samchain/econo-pairs-v1 huggingface dataset:
Unfortunately, the ratio between the resolved and withdrawn banks does not favour the first ones, but this situation should be reversed. We expect that the ongoing reform of supervision in the Bank of Russia will lead to a shift towards consulting supervision, wherein the Bank of Russia will be able to offer banks reasonable measures to remedy a problematic situation at an early stage. Certainly, consulting supervision is feasible only if a commercial bank is honest with the Central Bank and does not try to conceal real problems. Despite the problems I have mentioned, the revocation of licences has affected 4.3% of banks’ assets - over the past four years we have revoked more than 300 licences, or one third of all licences. The impact on the banking system at large is clearly able to be seen. On the whole, we estimate that the banking sector experiences no systemic risks, but remains resilient and capable of building up lending. Now we can say that a new economic cycle has begun: the economic downturn is over, some industries are growing at an outstripping pace, real wages have begun to grow, and demand is recovering. We believe it to be important that the banking system has now recovered from the shocks of 2014-2015. This is evidenced by return, profit and capital stock figures, as well as other data. Banks are well-positioned to develop their business and build up lending.

The aggregate capital adequacy ratio sits at a comfortable level slightly above 13% (the minimum 2/4  BIS central bankers' speeches  value is 8%). We estimate that current capital stock is worth 1.8 trillion rubles, which is sufficient to boost lending. Banks’ nominal profits have recovered to the pre-crisis level of roughly one trillion rubles, though real profits are still below the pre-crisis readings. In relation to 2013 prices, profits are still 30% lower. We expect banks to use their profits to boost growth in the banking business, and to step up lending. To do so, they should convert the bulk of their profits into capital. Currently, financial statements suggest that 88% of profits will be converted into capital. I hope that the final figure, after profit allocation between shareholders has occurred, will not differ greatly. Furthermore, banks’ profits increased by 212 billion rubles in the first two months of 2017, a growth rate 2.5 times that of the same period of the previous year. Despite the fact that the current situation in the banking system is quite good, we believe that changes are brewing, which will allow the banking system to more efficiently meet citizens’ demand and economic development objectives. Both bills which we consider to be pivotal - the proportional banking regulation bill and the new resolution mechanism bill - have passed the first reading at the State Duma.
The immediate task was to repair the banking system so that it would not be crippled by future economic shocks - forcing it to cut back sharply on credit supply. We now have standards in place that ensure banks can keep lending through economic shocks more severe than the financial crisis. Next was to guard against the financial system enabling other parts of the economy to become too highly indebted. It’s well established that high levels of mortgage debt magnify economic downturns as high-debt 2  households cut back sharply to keep paying the mortgage. That’s why we’ve set limits on high loan to income mortgage lending. Because we are tasked with achieving a general outcome, not with implementing a specific rule book or even a set of principles, we have a duty to adapt regulation as risks change and the financial system evolves. We must fight the next war as well as the last one. The Brevan Howard Centre’s own mission statement is clear on this: “Future research may show that the current focus on capital and liquidity regulation is inadequate. Among the topics that require further research are panics, asset price bubbles, contagion, deficiencies in the financial architecture, and foreign exchange mismatches.”  1  Financial crises often lead to a long-run reduction in GDP, with a persistent decline in output relative to pre-crisis trends. Staff estimates based on the impact of historical financial crises in a sample of advanced economies, reported in Brooke et. al.

And it is interesting to note that within the past year both the Federal Reserve  BIS central bankers’ speeches  5  and the Bank of Japan have adopted a target for annual inflation of 2%. The anchoring of inflation expectations has been the most successful aspect of the inflation targeting regime and it has allowed the Bank to avoid an unnecessarily damaging tightening of policy in response to short-run movements in inflation. It would be irresponsible to lose that. Second, the inflation target is not an impediment to achieving recovery today. It has not prevented the MPC from taking measures to combat the downward momentum in the economy following the shock of 2008. It is precisely because inflation expectations have so far remained firmly anchored that the MPC has been able to respond flexibly to weak demand. So the challenge we face is not the inadequacy of the framework, but the fact that there is no easy route to recovery after a major banking crisis. Recovery is inevitably slow and protracted. The healing process will take time, and patience is not a quality associated with our political debate. Patience and a sense of realism are sometimes mistaken for fatalism. Our economy is recovering, more slowly than we might wish, but we are moving in the right direction. The Bank has not been, and will not be, inactive. Low interest rates will not be withdrawn prematurely, but we should not rely solely on general stimulus to aggregate demand.
The changed conditions for wage formation have probably also contributed to the two most recent bargaining rounds being characterised by a high degree of cooperation between the labour market organisations. At the same time, there appears to be support among wage-earner organisations for the manufacturing industry to lead the way in collective wage agreement through what is known as the Industrial Agreement. Altogether these changes have entailed an increase in nominal wages of an  BIS Review 7/2003  1  average of 4 per cent a year over the past decade, which can be compared with an average figure of 8 per cent a year during the 1980s. Developments in wage costs over the coming years When we make our wage forecasts at the Riksbank, we base them on a total assessment of collective wage agreements, demand pressure in the labour market, productivity, profit margins, inflation expectations and taxes, to mention just a few factors. This autumn will see the beginning of wage bargaining rounds for more than 2 million employees and the outcome will have crucial importance for the development of inflation and thus monetary policy. The assessment in the December Inflation Report was that the Swedish economy would show a recovery towards the end of the year, following a relatively mild downturn in economic activity. We envisioned a still relatively strong labour market. However, employment was expected to fall slightly to begin with, before slowly showing an upturn once again.

Otherwise, the banking sector’s capacity to intermediate more effectively would be impaired for a longer time. Banks need to be determined to follow collateral execution procedures for insolvent borrowers. On the other hand, court decisions and particularly the actions of bailiff officers should be prompt and effective. I take this opportunity to appeal to the authorities to prioritize these actions. If legal procedures need to be complemented and improved further in order to enhance efficiency, the banking industry should make the necessary proposals in a prompt fashion and the public authorities should commit to considering them. Lastly, I want to elaborate on two other issues. The first relates to governance and accountability in banking operations and the second to the improvement of capacities for the identification, evaluation and management of risks. These two issues have continuously been part of our regular communication as they rest on the cornerstone of a safe and successful banking activity, public confidence on which remains unwavering. Concerning governance, last year I constantly highlighted the need for professionalism, commitment, responsibility, farsightedness and accountability to be reflected not only by you but they should also be embodied in your staff. To make this happen, policies and rules for defining strategies for the development, concrete decision-making, control of particular activities and their reporting to the institution and the public need to be continuously completed and improved. Internal control systems are the ones to determine the institution’s capacity to operate safely.
Another route would be to seek to address banks’ perverse incentives via idiosyncratic, riskbased capital requirements; ie active use of Pillar II of the Capital Accord, which is desirable in any case. One can argue that the two routes could be equivalent for the banking system as a whole. In a system of risk-based premia, the ex ante levies on “safe and sound” banks would obviously be lower than those on their riskier peers. In a system of variable capital requirements, the burden on the FSCS and so the ex post levies on the surviving “safe and sound” banks should crystallise less frequently, and perhaps also be smaller, the greater the amount of capital a riskier, failed bank had to carry. But it is not so straightforward. Unlike the US, the UK does not have a regime of “depositor preference”, which means that the FSCS ranks alongside (rather than ahead of) ordinary wholesale creditors and so shares losses with them. The risk-reducing benefits of extra risk-based capital would, therefore, be spread over  3  The FSA Consultation Paper, “Financial Services Compensation Scheme: Review of limits” (CP08/15), estimated that (based on BBA data for two large banks) the share of accounts covered by the increase in deposit insurance from £ to £ would rise from 96% to 98%, while the share of the overall value of deposits insured would rise from 52% to 60%.

It is no longer really about protecting depositors, as the vast majority are wholly protected by the insurance scheme. From a micro perspective, it is essentially about minimising risks to, and losses at, the deposit insurer, the UK Financial Services Compensation Scheme. Second, it also potentially alters the dynamics of the market place. It makes it easier for banks to pay up for deposits; the signal that a bank will take greater risk than otherwise, as it would have to, does not matter to the depositors. They are covered, and so simply enjoy the higher returns on their deposits. If the bank succeeds, the rewards are reaped by shareholders and management; if it fails, retail creditors get repaid in full. This doesn’t feel like a stable regime. And it is worth remembering that President Roosevelt seriously hesitated before introducing the equivalent FDIC scheme in the US in the 1930s for precisely that reason. One way of addressing these risks – and the approach eventually being tried in the US – would be to make such risk-taking banks pay a higher levy into the insurance scheme. Riskbased premia would help to offset the incentives otherwise created. And, of course, any such insurance scheme must be pre-funded; it is no good trying to collect levies from riskier banks after they have gone bust. That is why the Bank has advocated this course.
6.45  6.61  6  4 2  January April Inflation Target  9  01 09  05 09  09 09  01 10  05 10  09 10  01 11  05 11  09 11  * Constructed through the linear interpolation method by employing the inflation expectations of various terms in the CBT Expectations Survey. Second survey term expectations of the CBT Expectations Survey. Source: CBT. 3. Inflation and monetary policy outlook  Distinguished Guests, After summarizing inflation and monetary policy developments in the first quarter of 2009, in this part of my speech, I would like to share with you the evaluation of the Central Bank of Turkey about the inflation outlook and monetary policy in the upcoming period. I will also add the Central Bank’s inflation forecasts presented in the Inflation Report, which is to be posted on our website soon. Firstly, I will briefly touch on the economic framework underlying these forecasts. In spite of all the measures taken to alleviate its effects on the financial system and economic activity, no clear indication yet to signal that the global crisis is coming to an end. Within this context, challenges regarding the emerging markets’ access to global capital still persist and the risk premium indicators of these countries remain highly elevated despite the limited rebound observed at the end of the first quarter of 2009 (Figure 17).

While the said decline was mainly driven by the SCT (Special Consumption Tax) reduction on automobiles, white goods and electronic products to be effected for a limited period of three months from March onwards, automobile prices, by displaying sharp decline, were chief determinants in prices of this group. The favorable effect of these reductions started to be observed on the domestic sales of automobiles and household goods in March (Figure 6). Moreover, the temporary VAT cut on furniture and IT products for a three-month period will have a short-term restraining effect on annual inflation in durables. Nevertheless, the lagged effects of the exchange rate pass-through on the prices of durable goods are expected to be partially seen following the depletion of current inventories. Table 1. Prices of Durable Goods (Quarterly and Annual Percentage Change) 2008 I  2009 IV  Annual I  1.58 2.81 -1.80  0.61  3.19  -2.49  4.13 7.60 -1.27  -1.31  9.17  -3.17  Electric and nonelectric 1.16 0.68 0.12 appliances  6.04  8.13  Automobiles  1.04 2.44 -3.63  -2.30  -2.56  -1.36  Other  0.04 0.89 1.02  2.27  4.29  0.36  Durable Goods (excl. gold) Furniture  II  III  -4.26  Source: TURKSTAT. CBT.
If the Riksbank judges that inflation will rise above the 2 per cent target, it is up to us to raise interest rates. Consequently, excessively high wage increases will not lead, except possibly in the very short run, to higher inflation. Instead they will result in weaker economic activity and lower employment in the years ahead. In the earlier situation with a fixed exchange rate, excessively high wage increases primarily affected manufacturing and other parts of the economy that are exposed to international competition. Today the effects will be felt in particular by sectors that are sensitive to interest rates, such as distributive trades and a debt-burdened public sector. BIS Review 96/1997  -54. Conclusions for monetary policy The overall assessment in the inflation report is that the monetary stance is well balanced. Today there is no reason to modify that conclusion. In the past month there has been no appreciable change in the outlook for inflation. After the interest rate increases in Germany and other countries almost a week ago, many people have asked how this affects the Riksbank’s actions. As stated already on several occasions, the answer is: not much as long as the conditions for inflation have not changed. The Riksbank targets inflation and it is this target that guides policy. In view of what has happened in the past month, there is reason, finally, to highlight a couple of points in the report. The first is that monetary policy is being conducted against the background of an economic upswing.

In 1999 the GDP growth rate is expected to be rather more than 3 per cent. This implies that in 1998 and 1999 growth will be stronger than the increase in potential output, for which the annual trend is estimated to be just over 2 per cent. That means that today’s surplus capacity will be activated by degrees. It is difficult to tell how quickly this will happen. The Riksbank considers that the output gap -- a way of attempting to gauge unutilised capacity in the economy as a whole -- is currently about 2 per cent of GDP. With the growth rates envisaged above, the gap would then close some time in 1999. Other information with a bearing on when inflation might be likely to accelerate was also included in the inflation report. Estimates of structural unemployment and thereby, indirectly, of the level of unemployment that can be combined with stable, low inflation, suggest that risks of inflation also exist less than two years ahead. The rate at which capacity utilisation rises may likewise play a part. A rapid reduction of unutilised resources might generate inflationary impulses even though there is still a capacity surplus at total level. Risks in the wage negotiations Wage formation is particularly relevant at present because the settlements that are due in the coming six months will cover a large part of the labour market. Labour shortages are not yet being reported from more than a few sectors, but experience shows that the domino effects can be substantial.
At the same time, we know that competition may come at the expense of efficiency if it leads to a large number of services which are not coordinated. Maintaining a coordinated payment system while also ensuring a level of competition which can sustain and develop dynamics and innovation can be a difficult balancing act. As mentioned, it can be said that our experiences in Norway have been fairly good. In our view, coordination that promotes positive network effects should be encouraged. Competition considerations should primarily be safeguarded through objective and publicly known criteria for access to the network which makes it possible for new competitors to become established within the common infrastructure. How shall we assess new participants wishing to establish proprietary systems alongside the common infrastructure? This matter was discussed by the Banking Law Commission - which provided for the possibility of institutions other than banks and other financial undertakings to establish systems for payment services if licensed. The present bill does not address this question. It will be reverted to at a later time when the formulation of the regulation of institutions is addressed. Norges Bank has provided its view on these matters in earlier submissions to the Banking Law Commission’s fourth report. At that time, we supported the Commission’s proposal for opening for new participants in this area, by pointing out that such new systems for payment services will not be based on account agreements.

If the banking industry is also able to agree on an adequate loss-sharing agreement, we assume that the remaining danger of systemic risk in this part of the payment system. Gross settlements in NBO Turnover through gross settlements in NBO fluctuates between NOK 100bn and NOK 200bn per day, which is by far the largest portion of the settlement. Since it is a gross settlement, risk would be expected to be minimal or non-existent. Such is not the case, however. Liquidity problems can arise as a result of such factors as technical failure at one or several banks – i.e. operational risk. We have already experienced such situations and seen that they can quickly bring considerable liquidity strains upon other NBO participants. Norges Bank is actively analysing and improving routines associated with such situations in connection with preparations for the year 2000. This work will enable us to be well prepared if such unforeseen situations should arise after the turn of the century. Another risk-creating factor in connection with gross settlement is the extended use of early crediting. Relevant information is lacking, but is our impression that this practice is fairly widespread. The possibility of early crediting is, as is well known, connected to the information exchange model used in the Norwegian payment system (see my previous comments on so-called “T-copying”). This practice - which, by the way, is not in accordance with international recommendations - can result in the payee bank coming into a position of non-controlled exposure in relation to the payer bank.
Likewise, the reforms of the regulation and supervision of the financial industry has taken us in the right direction, and much has been accomplished to make our banks safer. But still much needs to be done to feel the right degree of comfort. Some final words I would direct towards the threat of protectionism. An enormous risk for the global economy is the temptation to shed the commitment to multilateralism and embark on protectionism. Beggar thy neighbor policies are quite perilous, as history amply shows. It is true that trade needs to be both free and fair, that commitments made within the framework of the World Trade Organization and other fora need to be observed. Unless we defend open markets, we invite big commercial conflicts and a proliferation of lose-lose situations. Allow me to conclude my short address by pointing out that as a Romanian official I am confident that important steps have been already taken to ensure a more close cooperation in order to solve the afore mentioned issues. As you know, Romania holds at the moment the Presidency of the Council of European Union and good work has already been done by our team in Bucharest and Brussels. They held 15 working parties in the Council, negotiated in 18 trilogues with the European Parliament, attended over 30 technical meetings, among bilateral meetings, informal consultations with the Parliament and the Commission. They have concluded the work and agreed on two files (Risk Reduction measures – the Banking package and Pan-European Pension Product).

This is also due to the operations of major central banks, to their unconventional policies; policy reversals can cause major pains, especially where there is much external indebtedness, public and/or private. As Hélène Rey says, the trilemma (free capital flows, exchange rate stability and autonomous monetary policy) may have turned into a dilemma; and that the power of monetary policy rests with the ability to control capital flows – which is a huge tall order. The resort increasingly to macro-prudential tools shows that, de facto, some kind of capital controls revival is under way, for the sake of both monetary policy effectiveness and financial stability reasons. I would argue that exchange rate flexibility has been quite helpful for undertaking macroeconomic adjustment, in Romania, too. Under-development creates additional challenges for monetary policy since catching up is accompanied by higher inflation (the Balassa Samuelson effect). This may not be a problem right now in view of the overall context, but it will likely turn out to bother us in the not too distant future. Migration of human capital (which is a very intense in some of our countries, including Romania) 2/3  BIS central bankers' speeches  also puts a lot of pressure on wages and fuels inflation. Let me turn now to a few regulatory issues. It is widely accepted among professionals, among us, central bankers, that the European banking sector has cleaned up much of its balancesheets, that it is better capitalized.