samchain/econo-pairs-v1 huggingface dataset:
The financial crisis was not caused by monetary policy Many have claimed that excessively easy monetary policy by the Federal Reserve after 2001 helped cause a bubble in house prices in the U.S., a bubble whose inevitable bursting proved to be a major source of the financial crisis. 5 However, as I see it, the crisis was mainly caused by factors that had very little to do with monetary policy and were mostly due to background macro conditions, distorted incentives in financial markets, regulatory and supervisory failures (also when central banks have been responsible for regulation and supervision), information problems and some specific circumstances, including the U.S. housing policy to support home ownership for low-income households. 6 The macro conditions preceding the crisis included low world real interest rates associated with global imbalances, as well as the Great Moderation, with a long period of very stable growth and stable low inflation, which led to a systematic underestimation of risk and very low risk premia in financial markets. There were distorted incentives for commercial and investment banks to increase leverage that were made possible by lax regulation and supervision and the lack of an appropriate bank resolution regime. There were also distorted  3  The idea that inflation targeting implies that the inflation forecast can be seen as an intermediate target was introduced in King (1994). The term “inflation-forecast targeting” was introduced in Svensson (1997), and the term “forecast targeting” in Svensson (2005). See Woodford (2007a, b) for more discussion and analysis of forecast targeting.

Thailand, like Japan, is a country that is aging very rapidly as our labor force would be shrinking within this decade. Given that we were to rely on existing workers including informal workers from other countries in the region, our growth rate would still certainly trend downward. Again, increasing availability and attractiveness of automation will help mitigate that weakness in the Thai economy. The second trend is digital and governance. Currently, for example, people use digital payment as a way to access government income support schemes is something that will help improve the transparency and effectiveness of the government schemes. The overall trend towards digital together with the trend towards increasing transparency will help us in this regard quite significantly. Page 8 of 11  The third area, digital again not just to help with transparency but to help with our long-standing problem of not being able to move up the value chain as well as increase the value-added of many economic activities. For example, what are the things that we think Thailand is good at? What immediately comes to mind? One would probably think of food and the trend now is that people are increasingly concern about health, wellness, and want to know where their food comes from, not just the food itself but all of things that went into their food. Digital technology with ability to improve traceability in a transparent, verifiable way allows us at least to have the potential to increase some value-added of our food products.
With a population of just under 650 million, ASEAN is characterised by its rising and expanding middle class. This segment will represent two-thirds of its overall population by 2030. Increasing urbanisation, rising consumption levels and a young workforce are expected to drive future growth. This forms the backdrop that will boost intra-ASEAN trade and investment. Consequently, this will further propel the region’s journey to become a highly integrated and cohesive economy as envisaged in the ASEAN Economic Community Blueprint. Current state of the ASEAN insurance industry Now, how has the ASEAN insurance industry fared during this period and how will it perform going forward and how do we want it to perform? Ten years ago, the ASEAN insurance sector recorded a total premium income of USD41 billion, with total assets of USD185 billion. In 2017, the region recorded a total premium income of USD103 billion, with total assets of USD480 billion. Nevertheless, the ASEAN insurance industry remains small. According to Swiss Re, the combined premium volume of the ASEAN insurance market accounted for only 2.1% of the world’s market share in 2017. In comparison, the insurance industries in China and Japan each accounted for 11.1% and 8.6% of the world’s market share, respectively. Insurance penetration in the ASEAN region remains low, averaging 3.6% in 2017. This is considerably well below the global average of 6.1% and the greater Asian region’s average of 5.6%.

As insurance regulators, these emerging trends place new demands on our skill sets, expertise and competencies. We have seen the need to become more agile, pragmatic and experimental. We also need to be more open to new ways of formulating developmental policies and regulation. In this respect, we can learn from each other the evolving practices, environment and developments that we face in our respective markets. As a group, I believe ASEAN regulators will continue to work closely towards achieving a consistent approach in driving the development of a holistic insurance ecosystem and infrastructure in the region. Regular dialogues and exchange of information among and between 3/4  BIS central bankers' speeches  regulators and the industry will continue with new areas for collaboration, particularly in the management of risks and developments brought about by innovation. These include consumer data protection issues, rise of cybercrime, potential job loss or disruption, and rapid and unexpected climate change and natural disasters. Closing This week’s ASEAN events continues our commitment towards promoting continued development in the insurance sector. The challenge herein lies with ensuring that the ASEAN insurance market has the capacity to reinforce the economic growth momentum and stand wellprepared against the evolving trends and risks. In doing so, we should never forget to uphold the highest standards of integrity, professionalism and ethics. 4/4  BIS central bankers' speeches
9-56, Federal Reserve Bank of Kansas City. Summers, P. (2005), “What Caused The Great Moderation? Some Cross-Copuntry Evidence,” Economic Review, Federal Reserve Bank of Kansas City, Third Quarter, pp. 5-32. Truman, E. (2003), “Inflation Targeting in the World Economy,” Institute for International Economics. Vega, M. and D. Winkelried (2005), “Inflation Targeting and Inflation Behavior: A Successful Story?” International Journal of Central Banking 1(3) pp. 153-75. BIS Review 74/2008  7  Figure 1: Growth and inflation in developing economies 25  6  Inflation  4 15 3 10 2 5  Output Growth  5  20  1  0  0 1974  1982  1990 Inflation  1998  2006  Growth  Note: Inflation was calculated using YoY \% change in consumer prices, given by IFS line 64. Growth was calculated as the YoY \% change in GDP volume as given by IFS line 99b. Averages are taken over all countries that have data available from 1975. Industrial and developing status of countries has been taken directly from IFS. Source: IFS. Figure 2: Inflation and output growth volatility in developing economies  10  8  8  6  6  4  4  2 1974  1982  1990  1998  2 2006  Growth Volatility (s.d.) Inflation Volatility (s.d.)

To do that, we will continue to take a technology-neutral and risk-based regulatory approach, offering a level playing field for incumbent banks and new market entrants alike. 39. So I call on all of you to put your most innovative ideas, your best technology, and your brightest people to work on fintech solutions for our city. 40. I think you will find plenty of opportunities. And I believe that, together, we will take banking in Hong Kong to new heights. 41. So join us and be part of this exciting fintech journey. Thank you very much. 4/4  BIS central bankers' speeches
the Sarbanes – Oxley Act in the USA and similar laws and/or regulations all over the world were quickly introduced in a possible attempt to prevent such scandals and failures in future, and to soothe the nervous minds of investors, both local and international. But, while the “big stick” was being brandished and freely wielded, the modern thinking and realization that has been quickly but firmly evolving simultaneously has been that, achieving an outcome of good corporate behavior needs more than just a long list of rules, regulations, and big sticks. In fact, we all have now begun to learn and understand that corporate scandals and failures are a bit like the flu. Regulators, researchers and stakeholders regularly “discover” or “invent” new vaccines to combat the menace, but the virus mutates and surfaces again in a different form or under a different strain. In the same way, notwithstanding many initiatives of the 1990s and the early 2000s, after several rounds of corporate scandals around the globe, from Enron to WorldCom to Parmalat to Daewoo to so many others, new vaccines and treatment methods had to be quickly researched, hastily prescribed, and widely administered. After the dust has settled however, we now find, when we pensively reflect, that some treatment may have been too strong or has been causing too many adverse side-effects. Some pills may have been too bitter. Some tablets may have been too expensive. Some disease management techniques may even have been more harmful than the disease!

All in all, as of today, Codes of Best Practice on Corporate Governance set out principles within which values and governance rules should be set by the management of the institution, and in the final analysis, good Corporate Governance is looked to as being a key tool to be used in the overall risk management of institutions, irrespective of the nature of the business carried out by the institution. Why is good governance in the banking and financial system more important than any other sector? The Banking and financial sector is easily distinguishable from the others. A few distinguishing features stand out: •  Unlike normal business entities which are funded mainly through shareholders’ funds, banks’ business involves funds raised mainly through deposits. The business of raising public deposits places greater fiduciary responsibilities on the institution and its managers, since depositors’ funds need to be safeguarded in a special way. 2  BIS Review 24/2007  •  Banks perform as financial intermediaries by lending and investing the funds mobilized and funding economic activities of others. •  Banks are the agents of the payments system where they facilitate payments domestically and internationally, through various instruments such as bank accounts, fund transfers, credit cards, etc. •  Banks are able to undertake all such business operations as a result of public trust and faith in the stability and soundness of the banks in particular and the system in general.
It has been rolled out in educational centres that voluntarily decide to participate in this initiative and to impart financial education. Indeed, some 500 centres each year throughout Spain have taken part. The participant centres have educational material provided by the Plan itself, through the Gepeese portal, so they may be used by teachers according to their own criteria and programmes. Complementing this is specific training for teachers, who are provided with supplementary educational resources (such as games and workshops). There is also an annual competition for participating pupils. In fact, on 1 October 2018 I had the opportunity to congratulate the winners of this competition from a school in Plasencia. In order to gauge the impact of this school programme, inform society of it and seek to continually improve it, an exhaustive evaluation of the programme was conducted in the 2014-2015 academic year.9 The evaluation of the short-term impact of the programme showed that:           Pupils following the financial education course obtained better results in financial literacy tests at the end of the year than pupils who did not. In terms of theme-based content, it was found that the financial education course especially increased pupils’ knowledge in “bank relations” (e.g. opening and closing bank accounts, the consequences of an overdraft and knowledge of bank fees, along with the notion of interest rates and their calculation). The impact of the course was less evident on matters such as saving, means of payment and responsible consumption.

Significant findings from the survey were that 66.3% of the Zambian adult population did not have access to financial services and that only 33.7% used banks, other formal and informal financial services and products (such as those offered by microfinance and savings clubs). Above all, only 15% of the adult population had access to commercial banking services. This low level of financial access therefore constitutes one of Zambia’s main challenges in facilitating economic empowerment of every citizen. Arising from these findings, the Government has since set targets or performance monitoring indicators. One such target is to increase the level of access to financial services to 48% by 2008 and 50% by the end of 2009. Following the earlier survey, a subsequent study called the “Finscope Supply – Side Survey” was conducted in 2007. Some of the key findings were that: a.  bank charges are unaffordable for 90% of the rural adult population in Zambia;  b.  Zambian banks generally have high operating costs and interest rate spreads; and  c.  the physical coverage of financial outlets may not increase at current cost levels. It is therefore, my hope that this Forum will address these and other challenges that slow the pace of financial inclusion in our countries.
7 The first one is commonly called contagion and is closely studied in the research literature. For example, a supposedly idiosyncratic failure of a financial intermediary leads to the failure of other intermediaries. The second one emerges from imbalances that build up over time, such as credit booms or concentrations of lending in certain regions or sectors. These “bubbles” can go on profitably for most participants who “ride” them for quite a while. Then relatively small events or changes in expectations can lead to their breakdown, simultaneously bringing down a wide range of intermediaries and markets. 8 The third way in which systemic risk can materialise relates to economic downturns or other aggregate shocks that cause the collapse of a wide range of intermediaries and markets simultaneously. 9 Other important elements in systemic risk include the strong information intensity of financial contracts and transactions, and a high degree of connectedness between financial intermediaries and markets as well as a strong reliance on debt financing (leverage) and on maturity mismatches between assets and liabilities. These factors imply feedback mechanisms that amplify shocks and can lead to non-linearities in the financial system that then are easily transmitted to the real economy. Systemic stability, or the absence of systemic risk, can be seen as a public good, thereby legitimising the role of governments and other authorities in addressing it.

Final remarks While the ESRB has a better chance of achieving its mandate now than it would have had earlier this decade, its tasks will be difficult and its challenges considerable. In particular regarding the issuance of risk warnings, the credibility of the ESRB will rest upon the minimisation and balancing of so-called type I errors and type II errors. Type I errors entail the possibility of identifying those risks that subsequently do not materialise, while type II errors relate to the possibility of failing to identify risks that subsequently do materialise. Identifying a long list of potential systemic risks to financial stability could minimise the  BIS Review 115/2009  11  probability of making type II errors but may lead to accusations of “crying wolf”. The opposite could lead to an important risk to the EU financial system being overlooked, which if it materialised, could harm the ESRB’s reputation. Both the rigour of the checks for potential sources of risk and vulnerability, and the quality of the risk assessments (based on the information made available to the ESRB) should have a substantive influence on the credibility and effectiveness of the Board’s work. Addressing the type I-type II error trade-off by selecting which risks merit risk warnings can only be done by combining a comprehensive and strict monitoring of all potential sources of risk with a well-informed and detailed risk assessment.
Evidently, the attractiveness for investors of issues of green bonds is a sign of the growing concern over the effects of climate change. Yet for the aforementioned transmission mechanisms to work properly, the volume of securities traded on these markets must reach a critical mass and be consistently catalogued. To achieve this, the initiatives developed within the European Commission are essential: these include most notably the taxonomy for determining the activities that contribute to sustainability in environmental terms, and the “ecological” labelling of financial products. We need a common language that can be used both by debt issuers and potential investors, so that these markets may be developed. On this point of financial investments categorised as “green”, it is worth recalling that we as central banks are also active investors in financial markets, both in monetary policy operations and in portfolio management relating to reserves. In this connection, as acknowledged in the report by the network of central banks and supervisors, and as recently indicated by Mario Draghi, we are aware that environmental risks are not yet being built into most of this portfolio’s ratings, whether internal or devised by rating agencies. Accordingly, in the Eurosystem, a thorough review of these risk valuation processes is under way. The aim is to ensure us that all the relevant factors, including environmental ones, for the prudent management of the portfolio held by the central banks are being taken into account.

Anita Angelovska Bezhoska: The denar was and remains one of the key pillars of the stability of the Macedonian economy Address by Ms Anita Angelovska Bezhoska, Governor of the National Bank of the Republic of North Macedonia, on the 29th anniversary of the monetary independence, Skopje, 26 April 2021. * * * Monetary sovereignty is one of the main components of the sovereignty of any state. Today we mark 29 years since the laying of the foundations of our monetary independence – the day when the denar replaced the Yugoslav dinar, and the National Bank began to function as an independent central bank, facing numerous challenges in those turbulent times of separation from the former Yugoslav state. Looking back through years, we can freely say that the monetary independence took place in an extremely difficult period marked with high macroeconomic instability as its main feature. Frequent exchange rate devaluations, when there were almost no foreign reserves, along with structural problems, ignited inflation, which reached four-digit levels, and all this had strong effects on the economy and the living standards of citizens. The economy has been declining 1996, when economic growth of 1.2% was registered for the first time since independence. Hence, no doubt that establishing a stable macroeconomic environment required great courage, commitment and professionalism of the National Bank team. The efforts of the National Bank, together with other policy makers and the academic community, have played a key role in ceasing the inflation spiral and stabilizing the exchange rate of the domestic currency.
In addition, a number of investment projects are extremely foreign exchange-intensive because of imports. The króna could depreciate as a result, with heavy outflows of foreign currency, even if there were ample opportunities for investment. This is the problem the liberalisation strategy is attempting to solve. Emphasis is placed on protecting the foreign exchange reserves by converting short-term claims against domestic entities to long-term investments to the extent possible. The Central Bank acts as an intermediary, and the auction format ensures that only a small portion of the foreign exchange reserves are in play at any given time. The auction format also ensures that transfers of banking system liquidity will not be large enough to jeopardise the system’s stability. The foreign exchange reserves are protected as well by the requirement that investors bring foreign currency into the country and exchange it for krónur in the domestic market. This will offset the foreign exchange outflows that often accompany new investment. Another important aim of the strategy is to ensure short-term Treasury financing. Even though significant progress has been made in controlling the fiscal deficit after the crash and halting the accumulation of unsustainable debt, it is important not to underestimate the current dependency of Treasury financing on the capital controls. More than half – and, in some instances, as much as ¾ – of the stock of short-term Treasury bonds is held by nonresidents.

The country’s natural resources are untouched by the financial crisis, and its human resources are relatively unscathed. The problem we face is not primarily a debt problem; it is a payment flows problem, which can be attributed in part to the fact that owners of frozen ISK assets either do not want to own them because they lack confidence in the Icelandic economy or are barred from owning them by regulatory provisions or investment strategies. If this, and not an underlying debt problem, is at the core of the issue, there are two main ways to restore balance in the foreign exchange market and lift the capital controls: the Central Bank could use its limited foreign exchange reserves to buy up unstable assets, or it  BIS central bankers’ speeches  1  could render unstable assets more stable by creating a forum for long-term investors to buy them with foreign currency. The problem with the former of these options is that it transfers private sector debt to the public sector, at least temporarily. The foreign exchange reserves are leveraged, and this option requires reducing reserve assets although the debts remain. The Treasury’s net debt position deteriorates as a result. The problem with the latter option is that, for the short term, the supply of krónur is too large in comparison with long-term investors’ capacity to invest. If it is executed too rapidly, the exchange rate of the króna could fall sharply, at least temporarily, or the foreign exchange reserves could be depleted excessively.