samchain/econo-pairs-v1 huggingface dataset:
This effort has been sufficient to create a primary surplus and, along with growth in the economy from H2/2010 onwards, to put debt on a downward trajectory as a share of GDP, which is predicted to be 85% gross and below 60% net in 2015. But this has not come without significant pain, and again, would not have been possible if private bank liabilities had been guaranteed more than was needed to keep the domestic payment system and basic banking services up and running. Let me conclude by summarising some of the potential lessons from this tale: 1. Iceland did not allow its entire banking system to collapse, it did not nationalise its banking system, and it did not default on sovereign debt. So, in spite of what one sometimes hears, the Icelandic case does not teach any lesson on the pros and cons of such measures. 4  BIS central bankers’ speeches  2. Iceland avoided sovereign default through a good initial fiscal position, the ringfencing of the sovereign as much as possible from collapsing cross-border banks, and a medium-term fiscal consolidation programme. The lesson is to practise fiscal prudence and avoid the socialisation of private sector losses. 3. Iceland protected its domestic payment system and deposits. The lesson might be bail-in, separability in resolution between the public utility element of banking from the rest, and deposit preference. 4. The EU system for cross-border banking is deeply flawed.

Be that as it may, the direct fiscal costs of capital injections into domestic banks, losses on government guarantees, the blanket guarantee of domestic deposits, and the refinancing of the Central Bank are estimated to have amounted to onethird of year-2010 GDP. The net might turn out to be somewhat lower, however; for instance, there will be some recovery on the collateral of CB lending to failed banks. Gross government debt went from under a third of GDP before the crisis to a peak of one GDP, and net debt rose from around a tenth to two-thirds. As a result, there was no fiscal space to save banks 10 times GDP, and attempting to do so would have bankrupted the country. Indeed, Iceland had to embark on a medium-term fiscal consolidation programme even as output was still contracting, in order to stop government debt from reaching an unsustainable level and to rebuild the external confidence needed for the sovereign to regain market access. The overall fiscal effort (measured by changes in the cyclically adjusted primary balance as a percentage of potential GDP) amounted to 10 percentage points 2010–13, more than that of Ireland during the same period (although Ireland will overtake Iceland if the expected effort for 2014 and 15 is added).
Bankers have every incentive to figure out ways to circumvent regulatory constraints and, if the restraints on behaviour are deemed onerous, activity is likely to shift outside the regulatory perimeter. It may be possible to design policies which embed incentives to comply rather than evade, and smart supervision can help. But there could be occasions when tighter monetary policy is the only way to reach those parts of the financial system beyond the reach of regulation. In such cases, if other policies are not available, then “leaning against the wind” may be the only option left. As the simple analytical framework used earlier makes clear, tighter monetary policy reduces both aggregate demand and credit supply, while tighter regulatory policies do the same. But the empirical evidence suggests the impact of interest rates on credit is generally relatively weak, while capital and liquidity regulation have a very direct impact on leverage and maturity transformation and thus on the resilience of the financial system. So my sixth lesson is: both monetary and regulatory policies are required to maintain price and financial stability; moreover, monetary policy should remain focused on the control of inflation, while regulatory policies should be assigned to maintaining financial stability. Much is sometimes made of the risk of monetary and macroprudential policies pulling in opposite directions if they are assigned to different agencies.

ICLIF is also currently expanding its outreach beyond the Asia Pacific, Middle East and African regions. These initiatives are based on the conviction that human capital development needs to also include the leadership level. Human capital development in general is of strategic importance and is integral to the success of any organisation. Building human capital capability has never been more important in today’s world. Successful businesses of the future will be the  BIS central bankers’ speeches  1  ones that are able to fully harness their pool of talent. This more difficult operating environment demands new abilities to manage the new challenges and the new emerging opportunities, and the ability to deal with the high level of unpredictability. The role of leaders in such an environment is to create organisations that are able to effectively respond to the changing environment and at the same time nurture flexibility and innovation. Also important is that it is also supported with high values. Effective leaders in this era, will be those that can deliver results in this environment. It is all about having clarity of purpose and aligning the entire organisation to achieve these goals. Thus, the investment in leadership development is vital to equip leaders and future leaders with the necessary capability to perform their role in the organisation.
[Otherwise] it would be unrealistic to expect the Community to be able to square a circle that has never been squared.”6 The early 1990’s were indeed difficult times for the European monetary system: several countries were forced to realign their exchange rate or to withdraw As  2/8  BIS central bankers' speeches  from the mechanism, like for instance Italy in 1992. It was that same year, with the Maastricht Treaty, that Europe chose to move forward towards a European monetary union. Tommaso Padoa-Schioppa was right in his belief and in his recommendation to create the euro. The euro has proven to be a great success which has delivered material benefits. First, price stability, which is the main objective assigned to the Eurosystem, and which directly benefits euro area citizens’ purchasing power. In the 18 years since the introduction of the euro (1999–2016), inflation has stood at 1.7% on average, compared with 4.6% in the 18 years preceding the introduction of the euro (1981–1998). Second, lower interest rates, which are the corollary to the confidence that investors place in our currency, and which can be measured by the decrease in long-term interest rate spreads vis-à-vis Germany, amounting to between –1.5% for France and –3.7% for Italy. Third, internal exchange rate stability, and a greater international role. Today, the euro accounts for 20% of international reserves, second only to the dollar. And an internationally recognised currency generates economic gains: financial markets are more attractive to domestic and foreign investors, more liquid, and thus more efficient.

François Villeroy de Galhau: The future of the euro area - from the "impossible trinity” to the "growth triangle" Text of the 6th Annual Tommaso Padoa-Schioppa Lecture by Mr François Villeroy de Galhau, Governor of the Bank of France, at the 6th Annual Tommaso Padoa-Schioppa Brussels Economic Forum 2017, Brussels, 1 June 2017. * * * ​I am grateful to Carine Bouthevillain, Bruno Cabrillac, Laure Carrel, Pavel Diev, Marine Dujardin, Pierre Jaillet, Eloïse Lecouturier, Céline Mistretta-Belna and Edouard Vidon for their assistance in preparing these remarks. Ladies and gentlemen, It is a pleasure to be here in Brussels and to speak in front of such a distinguished audience. For my generation of modest European architects – I was in Maastricht 25 years ago – Tommaso Padoa-Schioppa is one of those great – almost mythical – Italian figures who engaged in this “Kantian quest for European unity”1. So I am honoured to give a lecture named after him. He would certainly have been very pleased that the majority of French people clearly expressed their attachment to the euro on the occasion of the French presidential election. Giving fresh momentum to the European project is indeed one of the priorities of the new French President. And although I was invited several months ago, and although the Banque de France is fully independent of the government, I like to think that my presence here this morning is a sign that there is renewed interest for the voice of France in Europe.
More and more Mainland banks plan to expand their business or establish their branches in Hong Kong as they recognise that there is no other place like Hong Kong that offers a suitable and world-class operating, regulatory, legal and professional environment and serves as the springboard and bridge for Mainland banks and financial institutions to “go global”. This is also why the majority of overseas direct investment from China is made through Hong Kong. In the past decade, overseas direct investment from China has been on the rise and reached $ billion in 2008, of which 70% was invested in Hong Kong or in other countries through Hong Kong. Thirdly, Hong Kong may play a role in promoting RMB as an international currency as well as in promoting the circulation of RMB outside the Mainland. Since there have been many discussions and coverage of this topic recently, I am not going to elaborate here. Nevertheless I would like to emphasise that Hong Kong is an international financial centre and with the implementation of the “one country two system” policy, Hong Kong is closely linked to the Mainland in history, culture, and the flow of people, goods, capital and information, distinguishing us from all other places outside China. Hong Kong also enjoys the advantage of being a “first mover”. We began to develop personal RMB business in 2004 and started to develop RMB bond market in 2007. During this period, Hong Kong has established a highly efficient and secure RMB settlement platform and payment system.

I would not wish to conclude these considerations on the growing importance of the European component of our financial system without referring in particular to the euro area financial market. Indeed, financial integration is even greater for the European countries making up the euro area: their banking systems draw on a common pool for their funds, through bank loans, medium-term financing  BIS Review 67/2007  7  (whether subordinated or not), securitisations and mortgage covered bonds. The existence of this integrated market for the euro area has allowed certain financial systems in the area to finance their economy’s upturn with the funds from other financial systems operating with less pronounced cycles. This is a most favourable development as it allows financial institutions with surplus funds to earn more efficient and higher returns, thereby sustaining the profitability of their business, while providing demanders of funds with more stable financing for their most profitable lending business. Evidently, the outcome for the euro area economies is a more efficient use of financial resources, which are routed towards the most productive activities. Let me now analyse in greater detail the situation of Spanish deposit institutions. As earlier stated, their banking activity grew notably in 2006 both as regards lending to corporations and to households. This sizeable increase in activity is one of the reasons behind the highly favourable earnings performance of Spanish institutions. However, if activity were to slow in the future, income statement margins might suffer.
First, a number of studies show that short-term Treasury bills (which are a publicly provided type of money-like asset) enjoy a “liquidity premium,” especially when the supply of Treasury bills is relatively low.9 Short-term Treasury bills can provide various money-like services for larger institutions because they are so safe. Deposit insurance is limited (currently it is limited to deposits of $ so large institutions that want to hold funds safely for short periods cannot find that safety directly with bank deposits. Instead, shortterm Treasury bills can provide a convenient way for large institutions to hold wealth in a safe form. Because the Treasury bills are short-term, their prices don’t experience much variation, and they are easily transferred and used as collateral. Hence, they provide those features of money I mentioned earlier, namely a good store of value and a means of exchange. A second finding from these studies is that when the U.S. Treasury issues relatively smaller amounts of Treasury bills, the private-sector issuance of money-like assets increases, taking advantage of the liquidity premium that large institutions are willing to pay for their safety and convenience. So when the government funds itself with relatively more long-term debt, firms fill the resulting gap by issuing more short-term debt.10 In related work, Jeremy Stein (2012) points out that, notwithstanding their private benefits, there are systemic risks involved when the private sector creates money-like assets. For many reasons, if private intermediaries run into difficulty issuing those assets or in rolling over their short-term debt, then they must deleverage abruptly.

This workshop will help us learn from other practitioners' experiences who have already tackled some of the issues we are due to solve or are in the process of doing so. I wish you all a very productive rest of the day discussing about these issues. Thank you. 3/3  BIS - Central bankers' speeches
13  -20  -10  0  Figure 3  Activity indicators  (index, December 2019=100, deseasonalized series)  110  Manufacturing output (1)  Retail sales (2)  110 110  110  100  100 100  100  90  90  90  90  80  80  80  80  70 12.19 Dec.19  70  03.20 Mar.20 China  70 06.20 12.19 Dec.19 U.S. Eurozone Japan  (1) Real series. (2) Nominal series. 03.20 Mar.20 U.K.  06.20 Jun.20  70  Sources: Bloomberg and Eurostat. Figure 4  GDP - selected economies  (quarterly change of deseasonalized series, percent)  20  First quarter  Second quarter  20  Comulative first half  Source: Bloomberg.

As for spending, after contracting by 4.2% this year, total consumption will resume positive growth in 2021 and 2022, consistent with a recovery in employment and household income, and with the positive short-term effect of the withdrawal of pension savings. Plus, the low base that will be left by this year’s contraction. The projection is that the recovery of economic growth will result in an increase in employment, albeit with lags that will vary according to the categories of occupations, sectors and activities involved. Thus, it is likely that, with the lifting of the strictest sanitary measures, employment in sectors such as construction and trade will show a significant upturn, as will self-employment. However, in activities more permanently affected by social distancing, changes in production methods or technology, the lags may be last much longer. In the short term, the expected recovery in consumption would be more biased towards goods—with a higher proportion of imports and a lower relative intensity of employment—than towards services. Thus, after rising by 6.8% in 2021, total consumption will reduce its expansion to 1.7% in 2022, considering that the temporary stimulus to household spending provided by the various income support measures will have dissipated and that 2021 will leave a higher basis for comparison. Gross fixed capital formation (GFCF), in particular its construction component, will recover as quarantines are lifted, especially in those works that were shelved.
BIS central bankers’ speeches  Besides these fundamental goals, Banking Union also involves two practical aspects of more immediate concern that I will now address: (i) the repairing of banks’ balance sheets to unclog the impaired credit channel and consolidate the on-going mild economic recovery; (ii) the reduction of the bank-sovereign loop in order to further mitigate the remaining financial fragmentation6. I will complete my remarks by addressing the role of the SRM as the necessary complement to the SSM in the Banking Union and finally, by dwelling upon the broader implications of Banking Union for European Integration. I will only briefly touch upon the SSM as my colleague Danièle Nouy will elaborate on SSM issues during her speech later today. Bank recapitalisation and the economic recovery In the past few years, one could hear many voices urging European policy makers to repair the balance sheets of banks so that these could again lend to the real economy and jump start GDP growth. There will be no growth without finance, the narrative goes. In this vein, the fact that the U.S. has returned to robust economic growth faster than Europe has been, to a large degree, attributed to policy-makers acting quickly to repair the balance sheets of U.S. banks. This narrative, while intuitively compelling, is missing two crucial points. The first is that euro area bank balance-sheet repair has started for some time already.

BIS central bankers’ speeches  13  Figure 10 Nominal rates on 10-yr government bonds  Chile: Interest rates by type of loan (2)  (percent)  (index, 2006-2016=100)  18 15  Brazil  12 9  Colombia  6  14  175  175  15  150  150  12  125  9  100  15  125  Housing  100  Consumer  Perú Mexico Chile (1)  3  18  6  75  3  50  75 Commercial 06  16  08  10  12  14  50 16  (1) Considers Central Bank and Treasury bonds. (2) Weighted average rates of all operations performed each month. Sources: Central Bank of Chile and Bloomberg. Figure 11 Total debt of non-banking enterprises (*) (percent of GDP)  125  Domestic  125  External  100  100  75  75  50  50  25  25  0  09  10  11  12  13  14  15  16  0  (*) Based on firm-level information with the exceptions of factoring and leasing, securitized bonds and commercial papers. Preliminary estimate for March 2016. Source: Central Bank of Chile based on Achef, SBIF and SVS data.
Norman T L Chan: The risk of asset-price bubbles Speech by Mr Norman TL Chan, Chief Executive of the Hong Kong Monetary Authority, at the Hong Kong Economic Summit, Hong Kong, 14 December 2009. *  *  *  Introduction 1. I am very honoured to have this opportunity to speak to you today at the Hong Kong Economic Summit. Potential risks of an asset bubble 2. Recently, many people in Hong Kong have become concerned about the emergence of an asset-price bubble. As we all know, interest rates are now very low due to the extremely loose monetary policies around the world. Attracted by a promising outlook for economic recovery, large amounts of funds have flowed into Asia, including Hong Kong. From October last year up to now, more than $ billion have flowed into the Hong Kong dollar. This will certainly exert an upward pressure on local asset markets. I am sure you are all aware that the Hong Kong asset markets have become very active again. In particular, the prices of residential properties rose for 10 consecutive months from the beginning of this year, and prices and turnover have returned to levels we saw before the financial crisis. Many people are asking whether there is already a bubble. 3. Bull markets normally occur in times of rapid economic growth, abundant liquidity and strong investment sentiment. However, as to how far a bull market can develop before it becomes a bubble, there is no easy answer.

I agree that this would be the case if all property buyers used their savings and did not need to borrow from banks. However, I do not believe that none of the purchasers of luxury properties borrow from banks. Some buyers do not approach banks for mortgages because they still have time before completing the transactions, or because they do not intend to hold the flats for a long time. I also do not believe that the markets for small and medium-sized residential flats could have become so active without abundant credit from banks. I therefore believe that the prudential measures that we have taken and good risk management by banks will help stop asset-price bubbles from forming. 10. While banks will help to control the risks, members of the public and corporations in Hong Kong also need to be more alert. They should consider what they can afford and not borrow too much at a time when interest rates are so low to avoid getting into financial difficulties when interest rates rise again. But I can see that this is not easy. As hot money continues to flow into Hong Kong, it pushes the market higher. If this continues, people may get into a mistaken mindset that the market can only go up and overlook the risk that capital and hot would might one day reverse course without warning. 11. Finally, I would like to share with you an article I read last week.
Typical management actions might include, for example, an insurer assuming that it can replace reinsurance following the default of a reinsurer or at policy renewal, or a life insurer assuming that it could reduce bonus rates on a with-profits fund if it was in financial distress. Solvency II allows insurers to assume management actions provided it would be reasonable to implement them in stressed market conditions. We found that some insurers, however, were inconsistent and insufficiently rigorous in their approach. Good practice is to bring all future management actions together into a single document that, at least at a high level, the board can review. This plan should quantify each management action and show how it is used in the calculation of reserves, capital requirements or otherwise (for example, in stress testing). 5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  Model Risk Management  I have focused so far on models used to help calculate regulatory capital and reserves. Insurers use many other models though, notably for pricing. For many of these models, new technology is bringing rapid change. Processing power continues to increase, including from use of the Cloud. This is enabling development of models that employ artificial intelligence techniques, such as machine learning, to analyse so-called Big Data – larger, more complex information from new sources, some of it structured but a lot of it unstructured.

If there is a suspicion – whether or not well founded – that a public sector deficit is inclined to the former category, it will be judged less helpful to the long-term health of the economy and thus tend to weaken  BIS Review 70/2002  1  financial confidence. A sizeable underlying public sector deficit may anyway be regarded as a sign of fundamental weakness in an economy, if it signifies too heavy an involvement of government in the running of the economy. It is these types of consideration which have led to the emergence of various recommendations and rules about fiscal deficits. There is, for example, the "golden rule" of the UK finance minister, Gordon Brown, which he first espoused in 1997, stating that, over the cycle, spending of a current (as opposed to capital) nature should be balanced by revenues, and borrowing should only be countenanced to cover capital expenditure. In Europe there is the supposedly sacrosanct cap on the fiscal deficit of each of the member countries of the euro-zone, at 3% of GDP. And in Hong Kong there is the Basic Law (Article 107), stating that Hong Kong should strive to achieve a fiscal balance and avoid deficits. •  Second, the financing of private sector deficits is subject to market discipline, in that those who provide finance do so on the calculated expectation that the investment will generate sufficient internal returns to repay them in due course.