samchain/econo-pairs-v1 huggingface dataset:
Firstly, there was a lack of the necessary competence for managing credit in a responsible manner, both in the banks and in the supervision of the banks – largely due to the long period of  BIS Review 24/2006  3  regulation. Secondly, monetary policy and fiscal policy were conducted in a way that reinforced, rather than moderated, developments. I shall begin with the banks. Insight into the risks entailed in the new competitive situation was insufficient. The banks lacked the systems and processes needed to identify and measure credit risks, as well as to manage and prevent them. As you know, there have been rapid developments internationally with regard to awareness of these issues and knowledge of instruments to measure and manage risk. Even smaller banks now have comprehensive systems for assessing borrowers and can thereby avoid taking greater risks than they can afford. If the banks analysed credit risks at all then, they only looked at the risks from an individual company. They did not analyse risks in entire sectors or those related to macroeconomic developments. To a great extent, the banks’ credit assessment was also focussed on the value of the collateral rather than the borrowers’ ability to pay. With hindsight we can observe that not even collateral was analysed in a satisfactory manner. Sound international banking practice today says that credit should only be granted on the basis of the borrower’s ability to pay and the financial strength of the project.

Between 2007 – right before the last recession – and last year, employment grew by 10 percent in New York City, making it one of the best performing areas in the nation. In the Bronx, employment grew even faster, rising by more than 14 percent. While job creation in the Bronx has been quite broad-based, I would like to highlight two particular industries, each very different in nature, to illustrate the diversity of Bronx’s economy. Both health services and wholesale food distribution have been flourishing here. These sectors, on average, pay relatively well and both have been contributing strongly to 1  Jason Bram, Christopher Calabia, Tony Davis, Jacqueline Fenton, Claire Kramer Mills, Don Morgan, James Orr, Joseph Tracy and Luis Uranga assisted in preparing these remarks. BIS central bankers’ speeches  1  overall job creation and to the borough’s economic resurgence. By health services, I don’t just mean hospitals and clinics serving the local population. For example, Montefiore Medical Center is a nationally-ranked institution in a variety of specialties as well as a highly regarded teaching hospital. Additionally, the Albert Einstein College of Medicine is a graduate medical school and clinical research facility. And, of course, the Hunts Point Food Distribution Center houses institutions such as the Fulton Fish Market, which moved here from lower Manhattan about a decade ago. But, of course, these aren’t the only industries driving the Bronx economy.
Since asset prices, as I have already mentioned, affect aggregate demand in the economy, interest rates will be raised when asset prices rise and vice versa. Although we know from experience that there are no guarantees, this is likely for various reasons to have a stabilising effect on asset markets. For one thing, macroeconomic stability in itself has a stabilising effect on financial markets. For another, there is less likelihood of over-reaction, since participants in the financial markets will expect central banks to pursue a policy dictated by their inflation targets. Thirdly, lowering interest rates helps to mitigate the imbalances that may occur as a result of rapid falls in asset prices. In addition, a credible inflation target allows monetary policy more room for manoeuvre when it comes to preventing a financial crisis. However, a monetary policy strategy that waits until the market collapses before responding to changes in asset prices may, at least hypothetically, pose a dilemma. The fact is that we still do not know very much about how the incentives of players in asset markets are affected by such “asymmetrical” action on the part of a central bank, i.e. being largely passive while asset prices are rising and then acting forcefully when they fall. Perhaps the devaluation policy that was pursued in Sweden in the 1970s and 1980s is a relevant parallel in this context. During that period expectations about the rate of inflation were determined by an economic policy which responded to excessive rises in prices and wages by devaluing the krona.

Zeti Akhtar Aziz: Building human capital for emerging challenges Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the 9th Bank Human Resources Conference 2008 organised by the Indian Institute of Banking and Finance (IIBF): "Building Human Capital for Emerging Challenges", Kuala Lumpur, 29 February 2008. *  *  *  Let me first of all extend a warm welcome to the participants of this 9th Bank Human Resource Conference organised by the Indian Institute of Banking and Finance (IIBF). It is our honour to host this conference that is being held outside India for the first time. This is one of the concrete outcomes of the alliance that has been entered into between the Indian Institute of Banking and Finance and the International Centre for Leadership in Finance following the MOU that was signed about three months ago between the two organisations. The development of human capital has to be a constant undertaking in an environment of constant change. As recent as ten years ago, we have seen the economic and financial environment dramatically transformed. There has therefore required a corresponding change in the knowledge, skills, competencies and capabilities that are now required, in particular, by the banking industry, which is a highly knowledge-intensive and skills based industry. New challenges have also emerged in this environment arising from the rapid globalisation and internationalisation of the financial system and the significant advancement in technology.
Jayasundera in late 2006 and early 2007, to jointly decide on this all important priority. Based on such discussions, we decided that we would take the necessary initiatives to improve investor confidence so as to ensure the continuous investment via the Government and the local private sector, whilst specifically targeting new foreign investment. Accordingly, many initiatives were implemented, and over a comparatively short period of time, such efforts started showing results, and the country started to record a steady inflow of foreign investment through major government projects, investments in Treasury Bills and Bonds, and investments in international sovereign bonds. This regular flow of investments enabled the economy to record sustained high growth, even whilst the conflict was raging. As a consequence, Sri Lanka recorded an average growth of 6.7% through 2006 to 2012, which was one of the most difficult periods in our history. In fact, the growth levels of 2006: 7.7%, 2007: 6.8%, 2008: 6%, 2009: 3.5%, 2010: 8%, 2011: 8.2%, and 2012: 6.4%, were the highest ever in any seven year period in our history! That meant that our joint strategy had paid off, with sustained growth being recorded. With such sustained growth and with the pipeline of continuous investments, the economy was gradually transformed to a more stable level, and with that, all other key factors in the vicious cycle also began to change for the better. Initially, certain critics did not believe that we would be able to escape from the vicious cycle that had trapped the country for decades.

To do so, let us initially examine a snap shot of our economy in 2005. Growth in 2005 was 6.2%, with the average growth for the 7 years, 1999 to 2005, being 4.3%; Foreign reserves were around $ 2.7 billion, or about the equivalent of 2 ½ months imports; The country was at the mercy of a ruthless terrorist group and on the brink of war; Unemployment was at 7.2%; Poverty was at a level over 15%; Inflation was on a sharp rising trend; The banking system was vulnerable and displaying several worrisome cracks; Public debt to GDP level exceeded 90%; Per capita income was under $ GDP was around $ billion; The Western Province share of GDP was an overwhelming 51%; Infrastructure development was almost non-existent; The fiscal deficit was over 7% although very little infrastructure development work had been carried out. All in all, a rather bleak picture, and worse still, a bleak outlook.
BIS central bankers’ speeches  3  The third reason is that the Single Resolution Authority is an essential complement to the Single Supervisory Mechanism. The Single Supervisory Mechanism will provide a timely and unbiased assessment of the need for resolution, while the Single Resolution Authority will ensure prompt and efficient action once the trigger is reached. This will avoid misaligned incentives that could arise with supervision moved to the European level while resolution responsibility remained national. The fourth reason is that a Single Resolution Authority would help to break the vicious banksovereign nexus. The Single Resolution Authority naturally needs to be strong and effective to deliver what is needed. This requires three features to be fulfilled: First, the Single Resolution Authority needs to dispose of a robust resolution framework, one that provides it with enforceable resolution tools and powers. In this respect, the proposed bank recovery and resolution directive is key. Adoption of the directive, ideally by June, is an urgently needed step towards a strong European resolution framework. Second, the Single Resolution Authority needs access to resolution financing. It should therefore have a European Resolution Fund at its disposal, which should be financed by the private sector via risk-based ex ante levies. The European Resolution Fund should be backed by a public backstop mechanism, the support of which would need to be recouped via special ex post levies on the private sector. This means that it would be fiscally neutral over the medium term.

Mario Draghi: Hearing at the Committee on Economic and Monetary Affairs of the European Parliament Introductory statement by Mr Mario Draghi, President of the European Central Bank, at a hearing before the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, 18 February 2013. *  *  *  Madam Chair, Honourable members of the Committee on Economic and Monetary Affairs, It is a pleasure to be back here in Parliament and in front of your Committee for our regular exchange of views. We enter 2013 in a more stable financial environment than in recent years. This has been achieved through concerted reforms by governments and parliaments and decisive actions by European institutions. But considerable further efforts are needed to ensure that Europe continues emerging from the crisis, re-creates confidence among investors and citizens, and re-establishes stability and growth. This house has a key role to play in the reform agenda. I am thinking in particular of the adoption of the legislation for the Single Supervisory Mechanism. This is of crucial importance for progress towards financial union. Today, I will first review economic and monetary developments in the euro area since December. I will then address the two topics that you have selected for our discussion: the impact of a low interest rate environment; and the establishment of a Single Resolution Mechanism.
I shall not go into this work in any great depth here. Instead, I will discuss some factors that could contribute to strengthening movements on the financial markets in an unhealthy manner, and where we need to find other solutions to improve the functioning of the markets. These factors can also be more directly connected with mutual fund investment. Short-term evaluation and “follow the leader” behaviour The first thing that comes to mind here is the way many of the operations on the financial markets are evaluated. All too often the focus is on the short-term result. This applies in particular to the evaluation of various securities funds. Although many of you manage long-term savings that people intend to live on after retirement, you are nevertheless evaluated on the results you have achieved over the past year, the past few months or even the past few days. We have all seen the newspaper headlines declaring the winners and losers in mutual fund investment. Media coverage of developments on the financial markets certainly plays an important role for the transparency of these markets, but the focus on short-term results can create a vicious circle where investors and companies are constantly chasing the best possible result in the short term, despite the fact that this is not a good long-term strategy. Such behaviour can reinforce financial crises; for instance, through a fund manager not being given scope to wait until the crisis has abated, which could be rational in a long-term perspective.

DIE ZEIT: Last week the French secretary of state for European Affairs said in an interview that the Eurogroup - the 13 Finance ministers of the euro area - should be allowed to influence the ECB decisions. You reacted sharply. Trichet: I made the point that what was said was contrary to what the Treaty very explicitly says. BIS Review 85/2007  1  DIE ZEIT: The French intend to strengthen the political influence of the Eurogroup as a counter-weight to the ECB. That makes sense. Each other currency area in the world has one central bank and one Treasury. Trichet: It's a cliché that France is always heading towards a loose monetary policy. Since the creation of the Franc after the revolution, the monetary policy had the very strong tradition of a currency keeping well its value over time. Only during two periods of a little more than ten years over two centuries - after the Second World War up to De Gaulle became President and in the Seventies - the French monetary policy has been loose, but it is not the French culture. From 1994 up to the implementation of euro in 1999, we achieved a lower inflation rate than the Bundesbank. And we were supported by the French people. DIE ZEIT: But today the French government wants a co-ordination between the Eurogroup and the ECB. Trichet: The Treaty organises the relationship between the central bank and the executive branches extremely well.
Covered bonds have mortgages as collateral for their funding and according to the regulations governing the handling of these bonds, mortgages with an excessively high loan-to-value ratio may not be used as collateral. As the covered bonds are regarded as more secure by the market, the banks had the incentive to change over to this form of funding. Moreover,  3  See, for instance, Chistelis, Georgarakos and Haliassos (2013), Differences in portfolios across countries: economic environment versus households characteristics. The Review of Economics and Statistics, March 2013, 95 (1), pp. 220–236. 4  Another explanation for the banks’ extensive market funding is that the Swedish occupational pension system means that Swedish households themselves do not save with the banks, which means that the banks must find funding in the markets. The pension funds in their turn invest substantially abroad, which means that the banks must partly fund themselves abroad. BIS central bankers’ speeches  3  many banks in Europe had already introduced similar covered bonds. However, mortgage institutions were not allowed to fund the entire stock of mortgages with these bonds. To cover the remaining amount, the mortgage institutions instead began to borrow from their parent banks, which in turn to a great extent obtained funding on the financial markets. This meant that the link between the mortgage institutions, the banks and the financial markets were further reinforced, and this also increased the complexity of the funding of housing. During the 2000s, the banks’ market funding in foreign currencies also increased.

There are several factors that are usually highlighted as explanations for this structural problem: high costs for land and construction, the current legislation on planning, construction and the environment that makes strict demands regarding the type of housing that can be built, and rent regulations. I do not intend to go into this in depth now, but would like to note that structural measures are required in the housing market, which will contribute to an increase in housing and reduce the lock-in effect. However, such measures are beyond the mandate of the Riksbank. We should perhaps also reflect on the banks’ funding of mortgages, to create a better balance in funding sources and thus better stability. The banks’ issues of covered bonds to fund housing have been successful and led to good access to funding and lower funding costs, and ultimately to lower mortgage rates. But one should also be aware that as covered bonds have become so common, we have also built vulnerabilities into the banking system: the dependence on the market for covered bonds functioning properly and the risk that the banks’ balance sheets are too highly mortgaged limits the scope to take action in a crisis situation. An excessive share of encumbered assets risks putting the banks’ other investors BIS central bankers’ speeches  7  at a disadvantage, which can mean they become more volatile in times of financial stress.
01.06.2022  Parliamentary testimony: presentation of the Banco de España Annual Report 2021* Economic Affairs and Digital Transformation Committee Pablo Hernández de Cos Governor *iEnglish translation to the original in Spanish  *  Mr Chairman, ladies and gentlemen: I appear before this Committee to present the Annual Report 2021 of the Banco de España. The report 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. I should like to begin by describing how the Spanish economy performed and the role played by economic policy in 2021. Next, I shall present the economic outlook following the new shock triggered by the Russian invasion of Ukraine, before going on to describe the key aspects of the sharp rise in inflation and outlining my thoughts about the role that economic policy must play to meet the short-term challenges. I shall then discuss the main mediumterm challenges and the recommendations that, in the Banco de España's view, it would be desirable to implement, to tackle them. Lastly, I shall address the situation of the banking system, by summarising the main messages from our latest Financial Stability Report, published in April. Performance of the Spanish economy in 2021 The recovery in activity that started in the summer of 2020 continued at the global level during 2021.

If we can succeed in implementing the reforms that are still outstanding, there is a chance that economic growth can be propelled to a level beyond the current economic upswing. BIS Review 100/2006  1
Mr. George gives a central banker’s response to the Asian crisis Speech by the Governor of the Bank of England, Mr. E.A.J. George, at the Foreign and Colonial Emerging Markets Conference, in London, on 28/5/98. Thank you, Mr Chairman. I’m delighted to participate in this Emerging Markets Conference, sharing the platform with such distinguished company. I am particularly pleased to be joined in this session by Guillermo Ortiz - my colleague from the Bank of Mexico. The particular examination question which you set me is: “How did an OECD central banker respond to the Asian crisis?”. I have to confess that it’s a somewhat embarrassing question. If I’m brutally honest I have to acknowledge that I didn’t see it coming; I played a modest role in helping to contain its immediate impact on global financial stability; and I’m still struggling to understand its implications, in terms both of its economic after-effects, and of the lessons we must all learn to reduce the risks in the future. I would only plead in mitigation, your honour, that I was by no means alone in all of that; and I beg leave to join in my defence all my central banking colleagues, governments and Finance Ministry officials, in Asia and elsewhere, the international financial institutions, and the world’s financial markets. The storm last year in Asia struck essentially the ASEAN four - Thailand, the Philippines, Malaysia and Indonesia - spreading subsequently to South Korea and intermittently battering Hong Kong and elsewhere.

It is an irrefutable empirical fact that inflation variability rises with the level of inflation, which in turn increases uncertainty for investors and long-term interest rates through a rise in the inflation risk premium. A permanent increase in inflation curtails, rather than stimulates, long-term growth. A considerable body of empirical research finds that the Phillips curve has a negative bent in the long run: inflation and inflation volatility penalise capital formation and thus detract from the economy’s growth potential. Empirical evidence confirms this negative relationship, with a 100 basis point permanent increase in inflation being associated with a 10–30 basis point decrease in trend output  2  BIS Review 22/2010  growth. Hence, if this is applied to the euro area, a 4% inflation target would shave no less than half a percentage point per year off trend growth! As for using monetary policy to manage macroeconomic risk, it should be recognised that this would introduce harmful asymmetries. It avoids policy restriction when positive supplyside shocks reduce inflation, fuelling asset price booms; and when the asset price boom finally turns into a bust, it leads central banks to overreact to negative demand-side shocks. So, financial instability meets two formidable multipliers, the first being a pro-cyclical monetary response to expansionary disinflations in good times and the second being moral hazard in financial markets, namely the expectation that the central bank will aggressively protect the markets from “tail events” in bad times. These expectations encourage markets to tend towards risky strategies, over-exposures and exuberance.