samchain/econo-pairs-v1 huggingface dataset:
It is not surprising therefore that the figures for negative equity reported to the HKMA by the banks have shown a significant increase from the 83,000 cases (representing $ billion of loans) recorded at the end of March. The negative equity problem affects the banks in various ways. Most obviously, it poses an increased credit risk since loans in negative equity have a greater tendency to go into default; and if they do, the banks will suffer a loss since the loans are no longer fully covered by the value of collateral. Negative equity also has a deterrent effect on the demand for new loans since it makes property a less attractive asset to hold, and by locking in existing homeowners reduces market turnover. More generally, it has a pervasively depressing impact on consumer confidence and is thus a drag on the economy and on loan demand as a whole. What is encouraging however is that despite the current difficulties faced by homeowners most of them have made every effort to continue to service their loans. Although the overall mortgage delinquency ratio has edged up in recent months, it remained at a relatively comfortable 1.16% at end-May. The arrears for loans in negative equity are higher, as you would expect, but even so the delinquency ratio of around 2.5% is reasonable under the circumstances. Nonetheless banks need to keep a watchful eye on the situation, and adopt a proactive and helpful approach to restructuring mortgage loans when borrowers start to exhibit signs of financial distress.

Banks of all shapes and sizes have the opportunity to benefit from the recovery in the Hong Kong economy when it comes. Some banks will however do better than others, and our research indicates that a more efficiently operated and diversified bank will achieve higher profits. I hope that all the banks sitting here today will be among those that fall into this category. BIS Review 32/2003  3
Már Guðmundsson: Sovereign risk – a world without risk-free assets? Remarks by Mr Már Guðmundsson, Governor of the Central Bank of Iceland, in a policy panel at a seminar on “Sovereign risk – a world without risk-free assets?”, Bank for International Settlements, Basel, 8–9 January 2013. *  *  *  I would like to cover three issues in my remarks. First, I will reflect a bit on the title of the seminar and some of the more specific questions directed at this panel. Second, I will discuss the nexus between sovereign risk and banking fragility, using Iceland as a case study – after all, the Icelandic experience is probably the reason that I am taking part in this interesting seminar in the first place. Third, and again with reference to the Icelandic case, I will reflect on the connection between sovereign ratings of advanced countries and actual sovereign defaults. The title of this seminar is Sovereign risk: a world without risk-free assets? As has been repeatedly pointed out, there is, strictly speaking, no such thing. The default probabilities of even the strongest sovereigns are not zero, and they increase as the horizon gets longer. Furthermore, the real income stream of nominal government bonds is uncertain.

The need for this involvement is heightened by the entry into force in 2018 of the new standard (IFRS 9) under which banks will switch from using the concept of incurred loss to that of expected loss in order to calculate the credit portfolio provision. This standard is undoubtedly an improvement on the current situation, since it enhances the measurement of the risks of loans and receivables. At the same time, it significantly increases the complexity of calculating provisions and, thus, increases the risk of heterogeneous application across banks, which is something the supervisor should be aiming to mitigate. The work under way in the Basel Committee on this matter is therefore very timely. My comments so far imply that there are in practice significant obstacles to satisfying the legitimate expectations that a rigorous and granular supervision will help moderate the intensity of the regulatory changes needed to promote financial stability. BIS central bankers’ speeches  3  The regulatory frameworks in force and different supervisory cultures, along with the difficulty of becoming more involved in accounting practices, often place considerable limits on the intensity of supervision attainable. This explains why the actions of the authorities to prevent financial crises largely rest on the definition of clear and demanding prudential standards to underpin the work of supervisors.
So we are again impaled on the horns of our earlier dilemma, arising from continuing imbalance between the stronger domestic and weaker externally-exposed sectors of the economy. Believe me – it is not a comfortable place to be. The question is what to do? Of course, as with everything else, where you stand depends on where you sit. The suffering sectors – most of agriculture, large parts of manufacturing industry and some services sectors – are in no doubt. Cut interest rates again – they say – and again and again. They’re still twice as high as interest rates in Europe – and they might just as well add, they are over 150 times as high as interest rates in Japan! The many more net savers – including pensioners living off the interest on their savings – take the opposite view, although they do, of course, benefit from the low inflation environment through the protection it gives to the real value of their assets. What we have to try to do is to maintain stability in the economy as a whole, by keeping overall demand continuously broadly in line with the supply-side capacity of the economy as a whole. The  BIS Review 68/1999  2  inflation target is not some abstract end in itself – it is the measure, or barometer if you like, of how successfully we are managing to maintain macro-economic stability in the economy as a whole in this much wider sense.

Following the implementation of inflation targeting, the report will be published quarterly; - a model calibrated by the Bank’s staff is currently being tested and will be used for forecasting purposes. Instead of going into the details related to the Inflation Targeting framework, I will let my fellow speakers tackle the most important issues. Shortly after this, Deputy Governor Ms. Rachel Lomax will present a compelling account of UK’s experience and, may I add, success as a benchmark inflation targeter. After the lunch break, Gill Hammond, Deputy Director of CCBS, will give you an excellent presentation dealing with specific issues and challenges faced by emerging market economies when adopting inflation targeting. Later on, we will have our guests from the Czech National Bank and the National Bank of Hungary giving you a purposeful insight of such challenges and of their countries’ experiences with the IT framework. Mr. Ludek Niedermayer, Deputy Governor of the Czech National Bank, will first explain to you “why and how” inflation targeting was adopted in the Czech Republic – the first country to embrace this regime in our region. Then, it will be for Ms Csermely Agnes, Director with the National Bank of Hungary, to share with us the “Lessons and Challenges” put forth by the Hungarian experience with inflation targeting.
As in Puerto Rico, the fiscal woes of many of our largest cities have been closely related to long-term economic transformations—essentially, changes in the industrial specialization that occurred in those particular places. In the case of New York City, the transformation was from manufacturing to services, and it took a generation to complete. The city’s management of that transition was far from perfect, and the fiscal crisis was the major manifestation of that failure. The institutions set up to respond to the crisis were crucial to ensuring that fiscal policy didn’t continue to amplify the problems associated with the economic transition. For a city to turn its circumstances around, it must navigate this economic transformation, identify what will define its comparative advantages going forward, and then build 2/4  BIS central bankers' speeches  anew around those sources of strength. The road to recovery A successful fiscal reform first requires a regime in which local officials recognize and accept the reality of the changing economic situation, and set spending budgets accordingly. This part is fairly straightforward, because it produces the simple policy dictum that borrowing—in all its forms—must be strictly limited. Of course, knowing what to do and actually getting it done are different things, especially when politics are involved. As a result, the record suggests that it can be extremely helpful to have some kind of independent fiscal monitor in place on an ongoing basis.

1  Nout Wellink, ‘The Role of National Central Banks within the Europeans System of Central Banks: The Example of De Nederlandsche Bank’, 30th Economics Conference, Oesterreichische Nationalbank, June 13 – 14, 2002. 2  BIS Review 46/2002  This would not, however, represent much of a change because already today the Bank has only limited autonomy in the conduct of monetary policy. As far as the transition to the euro is concerned, therefore, the path that Malta should follow seems fairly straightforward, given the starting point of the existing exchange rate regime. Today, the basket consists of the euro, the US dollar and sterling, with weights of around 52%, 26% and 22%, respectively. There is no fluctuation band. The peg is backed by official external reserves, which have comfortably exceeded the monetary base over the years and are equivalent to a fifth of broad money. The first step would be to increase the weight of the euro in the currency basket at the expense of either or both of the other component currencies. If the United Kingdom were to join EMU, this would automatically raise the proportion of the euro in the currency basket, making Maltese entry into ERM II that much easier. On accession, the timing for joining ERM II, as well as technical questions relating to the entry level and the fluctuation band will be up for discussion. If the Maltese lira were to join ERM II with the normal fluctuation band of ±15%, this would inject more flexibility into the system.
1  ‘The future of savings’ conference – 4 November 2016 Introductory speech by François Villeroy de Galhau, Governor of the Banque de France Savings glut, or investment deficit? First and foremost, I would like to warmly welcome you all here at the Banque de France. I am delighted to open this conference dedicated to the future of savings, with such distinguished speakers and panelists: leading academics, bank and insurance industry experts, as well as regulators. Before leaving the floor to them, I would like to share with you a few thoughts on the role that savings can play in the current challenging macroeconomic context. Post-crisis growth has been disappointingly weak, both at the global level, with growth standing only marginally above 3% in 2015 and most likely in 2016 as well; and in Europe, where growth is levelling off. So what is the problem? (slide 2) In the mid-2000s, Ben Bernanke famously coined the term “global savings glut” to refer to the situation of surplus savings in emerging market economies. Savings are still abundant worldwide, but one thing has dramatically changed in recent years: (slide 3) investment, which has sharply dropped as a share of GDP in advanced economies. This is what I call the “investment dearth” or “investment deficit”.

There is also the possibility in the euro area to ask for refinancing by the ESM. Those developments are key for providing a comprehensive response. We still have some work to do to finalise the consolidation of public finances and establish them on a stronger footing. But clearly we are well advanced in the process of doing so, and the same is true of the banks’ capital base, although we may have to finish that with the SIFIs’ capital surcharge as from next year or thereafter, and with banking union which is in the process of being negotiated. BIS central bankers’ speeches  5  EUROWEEK: You’ve made some very strong comments about London. But what role does Paris see itself playing as a financial centre in the European context? Noyer: First, it’s clear that London is and will remain a major financial hub which brings a lot of advantages to the global economy, given its skills base and the capacity of its infrastructure. The comment I made was not a suggestion that Paris should replace London but simply that I do not believe in the trend of financial services concentrating more and more in London. This is something that should not be acceptable from a financial stability perspective by the euro area authorities. Why? Because, in the event of any problems, the central bank needs to be able to provide liquidity without any time lag where and if it is needed, and in a strictly controlled way.
Government debt and inflation Speech given by Ben Broadbent, Deputy Governor Monetary Policy 2020 Annual Meeting of the Central Bank Research Association London School of Economics via videolink 2 September 2020  I’ve received helpful comments from colleagues at the Bank of England. I’d like to thank Jack Meaning, Nickie Shadbolt and Ryland Thomas and especially Mette Nielsen for their help in preparing the speech. The views expressed are my own and do not necessarily reflect those of the Bank of England or other members of the Financial Policy Committee or the Monetary Policy Committee. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  Good afternoon. Thank you for asking me to speak to you today. This is an important and innovative time for central banks, across their many functions, and it’s vital we learn from our own and others’ research on the big questions. The Bank of England launched its new Agenda for Research1 yesterday and Andy Haldane will I’m sure want to tell you more about it in the panel following this talk. The topic I’ve chosen today certainly isn’t a new one. In fact, it’s almost as old as economics itself. I want to talk about “monetary finance” – what it is (and what it is not), what it’s worth and when it’s been used in the past. Old it may be, but there’s been quite a bit of talk about this topic very recently.

23  In an effort to control debt levels incurred during the war, the British government ran huge primary surpluses during the 1920s, averaging 7% of GDP, with all the social and industrial unrest that entailed. Yet ratios of government debt to GDP didn’t fall, remaining at over 160% of GDP throughout that decade. Just as rapid inflations can eat up debt so deflations can increase it. The short-lived reinstitution of the gold standard (it was then abandoned for good in 1931) was heavily criticised at the time by Keynes. 24 The question was only formally considered – and a return to the pre-war parity recommended – by the Cunliffe Committee in 1918. 18  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  18  Chart 13a: To the extent fiscal variables matter for inflation government demand more important than debt  Chart 13b: Debt higher in wars than in 1970s but residual monetary credibility may have contained inflation, bond yields  Average debt/GDP; changes in central government expenditure less interest payments over nominal GDP; and average inflation. Sources: Thomas and Dimsdale (2017), Mitchell (1988), Feinstein (1998), O'Donoghue et al (2004), ONS and Bank calculations. Average bond yields based on consols/ long-term bonds. Sources: Thomas and Dimsdale (2017), Capie and Webber (1985), Neal (1990), Klovland (1994), Feinstein (1998), O'Donoghue et al (2004), ONS, DMO, and Bank calculations.
Firms specializing in automated trading generally participate in trading venues with “protocols” that allow for highspeed activity, most notably those operating with a Central Limit Order Book (or “CLOB”). CLOBs have long been a fixture of the futures, FX, and equity markets, and allow participating firms to place anonymous orders to buy or sell securities into a standing queue, and to rapidly execute such orders at any given moment in time.7 In the Treasury market, automated trading has become most pronounced in the Treasury futures market and the interdealer market for on-the-run securities, both of which operate with a CLOB protocol. In fact, proprietary automated trading firms are believed to account for over half of the volume transacted over the major interdealer trading platforms. It is helpful to think of two basic types of automated trading strategies: those whose primary purpose is to earn a return by making markets, and those whose primary purpose is to generate excess returns – what market participants sometimes call “alpha-seeking” strategies. A market-making algorithm might be designed to supply liquidity to a CLOB under a set of rules that depend on, for example, historical analysis of market and order book dynamics. An alpha-seeking strategy, on the other hand, might better describe a set of trading practices that is more likely to consume liquidity to produce excess returns. Examples of alpha-seeking strategies might be momentum detection, statistical arbitrage, and spread trading.8 One important difference between most automated trading firms and traditional brokerdealers is their balance sheet properties.

•  A stable value of money combined with sustainable public finances makes an essential contribution to an economic development that is favourable and stable. •  A policy with this direction that is implemented consistently can, with the aid of certain direct cyclical measures, help to stabilise economic activity. As I have chosen to focus today on issues to do with cyclical activity and stabilisation policy, I have not said much about the first of these pillars but that does not imply a value judgement. On the contrary, the reforms of taxation, regulations and so on have presumably played a crucial part in the good development in the 1990s, both in Sweden and elsewhere. At the same time, recent developments bring out some of the problems we now face. Markets are evidently liable to malfunction in the sense that prices deviate markedly from what is reasonable in the long term. Stock markets have provided evidence of this in recent years and it is also very much the case with the krona’s exchange rate. The result can be considerable fluctuations not just in financial markets but in the real economy, too. It is here that I believe the major challenges lie today, both for economic theory and for us more practical decision-makers. I have already discussed the other two pillars. Attempts to raise demand and employment in the short term entail considerable risks, as we saw in the three decades before 1990.
On the credit market, growth in mortgage lending is slowly receding, with the current rate of increase below 5%. The “other loans” category continues to expand rapidly, while matching observations of the past in comparable phases of the economic cycle. This category is now growing at a rate of about 8– 10%, as at the beginning of the 2000s, when their level in fact considerably exceeded the levels we are currently experiencing. M1 and M2 shrank, which is nothing out of the ordinary during a phase of rising interest rates. When this happens, savings and sight deposits are shifted into time deposits. M1 and M2 are affected by this substitution. M3, which is not affected, is growing at a rate of 2% to 3%, which is appropriate for an expanding economy. Inflationary risks In the current environment, price stability is subject to three types of risk: The first risk is connected with the development in the price of oil. The barrel price for Brent crude rose by 40%, from USD 51.0 in January to USD 71.7 in May. This will lead to higher inflation during the course of the year. Unlike oil price hikes between 2004 and 2006, the most recent rally took place when capacity utilisation was higher. If the current surge in oil prices were to continue, it could affect prices more easily than previously. The second risk is due to the fact that demand is growing at too rapid a pace in relation to the development in production capacity.

Moreover, labour demand continued to be met by a significant influx of labour from abroad. The opening of the labour market within the context of the bilateral agreements with the EU creates additional growth potential. The competitive position of our economy is high, and the recent depreciation of the Swiss franc on the foreign exchange market gave it an additional boost. While exports continued to increase at a rapid pace, their growth rate may slow down somewhat compared with 2006. The healthy state of the economy and the improvement in the labour market have a favourable impact on consumer sentiment. Since the beginning of the year, household spending has been increasing at very steady pace. A continuance of this trend is possible, since the current near full employment is likely to lead to an increase in real wages. During the next quarters, companies will continue to step up equipment investment since the rate of technical capacity utilisation – in particular in the manufacturing sector – is high. Construction investment should stabilise at a high level. BIS Review 67/2007  1  These developments in demand components led us to revise our GDP growth forecast upwards for 2007. For the current year, we now expect growth close to 2.5%. Development in monetary and financial conditions In the Swiss capital market, we have been observing a steady increase in long-term interest rates over the past three months. The yield on 10-year Swiss Confederation bonds reached 3% in May.