries. These things are indeed true, and colleagues of mine have argued these points in public. [3] So I will not repeat my colleagues’ arguments today. Not because I don’t agree with them (I do). Page 4  But because I want to talk about the other side of things. About what we can, and about what we will, do differently because of the new objective. And this is because industry thrives better when trusted public institutions provide foundations upon which the private sector can build, innovate, and succeed. The PRA must do what it can to strengthen these foundations. [4] In particular, PRA rule making can deliver three things: harness the UK’s strengths as a global financial centre, maintain trust in the UK as a place to do business, and tailor regulations to UK circumstances. The PRA will make rules that harness the UK’s strengths as a global financial centre I believe that the PRA can help harness the UK’s strengths as a global financial centre by providing a high level of responsible openness. Responsible openness is essential to the UK’s success because it is one of the world’s most connected financial centres.
And whether the bail-in is effected by use of a bail-in tool in an operating bank or by application of a bridge bank tool at holding company level. It represents the realisations that if we are to end TBTF we must have bail-ins instead of bail-outs so losses can fall on investors not on taxpayers. And that the bail-in must enable continuity in a firm’s operations to avoid interruption to critical functions and to buy time for an orderly reorganisation of the firm to the extent necessary to deal with the problem that first caused the failure. This shared understanding at FSB, and the desire to meet the goal set by G20 Leaders to end TBTF and the risk of taxpayer bail-outs as soon as possible, has driven a focus on seeking changes at firms so that they can be stabilised and enter resolution safely without disruption to critical functions.

9  As described, there is more to do in some of these areas. But increasingly the emphasis is on implementation and, with it, assurance – how we supervise firms against these regulatory requirements and hold them to account that identified barriers to resolvability are removed and stay removed. In describing the progress towards end-state resolvability, I want to pick out three areas that will be a focus in the period ahead. (a) Internal MREL The first is internal MREL. One lesson that the crisis brought home is that the distribution of resources within groups matters. While in life, firms might want to run themselves by business lines on a consolidated basis, failure and resolution occurs at legal entity level. It is understandable then that since the crisis that there has been a discernible tendency for host authorities to hold onto more resources, capital and liquidity, or to force activity in branches into subsidiaries. The aim at FSB level with TLAC was to lean against this tendency towards fragmentation of international groups by providing comfort to authorities cross-border, not only that groups would have sufficient external TLAC to be resolvable but also that resources would be prepositioned as internal TLAC in material subsidiaries in host jurisdictions. Previous international regulation of financial resources in groups has, like the Basel Accord, typically focussed more on the consolidated level. Now applying TLAC regulation at legal entity level has brought with it challenges.
For instance, the mission observed that in Mpongwe, in the 2011 farming season, the Food Reserve Agency (FRA) paid out a total of K52 billion (Kr 52 million) to small-scale maize farmers while an additional K7 billion (Kr 7 million) was paid to commercial farmers. Coupled with this, total sales from maize alone exceeded about K80 billion (K80 million) if total sales to agents other than the FRA was included. It was further observed that the district produces more maize than the other nine districts on the Copperbelt put together. In addition, it was noted that the payments made to the farmers were growing steadily as evidenced by the increase from K19 billion (Kr19 million) in 2010 to K58 billion (Kr 58 million) in 2011 while members of the Farmers Union had accessed about K2.4 billion (Kr2.4 million) in loans from banks outside the district for the 2010/2011 farming season alone. Furthermore, the Mission reported that 2,700 residents of Mpongwe, comprising Government/Civil Service employees and registered farmers use the financial services located either in Kitwe, Ndola or Luanshya. It must be noted that this number did not include other persons in the productive sector such as private businesses. Distinguished Guests, Ladies and Gentlemen, the report further observed that a total monthly wage bill of about K2.8 billion (Kr2.8 million) was paid out to the residents of Mpongwe in 2011. These funds did not include grants and other sources of funding utilized by various Government organs and private individual and businesses.

Michael Gondwe: Enhancing access to financial services in Zambia Speech by Dr Michael Gondwe, Governor of the Bank of Zambia, at the launch of the Mpongwe branch of the National Savings and Credit Bank Zambia Limited (NATSAVE), Mpongwe, 28 June 2013. *  *  *  The Copperbelt Province Minister, Hon Mwenya Musenge, MP The Mpongwe Area Member of Parliament and Deputy Minister of Foreign Affairs, Hon Gabriel Namulambe, MP; The Copperbelt Province Permanent Secretary, Mr Stanford Msichili; The Permanent Secretary, Ministry of Agriculture, Dr Shamulenge; The Permanent Secretary Ministry of Agriculture, Mr Siazongo Siakalenge; Your Royal Highnesses the Chiefs Present; The Mpongwe District Commissioner; The NATSAVE Chairman of the Board, Dr Chiselebwe Ngandwe; The NATSAVE Managing Director, Mr Cephas Chabu; Distinguished NATSAVE Customers; Management and Staff of NATSAVE; Colleagues from Bank of Zambia; Members of the Press; Distinguished Guests; Ladies and Gentlemen. It is my honour and privilege to officiate at this very important launch of the National Savings and Credit Bank (NATSAVE), Mpongwe Branch. Let me begin by thanking the Board of Directors and Management of NATSAVE for inviting me to this momentous occasion, which marks the official opening of the Mpongwe Branch which is the first ever bank branch in this economically vibrant district. I commend the Board and Management of NATSAVE for the effort in opening this branch which will go a long way in supporting the Bank of Zambia’s strategic objective of increasing financial inclusion.
9  Bernanke (2010) shows that Fed policy rates do not seem excessively low given real-time FOMC forecasts. 10  See Del Negro and Otrok (2007), Jarocinski and Smets (2008), Edge, Kiley, and Laforte (2008), and Iacoviello and Neri (2008). 11  See Nyberg (2010) for similar arguments. BIS Review 16/2010  3  (although they could have ended the Great Moderation with a deep recession and deflation). 12 However, going beyond the Fed’s actual monetary policy, perhaps it is possible that the Fed’s emphasis on its readiness to relax monetary policy aggressively in the wake of a sharp fall in asset prices, as expressed by Greenspan (2002) for example, may have induced expectations of a floor under future asset prices and contributed to the asset-price boom, the so-called Greenspan put (Miller, Weller and Zhang, 2002). Arguably, this is more of a communication issue than one of actual policy, and less emphasis on the readiness to clean up after a sharp fall in asset prices might have been a preferable alternative. The International Monetary Fund (2009, Chapter 3) has investigated the role of monetary policy in causing financial crises. A large number of countries and financial crises were included in the sample.

3 The forecasts of inflation and the real economy are then conditional on the central bank’s view of the transmission mechanism, an estimate of the current state of the economy and a forecast of important exogenous variables. The central bank uses all relevant information that has an impact on the forecast of inflation and the real economy. In this framework, the central bank takes financial conditions such as credit growth, asset prices, imbalances, potential asset price bubbles and so on into account only to the extent that they have an impact on the forecast of inflation and resource utilization. Inflation and resource utilization are target variables, that is, variables that the central bank tries to stabilize. Financial conditions are not target variables. Instead, they are only indicators, as they provide information to the central bank about the state of the economy, the transmission mechanism and exogenous shocks. Financial conditions then affect policy rates only to the extent that they have an impact on the forecast of inflation and resource utilization. 4 Now, is there any reason to modify this view of monetary policy given the experience of the financial crisis so far? Let me approach this question by first asking what the causes of the financial crisis were, whether monetary policy contributed to the crisis, and whether a different monetary policy was warranted and could have prevented or reduced the size of the crisis.