samchain/econo-pairs-v1 huggingface dataset:
Hence, the key policy functions of a central bank should perforce be geared towards the attainment of its primary objective and all systems, within and outside, should be aligned to ensure it. It is, therefore, necessary to review and monitor the working of the key policy functions of a central bank continuously in order to diagnose the impending risks and take appropriate prescriptive measures. This function requires a special type of auditing of the key policy functions of a central bank. The irresponsible use of a central bank’s discretionary powers Central banks are privileged institutions in the sense that they can acquire assets by creating liabilities at their own discretion. No other organisation enjoys that kind of a discretionary power. If others are desirous of acquiring assets by assuming liabilities (in other words, by borrowing from others), they have to go along a tedious path. They have to do so by establishing their creditworthiness before prospective lenders and after complying with tedious legal and market-established procedures. The lenders too would lend them not because of being subject to any compulsion, but upon their free will, having assessed the risk and the profitability of the transaction involved. But, central banks could acquire assets just by making book entries. They could issue currency and get others to part with their assets in exchange for that currency.

What are the early signs of insolvency of a central bank? A central bank becomes insolvent when its capital is eroded to the extent that its net-worth turns negative. A central bank reaches such a catastrophic situation when it makes mounting losses year after year due to its engagement in imprudent financial transactions. A central bank can always finance itself (and also the government) by inflating the economy. However, it also spawns the danger of a central bank getting trapped in an ever expanding  BIS Review 58/2009  3  spiral of inflationary financing, if it does not pursue an inflation-fighting policy consistently. Economists have found that central banks, acting at the instance of their governments, have incentives to reverse the tight monetary policy after they have made some gains in controlling inflation. This is known as the “time-inconsistency problem” 2 or the “prisoner’s dilemma” 3 faced by a central bank. In the time-inconsistency problem, there is an unceasing battle between a central bank and the public for fooling each other. A central bank, in response to public’s outcry against the high inflation, may pursue a tight monetary policy to lower the inflation rate. However, once the inflation rate falls and the public’s outcry subsides, it no longer has the incentive to follow the same tight policy.
The foreign loan that the Central Bank was authorised to take was its largest on behalf of the Treasury so far. It can only be said that this was a highly successful measure – in fact, a respected international financial journal ranked it one of the ten most successful international bond issues worldwide last year. The borrowing terms were very favourable and of course reflected the confidence enjoyed by the Republic of Iceland in the market. The Central Bank’s greatly enhanced capital position and stronger foreign reserves do not signal any shift in its policy, but represent a natural response to changes in the environment in which the Bank operates. At last year’s annual meeting we all had serious concerns about the peculiar discussion and sometimes unfounded speculation aired then about the Icelandic banks, their position and strength. There is no doubt that this debate and the ensuing events made conditions tighter for the banks for a while. The banks responded firmly to the uncomfortable position that had arisen. They made great efforts to explain the structure and organisation of the Icelandic banks. This was no half-hearted measure, but a steadfast and confident approach which produced results. The banks adjusted certain aspects of their operations and operating environment in response to relevant criticisms, and dismissed what was less relevant with explanations, reports and candid communication, at large meetings, small meetings and man-to-man, depending upon which was most productive.

Davíð Oddsson: Review of recent economic and financial developments in Iceland Address by Mr Davíð Oddsson, Chairman of the Board of Governors of the Central Bank of Iceland, at the Bank's annual meeting, Reykjavik, 30 March 2007. *  *  *  Chairman of the Board of Governors, Prime Minister, Ministers of Government, Ladies and Gentlemen: On behalf of the Board of Governors I welcome you all to this, the 46th annual meeting of the Central Bank of Iceland. At the Bank’s last annual meeting it was announced that the Government of Iceland and the Central Bank had been in consultation on the need to boost the Bank’s foreign reserves substantially and also to improve its capital position. Their motivation for doing so was not, however, that either position had weakened, nor that the Bank no longer met the benchmarks for capital and foreign reserves. For a long time the minimum foreign reserve has been set at an amount equivalent to three-months’ imports, and this level has always been ensured. However, the major changes – which could even be called revolutionary – that have taken place in Iceland’s financial sector over a relatively few years prompted the Board of Governors to regard it as prudent to take other factors into account, such as the size and scope of the financial sector. As far as the capital position is concerned, it can be said that clear guidelines are to be found in recent legislation on the Central Bank.
Whether you are a technology service provider, a technology user in a financial institution, or an investor who funds these Fintech innovations, we invite you all to join us. This is going to be an exciting transformation, and we intend to make sure Hong Kong is at the leading edge of it. 42. Join us and be part of the change! 5/5  BIS central bankers' speeches

Central banks, as regulators, can play their own role in this endeavor. At Bank Al-Maghrib, we are continuously working to improve the representation of women in the boards of credit institutions through a gradual approach. For instance, in 2014 we laid down the obligation for such bodies to implement a policy aimed at ensuring a better representation of women. Two years later, this directive was reinforced by making compulsory compliance with the principle of parity in the appointment of independent directors. Our efforts in this regard are still ongoing with a new regulatory recommendation aimed at bringing the banking sector to further move towards the reduction of gender inequalities and a more inclusive finance. This regulatory text, which will be adopted before the end of the year, calls for a genuine implementation of the gender dimension by (i) entrenching professional gender equality within banking institutions; (ii) developing offers adapted to the needs of female customers, in particular female entrepreneurs, based on dedicated refinancing mechanisms such as “Gender Bonds”; and (iii) assisting these institutions in the implementation of funded projects. Furthermore, to catch up with the deficit in accessing financial services, the Ministry of Finance and Bank Al-Maghrib have developed and implemented a national strategy for financial inclusion. This strategy targets as a priority women, youth and the rural population. Ladies and gentlemen, Alongside these efforts as a regulator, Bank Al-Maghrib is striving as an enterprise to set an example in terms of professional equality between men and women.
World export prices, weighted by their share in UK imports, rose by over 5% in 2010, one of the fastest calendar-year rises in the past thirty years. The bulk of that rise can be attributed to the direct and indirect effects of higher commodity prices, though some may be indicative of more generalised global inflationary pressures. What has been driving higher commodity prices and are they likely to continue rising strongly? Most commodities have seen sharp price rises, particularly in the past semester (Chart 3). The rebound in global activity is a common thread, but there are significant differences in supply conditions that are relevant to gauging future prospects. In the case of agricultural commodities, there have been a number of extreme weather events that have adversely affected supply, including droughts in the Commonwealth of Independent States, South America and China, and excessively wet weather in other parts of Asia, Australia and North America. But barring further weather shocks, larger harvests can be expected to lead prices to fall back. In addition, the present high prices should encourage more planting, adding to the potential downward pressures. In the case of oil, such supply disruption – at least until the recent events in the Middle East and North Africa – has been less marked and the primary driver has been demand, especially from the emerging economies. Moreover, the income elasticity of energy demand is typically larger in the fast-growing emerging economies than in the advanced economies (Chart 4).

As the euro area suffered a broadly similar fall in activity to the UK, is similarly exposed to global price shocks, and probably has a similar inflation process, it represents a natural comparator. The goods price inflation differential between the United Kingdom and the euro area is shown by the green line in Chart 7. A second approach is to compare the inflation rates of services with that of goods in the United Kingdom. As goods are typically more import-intensive than services, the inflation rate of goods should rise relative to that of services after depreciations and vice versa (there is a differential between the two on average, because productivity tends to rise faster in the goods sector than in the services sector). The inflation rate of goods (excluding energy) relative to that of services is the blue line in Chart 7 and has the same general profile as the green line. That is somewhat reassuring, since there are factors other than the exchange  4  BIS central bankers’ speeches  rate that could affect one or other of these relative inflation rates, but usually not both together 4 . The fact that the two series move broadly in step suggests that the exchange rate is probably a dominant common driving factor. If one has an estimate of the relative import intensities, then one can go a bit further and back out a direct estimate of the contribution of the exchange rate to inflation 5 .
All these areas require strong political commitment and continuous efforts in order to achieve successful outcomes. 8. Lastly, I would like to highlight a key driver of sustained economic growth that is particularly important for Asia – infrastructure investment. Unfortunately, we still see big gaps for infrastructure financing today despite the large savings in the region, and infrastructure development has been slow and inefficient in many countries. One of the major reasons is the shortage of “bankable” projects. There are a host of factors behind involving legal and governance issues, and political risks. But whatsoever the reasons, it is a gap that can only be filled by bringing together capital and know-how from the public and private sectors. Indeed, the G20 has recently highlighted the importance of infrastructure investment as a growth driver, but many challenges remain in overcoming the obstacles to identifying “bankable” projects. 9. In the face of immense uncertainties and challenges ahead of us, IMF’s assessment of the prospects and risks, as well as advice on policy response for the region at this juncture is particularly important. We look forward to the presentation by IMF and the dialogue during the panel discussions. 10. 2  Thank you. BIS central bankers’ speeches

Jean-Pierre Roth: What to expect from monetary policy? Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the International Center for Monetary and Banking Studies (ICMB), Geneva, 25 November 2003. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  A number of current issues, such as the weakness of the economy and the new National Bank Law, raise the question as to what we can expect from monetary policy. With regard to the stability of consumer prices, the answer is relatively simple. The goal of price stability is at the very top of the Swiss National Bank’s priority list. Since both inflation and deflation are monetary phenomena over the long term, the SNB can and will guarantee price stability in future too. Expectations of monetary policy are considerably lower when it comes to regulating economic activity. Economic activity in Switzerland is strongly dependent on growth abroad. Inflation does not bring about long-term economic growth. Stable prices, however, are the best precondition for sustained growth. A goal of price stability automatically ensures a degree of stability in the economy. Because of uncertainty and time lags, however, fine-tuning the economy is an impossible task. Speculative bubbles in the real estate and equity markets have been an increasing source of macroeconomic instability during the past two decades.
The rise in home prices helped support more borrowing as households used lines of credit and second mortgages to tap into their rising home equity. This also fueled a strong boom in home construction. But house price increases could not be sustained without limit. When home prices peaked and started to turn down, the dynamic linking house prices, credit and consumption went into reverse. Let’s consider first what this means for consumption. Consumption of goods and services rose at a slow 2 percent annual rate over the first half of 2010 and with no sign of a rebound. Several factors are inhibiting families from spending, including: job or income losses, low confidence and declines in wealth as real estate and stock prices dipped. Households have been saving more and paying down their debts. Of course, lenders have also reinforced this tendency with tightened underwriting for credit relative to prerecession standards. Have households completed their deleveraging, so they will soon spend more? Although we believe that substantial progress has been made, it is hard to tell how much further this process has to run. Now, let’s consider why housing market activity – both new construction and sales – remains depressed. One reason for this is that many existing homes stand vacant. We estimate that there are roughly 3 million vacant housing units more than usual. This stock of vacant homes will shrink when foreclosures fall and more empty homes are sold or rented out.

On the sales side, even though low mortgage interest rates and falling home prices have together boosted housing affordability to its highest level in 40 years, the current pace of sales is quite sluggish. Impediments to home sales include tight lending standards, a weak job market and continued uncertainty about home prices. Importantly, the large drop in home prices between 2006 and 2008 also reduced homeowner equity broadly, making it more difficult to “trade-up” and move into better homes. With lower home prices, many families now owe more on their mortgages than their homes are worth. This means that they cannot refinance or sell their homes easily if they experience a crisis such as a job loss or a serious illness. Foreclosure completions are at an all-time high, although the initiation of new foreclosures may be finally slowing. Recently, attention has focused on cases where some of the documentation used in the foreclosure process may have been flawed. The Fed actively encourages efforts to find viable alternatives to foreclosure. Not many people know this, but a team of New York Fed officials work with mortgage counselors and community activists to support distressed homeowners, and our lawyers support legal aid programs for people facing foreclosure. At the same time, it is  BIS Review 141/2010  3  important that foreclosures that comply with the law can ultimately take place. This is a necessary part of returning the housing market to more normal conditions.
2  Again, due to their risky nature, EMEs are often perceived as a risky-asset class. As such, capital flows into/out of these economies tend to follow risk-on/risk-off patterns of the Global Financial Cycle, in turn strongly linked to the Global Business Cycle. The ER regime plays an important role in the transmission of financial spillovers. When capital flows into EMEs—for instance, as a result of a perceived softening of international monetary policy (MP) conditions—, the resulting appreciation of domestic currencies is the first line of response that discourages further flows (as a contemporaneous appreciation increases the expected depreciation in the medium term). But, if the FX adjustment is neutralized by FX interventions by the domestic monetary authority, it will further encourage inflows by reducing ER risk for foreign investors. As a result, FX stabilization enhances the spillovers from foreign conditions on broader metrics of domestic financing conditions, including credit expansion and stock market prices, as well as local bond markets.

·  Second, the New Accord will recognise that some banks treat their smallest business credits as retail exposures. In these cases, banks group and administer their small business loans on a “pooled basis,” similar to the way they manage most small personal loans. The New Accord will permit aggregate exposures to a single business borrower of up to € million to be treated as retail exposures. Because retail exposures enjoy a preferential treatment under both the standardised (reduction of risk weights by 25 percentage points, from 100% to 75%) and IRB (a different risk-weight curve) approaches to credit risk, banks making such loans may face lower capital requirements than are currently applicable. Moreover, for those who have monitored our work closely, the Committee recently eliminated a controversial requirement governing the “granularity” of such loans. In plain language, the rules will no longer require that retail portfolios contain exposures to a minimum number of unrelated parties. Instead, national supervisors will determine whether such portfolios qualify for retail treatment. Although the media has not reported on this change widely, it is quite important because it will help more banks to enjoy the preferential retail treatment for their smallest business credits. 2  BIS Review 32/2003  ·  Finally, the New Accord will recognise a far wider range of collateral and guarantees than the current rules do.
Sabine Lautenschläger: Regulation, supervision and market discipline - striking a balance Statement by Ms Sabine Lautenschläger, Member of the Executive Board of the European Central Bank and Vice-Chair of the Supervisory Board of the European Central Bank, at a conference hosted by the Financial Stability Institute, Basel, 18 September 2017. * * * Almost nine years ago to the day, the investment bank Lehman Brothers failed. What followed was a financial crisis that wreaked havoc on economies around the globe. But it did more than that. The crisis also shattered many beliefs about how the banking system works and how it should be regulated and supervised. There was a time when many people believed that the market could bring about a stable and efficient banking sector on its own. They thought that market forces would ensure banks had sustainable business models that were resilient to the ups and downs of the economy. We now know that this did not turn out so well. In fact, there are three pillars that support a stable banking sector: regulation, supervision and market discipline. The crisis made clear that all of these pillars were in need of some repairs. The good news is that we have come a long way – today, the banking sector rests on more solid foundations than before. But some issues still need to be resolved. Let us briefly look over them, beginning with regulation. Once the crisis had started, everyone agreed that the rulebook needed to be rewritten.

Estimations carried out at the Bank of Albania reveal that the relative high growth of real GDP during the period 2003-2007 is endowed to the rise of work productivity as well as to the increase of investments in the economy. Simultaneously, banking system is expanded with detectable and confident steps. The situation appears also pleasurable regarding banking credit to the private sector. Business credit has played the main contribution to the enlargement of banking credit portfolio, by 66%. The augmentation of this portfolio is considered to have impacted positively the growth of economic activity for the main sectors. In September 2008, credit portfolio was dominated from the lending to trade sector (around 25%), to construction (around 15%) and to industry (over than 15%). The credit to small and medium-sized enterprises as at November 2008  BIS Review 7/2009  1  resulted at 60% higher than the year end 2006, based on the calculations of the Bank of Albania, hence being a ratio over the half of the bank total credit granted to the business. Thus, crediting activity of banking system has supported the growth in the main sectors of economy and has assisted to the further deepening of the financial intermediation. This support is identified in the larger geographic expansion of them as well as in the services gamma and the improvement of products supplied by the financial system.