samchain/econo-pairs-v1 huggingface dataset:
Indeed in the data collection exercise we have just launched we ask for data on a calibration that combines 35% of medium term average index spreads with just 17.5% of excess spot spreads. Similarly, a lower calibration for the average spreads combined with a higher calibration of the excess spot spreads could achieve the same outcome. We are keen to read responses to the DP and to discuss stakeholders’ views on the CRP and its calibration. The breadth of application of the MA by UK insurers has been a unique aspect of our implementation of Solvency II (Chart 1 ): preserving and, indeed, expanding it further underpins the competitiveness of the sector in the UK. This uniqueness has understandably sent MA reform in different directions in the UK and the EU. The EU has chosen to leave the MA calibration untouched. But, in contrast to our focus on widening investment flexibility and MA eligibility, the  Page 6  EU’s approach is looking to tighten their MA eligibility requirements, particularly for structured assets. Prior to Brexit, the UK regime had already been more accommodating of a broader range of assets as appropriate for MA portfolios, including those that were internally rated. Further divergence in the practical use of MA is now possible, as part of the overall package of UKspecific MA reforms, in a way that preserves the same high level prudential outcomes. Reforms to the risk margin are at a more formed stage than those to the MA.

Indeed, it is worth noting that in 1994,  12  This lack of spare capacity in firms is hard to reconcile with the relatively sharp drop in GDP in the recession and the resilience of employment. However, it is possible that future data revisions may change the profile of GDP during the recession. It is also possible that underlying productivity growth trends were overestimated during the long expansion of the 1990s and 2000s, and that the economy was further above capacity in 2006/7 than was appreciated at the time. 10  BIS Review 158/2010  when the early 90s fiscal consolidation began, the UK economy grew by over 4%, which is still the strongest rate of GDP growth we have seen in any calendar year since the late 1980s. The strength of growth surprised forecasters, who had greatly underestimated the momentum of growth which would be generated by a rebound in private sector demand, a strong world economy and a competitive exchange rate. 13 There is a risk that we are making the same mistake again because of the preoccupation with downside risks following the financial crisis. The second key argument is that higher interest rates should help to exert a brake on abovetarget inflation and keep inflation expectations anchored around the 2% target. There are significant upside risks to the forecast recently published in the Bank’s Inflation Report which could sustain the period of above-target inflation into 2012 and 2013.
4/6  BIS central bankers' speeches  We have heard that CLS, has established a public register on their website, where CLS members are able to post their Statements to publicly demonstrate adherence to the Code. The BIS Governors have asked the BIS Markets Committee, which I currently chair, to assess the effectiveness3 of the Code over time. This will likely take place 3 years after the launch and will be conducted together with the GFXC. This is a demonstration of the BIS Governors’ ongoing commitment to the Code. Embedding, monitoring and demonstrating adherence are actions that we hope that you will take to support adherence of the Code. As a first step, I strongly encourage all of you to read the Code. You will find that it is written in simple language and addresses many issues where there were previously no guidance on. Consider how it can be applied to your firm, taking into account proportionality – i.e. how the principles are embedded must be in the context of the nature and the significance of your activity in the FX market. Consider how you can encourage counterparties to adhere. It would be a positive outcome if it becomes a norm that each new counterparty relationship starts off by bilateral indication that both parties adhere to the Code. Central banks leading the way We, in our capacity as central banks, will lead the way.

Third, firms should be able to demonstrate publicly that their conduct in the FX market is in line with the Code. A key part of the Code is the Statement of Commitment that is found in Annex 3 of the Code. This is a single, common basis by which each market participant can demonstrate that it commits to adhere to the Code2. It will be up to each market participant to decide whether and how to use the Statement. For example, some market participants may choose to publish their Statement on their websites, or provide a copy to counterparties when establishing trading relationships. Thus far, a number of the largest FX market participants have indicated that they will be signing the Statement by May 2018. The industry is also considering the development of public registers, which are essentially repositories where market participants can publish their Statements. Public registers can enhance transparency around the level of adoption of the Code, and can be a means to monitor the success of the Code over time. Feedback from market participants has indicated that there is a demand for public registers. Market participants that have signed the Statement can publicly demonstrate that they have done so on such public registers. Market participants can also use public registers to find out which of their peers or counterparties have signed the Statement.
If housing prices were to fall, for instance, housing declines in value while mortgages remain constant. Consequently, the loan-to-value ratio of the mortgage increases. As mortgages with an excessive loan-to-value ratio cannot be used as collateral, falling housing prices can thus mean that some of the collateral must be removed or replaced. As the banks have often allocated an extra buffer of collateral, there is scope to remove mortgages that no longer meet the requirements, without having to replace them with other collateral. However, if the banks do not replace the collateral that has been removed, it may limit their possibilities to issue further bonds based on this collateral. The reason for this is that both investors and credit rating agencies often require a buffer of additional collateral. The banks can top up the collateral by earmarking other types of collateral, such as government bonds, by selling parts of their liquidity buffers or by issuing short-term securities and then earmarking the liquid funds they receive. However, the opportunity to top up the collateral in this way presupposes that the financial markets are functioning normally and that investors have confidence in the Swedish banks. Heavily falling housing prices can disrupt market functioning Covered bonds are subject to special legislation that ensures that these securities are very safe. Although this regulation has worked well so far, one cannot rule out the possibility that heavily falling housing prices could disrupt the functioning of the market and thus affect the banks.

This means  5  See M, Sandström, D, Forsman, J, Stenkula von Rosen and J, Fager Wettergren (2013), The market for Swedish covered bonds and links to financial stability, Economic Review, 2013:2. Sveriges Riksbank. 6  See L, Marklund (2014), Consequences of an increased loan-to-value ratio for the funding of mortgages with covered bonds, The analysis group’s memorandums on household indebtedness, No. 7, Sveriges Riksbank. www.riksbank.se. BIS central bankers’ speeches  5  that higher interest rates could have an effect on the household’s finances. A further reason for concern is that households’ expectations of future mortgage rates are much lower than the Riksbank’s. This could mean that households do not have sufficient scope in their budgets for higher interest rates. A study based on data from the end of the 1990s and up to 2012 shows that households have acted rationally and that it has been financially beneficial for them not to amortise their loans.7 It has been more profitable to instead invest their savings in financial assets, such as equity funds and fixed-income funds. This is because the return on these types of fund was high during this period, at the same time as mortgage rates were low and housing prices rose, with the exception of shorter periods of time. But although it has been a rational decision not to amortise the loans, I also believe that these conditions have laid the foundations for a new type of behaviour among households. It has quite simply become more common not to amortise.
Sources: National central banks and the Riksbank  Figure 8. Rising housing prices in relation to disposable income Index 1995 Q1 = 100 250 200 150 100 50  95  00  05  10  Sweden  Denmark  Norway  USA  Finland  UK  15  20 Canada  Note. Quarterly data. The index shows nominal house price index in relation to nominal disposable income per capita. Source: The OECD  32 [35]  Figure 9. Household liabilities an increasing part of disposable income Index, 1995 =100 250 200 150 100 50  95  00  05  15  10  Sweden  Denmark  Norway  USA  Finland  UK  20  Canada  Note. Index shows household debt as a percentage of disposable income. Sources: OECD, Statistics Sweden and the Riksbank  Figure 10. Size of the Riksbank’s balance sheet has varied substantially over time Per cent 30 25 20 15 10 5 0 1800  1825  1850  1875  1900  1925  1950  1975  2000  2025  Note. Riksbank’s total balance sheet as a share of GDP. Source: The Riksbank  33 [35]  Figure 11. Many central banks’ balance sheets have grown Per cent of GDP 140 120 100 80 60 40 20 0  16  17  18  19  20  The Riksbank ECB Federal Reserve  21  Bank of England Bank of Japan  Note.

For the Riksbank’s part, this means that we need to continue our work on modernising our money so that it is better suited to a digital economy, that is, to continue our work with the e-krona. We also need to update the infrastructure for payments. One should not have to wait several days for a payment to be executed. We will therefore offer what are known as ‘instant payments’, that is, payments that are executed directly, 24/7. We also need to invest more resources in cyber security and crisis preparedness so that the payment system can withstand shocks. It is important not least to continue the international collaboration we have with other central banks and with the Bank for International Settlements (BIS). There we are working on simplifying cross-currency payments and analysing digital central bank money (also known as CBDC, Central Bank Digital Currency). It is therefore very pleasing that the BIS’ new Innovation Hub will soon open in Stockholm. These hubs are a means of ensuring that the central banks have good cooperation with one another and keep up to date with the rapid technological developments currently taking place. New participants entering the payment market This development is clearly visible in the payment market. New technology and new legislation has made it easier for other types of company than banks to compete in mediating payments. Consumption patterns are also changing, for instance, in that it is becoming increasingly common to shop online rather than in physical shops.
MONETARY POLICY REPORT PRESENTATION BEFORE THE HONORABLE SENATE OF THE REPUBLIC  Mario Marcel Governor Central Bank of Chile 5 September 2018    The September 2018 Monetary Policy Report can be downloaded at http://www.bcentral.cl. The Spanish original prevails. Introduction Mr. President of the Senate, senator Carlos Montes, honorable senators, ladies, gentlemen, On behalf of the Board of the Central Bank of Chile (CBC), I am grateful for your invitation to present the Monetary Policy Report (IPoM). As usually in September of each year, this coincides with the report that, according to the Organic Law of the CBC, we must submit annually to the Senate. In compliance with this obligation, the Monetary Policy Report that I will be summarizing in a moment contains our view of the recent macroeconomic and financial developments in the Chilean and international economy, as well as their prospects and implications for the conduct of monetary policy. It also includes the Bank’s financial results of the first half of 2018, the results of the management of international reserves and a summary of the main decisions adopted by the Board this year to date. The Monetary Policy Report Incoming data this year has been showing greater than expected economic growth, and inflation consolidating its prospects of convergence to the target, in a context of positive surprises in several areas, an upward revision of potential growth and a faster closing of the activity gap.

15  Housing  120  60  Commercial  15  10  5  5  0  0  -5  -5  02  05  08  11  14  17  (3) Real data built with splice of CPI annual base 2013. (4) Horizontal dotted lines show average of last ten years of each series. Sourcee: Central Bank of Chile using SBIF information. Sourcee: Central Bank of Chile using SBIF information. 18  Figure 9 Inflation indicators (annual change, percent)  CPI  6  6  5  5  Services  4  4  3  3  2  2  1  CPIEFE (*)  Goods  0  1 0  -1  -1 14  15  16  17  18  (*) For definition, see Glossary. Sources: Central Bank of Chile and National Statistics Institute (INE).
Second, this context of “low interest rates for longer” may provide greater incentives for economic agents to take risks, which could heighten the risk to financial stability. Today I would like to devote my address to the analysis of these two matters, focusing on their impact on the Spanish banking sector. I will also present the results of the latest stress test exercise conducted by the Banco de España. 1. Low bank profitability  Profitability is one of the main variables characterising the financial position of banks and the first line of defence against adverse shocks. Indeed, the volume of a bank’s profits determines the return its owners can earn on the capital invested. This, duly adjusted for the risks assumed, will affect the bank’s valuation. Moreover, profit levels determine the margin these agents have to address shocks. Indeed, low profitability reduces the possibility of generating capital internally through retained earnings. Note that banks’ capital acts as a buffer that allows potential losses to be absorbed in adverse scenarios, so that they can continue to offer financial services to households and  3/29  firms, thus contributing to smoothing – rather than amplifying – negative shocks to the economy.1  Since the international financial crisis the profitability of the European banking sector has remained very low and below the cost of capital.

03.12.2019  Low interest rates for longer. Profitability and risk appetite in the Spanish banking sector 15th Banking Industry Meeting/IESE Pablo Hernández de Cos Governor  Ladies and gentlemen, good morning: First I would like to thank the organisers, and, in particular, Professor Juan José Toribio, for their invitation to participate in the 15th Banking Industry Meeting. In October the Banco de España published its Autumn 2019 Financial Stability Report. As usual, this report identifies the main risks to financial stability in Spain and their recent behaviour. The analysis shows that the balance of risks to financial stability has worsened since the publication of the Spring report and identifies three main risks: the global economic slowdown and geopolitical uncertainty, low bank profitability, and the legal risk for banks derived from the potential consequences of the outcome of pending court action. The worsening of the risks to the stability of the Spanish financial system in the past half year is due in particular to the downward revision of the global economic outlook. Indeed, this year global GDP growth is expected to be the lowest since the international financial crisis; in addition, the balance of risks to this growth is tilted downward, mainly as a result of the continuing high level of geopolitical uncertainty. The downward revision of economic forecasts in the past year has been across the board, but has especially affected the euro area and emerging market economies, and Spain has not been immune to this trend.
4  The new profit margin will be (120–115)/115, which is just over 4 per cent of the purchase price. 5  Goldberg and Knetter (1997) summarise the results of the research. Adolfson (2004) also provides an excellent survey, together with new results. 6  See, for example, McCarthy (2000) and Bachetta and van Wincoop (2003). 7  However, there are some complications with dividing CPI into import prices and other prices. See Hansson and Johansson (2007). 8  See Burnstein, Eichenbaum and Rebelo (2002). BIS Review 3/2010  3  be various strategic reasons for not allowing import price increases to have a complete passthrough to consumers. Figure 1 illustrates some of the conclusions regarding the pass-through of the exchange rate. It shows the nominal exchange rate together with import and consumer prices in Sweden. We can see that import prices for consumer goods clearly co-vary with the nominal exchange rate, although there is no perfect correlation. It would thus appear that changes in the exchange rate nevertheless have a relatively large effect on these prices. Figure 1 Consumer prices, import prices of consumer goods and nominal trade-weighted exchange rate (TCW index) in Sweden Annual percentage change  Note. The import prices refer to consumer goods in the producer sector. Consumer prices are the CPI with a fixed interest rate (CPIF). Sources: Statistics Sweden and the Riksbank. We can also see that the relationship with the exchange rate is much weaker for consumer prices than for import prices.

Emerging markets in Asia and Latin America are now showing fairly good growth, while growth in the industrial nations in Europe and North America remains low. The fact that different parts of the world economy are developing fairly differently creates problems that have significance for monetary policy. The low short-term interest rates and good access to liquidity in Europe and North America make it attractive to borrow in the short term to invest in assets with a high expected yield. There have been reports of large capital inflows to several of the emerging markets. These inflows tend to push up asset prices – for instance, house prices and share prices – in several Asian countries. At the same time, the experiences gained from the financial crisis over the past year and during the Asian crisis of the 1990s indicate that these flows can change direction abruptly, which creates a risk of substantial falls in asset prices in the future. It is difficult to say what the consequences of the capital flows we are now seeing will be for the development of the world economy in the period ahead, but there is a risk that imbalances will be generated. Development in the economies that are now growing fairly quickly may be affected in the future either by tendencies towards asset bubbles or appreciating currencies, which would have a negative impact on their competitiveness.
Other things equal, higher gearing would suggest a higher company-specific discount factor.23 The final element in the firm-level discount factor calculation is the risk-free rate. The yield on government securities was used, based on data from the Federal Reserve and Bank of England. Having estimated (10) using pooled US and UK regressions over 20 years, a firm-specific risk premium can be calculated. The average premium across the sample is 5.9%. As Chart 3 shows, both gearing and beta contribute to the company risk premium estimates. 23  The gearing variable is of poorer quality than others in the data, leading to negative gearing observations for some firms. Any firm-year observations with negative gearing are excluded from the analysis (a total of 37 observations). 8  BIS central bankers’ speeches  Chart 3 Estimates of company risk premium  Sources: Thomson Reuters Datastream and Bank calculations. Notes: Uses the estimated coefficients from the pooled UK and US regression together with the mean annual values of beta and gearing for firms in the US and UK. (b)  Expected dividends and prices  The right-hand-side of equation (9) defines the stream of future dividends and terminal prices.

They will enhance the transmission of monetary policy, support the provision of credit to the euro area economy and, as a result, provide further monetary policy accommodation. We see early indications that our credit easing package is delivering tangible benefits. Since the beginning of June, forward money market rates have shown steep declines across the maturity spectrum. Now, the forward curve consistently lies below zero over a two-year horizon. EONIA is not expected to exceed 25bps before well into 2018. The 3-month EURIBOR rate, which is an important conduit of monetary policy impulses to lending rates, dropped to all-time lows and now stands close to zero. And the policy decisions, in particular those announced in September, triggered a compression of spreads across other asset classes, including ABS, covered bonds and sovereign bonds. But more time is needed for the full materialisation of the positive effects of the most recent set of measures. In this context, let me emphasise that we are committed to scale the total magnitude of our measures – lending operations as well as outright purchases – up to a size that can deliver the intended support to inflation and the recovery of the euro area economy. All these measures will have a sizeable impact on our balance sheet, which we expect to move towards its early 2012 dimension.