samchain/econo-pairs-v1 huggingface dataset:
Swedish banks’ commitments in the Baltic The Swedish banks’ total lending to the Baltic countries currently amounts to around SEK 400 billion. There are mainly two Swedish banks that have had a large presence in this region; SEB and Swedbank. These banks, their subsidiaries and branches dominate the markets in the Baltic and comprise 80 per cent of the Estonian market, 55 per cent of the Lithuanian market and 60 per cent of the Latvian market. Around 16 per cent of Swedbank’s total lending is to the Baltic countries. The corresponding figure for SEB is 13 per cent and the figure for Nordea is 3 per cent. Swedbank’s loan losses for the three first quarters of 2009 total SEK 19 billion, and 60 per cent of this stems from the Baltic countries. SEB’s loan losses total SEK 9 billion, with 75 per cent stemming from the Baltic region. According to the Riksbank’s own estimates, the three banks’ total loan losses in the Baltic region will be SEK 27 billion for the whole year 2009, and roughly the same in 2010, with around 80 per cent, or SEK 50 billion, falling to the lot of Swedbank and SEB. This figure of SEK 50 billion should be regarded in the light of the two bank groups’ total primary capital, which is SEK 185 billion, or the capital held in their Baltic subsidiaries which amounts to SEK 27 billion. It will be necessary for the parent banks to continue transferring capital to their subsidiaries to maintain their creditworthiness.

When foreign market participants assess the situation and risks for Sweden and Swedish financial institutions, they also take into account to a large degree what is happening in the other Nordic countries and in the Baltic countries. The global financial crisis has affected financial stability in Sweden, although financial institutions here have coped better than those in many other countries. At the end of 2008 and the beginning of 2009 there was considerable international uncertainty and the market was particularly sensitive to consequences for Swedish banks resulting from the crisis in the Baltic. There was thus good reason for the Riksbank to take measures to stabilise the situation among the major Swedish banks in accordance with its task "to promote a safe and efficient payment system”. As the problems of the Swedish banks concerned mainly lay in the Baltic region, there was even greater justification for aiming the measures at strengthening these countries and thereby the banks there. The costs of these measures would probably be much lower if the problem could be dealt with at source rather than waiting until it had spread to the parent banks in Sweden, for instance through a dead stop in the liquidity supply from international markets. When the Riksbank made an assessment of the resources required to manage a widespread Swedish bank crisis, we took into account the fact that the Swedish banks’ balance sheets nowadays amount in total to 3.7 times Sweden’s GDP (which can be compared to 1.2 times GDP during the bank crisis in the 1990s).
In this connection, the heterogeneity in households’ financial situation is proving very significant from the financial stability standpoint. Taking the Banco de España’s Survey of Household Finances (EFF), we find that the industries most affected by the pandemic used youths and women proportionally more than other sectors, also employing a higher percentage of low-wage workers. These lower wages would be partly offset by the fact that the employees concerned lived with other household members with higher income. As regards their finances, 28% of workers in the social industries lived in 2017 in households whose financial assets amounted to less than one month’s income, and around 8% had bank debts whose payments exceeded 40% of the household’s gross income. Accordingly, the labour income and financial situation of the households of workers in the social industries were in 2017 more fragile than those of employees in other, regular industries. Overall, then, the non-financial private sector’s financial position has worsened. The consequences of this for credit institutions’ results will become fully patent in the coming quarters. Clearly, too, the improvements in the quality of the Spanish banking sector’s balance sheet and in its solvency levels in the past decade have placed it in a better position to absorb this crisis and to continue providing the financing the economy needs. And the sector’s risks to financial stability have been mitigated by the various economic policy measures adopted. In any event, banks’ income statements have already been adversely affected.

In this respect, the BCBS, which I have the honour to chair, has resolved to delay by one year (from 2022 to 2023) the implementation of the revised methodology of identification of global systemically important institutions and also the full implementation of Basel III. The BCBS has also postponed the end of the transitional period for capital requirement floors for banks using internal models to 1 January 2028. In any event, the BCBS has confirmed that all jurisdictions are committed to the full, consistent and timely transposition of the Basel III regulations in accordance with the new calendar. Second, in the accounting sphere, certain aspects relating to how the existing regulations should be applied to calculate credit risk have been clarified, to ensure that potential temporary delays in loan repayments by borrowers are not treated as if they were a case of permanent impairment of loan quality. The latter would lead to an immediate and abrupt correction in credit ratings and, therefore, to an increase in the provisions required, which  3  See P. Aguilar, Ó. Arce, S. Hurtado, J. Martínez-Martín, G. Nuño and C. Thomas (2020), The ECB monetary policy response to the COVID-19 crisis, Occasional Paper No 2026. Banco de España. 12  would ultimately lead to a decline in credit extended by banks. In exchange, especially should the crisis become prolonged, it is necessary to ensure that misuse of this flexibility does not lead to inappropriate accounting practices that may translate into delayed recognition of actual quality impairment of some credit exposures.
SPEECH DATE:  07/05/2019  SPEAKER:  Governor Stefan Ingves  VENUE:  Swedish Economics Association  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  Long-term trends – important elements in the monetary policy analysis1 I shall begin by thanking you for the invitation. Coming here to the Swedish Economics Association to discuss various issues concerning the Riksbank's activities is something I really appreciate and enjoy. Today's speech is actually the fourteenth I have given, so it is beginning to be rather a habit to come back here every year. I intend to devote a large part of today's speech to the Swedish labour market and some of the overall trends and challenges it is facing, that is, what are usually known as “structural changes”. In this context it may be worth reminding ourselves of the predictions of two famous economists. Almost 90 years ago, John Maynard Keynes predicted that the rapid automation of work tasks would lead to “technological unemployment”. 2 Another famous economist, Wassily Leontief, foresaw similar problems 20 years later: “Labour will become less and less important ... More and more workers will be replaced by machines. I do not see that new industries can employ everybody who wants a job”. 3 As we know, these predictions have not come true, but nevertheless a similar debate has arisen recently.

18 Since then, migration has increased steadily and at the end of 2017 the percentage of those born abroad was more than 18 per cent. The migration streams can vary substantially from year to year, but the trend has been rising and there has been a particularly substantial increase in recent decades, see Figure 9. Figure 9. Immigration and emigration as a proportion of population, 1900–2018 1.8  1.8 Immigration 1.5  Emigration  1.5  1.2  1.2  0.9  0.9  0.6  0.6  0.3  0.3  0 1900  1915  1930  1945  1960  1975  1990  2005  0  Note. Per cent of the population. To be counted as an emigrant, a person must have the intention of living abroad for at least one year. To be counted as an immigrant, a person must have the intention of staying in Sweden for at least one year. Source: Statistics Sweden  Immigration to Sweden follows an international trend with increasingly large migration streams. Between 2000 and 2017 the total number of migrants in the world increased by around 50 per cent. There are roughly around 260 million migrants at the moment, most of whom are from low-income countries. These migrants move at approximately the same extent to low income countries as to high income countries, see Figure 10a. Migration from high income countries is much less common, but there is a not insignificant amount of migration between high income countries.
The G20 communiqué backed the calls for a broader international cooperation in several fronts, but let me remind you that the international community of central bankers and financial regulators have already developed strong cooperation ties. Institutions as the BIS with its regular meetings or governors and of senior central bank officials and experts or forums like the Basel Committees and the Financial Stability Forum have been providing for years the necessary dialogue, exchange of ideas and information between us. I understand that other forums of economic authorities can replicate our own model of cooperation. Regarding the IMF, the discussion currently concentrates around its role and legitimacy. Its role should focus on three main topics. The first is surveillance. It is very important that the IMF becomes a key and integral part of the financial early warning system. The IMF is vital not only in terms of forecasting, which is already regularly performed and published, but also  BIS Review 147/2008  1  in terms of surveillance of each country’s policies and specific warning indicators, aimed at detecting its growing unbalances. One of the points that, in my personal opinion, have complicated efforts to deal with the current financial crisis is that the whole focus of the IMF during decades was to prevent crises in emerging markets. There is a different picture now, and is paramount that the surveillance done by the IMF focus on every relevant economy and really works as an early warning system. The second topic, evidently, is international cooperation.

•  Have refined our rules to allow less complex ETFs which make limited use of derivatives to be reclassified as Excluded Investment Products (EIP) – these can be sold more easily to retail investors. 50. 80% of AUM of SGX-listed ETFs are now classified as EIP ETFs that investors can purchase as easily as they buy individual stocks. Third consumer initiative: spur competitive pricing for life insurance products 51. MAS worked with industry and CASE to create a new online portal, compareFIRST. BIS central bankers’ speeches  7  •  Will enable retail consumers to easily compare key features of life insurance products offered by various insurance companies  •  Since its launch in Apr, compareFIRST has registered healthy interest, with over 180,000 visits to portal and more than 110,000 product summaries downloaded. •  Consumers and industry have provided positive feedback on convenience and ease of use of compareFIRST. 52. (DPI). MAS has also worked with industry to make available Direct Purchase Insurance  •  DPI offers consumers access to selected term life and whole life insurance products sold without commissions or financial advice  •  More than 200 DPI policies have been sold in first three months of launch, with a further 100 applications pending approval by insurers. 53. compareFIRST and DPI have spurred more competitive pricing for life insurance products. •  Some insurers have lowered prices of both their DPI and non-DPI insurance products, since introduction of these initiatives. Fourth consumer initiative: enhance financial education 54.
And it is supported by a very strong tradition of technical training and education through the various financial institutes, a tradition which I hope may soon be bolstered by the development of a coherent set of professional qualifications across the different financial market sectors. But how far we remain successful will depend importantly, too, on how far we are able to maintain what I have described as the ethos of the competitive market place in a rapidly changing environment and that will represent a considerable challenge to public policy. Given market self-discipline, I have every confidence, Mr Chairman, that the various competent authorities will remain constructive and impartial in their approach to defining and applying the rules of the game, and open to innovation and wide participation, so that the City retains its position as an attractive location for the provision of financial and business services. So, Mr Chairman, I look to the future of the City with very considerable confidence. On recent form it has little to fear and great opportunities to look forward to. But I don’t say that it will be easy. BIS Review 134/1999  4

Related to this is the question of whether Asian governments have the political will to devolve monetary policy to a single central monetary authority. Asia is more disparate than Europe in its political systems, and it has often been noted that there is less of a tradition of cross-border institutionbuilding here than there is in other regions. It is quite striking, for example, that the approach to free trade agreements so far has been rather piecemeal, where in Europe they have grown and developed from a strong and centralised common market. Indeed, one serious political obstacle that has often been pointed out is the lack of embryonic supranational bodies within Asia from which to launch Asian monetary union efforts. These disadvantages must, of course, be recognised. But, on the other hand, it should be remembered that European monetary union has been a unifying force - a common interest that has brought countries together. All of these "special considerations" point to the conclusion that Asia is not yet ready to implement monetary union. In the process of discussing them, it may well turn out that Asian monetary union is a non-starter. But that does not mean that we are not yet ready to talk about monetary union. After all, it took Europe about half a century to move from the idea of monetary union to the reality.
Our standard and non-standard measures ensure price stability in the euro area. While our standard measures signal the monetary policy stance, our non-standard measures ensure the transmission of the desired policy stance to the real economy in those market segments in which the transmission is impaired. Our non-standard measures ensure that despite increased liquidity demand, financial institutions are able to continue lending to clients. However, misconceptions persist related to the Securities Markets Programme, our programme for intervening in government bond markets. The SMP deliberately addresses the appropriate transmission of our monetary policy to the real economy in market segments which are impaired. Government bonds are crucial for the transmission of monetary policy, via their status as a benchmark for borrowing by banks. Put simply, left unaddressed, the malfunctioning of sovereign bond markets’ could block the bank lending channel. An important difference with Quantitative Easing programmes is that the liquidity injected into the banking system via the SMP is sterilised by the ECB through regular liquidity absorbing operations. The ECB has been widely recognised as an institution capable of timely, decisive and convincing action during tumultuous times. We see this as a mark of distinction. However, it would be erroneous to derive from this that it should be a political institution in charge of running the euro area economy. It cannot be and should not be. The ECB is a central bank, committed to its mandate to preserve price stability over the medium term. It is not the fiscal lender of last resort to sovereigns.

As you will no doubt know, quantitative easing aims to depress a range of longer-term yields and raise asset prices, so boosting demand. Our analysis suggests that our first £ billion of asset purchases reduced the yields on gilts and corporate bonds by around a percentage point2. Studies for the United States, using a similar methodology, find comparable effects from the Federal Reserve’s large-scale asset purchases, which is comforting. The asset purchases also have the effect of boosting banks’ holdings of the most liquid asset, central bank reserves, which may be of particular value at the current juncture. While one cannot be confident about the impact of our earlier purchases on the real economy, our analysis points to a peak effect on output of 1½–2 per cent and of ¾–1½ percentage points on inflation. At this juncture at least, we have no reason to believe that, suitably pro-rated, the current phase of purchases will be greatly different in their effect on either asset markets or on the real economy. 2  For a summary of the evidence, including references to related studies, see Michael Joyce, Matthew Tong and Robert Woods (2011), “The United Kingdom’s Quantitative Easing Policy: Design, Operation and Impact” Bank of England Quarterly Bulletin, 51(3), 200–212. BIS central bankers’ speeches  3  Several commentators have suggested that the effectiveness of quantitative easing could be enhanced by spending the newly created money on something other than government debt.
12 See ‘[De]Globalisation and Inflation’, speech by Mark Carney given at the 2017 IMF Michel Camdessus Central Banking Lecture, 18 September 2017. 10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10  private sectors sought to reduce their pace of borrowing. These shorter-term factors pushed the equilibrium interest rate in the UK (and other advanced economies) into negative territory, prompting the adoption of unconventional policies following the crisis. The fading of the headwinds from the crisis implied that some of the fall in the equilibrium rate would gradually unwind, though the structural forces were thought likely to persist for many years to come. As a result, the MPC judged that the pace of Bank Rate increases consistent with eliminating slack and keeping inflation close to the target would be gradual and that, even once spare capacity had been absorbed, the appropriate level of Bank Rate was expected to be materially below the pre-crisis average of 5%. Out of that assessment came the guidance that future rises in Bank Rate were expected to be “limited and gradual” – a phrase so often repeated it became part of the monetary policy furniture. As intended, the MPC’s “limited and gradual” guidance dampened interest rate volatility and reduced the correlation between interest rate volatility and economic uncertainty. Both developments increased the degree of monetary policy stimulus at a given policy rate, thereby reinforcing the recovery during turbulent times. GDP grew robustly over this period, supported by strong consumer and business spending against a backdrop of continued fiscal consolidation.

I am thinking instead of, for example, Mexico, Indonesia, Thailand, South Korea, Malaysia and Brazil. In these cases, inflated asset prices and both domestic and external debt had an important bearing on the subsequent course of events. One important lesson is that a floating exchange rate with an explicit inflation target makes it easier to avoid a situation with rapidly rising asset prices, an unduly strong expansion of credit and high short-term borrowing abroad. That does not mean that a fixed, but adjustable, exchange rate is bound to result in problems of this type. Experience from Denmark is a good example. A clear problem in Sweden’s case, however, was that in the 1980s monetary policy could not be used to counter the tendencies to strong credit growth and rapid asset price increases. Another problem, as I just mentioned, was that the fixed exchange rate policy lulled people into a false sense of security and provided an incentive for short-run borrowing in foreign currency. With a floating exchange rate, the krona’s fluctuations make the exchange risk more evident (Diagram 2). Such a regime may have other drawbacks but it does show potential borrowers that foreign-currency loans involve a risk. The stock of foreign-currency loans to households and firms is in fact smaller today than it was a decade ago. A point to bear in mind is that the problem in the late-1980s was not the strong asset price rise as such but the combination of this and heavy borrowing in Sweden and abroad.
The performance of a clearly defined task - maintaining price stability in a way that is good for the union as a whole will be a heavy responsibility for each member of the Governing Council; in this sense they are all in the same boat. There are also many signs that power will gradually shift towards the centre and this in turn will affect recruitment. My guess is that the ECB will be able to attract personnel who are qualified, which in contexts like this is more important than their number. Fiscal policy Fiscal policy is a national concern but the national room to manoeuvre is conditioned by various EU regulations. The Treaty has general provisions to the effect that economic policy is to contribute to the achievement of Community objectives in accordance with BIS Review 50/1998  -4-  the principle of an open market economy with free competition. The Member States are to regard their economic policies as a matter of common concern and are explicitly required to coordinate them but the decisions are to be made on a national level. Then there are more specific agreements on matters like the scale of rates for value-added tax, government subsidies and rules for public procurement. These agreements, which are a limited constraint on the construction of taxes and public spending, have been concluded mainly for purposes other than stabilisation policy - to promote competition and establish a single market for capital, goods, services and labour.

By bundling financial and non-financial services, they are able to better meet the needs of consumers. Second, embedded finance by financial players. Regulated financial institutions are reinventing their business models and leveraging on technology to connect with customers at more and varied touchpoints. Financial institutions are “embedding” their offerings in an array of non-bank digital platforms in an attempt to reach new customers at lower acquisition costs. Embedded finance combines the benefits of platform economics with the trust premium that people still place with regulated financial institutions. Central banks and regulators should welcome both these developments. They offer the prospect of more efficient, more affordable, more inclusive financial services. 1/4  BIS central bankers' speeches  But we need to be alert to new sources of risk. If the distributor and underlying provider of a financial service are not the same entity, who is accountable to the customer? As the number of 3rd-party intermediaries involved in a financial service grows, there might also be increased operational risks. We will need to adapt our regulatory approaches. Pay greater attention to market conduct, consumer protection, and technology risks. Regulatory frameworks will need to become more modular and agile. Entity-based regulation remains relevant for the provision of key services such as deposit-taking, insurance, and the offer of securities. But for the growing number of players who offer niche financial services, we need to rely increasingly on activity-based regulation. This is all still fairly familiar ground, as the fundamental structure of financial services remains largely intact.