samchain/econo-pairs-v1 huggingface dataset:
The reduction in the IIP to less vulnerable levels will require running current account surpluses for a prolonged period. The continuation and deepening of the gains in the economy’s competitiveness posted in recent years should, along with healthier public finances, contribute to entrenching a sustained path of external surpluses. Closely related to the foregoing point, the second factor of vulnerability of the Spanish economy is that arising from the imbalance in public finances. The sectoral breakdown of the net IIP shows how, since the onset of the crisis, the general government’s net liability position has increased notably, with the liabilities position of the monetary financial institutions and the rest of the resident sectors declining. Despite the considerable reduction in the budget deficit relative to GDP from its peak of 11% in 2009 to 23.1% in 2017, Spanish public finances continued to evidence a high level of structural deficit (estimated by the European Commission to be 3% of GDP, the highest in the euro area) and of public debt, which currently stands at around 98% of GDP. Against this backdrop, it is worth bearing in mind that maintaining a very high level of public debt over a prolonged period may not only hamper economic growth but also lessen the stabilising capacity of fiscal policy in the face of future recessions. Spain must therefore harness the current, favourable economic setting by launching a medium-term programme to reduce the vulnerabilities of its public finances and thus generate budgetary room for manoeuvre, enabling it to face future crises.

With the rapid changes in society, technology and economy, we need to remain flexible, constantly iterating financial education approaches to adapt to what works best in the given context. This is where fresh ideas are welcomed, like those being featured and celebrated today. On this, I would specifically acknowledge and congratulate the three winners of the Best Paper Awards today. I understand that the winners and other shortlisted papers will be given the opportunity to publish their research in a renowned academic journal or an edited publication. I trust that their exemplary work will inspire many others to contribute to this area of research. In closing, I am hopeful that all of us here today can be increasingly effective in our shared aim to promote financial literacy in Malaysia. Today's event is a step in that direction. Let us take this opportunity to learn from one another and reimagine new paths forward – helping Malaysians regain financial resilience and improve their financial well-being. Thank you. 3/3  BIS - Central bankers' speeches
Even so, the real level of interest rates is expected to remain low and should act as a stimulus to the Swedish economy, above all in the somewhat longer run. The domestic economy In our December Inflation Report, the GDP growth rate was assumed to be between 2.5 and 3 per cent in 1998, between 2 and 2.5 per cent in 1999 and around 2.5 per cent in 2000. The available statistics suggest that our forecast for 1998 is probably correct. For 1999 and 2000, however, we consider that the December forecasts are somewhat too optimistic. One of the items we believe may be weaker is foreign trade. With the poorer outlook for the international economy, net exports could be lower in the years ahead. Industrial activity may then also continue to slacken. The expectations of Swedish firms are low, above all in manufacturing, and this could have a downward effect on investment. On the other hand, the statistics show that private consumption is still strong, with a 1998 third-quarter increase that exceeded expectations. House prices and the number of new cars registered are continuing to rise and retail turnover is also moving upwards. Other signs are increased lending to households and the growth of the money supply. Households are optimistic about their own economic situation, one reason being the growth of real disposable  BIS Review 18/1999  4  wage income; a marked increase in 1999 is implied by the low level of inflation and the tax cuts.

Even without this, economic activity could slacken in connection with decreased investment on account of falling demand and lower profits, as well as with a lower consumption propensity among households whose debt burden is already very high. In the euro area the available statistics indicate that the slackening of activity in the late autumn and winter was more marked than expected, mainly on account of weaker exports. Manufacturers and households differ in their assessments of the future; the former count on a turn for the worst, whereas consumer confidence has continued to improve. The direction in which confidence moves for these two groups will be crucial for prospects in the euro area. The optimistic trend among households has so far helped to mitigate the consequences of decreased external demand. The question is whether this will continue to be the case if industrial activity does not take a turn for the better. The Japanese economy has not shown any clear signs of recovering, though in some respects it does seem to have stabilised. The future path here is still highly uncertain. All in all, the statistics point to an international trend in the next two years that is weaker that in the Riksbank’s main scenario last autumn, though the differences should not be exaggerated. Together with lower commodity prices, the weaker international activity should result in lower external price pressure. The outlook in 2000 and beyond is, however, very difficult to foresee. One uncertainty is the endurance of U.S. economic growth.
The economic situation in July 2010  70  Purchasing Managers’ Index in the manufacturing industry Index over 50 indicates growth  70  60  60  50  50 USA Euro area Sweden  40 30 00  10  20  30  5  10  5  5  0  0  -5  -5  -10  4 3  2  2  1  -10  -15  July  -15  -1  -20  -2  10  Inflation Annual percentage change  3  April  08  08  4  -10  06  06  5  -5  04  04  5  -5  02  -10 02  10  0  00  15  Households  10  00  0  -20  20  Companies  15  40  02 04 06 08 10 GDP Quarterly changes in per cent calculated in annualised terms, seasonally-adjusted data  Bank lending to companies and households Annual percentage change  1  CPI  0  12  5  0  CPIF  -1  CPIF excluding energy 00  02  04  06  08  -2 10  12  Sources: The Institute for Supply Management, Markit Economics, Statistics Sweden, Swedbank and the Riksbank  Figure 6.

A large financial system can be more readily versatile, i.e. provide investors and those in need of financing with a full range of options to choose from according to their requirements. What does all of this mean for financial stability in the euro area? First of all, I should like to remind you that the financial system of the euro area showed a high degree of stability during last year’s period of financial turbulence as well as during the rather dramatic structural shift connected to the changeover to the euro. In the former case, it is true that there was a significant spillover effect for the euro area markets, but they recovered quickly and without suffering any lasting damage. There was no disruption to any of the basic functions of the financial system, and public confidence in it remained strong throughout. Second, the foreseen structural changes require, as I mentioned earlier, the need for adjustment to be taken seriously by all participants in the financial system. This adjustment appears to have intensified recently: there has been an increase in merger activity, an establishment of alliances and an introduction of new products and services, often based on modern information technology. The process of structural change contains risks, but if these risks are identified early and analysed carefully, they do not present a threat to financial stability. After all, we are talking about decision-making and planning by people who are dealing with risks every day at the highest professional level.
We’ve had a wild ride – first a housing boom of epic proportions, then a housing bust, a near-collapse of the financial system, and a terrible recession. Let’s go back to 2006, right before the recession hit. That marked the peak of an unprecedented run-up in U.S. home prices. But the bubble burst. Home prices plunged by over 30 percent nationwide, and even more in states such as Nevada, Arizona, and Florida. As the housing market went into a tailspin, about a quarter of borrowers found themselves owing more than their homes were worth. Delinquencies and foreclosures surged. With millions of mortgages going sour, financial institutions that had placed big bets on home loans posted massive losses. It was like an epidemic. No one knew which financial institutions were infected with toxic assets. Everyone was suspect. Financial institutions were afraid to lend money to anybody, including each other. That choked off the flow of funds that  BIS central bankers’ speeches  1  financial institutions and businesses depend on for their day-to-day operations. The result was a worldwide financial crisis. If left unchecked, this kind of financial panic could have ushered in an economic cataclysm like the Great Depression, when 25 percent of the workforce was out of work. Why didn’t we plunge into the abyss? A key reason was that the Federal Reserve did what it was supposed to do. The Fed is the nation’s government-chartered central bank.

In order to properly understand what happened, we must consider the gradual shift that occurred in expectations and in economic policy during the post-war period. The thinking at the beginning of that period was still marked by the interwar period’s mass unemployment but also by the price stability of that time. Prices fell during some periods and rose during others. On the whole, the price level was stable during the 1930s, which was also the Riksbank’s explicit target at the time. Inflation expectations during the first post-war period were marked by these experiences, even to such an extent that the government prior to the post-war period announced in advance that the price level would fall as the productivity gains from the transition to peacetime production materialised. As the general price level actually rose, but never dropped, the public’s expectations of inflation were influenced accordingly. Expectations of rising prices worked their way slowly into people’s minds. During the period 1956-64, the general level of prices increased on average by 3.4 per cent a year; during the period 1965-74 by 5.6 per cent and from the mid-1970s to the mid-1990s by an average of 8.1 per cent a year. Between 1973 and 1982, Sweden devalued the krona six times after the Bretton Woods system, with its fixed exchange rates, had been abandoned. By the end of the 1980s, following successive increases in the inflation rate and repeated devaluations, inflation expectations had been anchored at a high level.
In addition, it's not only a supervisor's job to maintain the stability of banking industry but also banker's. Both sides should put efforts together to create a safe and sound environment and should always recognize the significance and effects of technology towards the banking industry. So, working in a proactive and more collaborative manner is the solution for today's supervisors'. BIS Review 35/2005  9

This line of reasoning applies when demand grows rapidly, as now, and when capacity utilisation rises. In my opinion, the interest rate effects would be different if the growth in demand slowed down, the labour market weakened and capacity utilisation ceased rising. Then there would be less upward pressure on house prices and I believe that an interest rate cut would be less risky in these terms. International developments could also be so weak that insufficient export market demand would curb the recovery. The weak developments in our most important trading partner countries, the euro area, are particularly worrying. Like Sweden and the United States, Germany, France and Italy are affected by globalisation, but in these countries the labour market seems to be finding it particularly difficult to cope with change. Germany is at the same time undergoing extensive structural reforms, such as the reduction of compensation levels for unemployment benefits and other transfers, and also longer working hours without full compensation. In the long term, these measures are aimed at increasing the labour supply and competitiveness of the German economy. However, in the short term they lead to uncertainty for many individuals and thereby curb consumer confidence and demand. At the same time, fiscal policy is tied by weak government finances due to a lack of fiscal consolidation during the good times at the end of the 1990s which has made the obligations under the Stability Pact more or less binding, while monetary policy is common to the entire euro area.
While this may not change dramatically in the very short term, we cannot preclude a significant share of bank revenues being eroded by new entrants into the financial sector. We are already seeing this in the retail lending and payment segments of the market. FinTech will most likely change our banking landscape as the public at large becomes more predisposed to the use of technology. The intermediation role of banks may totally change, and may no longer be the sole domain of the banking industry. So it is in the banks’ interest that any public disillusionment with banks be addressed preemptively. The role of compliance is very much a part of this conversation. It has to be, since the compliance function exists not only to ensure that rules are followed by banks. It can be used to 3/5  BIS central bankers' speeches  maintain public trust and to shape the cultural norms and values for an organisation. The compliance function complements enforcement and supervisory actions in upholding the sanctity of rules that safeguard public interests. Bank Negara Malaysia will continue to take strong enforcement actions against institutions with significant lapses in controls that might lead to risks in the financial system. We recognise that compliance is not an easy task. It is not possible to police every minute detail of a bank’s operations. Hence, a key priority should be to foster a culture of compliance within the inherent norms and values of an organisation.

The degree of intrusiveness in regulatory requirements will swing from one end of the pendulum to the other, before settling somewhere in the between. This process can often be disruptive and unproductive, not only to financial institutions, but also to the wider economy. This leads me to my next point on the broader social and economic consequences of weak compliance. In most banks, the compliance function has mainly served to ensure that a bank is operating within permitted legal and regulatory boundaries. In such cases, the compliance function effectively does little more than constrain a bank from activities that increase compliance risks. So rather than work with business units and customers to close gaps that contribute to heightened risks, compliance officers are seen as gatekeepers rather than partners. This is an important distinction with potentially significant consequences for a bank’s risk-taking activities. I can give you at least three examples of this. When we issued revised standards on loan provisioning, one of the requirements was for banks to classify loans as “impaired” if the loans were restructured or rescheduled following an increase in credit risk. Rather than focus on how banks might strengthen internal assessments to better identify and measure changes in credit risk, many banks simply withdrew altogether 2/5  BIS central bankers' speeches  from entertaining requests from borrowers to restructure and reschedule their loans. SMEs were hit the hardest, requiring Bank Negara Malaysia to intervene.
Charlotte Hogg, our COO, oversees the Bank-wide diversity initiatives under our Senior Managers’ responsibilities. The Bank’s commitment to diversity cascades through the organisation. Our diversity goals now form an explicit part of the objectives of each Executive and the management of individual directorates. Our recruitment process is open and transparent to all, including for senior appointments. The Bank has also been focussing heavily on how to create the right environment to achieve these targets. We are looking closely at what drives performance, differentiates talent, motivates the right behaviours, and creates barriers to success. We have made a strong commitment to flexible working at all levels of the organisation. Over 11% of our staff are employed on a formalised flexible working arrangement. In a recent survey, almost two thirds felt that they had a good balance between their work and personal life. Encouragingly three quarters believe that the Bank takes diversity seriously. Our Women in the Bank network set up a mentoring programme, which is now in its second year. This is complimented by the work of some of our other thriving staff networks – our Bank of England Ethnic Minority (BEEM) network for example has established a “building bridges”, reciprocal mentoring programme – designed to foster relationships, networks and understanding between senior management and more junior BAME colleagues. We also have an LGBT network working hard to promote understanding, increase awareness and break down barriers. Our broader leadership training programme emphasises unconscious bias training to ensure diversity can flourish and progress.

This training is part of our broader focus on values. Values count heavily when assessing performance and reward. All managers – including myself – are assessed by colleagues on their values and behaviours – with direct and explicit feedback. BIS central bankers’ speeches  3  We are monitoring the effect of all of these changes, including through regular staff surveys. We are aiming for further significant improvement in how our staff perceive the Bank’s support for diversity initiatives and goals over the next two years. There is more to do to reach our medium-term target, but we are encouraged by the momentum that we’ve established, we believe we have the right plan in place, and are heartened to see that our approach chimes with the conclusions in today’s report. Finally, we are conscious that sustained effort across the financial service sector will be selfreinforcing; we will all benefit from each other’s progress. So without further ado, I will pass over to the Economic Secretary to the Treasury so that she may tell you more about the Report and the broader initiative it supports. 4  BIS central bankers’ speeches
Our current approach to ensure firms are able to continue to operate core functions in a major operational disruption involves ensuring that firms have primary and secondary sites at a safe distance from each other and the capacity to switch operations between the two without any extended interruption in activity. But with cyber such common systems environments between primary and secondary sites and mirroring of data between the two could, in the event of a successful attack, result in a complete loss of systems, disrupting a firm’s capacity to operate and leaving the timeframe and route to recovery uncertain. Unlike most other forms of operational disruption, we know too with cyber that this is not a game against nature. There are groups out there that are motivated to attack the sector. For most, the motivation is economic; that accounts for the rise in fraud. But there are actors out there, sometimes state-sponsored, who may be motivated to bring systems down and cause harm to the sector. Their capabilities vary, but it is in the nature of cyber that attack types are constantly evolving and readily scalable. And the threat is international. Attacks can originate anywhere around the globe. This all implies a different disposition for cyber defence. We should not expect to build an impermeable perimeter that, through technology design, will withstand attack. Rather we should expect the cyber threat to be ever-present, ever-evolving and networks to be penetrated. The capability to identify where this has occurred and to respond is key.

The accent has been on assessing the vulnerability of the UK financial sector to cyber attack. We are doing that in two ways: a crosssector review of current risk management practices with regards to cyber and vulnerability testing via CBEST. Let me describe these in turn. As a first step in diagnosing the sector’s cyber resilience, the UK financial authorities 3 issued a questionnaire to thirty six firms that make up the “core” of the UK financial system. This included the largest UK and foreign banks active in London and the key payment and settlement systems, clearing houses and exchanges that together are critical for delivery of the financial services that the wider economy depends on. The questionnaire provided for a detailed self-assessment by firms of how they organise their cyber defences. Its purpose was to enable UK authorities to take stock of resilience across the sector and identify best practice across firms. Part of this was to be able to play back to individual firms where they stood relative to best practice. But lying behind this is the objective of raising resilience in individual firms by ensuring that the network as a whole is resilient. And given the importance of these firms to the stability of the financial system, this implies a level of resilience that goes beyond basic cyber hygiene but aims instead to ensure that firms are in a position to manage Advanced Persistent Threats (APT) that are the hallmark of some statesponsored attackers.