samchain/econo-pairs-v1 huggingface dataset:
This is not the case to the same extent in Malta, where the HICP inflation rate is well above the euro area average. Let me now turn to the role of fiscal policy, which in the context of monetary union is the only national policy tool available for short-term adjustment. In Malta, however, in spite of the remarkable fiscal consolidation achieved in the run up to euro adoption, deficit and debt to GDP ratios are still at a level that allows limited scope for using fiscal measures to support economic activity. I shall elaborate on the implications of this constraint later on. Fiscal prudence is also necessary to safeguard the country’s credit rating and maintain investor confidence. There is indeed growing evidence that investors are increasingly discriminating among euro area countries on the basis of their fiscal outlook. From a budgetary standpoint, moreover, risk premia on long-term interest rates will increase, and the debt servicing burden will therefore grow, if the perception gains ground of a departure from the path of fiscal consolidation. Finally, from a longer-term perspective, a prudent budgetary policy is also required to cater for the growing costs of Malta’s ageing population, as was vividly pointed out in a recent report published by the European Commission, 8 and the still unidentified costs associated with climate change.

Housing market activity has begun to recover, and a widely followed national home price index is up 12 percent over the 12 months ending in September.1 Anecdotal reports suggest that this higher-than-expected increase in home prices is due to a relatively low number of homes for sale. Due to this shortness of supply, there is reason to expect increases in starts going forward. Yet another bright spot on the horizon is the fact that growth prospects among our major trading partners have improved following a few years of lackluster performance which induced a sharp slowing of growth of U.S. exports. In particular, the euro area appears to have emerged from a protracted recession and is experiencing modest but positive growth. To summarize, while growth in 2013 has been disappointing, I believe a good case can be made that the pace of growth will pick up some in 2014 and then somewhat more in 2015. The private sector of the economy should continue to heal, while the amount of fiscal drag should subside. Despite near-term concerns, growth prospects among our major trading partners will improve further next year. This combination of events is likely to create an environment in which business investment spending will strengthen. As growth picks up, I expect to see more substantial improvement in labor market conditions and a gradual updrift in inflation back towards the FOMC’s target rate. However, the notion that the economy will grow more swiftly remains a forecast rather than a reality at this point.
Modern catastrophe cover was born with your decision to stand by policyholders after the San Francisco earthquake. And Lloyd’s pioneered aviation insurance. 1 With eyes constantly on the horizon, Lloyd’s has remained at the forefront of global insurance. Today, you are insuring new classes of risk in new parts of the world – from cyber to climate, from space to specie, from Curitiba to Chengdu. And you are doing so in market conditions as challenging as any in the last 20 years. The need to manage emerging, mega risks is as important as ever. Alongside major technological, demographic and political shifts, our very world is changing. Shifts in our climate bring potentially profound implications for insurers, financial stability and the economy. I will focus on those risks from climate change this evening. 1  The first aviation policy was written in 1911, followed in 1919 by the founding of the British Aviation Insurance Association. That venture closed in 1921, with underwriters concluding that “there seems to be no immediate future in aviation insurance…” www.lloyds.com/lloyds/about-us/history/innovation-and-unusual-risks/pioneersof-travel. BIS central bankers’ speeches  1  The tragedy of the horizon There is a growing international consensus that climate change is unequivocal. 2 Many of the changes in our world since the 1950s are without precedent: not merely over decades but over millennia.

Due to time constraints, I cannot be exhaustive today. But, there are four important structural changes to the financial system that are worth highlighting. First, the tri-party repo system—which matches institutional investors with bank dealers that need to fund their securities portfolios—has been made much safer. Before the crisis, each morning the two large clearing banks provided huge amounts of intraday credit to their tri-party repo borrowers when cash invested overnight was returned to lenders. These temporary extensions of credit have been largely eliminated. This is an important structural reform because these exposures had proven to be destabilizing during the financial crisis. In particular, when a major dealer became stressed, the clearing banks were motivated to reassess their large overdraft exposures to the dealer, and that turned out to be an important channel of contagion. Another important change has been the shift in over-the-counter derivatives activity from bilateral settlement to central clearing. Although this shift was already underway at the time of the financial crisis, it has now been underpinned by important changes to the capital and collateral regime, which has accelerated the process by strengthening the incentives to structure and clear trades centrally. When banks settle their trades with central counterparties (CCPs), it reduces risk in the system. Exposures can be netted, and the counterparty risk is shifted from many individual firms to the single CCP that clears the trades.
But the primary justification deployed then was the need for a money market instrument, targeted at the banks as customers, to facilitate monetary management rather than the development of the bond market. Nevertheless, we adopted a comprehensive approach to the task. We put together an innovative market making system that virtually guaranteed liquidity by allowing a handful of market makers to go short in any issue of our paper for as long as their overall holdings, with suitable haircuts, are long. This has now been replaced by an even more robust arrangement whereby short positions in particular issues are squared at the end of the day through overnight repos against other issues. We also built a paperless clearing, settlement and custodian system operated by our Central MoneyMarkets Unit (CMU), which also provided similar services to the larger volume of private sector debt. And, at the same time as we introduced our Real Time Gross Settlement payment system at the end of 1996, we moved on to DvP, or delivery versus payment, with real time and end of day capabilities. Meanwhile, the supply of debt has steadily been increasing. Corporate bond issuance has increased by 300 per cent in the last decade or so. We also have an increasing variety of products, including mortgage-backed securities and retail products brought to the market by the Hong Kong Mortgage Corporation. All have been readily absorbed by the latent demand to which I also referred earlier.

What this means is that we now have, in this time zone, a robust financial infrastructure for US dollar transactions that can accommodate, among other things, a US dollar bond market in this region. You do not have to wait until New York opens before you can achieve finality of settlement of your US dollar transactions in bonds or, indeed, in any US dollar denominated financial assets, if they are lodged with our CMU in Hong Kong. Furthermore, any Asian currency with an RTGS payment system, if it is linked up with our system, will be able to achieve PvP or payment versus payment for the two currencies in real time. We already have PvP for Hong Kong dollar versus US dollar transactions the first in the world. I have, as you are probably aware, drifted into the positioning of the Hong Kong bond market for meeting future challenges. We have, through our efforts in the development of the financial infrastructure, put ourselves in a position to play the ideal host to the bond market of the region, or of this time zone. I hope members of our financial community can leverage on this position of strength and bring issuers and investors of US dollar bonds to Hong Kong. Further development of the bond market is largely in their hands. As central banking officials, we in the Hong Kong Monetary Authority have done what we can appropriately do, in the provision of this public good a robust financial infrastructure.
Another area where we need stricter requirements for Swedish banks is the area of shortterm liquidity risk. At present, the largest Swedish institutions are required to have a liquidity coverage ratio of at least 100 per cent. The LCR requirement applies in total for all currencies together and for operations in euros and US dollars separately. However, separate quantitative requirements for individual currencies are not included as a quantitative minimum requirement in the Basel III framework. In my view, however, it is very important that the banks maintain a high level of resilience to liquidity stress by holding liquidity buffers in the currencies in which they have their largest cash flows. An LCR requirement per currency ensures that this is the case in euros and US dollars. It is also reasonable that the banks report their LCRs in Swedish kronor to provide a more complete picture of their liquidity risks. The Riksbank therefore recommends the major banks to publish their LCRs in Swedish kronor. 2 Unfortunately, only one bank, Swedbank, meets this recommendation today. There are good reasons for introducing some form of quantitative requirement for LCRs in Swedish kronor. The banks have low liquidity buffers in Swedish kronor at present, which means that they would have to rely on foreign markets and swap markets if they were to need liquidity in Swedish kronor.

BIS central bankers’ speeches  5  But the structure of the Swedish banking system calls for greater safety margins Although the new regulatory framework will strengthen resilience in several ways there are structural vulnerabilities in the Swedish banking system that mean that the safety margins provided by the Basel III framework are not enough in all respects. As every country’s financial system and banking system are unique and have their own special characteristics and vulnerabilities, the basis of the Basel frameworks is that the regulations are minimum requirements. Countries that believe it is necessary to set stricter requirements can and should do so. In my opinion, the size and high degree of concentration of the Swedish banking sector, as well as the banks’ extensive dependence on both foreign and domestic market funding, create vulnerabilities that justify complementing the internationally-agreed frameworks. The high and growing indebtedness of the Swedish households poses further risks to the financial system. All-in-all, this justifies Sweden taking action sooner and having stricter regulations in certain respects. On the basis of several of these factors, the Riksbank has recommended, together with Finansinspektionen and the Ministry of Finance, that from 1 January next year the major Swedish banks should have CET 1 capital ratios of at least 12 per cent. This is significantly higher than the requirement in the Basel III framework. Several other countries with large banking systems have for similar reasons introduced or are discussing higher capital requirements for their banks. Two closely-related examples are Switzerland and the United Kingdom.
On most  2  BIS central bankers’ speeches  estimates of the various sensitivities the second effect will dominate the first and consumption should actually rise 1, even before those price cuts actually arrive. Conversely, if all prices fall simultaneously, including the price of labour (the nominal wage), then there’s no boost to real income to offset any increased tendency to save. Not only that, falls in nominal income would also expose the economy to a potentially much more serious risk, namely a rising burden of debt. Because the principal is fixed in nominal terms, shortfalls in cash income make debts harder to service, increasing the risk of financial instability and the pressure on debtors to cut back spending. It’s this “debt deflation” channel, emphasised originally by Irving Fisher and studied in depth by Ben Bernanke, amongst others, that is thought to have been the main cost of falling prices and wages during the Great Depression. It’s therefore important to understand whether “deflation” is happening simply because there’s been a sharp drop in the price of something we buy – oil, say – or whether it’s a more generalised phenomenon in which nominal incomes too are falling. The other important factor is interest rates. The incentive to save depends not on inflation expectations per se but on the (ex ante) real rate of interest.

5  If deflations per se were costly you’d expect to see Charts 3 and 4 become shallower south of the origin. 4  BIS central bankers’ speeches  Chart 3 Those deflations no more costly than other disinflations…  Chart 4 …same was true for wage growth  Source: ONS and Hills,Thomas, Dimsdale (2010). Source: ONS and Hills,Thomas, Dimsdale (2010). Chart 5 Interest rate unconstrained by zero bound  But what must also have been important, it seems to me, is that the appropriate level of real interest rates was sufficiently high through the period that monetary policy never had to contend with the zero lower bound on the nominal rate 6. Chart 5 adds to Chart 2 the series for Bank Rate, in green. The real short-term interest rate – which we know, after the event, can’t have deviated that much from the level necessary to sustain stable growth and prices (since that’s what generally occurred) – averaged 4% between 1850 and 1914. If the neutral real rate is anything like that high, only a very severe deflation would drag the appropriate nominal rate close to zero. As it was, Bank Rate was unconstrained from responding to lower nominal growth 7, when that occurred, and never fell below 2%. Source: ONS and Hills,Thomas, Dimsdale (2010). 6  By “zero” I mean the effective lower bound on nominal interest rates; this may not be precisely zero.
Sources: European Commission, Thomson Reuters and Norges Bank  Technological advances have reduced the relative cost of capital goods. Tasks have been taken over by robots and other capital equipment. This probably explains some of the decline in the labour share.7 The emergence of global technology companies is also reducing the labour share. With broad platforms and vast numbers of users, they dominate the market, which translates into both market power and substantial profits. The winner takes all. A few technology companies stand out by virtue of their size (Chart 7). Alphabet is one example. 80 percent of the world’s web searches are done through its Google search engine.8 Another example is Amazon. In 2017, the company accounted for 44 percent of all US online retail sales. Chart 7 The world’s largest listed companies. Market capitalisation in billions of USD1) Apple Alphabet Microsoft Amazon Facebook Tencent Berkshire Hathaway JPMorgan ICBC Johnson&Johnson ExxonMobil Bank of America 0  100  200  300  400  500  600  700  800  1) Market capitalisation at 9 February 2018. Source: Bloomberg  The decline in the labour share can primarily be explained by the fundamental transformation of the global labour market in recent decades. More countries are participating in global trade, labour mobility has increased, and offshoring production 7 Hagelund, K., E. W. Nordbø and L. Sauvik (2017): “Lønnsandelen” [The labour share], Aktuell kommentar 9/2017, Norges Bank (Norwegian only). 8 Source: Financial Times, January 2018 (https://www.ft.com/content/95d16c88-f795-11e7-88f7-5465a6ce1a00). 7  to low-cost countries has become easier.

The rate on the ECB’s deposit facility is used for the current and expected policy rate. 2) June 2021. Sources: Bloomberg and Norges Bank  10  As conditions normalise, interest rates will likely remain lower than they were a few decades ago. The structural conditions that have depressed the global neutral interest rate will not reverse overnight.10  Norges Bank Economic perspectives 15 february 2018  Central bank asset purchases have also made a mark beyond fixed income markets. We have seen a sharp rise in equity and real estate prices (Chart 12). When the major central banks put monetary easing into reverse, investors who have taken on added risk may seek to rebalance their portfolios. This could lead to financial market volatility, as we have noted in recent weeks. Strengthening global growth will help reduce the risk of sharp movements in equity markets. But a bigger correction than seen so far cannot be ruled out. Chart 12 Equity prices and earnings per share. 1) Standard & Poor’s 500. Index. 1970 = 100 3000  3000  Share index Earnings per share  2500  2500  2000  2000  1500  1500  1000  1000  500  500 0  0 1970  1975  1980  1985  1990  1995  2000  2005  2010  2015  1) The latest oberservation at the end of each quarter. For 2018 Q1, data from 9 February 2018 are used.
Following up on another of the Panel’s recommendations, the Board has agreed to have these independent evaluations done on a regular basis. These evaluations will be conducted every two years, focusing on different areas of institutional responsibility. The first of these will be commissioned next year and will be carried out with the same degree of independence, rigor, and dissemination as the first one. III.2. Special measures and balance sheet Since November 2019, the Bank has adopted a dozen exceptional measures to face present and potential episodes of financial volatility associated with sharp portfolio re-composition by market agents (Table 5) 6. All these initiatives have had the ultimate goal of complying with the Bank’s constitutional mandate, which is the stability of the currency and the normal functioning of the financial system, but they also have a significant impact on its balance sheet and its net worth. These measures include the Incremental Financing Conditional on Increased Lending (FCIC), the extension of collateral for Peso liquidity operations offered by the Bank, and the Term Purchase and Sale Program (CC-VP) to facilitate the liquidation of pension fund assets. In addition, a flexible credit line was established with the IMF, the Bank was included in the FIMA Repo Facility of the New York Federal Reserve, and the volume and possible uses for a Renminbi/Peso swap line with the People’s Bank of China were expanded, significantly strengthening Chile’s external position.

15  Figure 7  Labor market indicators (1) (2) (index, January 2020=100)  Employment levels  Total hours worked (3)  110  125 110  125  100  100 100  100  90  75  90  75  80  50  80  50  25  70  25  70  20 01 Chile  Abr. 04 Colombia Spain  Jul. 07 U.S.  France  01 20 Japan  U.K.  04 07 Abr. Jul. Peru (right axis.) (1) Monthly data for all except Spain and France, which use quarterly data. The latter use base 2020.Q1=100. (2) Seasonally-adjusted series, except for Colombia, Spain and Peru. (3) Four Chile and France, total hours worked are calculated by multiplying average hours and total workers in the period. Sources: Bloomberg and respective statistics bureaus. Figure 8 Q: How have your workers' wages changed with respect to before the crisis? (percent of total answers)  Annual wage correction Welfare benefits Sales commissions Overtime pay Incentives and bonuses Non-monthly payments Other basic and permanent wages Basic wage Significantly reduced  0 20 Slightly reduced  Slightly increased  Significantly increased  Source: Special survey to companies, Central Bank of Chile.
Chart 15 is a point-in21  All speeches are available online at www.bankofengland.co.uk/news/speeches  21  Chart 13: The FPC’s housing tools prevent an  Chart 14: FPC housing tools have positive net  increase in highly indebted households  benefits Per cent of GDP  Benefits Costs Net Impact  3 2 1 0 -1  Central  Upside  Boom  Source: Bank calculations. For more information please see the Bank’s Financial Stability Report, December 2019. It is often the case that more than one policy tool could be used to reduce GDP-at-risk, but these tools tend to be blunt. More targeted policies will usually have less impact on the FPC’s secondary objective, and so will yield better overall outcomes. The grey triangles in Chart 15 estimate GDP-at-risk (proxied by the 5th percentile of the forecast distribution of GDP) in 3 years’ time, conditional on risks at time t on the x-axis, versus on the y-axis the Bank of England’s 1-year ahead median GDP forecast at time t. It estimates that if in 2004 the FPC had their housing tools in place, GDP-at-risk (x-axis, proxied by the level of GDP expected in 2007, at the 5th percentile of the forecast distribution of GDP) could have shrunk by more than one third, from -3.3% of GDP to -2.1% of GDP. The cost of this (y-axis) would have been around 0.1% of GDP per year.

I do strongly believe that our efforts will persist in the future as well, enabling a smooth shift of the operational target and optimal functioning of their new form. Interbank market development Dear colleagues, Bank of Albania’s role in promoting the interbank market is indisputable. However, we are fully aware that the development of this market mostly reflects the results of the banking system’s own development and efforts. Therefore, the Bank of Albania requires your utmost attention in this regard. More precisely, in our discussion today we would like to have your opinion on the three steps we consider will boost the development of the interbank market. First, setting the prime rates in the functioning of commercial banks. These rates can and should serve as a guide to setting prices on banking products, both on the assets and liabilities’ side. Second, the functioning of the collateralized market through repo or reverse repo contracts. Although in its classical concept the interbank market is an uncollateralized market, its enhancement with the abovementioned instruments would open the way to its thorough development, ensuring a more efficient distribution of liquidity among the market operators. Third, banks can and should be active in quoting the liquidity in the Albanian lek, keeping the same stance as in the foreign exchange market. The constant quotation will encourage a more active liquidity management and it will enable its continuous price setting.