samchain/econo-pairs-v1 huggingface dataset:
As a result, one of the most salient features of the Swiss economy is the strength of its finance industry. Despite its very small size, Switzerland stands as the eighth largest securities market in the world. The total value of its quoted stocks and bonds amounts to four times its annual GDP, a world record. Swiss banks manage about one third of total offshore assets worldwide, and our insurance and re-insurance companies have reached global dimensions. What are the keys to financial stability? For sure, financial stability is the result of many elements: the importance of domestic savings, the stability of the institutional framework, the strength of our banking system and - last but not least - the deeply rooted conviction of the general public that monetary stability is important and should be preserved. Monetary stability: a well-accepted objective Indeed, there can be no financial stability without monetary stability. History has taught us many times that policy instability almost invariably leads to financial chaos and, very often, to political unrest. But the issue is not avoiding hyperinflation only. I suppose that everybody in this room would agree that hyperinflation must be eliminated by all means. Sooner or later, it leads to the total disorganization of a market economy. But even on a lower level, inflation interferes with growth and reduces welfare. In Switzerland, too, some are of the opinion that “a little dose of inflation” is beneficial to growth and employment. I entirely disagree with this view.

On the contrary, most empirical studies, as you know, show that there is a negative relationship between inflation and output in the long run. Inflation is a tax on financial assets; it distorts investment decisions and increases overall uncertainty. In Switzerland, monetary stability has become part of the country’s culture and has been the guideline of monetary policy for more than 30 years now. After the collapse of the Bretton Woods system in 1973, the Swiss National Bank made it clear that the overriding objective of its policy was to preserve long-term price stability. Convinced that inflation was a monetary phenomenon, it opted for a strategy aiming at a steady growth of the money stock in line with the potential growth rate of the economy. At the time, the Swiss National bank was actually one of the first central banks to adopt a rule-based strategy. Between 1975 and 1999, we implemented a “pragmatic” policy, with monetary targets serving as benchmark and communication devices. Here I would like to emphasize the term “pragmatic”, because it was never the goal of our policy to fulfil monetary targets mechanically. As a small economy with an international currency, we had to face severe exchange rate shocks or money demand instability. In such circumstances, pre-announced monetary targets could not be met. In these particular and difficult periods, however, we never gave up our objective of preserving price stability in the long term. In the late 1990s, day-to-day implementation of monetary targeting turned increasingly difficult because of financial innovations.
2  However, economic theory indicates that under an optimal precommitment policy, it will under some circumstances (e.g. after a cost push shock) be optimal to keep both the inflation gap and the output gap negative or positive for some time ahead, see for example Walsh, Carl (2003): Monetary Theory and Policy, Second Edition, MIT Press, Cambridge, MA. 2  BIS Review 26/2006  interest rate path. In both scenarios it is assumed that it takes time to identify the causes of developments and to adjust policy. Beyond such specific scenario analyses, in the Inflation Report we also discuss more generally possible consequences of more severe disturbances to the economy. The interest rate should normally be changed gradually so that we can assess the effects of interest rate changes and other new information. Thus, we started increasing the key rate from a low level of 1.75 per cent last summer. Thereafter, the interest rate has been increased in small increments of 25 basis points to 2.5 per cent. Interest rate policy must also be assessed in the light of developments in property prices and credit. A build-up of financial imbalances may influence future inflation and output. In recent years, house prices and household debt have increased sharply in several countries and in our country as well. Growth in housing investment moved up further in 2005 from the record-high level in 2004.

The FATF’s Consultation Paper is useful in spelling out the main elements of the due diligence process, namely: •  to identify the direct customer;  •  to verify the customer’s identity;  •  to identify the person with beneficial ownership and control, who may be different from the direct customer;  •  to verify the identity of the beneficial owner and/or the person on whose behalf a transaction is being conducted; and  •  to conduct ongoing due diligence and scrutiny. A number of features stand out from this. First, the process of know your customer is a two-stage process - identification and verification. Second, there is a clear obligation on institutions to look behind the corporate veil, nominee or trustee to the ultimate beneficial owner. If necessary, this means following the chain of ownership or control to the natural persons at the very end of the chain. There are obvious practical difficulties in this, which we can discuss with the industry. But the basic issue is whether it is safe for institutions to establish a banking relationship if they do not really know with whom they are dealing. The third point to note is that the due diligence process does not apply simply at the time the relationship with the customer is entered into. It must be an ongoing process using detection and reporting mechanisms that can pick up large or unusual transactions.
For example, how would you feel after a ransomware attack, if you find out that your backed-up data is intact but it will take months and millions of dollars to restore? Or, if your first corrective action is the wrong solution and makes the problem worse? It takes time and resources to develop the tools, procedures, and skills to accurately diagnose causes, contain the immediate threat, and implement a long-term solution. Will you be satisfied with the performance of your corrective controls when you need them? There’s also a bias towards automated controls that is not always well considered. Both manual and automated controls have a place in a control system. While machines are better than people at repetitive tasks with clear decision criteria, people are better than machines (for now) at tasks that are ambiguous and require judgment and flexibility. When you automate controls, are you preserving the knowledge and skills of staff who need to understand the system well enough to solve problems when automation fails? So, we’ve seen how controls are part of a dynamic system in an environment of uncertainty. We can’t know whether our controls are sufficient unless we look at the behavior of the control system as a whole. And, we can’t achieve our desired outcomes unless we design for them.10  Conclusions Today, I’ve highlighted two challenges to resilience: organizational silos and the complexity of control.

In future, they will have to hold additional amounts of both equity capital and loss-bearing contingent capital which takes their total holding of equity-like capital to 19%, compared with the Basel standard of 7%. But in most other countries, identifying in advance a group of financial institutions whose failure would be intolerable, and so are “too important to fail”, is a hazardous undertaking. In itself it would simply increase the subsidy by making it explicit. And it is hard to see why institutions whose failure cannot be contemplated should be in the private sector in the first place. But if international regulators failed to agree on higher capital requirements in general, adding to the loss-absorbing capacity of large institutions could be a second-best outcome. Solving the “too important to fail” problem will require ultimately that every financial sector entity can be left to fail without risk of threatening the functioning of the economy. So it is natural that improved resolution procedures is part of the overall strategy – and within many countries big steps forward have already been taken. But the successful resolution of a large institution would, in the absence of an implausibly large deposit insurance fund, require the ability to bail-in creditors. Yet that possibility would give an incentive to the bank to increase its dependence on short-term funding so that more creditors might get out in time. That might increase rather than decrease the fragility of the institution. So there would need to be restrictions on the maturity structure of its liabilities.
Another characteristic of the changeover was related to the timetable. All countries set an end date for the euro changeover, the dates were not harmonised. In some participating Member States the official changeover period was kept very short; in others it covered a maximum period of two months. Despite the absence of a harmonised timetable, the euro changeover in 2002 was a major success, and the whole changeover process was almost completed after only two weeks. 1 This clearly shows that the clarity of the information on the end date given in the information campaigns had been key, and customers in fact did not want to wait until that final date to begin using the euro. The experiences of the euro changeover are very relevant for the SEPA project, which is comparable in size, complexity and political relevance. I see, in particular, two main lessons to be learned from the changeover. First, more communication on SEPA is needed. I am not implying that the industry should carry out a similar launch campaign, but the industry should step up its efforts to foster customer readiness. To be as successful as the euro changeover, the SEPA project must build up a closer “partnership” with stakeholders. 1  2  After two weeks, over 90% of all cash transactions were being made in euro. BIS Review 134/2007  Some national communities have already closely involved the end-users, and have published reports on the developments of the different stakeholders.

Gertrude Tumpel-Gugerell: Going the extra mile to be ready for SEPA Speech by Ms Gertrude Tumpel-Gugerell, Member of the Executive Board of the European Central Bank, at the 10th Euro Finance Week-SEPA Summit: “Ready for SEPA?”, Frankfurt am Main, 19 November 2007. *  *  *  Ladies and Gentlemen, It is a great honour for me to open this conference, the SEPA Summit, which is organised for the second time in Frankfurt as part of the Euro Finance Week. Special attention in this year’s Euro Finance Week is given to the integration of European financial markets in a common regulatory framework. Indeed, the title of this Week “European Finance and Insurance between Regulation and Innovation” is directly related to the SEPA project as SEPA is all about harmonisation, modernisation and innovation. It is also a great pleasure to welcome you to Frankfurt, the city of the euro. Frankfurt is often characterised as the smallest metropolis in the world, in which there is a lot to discover at close hand. Indeed, Frankfurt is a European meeting place and an intersection for trade and finance. A perhaps lesser-known fact is that Frankfurt is also an important intersection for telecommunication and internet providers, as major data networks cross here. Indeed, 90% of German and 35% of European internet traffic is channelled through Frankfurt. We are, therefore, at the right location to discuss SEPA and the development of the European payment markets in the years to come.
Chairperson, allow me to share with you some of the key regulatory and supervisory issues that the Bank of Zambia is addressing with regards to the regulation of the financial system in Zambia and the need to address the supervisory challenges posed by the global financial crisis. These issues include: the adoption of a risk based supervision (RBS), enhancing the legislative framework, the determination of capital adequacy, the introduction of a deposit insurance scheme, the enhancement of our lender of last resort regime, and the enhancement of cross-border cooperation through consolidated supervision of financial institutions. Risk based supervision is a structured, forward-looking process designed to identify key risk factors to which individual banks are exposed. This approach entails closer interaction with banks and allows early identification of risks as well as close monitoring of the nature and direction of risks as they emerge. The banking industry has recorded notable rapid growth in the last ten years. This growth comes with heightened risk levels. The RBS provides robust mechanisms to ensure that banks have adequate risk management systems to mitigate risks. RBS systematically considers all key functional activities (business lines and operational areas) and, within each key functional area, evaluates the level of risk, quality of risk management, and direction of risk. The resulting risk profile of the bank, which is dynamic, will therefore change during the supervisory cycle. This paradigm shift in supervisory approaches requires a permissive legal and regulatory framework.

To enhance the enabling infrastructure for SME financing, the Credit Bureau Malaysia was established in 2008 to provide comprehensive and credible credit information and ratings for SMEs in Malaysia. More than 1.1 million credit reports have now been generated by Credit Bureau Malaysia to facilitate access to financing for businesses since its inception. In addition, SMEs with limited collateral or track record are able to benefit from the credit guarantee facility provided by Credit Guarantee Corporation that extends its services to include advisory. In efforts to ensure simple, efficient and prompt application process, Bank Negara Malaysia and the Association of Banks in Malaysia (ABM) introduced PARTNER 1, a simplified application form and documentation checklist which has now been adopted by 8 domestic  BIS central bankers’ speeches  1  banking institutions. This initiative has been enhanced in PARTNER 2, in which reasons are provided for loan applications that have not been successful. This is to provide to the SMEs the opportunity to address the weaknesses or limitation thereby enhancing their potential to gain access for financing. In addition, SMEs facing challenges in their business operations, may now seek assistance from the various agencies namely the SME Corporation’s One Referral Centre and the Bank Negara Malaysia’s Small Debt Resolution Scheme (SDRS) when confronted with financial stress. Under the Small Debt Resolution Scheme, a total of 894 SMEs have now been assisted since its establishment in 2005.
Against that background the G7 surveillance discussion focused particularly on Japan, where financial fragility - in the wake of the bubble and subsequent collapse of asset prices continues, which is itself acting as a drag on the domestic economy and which is compounded by a loss of both consumer and industrial confidence. Both the financial fragility and the domestic economic weakness are now aggravated by the problems elsewhere in Asia. Everyone at the meeting welcomed the Japanese commitment of public funds to strengthen the financial system and the recent announcement of large fiscal stimulus to strengthen domestic demand led growth, which will help to reduce Japan’s external surplus and also to strengthen the Yen. BIS Review 36/1998  -7-  In relation to the other major industrial countries there was general puzzlement at the persistent strength of equity markets and about the implications if it were to continue - or even if it does not. Particular points made in relation to continental Europe were that it is important there, too, that the gathering recovery - hitherto driven largely by external demand - should increasingly be based on sustained growth of domestic demand; and that continuing structural reforms will be necessary to combat persistent high unemployment - especially now in the context of monetary union.

Stable prices also facilitated firm investment and the creation of new jobs. Today, there are 20 million more Europeans in employment than 20 years ago in the 19 countries that currently make up the euro area. And since the creation of the euro, the labour force participation rate has risen from 59% to 67%, its highest level ever. The two decades in which the euro has existed have been exceptional. The first decade was the culmination of a 30-year period of macroeconomic stability, also known as the Great Moderation. Inflation averaged close to 2% and the ECB ensured price stability mainly by adjusting its key interest rates. The second decade produced the worst economic and financial crisis since the Great Depression. As I had the opportunity to discuss at length in my remarks at the Parliament’s plenary debate two weeks ago, as a response to the crisis we had to deploy new instruments to safeguard the effectiveness of our monetary policy and stabilise the euro area economy.1 Thanks to the collective efforts of all European citizens, the euro area has emerged from this crisis. The results of their and their representatives’ determination have been tangible: 22 consecutive quarters of economic growth, the unemployment rate at its lowest level since October 2008, and wages and incomes on the rise. However, over the past few months, incoming information has continued to be weaker than expected on account of softer external demand and some country and sector-specific factors.
But, ultimately, the crisis was borne out of structural changes in the world economy and our collective inability to adjust. Looking forward, many features of the precrisis environment will still be with us. Emerging economies will still be saving a high proportion of their income. A significant part of those savings will be invested in foreign exchange reserves. Downward pressures on wages will subsist. There are signs that wage dynamics are changing, especially in China, whose economy is deemed by many analysts to have reached the “Lewis turning point” where demographic pressures are offset by increased demand for (at least) qualified labor. Nevertheless, the process will likely be very gradual. As for advanced economies, biased technical progress and pressures from the emerging world as well as unemployment may work to constrain wage dynamics. A general sense of economic insecurity will lead to increase in savings. In most countries and especially in Europe there is an urgent need for strong fiscal consolidation. Market discipline will act powerfully to impose strong consolidation of public finance over an extended period of time. Therefore, it is a valid question to ask: where will growth in world demand come from in the future ? This may sound paradoxical. In most of the emerging world, demand seems to be booming, and, for many analysts future economic growth will be primarily constrained by the scarcity of natural resources and environmental pressures. These are real and unprecedented and they call for a new technological revolution. I am optimistic.

The Executive Board’s assessment was that monetary policy was sufficiently expansionary given the demand situation and they pointed to the fact that credit volumes and house prices were increasing at a rate that was not sustainable in the long run. They therefore began to raise the interest rate in January 2006, a little sooner than if they had merely given consideration to the inflation target. The Riksbank had no target for either credit volumes or house prices. But these were variables that might be expected to affect inflation and the real economy. If the credit volume and house prices had continued to rise rapidly this would have risked triggering larger adjustments further ahead. One reflection that can be made here is that if the interest rate had been cut even further in 2005, which was suggested by several outside of the Bank, the current situation might have been worse. There would probably have been a larger credit expansion and higher house prices that would have needed to be adjusted later. This could have put our economy in a much more vulnerable position and thereby worsened the current economic downturn. Another experience is from autumn 2007, when energy and food prices increased considerably, which contributed to pushing up inflation. It is also an example of a supply side shock, as these prices are set in the world market. Swedish monetary policy cannot affect them. But at the same time, domestic cost pressures were relatively high. Productivity growth had slowed down, while wage costs were rising.
If Norges Bank pursues objectives it does not have the instruments to fulfil, confidence in monetary policy may be eroded. The regulation and supervision of financial institutions must be the primary means of addressing shocks to the financial system. Employment levels over time are determined by structural conditions, such as the functioning of the labour market, the tax and social security system and the wage formation process. In Norway, a well-functioning wage formation process has enabled unemployment to remain low while wage growth has remained moderate. The new regulation underpins Norges Bank’s flexible approach to inflation targeting. In the conduct of monetary policy, substantial weight will continue to be given to the real economy. In this context, whether the inflation target is 2.5 percent or 2 percent is less important. At 2 percent, the inflation target is now at the same level as that of most of Norway’s trading partners. The reduction of the target will not in itself significantly affect the short-term interest rate outlook. Never before have global interest rates been as low for such a long period. Growth abroad has now picked up, and there are prospects of a gradual interest rate increase among Norway’s 3/4  BIS central bankers' speeches  trading partners. The outlook is also brighter in Norway. In the two years since the cyclical trough was reached, growth has gained a firm footing and the unemployment rate has declined.

Ardian Fullani: Recent economic and monetary developments in Albania Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the press conference on the Monetary Policy Decision of the Bank of Albania Supervisory Council, Tirana, 25 April 2012. *  *  *  In its meeting of 25 April 2012, the Supervisory Council of the Bank of Albania reviewed and approved the quarterly Monetary Policy Report. Based on the analysis of Albania’s latest economic and monetary developments and following discussions on their performance outlook, the Supervisory Council of the Bank of Albania decided to keep the key interest rate unchanged at 4.25%. This decision reflects the balance of inflationary pressures and the need to maintain the macroeconomic stimulus to the economy, under the conditions of a more prudent fiscal policy during the in the course of the year. (Let me now proceed with an overview of economic developments and main issues discussed at today’s meeting.) During the first quarter of 2012, the Albanian economy continued to maintain the parameters of macroeconomic stability even in the context of the ongoing global crisis. International financial markets are characterised by high risk premiums and, despite measures taken to solve the public debt crisis in the euro area, signals for a normal progress of in the short run are absent. These developments, as expected, have provided a reining impact on our economy, which is mainly expressed in the continuation of below-potential economic growth. Annual inflation slowed down significantly in the first quarter of the year.