samchain/econo-pairs-v1 huggingface dataset:
Small changes in projections can have a huge impact on sustainability. Some of the implicit assumptions underlying current negative judgments seem to me seriously misguided. Let’s look first at the short run. As you know, we have been recently surprised on the upside with the dynamics of growth in the Euro area. Consumer confidence is almost back to pre crisis levels, PMI are at an all time high and GDP growth will almost certainly be above potential, on average, for the year 2011. Those developments take place at a moment where drastic fiscal consolidation programs are implemented in all countries. Those analysts who predicted that fiscal tightening would stifle growth in the Euro area are currently being proven wrong. Positive confidence effects in the private sector are outweighing the negative impact  BIS central bankers’ speeches  3  of public expenditure reduction. In our economic jargon, we seem to be living to day in a “Ricardian” world. What about countries in the periphery? Spanish growth rate swung from –3.7% in 2009 to –0.1% in 2010, despite the fact that a major austerity plan was being implemented. Spanish exports are booming with an increase of 10% within the euro area in 2010 and 19% outside the euro area in 2010. This compares very favourably with performances of other countries both inside and outside the eurozone. Turning to the long run, it is essential, when looking at the inner workings of the euro area to make a distinction between real and nominal evolutions.

Real convergence is occurring between various parts of the zone and I think this process will continue and support growth in the future, contrary to over simplistic descriptions. One overlooked fact is the very fast productivity catch up in the periphery of the euro area. Between 2000 and 2008, cumulative labor productivity growth in Greece, as measured by the output per employee, was 14,7%, and 10,2% in Ireland. Both significantly outpaced Germany (6,1%). This is exactly what you would expect in an integrated economic and monetary area and this process should continue in the future, provided that appropriate policies are implemented. Economic convergence will therefore boost growth and support the return to debt sustainability. Now, looking at nominal evolutions, a very different picture emerges. During the same period nominal wages grew by a total of 42% in Ireland and 52% in Greece vs only 7,4 % in Germany. The nature of the challenge, therefore, is clear. There has to be a regime change in the way nominal wages and prices are set in some parts of the euro area. As Central Bankers, we have been making that argument for years. One benefit of the crisis has been that this message is now fully accepted by Governments and public opinions. Strong reforms are currently being pushed in labor markets legislation as well as wage determination in the public sector in many countries. I’ll end up with a few words about the banking sector. I have the privilege to be both a Central Banker and a supervisor.
7  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  7  Chart 1: Since 2010 we have seen a significant fall in mortgage spreads, particularly at higher LTVs Quoted 2-year 75% LTV spreads over risk-free rate  Quoted 2-year 90% LTV spreads over risk-free rate Percentage points  Percentage points  7  7  6  6  5  5  4  4  Spread  Spread  Risk-free rate  Risk-free rate  3  2y 75% LTV  3  2  2  1  1  0  0  2y 90% LTV  Source: Bank of England, MoneyFacts Notes: Risk-free rate is defined as 2 year overnight indexed swap (OIS)  Chart 2: We have observed a marked shift in the share of new mortgages at high LTV by building societies Major UK Lenders: share of new mortgages at high LTV  Building Societies: share of new mortgages at high LTV  35%  35%  30%  30%  25%  25%  20%  20% 85 ≤ LTV < 90  85 ≤ LTV < 90  90 ≤ LTV < 95 15%  LTV ≥ 95  90 ≤ LTV < 95 15%  10%  10%  5%  5%  0%  LTV ≥ 95  0% 2015  2016  2017  2018  2015  2016  2017  2018  Source: FCA Product Sales Database Notes: ‘Major UK Lenders’ include the large UK Banks and Nationwide.

So let me make it more real for you by giving some concrete examples of issues we have been working on in this broad area. As we mark today the 150th birthday of the BSA, an obvious place to start is the UK housing market. For deposit-takers including banks and building societies, this is the biggest single loan exposure, and it is also the biggest liability of UK households. And in insurance, firms are taking on more exposures to housing in response to the developing financial needs of consumers. So this will always be an important asset class for the PRA. But there are a number of areas to which we are paying particularly close attention currently. First, as all borrowers and lenders are well aware, we have seen something of a price war in the mortgage market over the last couple of years. This may be good news if you are, for instance, a young supervisor in the PRA looking to buy your first property. But it is less good news if you are a lender concentrated in mortgages, given the impact on net interest margins. The response of such lenders has been entirely unsurprising: a material move up the risk curve. You can see this absolutely clearly in several ways: a dramatic fall in spreads demanded over the risk-free-rate; a marked shift in the high-LTV share of new lending by building societies; and a significant increase in firms’ appetite for higher LTV and higher LTI lending (see Charts 1 to 4).
As I mentioned in October before Parliament and have reiterated later on several occasions, it is essential to avoid triggering a spiral of price and cost increases which would only exacerbate the already harmful effects of the current shock. Such a spiral can be avoided through an incomes agreement between firms and workers.4 I would now like to put forward some general principles which, I believe, should help to define it. First, this incomes agreement should involve distributing among firms and workers the diminished income in the national economy vis-à-vis the rest of the world that the recent cost increases entail. I must insist on this point again: the aim is to distribute costs. All the actors involved must sustain a loss. Workers will not be able to maintain their purchasing power in the short term, nor will firms be able to maintain their profit margins. Were workers to bear the full brunt of the adjustment, in the medium term firms would also suffer the consequences in the form of a sharp drop in demand. Conversely, if in the current situation we were to place the full burden of the adjustment on firms, many of them would be forced to close and many others would experience significant losses in competitiveness that would affect their future investment capacity. All of this would ultimately undermine job creation and our citizens’ well-being. Indeed, the latest information available suggests that this sharing of costs between workers and firms is already taking place.

We must not forget that these negative shocks are taking place while many of these vulnerable groups and firms have not yet fully recovered from the adverse effects of the health crisis. Selective fiscal policy support is also warranted by the need to minimise the impact on budgetary imbalances, which have increased very significantly during the crisis. It is thus important that the measures be temporary so as not to further increase the structural deficit. Moreover, the current high inflation also makes an argument for support to be selective and for avoiding an across-the-board fiscal impulse. Such an impulse could lead to an exacerbation of existing bottlenecks in the most stressed sectors that could eventually filter through to prices. It is also especially important to avoid the widespread use of automatic indexation clauses in the expenditure items that might further fuel the current inflationary process. This deindexation must be part of the incomes agreement to which I will refer later. It is also important for fiscal policy to provide certainty about the commitment to budgetary stability in the current context of heightened uncertainty, which could result, for example, in financial market tension. Thus, it is particularly necessary to design a fiscal consolidation programme that will allow the high government debt and budget deficit levels to be gradually reduced, to be implemented once the recovery has taken root. As I have already noted, this recovery may be affected by the conflict in Ukraine.
In return, the p2p lenders will refer borrowers who have completed two successful rounds of fund raising to DBS for larger commercial loans and other financial solutions such as cash management. The road to financial inclusion is neither short nor easy. But it is an important one. Broadening access to financial services will offer Asian banks – and FinTechs – the opportunity to grow their business while serving a social purpose. Financial inclusion will be a key priority in the economic co-operation agenda when Singapore assumes the chairmanship of ASEAN next year. Conclusion You will be discussing many of these issues in the days ahead. I look forward to hearing your insights. It leaves me now to hand over to John Williams for his keynote address. He will speak on US monetary policy – a subject of evergreen interest to the financial industry and central banks around the world. I look out for John’s speeches not so much for clues to what the Fed might do next – though that is of course of great interest too – but for the original insights John provides on some of the deep, conceptual issues in monetary policy. John has made thought-provoking contributions in areas such as the natural rate of interest, or r*, and nominal GDP or price level targeting for monetary policy. It is my pleasure now to invite John to share with us his insights on how we should view monetary policy in a changing world.

4/5  BIS central bankers' speeches  1 BIS’ definition of international claims comprises cross-border claims and local claims of foreign banks’  affiliates in foreign currency. 2 2 Based on a presentation by E Remolona (2017), “Bank flows in EMEAP: Neither a lender nor a borrower be”. See also E Remolona and I Shim (2015), “The rise of regional banking in Asian and the Pacific”, BIS Quarterly Review, September 2015. 3 4 World Bank (2015), “The Global Findex Database 2014: Measuring Financial Inclusion around the World”. 4 5 Asian Development Bank (2017), “Accelerating Financial Inclusion in South-East Asia with Digital Finance”. 5/5  BIS central bankers' speeches
Our stress tests show it has the capital strength to keep lending through severe UK and global market adjustments. And finally, are these markets resilient or are they prone to amplifying adjustments? 6  During his speech on April 2012, ‘Some reflections on the crisis and the policy response’, Ben Bernanke proposed that the aggregate decline of house prices had eliminated nearly $ trillion in paper wealth compared to the more than $ trillion eliminated from the fall of stock prices from the dot-com crash. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  Here we’ll need to change gear and delve into some detail of the financial architecture to spot things that might be what your mission statement calls ‘deficiencies’. In the process, I hope to give you some research interests. Because my short answer is that some new developments have raised questions that we should, and are, exploring by simulating markets under stress. Let’s look at each of these in a bit more detail. 2. Are credit and commercial property markets stretched? First, a word about burden of proof. The macroprudential objective – guard against the financial system disrupting the wider economy – means we are not in the business of forecasting; we are in the business of asking ‘what could go wrong?’ rather than ‘what is most likely to happen?’ It’s in that spirit that we approach asset price risks, where one person’s stretched price might be another’s rational assessment of fundamentals.

Subsidiaries are independent legal entities, while branches are not legally independent from their parent bank. However, host country authorities have little influence over foreign banks’ crisis management. One of the key issues is whether the home country authorities, in a crisis situation, should be obliged to take into account the effects of the crisis in other countries where a bank has branches with extensive activities. 5  Borchgrevink, Henrik and Thorvald Grung Moe (2004). ”Management of financial crises in cross-border banks” Norges Bank, Economic Bulletin, no. 3/04, pp. 157-164  BIS Review 34/2005  3  There are arguments to suggest that home-country authorities should have more responsibility for host banks also in a subsidiary bank structure. This would reduce the number of authorities that banks have to relate to. It is also in line with developments in banking where an increasing number of cross-border banks are organised as global firms with subsidiary structures under central management. The question of coordination is far from being solved. One possible way forward is to transfer some responsibility to supranational institutions. As transfers of responsibilities imply transfer of control, this solution is not a simple one in political terms. In the EU, the idea of a European supervisory authority has so far met resistance. A fundamental problem – especially in the case of a financial crisis – is the lack of a corresponding supranational fiscal institution. Today, any financial support must be granted by national authorities.
Humans design and control machines, and the algorithms that let those machines learn, whether that is automating the recruitment process or providing financial advice. As with any member of staff, coders, programmers and managers can be subject to the myriad of human biases, and the outputs of machines may likely reflect those biases. It follows that the regulatory reforms over recent years were developed to overcome the very ‘human’ problems embodied in people-centric workplaces – be they cultural failings and lack of diversity of thought; poorly aligned incentives, responsibilities and remuneration; or short-termism and other biases – remain equally relevant to an AI/ML-centric workplace. In fact, it may even become harder and take longer to identify root causes of problems, and hence attribute accountability to individuals. For example, how would you know which issues are a function of poor design – the manufacturer’s fault if you have bought an ‘off the shelf’ technology product – or poor implementation – which could demonstrate incompetence or a lack of clear understanding from the firm’s management. In the context of decisions made by machines which themselves learn and change over time, how do you define what it means for the humans in the firm to act with “reasonable steps” and “due skill, care and diligence”? In a more automated, fast-moving world of AI/ML, boards – not just regulators – will need to consider and be on top of these issues. Firms will need to consider how to allocate individual responsibilities, including under the Senior Managers Regime. Machines lack morals.

In 2018, an FT survey of banks around the world provided evidence of a cautious approach being taken by firms.5 And according to a McKinsey survey of financial and non-financial firms, most barriers to the more rapid adoption of AI were internal to the firms themselves: poor data accessibility; lack of suitable IMF (2019) ‘Global Financial Stability Report April 2019’ Carney, M., (2019) ‘AI and the Global Economy’ 4 IIF (2018) ‘Machine Learning in Anti-Money Laundering’ 5 FT (2018) ‘AI in banking reality behind the hype’ 2 3  3  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  3  technology infrastructure; and a lack of trust in the insights of AI, for example.6 Despite the plethora of anecdotal evidence on the adoption of AI/ML, there is little structured evidence about UK financial services. To gather more evidence, the Bank of England and the FCA sent a survey in March to more than 200 firms, including the most significant banks, building societies, insurance companies and financial market infrastructure firms in the UK. This is the first systematic survey of AI/ML adoption in financial services. The survey is focused on building our understanding of key themes. First, the extent to which firms have adopted, or are intending to adopt, AI/ML within their businesses and what they regard as the most promising use cases. Second, the extent to which firms have clearly articulated strategies towards the adoption of AI/ML.
And this is a journey without a final destination. When someone tells me “we’re done,” is when I know we have the furthest to go. It’s also a journey that is so much easier when we do not walk alone. Partners like OPEN Finance are crucial to our progress. Once again, I’d like to thank you for inviting me to open today’s forum. I know it’s going to be a productive and insightful day, and one full of the conversations we all need to be having more frequently. 1  LGBT Demographic Data Interactive. Los Angeles, CA: The Williams Institute, UCLA School of Law, January 2019. 2 James, Sandy E., Jody L. Herman, Susan Rankin, Mara Keisling, Lisa Mottet, and Ma’ayan Anafi. The Report of  the 2015 U.S. Transgender Survey. Washington, DC: National Center for Transgender Equality, chap. 9, 2016. 3 Human Rights Campaign Foundation, A Workplace Divided: Understanding the Climate for LGBTQ Workers  Nationwide, June 2018. 4 See for example: Hewlett, Sylvia Ann, and Karen Sumberg, For LGBT Workers, Being ‘Out’ Brings Advantages,  Harvard Business Review, July-August, 2011; and Hunt, Vivian, and Lareina Yee, Sara Prince, and Sundiatu Dixon-Fyle, Delivering Through Diversity, McKinsey & Company, January 2018. 3/3  BIS central bankers' speeches

Fatos Ibrahimi: The reduction of cash in the context of reducing the informal economy Speech by Mr Fatos Ibrahimi, First Deputy Governor of the Bank of Albania, at the Conference “Reducing the informal economy – a challenge of the Albanian Government”, Tirana, 16 October 2006. *  *  *  Since the inception of the programme undertaken by the Bank of Albania, in cooperation with the Ministry of Economy and the Ministry of Finance, on reducing cash, it came clear that the issue of cash in economy cannot be treated as separate from the issue of the informal economy. The companies, which try not to expose their activities to the third parties, will avoid banks and will find alternative sources of financing and payment, mainly in cash. Therefore, the Government initiative on reducing the informal economy is to be welcomed when bearing in mind the great impact it will have on reducing the cash economy. It needs to be said that the process of formalizing the economy has not been considered as an excuse for not undertaking a number of measures and initiatives, which may accelerate the progress of cash reduction. Among the actions undertaken in this context, I would mention:  1. The channelling of the state administration payrolls through the bank accounts  At this moment, the entire public administration payrolls are channelled through the accounts with the commercial banks.
That can mean a “second engine” for growth from abroad. But it can also mean a dragging anchor when things go awry across borders. 5  See for example Grossman, G and Helpman, E (1991), Innovation and growth in the global economy, MIT Press. 4  BIS central bankers’ speeches  3. Role of the EU in UK dynamism and stability  How has the EU affected the UK’s dynamism and stability? Let me begin with the first. 3.1  Role of EU in UK dynamism  In some respects the UK is the leading beneficiary of the famous “Four Freedoms” first set out in the 1957 Treaty of Rome.6 These are the free movement of goods and services, capital and labour, enhanced over time through a range of measures to reduce impediments across the EU. So although the UK’s dynamism is the product of many factors including deep human capital, well-developed physical infrastructure, a competitive fiscal regime and the rule of law; the EU has arguably bolstered it by establishing the world’s largest single market with free movement of goods, services, capital and labour. The UK has further benefited from these dynamics by retaining relatively flexible labour and product markets. In product markets, home and foreign firms receive close to equal treatment; the administrative burden on start-ups is second lowest in the G7; incumbent firms receive the lowest regulatory protection in the G7; and product market regulation is light (Charts 5–8).

The genius of Wren’s ceiling was its inspired interlocking beams, individually insufficient to span the Sheldonian’s diameter, but collectively arranged so that each could support another, perfectly balancing the forces of those pushing down with others pushing up, resting, ultimately, on the foundations Wren began in 1664. And this is the architecture of Europe: a single market whose participants are interlinked, relying on and complementing each other. Just as Wren’s wooden lattice supports Robert Streater’s art, this market network supports the creativity of Europe. Of course, the weight of the ceiling doesn’t disappear but rests on hidden foundations. So too does the single market rely on invisible supports, some of which are the responsibility of the Bank of England and European regulatory authorities. While these foundations have worked well thus far, they may in time need to be buttressed to realise the full creative potential of the peoples of the United Kingdom and Europe. BIS central bankers’ speeches  9  Charts Chart 1: UK trade is two-thirds of GDP  Chart 2: UK receives largest share of EU FDI(a)  Source: OECD  (a) EU-15 countries’ share of average annual FDI inflows into the EU: 1993 to latest. Source: UNCTAD. Chart 3: Global activity of UK financial system unmatched in the European Union…  Chart 4: … and UK financial system is very large relative to GDP(a)  Notes: Bars show share of global activity for cross-border lending, interest rate OTC derivatives and foreign exchange and share of global assets for all other categories.