samchain/econo-pairs-v1 huggingface dataset:
The possibility of taking out a loan expands this limit by adding anticipated future income to the resources available for spending. Why can this be a good idea? The somewhat banal answer is because making certain purchases or investments before having saved up the required amount can have a beneficial effect. Here are a few examples to show that this holds true from the point of view of companies, households and governments. Let’s start with the example of a start-up by a university of Berne graduate. This graduate has come up with a brilliant idea for a new product. To develop and produce it, she needs capital. She herself has no savings and it would take her decades to accumulate the required amount 1 2 3  Cf. Graeber (2011) and Grossman (2010) and the sources they cite. Cf. Grossman (2010) and Ferguson (2009). The focus hereby is on the monitoring of borrowers and on risk management. Page 3/16  on her own. Under these circumstances, she would probably give up on the idea. The possibility of obtaining credit radically changes the situation. A loan enables her to realise her idea within a short time and generate income with the sale of her product. 4 The example shows how loans make it possible even for firms with little capital to make investments that will generate income in future. In the best case scenario, such investments also drive technological progress.

Third, that the system does not do business and exist on the basis of an implicit commitment that the State will have to use public money, the public’s money, to bail out firms that get into trouble. And fourth, that the public can place trust in firms and markets based on their reputations and the transparency of their dealings. Regulation is important and it can help to foster that trust, but it cannot substitute for the trust that the public needs to have, in firms and markets. The State is not there to support the industry, and regulators are not there to substitute for trust in and the reputation of firms and markets. Some important principles follow from the identification of the public interest in financial stability. First, a competitive financial system can only exist if it is rooted in stability: competition and stability cannot be traded off in a binary sense. Second, the public should not define financial stability as preventing all financial firms from failing. In other sectors of the economy firms fail without putting at risk the funds of the public or taxpayers’ money. We will not truly have solved the too big or important to fail problem and thus the public money problem until we have tools at our disposal which enable us to resolve large institutions if they get into trouble. This will create the right incentives for risk management. And third, regulators must use their judgement to mount a robust challenge to stop dangerous business models and investment practices.
Caleb M Fundanga: Consolidated supervision Remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the Joint MEFMI-FSI Regional Seminar or on consolidated supervision, Lusaka, 19 October 2009. *  *  *  The Executive Director of MEFMI, Dr. Elias Ngalande The FSI, Senior Financial Sector Specialist, Mr Amarendra Mohan The Director, Financial Sector Management Programme of MEFMI, Mr Alphious Ncube Distinguished Resource Persons, Participants, Ladies and Gentlemen It is my honour and privilege to officiate at this regional seminar on Consolidated Supervision jointly organised by the Financial Sector Management Programme of MEFMI and the Financial Stability Institute of the Bank for International Settlements. May I also take this opportunity to welcome and thank our distinguished resource persons, for accepting invitations to come for this important seminar. It is my hope and trust that their participation will enrich the deliberations of this seminar. Before I delve into the intricacies of the seminar, I would like to applaud MEFMI, and the FSI for consistently working together in the region to upgrade the banking supervisory skills. I am reliably informed that at least once every two years, the two organisations organise a high level seminar on a topical issue. It is therefore befitting for me to commend the two institutions for the work well done.

Chart: Marked fall in oil prices 1/4  BIS central bankers' speeches  On top of this, there has been a substantial fall in oil prices as a result of a sharp fall in global oil consumption. Despite production cuts, total oil production is substantially higher than consumption, with little spare storage capacity. Against this background, oil prices are likely to remain low in the coming period. Futures prices indicate that oil prices will pick up, but to a markedly lower level than the level we have been used to seeing in recent years. There were already prospects at the beginning of the year that petroleum investment would decline. Owing to the fall in oil prices, oil companies have cut their investment plans. Low oil prices affect the outlook for the Norwegian economy. Chart: Substantial krone depreciation The fall in oil prices and general uncertainty in the wake of the coronavirus outbreak have weakened the krone exchange rate. On 19 March, the krone hit record-weak levels against a number of currencies. At that time, uncertainty in the NOK market was particularly high, and limited liquidity contributed to amplifying NOK movements. Against this background, Norges Bank announced that there could be a need to intervene in the NOK market. In order to support a wellfunctioning NOK market, Norges Bank has made extraordinary NOK purchases totalling NOK 3.5 billion in the foreign exchange market. Chart: Money market turbulence Financial market volatility also led to high credit premiums.
However, we should be aware that at one point in the future their contribution will be overwhelmed and we will need to take appropriate action on time in order to impede any reverse effects. In the policy design and decision making process under the current dynamic environment, the strengthening of analytical tools and the enhancement of knowledge on the policy nexus are extremely important. The interplay of monetary, fiscal and macro prudential policies is a quite new area, seeking for deeper research work to support the decision making process at the central banks and other policy makers, to provide appropriate advices and policy recommendation and therefore, to prevent from underlying risks. The aim of our conference is to contribute towards building knowledge and exchanging views on the policy nexus issue. Having in mind the quality of papers that are going to be presented today, I truly hope that we will make our contribution towards this aim. I wish you a successful conference and fruitful discussion! Thank you. 2  BIS central bankers’ speeches

The goal is to enable banks to retain market access to capital and funding even when large losses occur or the banks are subject to other adverse shocks. The ability to retain access should enable banks to manage through their problems, avoiding the types of liquidity runs that led to the forced unwinding of positions and that pushed what might have been solvent institutions over the edge into insolvency. BIS central bankers’ speeches  3  In addition to the Basel III standards for capital and liquidity, an international effort is underway to further reduce the probability of failure for systemically important financial institutions or SIFIs. The basic logic behind this effort is that the failure of a larger, more complex firm can have disproportionately large negative systemic consequences. As a result, such firms should be forced to hold additional capital in order to reduce their probability of failure below that of smaller firms. An additional capital requirement on such SIFIs would also help to level the playing field between larger and smaller firms by offsetting the funding advantage that accrues to the largest firms that stems from the perception that they are “too big to fail.” Although there are potentially other options, I believe that a SIFI surcharge could best be satisfied by requiring SIFIs to hold additional common equity above and beyond the Basel 7 percent Tier I common standard.
In the SSM area, large global banks are now subject to a single supervisor, associating the ECB with national supervisors in JSTs, as is also the case for their local foreign subsidiaries. The euro area banks have been subjected to wide-ranging and harmonised supervisory exercises. Stress testing exercises that apply a common methodology and common quality assurance have been performed every two years since 2011 under the aegis of the EBA. A transparency exercise is run every year by the EBA, generating lots of data on European banks. Publicly disclosed asset quality reviews and comprehensive assessments have been performed each time a bank is put under the direct supervision of the SSM since 2014. A large review of the internal models used by the European banks (Targeted Review of Internal Models, or TRIM) is currently performed by the ECB and aims at greater reliability and comparability of risk models and capital. In sum, we have set up a regulatory framework in Europe that penalises unnecessarily complex banking activities by imposing higher capital requirements, allowing for more intrusive and 2/3  BIS central bankers' speeches  comprehensive supervision and fostering greater transparency. The new resolution mechanism aims at extinguishing the implicit government guarantees, which provide an incentive for excessive risk taking and levels of complexity in order to gain “too-big-to-fail” status. C – Some challenges lie ahead: better coordination of the parties involved in the resolution process and the necessity for cross-border consolidations in Europe But we still face important challenges ahead.

I want to stress two of them. The Single Resolution Mechanism, the second pillar of the Banking Union, has just successfully passed its first real test this summer with the orderly resolution of Banco Popular. However, there is still room for improvement in the coordination between the numerous institutions and authorities involved in these procedures. It means that every participant must know and very clearly understand its role in the process to ensure an efficient resolution. Second, Europe still suffers from overcapacity and cross-border consolidation is needed. In the United States, the top five banks have a market share of more than 40% while this figure is barely 20% in Europe. Given the new regulatory and supervisory framework I described earlier, we believe that the Banking Union should be considered – according to the criteria set up by the BCSB – as a single geographic area. Furthermore, we are reaching the point in Europe where facilitating healthy and well-designed cross-border mergers could actually improve financial stability. It would make banks better able to diversify their risks, achieve economies of scale and become more efficient. And as we have strengthened the single supervision and resolution of significant institutions, we should not fear the “too-big-to-fail” issue. Cross border consolidation would foster a more efficient allocation of savings towards productive investments in Europe and it would place European banks in a better position in terms of international competition.
Accordingly, as supervisors we should test principles, theories and procedures against the reality of events in financial systems. Both within and outside Spain, last year provided us with representative cases of weaknesses that leave no room for complacency and which require fresh thought and responses. The rest of my speech will deal with these aspects. Let me begin by noting that no new initiative it is sought to take in this field may be considered in isolation. It must be part of a two-dimensional framework. First is the matter of international coordination, since in markets as interrelated as is currently the case, the stability and behaviour of the system has an international facet. And second is the multi-disciplinary dimension, since, as revealed by the welter of problems I discussed in connection with the ENRON case, it is becoming increasingly evident that no banking supervision model may be expected to be efficient if the rest of the institutional apparatus underpinning the rationale of the market economy does not function properly. Among these institutional underpinnings, there are two which, although they affect all companies, I consider to be of particular importance for the workings of credit institutions and for their proper supervision. The first is the need to reinforce market discipline. On the basis of adequate, reliable and updated information compiled by companies, duly verified by independent auditors and impartially evaluated by analysts and rating agencies, such discipline should simultaneously act as a deterrent to and penalise imprudent, inappropriate or simply mistaken behaviour.

As a result, the Swiss economy has benefited from far more favourable monetary conditions than Germany, for example, which is subject to the same interest rate regime as those euro area countries in the process of convergence. Furthermore, the interest rate bonus has remained, partly because of the heterogeneous economic development of the euro area. Even if the international significance of the Swiss franc diminished, its unique character should strengthen in view of the increasing complexity and diversity of the euro area. The markets have correctly assessed this process. The development of the euro area also presents a challenge to the Swiss economy. In this context, Switzerland's monetary autonomy will remain a significant asset. BIS Review 16/2005  1
Remedial actions need to be evaluated in terms of their short-term efficacy as well as their longer-term implications. •  Unbalanced financial systems create vulnerabilities. Financial systems that are unduly reliant on banks for financial intermediation are likely to be more vulnerable and slower to recover from the onset of weakness. Shallow capital markets limit lending alternatives and delay the recovery of financing to the real sector. The challenges can be daunting, but recent experience both within and beyond Asia confirms that a dedicated commitment to financial reform contributes to sustainable recoveries and greater crisisresilience. Just as strong financial systems act as stabilizers when a domestic economy is battered, weak financial systems amplify the scope and reach of the problems, making bad situations worse. Longer-term financial stability While financial sector rehabilitation will remain a key priority for authorities in Asia, longer-term measures need to be put in place to deal adequately with the increasingly complex and dynamic international financial marketplace of the twenty-first century. The threats to financial stability are many, and no one set of measures can be expected to ensure against the recurrence of future problems. Financial intermediation is a constantly evolving activity, involving new risks, instruments, and control challenges. Financial institutions and policymakers alike should continue to upgrade their processes to remain in command of these risks.

There are several reasons why it is an advantage that inflation is higher than zero: •  The structure of the economy evolves over time. Demand for labour with different qualifications changes. This requires changes in relative wages. There are rigidities in nominal wage growth. Nominal wages do not readily fall. With some inflation, relative wages can change without a fall in some nominal wages. There may also be rigidities in the pricing of goods and services. Some degree of inflation will thus oil the economic machinery. •  In periods, inflation and economic growth will be low. It is then appropriate for real interest rates to be low, or even negative. Nominal interest rates cannot be set below zero. If inflation becomes entrenched at a low level or near zero, the interest rate will be less effective as an instrument. •  There are different ways of measuring inflation. The consumer price index tends to overestimate actual inflation. The most important source of measurement errors is probably the difficulty of distinguishing between changes in the quality and price of goods. In other countries, findings show that the consumer price index overestimates actual inflation to the order of ½ -1 percentage point. The inflation target represents a framework for, not an obstacle to, monetary policy’s contribution to stabilising output and employment. This objective is also expressed in the Regulation on Monetary Policy. If demand for goods and services is high and there is a shortage of labour, there will normally be prospects of higher inflation.
The growing interest for attending the Conference confirms once again the significant contribution of the Conference to the enrichment of the knowledge and exchange of experience of the representatives of the central banks in regional and international frames. Nevertheless, the Conference would not be a unique treasure of knowledge and experience, if it did not include the representatives of the domestic financial system and the payment service providers, which by their continuous active participation and involvement in the panel discussion, contribute to the thematic comprehensiveness of the Conference. The Conference will cover the latest developments in payment and securities settlement systems, as well as payment services on global, European and national level. In the global context, Mr Klaus Löber, the esteemed expert from the European Central Bank, will elaborate on the new developments in the area of implementation of the PFMIs, work on retail payments, cyber security, digital innovations and correspondent banking. These are very important issues for central banks given that we also promote the safety and efficiency of payment, clearing and settlement, thereby supporting financial stability and the wider economy. In addition, the developments in the compliance area regarding the prevention of money laundering, financing of terrorism, insider dealing, fraud, corruption and other criminal offences are in the focus of the Conference, as well. In this context, we appreciate the contribution of Mr Oliver Schufmann, the representative of Commerzbank, who will present their experience regarding the compliance activities.

Ladies and gentlemen, at the end of my speech I declare the Ninth Conference on Payment and Securities Settlement Systems open, and I wish the chairman, Mr Michiel van Duveren and his colleagues, a successful Conference. Finally, I wish you all a pleasant stay, hoping that you will take with you nice memories of Ohrid, the city with thousands of years of history and beautiful nature that attract the tourists from all over the world. Тhank you very much for your participation in our Conference. 2  BIS central bankers’ speeches
Household debt and real housing prices Per cent of disposable income and index, 2000 Q1 = 100 200  200  Household debt ratio Real property price index  180  180  160  160  140  140  120  120  100  100  80  80  60  60 80  85  90  95  00  05  10  Note. Debts refer to total debts. Real housing prices are nominal property price index deflated using the CPIF. Sources: Statistics Sweden and the Riksbank  12  BIS central bankers’ speeches  Figure 8. Monetary policy deliberations • •  Inflation Resource utilisation  Target attainment during the forecast period  Monetary policy deliberations  Repo-rate path Probability of the scenario Debt Consequences of the scenario: • inflation • resource utilisation  Expected target attainment beyond the forecast horizon  Source: The Riksbank  Figure 9. Household debt ratio Per cent of disposable income  Note. Households’ total debts as a share of their disposable incomes, totalled over the past 4 quarters. Sources: Statistics Sweden and the Riksbank  BIS central bankers’ speeches  13  Figure 10. CPIF inflation  Note. Annual percentage change. The CPIF is the CPI with a fixed mortgage rate. Sources: Statistics Sweden and the Riksbank  Figure 11. Repo rate  Note. Repo rate, per cent. Forecast refers to quarterly mean values, outcome refers to daily data. Source: The Riksbank  14  BIS central bankers’ speeches  Figure 12.

In recent years, much of the (meagre) productivity growth seen in the euro area has come through labour shedding rather than from strong value added growth. And if those displaced don’t have the right skills to find another job, structural unemployment is likely to increase further, or they will be forced to consider low productivity sectors, and then aggregate productivity growth will stagnate once more. Neither scenario is desirable or sustainable. So our aim must be to achieve high productivity growth at full employment. But how can that be achieved? Essentially, there are two channels towards higher productivity growth, and to combine productivity growth with full employment we need to employ both. The first is within-firm productivity growth, which is about investing in or adopting new technology. There’s quite some debate, led by scholars like Robert Gordon, as to whether the great waves of technological innovation are now behind us. 11 But whether or not that’s the case, I don’t see it as a barrier to productivity growth in the euro area. In fact, we still have a long way to go to capitalise on the last wave of innovation – the ICT revolution – which many firms have not yet incorporated into their business models. Indeed, a large part of the difference in productivity performance between the US and the euro area can be attributed to the fact that US firms have invested more in ICT capital, and crucially, in the human and organisational capital necessary to full reap the benefits of it.