samchain/econo-pairs-v1 huggingface dataset:
This is the right place to stress that the BNB is aware of its huge responsibility for the financial stability of this country and consistently works in fulfilment of the functions and tasks assigned to it by law. In its work, the Central Bank collaborates with many other international and national institutions, and whenever a need arises, it steps into the role of a constructive opponent. Because, as I have stressed on various occasions, it should not surprise us, nor should we show intolerance to the fact that the political institutions in the democratic countries are very sensitive especially with regard to quick achievements within the context of the electoral cycle. Whereas the tasks of central banks go beyond the horizon of the next parliamentary or presidential elections. We are guided by the understanding that we have to keep our reputation as institutions with national responsibility, holding as our priority the long-term economic interests of the people and of the state. Hence, the fundamental logic of the so very important (and very strictly adhered to throughout the EU) principle of national central bank independence and the need to provide independent analyses and information to the general public.

If, on the other hand, people expect the rise in infection rates (and the associated restrictions) to subside relatively quickly – and if there are also no close substitutes for the sorts of spending that expose people to infection risk – one would expect a more marked effect on aggregate consumption, and less expenditure switching. Charts 5(a)-(c) depict some simulations to get these points across. The model they’re based on is extremely simple and stylised. In particular, it assumes that incomes, current and expected, are held fixed, and that there’s no change in the degree of uncertainty about the economic outlook. The only thing that changes is the path, actual and expected, of the pandemic. This is very obviously unrealistic. Household incomes have clearly been affected by the crisis. And we know from long experience that when uncertainty about people’s future incomes goes up, saving rates tend to rise as well. But as we saw earlier, from Chart 4, household incomes have been significantly protected by the furlough schemes, at least as compared with the huge dip in national income. (While this isn’t a free lunch – higher government debt has to be paid for eventually – it does spread out the cost of that dip.) So the assumption 2 In a more general model than the one used here Krueger et al (2020) also point out that the impact of the pandemic on aggregate  spending is lower the closer the degree of substitutability between risky and non-risky consumption.
That is well above the trend rate for the past 20 years, of just over 2%. Employment has increased by 1.2 million over this period, while unemployment has fallen almost month by month, on the familiar claimant count measure, from a peak of over 10% in 1993, to some 4.7% now. That is the lowest rate for 18 years. Meanwhile retail price inflation (on the Government’s target measure) has averaged around 2¾% - that’s the lowest for a generation. There’s not much evidence here that low inflation inevitably means low growth and employment. But, of course, we started this period with demand below capacity - with a fair amount of slack in the economy which we were gradually taking up. By last year it had become clear, in the evidence of rising capacity utilisation and of growing tightness in the labour market, that unless we acted to moderate the growth of demand we were at risk of overheating. That’s why we tightened policy over last summer - to slow things down before inflation took off - and to head off a subsequent recession. And although, as I say, you can never be sure - economic forecasting is a very uncertain business - a necessary slowdown rather than a more serious recession is what we think we’re seeing, and, as I understand it, that is what your own General Council thinks too. Our problem in slowing the economy down has been enormously complicated by the increasing imbalance between the domestic and the internationally-exposed sectors of the economy.

And that, of course, is exactly what we do in fact do - using the vast array of official economic statistics and financial market data, all the publicly available and some private surveys and commentaries, as well as a wealth of anecdotal and structured survey evidence that we collect BIS Review 71/1998  -3-  ourselves, through our 16 non-executive directors, through the frequent visits which MPC members make around the country, and through meetings in London, and through our network of 12 regional, information-gathering and disseminating, agencies with their 7000 industrial contacts throughout the United Kingdom. And we openly display the facts as they are available to us, as well as our analysis and our conclusions, regularly through the publication of the minutes of our monthly meeting and in the quarterly Inflation Report. So when people say to me that the economy is headed for recession, I’m interested in comparing the evidence on which they base their views with our own evidence, and I want to know whether or not they are also saying that they expect us to undershoot the Government’s inflation target. Let’s just for a moment turn down the noise and look at some of the relevant facts as they relate to the economy as a whole. Since the economy started to recover from recession in the spring of 1992 - some 6½ years ago - overall output has grown at an average rate of about 3%.
All the above entails capital gains for banks exposed to these financial and real assets, at the same time as it increases the value of loan collateral. This also favours an improvement in the credit quality of loans and, therefore, smaller losses in the credit portfolio. It is true, in any event, that these capital gains dry up once interest rates stop falling and remain at low levels. Furthermore, there is also evidence that, since the ECB’s deposit 2  See, Banco de España (2018): Annual Report 2017, Chapter 2, “The challenges facing the Spanish banking sector” and Banco de España (2017): Annual Report 2016, Chapter 1, Overview, Box 1.3. 10/13  facility rate has stood below zero, negative surprises in short-term interest rates have been accompanied by declines in European banks’ stock prices.3 Given the endogenous nature of the monetary policy response to projected economic developments, this change in banks’ stock prices due to monetary surprises may reflect, on one hand, the negative impact of less favourable projections for the future macroeconomic setting and, on the other, the market view on the direct negative effect of additional interest rate cuts on the future profitability of banks against the backdrop of protracted negative rates.4 In recent years, Spanish banks have partially cushioned the fall in net interest income by generating other income and, in particular, by increasing fee and commission income.

There are several factors that may explain the decline in net interest margin observed in this period. First, it is the result of the increase in the relative share of non-productive assets, that is, assets that do not earn interest, such as non-performing loans or foreclosed assets. In addition, this period saw a severe contraction in banks’ credit portfolios, a reflection of the sharp correction in the high indebtedness accumulated by Spanish households and firms in the pre-crisis years, and of the loss of share of the banking system in the financing of the economy. Banks cushioned the balance sheet effect of this contraction in their credit portfolios by increasing their exposure to other assets, especially through government debt purchases. As these debt securities provide lower returns than lending to households and firms, in the long run this portfolio rebalancing resulted in a fall in the average return on assets. However, when the sovereign debt crisis came to an end, the increase in value of these debt securities provided a positive, albeit short-lived, boost to profitability. On our estimates, the overall effect of these changes in asset composition – associated with the increase in non-performing loans and the decrease in the relative share of credit on balance sheets – would explain some 70% of the decline in net interest margin in the Spanish banking system between 2007 and 2018.
That will allow clear messages to be delivered about whether countries are living up to their commitments. A remit should be set annually. It will play two roles: it will give the IMF a clear mandate to guide its surveillance activities and it will give the shareholders a yardstick against which to hold the IMF staff accountable. Greater independence for staff should be accompanied by greater accountability. (d)  What are the constraints of history? The Bretton Woods conference at which the IMF was established was attended by the governments of just 44 countries. Yet even that was fraught. It would be vastly more difficult to agree a complete new treaty with 184 countries. The IMF has much of the infrastructure and expertise that will be needed to do the job I have described – and an annual budget of $ billion to do it. That is why it makes sense to attempt to reform the IMF that we have inherited rather than to build a new institution. But the inherited governance structure of the IMF and other institutions complicates matters. The founders of the post-war settlement encumbered several of the new international institutions with unwieldy full-time resident boards. And the distribution of voting rights no longer reflects the economic and political weight of member countries. The task of agreeing on a new system will be enormously difficult. But if we fail, the influence of the institutions will diminish further, possibly irreparably. Reform of IMF surveillance and voting rights of member countries complement each other.

These observations are calling urgently for structural reforms, in particular all the reforms that would augment the flexibility of all markets – labour, goods and services and financial – in the euro area economy. The need for structural reforms Understanding the reasons of these developments is very important. As also stressed by the OECD 5 , the lack of sufficient structural reform in Europe is a major cause of the gap in economic growth between Europe and the US. I will therefore now turn to structural reforms that have the potential to increase both euro area labour productivity growth and labour utilisation and therefore the long run growth potential. The euro area economy is facing a number of important challenges, including rapid technological change, ageing populations as well as accelerating globalisation. Moreover, the long-term sustainability of public finances in the euro area should be improved pursuing pension as well as health care reforms. These challenges will require major efforts to increase the adjustment capacity of the euro area in general and of workers in particular. The adverse consequences arising from an ageing population could only be solved by an extension of the working life and/or substantial inward migration. Other challenges, such as globalisation and increased competition, are also accompanied by increased opportunities: globalisation provides incentives for firms and workers to excel in what they do best while outsourcing some goods and services at lower costs on a global scale, providing consumers with substantial benefits 6 .
Already today we are quite advanced in this regard, as there are 14 Crisis Management Groups for which EU authorities act as coordinators. These groups are truly global, involving authorities of numerous countries, ranging from Japan to Mexico. The issue of private financing is also addressed. The FSB standard states that jurisdictions should have in place privately financed deposit insurance or resolution funds, or a funding mechanism for ex post recovery from the industry of the costs of providing temporary financing to facilitate the resolution of a firm. Bail-in, a form of creditor-financed recapitalisation, is also an important element of the FSB standard. I consider bail-in as an apparently promising resolution tool. However, in many cases, in order to ensure the robust viability of the distressed bank after such a measure and to limit moral hazard, a bail-in mechanism will need to accompanied by a set of other restructuring (such as replacement of management) or resolution measures (like asset transfers, termination stays of contracts, segregation of troubled assets, bridge banks, etc... ) . For cross-border institutions, international cooperation to elaborate resolution plans and implement them, it would help if other measures would be adopted like enforceable  2  BIS central bankers’ speeches  netting agreements, segregation of clients positions and, specially, the move of OTC derivatives to central counterparties (CCPs) and to organised markets.

The Fed System is comprised of the Board of Governors in Washington, D.C. – a federal agency currently led by Chairman Ben Bernanke – plus 12 regional Reserve Banks that span the country. For example, the district overseen by the New York Fed includes all of New York, the 12 northern counties of New Jersey; Fairfield County, Connecticut; Puerto Rico and the U.S. Virgin Islands. Each Reserve Bank is distinct, with its own charter and a board of directors drawn from its district, but overseen by the Board of Governors. The law that created the Federal Reserve made the central bank independent so that policymakers could make decisions about monetary policy – such as whether to adjust interest rates – in the national interest, somewhat insulated from political pressure. However, the Fed is accountable to Congress. Congress has set an explicit objective for monetary policy: To pursue the highest level of employment consistent with price stability. This objective is often referred to as our “dual  BIS central bankers’ speeches  1  mandate,” because it combines two goals: high employment, and low and stable inflation. In order to promote these objectives, we also pay close attention to financial stability, because without financial stability, it is very hard to achieve our goals for jobs and inflation. The Federal Open Market Committee consists of the Board of Governors plus the presidents of each of the 12 district Banks.
This year, we are advancing to a deep dive into the incentive systems of front offices in retail banks. 16. Based on what we have learned from the self-assessment exercise, we noted that banks’ culture effort in the area of incentive systems is still very much an area of “work-inprogress”. And having appropriate incentive system is such an important piece for inducing desirable behaviour that we have decided to intensify our efforts on this theme. 17. Up till now, we have not seen any guidance published on stylised approach to incentive systems, I guess because the design and implementation of such systems are very much dependent upon the characteristics of individual banks. But we have decided to take up this challenge by looking into the incentive systems of front offices in 20 retail banks, and aim to provide some useful guidance, or at least reference points, to the industry. 18. As you can imagine, the Focused Review on this subject is a very large-scale exercise. We are examining the front-office incentive systems, as well as analysing the perception and behaviour of front-line staff, in 20 retail banks in Hong Kong. So far, as a key component of this review, we have completed an industry-wide employee survey to gauge frontline employees’ views on their banks’ incentive systems and culture. We are encouraged to see the active participation of surveyed bank staff, with an overall response rate of around 70%.

In its own way, this symposium sets out to disrupt the ordinary in order to achieve the extraordinary; invoke curiosity to inspire creativity; and challenge the conventional to embrace novelty. With open minds and thoughtful exchanges, the next two days present an excellent opportunity to generate a critical mass of ideas that form the foundation for new strategic partnerships to be built, and existing ones strengthened. The time is now to deliver on the financial inclusion promise to the 2 billion unbanked and vulnerable people who continue to live in the most challenging financial circumstances. With an “eye for innovation”, I am certain we can spot the opportunities that will deliver that promise. 4  BIS central bankers’ speeches
In circumstances of permanent changes in the infrastructure of financial markets, the supervisory role of the central bank regarding the payment system contributes to the maintenance of financial stability. Additionally, the systems for large payments contribute to the coordination of the direct participants in the national payment system, such as the Treasury of the Ministry of Finance, banks and clearing institutions, ensuring finality of all payments in the national economy. In this way, the National Bank maintains the vitality of the payment systems as one of the most important components of the financial and economic infrastructure. In terms of achieving the development and catalyst role, allow me to affirm the strategic approach of the National Bank, the Ministry of Finance and the Banking Association in the development of the national payment system of the Republic of Macedonia through the adoption and implementation of the Strategy for the development of the payment system of the Republic of Macedonia for the period 2013–2017. Our shared vision for the development of the payment systems of the Republic of Macedonia until 2017 is the modernization and improvement of the operations of payment systems through the application of high-tech achievements and gradual harmonization with the standards and rules of operation of payment systems in the European Union. In this way, we expect to increase the reliability and efficiency of payments and the acceptance of non-cash payment instruments, simultaneously ensuring gradual compliance with the requirements for integration into the Single European Payment Area – SEPA.

A BIS survey in January 2020 found that more than 80% of central banks, compared to only 70% in a survey the year before, are looking into CBDC, suggesting that there is greater openness to issuing a CBDC than a year ago. The survey also shows that emerging market economies report stronger motivations and a higher likelihood that they will issue CBDCs. Although many central banks are considering CBDCs, they appear to be proceeding cautiously, with only about 10% of central banks say they are likely to issue a general purpose CBDC in the short term and 20% in the medium term. Whether it is for DLT, CBDC or other innovations in financial technology, it is important for central banks to continue cross-border cooperation in order to realise successful digital transition. Harmonisation of standards and data privacy across jurisdictions; information-sharing; and support for cross-border integration through the various international platforms, are some of 2/3  BIS central bankers' speeches  the ways for central banks to contribute to this transition. Preserving safety and soundness As we embrace financial innovation, we need to be mindful of the risks of unintended consequences such as cyber threats and spread of illicit finance. These areas, which were already the focus of central banks, have become increasingly important with the advent of the Covid-19 pandemic. An increasing number of cyber criminals are exploiting the current pandemic for their own objectives.
In the medium-term, our overall aim is to ensure the stability in the financial sector through identifying emerging vulnerabilities in this sector; adopting  Financial system stability is founded on  early corrective actions; and  the confidence of the public in the  implementing a series of measures to  financial system and depends on the  further strengthen financial institutions,  soundness and resilience of principal  markets, infrastructure and safety nets. components of the financial system to collectively withstand risks emanating  Our medium-term plan is to have a financial system, which offers the full range of financial products and services  Central Bank of Sri Lanka – ROAD MAP 2017  18  to all economic sectors, including  change, both nationally and  agriculture, infrastructure,  internationally. Considering the need for  manufacturing, particularly small and  upgrading of statutes in line with these  medium enterprises (SMEs), and trade  developments, we expect to initiate  to achieve broader economic objectives  amendments to the existing Banking  of our country. We need to have a well-  Act. Accordingly, steps will be initiated  planned and an ambitious agenda for  to streamline and strengthen the  financial sector development and  regulatory and supervisory framework  reforms ranging across financial sector  through the proposed Banking Act  policies with a vision of innovative,  amendments. We will consider  robust and competitive financial  provisions for reinforcing the Central  systems.

Sirisena, and Honourable Prime Minister  Last but not least, let me commend and  Ranil Wickremesinghe for their  congratulate the Assistant Governors,  leadership and guidance, and  Heads of Departments, particularly the  Honourable Finance Minister Ravi  Director of Economic Research and the  Karunanayake for his support, as close  Staff of the Economic Research  coordination between the Ministry of  Department for today’s effort in  Finance and the Central Bank is essential  formulating the policy document, as well  for sound economic management. as all Staff of the Central Bank who are  I am privileged to have unstinted support and prudent inputs from the Members of the Monetary Board. Therefore, my deep gratitude is due to Secretary to the Treasury, Dr. R H S Samaratunga, Mrs. Manohari Ramanathan, Mr. Chrisantha Perera and Mr. Nihal Fonseka. They have been giving up an enormous amount of their time to address the challenging issues of the day. I am also thankful to Deputy  committed to fulfilling the key objectives of the Central Bank with utmost diligence, proficiency and professionalism. On my first day in office, I said that professionalism, technical excellence and integrity are crucial guiding principles for any institution and its staff. I am very pleased to say I have seen plenty of these characteristics among the staff of the Central Bank of Sri Lanka.