samchain/econo-pairs-v1 huggingface dataset:
Monetary and fiscal policies are being implemented with a high degree of expansiveness, so as to limit any effects of the current international crisis as much as possible. This is, undoubtedly, very good news. Thank you very much. References Ahrend, R., B. Cournède, and R. Price (2008), “Monetary Policy, Market Excesses and Financial Turmoil” OECD Economics Department Working Paper # 597. Becerra, S., L. Ceballos, F. Córdova, and M. Pedersen (2009), “Evolución reciente de las tasas de interés de colocación,” Manuscript, Central Bank of Chile. Brunnermeier, M.K. (2009), “Deciphering the Liquidity and Credit Crunch 2007-08,” Journal of Economic Perspectives 23(1): 77-100. Central Bank of Chile (2009), Monetary Policy Report, January. De Gregorio, J. (2008a), “Estabilidad de precios y estabilidad financiera: algunas reflexiones en la actual crisis financiera global,” Economic Policy Paper # 28, Central Bank of Chile. De Gregorio, J. (2008b), “Monetary Policy and Commodity Prices in Turbulent Times 2008,” in Katuri Nagaswara Rao (ed. ), Global Financial Markets: Managing Turbulence, The Icafai University Press. Diamond, D.W. and R. Rajan (2009), “The Credit Crisis: Conjectures about Causes and Remedies,” NBER Working Paper # 14739. Felton, A. and C. Reinhart (2008), “The First Global Financial Crisis of the 21st Century,” CEPR-Voxeu.org. García, P. and R.O. Valdés (2005), “The Inflation Process in Chile: Changes and Stability,” Manuscript, Central Bank of Chile. Glaeser, E.L., J. Gyourko, and A. Saiz (2008), “Housing Supply and Housing Bubbles,” Journal of Urban Economics 64(2): 198-217. Taylor, J.

As a consequence, and given the potentially huge cost of a disorderly collapse of such a bank for financial stability and the economy, we cannot yet exclude the need for a public bail-out in a possible future crisis. 4  In this respect, both banks are now very well placed in an international peer comparison. At Credit Suisse, the ratio of loss-absorbing capital to risk-weighted assets has more than doubled, from 5.2% in the first quarter of 2012 to 10.8% in the second quarter of 2013, while at UBS it rose from 7.5% to 11.4% over the same period. 5  Risk weights increase from 75 to 100% for the loan tranche exceeding the 80% LTV ratio. 6  In particular, the revised guidelines require banks to apply tighter rules regarding mortgage lending, as follows. First, at least 10% of the value of the collateral must be provided in equity from sources other than borrowers’ pension assets. Second, the mortgage debt on residential properties has to be repaid such that it amounts to no more than two-thirds of the collateral value after 20 years. A 100% risk-weighting applies for new mortgage loans that do not meet these tighter minimum requirements. 7  As at Q2 2013. Pro memoria: during the crisis, UBS incurred losses of about 2%. BIS central bankers’ speeches  3  This state of affairs is still unsatisfactory, and has led to renewed debates on how to further regulate global banks.
The functioning of the fixed-income market is important for us as a central bank. It makes it possible to implement monetary policy and thus to fulfil our task of controlling inflation. We aim to influence economic activity and thereby inflation via the price for credit – the interest rate. For this to be possible, the payment system and the credit markets must function so that the Riksbank’s interest rate decisions show up in other interest rates. What does this require of the fixed-interest market? A discussion of which characteristics the fixed-income market should have so that monetary policy can be as effective as possible must start from the answers to two questions: What is the objective of monetary policy? And, what instruments are at its disposal? The situation in both these respects – monetary policy’s objective and the toolbox – can differ somewhat between countries. My focus is, of course, on the Riksbank‘s monetary policy objective and instruments. Monetary policy’s objective and steering system We have specified the objective for the Riksbank’s monetary policy as an annual rate of inflation of 2 per cent plus or minus one percentage point. Our aim in setting the interest rate is that inflation will develop in such a way that the goal is fulfilled. When the Executive Board has decided the level of the repo rate, it is up to the monetary policy steering system to ensure that the decision shows up in market interest rates.

The relations and cooperation of the CBRT in the international scene go well beyond our bilateral dialogue with your esteemed Bank and cover also the financial level (swap agreements signed with certain countries), as well as the educational level (the establishment of an international central banking research facility and regional training centre, the İstanbul School of Central Banking). BIS central bankers’ speeches  1  I would like to thank the Bundesbank for opening a Representative Office in İstanbul, for signing the MoU agreement and for all the support and assistance you have provided us in diverse fields and at various platforms. Closing my remarks, I would like to welcome my friend and colleague, Dr. Andreas Dombret, a member of the Executive Board of the Deutsche Bundesbank, and thank him for his tremendous efforts in bringing this project to life. Now let us celebrate our achievements. Thank you for your attention. 2  BIS central bankers’ speeches
As an example, the HKMA and our peer authorities in the region have adopted fintech sandbox 3/4  BIS central bankers' speeches  regimes, which are effectively testing grounds with a well-defined scope and a clear timeline. The authorities do not generally stipulate an exhaustive list of regulatory requirements in these sandboxes; rather, the products are to be developed flexibly, and requirements would be evaluated during the process. Coordination among regulators has also already begun as the Global Financial Innovation Network (GFIN) is now inviting applications for cross-border testing of financial innovations. That said, while providing a conducive environment to support innovation, central banks and regulators would have to strike a good balance with its other functions in consumer protection and financial stability, especially as the new and innovative services grow in scale or become widely adopted. Cross-border coordination is also required to address potential arbitrage across jurisdictions, given the much wider reach of fintech products and services. Derivatives markets, on the other hand, have a much longer history. The regulatory framework should therefore be informed by history, and lessons from the global financial crisis must not be forgotten. Regulators need to guard against the problems that plagued derivatives markets before the crisis: namely, the overuse of leverage, excessive interconnectedness, and opacity. I don’t need to “preach to the choir” on the tremendous efforts exerted by regulators and market participants internationally to solve these problems.

Another longer-term challenge—and one that’s perhaps most important—is the chance that some economies in our region might fall into the so-called “middle income trap”. The middle income trap is the phenomenon that many emerging economies slow markedly as per capita income approaches a certain level, typically estimated to be around $ Many important economies in Asia are already approaching that level, so we should all be thinking about this challenge before it’s too late. Trends such as population ageing, a slowdown of urbanisation, low productivity as a result of overinvestment, and the lack of financial market development are generally cited as the causes of the middle income trap. One would think that the reversal of these trends could help economies evade the trap, but this of course is easier said than done. Crucial Role of Financial Market Development While issues such as population ageing are probably best left to other forums, those of us here today are well-suited to think about how financial market developments can help Asian economies overcome the two longer-term challenges. Informed by Hong Kong’s blueprint as an International Financial Centre, let me share a few thoughts on this issue. First, both longer term challenges – navigating China’s economic transition, and evading the middle income trap – require Asia’s financial institutions to be tech-forward. Around the world, we have seen fintech play a key role, with innovations ranging from the digitalisation of traditional banking activities, to ones aimed at promoting financial inclusion.
One lesson that authorities in this part of the world drew from the financial crisis in the late 1990s was that strong policy fundamentals are not always enough to guard against the vagaries of international capital flows. A sizable cushion of international reserves is important as a buffer to guard against sudden changes in market sentiments that can lead to capital outflows and pressures on the currency. Starting shortly after the Asian financial crisis reserves were thus accumulated in the region to build up such buffers. But holding large amounts of reserves is of course costly as they are typically invested in highly liquid assets with relatively low yields compared with some alternative uses of the funds. It is partly for this reason that authorities in the region have taken steps to create a mechanism for pooling some of their reserves in the form of the Chiang Mai initiative which started in year 2000 and its multilateral extension which was agreed on in 2010. While the size of the pool of reserves under the Chiang Mai agreement is relatively modest compared to the potential needs for some of the larger economies in the region, the importance of the agreement goes far beyond the aggregate amount of reserves involves. It reflects a desire by authorities in the region to foster financial cooperation in the region while at the same time creating arrangements which will help safe-guard financial stability.

Peter Pang: Policies adopted by authorities in different jurisdictions with respect to international reserves Welcoming remarks by Mr Peter Pang, Deputy Chief Executive of the Hong Kong Monetary Authority, at the International Monetary Fund Independent Evaluation Office (IEO)/Hong Kong Institute for Monetary Research (HKIMR) Workshop, Hong Kong, 24 March 2011. *  *  *  It is a pleasure to welcome all of you to this event co-hosted by the Hong Kong Institute for Monetary Research (HKIMR) and the Independent Evaluation Office of the IMF. The HKIMR, as some of you already know, is a subsidiary of the Hong Kong Monetary Authority. Its objectives are to promote research on longer-term and wider policy issues of relevance to the monetary and financial development of Hong Kong and the Asia region; and to foster cooperation and cross-fertilisation of research efforts between academics, international financial institutions and the HKMA research activities. For this reason we are particularly pleased to co-sponsor this workshop which deals with the important topic of policies adopted by authorities in different jurisdictions with respect to international reserves and with the advice the IMF gives in this regard in its consultations with policy authorities. The accumulation of international reserves has become one of the issues at the center of debates about the functioning of the current international monetary system as well as about reforms of this system.
The approach must be chosen by each institution under the control of the supervisor, in relation to size and level of sophistication;  –  the supervisory review process (Pillar II), which gives supervisors a key role in assessing the risk profile and the quality of risk management of each institution as well as the corresponding minimum regulatory capital ratios;  –  market discipline (Pillar III), which enhances public disclosure requirements. These three pillars, whose technical aspects I shall not discuss today, constitute an ensemble aiming mainly to: i) improve banks’ risk management, ii) align regulatory capital more closely with the actual risks incurred by banks, iii) enhance the role of  BIS Review 11/2008  1  supervisors, as well as iv) that of market discipline and therefore, ultimately, v) strengthen financial stability. The implementation of such a framework, embracing a broad spectrum of possible approaches for banks and covering a large array of risks, is no simple matter and accounts for the current variety of national situations, including within the G10: Japan for example implemented Basel II in 2007, EU Member States are set to do so in 2008 and the United States in 2009. The magnitude of this task is particularly vast since Basel II, in view of the very nature of its objectives that I have just recalled, will be applied in a very large number of countries.

The latest study by the FSI on the application of Basel II, published in September 2006 and conducted among 115 countries, shows that 82 Non-Basel Committee Member Countries intend to implement the new framework, in most cases as of 2008 or 2009, and in some cases at a later date. Fully aware of the practical aspects of implementing a more modern, complete and risk-sensitive prudential framework, the Basel Committee published, in July 2004, i.e. directly in the wake of the New Capital Accord, a document entitled “Implementation of Basel II: practical considerations”. Recognising that the adoption and application of Basel II may not be a short-term priority for a certain number of supervisory authorities of non-G10 Countries, the Committee encouraged the latter to develop their own approaches and implementation timetables. Given that the necessary legislative and regulatory changes and human resource requirements have to be identified, the application of Basel II will necessarily be a gradual process throughout the world. This is especially the case since technical decisions often have to be taken on the exact choice regarding the scope of application of Basel II or the possibility of a staggered implementation of the three pillars. In this respect, I welcome the choice made by Algeria to adopt and implement Basel II in the near future. This choice should not be seen by banks as a regulatory constraint but rather as a great opportunity to converge towards best international practices.
In general, it can be observed that many people, particularly in the financial markets, put a lot of effort into making forecasts for the repo rate. If we can contribute to reducing uncertainty over how we ourselves view the future, this should be positive for everyone. Manageable difficulties But of course there are also some difficulties that need to be managed when a central bank presents its own forecast of the interest rate path. As you know, the Riksbank’s monetary policy decisions are taken by an Executive Board consisting of six people. While the decisions we make concern the level of the repo rate applying until the next monetary policy meeting, we must also agree on what we consider to be a reasonable development for the repo rate throughout the forecast period. There may, of course, be occasions when the members of the Executive Board have different opinions. For  6  See Jansson, P., and A. Vredin, (2004), ”Preparing the Monetary Policy Decision in an Inflation Targeting Central Bank: The Case of Sveriges Riksbank”, in the conference volume Practical Experiences With Inflation Targeting, Czech National Bank, Woodford, M. (2005), “Central-Bank Communication and Policy Effectiveness”, essay presented at a symposium organised by FRB Kansas City ‘The Greenspan Era: Lessons for the Future’, Jackson Hole, Wyoming, 25-27 August and Faust, J., and D. W. Henderson, (2004), “Is Inflation Targeting Best-Practice Monetary Policy?”, Federal Reserve Bank of St Louis Review, 86(4), 117-143.

There is currently a window of opportunity for Europe’s financial industry to make use of this top-tier infrastructure and the changing patterns in retail payments. But in order to seize these opportunities, it needs to avoid the mistakes of the past. Laying the foundations The euro was introduced in 1999, with physical banknotes and coins following in 2002. However, that success was not matched by integration in the market for electronic retail payments in euro, with national solutions remaining disparate and lacking interoperability. While the establishment of TARGET, the real-time gross settlement system for the euro, resulted in a fully integrated money market and wholesale payment market, cross-border retail payments in euro remained expensive, slow and inefficient, with no standardised way of making electronic payments across the euro area. For far too long, huge economies of scale remained unexploited. The ECB played a key role in laying the foundations for such standardised cross-border payments through the establishment of the Single Euro Payments Area (SEPA) – an endeavour that required substantial efforts by all stakeholders. That initiative consisted of two key stages. First of all, a harmonised legal framework was needed for payment services in the EU. Thus, the Payment Services Directive (PSD) was adopted in 2007 and entered into force in 2009. Second, it was important to ensure that consumers and businesses in the EU could send payments to each other quickly and easily across borders, with no differences between domestic and non-domestic payments.
Experiences from previous deep recessions in Sweden in recent decades indicate that such steep declines in GDP have long-lasting consequences. During the recessions of the second half of the 1970s and the early 1990s, the GDP level did not return to the previous trend during the ten-year period following the decline in GDP. (Figure 2. Historical GDP trends). In connection with financial crises, it is normal for GDP growth to be significantly lower and unemployment higher for an extended period after the crisis, as compared to a period of equivalent length before the crisis. Reinhart and Reinhart have described this in a paper recently presented at a conference at Jackson Hole. 7 This is partially because credit expansion and increasing real property prices prior to a crisis tend to be followed by tightening and falling prices after the crisis. They also note that dampened growth and higher unemployment after a financial crisis may result in lower investment and the depreciation of human capital, which, in turn, may lower both the level and the rate of increase of potential production. Also in connection with the current crisis, the Riksbank expects lower GDP in the long term than we did before the crisis. We are now expecting GDP to be approximately 4 per cent  3  UC models (UC = Unobserved Components) involve using economic theory to identify which development of the non-observed potential variables is compatible with the development of observed variables, such as GDP, employment, unemployment and inflation.

8  BIS Review 130/2010  Figure 1 GDP gaps in September 2010 and in real time Per cent  Source: The Riksbank. Figure 2 Historical GDP trends Index 2000 = 100  Source: Statistics Sweden and the Riksbank. BIS Review 130/2010  9  Figure 3 GDP, hours worked and productivity Index 2007 Q4 = 100  Note: Broken lines denote the Riksbank’s forecasts in MPU September 2008. Sources: Statistics Sweden and the Riksbank. Figure 4 The GDP gap according to the Riksbank, the National Institute of Economic Research and the Ministry of Finance Per cent  10  BIS Review 130/2010  Figure 5 The GDP gap according to the Riksbank, the OECD, the IMF and the European Commission Per cent  Figure 6 Labour market gaps Percentage deviation from the HP-trend and from the average 2000–2007, seasonally-adjusted data  Note. Broken lines denote the Riksbank’s forecast in MPU September 2010. Sources: Statistics Sweden and the Riksbank. BIS Review 130/2010  11  Figure 7 Indicators for the business sector Deviation from the average, percentage points  Note. Companies’ inflation expectations 12 months ahead are denoted in tenths of a percentage point. Source: National Institute of Economic Research. Figure 8 Shortage of labour in the business sector and capacity utilisation in the manufacturing industry Deviation from average 1996–2007  Source: National Institute of Economic Research.
The question that is being asked with increasing urgency is “How can the financial sector play a more significant role in supporting disaster risk reduction strategies?” Along with this focus has been a growing call for actors in the financial sector to do more to reduce vulnerabilities to climate and disaster risks, including through better analytics, professional advice, providing or supporting effective risk mitigation solutions, and by conducting their business in a socially and environmentally responsible manner. Going forward, society will be more demanding of financial service providers, including brokers, to discharge these responsibilities with much greater diligence, and those that do not are likely to bear more severe consequences. The fourth reason that insurance broking is finding itself at a critical crossroad is a more obvious one – the technology revolution. This phenomenon is hardly new and we continue to experience new technological revolutions at an unrelenting pace. The challenge is in  1  2  Swiss Re, Sigma No. 3/2014: “World Insurance in 2013”. BIS central bankers’ speeches  understanding and anticipating how evolutions such as aggregator capabilities, internetbased insurance, and big data are impacting insurance broking business models. So far, brokers appear to be taking some comfort in views expressed that technology is having the biggest impact on the more commoditised market for personal insurance lines, while brokers will continue to retain their share in the corporate insurance placements.

Brokers will be called on to provide expertise and advice in managing a more complex set of risks that will include environmental, geopolitical, supply chain and cyber risks in a more interconnected global and regional economy. In other words, the traditional information function of brokers will expand significantly. An area that will grow in importance for brokers is the SME sector. SMEs are a significant part of economies in Asia, driving growth and employment. In Malaysia, SMEs account for about one-third of Malaysia’s GDP and 59% of employment. Within five years, the contribution of SMEs to GDP is targeted to increase to 41%. Their importance to the economy however, remains disconnected with the extent to which these businesses are effectively managing their risks through insurance solutions. A significant majority of small businesses continue to be either not insured, or have inadequate insurance to secure the prospects of survival following business disruptions due to a natural disaster or other event. Among the most important reasons for this are cost and products offered by insurance providers that fail to reflect the specific risks that SMEs face. This is more acute for businesses at the lower end of the spectrum that operate with tight margins, have limited resources dedicated to formal risk management programs and are more vulnerable to business disruptions.