samchain/econo-pairs-v1 huggingface dataset:
Yet in a setting where credit accounts for a significantly lower proportion of assets than it did then, these expenses should also be lower given that the costs associated with the management of non-credit assets are lower. The consolidated statements show that, despite the deterioration in efficiency levels, the Spanish banking system’s efficiency ratios remain better than those of the main European banking systems and also than those of banks in the United States and Japan, although they are worse than those observed in other jurisdictions such as, for example, the Nordic countries Once again, to illustrate the potential gains, in terms of rates of return, of an improvement in efficiency, in a scenario in which banks achieved their best (lowest) efficiency ratio since 2000 (43.2% in 2009), it is estimated that the profit attributed to the dominant institution would have been almost € billion higher than the figure actually recorded in June 2019. In consequence, ROA would have increased by 17 bp and ROE by 2.2 pp. If we combine this hypothetical scenario with that of the non-performing loan ratio at record lows, annual profit could have been almost € billion higher than the actual figure, with ROA 27 bp higher and ROE 3.5 pp higher. Thus, ROE would be comfortably above the statistically viable upper range for estimation of the cost of equity.

Fifth, we cannot overlook the potential role of international diversification, as shown by the part it has played in some of the largest Spanish banks in the last decade. Thus, over that period, the Spanish banking sector has increased its international exposure by 45%, while banks in countries such as Germany, France and Italy have reduced their international exposure by 38%, 16% and 15%, respectively. Despite the risks associated with business in emerging market economies, international diversification of banking business, especially when focused on retail business and organised in a decentralised manner, brings important benefits, in terms of greater diversity of business models and revenue sources, as was seen during the last crisis. In addition,  18/29  there is evidence that the lower the level of synchrony between the economic and financial cycles of the countries in which banks operate, the greater these benefits.5 In this respect a profound reflection at the European and the international level on the regulatory treatment of diversification in the banking business may be appropriate, so that, in conjunction with the greater complexity it may entail, some of its beneficial effects on banks’ risk profiles may be afforded better recognition. Sixth, nor should we overlook the importance of operational risk being correctly managed by banks. Operational risk accounts for 9.3% of the risk-weighted assets of Spanish deposit institutions by volume, slightly below the European average (10.5%). In any event, we know on past experience that the deterioration in solvency associated with an operational risk event can be high.
In 2016, Switzerland’s foreign assets were almost seven times its GDP, while its foreign liabilities were more than five times its GDP. By international standards, Switzerland continues to rank well above the average in terms of its integration with the global economy, not only in relation to trade in goods and services but also in relation to portfolio and direct investment. As we saw earlier, the current account balance corresponds to the difference between savings and domestic investment. In the international perspective, it is often argued that countries with current account surpluses invest too little or save too much. Where does Switzerland fit in here? Chart 3 shows average saving and investment rates during the period 2010–2015 in various groups of countries and in Switzerland. Saving rates are depicted in red, investment rates in blue. As the chart shows, while Switzerland invests relatively heavily by international standards, it also saves far more than other countries. At 24%, Switzerland’s investment rate exceeds the average for both the advanced economies and the OECD countries; and, at 36%, our saving rate is among the very highest. Switzerland’s high investment rate shows that the current account surplus is far more a function of a comparatively high saving rate than of low domestic investment. Global current account balances Let me now give you an overview of the chronological and geographical development of global current account surpluses and deficits.

This brings me to the factors contributing to the persistent current account surplus in Switzerland. Factors contributing to the persistent current account surplus in Switzerland Switzerland’s current account surplus, reported in accordance with international standards, is driven by special factors. First, our current account surplus or savings surplus is overstated due to statistical distortions. Second, structural factors are in play that tend to contribute to a savings surplus. One of these is demographics, which have a decisive impact on the high levels of household saving in Switzerland. 5  High current account deficits may occasionally lead to refinancing problems, so-called balance of payments crises. This speech does not address the financing side of current account deficits in any detail, but focuses solely on the current debate concerning exchange rate manipulation in connection with current account surpluses. Page 7/13  Then, third, we must consider the industrial structure of the Swiss economy, which means that the current account and the economy as a whole do not necessarily move in parallel when the exchange rate changes. In Switzerland, two industries are largely responsible for the trade surplus, namely pharmaceuticals and merchanting, the net exports of which are only slightly impacted by exchange rate movements. At the same time, these two industries are much more important for the development of the current account than for that of the economy as a whole. Let me now explain these three factors in more detail. Statistical distortions Statistical distortions in the current account lead to the surplus in Switzerland being overstated.
The Germans have recognised these structural weaknesses and are taking steps to rectify them. However, one major obstacle to German banks divesting their industrial holdings has been the prohibitive capital gains tax. Now a Social Democrat government has proposed tax reforms that will remove this obstacle, and pave the way for banking and industrial conglomerates to untangle their web of cross shareholdings. In Asia, both South Korea and Japan relied on close association between banking and commerce in the earlier stages of their industrialisation. South Korean chaebols, and the banks that lent to them, are now facing painful reforms. Poor lending practices by Korean banks disguised the deteriorating finances of the chaebols, and eventually nearly brought the whole system down in the Asian crisis. In Japan, the pre-war zaibatsu system became the post-war keiretsu system. Each major keiretsu or industrial group consists of companies linked together through a web of cross-shareholdings, including a main bank. Keiretsu members support one another financially and in terms of direct business. The bank in the keiretsu plays a pivotal role, facilitating the financial transactions of the group. While the keiretsu system helped Japan to rebuild and industrialise its economy after the war, many of the problems of corporate governance and unsound banks that now plague Japan are rooted in this structure. The prolonged crisis of the Japanese economy since 1990 has forced a fundamental rethink. The Japanese are now gradually starting to make basic structural changes.

Scope of permitted activities MAS will determine the scope of activities which the bank or FHC will be permitted to undertake. Besides financial activities, they will include activities which have clear synergies with the bank’s financial business. We will not have a fixed list of permitted activities. Instead we will exercise flexibility to allow banks to undertake business ventures that are related to their core competencies, such as e-commerce activities that are changing the banking industry worldwide. These include providing payment services in support of e-commerce, and leveraging on banks’ IT competencies to provide IT services, especially in building infrastructure and applications for B2B e-commerce. Banks will also be allowed to undertake equity portfolio and venture capital investments. We will define an equity portfolio investment to be one where the bank and its financial affiliates do not have control over the investee company, e.g. by being the largest shareholder. An equity portfolio investment should generally not exceed 10% of the investee company’s capital. Furthermore, each equity portfolio investment will be subject to a single security limit of 2% of the bank’s capital funds. We will amend Section 31 of the Banking Act to remove the existing aggregate limit on portfolio 5  BIS Review 53/2000  investments, and replace it with this new single security limit. We will also exclude debt instruments from Section 31 because they are generally less risky than equities. Venture capital investments will be treated separately.
While the merit of what has been achieved should be accorded to many, allow me briefly to acknowledge the work of the staff of the Banco de España, and most specifically the body of bank examiners, economists, lawyers and the senior managers of the supervisory, regulatory and legal arms of the Bank, on whom the greatest burden has fallen in terms of implementing the strategy approved in legislation. The fact is, the task discharged by them has perforce been complex and time-consuming. The decision by the authorities – previous and present alike – to use limited public funds in the reconstruction of the banking system was warranted because the big Spanish banks did not and do not need help and because, given the delicate situation of our country’s public finances then and now, the impact on the markets of a sharp and sudden increase in the budget deficit might have led to the collapse or intervention of the entire Spanish economy, as indeed occurred in some other countries. But with this strategy of minimising the use of public resources, the restructuring work increases exponentially and extends over time. The Spanish supervisor has had no “bad bank” with which to restructure the sector. Here we have not seen a State which, armed with taxpayers’ money, has bought bad assets from banks, thereby resolving all supervised banks’ problems at a stroke. Our Bank’s supervisory team has had to apply a strategy which has obliged it to seek predominantly private solutions.

We can now see that the economic upswing is continuing to strengthen gradually. Industrial activity has made some progress; export demand is accelerating and firms are relatively optimistic about the future. Capacity utilisation is also continuing to increase. Households’ expectations regarding their own finances and the Swedish economy are once again more optimistic, after a decline at the end of last year. Retail trade sales indicate a good level of consumption. A slightly stronger development in real disposable incomes, partly due to lower inflation, continuing low interest rates and rising asset prices, is expected to benefit consumption in the near future. Given this background, we have found no reason to make more than a few marginal changes to the overall picture of growth we have been outlining since last autumn. We now believe that economic growth will amount to just over 2½ per cent on average over the coming two years, which is a tenth of a percentage point more than our previous estimates. However, the annual outcomes differ slightly more because of the fact that the figures for the current and coming years are affected by changes between the years in the number of working days. This has no major significance for our view of resource utilisation, as both production and demand are affected. The conclusion of our assessment of economic activity is that the economy will approach full resource utilisation at the end of the forecast period.
Figure 4 2020 growth forecast in latest Monetary Policy Reports (*) (annual change, percent)  8  8  6  6  4  4  2  2  0  0  -2  -2  -4  -4 EE.UU. Eurozona  China  A. Latina  (*) Evolution of forecasts from MP Reports of September 2018 to March 2020. Source: Central Bank of Chile. 10  Figure 5 Commodity prices 2020 forecasts (1)  Terms of trade (2)  (USD/lb; USD/ barrel)  (índex, 2013=100)  3.00  65  110  110  2.75  55  100  100  2.50  45  90  90  2.25  35  80  80  2.00  25  70  Copper  70 04  Oil  07  11  14  17  20  (1) Evolution of the forecast between the MP Reports of March 2019 and March 2020. (2) Red diamonds show forecasts for the period 2020-2022 contained in the MP Report of March 2020. Source: Central Bank of Chile. Figure 6 How do you feel about the performance of your business over the next six months? 100  Very preoccupied  Slightly preoccupied  Not preoccupied  50  100 50  0  0 Unfolding of social conflict  Effects of Covid-19  Global economic situation  Tightened lending standards  How will your firm's number of employees evolve in 2020 with respect to today?

Despite significant downward corrections, it is still possible for the economy to perform below expectations, particularly towards 2021 and 2022. This could be the case if the control of the sanitary emergency and containment measures around the world need to be kept in place longer than anticipated. This could also happen if the significant financial needs of businesses and households fail to be met by the supply of credit. Such scenarios would entail solvency problems and bankruptcies of companies in the most affected sectors, with a greater loss of jobs and a slower speed of recovery for the next two years. In such case, convergence to the inflation target may require keeping the MPR at its technical minimum for a longer 6  period of time. This is reflected in the monetary policy trajectory that describes the lower part of the MPR corridor (Figure 12). Another possible scenario is that the sanitary crisis is resolved faster, and the economy restarts its normal activities sooner than expected, lending support to inflation towards late 2020 and the turn of 2021. In such a case, monetary policy could begin normalizing gradually some quarters before, i.e. consistently with the upper bound of the MPR corridor (Figure 12). Inflation could also rise if the companies’ downtime results in a large drop in the available supply of goods and services, pushing up prices. In that case, it is not evident that the MPR path has to be changed, in particular if medium-term inflation expectations continue to be aligned with the target.
Besides the WTO, ASEAN and its members need to take full advantage of APEC, supporting its concept of “open regionalism”, and its goal of free trade and investment in the Asia Pacific region. ASEAN also needs to explore links with other regional groups, for example with North East Asia through a possible free trade area with China, Japan and South Korea. At the Informal Summit, the ASEAN plus three countries clearly recognised that it is not in their own interest for the divide between Northeast and Southeast Asia to continue widening. The “plus three countries” want to work with ASEAN, to develop closer and deeper linkages between the two sub-regions. The way to strengthen ASEAN economic cooperation is by participating actively in these external fora, and not by opting out of them. This will send a strong signal to the world that ASEAN remains an open and outward looking organisation, with its members welcoming competition and strengthening themselves as a group. It will help restore ASEAN’s credibility as a vigorous and effective organisation that plays a responsible, relevant role on the international stage. Corporate sector restructuring The third area on which the crisis countries have to focus attention is their corporate sectors. Insolvent and non-viable companies have to be restructured, to set growth on a firm basis and restore confidence. The problems differ from country to country, but some fundamental issues are common.

Finally, the ultra-accommodative monetary policy stances of advanced economies have contributed towards greater global asset price co-movements and increased cross-border financial spillovers. In the context of a highly globalized financial system, extreme monetary easing has ‘pushed’ capital to other parts of the world, particularly emerging market economies where yields are higher, and boosted asset prices globally. The exceptionally long period of zero interest rates has also led to a buildup of financial positions that are attractive or justified only if yields remain low. As a result, global bond yields and exchange rates have become acutely sensitive to shifting expectations about monetary policy 5  changes in advanced economies. Such excessive sensitivity has put global markets on a knife edge with frequent bouts of volatility. These developments have critical implications for the transmission mechanism of monetary policy and its conduct. On the one hand, the greater influence of global factors and structural growth headwinds may have made inflation and output less responsive to monetary policy. On the other hand, financial markets and asset prices globally have become more sensitive to monetary policy actions and communication. This raises a dilemma. With inflation and output below targets, monetary policy is eased. Against the tide of global factors and growth headwinds, inflation and output fail to respond, and the temptation is to do more and more. In the meantime, financial markets respond vigorously to low interest rates and the search for yield accumulates in the form of greater financial fragility over time. Something will eventually have to give.
After lunch Philip Turner from BIS and Governor Ingves will share some of their insights from the theory and practice of central banking. The day will conclude with a panel discussion chaired by professor Gerlach, on central banks’ future challenges. We are fortunate to have such prominent speakers here with us today. I hope they inspire our further research on the topic “What is a useful central bank?”. 1  Walter Bagehot (1873): “Lombard Street: A description of the Money Market”. BIS Review 154/2010  3

Obviously, if the starting point is a structural budget deficit, then the return to budget balance will require spending to grow more slowly than nominal growth or else a discretionary increase in revenues, until balance is achieved. Evidence suggests that the application of a rule of this type during the upswing prior to the last crisis would have substantially curbed the public spending permitted each year, allowing the generation of significant room for manoeuvre that would have limited the deterioration in public finances during the crisis. Finally, pressing ahead with the various pending reforms would raise the economy’s growth potential which – through its effects on employment and productivity – is one of the basic determinants of reductions in public debt. These reforms include, in the regulatory area, revision of regulations that hinder the market entry of new firms or that limit their growth; in the labour market, reforms to reduce the degree of duality and to improve the employment prospects for the long-term unemployed; and the need to increase the efficiency of the legal system and of the education system and to promote the accumulation of technological capital, among others. Accordingly, any delay in their implementation or, worse still, a hypothetical reversal of reforms already introduced since the start of the crisis, would significantly worsen the prospects for economic growth and would make the fiscal consolidation still needed more costly. Conclusions Let me conclude by recalling the challenges and risks for the economy as a whole raised by the current fiscal imbalance in Spain.
Miguel Fernández Ordóñez: Recent decisions adopted by the Bank of Spain Testimony of Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, before the Parliamentary Committee on Financial Affairs, Madrid, 2 April 2009. *  *  *  Honourable Members of Parliament, Let me begin this testimony by thanking you for the opportunity to explain the recent decisions adopted by the Banco de España as supervisor of the banking system in relation to Caja de Ahorros de Castilla La Mancha (CCM). Last Saturday, the Executive Commission of the Banco de España adopted the decision to replace the governing bodies of the institution with three provisional central bank nominees. On Sunday, 29 March 2009, the government, in an extraordinary meeting of the Council of Ministers, passed a Royal Decree-Law authorising guarantees by the Treasury for a maximum amount of € billion backing the loan the Banco de España could grant to CCM. These two decisions have allowed CCM to continue operating normally and to meet all its payment obligations and commitments. This solution was adopted once a "private" solution to CCM's problems under the Savings Bank Deposit Guarantee Fund had been deemed inviable. As you know, CCM has held talks (exploratory in some cases, more advanced in others) with other savings banks with a view to participating in a merger process giving rise to a new economically and financially viable institution. In this connection, assistance from the Savings Bank Deposit Guarantee Fund had been envisaged to smooth the process.

Caleb M Fundanga: Payment system developments in the region Speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the official opening of the 2007 SADC Payment Systems Regional Conference, Livingstone, 2 April 2007. *  *  *  • SADC Payment Systems Project Team Leader; • SADC Payment Systems Project Country Leaders; • Chairperson, Bankers Association of Zambia; • Delegates from all SADC Countries; • Distinguished invited guests; and • Ladies and Gentlemen On behalf of the Bank of Zambia and indeed on my own behalf, I wish to welcome you all to Zambia and Livingstone in particular. For those of you coming to Livingstone for the first time, you will no doubt soon discover that this historical city, which incidentally was Zambia’s capital city until 1935 when it was moved to Lusaka, is one of the world’s pristine tourist destination and boasts of a number of magnificent sights and places of cultural interest. For those of you that have been here before, I wish you a joyous time as you renew your acquaintance with this beautiful city and enigmatic Victoria Falls. To all of you, I implore you to shop around and take a piece of Livingstone as souvenir on your return. Ladies and Gentlemen, allow me to thank you all for being here for the 2007 SADC Payment Systems Regional Conference. This event has now become interwoven into the tradition and fabric of SADC.