samchain/econo-pairs-v1 huggingface dataset:
The implication is that in order to reap the full benefits of the policy reforms currently under way, Malta does not only need to integrate further internationally, but has to do so through a structured approach that seeks to exploit potential synergies with other economies. The question then arises, “What kind of regional arrangement and with whom?”. Malta’s potential partners for regional integration Traditionally, partners to regional integration arrangements exhibit strong trade ties based on complementarity in terms of resource endowments and geographical proximity, as well as a common historical and cultural background. These criteria limit the scope for integration between Malta and a number of outlying European countries such as the transition economies of Eastern Europe and the EFTA countries. In fact, Malta’s commercial links with these countries are weak, with only a few economic sectors that could be of potential interest to both parties. In 2001 Malta’s exports to EFTA countries represented less than 0.5% of its exports to the European Union (EU). It follows that the EU and the countries of North Africa, many of which are participating in the Euro-Mediterranean Partnership known as the Barcelona process, are more likely to be potentially viable regional partners for Malta. As far as the latter countries are concerned, there is no doubt that they have made considerable progress in recent years. Most of them, however, require more time to be able to take full advantage of their potential.

Those who perceive EU membership as a unique opportunity are equally aware that catching up with some of the most economically and socially advanced countries on earth is a major task for countries whose average income is still only some 40 per cent of the EU average. This challenge can only be overcome if the candidate countries seriously question the way they have organized and managed their economies in the past, and resolve to raise their performance. The magnitude of the task is not to be underestimated because the necessary changes are pervasive – affecting both institutions and mindsets, policies and work practices – and they also entail costs, financial and otherwise. There is clearly, however, also a widespread conviction in the other candidate countries that this would be change with a purpose. Apart from the highly desirable prospect of convergence with EU income levels and living standards, a process itself facilitated by EU financial and technical assistance, the pay-off would include anchoring the future prospects of each new member country to those of an economic superpower, unfettered access to a large and rich market with a single currency, the adoption across the board of international best practices and standards and, not least, a place at the table where decisions are taken which would affect these countries even as non-members. The dynamics of regional economic integration are such that the choices available to our policymakers will be inevitably conditioned in future by the policies of an enlarged and stronger EU.
Also, the IMF assumes solid growth of the Macedonian economy of 3.2% in 2014, which is higher than the growth projected for the regional countries and wider, and provides a clear vision that there is potential for achieving the economic growth. As the central bank, for us, it is extremely important that the surveyed companies largely expect increase in the exports. Thus the larger export potential, the higher foreign exchange inflows, i.e. narrowed trade imbalance. After all, in 2013 we witnessed trade deficit narrowing in the trade of goods that equaled about Euro 190 million, annually, given the increase in the exports (of 3.2%/3.9% in services) and a decrease in imports (of 1.5%/0.9% in services). This improvement in the trade is closely linked to the increase in the production capacity of the economy, i.e. the increase in the export potential. The policies that were applied in the previous period, which were aimed at attracting foreign investors in the tradable goods sector, which meant export diversification, proved as a good pillar for reducing the foreign trade imbalance. The export growth capacity of TIDZs plans indicated that the foreign exchange rate is not a barrier to exports, i.e. that it is not overvalued. On the contrary, the stability of the Denar exchange rate, in the past against the Deutsche Mark, and today against the Euro, is an important pillar of all business decisions.

This significant strengthening of the trade relations with the EU member states is mostly a result of the intensified trade with Germany, and moreover, such development is fully conditioned by the increase in the exports of RM to Germany. Thus the share of the export of goods to Germany in the total export of goods of RM in 2008 equaled 14%, while in 2013 it climbed to high 36%, or in absolute amounts, from Euro 383 million, for only five years, it reached Euro 1,154 million. It is a significant increase, a triple increase. It means that, despite the crisis in the Euro area and its negative implications, the strong economy based on sound and solid economic fundaments – such as the German, proved to be our certain partner for placement of more than a third of the exports. Besides the traditional export products, i.e. the export of the domestic textile and metal manufacturing industry, in the last two years, Germany is important destination for export of the new capacities in the technological industrial development zones (TIDZs), i.e. for the export of machinery and equipment and equipment of automotive industry. Second, Germany is our significant investor, which in 2013 advanced on the list of the ten most important foreign direct investors (9th).
Resolving bank distress: information needs As the 2007 Northern Rock disaster demonstrated and as the Governor explained at the Treasury Select Committee in September of that year, each country needs a Special Resolution Regime for banks, enabling economically essential banking functions and so confidence to be preserved in the event of distress. The UK now has such a regime. But delivering effective resolutions is not just a matter of the official sector introducing legislation and equipping an authority, in the UK’s case the Bank, with resources to use it. It also, crucially, requires banks to structure themselves so as to permit orderly resolution. That, it can now been seen, is the better version of the third element of the banking Social Contract. What does it mean? In the first place, it entails banks maintaining up-to-date information on their retail deposits in a way that facilitates rapid payout under the FSCS. Rapid payout is necessary to maintain the confidence of depositors in other banks. It’s all very well most retail depositors being 100% protected, but not so comforting if they had to wait ages to receive repayment from the deposit insurer after their bank had failed. In the UK, the FSCS will be working hard to address this issue. 4 Until rapid payout is feasible, where a buyer for the whole bank for some other solution cannot be found it is more likely than otherwise that distressed banks will be resolved via the SRR, with deposit books transferred where possible to other banks.

But, of course, it would also entail lower risk for bank equity and bond investors, and surely it is risk-adjusted returns that matter. And it would also deliver lower risk to society more generally, which matters hugely. To be clear, we want banks and the financial sector more generally to thrive. The institution I come from believes in a market economy, in capitalism. The financial sector has played an enormous role in the development of modern economies. But a regime in which banks can thrive standing on your own feet would be a better market – for all of us. BIS Review 83/2009  9
China has a high rate of savings, healthy external position, an inherent competitive mass manufacturing advantage and a large educated workforce to sustain its long-term potential economic growth. Importantly, the narrative of the global future of China cannot be explained in isolation – it is part of a broader account of the growing importance and greater integration of Asia, and the stronger interlinkages with other emerging economies in the global economic landscape. China and the region are becoming more than just global exporters. The increased efforts are seen in the steps to develop more extensive investment and financial linkages in the region as well as the rest of the world through key strategic initiatives such as the One Belt One Road initiative, the Asian Infrastructure Investment Bank and the New Development Bank. Reflecting its expanding role in the global economy and the international financial BIS central bankers’ speeches  1  system, the renminbi will assume greater strategic importance in facilitating the development of these new investment and financial linkages, including meeting the greater demand for infrastructure spending. This is also reinforced by the transition of Asia from a global producer to a global consumer thus becoming an important driver of growth in the world economy. The rise of the renminbi is often associated with expectations of rapid capital account liberalisation. In this regard, the historical experience of the major currencies over the recent fifty years holds important lessons for the renminbi.

At the same time, China is improving the global renminbi settlement and clearing system through a wider network of renminbi clearing banks and the upcoming Cross-Border Interbank Payment System (CIPS) to lower the transaction costs for the renminbi relative to other major currencies. Currently, there are at least five hundred global investors, including sixty or more foreign central banks and sovereign wealth funds, that have gained direct access to China’s financial markets. Many more have access through the Hong Kong-Shanghai Stock Connect. Malaysian institutional investors seeking to internationally diversify their investments would need to intensify the learning curve process in the Chinese financial markets to realise its benefits. Malaysia: A pioneer in the cross-border use of the renminbi Malaysia was one of the earliest countries to recognize the potential role of the greater crossborder use of renminbi. Given China’s significance as Malaysia’s largest trading partner, the settlement of trade and investment in renminbi significantly lowers costs and promotes greater cross-border trade and investment activity. In turn, fund-raising activity in renminbi has become a means for Malaysia to utilise the renminbi liquidity obtained through trade settlements. Malaysia has a comparative advantage in this area, as the largest debt securities market in Southeast Asia and as a leading centre for sukuk issuance. As an early pioneer of renminbi initiatives, Bank Negara Malaysia (BNM) was the first ASEAN central bank to sign a currency swap agreement with the People’s Bank of China (PBC) in February 2009.
Social costbenefit analysis requires skills which charities themselves can rarely afford to hire. Or, put differently, as a charity why would you spend money on an analyst if it came at the expense of helping a homeless person or a sexually-exploited child? You wouldn’t – and, in the main, they don’t. 25  PBE (2013). 26  PBE (2011)  27  See http://www.volunteering.org.uk/resources/esv-resource-hub/case-studies. 28  UK Civil Society Almanac 2014, National Council for Voluntary Organisations (NCVO). 29  Ní Ógáin et al (2012). 10  BIS central bankers’ speeches  It is precisely this market failure that PBE was created to help correct. Economists have precisely the analytical skills that charities themselves can ill-afford. If these skills are volunteered, then they can be matched into charities to help plug that societal externality. That is why studies evaluating the social benefits of charitable interventions have been a key element of PBE’s work since its inception. Volunteering and public policy So where does this leave us? Let me now do what I told you at the beginning I would try to resist, by adding-up the layers of the volunteering onion: •  We have a volunteer army, the full-time equivalent of 1.25 million people, diverse in age, gender, background and ethnicity and potentially growing in number. •  They create each year economic value of at least £ billion and potentially higher. •  They create private value for individual volunteers of maybe as much again.

Mr. Heikenstein discusses the Swedish financial crisis of the early 1990s Speech by the Deputy Governor of the Bank of Sweden, Mr. Lars Heikenstein, at a seminar arranged by the Swedish embassy held in Seoul, Korea on 15/7/98. Let me begin with a thank you to the organisers of this seminar. I am honoured to have the opportunity to share with you some experiences from the Swedish financial crisis in the early 1990s. 1. Introduction An IMF study from 1996 showed that in the past fifteen years, 132 of the Fund’s 182 member countries had experienced macroeconomic and/or financial crises. Today the figure is even higher. Crises are a recurring phenomenon. In spite of every effort to prevent them, I fear that crises will continue to occur. We should therefore use the opportunities to learn from each other, both in order to avoid making the same mistakes and to find the appropriate correctives sooner. Needless to say, there are no single “best solutions”. Crisis situations are always specific in some respects, not least with regard to their structural and political environment. Had they not been specific, they would probably never have occurred because they would have been “spotted” in advance. Having said this, however, there are a number of globally accepted “truths” about what constitutes a good response to crises. Discussions around crisis situations are usually divided into two parts: crisis prevention and crisis management. In this presentation I will be focusing on the latter.
In my view, monetary policy measures and instruments alone are inadequate for the task of effectively checking and preventing systemic crises. In the second part of my talk, I shall therefore focus on the regulatory response to deal with potential instabilities within the financial system. One possible response to the inadequacies highlighted by the crisis would be to strengthen macroprudential supervision and regulation. In this case, the interaction between these measures and monetary policy would have to be borne in mind. Thirdly, institutional aspects play a key role in the restructuring of the regulatory environment. I will outline these briefly in the final part of my talk. Monetary policy after the crisis Let me start by reviewing the objectives and instruments of central banks in the light of recent events. Comparing today’s world with the situation a few decades ago, it becomes evident that much has changed. Deregulation of the financial markets has increased and globalisation has progressed extremely fast – in the real economy as well. The brisk level of trading made a significant contribution to the long-lasting worldwide upswing in recent years. This was supported by the credible policies pursued by central banks, which increasingly prioritised the goal of price stability, thus contributing to a global reduction in the level and volatility of inflation. The battle against high inflation appeared to have been won. Overall, this led to firm expectations of low inflation and a dramatic drop in risk premia in virtually all areas of the financial markets.

Then I will consider whether monetary policy should step up its focus on the goal of financial stability. With regard to measures taken during the crisis, I can say straight away that the effectiveness of monetary policy instruments was clearly demonstrated. We were able to safeguard price stability and cushion the negative impact on the real economy. However, vigorous interest rate cuts were not sufficient on their own – neither in Switzerland nor in other countries. The liquidity situation on the money markets initially remained extremely tense. In many cases, interest rates rapidly dropped to zero. The chief monetary policy instrument could thus no longer be used. Central banks around the world therefore adopted so-called unconventional measures. These included direct intervention in the financial markets by buying assets, such as long-dated government bonds, debt securities issued by private borrowers and foreign exchange. Another measure was the temporary expansion of liquidity provision to banks beyond the “normal” level – for example, through repo transactions with unusually long maturities of up to one year. These measures were taken for two reasons. First, they permit further monetary easing if the desired stabilisation of prices and the economy cannot be achieved through cutting interest rates alone. Second, unconventional measures can be justified by the central banks’ role as lender of last resort. Its role, in other words, of providing emergency funding for financial institutions that are facing short-term liquidity bottlenecks.
Also, as discussed in depth in our Financial Stability Report, our financial system is well prepared to deal with more adverse conditions abroad without becoming an additional source of unrest. But as I said before, there are important risks. We are attentive to the evolution of the external scenario and its effects on our economy. We have the tools necessary to deal with adverse situations, and, most importantly, we have the firm determination to act to mitigate the impact of external environment on the Chilean economy. Now let me describe in detail the current macroeconomic scenario, our projections, the risks that remain and where our economy – particularly its financial system – stands, to address them. Macroeconomic scenario As I just said, economic and financial developments of the past few months have been dominated by events from abroad. The crisis of the Eurozone has widened and deepened as distrust builds up with respect to the region’s fiscal, banking and economic situation. All this has reflected in high volatility in global financial markets, increases in risk premiums and liquidity, falling prices of financial assets and commodities, an appreciation of the dollar and a downward revision of global growth projections (figure 1). The transmission of the global crisis to the emerging world has proceeded through the financial channel – via higher debt premiums and net capital outflows –, falling commodity prices – especially for metals and agricultural products –, and a reduction in manufacturing exports.

(2) Considers long-term interest rates on corporate and bank bonds with over 9-year duration, except for BBB bonds, which considers more than 8-year duration. Sources: Central Bank of Chile and LVA Índices. Figure 4 Stock-index volatility (*) (annualized percentage) 60 Hungary  July-December 2011  50  France Germany Spain Russia Brazil S. Korea Chile Turkey Mexico Australia Hong Kong U.K. U.S.A. Taiwan India Colombia N. Zealand Philippines China  40 30 20  Peru  10 0 0  10  20  30  January-June 2011  40  50  60  (*) Calculated with daily return of stock indexes, base 100=2010. Data at 16 December. Fuentes: Banco Central de Chile a base de información de Bloomberg. 8  BIS central bankers’ speeches  Figure 5 Retail sales and new car sales Emploment and unemployment rate (index, centered on mean of period (1)(2) (index, 2003=100) 1990-2010) 40 225 375 30 200 300 20 10  175  225  150  150 -10  125  75  100  0  0  -20 -30 -40 90 93 96 99 02 05 08 11  06 07 08 09 10 11 Non-durables  New cars  Employment  Unemployment  Durables (1) Sold in moving quarter. (2) Seasonally-adjusted series. Sources: Chile's National Automobile Association, Central Bank of Chile, Chile's National Chamber of Commerce, and Ricaurte, M (2011), “Indicadores de Mercado Laboral para la Comparación de las Crisis Asiática y Financiera Internacional,” preliminary document, Central Bank of Chile, June.
The Basel countercyclical capital buffer is the primary supervisory tool to implement regulatory capital requirements that vary over the credit cycle, but stress testing has cyclical elements as well. Both stress scenario design and the starting condition of banks’ balance sheets – the credit characteristics of the loan and securities portfolios, the extent of currently non-performing loans, exposures from trading and counterparty positions – can result in differences in stress test severity over the cycle. What is the optimal degree of cyclicality for the stress testing regime? How does cyclicality of stress testing interact with other cyclical elements, such as the countercyclical capital buffer and the incoming current expected credit loss (CECL) approach to loan loss provisioning? How should the piece fit together? Finally, one concern that has been raised about the Federal Reserve’s approach to stress testing and integration into the CCAR program is that of “model monoculture” – the idea that banks will be incented to develop models that mimic the Fed’s models rather than developing their own independent approaches.17 Significant commonality in modeling approaches in the banking system could result in banks adopting similar risk exposures and hedging techniques, exposing the sector to additional systemic risk and potential future instability. How do we measure this risk? What should we think about differences (and similarities) between bank-generated and supervisory stress test results, both for a particular stress test cycle and over time?

A stress testing regime that incorporated these feedbacks, including the potential for liquidity pressures, bank runs, and firesale risk, would be considerably more complex to implement, and would likely involve a greater degree of abstraction and simplification – and thus less “precision” – than the current supervisory capital stress tests. In that regard, the drive for precision and accuracy at the individual institution level – and the resulting complexity of the supervisory models and extensive firm-specific data inputs needed to run the models – has created other challenges. Perhaps the most notable of these is that generating the supervisory projections is resource- and time-intensive, which limits the number of scenarios that can be assessed during any particular CCAR cycle. Some have suggested that stress testing would be more effective if many supervisory scenarios were examined, instead of just a few. Any individual scenario could miss important risk exposures at individual banks or in the sector as a whole. Turning that thought around, a single scenario might not uncover true capital vulnerabilities at all institutions. The bank-generated scenarios that are part of the CCAR program are certainly an important channel to address concerns about idiosyncratic risk, as banks are meant to self-identify the scenarios that would be especially stressful for them. But running multiple common supervisory scenarios could provide a more robust assessment of the capital strength of the broader banking industry, at least as represented by the firms taking part in the CCAR and DFAST programs.