samchain/econo-pairs-v1 huggingface dataset:
It would ensure regular supply of international liquidity, but could only provide partial protection against exchange rate volatility and valuation losses. There is an important trade off, there , which is the essence of a new “Triffin dilemma” and which cannot be avoided when looking at the public supply of international liquidity, whether by one nation or within a multilateral framework.   More fundamentally, a new currency which would provide a reliable store of value would, in fact, grant its holders a collective guarantee against exchange risk. That guarantee would benefit surplus countries and would be given by deficit countries. This issue was intensely debated when the substitution account was discussed and negotiated within the IMF, more than 25 years ago. It became clear, at the time that it would not be accepted by many countries unless some explicit, binding and symmetric rules on balance of payment adjustments were agreed upon simultaneously. Most likely, those questions would be raised again today and the creation of a new reserve currency would have to be part of a broader framework. Conclusion and provisional policy lessons Looking at the next decade, one can project two alternative – and polar – scenarios for the evolution of the international financial system. First, a scenario of progressive and partial fragmentation: no significant capital account opening would occur in many parts of the world.

Excess saving in some parts of the world would be efficiently allocated to investments in other regions. Risk would also be efficiently shared between agents and countries according to their respective needs and risk appetite. Shocks to GDP and/or consumption would be smoothed over time. And, finally, liquidity would be permanently available for those agents and countries whose solvency was not in doubt. In such a world, balance of payments crisis would not exist. Current account imbalances would not matter as they would reflect savings and investment decisions made by fully informed and non constrained rational agents. This vision may serve as a reference for future reforms: “The vision that underlies most proposals for reform of the international financial system is that the international capital markets should operate at least as well as the better domestic capital markets” (Fisher, 1999). But, of course, we don’t live in such an ideal world. Global capital markets are neither fully integrated nor complete. Complete markets do not exist, either at the national or international level, for a broad array of securities. Moreover financial markets are still naturally fragmented by national borders. Specifically, we can identify five important deviations from the model of perfect international markets: 1. Information asymmetries. These are natural features of all financial markets and they give rise to significant frictions through, in particular, adverse selection and moral hazard which prevent many profitable investments to be properly financed.
Even if it is too early to tell, we can see that the financial support plans have contributed to a certain degree of recovery in the markets. Interbank rates are falling, credit spreads are narrowing and liquidity is returning in some markets. However, most of the content of the support plans is directed at handling the most pressing problems in the financial system. In the longer term other measures will be needed, and this is what I will discuss now. What are the future challenges? Let me first say that we need to realise that times of financial turbulence are unavoidable and something that we have to learn to live with. What is important is that we learn from previous experiences and use this knowledge to lower the probability of future crises occurring, and when they actually do happen, to mitigate their costs. We also need to realise that despite the many similarities between various crises they are never exactly the same. Therefore, flexibility is needed in the policy frameworks aimed at preventing and managing financial crisis. If I may start on the prevention side, it is hard – given the present circumstances – not to get in to a discussion of what role monetary policy can play in preventing the build up of economic imbalances.

So, what is it that we need in order to achieve better crisis preparedness? As I just indicated, one important requirement is to have in place solid frameworks for the management and closure of distressed banks. Such frameworks include several different aspects, everything from deposit guarantee schemes to insolvency procedures. Basically, it is a quite technical mix of legal and financial measures which can look rather different from country to country. However, the basic concept applies to all. Frameworks should facilitate the quick and efficient closure of banks at a low cost to the deposit guarantee system, while making shareholders and uninsured creditors bear the responsibility for their investment decisions. It must also allow for special measures to be taken in the exceptional situation where the failure of a bank risks destabilising the financial system as a whole. Also in such situations, the government needs to have a strong negotiating position relative to the shareholders. Necessary ingredients for achieving all this are to allow distressed banks to be put under special receivership and to enable governments to issue guarantees and make capital injections. As a countermeasure the government obviously needs to have farreaching authority to take control of the institution, for example by requiring the compulsory sale of shares. 4  BIS Review 134/2008  With regard to central banks there is also reason to contemplate how crisis preparedness can be improved. For example, we need to consider how appropriate flexibility is achieved in the central banks’ operational frameworks to deal with extraordinary situations.
10  BIS central bankers’ speeches  15  Chart 9: Unemployment on a solid downward trend, and short-term unemployment now below pre-crisis average 5 6 months or less between 6 and 12 months over 12 months  4.5 4  3 2.5 2  Per cent  3.5  1.5 1 0.5 2015  2014  2013  2012  2011  2010  2009  2008  2007  2007  2006  2005  2004  2003  2002  2001  2000  1999  1998  1997  1996  1996  1995  1994  1993  1992  0  Notes: Dotted lines show averages computed over 2000–5. Source: ONS and Bank calculations. In the wake of the crisis, one reason that headline unemployment has not been a sufficient summary statistic for slack in the labour market is because of underemployment of those in work. Employees wanted to work more – perhaps to make up for lost income. This gap between actual and desired hours widened significantly (Chart 10). Since the start of 2013, it has been closing and most recently, rather sharply so. As overall employment growth remains strong (Chart 11), this may reflect a normalisation of working patterns, with desired average hours returning to their pre-crisis level, rather than an unwelcome decline in labour demand. An additional source of labour supply is net migration, which has recently been running above past averages.

The conclusion was that our annual stress tests comprised stresses of a scale and nature that encompassed even the worst case disorderly Brexit scenario and that the core banking system would be resilient to such an outcome, were it to occur. We have also assessed other parts of the financial system in the same vein. And of course over recent months, as we approached ‘crunch’ Brexit dates and events, we have developed and have been ready to implement contingency plans to respond to financial sector stress. I would make three observations about this work that has occupied an increasing amount of the Bank’s resources over the last year and a half. First, we have sought to address risks to financial stability. Financial stability is a high hurdle. It does not mean market or economic stability or absence of any disruption or absence of losses. 1  The March FPC statement noted that, while most risks to UK financial stability that could arise from a disruptive Brexit have been mitigated, in the absence of further actions some potential risks to financial stability remain. These risks were: the ability of UK and global banks to provide wholesale banking to EU clients; the operational risks involved with migrating businesses, assets, and contracts in a short period of time; and the ability of UK-EU counterparts to use uncleared derivatives to manage risks.
China didn’t adopt paper money again for several hundred years. Although paper money eventually made a comeback, it took generations. The second story I would like to tell is a bit more mundane: the story of my breakfast. On the way to this conference, I stopped to get a coffee and paid for it by tapping my phone against an ipad. Of the other people in line in the busy coffee shop, not a single one paid in cash – everyone was tapping cards or phones. The story of my breakfast won’t be a surprise to most of you – indeed card payments have become the norm in many parts of the UK. The proportion of UK payments made with cash has fallen from 60% in 2008 to 28% just ten years later. This of course has implications for financial inclusion, which I won’t cover today as I don’t have time to do the topic justice. The future of payments regulation  So, what do these stories have to do with payments regulation? Well, the story of my breakfast is just one tangible example of the transformation underway in payments. Transformation that could very well end with another leap forward in payments. But the story of the first paper money is a cautionary tale. Leaps in payments are not always forwards. And if mismanaged or poorly governed they can lead to a reversal or even a leap backwards.

2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  Ensuring that innovation in payments this time around doesn’t end in a leap backwards is important for two reasons. The first is that we want innovation to be sustained. Innovation in payments could bring significant benefits for users. Innovation could meet unfulfilled customer needs, widen access to financial services, lower costs, and facilitate better integration of payments with other platforms. Innovation could also support financial stability by increasing diversity in payment methods. Diversity means that if there is a problem with one way to pay, there are ready alternatives, reducing the risks of disruption from any one payment method. The second is that the ability of individuals and businesses to transact safely and smoothly is critical to financial stability. People and businesses need to be able to make and receive payments on time, with confidence, even in periods of economic uncertainty. The Bank of England’s Financial Policy Committee, the body charged with safeguarding financial stability in the United Kingdom, lists the provision of payment and settlement services as the first of the vital functions which the financial system as a whole performs in our economy. They define the very purpose of preserving financial stability as “avoiding serious interuptions in [these] vital functions”. Responding to innovation already under way  While some of the current innovation in payments is very visible, there is also significant innovation happening beneath the surface. Increasingly, the process of electronic payments has been disintermediated or ‘unbundled’.
CPI inflation had risen quite sharply, but was – and, I should say, still is – also expected to fall back quite sharply towards the 2% target. Provided that broadly “humped” path for inflation materialised over the coming months, the upside risk to medium-term inflation expectations seemed likely to subside. It was not a matter of my wanting to avoid surprising the markets in some narrow sense, which in the greater scheme of things is neither here nor there. Rather, I was concerned that an immediate move might, on balance, cause unnecessary confusion about the Committee’s view of the medium-term outlook for inflation and about monetary strategy. In the event, subsequent speeches by colleagues, and the medium-term perspective of the February Inflation Report, helped to keep that genie in the bottle. In February, I was strongly in favour of widening the width of the Inflation Report “fan chart” for inflation during the coming year, to underline the near-term uncertainty about, and the great difficulty in forecasting, the path of utility prices. It was vital to convey the medium-term prospect, and also that we stand ready to act if the risks warranted it. More recently, with Bank Rate at 5.25% and a modestly upward sloping money market curve, I have characterised monetary conditions as “edging towards restrictive”, so long as inflation does as expected fall back in the near term. That has been appropriate given the degree of pricing power apparently emergent in conditions of relatively high capacity utilisation amongst firms.

Ardian Fullani: Bank-business relationship in Albania Greeting speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the meeting “Business Bank Communication Day”, Tirana, 20 October 2005. *  *  *  Ladies and Gentlemen, Recently, the promising paces in the increase of crediting to the economy from the banking sector make us realize that the numerous meetings organized with the scope of approaching banks to businesses are finally producing their results. Nonetheless, it is yet, too soon to describe it as a victory. Without diminishing the significance of these meetings, I think that the expansion of business crediting is not an effortless issue to be solved, especially when considered that our economy is still in transition. Frequently, the solution to the arousing issues goes beyond the good will of both, the business and banking community. Thus, avoiding the rhetoric of the previous meetings which habitually sets one’s party claims against the other, I would like to emphasize the need of a better coordination of efforts by the two communities to the solution of various issues. A few days ago, on the privatisation anniversary of one of the participant banks present in this meeting, I stressed the necessity of intensifying the institutional relationship between the banking system and the different business associations. Therefore, this meeting is an outstanding example of putting this initiative into practice and I trust it will serve as a good start of the regular contacts between the banking association and the business one.
But as we strengthen international regulation, we must not lower our guard in terms of ethics. Ten years later, this would generate the opposite imbalance to that of 2007–08. In other words, there's a risk that the pendulum could swing back the other way. 2. Ethics must permeate the day-to-day practices and culture of financial institutions. Over and above the good intentions, declarations and codes of conduct, which did nothing to prevent the excesses that caused the 2008 crisis, the challenge now is for all actors from the bottom to the top of these organisations to adopt an ethical approach. As the "Banking Conduct and Culture" report of the Group of Thirty, which brought together private and central bankers and academics, asserted, the "tone from the top" must have an "echo from the bottom". This begins with the Boards of Directors and the management teams, who must always be exemplary, and who need to realise that their behaviour is scrutinised at all times for indications of what is acceptable and what is not, irrespective of their declarations of intent. Actions speak louder than words. It then requires employees to be trained and informed on ethical standards on a regular basis and not only on their first day on the job. Situations change; new developments can be an opportunity to reconsider existing practices; stakeholder expectations evolve. Ethics – just like technical issues – must be subject to constant communication and ongoing training. And this is no easy task.

But I am thoroughly convinced that in practice, in the financial sector and in society in general, we must respect the rules and behave ethically – even when we are respecting the rules. A number of cases that have recently made the headlines have also shown that citizens and customers alike are becoming increasingly demanding in this regard. Adopting the same reasoning, Paul Dembinski likes to quote Ricoeur's broader definition of ethics as "a wish for a fulfilled life – with and for others – in just institutions". 1. From this perspective, what is at stake is more than a simple contrast, but the sound balance and dynamic tension between compulsory rules and enduring, freely adopted ethics. There can be no doubt that the financial sector needs rules. This is not just a question of an activity that involves intermediation between different parties – each of which must be convinced that the rules are being properly applied – but it is also a question of managing risks, while protecting the interests of customers and policyholders. Financial instability also has substantial externalities on the economy, and on social cohesion through unemployment. The recent financial crises have brought the failings of the financial system into focus, not forgetting the impact of new technologies, such as high frequency trading, FinTechs, or crypto-assets. But rules have their limitations.
This will allow us greater flexibility to ringfence the subsidiary, and minimise contagion arising from problems that may emanate from the bank's home market or global operations, especially where the home jurisdictions have laws which favour depositors in the parent bank over depositors in overseas branches. Subsidiarisation will not turn the subsidiary into a local bank. The foreign parent bank will in most cases own 100% of the subsidiary and want full control over its activities. MAS will continue to treat the subsidiary as a foreign bank, and will exempt it from a requirement placed on local banks to maintain a majority of Singapore citizens or permanent residents on their board of directors. 6  BIS Review 61/2001  MAS is studying this issue and will make a decision later this year. We would not be the only jurisdiction with a subsidiarisation requirement. Several reputable jurisdictions, such as Australia, the US, and Canada, go even further and require that in order to accept any retail deposits at all, foreign banks must incorporate locally and meet the minimum capital requirements imposed on locally incorporated banks. Deposit insurance We will study the need for a deposit insurance scheme in Singapore. Unlike most countries, Singapore does not have a deposit insurance scheme. In the past, sound management and conservative practice by the local banks, coupled with strict regulation and supervision by MAS, helped to avoid problems in our banking system.

On the few occasions when a foreign bank has run into difficulties, MAS has managed to ring-fence the banks' Singapore operations in time – as we did during the Asian crisis – so that Singapore depositors did not suffer losses. However, as we liberalise, foreign banks will gain market share. Local banks will also venture abroad. The safety and soundness of both local and foreign banks will increasingly be affected by factors beyond our control. We have seen how in other countries even well-run international banks supervised by highly-regarded authorities can nevertheless run into financial trouble. Even as we strengthen MAS supervision, we cannot expect our supervisors to always be in time to pre-empt any difficulties that the bank has not prepared itself for. No government can promise to bail out depositors whenever a bank runs into trouble. If a government did so, depositors would lose the incentive to seek out sound banks, and banks would lose the incentive to lend prudently, knowing that even if they run into trouble their downside risks will be absorbed by the government. This is what bankers call moral hazard. However, in the absence of a deposit insurance scheme, there will be an implicit expectation, both by depositors and banks, that if something goes wrong, particularly with a large bank, the government will be there to pick up the pieces. And should a mishap happen, the government may come under strong political pressure to do so. This can be destabilising.
For most of the first half of my own working life - through the 1960s and much of the 1970s - the essential emphasis of economic management in the UK was on short-term aggregate demand management, with too little regard to the structural, supply-side capacity of the economy to meet that demand. Monetary and fiscal policy were used in combination to try to maintain an appropriate balance between what were seen as conflicting objectives of growth and full employment on the one hand and price stability and balance of payments equilibrium on the other. Slow growth and high unemployment were typically met with monetary and fiscal stimulus. As the symptoms of imbalance inevitably emerged - in the form of external deficits or accelerating inflation - attempts were made initially to suppress those symptoms through various forms of direct control (for example, foreign exchange controls or credit ceilings or prices and income policies) but as demand pressures built up macroeconomic policies had eventually to be thrown sharply into reverse. This was the go-stop policy cycle that resulted in the exaggerated boom-bust economic cycle, which was for a long time a pronounced characteristic of British economic performance. Such macroeconomic instability was disruptive in itself, but it also had the effect of encouraging short-term attitudes to both financial and non-financial investment, with a corrosive effect on our longer-term, supply-side capacity.

Very often such type of predatory lending results in perpetual debt since the interest rate is prohibitively high, and the borrower does not have recourse to legal aid or proper financial advice given that the transaction takes place in the informal financial sector. Increased financial literacy would avoid recourse to such financing and would facilitate greater reliance on the formal financial service providers. An important objective of enhanced financial literacy is to achieve greater personal accountability for post-retirement financial, medical and social needs. Unlike in the developed economies, the financial burden of those who have retired with respect to health and retirement costs are usually borne by the individual. This requires understanding of the various insurance products and other health care plans. The most sustainable approach to mitigating this type of risk is to have informed participation in health and retirement funding schemes. Greater understanding and knowledge of these financial risks through improved financial literacy is the first step towards actively managing these risks. Enhanced financial literacy can also contribute towards a more stable and sound banking system. A more discerning household sector can drive greater innovation, greater efficiency in terms of lower fees and charges and better quality of services. This combined with the monitoring by Central Banks to ensure that financial services are provided fairly and to ensure appropriate risk management and governance practices adopted by the industry increases the potential for enhanced stability and performance of the industry.