samchain/econo-pairs-v1 huggingface dataset:
This building will inevitably become known as the “house of the euro”. It provides a sound foundation for the ECB to pursue its mandate of maintaining price stability for all euro area citizens. In that sense, the building is a symbol of the best of what Europe can achieve together. But it is also a symbol of why we can never again risk to split apart. We are standing here today in what used to be Frankfurt’s former wholesale fruit and vegetable market, a state-of-the-art functional building from the 1920s that has largely been preserved and incorporated into the new structure. Between 1941 and 1945, more than 10,000 Jewish people from Frankfurt and nearby were deported from here to the concentration camps. A memorial on the east-side of the building has been built to remind us, and those who come after us, of deeds that cannot and must never be forgotten. An integrated, democratic and peaceful Europe was one of the key lessons from this dark chapter in history. We have come a long way since then – but nothing we have achieved should be taken for granted. European unity is being strained. People are going through very difficult times. A recent Eurobarometer survey on how households in several countries are coping with the crisis showed that all respondents had been affected by a loss of income, and almost all said life was worse since the crisis hit.

Now we need to make progress in the other areas that remain unfinished, notably in terms of economic and institutional convergence. Still, I recognise that we cannot have a purely economic perspective on the questions facing our Union. While economic integration produces more jobs and growth on aggregate, this does not completely solve the problem that drives dissatisfaction with the euro and the EU. There is also the problem of distribution: who gains and who loses from that process? For example, higher labour mobility across countries might reduce unemployment, but it can also stoke fears about immigration and create insecurity for low-skilled workers. Opening up a previously protected sector might reduce costs for consumers, but it can also leave citizens employed there with an uncertain future. So, if we are to build lasting confidence in our Union, we still need to address this tension – to reconcile the economics of integration, which is about efficiency, with the politics of integration, which is about equity. 2  BIS central bankers’ speeches  This is a complex issue, but a solution can be summed up in one word: skills. Theoretical and empirical research both suggest that recent technological change has been skill-biased. In other words, production technology has shifted in a way that favours skilled over unskilled labour, by increasing its relative productivity and therefore its relative demand. Equipping workers with the right skills therefore makes the economy more efficient and creates new job opportunities.
But the flow of general provisions moves in the opposite direction, acting as a countercyclical mechanism. In the last boom, the accumulated stock of total provisions grew steadily between 2005 and 2008, to a level which at the start of this year was twice as large as their non-performing loans. That figure has fallen sharply in recent quarters, in the face of fast-growing credit losses, but it did ensure that Spanish banks were better placed than their counterparts in other countries to absorb such losses without immediately eating into their core capital. The Bank of Spain estimates the current level of general provisions could absorb losses associated with a doubtful assets ratio of 9% (the current level is 1.5%). The general reserve is also substantial in comparison with the tier 1 capital ratios, representing 1.3% of the riskweighted assets. I know that general provisions fall foul of modern accounting practice and can be unpopular with tax authorities. But the Spanish example demonstrates that – despite all the technical arguments there might be about the details – a mechanism with broadly the right features is practicable and can generate worthwhile additional reserves against the losses which crystallise in cyclical downturns. It does not require precise estimates of the length of the cycle, or predictions of when the cycle will turn; and it can be capped, so that the reserve does not continue to grow inexorably in an extended upswing.

With regard to the outlook for Sweden, the Riksbank foresees an average annual growth rate of almost 3 per cent in the coming years. Looking at inflation prospects, the rate of price increases is expected to rise in the period ahead as resource utilisation increases in Sweden and abroad. However, a continuation of relatively weak labour market conditions and a favourable cost situation mean that the rise in inflation is expected to be relatively moderate in Sweden. Our forecast in the Report is for a risk-adjusted inflation rate of 1.1 per cent one year ahead and 1.8 per cent two years ahead, measured as UND1X inflation. Swedish housing finance On 1 July this year the Act on issuing secured bonds (2003:1223) will come into force. One of the main incentives behind the new Act is to offer Swedish mortgage institutions the same favourable financing opportunities that these institutions face in European countries that have already introduced similar legislation. So will this new legislation result in a new financing structure for Swedish mortgage institutions and in large issue volumes in the international markets? This remains to be seen. The Riksbank has, for reasons of principle, been hesitant towards the introduction of the legislation on secured bonds, primarily because the supervisory task charged to Finansinspektionen (the Swedish Financial Supervisory Authority) could be perceived as an implied government guarantee, but also because the legislation in this field entails a return to regulation in the credit market, which in itself can be questioned.
In terms of the migration to e-payments, the insurance and takaful sector is a key sector where the usage of cheques is still prevalent. In 2016, 2.3 million cheques were issued by insurance and takaful companies while 9.8 million cheques were collected by such companies from their customers. While good progress has been made this year with the decline in cheque collection accelerating from -0.5% in 2016 to -22.1% in the first 7 months of 2017, more effective and creative measures are needed to drive cheque usage to negligible levels. To this end, Bank Negara Malaysia has recently concluded a consultation exercise with the industry on the implementation of an ePayment Incentive Fund Framework (ePIF). Under the framework, insurance companies shall set aside RM3 for every cheque issued and RM1 for every cheque collected to be used as incentives to encourage their customers, agents, service providers and government agencies to migrate to e-payments. The current practice where agents collect premiums from customers in cash and make payment to insurance and takaful companies using the agencies’ own cheques or credit cards should stop. The industry should promote greater prudence and transparency in the collection of customer premiums by facilitating customers to make direct payments to the insurance and takaful companies. To this end, the industry equipping agents with mobile point-of-sale (mPOS) or mobile apps to collect payment directly from customers should be the norm. Thirdly, the industry needs to collaborate and invest in key market infrastructure and arrangements.

2/4  BIS central bankers' speeches  In addition to clearing, the extended use of electronic platforms also contributes to the resilience of the European repo market. As mentioned in the last ICMA survey, the segment of the electronic repo trading (via bilateral trading) in particular has benefited from the turmoil observed during H1 2020 because of the dash for cash situation. Nonetheless, support that voice-brokers can punctually bring to clients has been also an important factor during these difficult times. 2. Some points of attention going forward The resilience of the sovereign debt markets during the crisis and their contribution to the absorption of the economic and financial shocks we had to face, should not hide however a few attention point that their development has contributed to intensify or bring back to the forefront, from a financial stability perspective. I would like to highlight two of them, margin calls and the sovereign-bank-corporate nexus. a) European sovereign debt is of course used as collateral to obtain liquidity on the repo market. Episodes of volatility in times of crisis, like during the March 2020 market turmoil, or idiosyncratic events, such as the Gamestop or Archegos ones, can result in significantly increased cash needs, in particular stemming from margin calls across centrally cleared and non-centrally cleared markets. The resilience of the repo market, meaning its liquidity and depth, is thus critical in responding to those margin calls, including for the non-bank financial sector.
Incidentally, as oil prices moved higher in recent weeks, the inflation risk premia also rose amid an increasing willingness on the part of investors to hedge against inflation in an environment of strongly declining deflation probabilities. This is also consistent with survey-based evidence. For example, a recent survey of 62 fund managers by Bank of America Merrill Lynch revealed that a rise in inflation is thought to be the most underestimated tail risk for global financial markets in 2018. One fund manager in two considers a rise in inflation as a risk to current market prices. Now, whether or not this risk is real, or how much we should worry about it, is an entirely different question. I will pass no judgment on the US. In the euro area, however, we see no such inflation tail risks at the current juncture. Inflation is expected to converge only very gradually to levels closer to 2%. For this reason, an ample degree of monetary stimulus remains necessary for underlying inflation pressures to continue to build up, and we expect the ECB’s key interest rates to remain at their present levels for an extended period of time, and well past the horizon of our net asset purchases. At the same time, we currently see no reason to believe that the distribution of future inflation risks has moved permanently lower. 13 It is true that it is taking longer than usual for inflationary pressure to emerge.

What happens now is that participants in CHIPS submit payment instructions throughout the day. But actual settlement, performed on a net basis, is deferred and becomes final only at the end of the processing day. In the new arrangement, which the New York Clearing House has announced it will put into operation in January, CHIPS participants will continue to submit payment instructions throughout the day. However, through the use of a bilateral and multilateral matching algorithm, the vast majority of payments will be settled and become final over the course of the day. By ensuring that final payment is made promptly, the new procedure will reduce settlement and operational risks and enable participants to manage their risks more effectively. A third major improvement to the U.S financial infrastructure that the Federal Reserve has already implemented deals with a new net settlement service for Fedwire. The net settlement service was  1  BIS Review 93/2000  implemented in 1999 in response to requests from major US clearing associations. These groups asked the Federal Reserve to help their members reduce settlement risk while improving operational efficiency. They noted that Fedwire itself is not an effective way to settle obligations among the members of a clearing group. We agreed and rolled out a new settlement vehicle. This new service helps clearing houses and related arrangements achieve their goals by offering Fedwire-like, immediate and irrevocable finality for entries that have been submitted in a convenient file format by a group’s agent.
Without wishing to anticipate this inquiry, let me just note that we should, as far as possible, manage problems before they arise. Finansinspektionen’s inquiry appears to be a step in this direction. The Baltic countries – more stable but still cause for concern One risk tied to the financial markets and which is particularly important to Sweden, is economic developments in the Baltic countries. Just a few weeks ago, we met here in the Riksdag Committee of Finance to discuss the Swedish banks’ commitments in Estonia, Latvia and Lithuania – what has happened in recent years, what we are expecting to see in the future and what we can learn from recent events. I do not intend to repeat what we talked about then, but can note that developments in the Baltic countries do appear somewhat brighter now than they did a while ago, but that the future is still very uncertain. One question that could affect the region as a whole is, for example, Estonia’s application to join the EMU. Loan losses in the Baltic countries are still increasing, which in turn has a negative effect on the Swedish banks’ profitability. We are counting on loan losses there peaking during 2010, but also on the Swedish banks being able to cope with the strains this will entail. An important element here is that the banks have increased their capital and thus their resilience to increased loan losses. The road ahead of us is not without problems.

The financial transactions are derived from real economic activities, and hence risks are understandable and manageable, with lending to domestic companies accounting for 70 percent of loan portfolio and the rest is mainly mortgage loan. The direct exposure of Thai banks to European countries is also very small. Investments and loans made by Thai banks to Europe are only 0.3 percent of total assets, while claims on Thai banks by European countries are even smaller at 0.03 percent of total liabilities. Nevertheless, we will be watchful of the second round impact of the EU crisis, particularly via impact on exports that could impact asset quality. Apart from the existing solid fundamentals outlined above, Thailand is currently striving to develop a more efficient financial system to anticipate increased regional integration. The key driver and rationale behind this momentum is clear. ASEAN economies aim to increase competitiveness from increased economy of scale and scope, and technology transfer, with link up of supply chain of ASEAN and ASEAN plus 3, in particular. This, in turn, will help strengthen our competitive position in the global market. Thus, the vision of financial sector is that it should seamlessly facilitate this process, whilst safeguarding financial stability. It should be emphasized that economic integration in ASEAN is not aimed to reach the same level of integration as EU, as the single currency and monetary union is not on the agenda.
UK  160  15 10  140 Range of previous recessions  2008 0  0  120 UK EU Referendum Act  5 10 15 20 25 30 35 40 Quarters since pre-recession peak in GDP  Sources: ONS and Bank calculations. 5 -5  100  -10  80  -15  60  -20 -25  2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018  Sources: Eikon from Refinitiv, Japanese Cabinet Office, OECD, ONS, Oxford Economics, Statistics Canada, US Bureau of Economic Analysis and Bank calculations. Similarly, a prolongation of global trade uncertainty could undermine the global expansion. The impact would be magnified if financial markets move such a possibility from their tail risks towards their central scenarios.30 29 Based on simulations using NiGEM. The baseline scenario assumes a 10 percentage point increase in tariffs that persists for three years. The additional impact from tighter financial conditions is based on a 75bp increase in term premia and 50bp increase in equity risk premia globally; and the uncertainty impact is proxied by assuming agents anticipate a further 10pp increase in tariffs the following year. Global monetary policy is held fixed for five years. 18  All speeches are available online at www.bankofengland.co.uk/speeches  18  Most fundamentally, the larger and the more permanent the disruption to global trade—the greater the deglobalisation—the greater the reduction in both activity and supply capacity of economies. The latter—a material hit to supply—is something that advanced economies have not experienced since the mid-1970s.

For example, the process of private sector balance sheet repair is nearing an end and the global stance of fiscal policy is shifting from contractionary to expansionary. Any rise in potential productivity growth would also boost the equilibrium rate. The scope for the equilibrium rate to rise will also be greater if spare capacity is larger than currently estimated. 11 See Carney, M (2018), ‘Guidance, Contingencies and Brexit’. 12 For example, as explained by Richard Clarida in his speech ‘Data Dependence and US Monetary Policy’, 27 November 2018. 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  In the MPC’s projections published last week, the balance of headwinds to growth and more accommodative policies are expected to return global growth to around potential rates by the end of the year (Table 1). Table 1: MPC projects global growth likely to settle around potential rates Projections Average 1998-2007  2018  2019  2020  2021  Memo: potential  PPP-weighted  4  3½  3¼  3¼  3½  3½  UK-weighted  3  2½  2  2  2  2¼  Sources: Bank of England, Eurostat, IMF World Economic Outlook (WEO), ONS, US Bureau of Economic Analysis and Bank calculations. Notes: 2018-21 figures show annual average growth rates. Potential growth is calculated as an average from 2019-2021. This is the most likely scenario unless there are shocks from the other two cycles.
As a result, euro area cross-border banking groups potentially face higher costs than interstate banking groups in the United States. 3/5  BIS central bankers' speeches  This recourse to ring fencing takes a narrow national perspective. At present, national deposit insurance schemes will be drawn upon should depositors need to be compensated during bank resolution. Hence the desire of national authorities to ensure that each national subsidiary is sufficiently capitalised and has adequate liquidity. Completing banking union, including the introduction of a European deposit insurance scheme and the removal of the remaining national options and discretions, would help ensure that the costs of resolution are equitably shared. Meanwhile, it would enable banks to use liquidity and capital efficiently at the euro area level. Competition from outside the sector The final challenge for bank profitability comes from increasing competition from outside the sector, in particular from financial technology companies (fintech) and non-bank financial companies. Lightly regulated fintech companies have begun to encroach into the realm of payment and settlement systems. More than 60% of incumbents view fintechs as a threat to their income from these activities.13 Given the greater desire by consumers for instant payments and the use of mobile payments, investment in IT is vital to secure future revenue streams. Banks also face increasing competition in the provision of credit. Total assets of non-bank financial intermediaries doubled in the euro area between 2008 and 2017, whereas total banking sector assets remained broadly unchanged. The growth is particularly marked in the investment fund sector.

Over a mediumterm horizon, balance of payments trends remain unchanged. This year’s revision of the estimate for foreign currency reserves from $ billion to $ billion comes a result of higher foreign currency purchase volumes based on the fiscal rule in the context of higher oil prices. In conclusion, I would like to make the following comment. Should the situation unfold according to our baseline forecast, we hold open the prospect of a key rate reduction somewhat sooner than we assumed back in December last year. We do not rule out that this may occur in 2019. The Bank of Russia will make its key rate decisions, as it always does, taking into account inflation and economic dynamics against the forecast as well as risks posed by external conditions and the reaction of financial markets. 3/3  BIS central bankers' speeches
8 The resulting loss of the public’s faith and trust in this critical market comes with a cost: Let’s recall that it is ultimately the public that stands to lose from an FX market unable to play its vital role in the global economy. The FX market is considered by many to be relatively lightly regulated, particularly in the FX spot market. Regulatory treatment across jurisdictions varies. 9 Regardless of who regulates in a given region, in the absence of a single centralized and comprehensive global regulator of this highly global market, collaborative efforts between the private and official sectors play an important role. These efforts help us to better understand the roots of the misconduct and the misalignment of incentives that contributed to weaknesses in trading structures and encouraged unethical and illegal activities. And they can also play an important role in elevating best practices in order to promote a sound, effective FX market going forward. In the remainder of my remarks, I’ll discuss three examples of such work. First, the recommendations of the Financial Stability Board’s Foreign Exchange Benchmarks Group. Second, the work of the various foreign exchange committees, including the New York Fedsponsored Foreign Exchange Committee (FXC), to provide more detailed, globally harmonized guidance through an expanded Global Preamble to the existing regional codes of conduct.

As a result, some people began to orient more towards the MKD. Traditionally our country, like most former Yugoslavian countries are highly Euro-rized, which means people save and use credits in Euros, with a 65% Euro to 35% MKD ratio. During the crisis and continuing today, the ratio of households and their propensity to save in MKD has elevated to 50%. BIS central bankers’ speeches  1  You have been in your post for 2 years with 5 more remaining. How do you view the future development of the economy based on the government’s FDI promotional campaigns that are taking place currently across the globe? We have witnessed in the past 4–5 years several very important foreign direct investments. Some of them are so large that they already equate to roughly 17% of our exports, with the majority of the companies focused on component manufacturing for the automotive industry. There are also several large firms that are in the pipeline which have shortlisted Macedonia for their capacities. Importantly, these incoming large-scale investments are also bringing diversification to our exports, which are traditionally based in textiles, agriculture and metals. It is worth noting that several of these firms not only made the decision to enter Macedonia but are currently in expansion mode based off their operational successes here, to the degree that I predict in 3 years the current and pending FDIs can equate to 30% of our exports.