samchain/econo-pairs-v1 huggingface dataset:
Recently, in fact, we have seen how our sovereign spread has been converging more towards the core euro area countries, distancing itself from those economies with bigger challenges outstanding. Our firm commitment to transparency, to the rigorous valuation of assets through a clear provisioning system and our significant increase in capital requirements should contribute to fully dispelling doubts about the current situation of Spanish banks and their medium-term prospects. Thank you for your patience. I am at your entire disposal to respond to your questions. BIS central bankers’ speeches  5

Efforts have now to be pursued as regards the prioritization of these Standards and Codes (the Financial Stability Forum Task Force on Implementation identified 12 of such Codes and Standards out of 65) and the development of incentives to implement them. Is there a better demonstration that we are experiencing globalization than to observe that 65 global workshops including countries in transition and emerging economies have worked out 65 Codes and Standards to be implemented BIS Review 52/2000  2  universally? The commitment of economies to implement Codes and Standards might be reinforced if market participants reflect information on observance of Codes and Standards in differentiated credit ratings. 1.4  Private sector involvement  The main objectives of private sector involvement is to avoid moral hazard and other distortions in the functioning of international financial markets and to facilitate more orderly adjustments in case of crisis. Market participants should be encouraged to assess adequately the risks involved in investment decisions on the basis of a country’s underlying fundamentals, including the soundness of its financial system, rather than on the expectation that official flows will possibly support repayments to them in times of crisis. We have to promote approaches that permit appropriate coordination among creditors, and between creditors and borrowers. Appropriate instruments to reach that goal include collective action clauses, private contingent credit lines, call options on interbank credit lines and the removal of put options from bond contracts.
As we know commuting often detracts from people’s well-being, this cartogram perhaps explains why Londoners are richer but more miserable.21  21  For example, Office for National Statistics (2014) and Novaco and Gonzalez (2009). 23  All speeches are available online at www.bankofengland.co.uk/speeches  23  Chart 17: Cartogram of UK travel time to work  Sources: ONS Labour Force Survey, 2011 Census and Bank calculations. Notes: UK local authorities re-sized and coloured by mean travel to work time (minutes). 24  All speeches are available online at www.bankofengland.co.uk/speeches  24  Modelling the Economy  How can these micro-level data help when modelling the economy? Economists and policymakers typically use highly-aggregated models which operate at an economy-wide level, often comprising a small number of “representative” agents. In their most aggregated versions, there is a single representative household and company. The most widely-used is the Representative Agent New Keynesian (RANK) model.22  RANK-type models have real virtues. They are underpinned by an optimising view of individual human behaviour and, in this sense, can be said to be “micro-founded”. They are explicitly identified, in the  statistical sense, and parsimonious. These characteristics mean these models can often offer deep insight into comparative static questions about the impact of changes in the deep parameters of an economy, such as shifts in risk-aversion among households or in levels of technology among firms.23  There are also, of course, costs of simplicity.

Paul Clarke, Chief Technical Officer at Ocado, has recently set out a vision of smart cities and communities, with tracking and modelling of flows through drones, robots and smart infrastructure, which is in this same spirit.38  Such a model is not without precedent. In 1949, the New Zealand economist A W Phillips built a machine in his landlady’s garage in Croydon using liquid and tanks to illustrate the circular flows of income and interactions in an economy (Figure 3). This early analogue computer was not for show; it was used to understand the economy and simulate policy before digital computers existed. Working versions still exist. The model I have sketched is a high resolution, digital version of the Phillips machine. 38  Clarke (2018). 28  All speeches are available online at www.bankofengland.co.uk/speeches  28  Figure 3: Phillips machine  Sources: Image available at https://en.wikipedia.org/wiki/William_Phillips_(economist)  Building a microscopic-level model of the economy is an enormous undertaking if it were to be attempted top-down. But that traditional top-down approach to model-building may itself need to be inverted. Clarke’s suggested approach is to build this model bottom-up. The map would be crowd-sourced and then stitched together, a Wikipedia-style or micro-to-macro approach to model-building. An economy-wide digital twin would, in a very literal sense, be micro-founded, but in a diametrically-opposing way to existing models. The foundations of this digital twin are constructed not on micro theory, but micro fact.
History shows that price stability is the norm. High inflation is a phenomenon associated with monetary disturbances in times of war and need, and a 1970s and 1980s phenomenon associated with an unsound macroeconomic policy and undermining of the nominal anchor. In many countries, including Norway, the perception in the 1960s and 1970s was that strong growth and low unemployment could be achieved if only we were willing to accept somewhat higher inflation. But experience showed that this was not an option. Counter-cyclical policy through the 1970s in Norway and a number of other countries contributed to rising inflation. Inflation expectations were gradually revised upwards and inflation took hold at a high level. In both economic theory and practical policy, it was gradually recognised that there is no trade-off between inflation and unemployment in the long term. In the early 1980s, many countries again focused on the need to restore confidence in the nominal anchor. In Norway the shift in policy took place in 1986. Following the last devaluation of the krone in 1986, economic policy was oriented towards securing confidence in the fixed exchange rate system. A fixed exchange rate was an intermediate target for achieving low and stable inflation. The fixed rate policy was abandoned in 1992, and the experience of the latter half of the 1990s demonstrated that monetary policy cannot fine-tune the exchange rate. Norges Bank therefore placed increasing emphasis on low and stable inflation.

We assume that fiscal policy will provide some stimulus to aggregate demand and output in 2008 and 2009. A gradual increase in the interest rate will curb demand growth after a period. Household debt and house prices have increased markedly over many years to historically high levels. House prices may now seem somewhat high in relation to developments in income, interest rates, unemployment and housing construction. The prospects of a gradual normalisation of interest rates may restrain credit growth and the rise in house prices. The interest burden is low, but will increase as interest rates rise. Intensified competition in the financial sector has contributed to lower interest margins on lending, which has curbed the rise in interest expenses to some extent. BIS Review 80/2006  5  Monetary policy assessments and strategy The Executive Board’s assessment in Inflation Report 2/06 was that the interest rate may gradually – in small, not too frequent steps – be brought back to a more normal level, and that the sight deposit rate should be in the interval 2¾ - 3¾ per cent in the period to the publication of the next Inflation Report on 1 November, conditional on economic developments that are broadly in line with the projections. In the first half of 2006, the interest rate was increased in two increments of 0.25 percentage point, and the Inflation Report announced that there were prospects that the interest rate would rise further at approximately the same pace.
Therefore, although Spanish institutions have already largely adapted to these regulatory changes, there are still some outstanding reforms to be applied, which will require them to make further adjustments. Lastly, the main medium-term challenge lies in the new competition framework derived from the new technologies and progressive financial disintermediation. New technologies can quickly change the competitive framework by increasing competition in some segments. That will oblige institutions to anticipate changes and adapt to the new environment, even though this entails a rise in costs in the short term, which will be difficult to manage in an environment of low profitability. One of the areas where the highest degree of penetration by new entrants has been observed is payment services, particularly retail payments, which is causing a decline in income from transactional services. Furthermore, adapting to these technologies may involve greater operational, and even reputational, risks, with aspects such as cybersecurity gaining in importance. But new technologies also entail fresh business opportunities for banks. On one hand, these technological changes allow immediate remote access to a broad range of financial services, which may enable general administrative expenses to be reduced. The relatively scant penetration of digital banking in Spain suggests that there is ample scope for this form 7/8  of banking to grow, providing Spanish banks with an opportunity to expand their business. The application of artificial intelligence and the use of large databases with real-time information (known as big data) may also provide for significant efficiency gains.

the leverage ratio, the Spanish banking system as a whole shows, on the contrary, slightly higher levels than the euro area average. Also, Spanish banks evidence, overall, a sound liquidity position, with their LCR ratio above the European average. Regarding the resolution of institutions, in recent years a number of regulations have been approved in Europe establishing a common framework for the EU, and defining the circumstances in which banks with financial difficulties should enter wind-up or resolution processes. In this setting, a new category of senior non-preferred debt instruments has been created, which ranks below senior debt in the payment priority of insolvency proceedings, with a view to facilitating compliance with the minimum requirements for own funds and eligible loss-absorbing liabilities, known as MREL. The MREL requirements that the Single Resolution Board has started to set for significant European institutions are an added reason for Spanish banks to strengthen their capital in the present environment of recovering profitability and an economy that is growing at a significant pace. More recently, December 2017 saw the completion of the second phase of reforms in the Basel III framework. The reforms include, inter alia, the improvement of the standardised methods for calculating credit and operational risk, restrictions on the use of internal models and changes in the leverage ratio. These changes will be implemented in two phases that will conclude in 2027.
Jean-Pierre Danthine: Resilience of Swiss banks from a financial stability perspective Introductory remarks by Mr Jean-Pierre Danthine, Vice Chairman of the Governing Board of the Swiss National Bank, at the Media News Conference of the Swiss National Bank, Berne, 12 December 2013. *  *  *  In my remarks, I would like to look at the situation at Swiss banks from a financial stability perspective, taking the big banks first and then moving on to a discussion of domestically focused banks. To close, I will say a few words on the subject of banknotes. Big banks: strengthening resilience Since the last media news conference in June, the two Swiss big banks have improved their capital situation further. This applies particularly to their risk-weighted capital ratios, where, in an international comparison, they are above the average for large global banks. Credit Suisse, for example, has already met the requirement of 13% loss-absorbing capital to risk-weighted assets, which comes into force in 2019. According to its published plans, UBS should be able to meet this target by the end of 2014. As regards total capital – which, in addition to loss-absorbing capital, also comprises low-trigger contingent capital instruments – the big banks have also made great progress; however, they have not yet achieved the ratios that will apply from 2019. Unweighted capital ratios – leverage ratios – generate a different picture.

The most recent of these measures is the activation, in February this year, of the countercyclical capital buffer (CCB). These measures were necessary and useful. For example, this year a  2  BIS central bankers’ speeches  few large domestically focused banks – citing, among other reasons, the activation of the CCB – have taken steps to strengthen their capital and thereby their resilience. So far, however, the package of measures has not been enough to prevent a further build-up of imbalances on the mortgage and real estate markets. In an environment of persistently low interest rates, coupled with banks’ undiminished appetite for risk, the danger of a further build-up of imbalances remains considerable. For this reason, the SNB continues to monitor the situation very closely, and regularly assesses whether the CCB should be adjusted. Supply of secure banknotes ensured at all times Now I would like to say a few words on the subject of banknotes. At the beginning of October, we informed the public that, since autumn 2012, a small number of Swiss 1000-franc banknotes have been in circulation which were not issued by the SNB. As you know, these notes were abstracted during the production process at Orell Füssli, before they had been through all stages of production. Out of consideration for the investigation by the Office of the Attorney General, this information was only made public after some of these notes appeared in Switzerland.
The volume and value of cheques returned unpaid on account of insufficiently funded accounts continued to decrease following the issuance of the directives on dishonoured cheques and direct debit instructions which were issued by the Bank of Zambia in the second quarter of 2010. The volume of unpaid cheques decreased by 15% to 4,202 (Quarter 2: 4,929). Similarly the value of unpaid cheques decreased by 6.6% to K35.3 billion from K37.8 billion reported in the second quarter of 2010. The public is advised to ensure that they have sufficient funds in their accounts whenever they issue cheques in order to avoid charges. Economic reform programme An IMF Mission was in Zambia from 2nd to 15th September 2010, to conduct the 5th Review under the Extended Credit Facility (ECF) arrangement. Overall, the mission was satisfied with the programme performance. A follow-up mission visited the country from 28th October to 3rd November 2010 to conclude the discussions. The mission had fruitful discussions with the Zambian authorities and reached agreement on a set of macroeconomic policies and structural measures for the remainder of 2010 and for 2011. The policies and structural measures would pave the way for the completion of the Fifth Review of the ECF arrangement, subject to approval by the IMF’s Executive Board. The Board meeting is expected to be held around mid-December 2010. BIS Review 148/2010  11  The IMF mission commended the Zambian Government for its handling of economic policy so far in 2010.

These rules emphasise sensible governance structures – such as preventing control function officers from having their bonuses determined by the profits of business units they oversee. They also require risk-adjustments in quantifying bonuses – for instance, two traders who bring in the same profits, but expose the firm to different levels of risk, are rewarded differently. The other area that is important to fostering a healthy culture at the situation-level is “speaking up”. It is important that there are clear and robust whistleblowing arrangements for employees to raise legitimate concerns about illegal or unethical practices. In addition to the statutory protection offered for whistleblowing to authorities, it is also important that financial firms have internal arrangements for concerns to be raised within the organisation. However, whistleblowing only makes up a small portion of a speaking up culture. In fact, it is a last resort which will not need to be used in an organisation with a healthy culture of open discussion. For professionalism and integrity to prevail – it is crucial that financial firms encourage constructive challenge and healthy debate. This is particularly pertinent for the more ambiguous issues of ethics, professionalism and integrity. (c) Person We have discussed the elements of “system” and “situation”. The third element that is critical for a healthy culture is that of the “people”. I pointed out earlier that the evidence of psychology suggests that the “system” and “situation” are far more likely to predict actual ethical behaviour compared to personal convictions.
Given this, the Riksbank has initiated a research project to obtain more information on how investment and use of IT as well as reorganisation affects productivity growth in Sweden. The project is in two parts. The first sub-project is a micro study which examines whether companies that have reorganised and invested in IT will have higher productivity growth. The second part of the project is based on an own survey study in collaboration with Statistics Sweden, which covers the years 1997-2005. The first, preliminary results of this study were presented at a conference organised by the Riksbank at the end of last year on the theme of productivity. 8 They indicate that the companies that made organisational changes at the same time as investing more in IT than the average company experienced a substantial increase in productivity growth. 9 The study also shows that it was not possible to find any significant effects on productivity growth from IT investments in the companies that had not reorganised. It is therefore important to take into account investments in "organisational capital” when analysing productivity growth. Other investments in knowledge capital such as staff training and R&D should also be important to productivity. This is also confirmed by studies using US data. 10 This type of measure is not reported as an investment in the official statistics. This is despite the fact that they can be regarded as intangible investments. Instead they are calculated as a cost to companies.

Bandid Nijathaworn: Challenges for central banks in the new globalisation Remarks by Mr Bandid Nijathaworn, Deputy Governor of the Bank of Thailand, at the Bank of Thailand International Symposium 2010 “Challenges to Central Banks in the Era of the New Globalisation”, Bangkok, 15 October 2010. *  *  *  I think it is clear from the discussion we had that the post-crisis global economy will not be the same as the one we remember three or four years ago. The global financial crisis was serious, causing much dislocation to the global economy, the banking sector and financial markets, and the process of regaining full normality will take time. Therefore, at least for the next few years, the post-crisis global environment will be characterized by a world of two halves: the advanced economies and emerging markets, each exhibiting different growth prospects, different economic challenges, and different policy stance. And it is this divergence in policies and performance that will drive uncertainty and volatility in global financial markets, accompanied by shifts in risk appetite, global asset allocation, and relative prices. This, in essence, is the context in which new challenges for central banks are being shaped. What implications will this post-crisis environment have on central banks’ roles and responsibilities in maintaining economic stability? To me, three implications are clear. The first is the need for central banks to expand their mandates to formally recognize both price and financial stability as their core policy objectives.
Over the same period, households’ inflation expectations from the Bank/NOP survey have fallen by 90bp, 60bp and 50bp respectively at the one, two and five year horizons. Chart 20 looks at the term structure of expected inflation by households from the Bank/NOP survey, relative to the past and the Bank’s forecasts.12 The term structure of expected inflation is currently lower than at any stage since the crisis. Moreover, household inflation expectations are significantly below 2% at the two-year horizon and, to a lesser extent, thereafter. That means it is unclear, at present, whether household inflation expectations are consistent with the Bank hitting the inflation target. 11  The MPC’s February Inflation Report included a small downside skew to the inflation fan chart, but this did not extend to two years. 12  These have been adjusted to take into account the average difference between perceptions of the level of current inflation and actual inflation. 10  BIS central bankers’ speeches  Chart 19: UK household inflation expectations Citigroup 1 year ahead  Chart 20: Term structure of UK household inflation expectations Per cent  Citigroup 5-10 years ahead  Per cent  Vintage Series (2009 - 2014) Feb 2015 IR CPI Data NOP Feb 2015  5 4  6 5 4  3 3 2  2  1  1  0 2006  2008  2010  2012  2014  Sources: Citigroup. Dashed lines show series 2005–07 averages.

From a more macro perspective, these risks may impair productivity and also cause a reallocation of resources, not only of physical capital, but also of labour, through migration. Special features of climate change risk factors In general, these risks can be considered to manifest themselves in financial institutions through the traditional financial risk categories (credit, market, liquidity, operational and reputational risk). However, climate change incorporates some fundamental special features into these traditional risks, which must be taken into account if they are to be managed and supervised appropriately.7 First, the consequences of climate change are unprecedented and will occur over a very prolonged period. Historical experience is thus of little use to assess their magnitude and evolution, and therefore the uncertainty associated with how and when they will materialise is very high. Second, that uncertainty is exacerbated by the fact that the physical and transition risks are interrelated non-linearly, and possibly subject to tipping points. This, in essence, means that the magnitude of the effects of their materialisation could be greater than expected and will affect economic agents more generally and more abruptly than other risks. Third, the problem has a global dimension. There is little any one country can do on its own to avoid the problem and there may always be free-riders. That is why utmost collaboration and cooperation are required. International organisations and institutions therefore need to play a key role in this area.