samchain/econo-pairs-v1 huggingface dataset:
But there are many others.   Second, good cop: areas where we and firms are collectively facing a shared challenge. There is no inherent conflict between the public and private interest – we have a shared interest in mitigating the risk, and there is a role for both public and private sectors. Cyber is the classic case of these shared endeavours. With the post-crisis reform job now largely complete, I will set out what firms should expect to see from the PRA across these areas as we enter a new phase. Bad cop Let me turn first to areas where our incentives and those of firms are not perfectly aligned, and where there may therefore be a degree of tension between us as we seek to secure the benefits of the new system we have spent the last decade putting in place. I will give you five examples – in highly abridged form, as I’m determined to beat Andrew’s time. First, our brand-new retail ring-fence, the last major section of which was erected by a team at RBS on the weekend of 12 August. This has been a truly massive operation, including the three largest-ever bank authorisations here in the UK, over £ billion of assets moved and over 1.3 million sort code changes. So I would like to say a big thank you to all of the teams at the PRA and at the banks for some really hard work during the construction phase.

But the SMR is not an end in itself – the accountability it delivers should contribute to safety and soundness. Firms should therefore expect us to make more use of the SMR to deliver supervisory priorities. There is no magic to this: we will simply ask, when we set out those priorities, which senior manager is on the hook to deliver them, and what will happen if they do not? We want to know who is on the hook if things go badly wrong, and have recently asked firms to spell this out in developing areas such a crypto-assets, operational resilience and algo-trading. And enforcement cases have shown that we can, and will, take action against Senior Managers if our red lines are crossed. However, we are not an enforcement-led regulator: in my opinion, the real prudential value of the regime lies in creating opportunities for preventative or remedial action through supervision. Which brings me to my third example: pay. This has been another area of massive reform. No pay system is perfect, but I remain convinced that the 100% cash, paid out up-front bonus systems which existed for risk-takers in some of our largest firms before the crisis were an important part of what broke the financial system. The new system of deferral, malus and clawback is much safer. So we are not planning to come up with some new approach at this stage – seven year deferral is long enough, and has a pleasingly biblical ring to it.
Labour market indicators such as redundancy notices and the number of job vacancies are pointing to a continued rapid decline in the labour market. In the February Report our forecast is for employment to decline by almost 200,000 persons at the end of 2010, from the top level in 2008, and for unemployment to rise to around 9 per cent in 2010. However, our most recent forecast is that the current economic downturn will not be as severe as that during the crisis in the 1990s. On the other hand, we are assuming that it will be more severe than the most recent economic downturn in connection with the dotcom crash in 2000. This is indicated by the various measures of resource utilisation we regularly produce. Since the monetary policy meeting in February Statistics Sweden has published the National Accounts for the fourth quarter of 2008. GDP fell by just over 9 per cent calculated as an annual rate during the fourth quarter of 2008. This is the weakest rate of change measured during the period for which statistical comparisons are available, that is, since 1980. Our forecast in the February Monetary Policy Report assumed that GDP would fall by almost 4 per cent calculated as an annual rate during the fourth quarter. Inflation will fall rapidly In 2008 CPI inflation rose up to September. It then peaked at 4.4 per cent. Since then inflation has fallen rapidly. In January 2009 it amounted to 1.3 per cent.

Of great interest in any survey of its role in nation-building is Bank Negara’s promotion of forms of financial intermediation that are of special relevance to Malaysia's needs and culture. The Bank has been a pioneer in the promotion of microfinance, and a leading participant in the national agenda to promote a strong SME sector. Considerable funding and expertise have been devoted to these activities in recent years, with the result that the share of SME financing in total business financing has increased from 31% in 2000 to 44% in 2007. The experience and networks established in this field have been of great value in the Government's efforts to mitigate the effects of the current global financial crisis, which have included the recent launch of a substantial Micro  BIS Review 12/2009  1  Enterprise Fund. Like many other economies in this region, Malaysia is a land of small businesses, but the attention that has, during years of stability, been given to strengthening channels of finance to the smallest of enterprises offers lessons for all economies at this time of pervasive credit crisis. Bank Negara has also taken a prominent part in the development and advocacy of Islamic finance, which has seen rapid growth in the country since 2003, with annual growth rates in Islamic banking assets and insurance assets approaching 20%, and Malaysia now accounting for about 70% of all global sukuk issues. Islamic finance is increasingly recognised as an important alternative channel of financial intermediation, and not only within primarily Islamic communities.
The second option is to have a mechanism or process to facilitate the orderly liquidation of a defaulted dealer’s collateral. One could imagine a mechanism that was funded by tri-party repo market participants and potentially backstopped by the central bank. This would have the advantage of dealing with the entire tri-party repo market and not artificially favoring one type of collateral over another. It would also push against the underpricing of liquidity and credit risk during good times by forcing market participants to pay for the costs of a liquidation facility up front. 11  OMO eligible is collateral that the Fed can purchase or repo in its open market operations. 12  In addition, because the Federal Reserve is authorized to intervene in the Treasury, agency debt, and agency MBS markets, it could act to stabilize these markets during times of stress. This would make it easier to liquidate such collateral without unduly depressing prices. 6  BIS central bankers’ speeches  Because no single market participant has a strong incentive to develop such a mechanism, however, sustained regulatory pressure may be required to reach such a solution. From the perspective of the tri-party repo borrowers and investors, the status quo undoubtedly is viewed as superior because neither group is forced to fully bear the externalities associated with their actions. Instead they anticipate that emergency liquidity would be made available in the event of a future systemic crisis.

As time goes by, we will have to consider our options. A review of our future exchange rate policy will be particularly important. The possibility of Iceland at some stage joining a larger currency area should not be precluded, particularly if the political and economic cost of staying outside will be found to outweigh any advantage of maintaining an own currency. BIS Review 117/1999  4  Iceland and America Looking briefly in another direction, Iceland’s relations with the great continent in the West date back a thousand years. In recent decades, we have had important trade links with the United States. However, the relative share of trade with the US has declined significantly, or below 15%, since exports to the US peaked at almost 30% of total exports in the 1970s. Imports from the US also declined significantly from a high level around the middle of the century to around 10% of total imports in the most recent years. The number of American tourists has also declined in relative terms. Although the share of the US in Icelandic merchandise trade and tourism has declined, the US dollar still plays a significant role as a vehicle currency in Icelandic trade and foreign exchange transactions. Recent changes in the geographical pattern of trade and investment reflect the liberalisation of trade within Europe and the increasing globalisation of the world economy. Like other developed countries, Iceland has a most favoured nations agreement with the US and Canada.
However, the historical experience, even of the world's major currencies - US dollar, Japanese yen or the currencies now merged into the euro, for example - is that a floating regime provides no assurance of a stable real rate. In practice, the market does not steer the rate in a continuously rational manner. There is also a tendency, even if the authorities are prepared to conduct some intervention, for floating rates to overshoot occasionally, especially when at the mercy of potentially massive international capital flows and herding behaviour in financial markets. Indeed, in certain circumstances floating may magnify rather than reduce short-run volatility in competitiveness, thereby unsettling the environment for making judgements about costs and prices, and hence for business planning. BIS Review 17/2002  3  The advantage of a fixed rate is that, if credible (and I take Hong Kong's 18-year track record as a leading example of that), it provides an unambiguous and highly transparent real-time indicator of whether monetary policy is on track or not, as well as a solid anchor for planning purposes. But, as with floating, it provides no assurance of a stable real rate. And the disadvantage is that the entire burden of relative cost-price adjustment falls on domestic costs and prices. Inflation is likely to be more volatile than under, say, inflation targeting accompanied by floating. Moreover, notably, the fixed regime may require downward flexibility of costs and prices if the nominal exchange rate becomes too strong for whatever reason.

This might involve higher rather than lower interest rates because of a risk premium, plus greater uncertainty. Before moving on from the subject of competitiveness, let me leave you with a couple of thoughts. If Hong Kong has, in some underlying sense, been suffering from severe uncompetitiveness, how does one explain the continuing strength of the trade and current account performance...  … and the fact that the pace of recession in Hong Kong over the last two years has not been significantly different from that in a number of other economies in the region? 6  BIS Review 17/2002  I am drawn to conclude that the criticisms of the peg on competitiveness grounds do not stand up too well under scrutiny. Even if the foregoing analysis and discussion does not prove unequivocally that fixing is superior to floating, it does challenge the contention that perceived problems of competitiveness would dissipate if only we had a floating exchange rate. Living with deflation Let me turn now to the other focus of criticism of the monetary regime that I mentioned earlier, namely deflation. There are four main factors which have been contributing to falling prices in Hong Kong. First, there is the state of the global economy. A combination of recession and remarkable success in taming inflation in recent years have left policy makers in several countries facing the unusual situation of deflation. Hong Kong has not been alone, although the process has perhaps been more prolonged here than in many other places.
Simon Potter: New York Fed - strengthening relations with African central banks Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, to the Assembly of Governors of the Association of African Central Banks, South African Reserve Bank, Pretoria, 16 August 2017. * * * Mr. Chairman, Mr. Vice-Chairman, and honorable governors and heads of delegation, I appreciate this opportunity for me and my colleagues from the Federal Reserve Bank of New York to speak before the Assembly of Governors of the Association of African Central Banks (AACB). Since its establishment in 1963, the AACB has played a vital role in fostering cooperation among central banks in Africa, and between central banks inside and outside of Africa. Through my participation in the Symposium yesterday, I got a sense of the challenges and purpose that drives your agenda in this diverse and dynamic region. The AACB is an important forum for exchanging views within the region and with international partners on these shared challenges and opportunities. My colleagues and I have joined your meetings to seek enhanced dialogue with each of your institutions to strengthen our relationships and channels of communication. We view this engagement as an initial step in our long-term commitment to strengthen our ties with African central banks, and we are pleased to have already met bilaterally with many of you.

The issue is clear, the perfect solution less obvious. At the moment, regulators are talking about dynamic provisioning or capital requirements conditional on the cycle phase. The key idea is that regulators may want to be more lenient in bad times so that individual institutions have more breathing room. If this is the case, the logical consequence is that the overall requirements (e.g. capital adequacy rules) should be tougher in good times. Of course Jean de la Fontaine would argue that this is simply good management and that regulation should be superfluous! Thirdly, it is important to realise that there is no perfect solution and no perfect design. This means that we need to be pragmatic and attack the problem from various angles. Some of the new regulation proposals are elegant and attractive because they go straight to the heart of the problem (convertible debt or contingent capital), others are less pretty (e.g. size requirements), but we should accept this state of affairs until we have a clearer intellectual picture of this major issue. A final note on the issue of remuneration. There may or may not be some truth to the idea (not very popular at the moment) that the financial sector is a high contributor to national value creation, and that this explains the high level of remuneration in that sector. But bankers have some convincing to do and doing so requires being honest about the source of income: is it truly high productivity or is it leverage?
These strains in household finances from suddenly excessive debt service burdens are met by households in a variety of ways: through default, foreclosures, and bankruptcy, or renegotiation of the terms of repayment, but also through continued higher principal and interest payments accompanied by much lower consumption than the household had previously planned. As we see in Chart 1 (Employment declined dramatically) job losses in the recent recession were extremely large and prolonged, a problem that resulted, in part, in significant delinquencies in debt repayment. Furthermore, the significant decline in house values imposed a much stricter limit on how much households could borrow if they needed, for example, to adjust to the effects of a temporary loss of income. Recent economic research has examined how the macroeconomy is affected when households suddenly experience reduced borrowing capacity. Eggertsson and Krugman consider the case of households that have borrowed up to some limit and now see their debt limit reduced; these households suddenly find themselves over-indebted and are forced to cut spending.1 If the required cuts in spending are large enough, then even a very active monetary policy will be unable to offset them completely. Other research has also suggested similar mechanisms.

2  BIS Review 132/2008  Within a day, AIG had to be rescued following rumours about the size of its losses on CDS contracts and pressures grew on the remaining securities dealers. Later in the week, Secretary Paulson announced his initial $ billion plan to purchase assets to support the banking sector. It didn’t entirely still the doubts. The pressures were also felt in Europe. At the end of September Dexia, Fortis and Hypo Real Estate all had to receive emergency capital injections, mostly government supplied. In the UK the authorities facilitated a rapid consolidation in the mortgage sector with Abbey Santander buying Alliance and Leicester, some mergers in the building society sector, and the proposed merger of LTSB and HBOS. Finally, in late September the Tripartite authorities intervened to resolve growing difficulties in Bradford and Bingley by transferring the deposits and branch network to Abbey Santander and taking the remaining assets and liabilities into public ownership for orderly wind down. But the loss of confidence went wider than a subset of vulnerable banks. Our report estimates the total US and European marked to market losses on credit assets at nearly $ trillion. While these will not all fall on banks and may exaggerate the losses to those who can hold debt to maturity, investors and counterparties became worried about the extent of the likely losses on banking and trading books in a wider range of institutions and in their ability to continue to finance their businesses.
From this we should deduct a figure for sustainable growth in disposable income, say 4 per cent – 2 per cent real growth and 2 per cent inflation. This leaves us with 1 per cent. See Svensson (2012b). 8  BIS central bankers’ speeches  The household debt situation is also analysed in Finansinpektionen’s (the Swedish financial supervisory authority) report, The Swedish Mortgage Market. Finansinspektionen observes in this report that the loan-to-value cap has had an effect. Households’ loan-to-value ratios for new loans fell in 2011, and the percentage of houses with a loan-to-value ratio of more than 85 per cent has halved since 2009, to just under nine per cent. The banks make stringent credit assessments of borrowers using a “left-to-live-on” calculation with a high mortgage rate.17 Stress tests also show that most households that have taken out a new mortgage and which should be the most vulnerable, have a good debt-servicing ability and are resilient to increases in interest rates, falls in housing prices and increases in unemployment.18 In contrast to what was the case during the 1990s crisis, however, large interest rate increases probably will not coincide with high unemployment. Finansinspektionen’s conclusion is that “Only a limited portion of the households are affected even when simultaneously applying assumptions of sharp drops in house prices and sharp rises in unemployment, which indicates that Swedish mortgages are currently not a threat to financial stability.“ Moreover, this resilience has also been tested in real time.

There then remains only 1 per cent of the debt of 170 per cent, that is, the net debt service required in the long run to keep the debt ratio constant is only 1.7 per cent of disposable income.16 With this reasoning, a debt ratio of 170 per cent is sustainable with a considerable margin. Figure 3 Capital over assets for households, some large listed companies and Swedish banks Per cent 80 70 60 50 40 30 20 10 0  Sources: Dagens Industri (capital/assets 2011 for listed companies and Swedish banks) and the Riksbank (household net wealth/assets). surplus of disposable income in a “left-to-live-on” analysis – which is described in footnote 17 – is around 58 per cent. The current value of this surplus is then around 1 000 per cent of disposable income. When these figures are compared with a debt of 170 per cent and added to real and financial assets of 510 per cent, households’ leverage ratio and debt-servicing ability undoubtedly appear to be pretty good. 15  Isaksen, Lassenius Kramp, Funch Sørensen and Vester Sørensen (2011). 16  A high mortgage rate after tax could be 5 per cent. A long-run level for the repo rate of 4 per cent plus an historically-high spread of 3 percentage points gives a mortgage rate before tax of 7 per cent and after tax of approximately 5 per cent ((1-0.3)x7=4.9).
“The pass-through of higher natural gas prices to inflation in the euro area and in Spain”, Box 4, “Quarterly report on the Spanish economy”, Economic Bulletin 3/2022, Banco de España. 4  instance, the presence of global supply chain bottlenecks, the rapid intensification of demand once restrictions were lifted or the impact of changes in work and living habits, which led to increased consumption of housing-related goods and services. According to our estimates, demand factors were of minor importance at the beginning of 2022, but their contribution increased until the summer, stabilising at high levels thereafter. Supply-side factors – which were predominant at the beginning of 2022 – now explain around half of the deviation of euro area core inflation from its historical average. All in all, some core inflation components are beginning to show a certain degree of stabilisation, but the data suggest that inflationary pressures continue to broaden. By way of illustration, during most of 2022, pressures on core inflation were highly concentrated on specific expenditure items, such as household equipment and maintenance, transport, and activities involving more social contact.10 The aggregate price index of these items indicates some stabilisation in its year-on-year growth rate at the beginning of this year, albeit at high levels, over 7%.11 Excluding these expenditure components, the remaining basket of core items, which has a weight of over 30% in the HICP, has shown a very contained inflation rate throughout the inflationary episode.

In addition, banks are being offered the opportunity to borrow an unlimited amount of money each week against collateral at three months’ maturity at an interest rate of 0.20 percentage points above the repo rate, which is at zero per cent. In addition to this, the Executive Board has decided that the Riksbank will extend its purchases of securities by up to SEK 300 billion up until December. The Riksbank normally buys government bonds. In these exceptional circumstances, however, it is important to ensure that all major markets continue to function. For this reason, the Riksbank has now also begun to purchase mortgage bonds and will purchase municipal bonds. In the last few days, corporate bonds and commercial paper issued by Swedish non-financial corporations have also been included in the asset-buying programme. These bond purchases increase the access to credit in the economy in general and future purchases of corporate bonds and commercial paper will provide additional support to Swedish companies in particular. Just like the Riksbank’s previous purchases of government bonds, the new purchases will also help to keep monetary policy expansionary and to stimulate activity in the economy. Given the global nature of the crisis, it is also important to ensure that there is access to US dollars (USD) in the Swedish financial system. To strengthen access to one of the most important currencies for Swedish companies, the Riksbank has announced that we will lend up to USD 60 billion.