samchain/econo-pairs-v1 huggingface dataset:
I nevertheless think that one can draw some conclusions from these exercises: Firstly: Whatever the authorities do in terms of macroprudential policy measures, changes in fiscal policy or in monetary policy, it will affect the price of money in the economy, that is, loan costs, and thereby the incentives for indebtedness. This means that measures taken in one area must take into account what is being done in other areas. The one hand must be aware of what the other is doing, even if they are not completely coordinated. 10  BIS central bankers’ speeches  Secondly: It is clear that of the measures now being discussed, some have much greater potential than others for influencing the incentives for households to borrow. Here the challenge will be to find measures that are sufficiently forceful, but will not be the actual straw that breaks the camel’s back. What one wants to achieve is a controlled adjustment. Thirdly: If we are to deal with the excessively high indebtedness, it is unavoidable that this will have an effect on individual households and entail costs for the economy as a whole – although of course the benefits will ultimately weigh heavier, if we can avoid a really poor outcome. Let me be clear that I do not believe it is enough to solely implement measures that affect the supply and demand for credit through increased loan costs for households. Other measures are also needed.

After a quick look at the statistics, we can conclude that an average household of this type in Upplands Väsby has a total income of around SEK 44,000 a month after tax and a first mortgage of around SEK 1.75 million. A corresponding household in Luleå can be assumed to have a total income of approximately SEK 39,000 a month and a mortgage of approximately SEK 1.1 million. I am here talking about two average households without extremely high incomes or loans. The debt ratio, that is, the loan in relation to disposable income, is in this case 331 per cent for the family from Upplands Väsby and 235 per cent for the family in Luleå.17. For the family in Upplands Väsby this is just above the average in the country for households with mortgages, while the family in Luleå is well below average. At the same time, we know that it is not unusual for households to have debt ratios of 600 per cent, for example in central Stockholm. Let us therefore include one of these households in our comparison. For a similar family with two children in central Stockholm, with a total income after tax of almost SEK 55,000 per month, a loan of almost SEK 4 million entails a debt ratio of around 600 per cent. 16  According to the Financial Accounts, Swedish households’ debt currently amounts to around SEK 3,300 billion, while their disposable income amounts to a total of around SEK 1,900 billion, according to the National Accounts.
This pro-cyclical, boom-bust pattern is, of course, neither new nor UK-specific. Over the past century, the UK commercial property market has experienced five distinct boom-bust cycles (Chart 1): in the 1930s, the 1950s, the 1970s, the 1990s and then again in this century. Peak-to-trough, the average price decline was 26%. The commercial property cycle appears to be every bit as regular as the business cycle, but with one key difference: its amplitude is perhaps three times greater. That pattern is replicated internationally. During this crisis, commercial property prices fell by 22% in Japan, 29% in Spain, 34% in the US and 67% in Ireland. Earlier, commercial property lay at the heart of the UK secondary banking crisis of the 1970s, the US Savings and Loans crisis of the 1980s, the Japanese and Scandinavian financial meltdowns of the early 1990s and the Asian banking crises of the late 1990s. During those crises, commercial property prices fell, on average, by around 40% and often by much more. The costs to the wider economy of these boom-bust cycles have been even more striking. Recessions that are accompanied by a property bust come with a much higher price tag. The cumulative loss of output from a residential property-related recession, for example, is around three times greater than a plain-vanilla recession at around 10% of initial GDP. Its duration is also around a third longer. It may not be an over-statement to say that, historically, commercial property has probably been the most pro-cyclical sector on the planet.

That twenty year period has been far from a quiet one, for the Bank or the commercial property industry. The Bank gained operational independence for monetary policy through the Monetary Policy Committee (MPC) in 1997; had its role in supervising individual firms first stripped from it in 1998 and then, earlier this year, re-instated through the Prudential Regulation Authority (PRA); and, most recently, has taken on responsibility for so-called macro-prudential regulation through the new Financial Policy Committee (FPC). The commercial property industry’s fortunes have been just as undulating. But throughout those ups and downs, the Forum has remained a key source of intelligence for the Bank and the industry and an important sign of cooperation between the Bank and the industry. Since 1997, the Forum has helped inform the deliberations of the MPC and, over the past few years, the PRA and FPC. And it was the success of the Forum that led me, three years ago, to set up a parallel Residential Property Forum, chaired by Nick Ritblat. Some of you will have heard me say that the Forum is one of the best meetings I attend at the Bank. And I know some of you, on hearing that, have been left wondering just what my other meetings must be like. Speaking on behalf of the Bank, I wanted to say how grateful we are to you all for those contributions. But what has the Forum achieved during its life? And, looking forward, what could it achieve in future?
For the moment, however, we have to work on the basis of the published statistics and our experience, which tells us that good macroeconomic data should not provide a basis for complacency. The importance of humility is emphasised by the recent experiences several countries have had in Asia. For instance, the experience of Japan at the end of the 1980s and Korea in the mid-1990s, when traditional macroeconomic measures, such as consumer price inflation and public finances long indicated a favourable development. What was not so evident were the imbalances built up through stock exchange and property valuations and through low-yield investments. What is the reason behind the positive developments? Is the positive development in Sweden due to computers and the Internet? It is of course possible that information technology has made a contribution, but is it a central part of the explanation? The new information technology is not very good at explaining what has happened so far in the Swedish economy. The path of inflation is not determined by technological or organisational developments. There have been periods of technological development with rising, falling and constant price levels. In Sweden, the shift in monetary and fiscal policy towards macroeconomic stability is an important part of the explanation for the improved economic developments. Moreover, we have moved away from a tax system that severely restrained the economy (Stig Malm called it perverse), to a system that is less restrictive.

Examples of this include the introduction of the steam engine and the telegraph at the beginning of the 19th century, the building of the railways somewhat later and the internal-combustion engine and electric motor in the 20th century. These changes usually follow a similar pattern of growth and structural transformation. The transitional phase initially involves a period of crisis, which is expressed in company closures and rising unemployment. After this, productivity and growth increase. Some industries expand rapidly and are met by expectations of large profits. The demand for labour is unevenly distributed and matching problems arise. Wage differentials increase. In many ways the “new” economy can be regarded as one in a row of structural changes taking place in society. It is thus more appropriate, in many respects, to talk of a blend of new and old, rather than a new economy. In comparison with the steam engine, the railways and electricity, today’s IT developments may be perceived as marginal. But, while there is considerable exaggeration in the discussion of the importance of IT, I would still say that today’s change process could be compared to these events. Computers and the Internet allow us to gather information easily, cheaply and rapidly, as well as facilitating contacts between buyers and sellers at almost all levels. IT affects a number of areas, such as financing, stock management and procurement. This often involves a dramatic reduction in costs.
While the use of credit derivatives has substantially contributed to enhanced risk-sharing and is expected to have improved the resilience of the financial system, questions can be asked about the sustainability of the pace of growth in these markets as well as about their implications for the emergence of other forms of risk. Two issues in particular have surfaced in the course of the past year. First, the sheer complexity of many of the structured products introduced in the credit derivatives markets implies that there are potentially large risks for end-users who might not fully understand the time-varying risk profiles of such instruments. Indeed, as illustrated in several episodes of recent large corporate downgrades, the pricing of structured credit products might not adequately account for unanticipated changes in correlation structures among the assets incorporated in the underlying pools. Second, the rapid increase in trading volumes has stretched banks’ and dealers’ settlement systems and caused backlogs that could contribute to liquidity problems in a situation of increased trading activity. These problems could be particularly relevant for the European market, given the larger discrepancy in size between the cash bond market and the derivatives market than in the US. There are signs that, in accordance with the recommendations of the Counterparty Risk Management Group II report, many  BIS Review 50/2006  3  global banks have successfully worked towards solutions to these problems. However, it is rather widely acknowledged that pockets of vulnerability remain in these markets.

We have urged French banks, in conjunction with the national institute of statutory auditors, the CNCC, to provide detailed disclosures of their subprime exposures. A joint working group made up of staff from the Commission Bancaire, the Autorité des Marchés Financiers and the French Banking Federation has defined best practices in this area. Institutions have started implementing them in a satisfactory manner and practices should be further improved in the financial statements for first-half 2008. In 2009, the Basel Committee is planning to publish recommendations on information to be disseminated under the requirements of Pillar 3 of Basel II. In-depth discussions with banks led to a convergence of practices for asset valuation, including the priority on relying on prices and directly observable market data. Where banks have had to use valuation models because liquid prices disappeared in some markets, the recommendations deal with consideration of all risks – including liquidity risk and counterparty risk – and the rigorousness of the process for determining such prices. With regard to adapting the Basel II requirements, we are also playing a very active role in the various international working groups led by the Basel Committee to give greater consideration, where necessary, to the capital requirements related to some liquidity lines or to the securitisation rules. Finally, the crisis has highlighted the need for banks to improve their analysis, measurement and management of liquidity risk.
For example, a firm with a strong traditional lending franchise with appropriate risk management can both build capital organically through retained earnings and serve its customers through the efficient provision of financial services. Similarly, a firm that diversifies into a broader portfolio of financial products may reap the benefits of economies of scope and diversification, while better serving its clients’ needs. This would support both enhanced safety and soundness and the broader objective of effective financial intermediation. There may be times, however, when these two objectives appear to contradict. For example, a firm holding a large buffer of low return, highly liquid assets might be stronger from a liquidity perspective, but might have less lending capacity. Similarly, greater oversight and controls around a particular activity may lower the associated risk, but could also reduce the provision of that financial service. Finally, higher levels of capital may increase the weighted average cost of funding, which could prompt banks to reduce the supply of certain financial services. The latter 5 2/7  BIS central bankers' speeches  point remains an area of active research without a strong consensus.5 This suggests the potential for a trade-off between resilience and intermediation, implying an “optimal” level of capital. This simple, static framing, however, is incomplete and requires further elaboration in terms of the policy horizon and a broad perspective on costs and benefits.

For alternative views on this topic, see “Higher Bank Capital Requirements Would Come at a Price,” Douglas Elliott, Brookings Report, February 20, 2013 and “The Miss Opportunity and Challenge of Capital Regulation,” Anat Amati, National Institute Economic Review, February 2016. 6 Federal Reserve, OCC, and FDIC Release Results of the Supervisory Capital Assessment Program, May 7  2009. 7 "The Theory and Practice of Supervision,” Kevin J. Stiroh, April 11 2016, describes the role of externalities in  supervision in the broader context of market frictions. 8 "Have Big Banks Gotten Safer,” Summers, Lawrence H. and Natasha Sarin, Brookings Papers on Economic  Activity, Fall 2016. 9 Net liquid assets are defined to include cash, central bank reserves, federal funds, net reverse repos, and  certain U.S. treasury and agency securities. 10 Of course, one could look at a broader range of financial services such as market-making activities, provision of  payment services, or risk transfer activities. 11 "Small Business Economic Trends,” National Federation of Independent Businesses, December 2016. 12 "Senior Loan Officer Opinion Survey on Bank Lending Practices,” Federal Reserve Board of Governors, October  2016. 13 Level 3 assets are defined as fair-value assets whose value has to be estimated without benefit of observable  inputs 14 ”Agencies Issue Advanced Notice of Proposed Rulemaking on Enhanced Cyber Risk Management Standards,”  Federal Reserve Board of Governors, October 19 2016. 15 "The Opportunities and Challenges of FinTech,” Governor Lael Brainard, December 2, 2016.
This recognition that it is neither practical nor desirable to see the IMF in a role of Lender of Last Resort has prompted considerable thinking about the nature of private sector involvement in crisis resolution and the modalities of sovereign payments suspensions or standstills. Payments suspensions are in some ways the obverse of recognising the limits on IMF lending. And, reflecting this, sovereign standstills litter history over the last two centuries: in Latin America in the 1820s; among the US states in the 1830s and 1840s; in Latin America again in the 1870s; among the majority of sovereign debtors in the 1930s; and in Latin America once again in the 1980s. All too often in the past, however, sovereign standstills have also been a recipe for chaos and confusion. The recent sovereign defaults in Russia, Indonesia and Ecuador are good cases in point. But looking back over history, it is clear that messy and protracted sovereign standstills are very much the rule rather than the exception. Historical experience with sovereign standstills probably looks quite a lot like corporate experience before insolvency rules were put in place, with the work-out process inefficient and inequitable. I will return to that corporate bankruptcy analogy later on. Against this backdrop, the key issues facing the official community seem to me to be twofold.

The median rating of banks, taking the entire rated G10 population of more than 300 banks, is A1 on the Moody’s scale, or A+ on the Standard and Poor’s scale. This would indicate a near-invisible insolvency probability for such banks over a 1 year horizon. However, this very small insolvency probability does reflect two factors which ideally we would wish to discount. First, the ratings reflect the bank’s actual capital level which will in most cases be significantly above the regulatory minimum. And second, in some cases the rating also reflects the agency’s expectation that public support would be forthcoming for the bank, which of course we would wish to strip out. A more accurate measure of the confidence level established by the Basel 8% would be the “standalone” ratings produced by some agencies, for those banks whose capital is at or close to the Basel minimum. Even on this basis, nearly all such banks are rated above investment grade. The message therefore from this view of the matter is that under the new Accord we should be targeting a minimum level of regulatory capital for our G10 internationally active banks that is at least consistent with an investment grade rating. An alternative way of assessing the regulatory soundness standard would be on a “bottom up” basis, that is by modelling the probability of default arising from a typical credit portfolio if the bank held only the Basel minimum capital.
This was a resource that truly helped maintain lending volumes. A survey by OPORA RUSSIA — we are closely monitoring your survey findings — shows that businesses generally record a higher accessibility of loans in recent months. We appreciate this view. Nonetheless, we can see that currently loans are mostly concentrated with large banks, but we are confident that both banks with a basic licence and regional banks will be capable to significantly contribute to the small business development and become more flexible since they better understand clients’ interests and regional specifics. We are going to advance this segment of the banking system. Not only large banks have had access to our special-purpose instrument: 55 banks have used it, including regional banks and those banks that received corporate sureties. As regards loan restructuring, as you know, an important aspect is that we have been improving the financial system through resolution measures for many years, in order to make it resilient and capable to support its clients in challenging periods. We can see that the banking sector has really demonstrated its readiness to provide support to a considerable portion of its borrowers during this hard period. More than 80% of the restructured loans were under banks’ in-house programmes, and not because this was required by law. Since the beginning of the year, the amount of restructured SME loans has reached 819 billion rubles, which is over 15% of the SME portfolio.

Encik Abu Hassan Alshari Yahaya: Anti-money laundering and combating the financing of terrorism Welcoming remarks by Mr Encik Abu Hassan Alshari Yahaya, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the ASEAN Regional Bank Supervision Workshop on “Anti-Money Laundering and Combating the Financing of Terrorism”, Kuala Lumpur, 3 March 2015. *  *  *  Welcome to Malaysia. I hope you have had a pleasant journey travelling to KL and managed to have a good rest. I also hope that the facilities being offered here at our Lanai Kijang are adequate to meet your expectations. It is a great honour for Bank Negara Malaysia to host and co-organise the ASEAN Regional Bank Supervision Workshop on Anti-Money Laundering and Combating the Financing of Terrorism. I would like to take this opportunity to thank the World Bank for formulating the programme and organising this workshop and our utmost gratitude to the Government of Canada for the generous financial support that has made the hosting and organizing of this course possible. As a country that has just gone through its on-site mutual evaluation process, we have seen that the role of supervision is very important in the development of a country’s AML/CFT regime. There is critical need for the integration between AML/CFT, prudential and business conduct supervision as well as between those supervisors and the law enforcement authorities. These inter-linkages prove to us that collective effort is key in combating ML/TF effectively.
France has carried out more reforms than has been said, but less than many of our neighbors, on all political sides. The Banque de France also serves the country through the economic services that it provides. In 2016, we helped 212,000 families get out of excessive debt and, in line with what we had proposed, the legislator simplified the procedure by reforming the out-of-court phase and by limiting the role of the judge in the debt resolution procedure. These two advances, which will take effect on 1 January 2018, will accelerate the implementation of solutions, with an average gain of 3 months: more than 130,000 families would have benefited from these measures in 2016. In 2016, we also appointed, in each département, a VSE correspondent responsible for advising them in their requests for financing or financial assessments; I invite the banks present today to continue their efforts towards VSEs. Lastly, in 2016, the Banque de France was appointed as the operator of the national strategy for the economic and financial education of the public. In this capacity, we will orchestrate the actions of public services, associations and professionals, to provide French citizens with the maximum amount of resources for understanding the budgetary, economic and financial issues of everyday life. By the end of January, we will take a very concrete step with the opening of the new information portal “mes questions d’argent .fr". 1.

François Villeroy de Galhau: Prospects, challenges and promises New Year wishes to the Paris financial centre New Year wishes to the Paris financial centre by Mr François Villeroy de Galhau, Governor of the Bank of France, 12 January 2017. * * * I would like to welcome you all, our partners throughout the year – public officials, financial and economic players, journalists – to this magnificent Golden Gallery for this happy tradition of extending New Year wishes to the Paris financial centre. I would like to start by extending to you, on behalf of the whole of the Banque de France and the ACPR, our warmest wishes for 2017, for you and your loved ones, as well as for all of your staff. To these personal wishes, I would like to add several collective wishes this evening: first for Europe and its economy, then for our country, and finally for the smooth financing of our economy and for financial institutions. 1. For Europe and its economy A year ago, I had noted with you that 2016 had begun as the year of volatility, with the turbulences in the financial markets. In fact, 2016 was rather the year of uncertainty, with the Brexit victory in June, the American election in November and the Italian referendum in December.