samchain/econo-pairs-v1 huggingface dataset:
BIS Review 71/2009  1  Evidence from South East Asia indicates that capital flows engendered a financial crisis in that region in 1997 and 1998. In light of this evidence, the results of the Foreign Private Investment and Investor Perception Survey are intended to assist the Government to effectively monitor private capital flows. Accurate and reliable data on private capital investment will be helpful in understanding recent developments in the Zambian economy. Better information on investor perceptions will assist Government in designing policies that will attract more investment into our economy. Further, the results of the survey should prove useful to the private sector and other stakeholders. On the whole, the importance of timely and reliable information on capital flows in the design of appropriate policy responses by Government and thus enhancing macroeconomic stability can hardly be overemphasised. Adequate and consistent information on capital flows will also greatly improve Balance of Payments Statistics for Zambia and serve as an early warning system for Government on potential international financial crises and other external shocks. Mr. Chairman, Zambia, like many other developing countries, has inadequate capacity to collect, analyse and disseminate data and information on foreign private capital investment. Compared with other countries in the African sub-continent, Zambia has serious gaps with respect to data on foreign private capital investment. For instance, while we are now at the second phase of the Survey, Uganda, Tanzania and Malawi are in the sixth, fourth and third phases, respectively.

Simon M Potter: Discussion of “Evaluating Monetary Policy Operational Frameworks” by Ulrich Bindseil Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, at the Federal Reserve Bank of Kansas City Economic Symposium “Designing resilient monetary policy frameworks for the future”, Jackson Hole, Wyoming, 26 August 2016. *  *  *  Accompanying charts can be found at the end of the speech or on the Federal Reserve Bank of New York’s website. My thoughts on implementation issues have been enriched by numerous conversations with colleagues, particularly around the current longer-run efforts in the Federal Reserve to examine implementation. Recent dialogue with Antoine Martin was particularly helpful in producing this discussion. Introduction: what do we still need to know to evaluate operational frameworks? Thank you for giving me the opportunity to discuss Ulrich Bindseil’s excellent paper, which builds on his considerable body of work in this field and provides an insightful discussion of monetary policy implementation. What makes Ulrich’s contributions notable is the unique combination of academic rigor and practical insights he brings to the topic. By distilling the key elements of his previous research into an accessible form, this article is a useful read for anyone who wants to gain a deeper understanding of the economics of monetary policy implementation, including practitioners of central bank market operations, central bank researchers, and academics.
This entails counterparty credit risk and, taking account of collateral, is akin to writing out-of-the-money put options. So, for me, the question is not so much “where is the risk?”, as “in what circumstances could risk flow back to the banking system?”; and “do banks have enough capital and liquidity to absorb such flows without stress?” This is relevant not only to credit risk, but also to transfers of complex market risks. In providing bespoke “solutions” to their corporate and investment management clients, investment banks accumulate complex market risk exposures that are hedged largely in public, and so relatively “vanilla” wholesale markets. These hedges are inevitably imperfect. Some of the residual market risk is now occasionally transferred to the fund sector, via for example variance swaps or correlation swaps, transforming market risk into counterparty credit risk – underlining the importance of the work of the industry’s Counterparty Risk Management Group in debating and promulgating prudent practices. 10 Other imperfectly hedged risks are retained, leaving intermediaries with so-called “basis risk” – or, more prosaically, the risk that assumed correlations break down. Put bluntly, if instruments A and B have subtly (or not so subtly) different characteristics but are nicely correlated for a while, B might be employed as a “hedge” for A, without the implicit risk exposure turning up in Value At Risk measures.

Even country workouts in the early 1980s had that broad shape, albeit with the IMF holding the ring. One might wonder how on earth it would work today, in a world of traded debt, synthetic risk transfer, and vehicular finance. Much thinking remains to be done on this, but a policymaker has to form a preliminary view, just in case the music stops tomorrow. My provisional view is that some investors in credit risk would find themselves without the skill set to participate in a workout. In a “covenant-lite” world, they might also find themselves with fewer protections as conditions deteriorated than they would like ex post. Unless markets seized up, however, they might be able to crystallise their losses by selling out to funds and bank desks who trade in “distressed credit”; and they in turn might be able to sell on to funds and banks with specialist workout skills and risk appetites. By such transfers, the end-game co-ordination problems might be reduced. On the way, some hard bargains would be struck, and some participants would no doubt be surprised by their losses. But this relatively benign scenario is not guaranteed. It depends on markets continuing to function; on the infrastructure holding up through volume surges and stress; on the shadow of the insolvency regimes in various jurisdictions establishing productive incentives; and on lack of uncertainty in the terms and conditions of market contracts. That last point needs underlining.
6 By many measures, the global banking system is more resilient. For example, compared to earlier this decade, Common Equity Tier 1 risk-weighted assets of internationally active banks stand at around 13%, from about 7% before. Their leverage ratios average about 6% now, from less than 2% previously. Implementation of post-crisis regulatory reforms 7 We should also remember that the global banking regulatory standards are minimum requirements. National supervisors can use other levers of the Basel framework to apply higher standards or additional requirements on their banks, as appropriate, based on idiosyncratic considerations. 8 There is a general consensus that the financial system is safer than before. But the followon question can be: safer, yes – but is the system safe enough? 9 To say that regulators have addressed all that can go wrong would be great hubris. Indeed, this will be contrary to the evolving and adaptive nature of financial activity. The reality is a recurrence of financial crises in economic history. I would add that no amount of regulations and supervision can prevent crises; what regulators seek to do is to reduce the likelihood and negative impact from one. This will require banking regulators to remain vigilant against emerging risks, and hence the importance of forward-looking supervision to complement regulations. 10 On the other hand, with the last global financial crisis becoming a distant shadow of sorts, there are already calls that “this time it is different” and to dial down the enhanced regulatory requirements – just as all the crises before it.

4/5  BIS central bankers' speeches  34 Another field of research work can be around central bank digital currencies, or to use the buzz word, CBDC. Globally, there has been some discussion on the potential implications of CBDCs, but this is still relatively green field thinking. I will not delve more into it as the subject can be a seminar theme in and of itself. Conclusion 35 As you will have realised, I have flagged more questions than answers this evening. I think the post-crisis financial landscape is an exciting time to be an economist, analyst or researcher in support of financial market development, as well as to help shape policy reviews and thinking. Many of the developments I have touched on are rapidly evolving, and are also not mutually exclusive from one another. 36 There is a view that we should accept a more central role incorporating beliefs and expectations to both understand and shape financial market developments. New advances in behavioural economics can provide for tractable and psychologically-founded models of beliefs to be integrated into the standard analytical frameworks in finance and macroeconomics. 37 It is important that policymakers and regulators have a firm grasp of these interactions and develop new techniques to calibrate policies and mitigate risks. 38 The MAS therefore welcomes the opportunity to further engage the research community, hopefully with many of you, so that with your knowledge, expertise and research rigour, we can deepen our collective learning and understanding.
Capital adequacy ratios were raised and a more risk-differentiated view was taken of bank assets. Risk management systems were made more robust. It was in large part because of these changes, that Asia was better able to withstand the global financial crisis in 2008 and 2009. 18. But much work remains to be done in one important area. Developing Asia needs to continue to develop its capital markets. The Asian financial crisis was essentially due to a double-mismatch in bank financing – currency mismatches and maturity mismatches. This is where strong capital markets can play a useful role in allocating capital in a more balanced and efficient manner. They also help to deepen financial intermediation, so as to facilitate the deployment of the region’s high savings for investment within the region. 19. This was why, nearly ten years ago, the ASEAN+3 countries (namely the ten nations of ASEAN together with China, Japan and South Korea) introduced the “Asian Bond Markets Initiative (ABMI)”. The ABMI has had a good start – the Asian corporate bond market has grown by more than 2.5 times during 2002 to 2010. But it is still too small relative to the size of Asia’s investment needs. It needs to be more liquid and diverse. Access to capital market funding is still mostly restricted to large conglomerates and government-linked companies. 20. Emerging Asia is also under-represented in the equity universe.

Firms are the basic economic agent, since they take most of the economy’s production decisions and their management, strategy, adaptation to demand and use of resources ultimately determine the economy’s growth rate, productivity and competitiveness abroad. Given the weak national demand with which they are faced, firms will evidently give their utmost attention to managing their productive processes efficiently. In particular, the surge in oil prices will force them to review the energy consumed in production. Although oil prices have moderated in the last few weeks, the uncertainty surrounding this market makes it advisable to maximise efficiency in oil use. In this respect, progress has to be made in introducing competition in the energy market and, at the same time, taxation must be revised to stimulate energy saving, since this input represents a significant burden on Spain’s trade balance. Spanish firms are tackling this phase through three lines of action, which the authorities should support. First, firms are reviewing their growth strategy in Spain. They are analysing the markets in which they compete, but also others in which they still do not and to which demand may shift in the future. Firms will try to see beyond the next few years of low growth to identify opportunities and imagine what the forthcoming needs and demands of consumers will be, in order to position themselves advantageously in those business areas.
Indeed, those in the bottom 20% have seen their wealth fall over this period. By contrast, those in the top quintile have seen their wealth increase by almost 20%. This uneven pattern of gains and losses in wealth has widened what was already a fairly wide wealth divide: in 2010, those in the bottom income quintile had average net wealth of £ compared with £ for those in the top quintile. That means the gains in social well-being since 2008 are likely to have been considerably more modest than the rise in headline wealth would imply: these gains have largely been harvested by the already-asset-rich and not at all by the already-asset-poor. Looking across the income distribution, then, it is clear that recovery has been associated with both the incomes and, more strikingly, the wealth of the least well-off having broadly flat-lined. Recovery has not lifted all boats, especially some of the smaller ones. This pattern may go some further way towards solving the recovery puzzle. Whose recovery? To a significant extent, those already asset-rich. (c)  Age distribution  A third dimension of recovery is how it has affected different age groups. Chart 18 looks at the evolution of nominal average hourly earnings across different age groups. It suggests a significant inter-generational income shift has been underway over recent years. Nominal earnings of those under-30 have risen by a cumulative 6% since 2007, while those over-50 have seen cumulative gains of 22%.

And the impact of so-called Quantitative Easing (QE) is also likely to be different across cohorts of society. 3 Understanding the differential impact of monetary policy across these sectors is important in general, as well as for gauging whether policy is working through its intended channels. Fourth, and perhaps most important of all, the distribution of outcomes across different groups can matter greatly for the well-being even of the economy as a whole. To see that, consider a simple example. Imagine the economy comprises two regions, one with income of 10, the other with income of 90. Now imagine income falls by 5 in region one but rises by 10 in region two. At least as measured by GDP, the economy and society as a whole is 5% better off. But is it? The income of the already-rich has risen by just over 10%, while the income of the already-poor has fallen by 50%. Does the former really swamp the latter when it comes to the well-being of society? There are grounds for doubt. Empirical studies show that every extra pound of income or wealth yields less satisfaction than the last. A millionaire values a £ lottery win less than someone on the living wage. For economists, this goes by the name “diminishing marginal utility”. Yes, I know we should get out more. If they are sufficiently unevenly distributed, income losses by the poor may more than offset gains by the rich in a social welfare sense, even if not in a GDP sense.
However, beyond the banking sector’s response, if society is to derive maximum benefit from digitalisation while minimising the costs of the transition, I believe that a comprehensive response is required from the public authorities. A response which surely transcends the financial sphere, to which the financial authorities can no doubt make an important contribution. That is why we are going to focus precisely on improving digital skills in the coming years using, for example, the Financial Education Plan launched jointly by the Ministry of Economic Affairs and 1/2  BIS central bankers' speeches  Digital Transformation, the CNMV and the Banco de España. Because we are fully aware that digital literacy is also part of our financial education. That is also why the Banco de España has long identified the economic and population differences in urban and rural areas (also in terms of access to general services and, more specifically, to banking services) as phenomena that warrant priority analytical attention. Such analysis must provide the basis for informed decision-making. Our most recent annual report, presented before Parliament last year, included a chapter dedicated to these issues. In the coming months we shall present the findings of several studies which examine in depth the phenomenon of financial exclusion in relation to digitalisation processes. Specifically, we are going to present a comparative study of access to cash in Spain and in other euro area countries, focusing particularly on the differences between rural and urban areas.

Joint ICMIF/AMICE Regulatory Affairs conference Paris, Tuesday 4 December 2018  Keynote address Denis Beau – First Deputy Governor  “Old and new challenges for the insurance sector, its regulators and supervisors”  1  Good morning to all of you, dear Presidents and members of ICMIF and AMICE,  I am very happy to be here with you today to exchange views on the stimulating and no less challenging developments that the insurance sector, and especially mutual insurers, as well as their regulators and supervisors, will have to face in the upcoming months and years. After a few words on the economic and financial context and its related challenges for insurers, I will first focus on those brought by regulatory developments currently in the making, and will finish with the new risks that insurers, their regulators and supervisors will have to address, namely cyber-risks and climate change-related risks. Overall, the macroeconomic environment has been favourable. The recovery of the global economy strengthened last year. Global GDP grew at 3.8% in 2017 and is expected to grow at a similar pace for the next two years. The European economy performed well and the inflation rate in Europe is in line with the European Central Bank’s target (2%). Even if recent survey data have been somewhat weaker, the medium-term outlook for the euro area remains broadly positive. However,  global  and  domestic  uncertainties  are  growing.
The prompt implementation of the proposed financial reforms will not only foster sustainable growth and financial stability in the long run, but it should also contribute to boosting confidence in the financial system in the short run, thus promoting economic recovery. Fiscal policy Last, and definitely not least, it is also essential for sustainable growth and prosperity that confidence in the long-term soundness of public finances is maintained. Government deficits and public debts are rising substantially in most countries as a result of the economic downturn, discretionary measures to stimulate the economy, and the funding of the bank support schemes. This is partly inevitable – due to the downturn – and partly necessary – to help stabilise the economy and the financial system – in the short run. But it is also imperative that fiscal policies are designed and implemented in a manner that strikes the right balance between the need to support the economy’s recovery and the need to preserve the confidence in the soundness and sustainability of public finances which is key for the long-term performance of the economy. III. Conclusion  I have used the word “confidence” several times. The severity and duration of the current economic and financial crisis is partly a consequence of the reduced confidence in the prospects of the economy and the soundness of the financial system.

The participation of banks in the debt guarantee schemes is voluntary, and the very limited use of these guarantees may reflect a decline in the demand for credit and/or the desire of the banks to continue deleveraging their balance sheets. It is, however, important to ensure that other constraining factors are addressed, for example that the disincentives associated with the provision or pricing of these debt guarantees are promptly addressed, so as to help banks finance additional lending to the private sector. Possible further measures A relevant question is whether the tight financing conditions and the continuing stresses on the banking system require further measures by governments and central banks in order to help revive the extension of bank credit to the economy. The answer regarding the need and the nature of potential further measures depends on the causes or determinants of the prevailing financing conditions and on the structure of the financial system. To the extent that (i) financial market stresses, (ii) the deleveraging process, (iii) uncertainty about the economic outlook and about potential further bank losses, and (iv) low confidence impair the functioning of the credit and bank funding markets and the transmission of the effects of monetary policy, “non-standard” measures aimed at reducing funding uncertainty and enhancing the functioning of the credit market and, consequently, the monetary policy transmission mechanism, may represent possible courses of action.
Conclusion Roughly eight years of extremely accommodative monetary policies on both sides of the Atlantic might lead to the notion that the ECB and Fed have been confronted with similar or even homogenous challenges. This would be a misapprehension. Major institutional and structural differences at the onset of the financial crisis explain why the clean-up efforts in the US were faster and more effective and the recovery was more sustainable. After the institutional short-comings of Monetary Union had been painfully exposed, much progress has been achieved on the road to completion and further integration. However, this institutional reform package took time. Now, economic recovery, although still timid, is under way in the euro area. But this finding cannot be taken as an excuse to rest on our laurels. More determined structural reforms need to be implemented to lift the growth potential and overcome the ultra-low interest rate phase. A more determined approach to tackle the problem of non-performing loans is necessary to tackle the remaining legacy of banking crisis. When the macroeconomic ship is engulfed by a major storm, all hands – not just monetary policy – need to man the pumps. This, indeed, holds true on both sides of the ocean. 1 Lang, J. H., Peltonen, T. and Sarlin, P., “A framework for early-warning modeling with an application to banks”,  Working Paper Series, ECB, forthcoming. 2 Ghysels, E., Idier, J., Manganelli, S. and O. Vergote, (2014), “Ahigh frequency assessment of the ECB Securities  Market Programme”, ECB Working Paper No. 1642.

Longer maturities have smoothed the growth of borrowers' debt burden in terms of monthly payments of a mortgage. Of course, looking at total loan servicing costs, the overall debt burden has increased. When we compare Estonia and other Baltic countries with more developed economies, there is obviously room for further credit growth: total bank credit as a percentage of GDP in 2004 was over 100 percent in the euro area, around 60 percent in Estonia, and only 20 percent in Lithuania. And although it is rapidly increasing, the debt burden of Estonian households, at 32 percent of GDP by end-2005, was still about two times lower than in the Nordic countries. Secondly, the increase in incomes enables people to upgrade their living conditions. For example, the number of square meters per capita in Estonia (at around 30) is relatively small compared to Sweden  2  BIS Review 81/2006  (45) or Denmark (50). Moreover, older housing stock needs quality improvements. Both these factors may indicate that real estate markets may continue to perform reasonably well over the medium term, even if some slowdown might be ahead. Indeed, the relative contribution of Estonia's construction sector to GDP is hardly exceptional if compared to many other EU countries. Are risk premia sufficient? However, this rapid growth poses important questions of sustainability and stability, especially in countries with shorter borrowing experience.