samchain/econo-pairs-v1 huggingface dataset:
But the fluctuations need not be larger than many other and larger countries appear able to tolerate. Finally, it is appropriate to emphasise that independent monetary policy under a flexible exchange rate regime can take many forms, including different types of price stability target and taking into consideration the role of money and credit in policy formation. It can therefore change from one period to another without necessitating major decisions concerning the currency as such. 1.7  Capital controls and exchange rate regime options  Lifting the capital controls is one of the most important yet most complex challenges facing Iceland at present. The controls have proven an important means of achieving stability in the wake of the financial crisis. Because of this, they were approved by signatories of the EEA Agreement even though they are contrary to the spirit of the Agreement. In the long run, however, it is critical that they be abolished. There are at least two main reasons for this. First, the costs associated with the capital controls grow over time and will ultimately exceed the benefits. Second, they are in contravention of Iceland’s international obligations. For the long term, it will be impossible to retain universal restrictions on capital outflows and remain in the EEA. Iceland must therefore make a genuine attempt to lift the controls. It may prove complicated and time-consuming, but there is no other option. This gives rise to the question of how capital account liberalisation is related to the choice of currency and exchange rate policy.

The present report therefore does not discuss those options in as much detail. In Chapter 3, however, is an in-depth discussion of Icelanders’ experience with independent monetary policy and a floating exchange rate. The strategy formulated in coming months must take into account this material if all options are to be considered. It is also necessary to examine which prudential rules would be applied in order to reduce the risks related to domestic financial institutions’ foreign assets and liabilities and the risks related to unrestricted capital flows. These rules are discussed in a newly published Central Bank report entitled Prudential rules following capital controls. That report discusses the limitations on liquidity and foreign exchange risk and the restrictions on domestic financial firms’ international operations that must be in place if movement of capital  BIS central bankers’ speeches  1  is unrestricted in other respects, particularly if Iceland retains its own currency. The discussion below also takes account of these two publications. 1 1.2  Iceland’s experience with its own currency  Iceland has had its own currency since 1885, maintaining parity with the Danish krone until June 1922, when it was devalued by 23%, followed by a temporary float (see Chapter 12). It can be said that the króna came into existence as an independent currency at that time. The experience with it has been mixed, and efforts to preserve the value of the currency have been largely unsuccessful.
First, eTradeConnect will provide the infrastructure for digitalising trade finance, as well as support cross-boundary trade between Hong Kong and Mainland China. Second, CDI will link up various digital islands to form a seamless data ecosystem. And finally, mBridge will expedite cross-border payments while reducing costs. 18. We believe that the combined power of the three infrastructure would pave the way for digitalising cross-border trade in the trade corridor between Hong Kong, Mainland China, and other APAC regions. I hope to share further updates with you in the not-so-distant future, and 2/3  BIS central bankers' speeches  in the meantime, I welcome your feedback and suggestions. 19. Thank you, and an early Happy Chinese New Year to you all. Wishing you all health, happiness, and good fortune in the Year of the Tiger. 1 Asian Development Bank, 2021 Trade Finance Gaps, Growth, and Jobs Survey. 2 Mr Chu’s story is based on the true story of Joe Chu, a local importer of Qingyuan chickens. Here is the web link  to the interview of Mr Chu and a few entrepreneurs who have used CDI: www.youtube.com/watch? v=Fp6HLkUd3Xo  3/3  BIS central bankers' speeches

New licences were issued to foreign conventional and Islamic banking institutions, while the minimum foreign strategic stakes in the insurance and takaful industry were increased. Increased operational flexibilities were also accorded to the existing foreign banking institutions in the financial system which now account for about 30% of the banking system. At the same time, the foreign participation in our securities market was liberalised in 2007 to allow foreign corporations to raise financing either in domestic or foreign currency. The capital account liberalisation throughout the first decade in the 2000s has involved the progressive removal of restrictions on foreign exchange administration rules. This liberalisation was intensified after 2005, taking into account the state of readiness of the financial system and the economy to manage the consequential increased cross border financial flows. In July 2005, Malaysia migrated from a fixed exchange rate regime to a flexible exchange rate regime to accord greater flexibility to adjust to changing structural conditions in the region and the global economy. With the progressive dismantling of restrictions, businesses now had the flexibility to manage their financial exchange exposures. This encouraged two way capital flows and contributed towards stabilising the volatile capital flows to our economy. Finally, in addition to being accorded with the necessary powers in the new legislations, the policy toolkit of the Central Bank has also been expanded to address the potential build-up of financial imbalances and its risks to financial stability following increased internationalisation. This includes macro-prudential and supervisory measures to collectively address the underlying causes of financial stability.
The impact of the crisis in the financial sector on the rest of the economy has been felt less acutely and a lot more slowly than could have been expected. It is precisely the continued robust global growth which is the main reason for the sharp rise in food and oil prices – although market speculation may have accentuated this trend. In most countries, the rise in the price of oil has translated into an increase in consumer prices. After remaining at a moderate level for a long time, inflation is again a cause for concern. This increase in the indices risks destabilising inflation expectations, which have remained very stable over the last number of years. Swiss economic outlook Last year saw the Swiss economy still operating at a dynamic pace, but there was a distinct fall-off during the first few months of 2008. In the first quarter, real GDP grew at an annualised rate of only 1.3%. This compares to growth rates in the region of 3% or even 4% which we saw in 2007. The slowdown is attributable to three major factors. First, the economy was turning over at an exceptionally high rate last year. A slowdown was therefore inevitable as much as it was desirable. It reduces the likelihood of the economy overheating and reflects the normalisation of monetary policy which we have undertaken in recent years. Second, the slowdown in exports played an added role, by curbing manufacturing activity.

However, increases in catastrophic risk events can provide both an opportunity and a threat to insurers. There is an opportunity for growth in underwriting new products. But the combination of concentrated exposures to large catastrophe losses, inadequate risk management and/or the potential for mis-pricing could undermine the sustainability of businesses. The insurance industry is already taking steps to stay ahead of the climate curve on the liability side with the establishment of Flood Re; ClimateWise forums; more sophisticated underwriting techniques; the development of climate change products and carbon offsets. However, it is worth bearing in mind that, even though the full impacts of climate change often may not be visible in the short term, it is well worth insurers being alert to the emerging risks, including those emanating from policy makers. But insurers, as long term investors, are also exposed to changes in public policy as this affects the investment side. One live risk right now is of insurers investing in assets that could be left “stranded” by policy changes which limit the use of fossil fuels. As the world increasingly limits carbon emissions, and moves to alternative energy sources, investments in fossil fuels and related technologies – a growing financial market in recent decades – may take a huge hit. There are already a few specific examples of this having happened. The Bank of England has been carrying out analysis to better understand these risks.
It comes out of the analysis that the short-term credit has maintained the same growth rate, while a shifting of the mid-term credit to long-term credit is noticed, particularly when the comparison is made with year-end 2004. Banking system assets of the nine-month period of 2006 increased by ALL 71 billion or 14% more than at year-end 2005, maintaining almost the same growth rate with the previous year. The downward trend of the large banks’ contribution to the growth of the system indicates a reduction of the overall banking activity concentration. Meanwhile, the banking system assets performance in years, but particularly in 2005, expressed as a share of GDP, shows increased depth of the banking system intermediation. The ratio under discussion is estimated at about 59.3% for year-end 2005, versus around 52% at end of 2004 and 60.4 % at end of the nine-month period of 2006. Though in 2000, the National Commercial Bank was privatized, the increased weight of the domestic government capital in comparison to 1999 is explained with the growth of the size of the shareholders’ equity of the Savings Bank to ALL 5 billion, from ALL –9.3 billion at end of ’99 (it is evidenced with a negative value because of the accumulated losses of the SB).

For a small, open economy like Switzerland, in particular, the effectiveness of monetary policy measures can be largely dependent upon acceptance by the international environment. An important example for our country is the minimum exchange rate – an exceptional measure taken in an extreme situation. With this measure, the Swiss National Bank is countering distortions in the foreign exchange market which can be traced back to international events. The minimum exchange rate is accepted internationally because markets, international organisations and foreign central banks have understood the objective and motivation behind it, which they see as justified. BIS central bankers’ speeches  1
(2001): The essential Buffet, John Wiley & Sons, Inc. New York. 2  Cutler, D., J. Poterba and L. Summers (1991): Speculative dynamics, Review of Economic Studies 58, pp. 520-546. 3  See e.g. Tversky, A. and D. Kahneman (1974): Judgement under uncertainty: heuristics and biases, Science 185, pp. 1124-1131. 4  an analogy with a game of poker. In normal times the market behaves like a game of roulette; the probabilities are known and independent of the investment decisions of the different players. In times of market stress, though, the game becomes poker. The players have to take into consideration the position of others and their likely behaviour. We are also liable to succumb to wishful thinking. An example that confronts me almost daily at present is when supporters of a national football team, for instance, are frequently over-confident about the chances of winning. Learn from history The so-called IT boom, combined with markedly lower transaction costs as a result of new technology, induced many inexperienced people to invest in shares. Moreover, access to the Internet leads to an increased number of share transactions, often with poorer results. Investors have also become younger. The same tendency applies to stockbrokers and analysts, many of whom began their careers in the 1990s. Inexperienced investors did not get the assistance and support they needed. In the period running up to the Nasdaq crash, less than 1 per cent of the analyst’s recommendations had been to sell.

The Central Bank as the banker to the Government maintains accounts of the General Treasury and Government institutions and agencies. The Treasury Account, known as DST Account, is the main transaction account to handle public debt flows. In terms of the MLA, Government or Government institutions and agencies must obtain the advice of the Monetary Board on the implications if any borrowing on the monetary conditions before raising such debts. This is to ensure that Government borrowing is made with the concurrence of the Monetary Board in line with the monetary policy. Two other important agency functions are the management of Employees’ Provident Fund and administration of Exchange Control Act, both of which have evolved controversy. In the case of Employees’ Provident Fund, the Monetary Board is empowered to manage the fund including investment of surplus funds in securities the Monetary Board considers fit. I know you have heard enough on some of the EPF investments made in the recent past. Given the nature of the EPF and responsibilities of the Government, EPF funds are, I would submit meant only for safer investments. BIS central bankers’ speeches  5  The Exchange Control Act is to regulate and manage foreign exchange flows of the country which is essentially a part of macroeconomic management. In economics, exchange controls are about the regulation of the quantity or volume in the foreign exchange market. Conversely, the Central Bank regulates the price or exchange rate in the market under the MLA.
José De Gregorio: The tensions of the world economy Speech by Mr José De Gregorio, Governor of the Central Bank of Chile, at the Seminar organized by students of the School of Business Administration of Pontificia Universidad Católica de Chile, and in the Manufacturers Association SOFOFA, Santiago, 24 September 2008. I am thankful to Kevin Cowan, Pablo García and Andrea Tokman for valuable comments. *  *  *  A natural thing to do is to program these presentations some time in advance, not being fully aware of the conditions we will be facing when the time comes. Needless to say, over the past few days I have had to edit many developments into my lecture, as the world economy is making history. Thinking of the global economy’s present situation leads us to focus almost exclusively on the financial crisis, but this is one aspect of more generalized problems and imbalances that have build up over the years. The global economy is going through a severe financial crisis, high inflation and unusual dispersion of growth around the world. Furthermore, this scenario is very uncertain, as we have stated in our last Monetary Policy Report. Today I would like to address the current situation from a broader perspective, not only analyzing the financial crisis but digging more deeply into how we got to the present scenario, exploring its economic policy implications and finding the lessons to be learned from it.

Similarly, an economic slowdown cum banking crisis has severe effects on output and employment. But today we need not resort to those stories. The US has been accumulating a current-account deficit for quite some time that sooner or later would have to be corrected via deceleration and depreciation. But the financial crises that got in the picture will make adjustments much more expensive. BIS Review 124/2008  1  Global imbalances By the late 1990s, the US current account deficit began to soar: From 140 billion dollars in 1997 – equivalent to 1.7% of GDP – it climbed to 739 billion dollars in 2007, that is, 5.3% of GDP (figure 1). A first glance at the data requires screening the regional savings and investment balances to see how current-account deficits are distributed around the world. What we see is a dramatic fall in savings – both private and public – in the United States, but also a major increase in surpluses in Asia. This reflects increased savings in China, but also a post-crisis dramatic reduction in investment in the rest of Asia. 1 The recession of 2001 brought a slight relapse, but growth resumed briefly. Fiscal policy was of little help, although the fact that the international interest rate was so low – as opposed to the mid-1980s' twin deficits experience – is an indication that the cause of the deficit was not the drop in US saving , but rather Asia’s surplus.
Regarding the various sources of risk regularly monitored by national bodies with responsibility for safeguarding financial stability, the surprise factor was perhaps the form via which systemic risk could be triggered by the collective behaviour of financial institutions and the ways in which they interact in national and international financial markets. The crisis has highlighted the importance of improving our understanding of interconnectedness in the financial system, both via the direct links between financial institutions and the indirect ones created in financial markets. Macro-prudential analysis has two main focuses: (i) risk surveillance with the view to detect sources of risk or vulnerability within and outside the financial system, and (ii) risk assessment aiming at evaluating the potential severity of the identified risks. Risk surveillance should aim at leaving “no stone unturned” in reviewing potential vulnerabilities and risks to the stability of the financial system. It relies on the continuous and rigorous monitoring of financial markets, financial institutions and the economy at large, with the goal of detecting potential vulnerabilities. It is important at this initial stage to cast the net as wide as possible to ensure that no risk is missed or overlooked. Early warning indicators and a broad range of financial stability indicators can also be useful in this analysis. A solid statistical information-base and market intelligence efforts are also of the essence in the risk identification process with the view to support.

The ECB will provide the secretariat and analytical, statistical, administrative and logistical support to the ESRB. As the ESRB will start to operate from 1st January 2011, we are intensifying the work needed for the definition of the activities that will underpin the ESRB analysis. This includes several strands of work. First, we have started to identify the analytical tools and methodologies that will support the identification and surveillance of systemic risk. This is quite a challenge in itself, as this is a new field in which further research is needed. Second, the risk assessment analysis will have to be supported by adequate information, to be provided by central banks and by supervisory authorities. This will include information both at aggregate level and, when necessary, related to individual institutions. The latter will be gathered through the European Supervisory Authorities. In particular, the ESRB may request information from the ESAs in summary or collective form, such that individual financial institutions cannot be identified. The ESRB may also address a reasoned request to such Authorities to provide data that are not in summary or collective form when the latter are not sufficient. In fact, the establishment of a framework for efficient cooperation between the ESRB and the European Supervisory Authorities is of utmost importance for the successful pursuance of the tasks assigned to the ESRB. This is recognised by the legislation that provides a duty of cooperation and reciprocal exchange of information between the ESRB and the ESAs.
Indeed, the fact that the risk premium indicators in many emerging economies including Turkey are below pre-crisis levels, and the consequent upgrades by credit rating agencies indicate the permanent change in risk sentiment for these countries. 12. As a result of capital inflows, emerging market currencies appreciated and asset prices rose sharply. Furthermore, capital inflows in emerging economies raised concerns over financial stability by fuelling domestic demand and thus causing rapid credit growth. 13. Under these circumstances, central banks of emerging economies focused on containing upside risks on inflation amid the strong rise in domestic demand as well as limiting financial risks due to massive capital flows. Accordingly, many central banks of emerging economies withdrew the liquidity measures adopted during the crisis and embarked on monetary tightening in 2010. Meanwhile, central banks of emerging economies took additional measures against financial and macro financial risks such as excessive credit growth due to accelerated capital inflows, widening current account deficits and the short maturity of the foreign capital. Accordingly, in addition to using policy rates, they opted for a tighter monetary policy stance through the active use of alternative instruments such as required reserve ratios, reserve accumulation and capital controls. 4  BIS central bankers’ speeches  14. The monetary tightening in emerging economies through policy rates and alternative instruments is expected to continue in the upcoming period. Meanwhile, advanced economies are expected to end their easing measures in 2011 and to start normalizing policy.

But I would caution those who have doubts about the euro, that they underestimate the political commitment to it at their own risk. The euro area is moving towards a more sustainable equilibrium, and comparably fast in international comparison. The ambition to provide long-term foundations for EMU in less than a decade is a historical step of great significance. It is faithful to the objective laid down by the European Treaties to create an “ever closer union among the peoples of Europe”. The alternative would be the continuation of the current trend of market fragmentation, leading to protectionism and ultimately to populism. Some of the proposals will imply a greater sharing of sovereignty among Member States. This is unavoidable to guarantee sufficient economic and financial convergence for EMU to function effectively. But it must be ensured that if sovereignty is elevated to the EU level, so is democratic control, and that steps are taken towards the emergence of a true European identity. As central bankers, we all have an interest in global stability. I am confident that, with the measures I have described, the euro area will remain a cornerstone of the international economy. Thank you for your attention. 4  BIS central bankers’ speeches