samchain/econo-pairs-v1 huggingface dataset:
In a recent report, the Commission identified a number of risks to the financial stability of various EU countries, including Sweden.3  1  Modestino & Dennett (2012)  2  Finansinspektionen (2012). 3  European Commission (2012)  BIS central bankers’ speeches  3  In this sense, the European Commission’s analysis does not depart radically from our own. As I have already said, there are good reasons to try to prevent problems and to curb excessive risk-taking as regards housing loans. This is why we in Sweden have argued that Sweden must have the possibility of placing higher requirements on the Swedish banks – particularly the major banks. As you are aware, the EU countries are currently negotiating new capital adequacy regulations for the EU. The Riksbank’s opinion is that the EU should establish minimum requirements, but that individual countries, such as Sweden, for example, should be able to go further – just to reduce the risk of financial crises at a national level. I know that the Ministry of Finance and Finansinspektionen agree, as do several other countries and, for example, the European Systemic Risk Board. The Riksbank has an important role to play in the prevention of financial crises The Riksbank’s task of preventing new crises is connected to our responsibility for the country’s means of payment. Only the Riksbank can provide unlimited liquidity to the Swedish banks in a crisis situation. During the crisis of 2008 and 2009, the banks could also borrow as much as they needed from the Riksbank.

4  BIS central bankers’ speeches  The regulation of the financial sector affects the country’s citizens Policy discussions in Sweden, in the EU, globally  Could be perceived as abstract Often technical  Behaviour of the financial sector  Effects on the real economy  Swedish citizens and consumers  Crises cost society enormous amounts GDP growth in Sweden, 1960-2010, SEK billion  Source: The Riksbank  BIS central bankers’ speeches  5  The real effects have a high social and economic price Unemployment in Sweden, 1985-2000, percentage of labour force  Source: The Riksbank  Problems in the banking sector impact the country’s citizens in many ways Via the real economy  Problems in the banking sector  Directly against bank customers  Via the public sector  Weaker economic development  Deposit guarantee Need for capital injections  Increased uncertainty  New banking relationships  Higher unemployment Lower wages Lower pensions  Higher taxes Deterioration of public welfare  Higher interest rates  New terms  Poorer economy for households  6  BIS central bankers’ speeches  A financial crisis will ultimately threaten basic social functions The financial system is central in the society  Household  Who can pay whom in a serious crisis? Household’s bank Grocery shop  Grocery shop’s bank  ?
This is shown for the UK in Chart 14. The crisis has tended to reinforce these trends. Unemployment among the highly-skilled rose less during the crisis (Chart 15). With employment growth strong (Chart 14), unemployment within the highly-skilled sectors has returned to close to pre-crisis levels. By contrast, unemployment rates among the mid-skilled rose by more during the crisis (Chart 15). In keeping with pre-crisis trends, employment has contracted (Chart 14). Meanwhile, for the lowest skilled the picture is more nuanced. While suffering most during the crisis, they have also benefitted from rapid rises in employment during the recovery (Chart 14). In principle, these patterns of employment ought to have been reflected in real wages. We might expect wages to have risen at either end of the skill distribution, but potentially to have stalled for the mid-skilled. There would have been a “hollowing out” of wages, but the aggregate wage distribution ought to have been relatively static. In practice, the distribution of wages has not been static; it has widened over the past 20 years (Chart 16). In the late 1990s, wages for the top 10% of earners were around 6.5 times higher than the bottom 10%. Today, the figure is closer to eight. Or, put differently, in the decade prior to the recession, real wages for the top decile rose on average by 3% per year, while for the bottom decile they rose by around half that. Since the crisis, there has been an across-the-board squeeze on real wages (Gregg et al (2014)).

These indicators clearly have an important bearing on macro-economic health: among workers whose disposable incomes have fallen materially below their pre-crisis levels; among savers, the rates of return on whose assets have fallen materially below their precrisis levels and are near-zero in inflation-adjusted terms; and among companies, whose underlying efficiency has flat-lined since the crisis. These trends are also closely linked. Weak productivity has constrained UK companies’ ability to pay higher wages, such that productivity and real wages have fallen in lockstep since 2008 (Chart 3). And this combination of a weak supply side and weak pricing pressures has in turn generated the need for low or negative real interest rates. To give these developments some context, consider a simple index of real wages, real interest rates and productivity growth. Given their recent trends, and with an eye to semantic symmetry, let’s call this an “agony index”. Charts 4 and 5 plot this agony index from 1970 and back to 1870. The agony index is currently at painfully low levels.5 It has been around 5 percentage points below its 1970–2014 average since 2008. Such an extended period of agony is virtually unprecedented going back to the late 1800s, with the exception of the aftermath of the World Wars and the early 1970s. So far, then, so bad. On this evidence, the UK economy is as weak as at any time in the recent or distant past. It is firmly on the back foot.
And the recovery of the euro – including its recovery against sterling – will help to ease the severe imbalance within our own economy between the domestically-orientated sectors which have typically been doing relatively well and those businesses and sectors that are most exposed to competition from the Eurozone and which have been having a rough time. That imbalance is, I know, a real concern up here north of the border, and it has more generally for some time been one of the most difficult issues confronting us in conducting monetary policy. But there are, of course, also major domestic uncertainties. What – as I have often explained before – we are seeking to do through monetary policy – in order to achieve the Government’s inflation target – is to keep overall nominal demand growth more or less continuously in line with the supply-side capacity of the economy to meet that demand. That is a necessary condition for maintaining our steady economic progress. But we cannot directly observe supply-side capacity in either product or labour markets, nor therefore anticipate just how it will develop, with any great precision, nor do we know precisely what is currently happening or is likely to happen to the rate of growth of aggregate demand in the economy anyway. Our forecasts and policy judgements are based upon very careful scrutiny of all the latest data available to us, informed by the best technical analysis we can muster.

Joseph Yam: Banking sector risks and challenges Luncheon talk by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, at the Hong Kong Institute of Bankers, Hong Kong, 16 June 2004. *  *  *  The turnaround Thank you for inviting me to talk to you today. It is a pleasure to be here and I am delighted to see such an enthusiastic attendance. I was recently looking over past speeches (not, let me assure you, with the aim of recycling them), and I noted that the last time I spoke at one of the Institute’s lunches was on 24 October 2001. This has prompted me to reflect on how much we have all been through over the past 32 months - both as a financial community and in the larger community. When I last spoke to you the world was just six weeks on from the 9-11 attacks. There was a strong sense that we were heading for difficult times, with a worsening global environment, and with deepening deflation, unemployment, a budget deficit, falling asset prices and a rising number of negative equity mortgages within Hong Kong. Conditions were likely to get worse before they got better, I concluded. Well, after a period of great difficulty, in which things got considerably worse than I think any of us had imagined, conditions are now at last improving. Since around the middle of last year Hong Kong has been enjoying a strong and broadening recovery.
Adding in the related work of the international standard setters – the Basel Committee on Banking Supervision, the International Organization of Securities Commissions, the International Association of Insurance Supervisors, we are talking about literally hundreds of meetings over the past five years, attended by hundreds of experts across a wide range of fields. But only bureaucrats – and possibly international airlines and hotels – are interested in inputs like the number of international meetings… What about the outputs? The outputs have been impressive. Most so, is the international agreement on a new capital and liquidity framework for banks. The so called Basel III capital standard for banks was finalised in 2011. Banks have already begun the transition to the higher standards that will be fully in force by 2019. 2  BIS central bankers’ speeches  And the FSB has begun to take steps towards establishing a global capital standard for systemically important insurers. Alongside capital, the first ever international liquidity standard for banks was agreed at the beginning of this year. It is part of a new liquidity framework that will be finalised by the end of the year. We now also have an agreed definition for an international standard covering bank leverage – the so-called “leverage ratio” – the final standard is due to be set in 2017 after trial running. To critics, the speed of progress on liquidity and capital – key areas of weakness in the crisis – may seem painstakingly slow.

Philipp Hildebrand: The Swiss National Bank’s ability to act in the crisis Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the Executive MBA HSG, Universität St Gallen, St Gallen, 21 January 2009. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The global financial system is in the midst of the biggest crisis of the postwar years. Above all, the crisis is the most complex of this period. Problems in the US sub-prime mortgage market led to the breakdown of both markets and general trust. In particular, the interbank market, the nerve centre of the financial markets, froze up for several months. Governments and central banks managed to prevent the financial system from collapsing. The interbank market has been revived and risk premia have come down from their former record levels. In the meantime, however, the financial crisis has worked its way through into the real economy, which is now moving into a sharp downturn. In order to fight the crisis, the central banks have lowered their key interest rates aggressively. The instrument of the Swiss National Bank (SNB), the repo rate, has practically reached zero. However, this certainly does not mean that the SNB is incapable of action. If needed, there are other options available. The National Bank can extend the terms of repo transactions or give consideration to the purchase of government and corporate bonds.
Everything was decided according to the two laws that apply in these cases, with, in the case of the BRRD, the potential exception of precautionary recap, which is in the law, and state aid rules. This was applied. At the same time, as a result of state aid rules, and logic, policy, the overall capacity of the banking sector in Italy went down. So there was downsizing; there was restructuring. Indeed, everything was applied according to European legislation. Is that just the beginning now for the Italian banking sector? As we all know, it has a huge slab of NPLs. Can we be prepared for more of these kind of… Constâncio: I don’t anticipate anything of that sort. There is the situation which was announced also during these days that is about to be concluded regarding Monte dei Paschi di Siena, but that has been discussed with the European authorities, and very likely it will have, as was stated in the past few days, a solution very soon for that case. 3/3  BIS central bankers' speeches

Although equity and property prices serve as important indicators for the future development of economic activity, they are not a goal of monetary policy. Many reasons militate against a direct monetary-policy response to changes in asset prices. The question nevertheless arises as to whether monetary policy could not do more to prevent any speculative bubbles from forming in the first place. BIS Review 53/2003  1
While the library at Alexandria succumbed to fire, it is difficult to see the clouds suffering the same fate. Ending quarterly reporting will not bring an end of quarterly capitalism. The flood of information seems set to continue to rise, our cognitive in-box overflowing, our brains rewiring. That begs the question of whether there is another public policy path better able to tackle fat tails and short minds. There may be. It is both an old path and a new path. Along it lie institutions – “humanly devised constraints that structure political, economic and social interactions” (North (1991)). So defined, institutions have long been recognised as key ingredients of stability and growth. In Adam Smith’s “other” book, The Theory of Moral Sentiments, institutions were seen as a necessary foundation for progress (Smith (1759)). They embedded past knowledge – “institutional memory” – thus providing a platform for future development. They also created the security of environment necessary to generate that progress – for example, through the rule of law and property and civil rights. In the late 19th century, economists such as Thorsten Veblen went one step further. They saw institutions as the basic building blocks of economic development (Veblen (1899)). As societies and economies became more complex, institutions were needed to solve increasingly complex collective action problems. They helped co-ordinate the actions of individuals to create public goods such as language, money, the rule of law, even central banks. After a lull of over half a century, institutional economics has re-emerged with a vengeance.

*  *  *  The banking system supervision function is another important aspect of central bank duties. 3. Banking supervision and financial stability  Year 2010 was characterised by increases banking system activity, improved banking soundness and profitability indicators, as well as a good capitalisation of the system. On the other hand, the banking system was characterised by increase in non-performing loan portfolio, reflecting also the active policy of the Bank of Albania in terms of enhancing the transparency of bank balance sheets. Banking system development The banking sector continues to remain the main actor of financial intermediation in Albania. At end-2010, banking system assets doubled compared to a year earlier, accounting for about 81% of GDP. The banking system continued to be financed mainly by public deposits and focused on lending to the private sector. On the other hand, the economy’s below-potential growth and the depreciated exchange rate contributed to increasing non-performing loans, to 14% of total loans. However, this indicator’s growth rates decelerated in 2010. Capital adequacy ratio remained at satisfactory levels, to 15.4%, obviously higher than the 12% benchmark set forth under the regulatory framework. The system’s shareholder equity increased by 10% in 2010. Credit risk remains the main risk to the banking sector. In response to this risk, the banking sector has created adequate provisions to weather big shocks to borrowers’ solvency and market equilibria.
In order to foster an adequate level of competition, apart from lowering the barriers to entry in some sectors, certain regulations hampering the development of new productive firms will have to be reviewed, either because they provide incentives contrary to the development of business growth or because they hinder the exit from the market of firms with sub-optimal productivity, thereby limiting the proper allocation of productive resources in the Spanish economy. Additionally, enhanced productivity requires improvements in human and technological capital. In this respect, the educational legal framework needs to be strengthened, to eliminate the gap between the educational quality indicators of Spain and other developed 10/14  countries, and the challenges to Spain’s educational and occupational training system posed by globalisation, technological process and task automation need to be addressed without delay. Furthermore, during the crisis the technological capital gap between Spain and its European partners widened due to lower spending on R&D as a proportion of GDP in the public and, particularly, the private sector. In addition to the structural features limiting firms’ innovative ability (in terms of human capital, business capabilities, productive structure, business competition and financing), Spain’s public research system is susceptible to improvement and the budgetary funding of innovation is low. Challenges facing the Spanish banking sector Let me now concentrate on some of the main challenges facing the Spanish banking sector. Despite the significant progress made in recent years in terms of profitability, solvency and liquidity, it still faces some significant challenges, largely shared with other euro area banking systems.

In other literature, women have been credited with owning 48 per cent of MSMEs in Africa (NFNV). Therefore, women are increasingly being recognised as a powerful source of growth. Indeed, at the Second African Women’s Economic Summit held in Lagos in July 2012, women were recognised as the New Emerging Market. Chairperson, as you may be aware, the Zambian economy has been growing at an average rate of above 5% in the recent past. Most of this growth has been broad based with economic sectors, such as, agriculture, mining, manufacturing and tourism recording impressive growth rates. However, there is potential for further economic growth across all sub sectors if the potential of women entrepreneurs can be harnessed. Limited access to affordable financial services such as savings, loans, remittances and insurance services by the vast majority of the population, especially for women and the SME sector is acting as a constraint to the growth impetus. It is recognised that many women, together with the businesses they run are financially excluded. This is also acknowledged in a 2011 Report by the Gender and Development Division on the study tour to Tanzania and Rwanda, regarding women’s economic empowerment. The Report states that “there is evidence that gender disparities in national development still exist in Zambia and one of the areas of concern is access to finance by women entrepreneurs.
Also, in addition to the ABSs that were already eligible for Eurosystem operations, the ECB would accept as eligible collateral ABSs with a second best rating at issuance and over the lifetime of A- or above, the underlying assets of which comprise residential mortgages and loans to SMEs. Additional credit claims not complying with the regular minimum credit quality threshold applied to collateral eligible for Eurosystem credit operations are subject to increased haircuts to aim at achieving risk equivalence with the regular set of eligible collateral. The Eurosystem allotted € billion with the first three-year LTRO on 21 December 2011. Accounting for other operations that matured and settled within that week, however, the net liquidity increase was € billion. In the second three-year LTRO, on 29 February, the Eurosystem provided credit institutions with an additional gross amount of € billion. Again, taking into account maturing operations, the net liquidity injection was around € billion. Counterparties bidding in the three-year LTROs can be divided into two groups: one group consists of many small banks, bidding for comparatively small amounts, while the other group comprises large banks and accounts for the main share of the overall allotment amount. A distinctive feature of the second operation was the higher number of bidders, 800, as opposed to 523 in the first operation. The majority of bidders in the second LTRO were small banks from euro area countries where the economic conditions are stronger, with more than half of the bidders bidding for € million or less.

At some point, as global economic activity begins to recover, we will again need to act to restrain the growth of domestic demand, but that is a problem for the future. Given the present international economic environment, and given the present advanced stage of our own economic cycle, if the outturn over the next couple of years is anything close to this – that is about the best we can realistically hope for. 7  BIS Review 19/1999
So instead they did the next worst thing: they sought higher return on equity by increasing the riskiness of their asset pool. This explains their venture into sub-prime and leveraged lending and various kinds of securitised exotica. Chart 9 looks at the leverage and risk positions of European versus US banks. European banks lie in the North West, as they exploited the absence of a leverage constraint to expand their balance sheets in search of higher return on equity. US banks, by contrast, located themselves in the South-East with lower leverage but higher risk per unit of assets. For US banks, this was a best response strategy for boosting shareholder payoffs. When risk on these high-default assets materialised, however, the result was the same as for European banks – deep losses, often cushioned by the state. •  Out-of-the-money options: The payoffs to high-risk lending can be replicated using an alternative strategy of writing deep out-of-the-money options. This can be achieved, for example, by selling protection in the CDS market. The writer of that protection receives an insurance premium and thus a steady source of income in  14  Keynes (1931). 15  Haldane (2009), Beale et al (2009). 6  BIS Review 139/2009  good states of the world. Because of that, this strategy appears to generate “alpha” – excess returns – during the good times. In fact, this strategy is a wolf wrapped in sheep’s clothing; it is beta dressed up as alpha.

5 Two sets of initiative are discussed here: changes to the regulation of banks’ risk-taking; and changes to the terms of the social safety net to improve its time-consistency. It is too early to know whether these measures will be sufficient. But recent events suggest some mix of these measures is surely necessary. 2. Evolution in the banking safety net  The three longest standing state insurance devices for the banking system are liquidity insurance, deposit insurance and capital insurance. These offer protection to different parts of banks’ capital structure, respectively wholesale deposits, retail deposits and equity. So how have risks to banks’ balance sheets – in effect, the “insurable interests” of the state – evolved over time? And how, in turn, has this evolution shaped the design of the banking safety net? The UK provides a useful historical case study. Chart 1 plots UK banks’ balance sheet against GDP since 1880. The ratio is flat for almost a century, at around 50%. Over this period, banks’ assets grew roughly in line with money spending. But from the early 1970s, this pattern changed dramatically. By the start of this century, bank balance sheets were more than five times annual UK GDP. In the space of a generation, the insurable interests of the state had risen tenfold. By itself, this expansion of balance sheets need not imply that the state was bearing greater implicit risk. For example, banks could have self-insured by holding larger buffers of capital and liquidity.