samchain/econo-pairs-v1 huggingface dataset:
Customers, especially the more sophisticated ones, will take their business to the foreign banks already in Singapore. The local banks cannot rely on government protection forever. Even if we had not liberalised the banking industry, the foreign banks here would still have been able to use technology and new delivery channels to compete for retail business. In fact, the most innovative foreign banks have been growing their market share despite the restrictions that we have placed on them. Over time, local banks that cannot compete would become marginalised. This would not be a good outcome. In the event of a crisis, we want to be able to count on strong institutions with a major stake in the country, whose interests will be aligned with those of the long term interests of the Singapore economy. Banks which are tied more closely to Singapore will be more likely to act in support of financial and economic stability. That is why MAS remains committed to building strong local banks with a significant share of the domestic market. This is the reality that Singaporeans must understand and accept, as we debate the pros and cons of bank mergers. If small banks were economically viable, we would not be meeting tonight with every Singaporean bank either a bidder or a takeover target. The fact that they are bidding and being bid for proves not just that the smaller local banks are vulnerable, but also that the bigger ones themselves feel insecure, and rightly so.

Despite this, it is still too early to give the all-clear. Imbalances in the housing markets have stabilised at high levels only, and the risks of a further build-up remain substantial, not least given the current environment of negative interest rates. Should there be renewed signs of a further build-up, I am confident that we could contain the problem. With respect to the TBTF issue, the knowledge and awareness of the risks stemming from our systemically important banks have improved significantly. As early as in 2011, Switzerland adopted a package of measures to address the core problems in this area. 9 On behalf of the Federal Council, the effectiveness of the Swiss TBTF framework was assessed by a group of experts in 2014. Overall, the assessment indicated that the chosen approach was appropriate to address the TBTF problem. At the same time, the experts concluded – rightly in the view of the SNB – that even the full implementation of the framework in its current specification would not solve the Swiss TBTF problem entirely. Therefore, supplementary measures have been proposed. 10  8  FSB (2014). This FSB report states furthermore that “compared to the country’s banking sector, the size of Swiss shadow banking is considerably smaller – by more than five times.”  9  The package consists of four complementary measures, namely, significantly more capital of better quality, larger liquidity buffers, rules imposing sufficient diversification to reduce counterparty risk, and organisational measures.
Depending on its design, such a rule book would either be permanently outdated and incomplete, because legislators cannot keep up with the rapid pace of innovation within the financial sector with meticulous regulation, or would have to regulate so rigidly that it would impose excessive restrictions on the functioning of the financial system. As is often the case, the most sensible option is in the middle. We need regulation based on principles which adapts to changes in banking and we need a supervisory authority that is capable taking action. Allow me to elaborate. •  Good regulations must be adaptable. They must be just as applicable to different business models as they are to different sizes of institution – they must fit large and small institutions alike. Good regulations must adapt to changing circumstances without legislators having continually to improve on them. Accordingly, the rules must provide room for discretion in individual cases. •  Good regulations must, however, also ensure a minimum level of planning and legal certainty for banks; that is the only way in which banks operate properly and provide their financial services over the long term. This holds particularly true of Europe, where banks play a greater role in financing the real economy than the capital markets.

In this respect, banks and financial market participants that act independently, and take responsibility for their actions, remain a prerequisite for a stable and secure system, even if it is well-regulated and supervised. Thank you for your attention. BIS central bankers’ speeches  5
As we get greater clarity over the coming year, I will update my assessment of the economic outlook and, with that, my views about the appropriate stance of monetary policy. Monetary and fiscal policy in a low-rate environment I also would like to highlight the limitations of monetary policy. One important factor contributing to such limits is that the real short-term interest rate consistent over the longer run with a neutral monetary policy stance appears to be very low, and is expected to remain so for some time. This has been helping to keep real inflation-adjusted interest rates lower than they have been historically. In part, this reflects anemic productivity growth as well as the slowing of labor force growth due to the aging of the population. An implication of this environment is that there will likely be less scope than there has been historically for the Federal Reserve to cut interest rates when needed in the face of an economic downturn. All else equal, this means a greater risk for short-term interest rates to be pinned at their effective lower bound and for inflation expectations to become unanchored to the downside. Although forward guidance and large scale asset purchase programs have expanded the ways in which the Federal Reserve can provide additional accommodation, these unconventional monetary policy tools also have their own limits. These limits suggest that fiscal policy may need to play a greater role in stabilizing the economy than has been the case in past decades.

What I have in mind here is putting in place stronger, more robust automatic fiscal stabilizers that would provide income support during economic downturns. By reducing fluctuations in disposable incomes, these types of fiscal actions would stabilize aggregate demand, thereby limiting the risk of monetary policy getting pinned at the zero lower bound for an extended period and the need for extraordinary monetary policy measures. I favor automatic, rather than discretionary, fiscal actions because they would typically go into effect more quickly and would be better anticipated. Expectations matter greatly in affecting economic behavior. For example, if the economy were to weaken, the anticipation that strong fiscal stabilizers would kick in to support incomes should lead workers to be less fearful about losing their jobs, and businesses to be less concerned that demand for their products might fall precipitously. This, in turn, would make workers more confident that they could sustain their spending, and would make businesses more confident that they could keep workers on their payrolls. What type of fiscal stabilizers would be most effective? I would turn first to those that Congress has implemented on a discretionary basis during past economic downturns, such as extensions of unemployment compensation and cuts in payroll taxes. For example, when the unemployment rate climbs, extensions of the duration of eligibility for unemployment compensation could be triggered automatically, helping to stabilize household income.
They have been defensive when it comes to granting technical access to new and innovative payment service providers, which will limit European fintech companies’ ability to provide competitive solutions. Indeed, I fear that global giants from outside Europe will use their network power to increase their presence further. In other sectors, European companies have succeeded in achieving global reach. In the car industry, for example, European vehicles set the standard when it comes to quality and reliability. There is no reason why this success cannot be replicated in the area of payment services – or financial services in general. The way we pay in Europe is changing. Significant numbers of consumers are moving to online payment channels, with retail payments increasingly being carried out via mobile phones. At the same time, virtual currencies have long been a topic of debate – and not only among experts, either. European citizens demand pan-European services that are safe and efficient. Consequently, there is a need to look carefully at the governance and regulation of payment solutions. Many payment channels are provided by non-European companies. Although those companies comply with our legislation and use our payment infrastructure, they are, for the most part, not domiciled in Europe. This increases our dependence on third countries. In particular, we have to be mindful of the fact that extraterritorial jurisdiction could, in a worst case scenario, affect the operation of those companies and disrupt payments between European counterparties.

European banks have relinquished their influence in this area, possibly because of short-term profit considerations. Indeed, large non-European companies now play a significant role in the provision of payment services in Europe, while European banks are focused solely on serving their national markets. Let’s face it: the foundations laid by European institutions have not been leveraged by European providers in order to offer pan European services. Instead, those foundations are often exploited by multinationals from outside Europe offering innovative, consumer-friendly solutions. Indeed, European banks seem to have surrendered much of the pan European payment business. PayPal now dominates the market for online payments in Europe, using the pan-European SEPA credit transfer and SEPA direct debit schemes to provide harmonised services. Meanwhile, 2/4  BIS central bankers' speeches  Google, Apple, Facebook and Amazon – often referred to collectively as “GAFA” – are also offering significant payment services with pan-European reach, some of which involve joint ventures with individual banks at national level. At the same time, Chinese giants like Alibaba and Tencent are advancing. While these companies are to be admired for their ability to expand and provide innovative services that consumers want, I would ask why there are no European companies competing in that arena. There is a risk that our dependence on foreign providers will increase further as regards the development of innovative payment services, since banks are resisting the objectives of PSD2 on this front.
As I have also said repeatedly, this is how the Central Bank of Chile contributes to the Chilean economy’s growth and stability. 6  BIS Review 9/2010  Figure 1 World growth (1) (annual change, percent) 15 12 9 6 3 0 -3 -6 -9 -12  15 12 9 6 3 0 -3 -6 -9 -12 80  84  88  92  96  00  04  World at market exchange rate  08  Chile (2)  (1) Gray area shows projections from 2009 onwards. (2) Growth for 2010 is the midpoint in the range of forecasts included in the Monetary Policy Report. Sources: Central Bank of Chile, International Monetary Fund and World Bank. Figure 2 Difference in growth in 2009 (*) (percent) 4 3 2 1 0 -1 -2 -3  Poland  Norway  Australia  Israel  Greece  Colombia  Chile  Brazil  Switzerland  Denmark  Korea  Canada  China  New Zealand  France  Belgium  Singapore  Netherlands  Spain  Sweden  United Kingdom  Thailand  Italy  United States  Germany  Japan  Finland  Turkey  -5  Hungary  -4  (*) Actual growth minus estimated growth. Growth estimate for 2009 based on change in the terms of trade, population, and per capita GDP. Sources: Central Bank of Chile, International Monetary Fund and World Bank.

But the extent to which an easing in the labour market induced by monetary tightening will weigh against inflationary pressures will depend on the wider context. It is here where the interaction with developments in energy prices plays out. Higher energy prices and the terms of trade In contrast with developments in the US, wholesale European natural gas prices have risen very sharply over the past year, and continue to show substantial volatility. Owing to the importance of pipeline infrastructure to the transport of natural gas, there is much less integration than for other energy commodities like oil. Notwithstanding Brexit, for these reasons, the UK remains closely integrated into the European natural gas market. Gas price developments in Europe have departed very significantly from those in the US, owing to the disruption to supplies of gas from Russia in the aftermath of the Russian invasion of Ukraine last February. The rise in European gas prices came as a genuine surprise: the Russian invasion was not foreseen in the autumn of 2021, and the duration and intensity of the subsequent conflict have anyway proved greater than expected at the outset. The rise in gas prices has therefore been substantial: at its peak in late August, the April natural gas future stood more than ten times higher than a year previously.
In this regard, the Banco de España’s latest projections point to a substantial downgrade in GDP growth in 2022 and 2023, while the rate of inflation is expected to rise sharply this year. Second, economic policies have a pivotal role to play in this scenario. On the one hand, European economic policies and domestic fiscal policies must respond decisively, providing targeted support to the most vulnerable households, businesses and sectors affected, and offering certainty. It is important to ensure that such action is indeed selective and temporary in the case of the fiscal policy of a country like Spain, whose room for budgetary manoeuvre, already very limited before COVID-19, has been significantly further eroded as a result of the pandemic. Meanwhile, amid sharply rising inflation, the ECB has taken gradual steps towards normalising its monetary policy, already leading to a slight tightening of financial conditions. Looking ahead, monetary policy decisions will depend on the new data and, given the significant degree of uncertainty, flexibility, gradualism and optionality will be maintained. We are clearly committed to adopting all such measures as may be necessary to ensure price stability and safeguard financial stability. Lastly, amid the current upsurge in the price of energy and certain other commodities, it is vital to guard against the emergence of second-round inflation effects, particularly in the form of a wage-price spiral. In the short term, preventing this feedback loop is neither easy nor, above all, agreeable.

Finally, the low real exchange rate stimulated exports and other traded goods sector activity. Moreover, the composition of Iceland’s exports is such that they are somewhat less cyclically sensitive than, for example, exports of motor vehicles and consumer durables. The net result was that Iceland’s exports held up well in comparison to world trade overall, as can be seen in Graph 3. Some of these factors were temporary, however, and the price was paid this year. Contrary to earlier (probably unrealistic) expectations, Iceland did not recover from recession in the first of half 2010. That means that Iceland will emerge from recession later than most other countries, many of which began to recover in the second half of 2009. But given the huge imbalances in the Icelandic economy during the boom and the size of the shocks it sustained, this is not surprising when measured against the broader historical record of countries experiencing major financial crises. In both international and historical comparison, Iceland has gone through a deep and a somewhat drawn-out recession, as can be seen from the following graph. BIS Review 139/2010  5  Perhaps recovery has only just started, but the signs of stabilisation are all over the place. The huge current account deficit of the boom period has turned into a surplus if we exclude the accrued interest on the debt of the failed banks, interest that will probably never be paid.
In this kind of uncertain economic environment, it is all the more important that we should be trying to maximize the opportunities to develop trade and investment links between neighbouring economies. That is why this Symposium is timely and important. The existing economic links between Fujian, Hong Kong and Taiwan provide a solid platform on which to build for the future. Taiwan and Hong Kong are already major trading partners with Taiwan’s exports to Hong Kong accounting for 23.5% of its total exports in 1997. Visitors from Taiwan also account for a significant proportion of the total number of visitors to the territory and thus make a major contribution to the tourist industry in Hong Kong which, as you will know, currently needs all the help it can get. 4. Trade between Hong Kong and Fujian is also growing rapidly in both directions and both Hong Kong and Taiwan are a major source of overseas investment into the Province. There are over 10,000 Hong Kong enterprises in Fujian. 5. The Hong Kong presence in Fujian includes a number of banks from Hong Kong, including Bank of East Asia. The same bank also maintains a branch in Taiwan which puts it in a good position to take advantage of the triangular trading links between Fujian, Hong Kong and Taiwan. In its role as an international financial centre, Hong Kong is also the host to a number of banks from Taiwan. The Taiwanese presence here consists of 4 licensed banks, 2 restricted licensed banks and 3 representative offices.

1  Testimony of Ben S. Bernanke, Nomination hearing before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, November 15, 2005. 2  Remarks by Governor Edward M. Gramlich, Federal Reserve Board, “The Politics of Inflation Targeting”, Paris, France, May 26, 2005. BIS Review 80/2006  3  Norges Bank’s practice in this respect is in line with the recommendations of leading academics in the field of monetary policy, such as Professor Lars Svensson 3 : “… announcing the optimal projection – including the instrument-rate projection – and the analysis behind it would have the largest impact on private-sector expectations and be the most effective way to implement monetary policy.” Norges Bank’s interest rate projection is based on seeking to achieve an interest rate path that provides a reasonable balance between the objective of stabilising inflation at target and the objective of stabilising developments in output and employment within a reasonable time horizon, normally 1 – 3 years. Interest-rate setting is also assessed in the light of developments in property prices and credit. Norges Bank forecasts inflation, output and the interest rate simultaneously. There is considerable uncertainty associated with the estimates of capacity utilisation in the economy (the output gap), and there is no simple relationship between developments in capacity utilisation and developments in inflation. It cannot therefore be argued with great conviction that it is possible to identify one particular interest rate forecast that provides the indisputably “best” trade-off in monetary policy.
BIS central bankers’ speeches  3  of new regulation,8 or try to model impediments to trade in the form of preferred habitat frictions9 or search frictions.10 These new models provide fresh insights and can also be useful for us in communicating with academics and market experts. These improvements are notable because they represent a significant departure from views that were espoused a few decades ago.11 Much research before the crisis put too much faith in market efficiency and spent too little time exploring the detailed plumbing of the financial system.12 Empirical work can also contribute to our thinking about monetary policy implementation. What more can we learn about the relationship between different money markets, such as the spreads between various secured and unsecured rates?13 How much should we care about volatility in money markets and how does that volatility affect the monetary policy outcome? We saw some interesting work on the topic today.14 In the United States, we also have the benefit of internal work, now public, that we undertook previously. The Federal Reserve had started to examine ways to improve its policy implementation framework before the crisis. Analytical work between 2006 and 2008 provides a solid foundation from which to build. As you may recall, in 2006 Congress granted the Federal Reserve the authority to pay interest on reserve balances held by depository institutions, and this authority was originally set to become effective in 2011.15 We went to work to try to understand how best to employ this new tool.

This prudence is well captured in the FOMC’s Policy Normalization Principles and Plans, released in September 2014, which note that, in the long run, the Fed’s balance sheet should be no larger than necessary for the effective and efficient implementation of monetary policy and should consist primarily of Treasury securities.24 We also need to make sure that the impulse of monetary policy is transmitted effectively to the real economy. Given the growing importance of nonbanks in many money markets, especially in the U.S. dollar markets, we should think about the counterparties with whom we interact. Would expanding the types of counterparties that we do business with increase the effectiveness of monetary policy? What are the costs and benefits of interacting with counterparties beyond our traditional set? Any long-run monetary policy implementation framework should be assessed relative to goals. That assessment may be informed by recent experience. For example, a framework should allow us to achieve an appropriate degree of control over short-term rates, both in normal times and during periods of financial distress. It should also be as robust as possible to potential structural changes in the financial system. The framework should enhance our ability to achieve macroeconomic objectives at very low or even negative interest rates. Further, it might be important to consider the framework’s ability to address liquidity strains in money markets and to support overall financial stability.