samchain/econo-pairs-v1 huggingface dataset:
In the real world, central bank independence relies on the willingness of key stakeholders–most notably governments and legislatures—to play by the rules and by the ability of central banks to gain legitimacy and credibility from stakeholders. Independence does not automatically guarantee credibility either. Being free from political interference from politicians does not make a central bank infallible nor free from undue influence from other actors. Credibility needs to be protected and cultivated amid social, political and technological change. Page 2 of 8  Central Bank of Chile July 2019  In a recent piece, the IMF illustrates the importance of central bank credibility (IMF, 2018). It shows that central banks can better accommodate shocks with smaller output loss and social cost the more anchored are inflation expectations to the policy target, with lower pass-through from the exchange rate to consumer prices and lower persistence of inflation. More generally, public policies should be more effective the more credible the institutions in charge of them, as it helps aligning the behavior of the public to the policy objectives pursued. This is surely more important for independent institutions that cannot rely of a broader set of incentives and controls to shape the behavior of their stakeholders. A key question then is how to build credibility. This is an issue only partly addressed by Economics. The rational expectations school would suggest adopting a clear-cut policy rule, communicating it openly and clearly, and ensuring strict compliance, to exploit the learning capacities from economic agents.

Some parts of the subregion sometimes have problems with floods, but in many parts there is permanent lack of even drinking water. Macedonia’s track record within the relations with the World Bank, can be assessed as quite successful. The World Bank has been one of the most important partners in the process of designing and implementing important structural reforms. The strong focus of the World Bank programs on the financial and the enterprise sectors, public administration, and business environment, has proved to be an important trigger and contributor to the productivity gains and real convergence of the economy. Personally, I am deeply grateful to the World Bank and the IMF for the contribution they have made in overcoming our existential problems. It is my personal opinion, however, that our need for the cooperation with and support of the World Bank is more than necessary. We have made some progress, but we have also encountered a lot of problems. The global crisis emphasized a number of structural issues that are bottleneck for the growth of the Macedonian economy. A comparative analysis shows that Macedonia has pretty low level of investments (on average about 15% of GDP during 1997–2007). Thus, further support which will lead to higher investments and higher stock of capital will play an important role for the long-term growth. We substantially lag behind those we want to keep up with. The unemployment rate is still staggering (32.4%).
We knew the nascent recovery was not yet secure. So we used the flexibility in our remit, given to us by Parliament, to return inflation to the target over a longer period than usual in order to support sustainable jobs and growth. To make our intentions clear, the Bank committed not to even think about raising interest rates from historic lows at least until unemployment fell back to 7%. That guidance gave businesses the confidence to hire and invest. It reassured households that the costs of servicing their debts were not about to rise abruptly at a time when they remained particularly sensitive to interest rates. And it evolved with the economy. The effectiveness of that policy has been reinforced by the healing of the financial sector. Prompted by the Bank of England, British banks have raised over £ billion in new capital in the past few years. They are right-sizing their balance sheets and re-focussing their businesses. The recovery has exceeded all expectations. It has momentum. There has been a sustained and sharp fall in the unemployment rate to 6.4%. Over 800,000 jobs have been created in the past year alone. We expect robust growth of 3½% this year and 3% in 2015. The challenge now is to secure a durable expansion; to make sure the economy realises its full potential. What does that mean for interest rates? With many of the conditions for the economy to normalise now met, the point at which interest rates also begin to normalise is getting closer.

Low domestic cost pressure In other words, the outlook from the autumn has so far remained largely intact, and economic activity is strengthening as expected. The situation is different for domestic cost pressure. In this respect, since the middle of autumn 2003, new data has gradually been received that has warranted changes in our view of the inflation situation. These relate to the labour market, which has been weaker than expected with consequences for our assessments of wage developments, to productivity, which has risen more than anticipated, with lower cost pressure as a result, and finally to actual inflation, which has been lower than expected, with effects also on inflation expectations, which have declined somewhat. Employment growth has therefore been weaker than expected, particularly at the end of last year. The same applies to the number of hours worked. The weak employment growth coupled with a lower number of labour market policy measures has resulted in higher unemployment. This rose from 4.5 per cent in February last year to 6.0 per cent in February this year. Business tendency data and other indicators currently suggest that employment growth in the private sector will be relatively weak in 2004. There are some signs that the labour market may be about to turn, but these are weak. Very recently, for example, the number of new job vacancies has increased slightly and redundancy notices have declined.
If this were the only correct interpretation, more favourable interest rates would not represent a genuine advantage for the Swiss economy, because the real interest rate advantage would be fully offset by a corresponding real appreciation of the Swiss franc. This has not been the case during the past decades. On the contrary, the real interest rate lead in our country has on average exceeded the trend in real appreciation. Therefore, the upward trend of the Swiss franc is only one of the reasons for the "interest rate island". More convincing explanations include the high savings rate in Switzerland, political stability, the efficiency of the financial sector, and a by and large investor-friendly legal framework. To the fore, however, are likely to be monetary arguments. In an international comparison, Switzerland has exhibited very low inflation rates and correspondingly low price fluctuations over a very long period of time. Beyond this, its higher-than-average gold and foreign exchange reserves create confidence. The relatively low Swiss franc interest rates may therefore be considered as a type of insurance premium paid by investors to hedge their portfolios against crisis situations. The more than three years of relatively calm co-existence with the euro have not significantly diminished the interest differential in favour of the Swiss franc. Currently, the difference between German and Swiss long term rates on government bonds still amounts to more than 1.5 percentage points.

Yet the stability and growth pact, which helps to ensure budget discipline in Euroland, imposes restrictions on the fiscal policy of the individual members. By contrast, interventions in the field of fiscal policy on a European level would hardly be in contradiction to the stability and growth pact. For a long time to come, however, the Union's budget is still likely to be too modest to bring about the desired effects within the Union by means of a stabbility-oriented fiscal policy. For the time being, fiscal policy is therefore not a realistic option. Finally, one should take into account that by its very nature a monetary union promotes the division of labour between the participating countries. Instead of being evened out, differences between countries may thus become more acute. In fact, regional specialisation in the United States is more pronounced than it currently is in Europe. Major industries have joined together in national clusters - car manufacturers in Detroit, software producers in Silicon Valley, the film industry in Hollywood. One might argue, in this context, that the Fed in Washington faces the same problems as the ECB in conducting a common monetary policy that fits economically diverging regions. However, there are two remarkable differences between the United States and Euroland. First, the US labour market exhibits a higher degree of flexibility, and second, the United States are a federal state with a large budget and fiscal policy power of its own. The European Union (EU) is still far removed from all this.
Since March, our world and the financial industry have changed before our eyes. Our workplaces were transformed overnight from offices to our homes. Our office mates now include our spouses, kids, and roommates. And, our colleagues became voices on the other ends of our phones or faces on our screens. What does all of this externally-driven change do to a firm’s culture? In the early days of the pandemic, the financial industry and the official sector responded quickly and forcefully to ensure that the provision of critical financial services continued despite the tragic health crisis, significant economic and financial uncertainty, and substantial operational challenges. Many were focused on solving the immediate problems and figuring out how to work remotely. This proved surprisingly effective, at least in the short run. From the perspective of cultural capital, this sudden and dramatic shift in how we work raises multiple questions. First, how does cultural capital influence outcomes in this new environment? How are we drawing on, or depleting, the cultural capital that already existed? Does this environment pose new challenges regarding behavioral risk? And finally, is it possible to identify new opportunities to build cultural capital in a predominately remote environment?

We have nowadays in our countries the same financial institutions and the same behaviour of such financial institutions in response to a centralized business development policy, growing cross-border interaction among businesses and households, similar trends in social life. Monetary and supervisory authorities in different countries in the region, to a large extent have responded to such developments with establishing formal cooperation with home country supervisory authorities, particularly in the area of banking system supervision, by signing bilateral Memoranda of Understanding (MoU). The fact that our countries are at the borders of the European Union (EU) has caused an increased presence of EU financial institutions, including banks. Hence, the MoU’s have been signed with these EU countries supervisory authorities. The quality of cooperation varies in different countries but one can say with reasonable confidence that the willingness of the host countries to cooperate has not always met the same interest from our counterparts. To an extent this is expected, because the assets of their banks in our single countries sometimes represent only a fraction of their total assets. Nonetheless, they should take notice of our concern that this cooperation is very important for us, particularly in cases where these foreign banks dominate our local markets. The liberalisation of the financial markets in Albania has been a desirable move. We consider the inflow of foreign capital an important factor to upgrade the level of our banking system, improve its efficiency and the quality of its products, by improving competition conditions in the marketplace.
Information on CHF-denominated loans  CHF-denominated loans do not pose a systemic risk because they hold a small share in GDP and also in total loans. CHF lending to the private sector stands for 1.4% of Romania’s GDP, while Poland and Hungary report levels five and seven times higher respectively. The proportions are the same as regards the share of CHF-denominated loans in total private sector loans: in Romania they account for 4.7%, while Poland and Hungary report levels three and five times higher respectively. The weight of CHF lending in total loans to non-financial corporations and households in Romania has followed a downward path since 2012, to 4.7% of total loans to these sectors. The development is also attributable to the notable decline in CHF-denominated loans granted since 2009. CHF-denominated loans were almost exclusively taken by individual borrowers. These loans account for around 10% of total loans to households, and individuals with CHF-denominated loans (75,412) account for 2.1% of the total number of individual borrowers. For comparison, in Poland, the number of CHF borrowers exceeds 500,000. The rationale behind the boom in CHF lending during 2007-2008 is in close connection with the social factors. The CHF borrowing costs were lower at the credit agreement date, which ensured easier access to lending for lower income borrowers, as well as larger loans for larger income borrowers. On the other hand, the unfavourable developments in the CHF may have a major adverse impact on debtors’ capacity to repay the loans.

The analysis of the latest statistical data points to a further decline in the annual inflation rate, which followed a lower-than-forecasted path and ran below the lower bound of the variation band of the flat target, due to the steeper drop in volatile prices and to the increasingly weak inflation on external markets, overlapping the lingering negative output gap and the ongoing downward adjustment in inflation expectations. In December 2014, the year-on-year inflation rate stood at 0.8%, while the average annual inflation rate stuck to 1.1% and the annual average inflation rate based on the Harmonised Index of Consumer Prices – which is relevant for assessing convergence with the European Union – came in at 1.4%, the same as in the previous month. The fall in the inflation rate allowed for successive policy rate cuts (to an all-time low of 2.25% in February 2015) and for interbank rates to decline markedly to record lows, amid favourable liquidity conditions in the money market. In August 2014, the NBR resumed the rate cutting cycle so that in February 2015 the monetary policy rate ran at 2.25% versus 5.25% in June 2013. Moreover, January through November 2014, the NBR gradually lowered the minimum reserve requirement ratios. Thus, at present the minimum reserve requirement ratio on leu-denominated liabilities of credit institutions is 10% (from 15% at end2013) and that on foreign currency-denominated liabilities is 14% (from 20% in December 2013).
Fiscal balances have improved, with the median deficit the lowest it has been in three decades, and the high public debt countries are running primary surpluses large enough to stabilize if not reduce the debt-to-GDP ratio. Exchange rate regimes are more flexible, removing the implicit guarantee in a fixed regime and providing greater independence for monetary policy. Monetary policy frameworks have matured, with greater institutional independence for central banks. Better monetary policy, along with improvements in fiscal balances, have helped to bring about a dramatic reduction in inflation and the volatility of inflation rates in emerging economies. It is hard to look at this record and find support for the argument that the financial resources deployed by the IMF and the major economies in the crises produced a damaging degree of moral hazard moral hazard in the form either of governments more prone to profligacy or investors prone to excess risk-taking in lending to banks and sovereign in emerging markets because of the expectation of financial resources from the IMF. Of course, those interventions must have produced some increase in moral hazard, but the effect on incentives does not seem to have been powerful relative to the countervailing effect of the economic and financial losses incurred in the crises. These changes in policies, and the reduction in external vulnerability that they have brought about, make it less likely that financial market shocks will trigger the types of acute, broad-based crises we saw in the late 1990s.

The total cost is even higher when we take into account the cost incurred by the payer and payee in delivering and depositing cheques. It is estimated that cheque processing cost Malaysia about RM768 million5 per year. This amount is huge and a sheer wastage. Correcting distortion between paper-based and electronic payments Despite the cost incurred in processing cheques, cheques have not been priced directly to reflect its costs except for the stamp duty of 15 sen per cheque. On the contrary, electronic payment services such as the Interbank GIRO (IBG) are priced above cost at about RM2 per transaction. Such price distortion does not incentivize the adoption of the more efficient electronic payments on a mass scale. In advanced countries such as Australia, Norway and Sweden, electronic payment services are priced lower than cheques consistent with their respective cost of production. The correct price signals that reflect the real cost of cheques and electronic payments had facilitated a broad shift from the use of cheques to the use of electronic payments. We need to correct this price distortion between cheques and electronic payment services, Bank Negara Malaysia has announced a new pricing strategy for payment services in March this year where the price of IBG and cheques are aligned closer to their cost of production. With effect from 2 May 2013, the transaction fee for IBG conducted via internet and mobile banking was reduced to 10 sen from RM2 previously.
Starting from the collapse of Lehman Brothers in mid-September 2008, a regime switch in the pricing of sovereign credit risk could be observed, from a pre-crisis situation of almost complete compression of spreads to one of extreme market sensitivity to adverse country developments. At the same time, the high degree of economic and financial integration in EMU resulted in the fact that risks quickly spread to other Member States perceived as vulnerable by the market. This happened, particularly, via national banking systems and their exposure to sovereign credit risk. These developments illustrate how the emergence of economic and financial imbalances laid the groundwork for the subsequent instability. The experience of the crisis has also shown that in times of financial market stress the unravelling of imbalances and contagion effects, which are both sources of systemic risk, often reinforce each other. As result, I think it is fair to say that we now stand at a crossroads and that decisive and farreaching reforms will be necessary to address the sovereign debt crisis and ensure a smooth functioning of EMU in the future. It seems that European policymakers have understood the urgency of the situation and, fortunately, substantial reform steps have been initiated. A governance reform package – the so-called “Six pack” – has been approved by the European Council, the European Parliament and the European Commission in September 2011. It strengthens both the preventive and the corrective arm of the SGP and establishes minimum requirements for national budgetary frameworks.

But I am afraid that the evidence of contagion that I will present to you in a moment illustrates that we no longer have the privilege of focusing on prevention alone. December; O. de Bandt, P. Hartmann and J.L. Peydro (2010), “Systemic risk: An update”, A. Berger et al. (eds. ), The Oxford Handbook of Banking, Oxford University Press. 3  See de O. Bandt and P. Hartmann (2000), op.cit., sub-section 2.4 for a more extensive discussion of policies addressing financial contagion. 2  BIS central bankers’ speeches  Recent evidence on sovereign contagion in the euro area There is a growing body of evidence which shows that contagion plays an important role in the current crisis gripping the euro area – across sovereigns, across banks, and between the two.4 While contagion has characterised the various stages during which the financial crisis has become more acute through the end of this last summer, recent developments have been indicative of a continuation – or even by some metrics an intensification – of contagion forces. Perhaps the most potent illustration of this comes from studying the dynamics of a specific recent episode where various aspects of contagion – notably the intense and persistent transmission of idiosyncratic risks in a sequential manner – offer a compelling narrative characterising developments. The episode in question is the announcement by the Greek authorities on the first of November that a referendum on the rescue programme agreed at the EU summit the week before was being considered.
Let me now turn to these. The financial systems had not adapted to the change from a sheltered environment to a deregulated and much more competitive situation. In the earlier environment, banks had had little incentive to develop a sophisticated credit culture, involving comprehensive evaluations of debtors, projects and collateral. (One important similarity between Sweden and Korea was the overoptimistic reliance on collateral and other guarantees, rather than on the viability of the loan project itself). When deregulation was a fact, bank managers saw a chance of gaining market share and increasing revenues by taking new risks, but did not clearly see the dangers in a lack of the necessary expertise. One of the major faults in credit decisions in Sweden was that banks lent to customers, projects and geographical areas of which they did not have sufficient knowledge. Another major mistake was that banks accepted high-risk concentrations, not just to individual companies but also to economic sectors, primarily real estate, and to geographical areas. At the peak of the crisis, bank loans to real estate, or collateralised by real estate, accounted for more than 60 per cent of all loan losses. A further weakness was the inability of the banks, as well as of the authorities, to register the growing prevalence of indirect concentration risks. For instance, bank borrowers demanded loans denominated in foreign currencies. Interest rates on these loans were lower than on krona loans and as the krona was fixed within a fairly narrow band, there was presumed to be no exchange risk.

G7 2019 Conference – Banque de France, 10 May 2019 Cybersecurity: Coordinating efforts to protect the financial sector in the global economy Conclusion by François Villeroy de Galhau Governor, Banque de France  Press contact: Mark Deen (mark.deen@banque-france.fr). Page 1 sur 6 Ladies and Gentlemen, First, I would like to thank the moderators and the panelists for their very rich comments and the very useful ideas. We are all convinced that cybersecurity of the financial sector will remain on our agenda for a long time. The challenge is no longer about gaining awareness anymore, but to find ways to intensify and rationalise our action. Based on the discussions today, let me start with one pre-requisite – coordination - and then propose concrete steps and tangible actions to improve our coordination in three areas: I. Regulation and supervision; II. Information; III. Preparation. A. Global threats, coordinated action Panel 1 questioned the importance of cyber threats for the financial sector. There is a consensus that the level of cyber threats has never been so high, but at the same time, we must acknowledge that the capacity to anticipate attacks needs to be reinforced. Following an attack, we need to address the potential contagion issues to the entire financial system or the entire economy. This is why coordination is a pre-requisite, not an easy one but a necessary one. While remaining realistic, there will not be a “world organization for cybersecurity” for obvious reasons, including trust. Hence, coordination should be cross-jurisdictional.