samchain/econo-pairs-v1 huggingface dataset:
25  All speeches are available online at www.bankofengland.co.uk/news/speeches  25  When there is an economic shock, the FPC can release the CCyB to 0%, reducing banks’ capital requirements. This frees up capital to absorb losses and preserve lending capacity. By continuing to lend, banks help to cushion the economic shock, and promote a quicker economic recovery. That is, the ability to cut the CCyB reduces GDP-at-risk, improving overall welfare.27 To give you some idea of scale, a cut in the CCyB from 2% to 0% today would preserve banks’ capacity to lend to UK households and businesses by £ By comparison, net lending was around £ over the past year. This is a stark departure from the pre-crisis framework. Banks’ capital requirements were determined by microprudential supervisors focussed on the safety of individual institutions. When shocks hit, this incentive created by a purely microprudential objective was more likely to motivate supervisors to conserve capital at all costs, with the consequence that banks restricted lending and exacerbated the macroeconomic downturn. The CCyB also supports the central GDP forecast by ensuring banks do not have to carry at all times sufficient capital for an elevated risk environment, with the associated knock-on to borrowing costs, investment, and output. For example, Bank of England work suggests that - had the current capital framework been in place before the crisis - the CCyB would need to have been between 3.5% and 5% to absorb losses.

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.
However, it is unclear whether the purchases contributed to the exchange rate remaining weak, and – above all – whether the economy was stimulated by the lower long-term rates. The Riksbank’s purchases pushed down yields on securities Let me begin with yields on government securities, which fell. On the surface, this looks like a typical portfolio balance effect that has been highlighted in many studies, for instance Vayanos and Vila (2021). The idea is that the policy rate is limited by its lower bound, but that the yield curve slopes upwards so that interest rates at longer maturities can be pushed down. When the central bank buys government bonds with long maturities, investors who want debt instruments with long maturities need to seek other investments. This means that prices rise, that is, the rates fall, also on other assets with long maturities. As borrowers then gain access to cheaper financing, monetary policy has become more expansionary. But for several reasons, this was not really how it worked in Sweden. Certainly, rates on government securities appear to have fallen. This is supported by event studies which investigate how market rates are affected by new information on asset purchases.5 Erikson (2021) also finds that rates on government securities fell apace with the Riksbank's holdings increasing from 2015 to 2017, but he shows that the rate fell on the shortest maturities.

After falling by 3.1 percent in 2009, growth in real GDP averaged 2.4 percent in 2010, 1.8 percent in 2011 and 2.2 percent in 2012, a consistent but sluggish pace. This sluggishness has been quite evident in the labor market. After falling by 421,000 per month in 2009, payroll employment grew by 85,000 per month in 2010, 175,000 per month in 2011, and 181,000 in 2012. To put these numbers in perspective, the trend rate of growth of the civilian non-institutional population is around 200,000 per month. The unemployment rate has declined from a peak of 10 percent in October of 2009 to just under 8 percent recently, due largely to the fact that the labor force participation rate has declined by considerably more than would be suggested by underlying demographic trends. Fortunately, long-term unemployment, defined as those unemployed for 15 weeks or longer, has declined from nearly 9 million in the first quarter of 2010 to about 6.6 million in recent months – a decline of 28 percent. The median duration of unemployment has declined from 23 weeks in the second quarter of 2010 to 16 weeks recently. Nonetheless, as of January there were still about 3.2 million fewer jobs than at the end of 2007. The unemployment rate remains elevated, despite a significant decline of the labor force participation rate. And the ratio of employment to population in January was lower than it was at the end of the recession, indicating that employment growth has not kept pace with population growth.
The banks have also increased their capital levels over the past few years. As a result, the financial system in Norway is now more resilient to shocks. An accountable and credible macroprudential policy must be based on an understanding of how systemic risk arises. The academic research on macroprudential policy issues is growing, but is still at an early stage. Some conclusions seem, however, to be robust. Many studies single out rapid credit growth in particular as a symptom of rising systemic risk. This is in line with the recommendations from the Basel Committee and the EU, which state that decisions on the countercyclical capital buffer should be based on the credit gap. Chart: Basis for advice on the countercyclical capital buffer: key indicators In preparing its advice on the buffer decision, Norges Bank adds three other variables as key indicators. The three variables are, as shown in the chart: house prices, commercial property prices and banks’ wholesale funding ratio. Together, the four indicators contain a considerable amount of information about how cyclical systemic risk evolves. Chart: Early warning models for financial crises A number of studies have indicated that credit growth, real estate prices and banks’ wholesale funding ratio show a systematic pattern ahead of financial crises. At Norges Bank, we have examined data from 16 OECD countries to see whether such a systematic pattern exists. 2 We have developed empirical models for estimating the probability of a crisis.

Chart: Unemployment, inflation, house prices and household debt ratio in Norway, the UK, the US and the euro area Norges Bank has in periods kept the interest rate somewhat higher than implied by mediumterm inflation and output gap considerations. In other words, we have been “leaning against  1  Tinbergen, J. (1952): On the theory of economic policy, North-Holland Publishing Company, 2nd edition. BIS central bankers’ speeches  1  the wind”. Norway is a large exporter of petroleum, and our economy has benefitted from 15 years of high oil prices. Unemployment has been low and consumer price inflation close to the 2.5 percent inflation target. At the same time, house prices have been rising sharply, and household debt is at a historically high level. Hence, our monetary policy trade-offs have in recent years differed from those of our trading partners. Before I return to the interlinkages between financial stability and monetary policy, let me describe some elements of macroprudential policy in Norway. Banking regulation has recently been reformed in Norway in accordance with Basel III and directives issued by the European Union. Capital requirements have been increased and the countercyclical capital buffer has been introduced. Norges Bank is responsible for conducting analyses and providing advice on the level of the countercyclical capital buffer for banks. The responsibility for the final decision on the buffer level lies with the Ministry of Finance. The current decision requires Norwegian banks to hold a countercyclical capital buffer as from July this year.
Macroprudential policy is especially important in a country like Spain, which belongs to a monetary union and a banking union, since – as we have seen in the past – the financial and business cycles of the various countries that make up the currency are not always harmonised with those of the euro area as a whole. Considering that the euro area has a common monetary policy and supervisory policy and that there is limited scope for fiscal policy measures, macro-prudential policy has a fundamental role to play in addressing the credit cycle. I will now move on to institutions’ adaptation to the other components of the international regulatory reform such as stricter requirements for own funds and liquid assets, and other requirements under the new resolution legislation. These regulatory changes were agreed at international level in response to the shortcomings that became apparent when the financial crisis broke out ten years ago now. Their aim is to boost banking systems’ resilience to adverse shocks, and to minimise the cost to taxpayers in the event of resolution. In other words, they seek to reduce the likelihood of future financial crises, and if they do happen, reduce their impact on society. 7/11  The first phase of the reforms, agreed between 2010 and 2011, focused, among other things, on strengthening the quantity and quality of banks’ capital and introducing new liquidity requirements and limits on credit concentration. Almost all of these requirements will have come into force by the end of 2019.

The total capital ratio, meanwhile, has increased by 1.7 percentage points over the last four years, and the leverage and liquidity ratios are above the European averages. Indeed, the recent stress tests carried out by the European Banking Authority (EBA) and the Banco de España show the considerable resilience of Spanish banks’ solvency under adverse scenarios. However, while recognising the significant progress made in recent years, the Spanish banking industry continues to face significant challenges, which are largely shared by other euro area banking systems. Notable among them are: i) the need for further progress in reducing unproductive assets which remain at high levels; ii) raising profitability; iii) strengthening the industry’s reputation by preventing misconduct; iv) adapting to the new regulatory framework and strengthening the highest-quality capital ratios; and v) competing in a new financial environment arising from technological progress and the emergence of new players (see Chart 2). Reducing unproductive assets As I have already said, the reduction in non-performing loans and foreclosed assets from the peak levels they reached during the crisis has been significant. Private-sector nonperforming loans, which have fallen by 60% from their peak in 2013, currently stand at the same level as in 2009. Foreclosed assets have followed a similar pattern, falling by 40% from their peak in 2012. The economic recovery has certainly contributed to this process, but it has also been driven by credit institutions’ management of troubled assets and by supervisory pressure.
For CCPs the task of assessing an insolvency counterfactual is likely to be harder still – particularly if it must rely upon a forecast of how the rest of the waterfall would have unfolded, the behaviour of the CCP’s participants and the movements of the markets in the days that would have followed if resolution had not taken place. A liquidation counterfactual must also confront the argument that the CCP would have protected itself from insolvency through full tear-up. Given these valuation challenges, I suspect there will need to be careful further consideration given to the formulation and practical application of the NCWO safeguard; we must end up with a safeguard that is sufficiently certain and capable of estimation in advance that both creditors and resolution authorities are able to make sensible decisions before, during and after resolution. With that, let me conclude by summing up some key points: •  CCP resolution is both a necessary and inevitable part of the overall post-crisis reform agenda to end Too Big to Fail. As private, profit-making enterprises CCPs must be allowed to fail, but, given their systemic importance, many will need to be allowed to do so in a manner that maintains the continuity of their critical functions. •  Having a credible resolution regime for Clearing Members is a big step forward in helping to reduce the risk of clearing member default and from that the risk of CCP failure.

I very much doubt it given the usual time lags observed in the diffusion of past technologies and the differences in productivity levels between firms. The second type of lag, space-lags, refers to the uneven diffusion of technology across firms. Frontier firms usually enjoy stronger rates of productivity growth than imitators in the same sector. In France, the productivity growth of frontier firms has remained steady – or even increased – throughout the slowdown [slide 7]. This may reflect winner-takes-all phenomena. For example, in the digital economy, due to network externalities, one firm with a marginal comparative advantage can seize the whole market and benefit from the low marginal cost of production of additional units of its product. However, these phenomena may be specific to ICT-producing sectors. Productivity growth in frontier firms mostly reflects the actual pace of technological advance and supports techno-optimists views. I’ve shared with you a few thoughts on these three promising hypotheses. To conclude, let me share with you what I see as priorities in order to exit the low growth trap and prevent the risk of secular stagnation. We must obviously accelerate domestic reforms in order to foster innovation and an entrepreneurial spirit. But at the European level, we need to tackle the persistent “investment crunch” which followed the financial crisis. Thus, we first need a “Financing and Investment Union” in Europe to steer abundant savings into investment and provide adequate financing for innovation.
First, greater clarity on liabilities should encourage more appropriate matching with assets in a way that was absent in the run-up to the crisis – some assets suit a deposit contract, some do not. Second, resolving failed banks without the use of public money depends on a very strong delineation of bank liabilities to make clear what can be bailed in. This is a key to unlocking the answer to the too big to fail problem. Third, as the Bank of England announced in December, we are now in a position to clarify the expected steady state regime for bank capital and because we can distinguish going concern capital  BIS central bankers’ speeches  3  and thus loss absorbency from resolution or gone concern absorbency, we can put a lower number on the former. Clarity is therefore a good thing when it comes to balance sheets. Put like that, the wonder is that so much was unclear in the previous system. And, finally, the same principle holds for assets under management. Make sure investors know the characteristics of the assets they hold and that they are not promised access to their investment on terms or with a promise (explicit or implicit) that is out of line with what financial markets could deliver. Thank you. 4  BIS central bankers’ speeches

Or their domestic policy needs may diverge as a result of economic shocks of some sort - a classic but unique example being German unification, but the recent global economic disturbance is perhaps another example. So the risks of divergent monetary policy needs within the monetary union are real. They are essentially similar to the risks of sectoral and regional divergences within a national currency area. And if there were to be material divergence within the Eurozone the tensions could be more severe than in a national currency area because alternative mechanisms - labour migration or fiscal redistribution through a central budget - which help alleviate regional disparities in the national context - are less well developed at the Eurozone level. Some commentators point to the present inflationary pressures in Ireland as an example of the problems that could arise on the upside as it were - through I’m not sure how far one can generalise from the Irish case. The fact that the UK did not join in the first wave of EMU was a disappointment to some people, including to some of our European partners - but it was also a considerable relief to them - we could have been the elephant in the rowing boat! It was I must confess also a relief to me. If we had joined EMU from the start - and had Eurozone interest rates over the past year or so it is very difficult to envisage how we would have avoided an inflationary boom in this country.
In particular, BELab has been created with the aim of providing the research community with greater access to high-quality microdata, in a controlled environment that ensures data confidentiality, through on-site or remote means depending on the sensitivity of the data. The microdata available at BELab include the Survey of Household Finances, the Survey of  1  Financial Competences, the balance sheet data of non-financial corporations and microdata on loans to legal persons. I would strongly encourage all of you to have a look at these data, because I honestly believe that allowing independent researchers to access high-quality data is a necessary step to enhance our knowledge of the Spanish economy. And this annual conference specifically should be seen as another step in furthering our commitment to research as an indispensable tool for improving economic policymaking, in this case with the focus on understanding and monitoring developments in the Spanish economy as a basis for promoting well founded economic policy decisions. We wish to strengthen our interaction with the research community in this field as a way of better discharging our legal responsibility to provide advice to the Spanish governments on economic policy matters. And related to this responsibility, the annual report of the Bank, that it´s regularly presented to Parliament, offers an analysis of recent developments in the Spanish economy within the global setting, as well as how it is likely to perform in the future and the challenges it faces.

Nor Shamsiah Mohd Yunus: Value based intermediation - beyond profit Keynote address by Ms Nor Shamsiah Mohd Yunus, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Global Islamic Finance Forum 2018 (GIFF) "Value Based Intermediation - Beyond Profit", Kuala Lumpur, 3 October 2018. * * * Henry Ford, credited with revolutionising the American transportation industry in the 20th century, once remarked that “Business must be run at a profit, else it will die. But when anyone attempts to run a business solely for profit and thinks not at all of the service to the community, then also the business must die, for it no longer has a reason for existence”. Nearly a hundred years since, these words of wisdom remain true. Perhaps, even more so now than ever. Indeed, we have witnessed time and again, episodes of excessiveness, and the sole and unchecked pursuit of profits, that have led to global financial crises. The theme of this conference, “Value Based Intermediation – Beyond Profit”, is therefore a fitting reminder of the role of finance, and Islamic finance in particular, in helping build a more resilient and sustainable future. In the past half century, the world economy expanded sixfold, despite experiencing the worst and most expensive financial crisis. Average per capita income more than doubled to about USD11,000, compared to only about USD5,000 in 1967. People are living longer, with better quality of life, greater access to basic necessities, improved health and medical care, and better education.
Needless to say that it is the same in Germany and in all the other countries of the Monetary Union. For this reason, we all fully subscribe to the recent declaration of the President of the ECB, Wim Duisenberg: “European citizens can be assured that the future of the euro is that of a strong currency, based on price stability and the strength of the European economy”. 7  BIS Review 61/2000

This is ongoing and there is still some way to go. In the process, there will be arguments, frustrations and inevitably pushback. No doubt the new standards and regulations will lead to some changes in the behaviour and business models of banks. However, I do not for one moment believe that regulators and regulatory measures alone can possibly redress all of the problems stemming from the misalignment of interest amongst the various stakeholders in banking. Regulators can set standards and provide some external checks and balances. But there is no substitute for internal governance and controls that are designed to achieve the desired behavioural change across the entire firm. In this context, it is crucial that we have buy-in from the owners, directors and management of the banks. 4  BIS central bankers’ speeches  21. Only when the public sector and the owners, directors and managers of banks share the same goals and objectives can we induce the desired outcomes on a sustainable basis. Only when shareholders cease to put unreasonable pressures on bank management to keep on improving RoEs can regulators feel comfortable that the bank is not incentivised to take the short-term view on business growth and profitability. Only when bank management is not rewarded based on short-term financial performance can we be less concerned that bank managers will take excessive risks for near term bonus or share option value.