samchain/econo-pairs-v1 huggingface dataset:
4 As we celebrate CCS’ achievements , it is also timely for us to take stock of the consumer credit situation in Singapore, and consider how the Government, CCS, the banks and the social service sector can continue to work together to encourage financial prudence and help Singaporeans in need. Consumer credit situation in Singapore Household balance sheets in Singapore 5 The consumer credit situation in Singapore is on the whole healthy. Household balance sheets are generally strong. The net wealth of the household sector, or their assets net of liabilities, has grown significantly over the past 10 years, and stands at about four times of GDP. But while we are in a good position overall, there are some individuals and families who have over-extended themselves and are especially at risk when interest rates rise. 6 The Government has taken a multi-pronged approach to encourage financial prudence. We introduced several rounds of property-related measures to avoid a boom-bust cycle and hence anchor financial stability, and to ensure that individuals and households do not overstretch themselves. These measures include the Total Debt Servicing Ratio (TDSR) framework and tightened loan-to-value (LTV) ratios for housing loans. 7 These measures have helped to strengthen household balance sheets. (a)  First, they have slowed the growth of household debt. (b)  Second, the risk profiles of borrowers have improved.

The Agreement on Net Financial Assets Let me conclude by turning briefly to the recent decision to publish the Agreement of Net Financial Assets, also known as ANFA. This is another step to live up to our commitment to be accountable and transparent, both towards you as Parliament and towards the public at large. The ANFA is an agreement between the ECB and the euro area National Central Banks – the NCBs. It ensures that monetary policy is unaffected by NCB operations related to their national, non-monetary policy tasks. The right to perform such tasks dates back to the start of Economic and Monetary Union. At that time, the founding member states decided to centralise only central bank functions and tasks that are necessary to conduct a single monetary policy. All other tasks remained with the NCBs. Such national, non-monetary policy tasks include managing the NCBs’ remaining foreign reserves – including gold – after the transfer of foreign reserves to the ECB, managing some non-monetary policy portfolios including those related to pension funds for their employees, or providing payment services to national governments. When the NCBs hold portfolios not related to monetary policy as part of their national tasks, these portfolios are financed either by central bank money provided by the NCBs or by nonmonetary liabilities. This does not interfere with monetary policy as long as it is limited to less than the amount of banknotes needed by the public.
16  17  18  19  20  Figure 10 Business expectations (IMCE) (1) (original index)  80  80  Investment expectations (2)  70  70 Present situation  60  60  50  50  40  40  30  30  Employment expectations (3)  20  20  10  10 10  11  12  13  14  15  16  17  18  (1) Value above (below) 50 shows optimism (pessimism). (2) Simple average between expected investments in manufacturing and trade. (3) Simple average of expected employment in manufacturing, trade and construction. Source: Icare/Universidad Adolfo Ibáñez.

Those challenges include the prevailing low interest rate environment; the consequent influx of alternative capital, especially into reinsurance markets; the transformation to the “at retirement” taxation system in the UK; competition in general insurance from overseas locations, possibly linked to regulatory arbitrage; as well as the new Solvency II regime. I plan to focus my time mostly on Solvency II; but will also touch on the “at retirement” taxation changes. Before that, I would first like to reflect upon the role insurance plays in the wider economy: •  Insurance is a critical cog in a financial services sector which facilitates trade and commerce and the efficient allocation of resources. Without a fully functioning financial services sector, the economy would stagnate. That importance of financial services to growth should be one of the big lessons of the Great Financial Crisis for anyone who did not appreciate the fact previously. More specifically, the insurance sector provides a critical risk-transfer role and is a vital long-term investor in the economy. •  The UK insurance industry is also an end-contributor to UK output and employment – being the largest insurance industry in Europe and third in the world. The UK insurance industry is known for its innovation and entrepreneurialism, typified through the modest beginnings of Edward Lloyd’s coffee house. The role played by the insurance sector in future will be contingent upon maintaining that tradition of competition and innovation and the PRA is committed to support that, not least through our secondary objective in respect of competition.
Chart 2: Banking concentration Per cent 60 50 40 30 20 10 0 1996  2000  2004  2008  UK  Euro area  2012  2016  US  Sources: Bank of England, European Central Bank, Federal Reserve Bank of St. Louis and Bank calculations. Notes: Data refer to banking sector assets of the five largest institutions in each region as a share of total banking sector assets. UK banks are all UK resident monetary financial institutions (MFIs). These data cover only the UK assets of the MFIs. As such they differ from the institutions' own published accounts that will comprise the global assets of the group. Euro-area data prior to 2006 are constructed using data for the Netherlands, Germany, France, Italy, and Spain holding the share of these countries relative banking sector sizes constant, at their 2006 level. This is due to data availability limitations pre-2006. 25  All speeches are available online at www.bankofengland.co.uk/speeches  25  Chart 3: UK-listed firms’ average mark-ups Mark-up (e.g. 1.2 = 20%) Mean (weighted by total sales)  1.6 1.5 1.4 1.3 1.2 1.1 1.0  1987  1990  1993  1996  1999  2002  2005  2008  2011  2014  2017  Sources: Thomson Reuters Worldscope and Bank calculations. Note: Details of how mark-ups are estimated are described in the Appendix. Individual mark-ups are weighted by their share of total sales in the sample in a given year.

Chart 4: UK market concentration and mark-ups Sales-weighted markup (per cent)  6 5 4 3 2 1  y = 0.2132x + 1.4031 R² = 0.0014  0 0  0.1  0.2  0.3 0.4 0.5 Market concentration (HHI)  0.6  0.7  0.8  Sources: ONS, Thomson Reuters Worldscope and Bank calculations. Notes: Data show market concentration and the average firm-level mark-up at the 2-digit sectoral level. The market concentration metric shown here, the HHI, is normalised to be between zero and one. While the relationship shown here – at the sector level – is only weakly positive, the relationship between firm-level mark-ups and the HHI is statistically significant in a regression when firm and time fixed effects are included. Mark-ups also exhibit a positive relationship with other broad measures of profitability, such as the dividendsto-sales ratio and the market capitalisation-to-sales ratio. 26  All speeches are available online at www.bankofengland.co.uk/speeches  26  Chart 5: UK-listed firms’ sectoral mark-ups Mining and Quarrying Manufacturing Construction Wholesale and Retail Transport and Storage Accommodation ICT Professional, scientific and technical Administrative and support Other service activities  Cumulative change in the mark-up since 1987 (Δ0.5=50pp) 1.0 0.8 0.6 0.4 0.2 0.0 -0.2 -0.4  Note: the Arts, entertainment and recreation sector is excluded. -0.6 1987  1990  1993  1996  1999  2002  2005  2008  2011  2014  2017  Sources: Thomson Reuters Worldscope and Bank calculations.
In addition, regional financial cooperation such as the Credit Guarantee and Investment Facility (CGIF) and the Asian Bond Markets Initiative (ABMI) could also help support the development of local bond markets. 10. To sum up my remarks, the process of strengthening financial markets and enhancing their capacity to absorb large long-term development projects is a longdrawn process in which the commitment of public sector alone cannot guarantee success. Of course, the public sector must fulfill its integral role in creating a supportive regulatory framework and in distributing public goods so that economic benefits can be enjoyed and shared by social participants through the whole range of the income spectrum. 3  Gross national savings in 2012 of 32 Asian countries is approximately 7.14 USD trillion (Countries used in calculation include China, Japan, South Korea, Singapore, Thailand, Indonesia, Malaysia and others) from IMF Source; WEO  2  BIS central bankers’ speeches  However, private entities must collaborate with the public sector and step in to bridge current financing gaps and take part in the structural reform process. Ladies and gentlemen, 11. In light of our historical background, we, as part of the GMS community, have shared long-lasting prosperity throughout the Mekong River areas. Looking ahead, it will be our future that needs more commitments and a more united aspiration from each of us to move forward together as a cohesive region. The opportunities ahead are apparent, if we can transform each member countries’ strengths into regional competitiveness, these opportunities can be multiplied.

(3)  Allan Greenspan in his latest paper “The Crisis” wrote about the reasons for it:  a. “it was the global proliferation of securitized, toxic U.S. subprime mortgages that was the immediate trigger of the current crisis”. But, he says: “the roots of the crisis reach back, as best I can judge, to the aftermath of the Cold War”. Later he explains actually the large increase of the aggregate demand which came from, formerly the third world nations, especially China, which replicated the export-oriented model of the so-called Asian tigers, argumenting it with data that “the savings rate of the developing world soared from 24% of nominal GDP in 1999 to 34% in 2007, far outstripping its investment rate”. b. that “subprime mortgages in the United States for years had been a small appendage to the broader U.S. home mortgage market, comprising only 7% of total originations as recently as 2002”...that “most such loans were fixed-rate mortgages, and only a modest amount had been securitized...” that “..,. starting in late 2003, began to accelerate the pooling and packaging of subprime home mortgages into securities...” that “subprime mortgages securities outstanding in 2007 totaled more than 900 billion USD, a more than sixfold rise since the end of 2001”. c. that “a classic euphoric global bubble took hold”, “that by 2007, yield spreads in the overall debt markets hаd narrowed to a point where there was little room for further under pricing of risk”.
These agents, together with VPC AB (the Swedish central securities depository) and the Stockholm Stock Exchange, account for the central parts of the payment system. Payment information is sent between the participants through the SWIFT communications system. The Riksbank’s RIX system is the central point on which most payments and payment methods are dependant. This applies to cash payments, card payments, credit transfers, interbank loans, payments of transactions in securities and foreign exchange, etcetera. What I have just described is part of the central financial infrastructure about which most people know very little and see very little – it just exists and is expected to work. The banks are responsible for a large part of the infrastructure that meets the general public, for instance, through ATMs. In recent years, however, the general public has also become part of the infrastructure in that our own private computers can communicate with the banks' Internet banks. The importance of crisis recovery planning Today it is a matter of course for us to have access to different types of payment services. It is therefore easy for us to forget how complex and time-demanding it would actually be if we were suddenly forced to make cash payments directly to all those we need to pay money. Personally, I have many suppliers that I would need to visit at the end of every month to pay my bills.

4  BIS Review 98/2006
2 The scenario for the 2019 test includes a deep recession in the UK with GDP falling by 4.7 % from peak to trough, house price falls of 33%, falls in commercial real estate prices of 41%, recessions in the Euro Area, the US, and China and market stresses including a 41% fall in equity prices and a nearly 400bps widening of investment grade spreads 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  In the event of a no deal, no transition Brexit, markets would be likely to be very volatile – as they were after the referendum - as prices adjust to that outcome. The banking system has the ability to withstand the losses that would accompany a serious downturn – but one would still expect there to be losses. And, of course, while we have addressed all of the risks we can foresee, stress events can evolve and combine with other events in unpredictable ways. Second, to return to my opening point, the reason we have focused on the risks from a disorderly no deal, no transition Brexit is not because that is what we expect to happen but because the financial system needs to be able to withstand what could happen. The crisis taught us the costs to the economy and to society of a breakdown in the financial system. Third, we have been fully transparent in our assessment of the risks and the actions necessary to address them.

Since then, global debt has stabilized, growing by only 1% in total, relative to global GDP, over the past 5 years. The aggregate growth rate is not therefore signaling an impending correction. The level, however, may well represent a significant vulnerability given that high levels of debt are associated with deeper and more persistent recessions. Assessing the sustainability of this debt is more difficult. Whether debt is sustainable depends on the difference between the interest rate and the growth rate of the income stream that will be used to repay the debt. The future is not known – in assessing today whether a given level of debt is sustainable, we must rely on our best forecast of future interest rates and growth. The level of debt that is sustainable in an economy is not a constant. It can change over time and indeed has changed enormously over the last 150 years. The ratio of credit to GDP in the late Victorian British economy was under 20% (not including the financial sector). In the mid-twentieth century it was around 60% and by the early 1990s over 100%. It is influenced by many factors including, very importantly, the long run real rate of interest. There is strong evidence that the long run, or trend real rate has come down materially over the past 40 years as a result of slow moving, secular changes in the supply of savings and the demand for investment.
Another part of these reallocations (USD 37 billion at this stage) is about to become reality, by IMF Annual Meetings in October if everything goes according to plan, thanks to the newly created Resilience and Sustainability Trust (RST). I am sure I agree with the Managing Director in wishing the RST to be higher in its amounts, quicker in its disbursements, and not too conditional in its provisions. Indeed if we want to fulfil our commitments, we have to care not only about the lending capacity of the RST, but also about demand for RST facilities. France will be true to its word and reallocate 4 billion SDRs, representing 20% of SDRs received. The IMF must play a greater role in crisis prevention for vulnerable countries. Despite recent initiatives, there is still considerable room for improvement to make the GFSN more effective for these countries, notably for prevention. This is even more pressing in a context of unstable geopolitics, looming food crisis, commodities price volatility and more frequent natural disasters linked to climate change. I therefore welcome the recent proposal of a new Food Shock Window. However, our efforts should not stop there. * ** As Sophocles wrote, “trust dies but mistrust blossoms”. Let me conclude by stressing that trust as a shared treasure also has a key human foundation, which  Page 10 sur 10 we have patiently built over time.

In this regard, we had introduced the Pricing Reform Framework as well as the Payment Card Reform Framework. Correcting price distortions In May 2013, BNM had introduced the Pricing Reform Framework to correct the price distortions between paper-based payments and e-payments. By differentiating the prices of payment services according to their relative costs, the public are thus incentivised to use the more efficient and cost-effective e-payment services. In this respect, we need to explore new incentives that can accelerate the migration to epayments. Strengthening competition and lowering cost To curb the rising cost of payment card acceptance that had impeded the expansion of payment card terminals among merchants, BNM had implemented the Payment Card Reform Framework in July 2015. The Reform Framework had removed market distortions and imbued competition and transparency in the payment card market. This has resulted in the offer of higher quality and lower cost solutions, especially to the lower tier merchants. Driving infrastructure building and network expansion To facilitate infrastructure building and enhancements to payment services, BNM had also established market incentive structures such as the e-Payment Incentive Fund (ePIF) Framework. Under the ePIF Framework, banks are incentivised through a set of prerequisites to invest in e-payment services, and to channel the cheque fee collected as incentives to encourage their customers to migrate to e-payments. The industry players had also established a Market Development Fund (MDF), which would channel approximately RM455 million to expand the network of payment card terminals from 240,000 in 2014 to 800,000 by 2020.
At face value, these regulations could be expected to have contributed to bumping up demand for government bonds, thereby reinforcing the effects of the ECB’s APP. But because, as a result of our asset purchases, banks hold a large amount of central bank reserves, which count as highquality liquid assets, such regulations are unlikely to have been a key driver of increasing collateral scarcity. These reforms, however, are likely to have affected the repo market in different ways. One of them you can see on my next slide. Here I show the distribution of repo market activity for oneday tenor contracts exchanged bilaterally or via central clearing counterparties (CCPs) for German collateral. The chart shows an interesting feature, namely that the market attaches a premium to centrally cleared transactions. The reasons for this are unlikely to surprise you: the leverage ratio allows for offsetting cash proceeds to be netted off when the transactions are with the same counterparty, have the same end date, and are conducted in the same settlement system. This means that although repo transaction are not part of the 2009 Pittsburgh central clearing mandate, which covers OTC derivatives, centrally cleared transactions have a premium because they make those trades less capital intensive compared with non-nettable ones. According to MMSR data, around two-thirds of repo transactions are already cleared centrally.

The question now is how to sustain and strengthen this new simpler system. I have two answers:  First of all, keeping the spaghetti bowl untangled means global infrastructure. The deep pools of liquidity that make central clearing economical don’t correspond to national borders. Derivatives clearing is a global service. UK CCPs clear global markets for interest rates, foreign exchange, credit default swaps, and commodities. Foreign clearing members make up 63% of the clearing members at  6  Speech by Alex Brazier. How to: MACROPRU. 5 principles for macroprudential policy. 13 February 2017. 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  UK CCPs. At the end of 2020 there were £ trillion of derivative contracts between UK CCPs and EU clearing members, and £ trillion between UK CCPs and US clearing members.7  The growth of global infrastructure that spans national borders is a direct result of the reforms we put in place after 2008 – again a feature not a bug. This cross-border nature of clearing means that there must be a consistent approach for the regulation and supervision of cross-border CCPs. The Principles for Financial Market Infrastructure, issued in 2012, provide that foundation. It also means that regulators and supervisors must do something difficult and for some, radical: we need to trust each other. This trust should not be blind.
Price developments for sub-groups behind the CPI measures show a similar picture (see Figure 3).4,5 Over the past two years, goods prices have fallen somewhat faster than normal. Prices of services have increased more slowly since the beginning of last year. This  3  See Figure A1 in the appendix. Trim85 is a measure that excludes the prices that have varied most and least. UND24 is a measure that weighs together the prices included in the CPI in a different way – the prices that have varied the most in historical terms are given the lowest weighting, and vice versa. 4  Please note that there has not been time to update the figures I show here with the inflation outcome for April published by Statistics Sweden yesterday. CPI inflation then rose to 0 per cent, that is, prices in April were unchanged in relation to April 2013. 5  Normally, one divides the CPI into prices of energy, foods, goods (excluding energy and foods), services and interest expenditure. One reason for this particular division is that energy and food prices met by consumers are to a large degree influenced by developments in commodity prices on the global market. It may thus be interesting to study the sub-groups separately. The component in the CPI that measures interest expenditures is also special, as it is affected by the Riksbank’s changes in the repo rate.

But the problem with prices falling is often said to be that demand will then collapse as households are postponing consumption while waiting for prices to fall so they can buy more cheaply.19 This reasoning is not necessarily wrong, but is really only a reformulation of the problem I mentioned above; that low inflation limits the scope for making monetary policy more expansionary. There is a risk that households will postpone their consumption – that is, that they will increase their saving – if the real interest rate becomes unjustifiably high. Here it is necessary to put price developments in relation to developments in wages and the return on saving. There is therefore scarcely reason to believe that anything dramatic will begin to happen just as the general rate of inflation becomes negative. One should also remember that substantial differences are hidden in the price trends for different product groups that lie behind the general rate of inflation. One example is developments in prices for technology-intensive goods such as TVs, computers and mobile  15  According to Drehmann et al. (2012), an average financial cycle, in which the credit cycle is a central element, is 16 years long. The length of an average business cycle is much shorter, perhaps five years. 16  Inflation expectations have fallen in recent years in the surveys conducted by the National Institute of Economic Research and Prospera. Short-term expectations are now just below one per cent, but long-term expectations are still close to the two per cent inflation target.