samchain/econo-pairs-v1 huggingface dataset:
A number of banks have established dedicated funds or have tailored business packages that are specifically designed to meet the demands of small enterprises. In contrast, however, the concept of investing private money in small enterprises has yet to gain currency in Malta, and the commitment of government funds for the establishment of the first official venture capital fund has so far not been followed up by private investors. Conclusion Small businesses have undoubtedly contributed to the resilience shown by the Maltese economy during the recession. Indeed, the majority of emerging niche industries in both the manufacturing and the services sector belong to this category. Going forward, they could also play an important role in sustaining the recovery. This calls for the creation of a more  8  Flash Euro Barometer No. 196 – Observatory of European SMEs. BIS Review 50/2010  5  congenial environment, which not only allows entrepreneurship to flourish but also focuses on the ingredients that will become increasingly important in the post-crisis economic environment. These include a greater emphasis on innovation, research and development and marketing, drawing on EU and public and private financial assistance schemes. Without such a proactive orientation, small businesses cannot hope to overcome the limitations inherent in a small domestic market. 6  BIS Review 50/2010

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As part of this work, the Bank, alongside the Treasury and the Financial Conduct Authority, has convened an industry working group, to help overcome some of the barriers to investment in productive finance. And finally, growth in potential supply is also being supported by fiscal policy. Last week’s Budget, and the Build Back Better policy paper released by the Government alongside it, outlined a range of measures the Government is taking to support economic growth through significant investment in infrastructure, skills and innovation. Let me end on the fourth point, what does this all mean for monetary policy? There is a growing sense of economic optimism, in markets and in consumer and business confidence measures. The rate of new Covid infections is declining, and the vaccine programme is a huge achievement. There is light at the end of the tunnel. A note of realism though: our latest forecast in essence painted a picture of an economy that starts at a lower level of activity as a result of the current restrictions and people’s natural caution associated with the renewed onset of Covid, which then gets back to where it was pre-Covid by the early part of next year. The level of activity in a year’s time is broadly similar in the February forecast as it was in our November forecast, although the recovery is faster because the starting point is lower. There is good news in that projection, with a rapid recovery later this year, and inflation returning to around our 2% target.

Foreign participation in the Thai bond market decreased from a peak of 13 percent to the current level of around 10 percent of total outstanding public sector bond. The strong local institutional investor base was able to pick up from where foreigners left. Despite foreigners exiting the Thai bond market, total portfolio outflows last year (2014) amounted to a mere 1 percent of our international reserves. A flexible exchange rate, a relatively balanced external position and a modest external exposure, altogether acting as the first line of defence, contributed to the success. The Bank of Thailand is also equipped with comprehensive policy tools, along with ample international reserves, that can be used as a backstop to deal with disruptive capital flows and to  1  Examples of anti-corruption measures are 1) the Construction Sector Transparency Initiative (CosT) which promotes transparency in state enterprise projects and 2) Integrity Pacts which oversee purchase plans of government and state enterprise projects. Among the big projects already implemented are 1) Suvarnabhumi Airport Phase II 2) the Blue Line metro extension, and 3) Bangkok NGV bus purchase plan. 2  Total corporate debt / total corporate equity. 2  BIS central bankers’ speeches  safeguard financial stability. In fact, these are our multiple lines of defence available at our disposal. Ladies and gentlemen, We, should not be under the illusion, however, that good fundamentals can be taken for granted. In fact, the slowdown of economic growth in the recent years pinpoints to structural problems, holding back the economy.
But capital ratios have declined and leverage has risen. Immediately prior to the crisis, leverage in the banking system of the industrialised world had increased to astronomical levels. Simple leverage ratios of close to 50 or more could be found in the US, UK, and the continent of Europe, driven in part by the expansion of trading books (Brennan, Haldane and Madouros, 2010). And banks resorted to using more short-term, wholesale funding. The average maturity of wholesale funding issued by banks has declined by two thirds in the UK and by around three quarters in the US over the past thirty years – at the same time as reliance on wholesale funding has increased. As a result, they have run a higher degree of maturity mismatch between their long-dated assets and short-term funding. To cap it all, they held a lower proportion of liquid assets on their balance sheets, so they were more exposed if some of the short-term funding dried up. In less than fifty years, the share of highly liquid assets that UK banks hold has declined from around a third of their assets to less than 2% last year (Bank of England, 2009). Banks tested the limits of where the risk-return trade-off was located, in all parts of their operations. As John Kay wrote about his experience on the board of HBoS, the problems began “on the day it was decided that treasury should be a profit centre in its own right rather than an ancillary activity” (Kay, 2008).

Financial intermediation does add value, but not as much as the statistical convention would suggest. Moreover, a financial sector that takes on risk with the implicit support of the tax-payer can generate measured value added that reflects not genuine risk-bearing but the upside profits from the implicit subsidy. And even without an implicit subsidy the return to risk-bearing can be mismeasured. It is widely understood that an insurance company should not count as profits the receipt of premia on an insurance policy that will pay out only when a lowfrequency event occurs at some point in the future. But part of the value added of the financial sector prior to the crisis reflected temporary profits from taking risk and it was only after September 2008 that much of that so-called economic activity resulted in enormous reported losses by banks. It is possible to make a very rough estimate of the possible size of this distortion in the reported financial sector output data. If we assume that true labour and capital productivity in the financial services industry grew in line with that in the wider economy in the 10 years prior to the crisis, then, given the inputs of capital and labour over that period, the official estimate might have overstated UK financial sector value added by almost £ billion up to 2007 – around half of the growth in the official measure.
However, this should not stop an action started by the supervisor to deal with a presumed problem in the bank. The supervisory management and staff must also have reasonable protection should they be sued for their bona fide decisions taken as supervisors. In some countries the supervisors are harassed by frivolous lawsuits by bank owners, managers or other parties. Even if the supervisor is in the end acquitted from any guilt, the process may take years. During this time the supervisor will be severely hampered in performing her job having to concentrate on her defence. Such lawsuits will also reduce the willingness of other supervisors to take necessary supervisory decisions, since they are themselves afraid of being sued. A first line of defence is to take all major supervisory decisions in a collegiate fashion at the top level. Thus only the agency such can be sued as an institution. Nevertheless, should individual supervisors be sued, they must be provided assistance in the court proceedings, such as legal counsel and protection against any costs. Of course, if the supervisor is finally found guilty and have not acted in good faith, the supervisory agency could reclaim any outlays. The second issue is that the supervisors must have a sufficiently large and skilled staff with satisfactory resources. With too few, or not adequately skilled supervisors, bank problems may not be detected early enough which may lead to major crises. With too many supervisors interventions in the banks might become excessive, thus interfering in banks’ daily business.

The levels of growth, employment and prices for real and financial assets could not be maintained. Partly for these reasons, Sweden experienced a profound crisis. Had the adjustment been made earlier and resulted in stability, perhaps the crisis would have been less painful. In recent years, however, the process of adjustment in Sweden has come a long way. The economy is in the process of adjusting to the conditions that apply in a low inflation regime. This is being accompanied by an appreciable improvement in government finance, not least as a result of the extensive consolidation programme. From a two-digit level just a few years ago, for 1996 it seems that the government deficit has been reduced to between 3 and 3.5 per cent of GDP. Moreover, the improvement is expected to continue. That the consolidation of government finance proceeds successfully to the goal of balance in 1998 is of the utmost importance in that this lays a foundation for balanced, sustainable growth. With the new, globalised capital market, the need for discipline in economic policy soon makes itself felt, particularly for a country that has had a difficult period of deficits and has therefore become more dependent on domestic and foreign creditors. After all the experiences earlier in the 1990s, this is widely understood in Sweden. The resolution with which the consolidation is being achieved has been questioned from time to time.
The lack of supervision also applied to Long Term Capital Management, LTCM, some years earlier. One might wonder whether function rather than company type might not be a better base for supervision. There is otherwise a risk that functions essential to society and thus needing protection will be transferred to companies not subject to supervision. At the same time, the public sector is in practice forced to intervene if the failure comprises a threat to the system, regardless of whether it has been able to exercise supervision. To what extent Enron was involved with functions that can be assessed as worth protecting is a question for discussion, but it is an important question of principle. We cannot and should not regulate all companies involved with financial operations, e.g. in managing their own funds. Secondly, it appears obvious that accounting regulations, at least those in the US, have not developed at the same rate as the instruments and forms for capital acquisition on the financial markets. Is it really reasonable in the long term for an increasing number of companies' risks to be reported off balance sheets? In the case of Enron, it also appears that there were risks that did not need to be reported at all, according to the regulations in force, such as liquidity risks that were triggered by a down-rating.

These are questions I wish to discuss now, however more with the aim of provoking some interesting ideas rather than providing any ready-made answers. Are the markets more robust? Let me begin with the question of whether the markets have really become more robust, in the sense that they are now less sensitive to disturbances. There are some arguments in favour of this theory. One of these is directly linked to monetary policy and inflation. This is namely that an increasing number of countries have abandoned the ambition of maintaining a fixed exchange rate and chosen instead to focus their monetary policy directly on an inflation target. Openness and transparency have increased as a result of this, which in itself has probably improved the functioning of the markets. Inflation rates and inflation expectations have fallen and become more stable, which has led to significantly lower nominal rates. Uncertainty with regard to the future has thereby declined and the conditions for making the right investment and savings decisions have improved. All of this should have increased the stability of the markets. However, there are other arguments. Greater awareness of the need for maintaining central government finances under control has increased budgetary discipline and led to reductions in central government debts in most countries.
As much of these efforts will involve interface with other parts of the public sector, it has been my experience that the participation of the Central Bank in many of these agendas will require careful boundary management and a signing off when it is completed so that it does not remain permanently with the Central Bank. New institutional arrangements will need to be developed to render effective coordination across the public sector. Of great importance in this process is also to carefully safeguard the independence of the Central Bank. Conclusion As policy makers in emerging economies, we have the added responsibility of building institutions for the country. Our quest is filled with challenges but we can learn much from each other. Going forward, the transitions that are taking place in the global economy necessitate continuous institutional building at the national, regional and international level. A regional institution such as SEACEN has an important role in enhancing future talents, facilitating the sharing of knowledge, ideas and insights on policy management in the region and from its research on subjects important to the region. In conclusion, allow me to express my deep gratitude and appreciation to my fellow governors and to all my colleagues at the SEACEN member Central Banks and to SEACEN for all the cooperation and support that has been extended to me and to Bank Negara Malaysia throughout my career. For the friendship and for the collaboration, it has truly been enriching and special for me.

But regulators cannot halt the advancement of technology just so that they are ready to regulate. In this situation, our challenge is to ensure that we keep pace with technology so that we are able to offer the required protection to all who access financial services using the new and unconventional payments systems. On our part, the Bank of Zambia shall focus its attention on the development of a robust regulatory framework that will address the key “hot button” issues of; 1. Prudential requirements; particularly those that relate to liquidity management and capital for infrastructure,  2. Consumer protection; with emphasis on disclosure of charges and confidentiality of customer information, and  3. Unfair trading practices particularly those related to monopolistic tendencies such as development of platform that are not compatible or not interoperable with platforms of other service providers. To strike a balance between a robust regulatory framework and the need for the framework not to hinder innovation and allow business to flourish, our efforts in establishing a robust  2  BIS central bankers’ speeches  framework will therefore be anchored on five key or internationally accepted best practice principles. These are: 1. The need to identify the types of mobile payment platforms to be permitted;  2. The need for an efficient mobile payments infrastructure such as settlements systems;  3. The need to design rules to regulate the information communication technology platform which is itself rapidly evolving;  4. Consumer protection; and finally  5. The need for compliance monitoring.
In addition to encouraging trends in the global economy, the stabilisation of output growth in the euro area has contributed significantly to this. However, the most recent industry and consumer surveys also give positive indications with regard to economic activity in the euro area. Therefore, it is likely that economic activity will accelerate in the second half of 1999 and the year 2000. When assessing the risks for price stability, the ECB does also monitor the external value of the euro. The weakening of the effective exchange rate of the euro, which remained at around 8% between the start of the year and early September, lent itself to an increase in import prices denominated in euro. Taking into account all available information, the outlook for the preservation of price stability remains favourable. However, recently inflationary risks have increased slightly. In the coming months it will therefore be necessary to monitor developments in the monetary aggregates and credit aggregates. In addition, the short-term effects of the increase in oil prices and exchange rate developments on consumer prices need to be taken into account. The latter factors should not affect the outlook for price stability as long as wage increases remain moderate. The wage round for the year 2000 will, however, play an important role in future price developments. On the basis of this current assessment of the monetary, financial and economic situation, the Governing Council of the ECB left the central bank interest rates unchanged at yesterday’s meeting.

The second pillar consists of a wide range of economic and financial indicators: stock and bond prices, housing prices, exchange rates are also analysed in depth. Obviously, their assessment is made in the context of maintaining price stability over the medium term, and the ECB does not react to their signals unless price stability is endangered. To recap, if monetary policy does not react directly to asset price developments or to an asset price bubble, it has clearly to take under consideration all the consequences of these developments on aggregate demand and aggregate supply, on economic agents’ confidence and expectations, since they may at some point affect price developments. Let me now turn to my second point, that is the implications of asset prices bubbles for financial stability. 2. Implications for financial stability  Over the last decade, we have experienced several financial crises and contagion episodes: just to name a few episodes, the Mexican crisis in 1994-1995, the Russian-LTCM in 1998, the “Tech-Bubble” that ended in 2000, or more recently the financial crises in Argentina and Turkey. However, recent  2  J. M GUTTENTAG and R. J HERRING (1986), “Disaster myopia in International Banking”, Essays in International Finance, 164, Princeton University. BIS Review 28/2002  3  3  research has shown that, if the frequency of financial crisis is not significantly different from what was observed in previous periods over the long run (1883-1998), recent episodes were certainly shorter, but perhaps more severe.
This year, the squeeze on real income growth is likely to mean that both house prices and consumer spending weaken together. The housing market leads me to the second recent development – the reassessment and repricing of risk in the financial sector. It is clear that the housing market is being severely affected by the reluctance of the banking system to expand its balance sheet further. Banks are adjusting to the fact that many asset markets are unlikely to re-open in their old form and, as they do so, the supply of mortgage finance is being restricted. Once the adjustment in the financial sector is complete, banks will be able to resume lending. But the era of cheap mortgage finance that underpinned the housing market in 2006 and the first half of 2007 is over and, as a result, it is reasonable to expect the ratio of house prices to incomes to fall back, though with real interest rates still low by the standards of the past fifty years, not to previous averages. 2  BIS Review 79/2008  These changes to our spending power and to the housing market are “real” shifts that, although not easy to accept, we cannot side-step. Lord Mayor, we face the most difficult economic challenge for two decades. But I am confident that we can meet it. Inflation will fall back and growth will recover. But the cost of the necessary adjustment will depend on the credibility of the framework for monetary stability.

Monetary policy should not, and in the end cannot, prevent such changes in relative prices. They will show up either in higher consumer prices or in a lower level of other prices and pay. Either way, the result is the same – a loss of real purchasing power. This year our real take-home pay will rise at a slower pace than national productivity. Rising fuel, gas, electricity and food prices, mean that average real take-home pay will stagnate this year. It will not be an easy time, and I know that some families will find it particularly difficult. But it is only a temporary slowing in the growth of our real take-home pay and remember that this is the opposite side of the coin to the falls in prices of manufactured goods from countries such as China and India, which in the nice decade allowed our standard of living to rise at a rate faster than productivity. The squeeze on real take-home pay will arguably be an even more significant restraint on consumer spending this year than the credit crunch. And it will affect the housing market too – lower demand in the high street will go hand in hand with lower demand in the property market. I have said in the past that there is no causal link between house prices and consumer spending. That remains the case. How closely they move together depends on the underlying forces that are driving them both.