samchain/econo-pairs-v1 huggingface dataset:
I will start with the financial markets and international developments, before turning to economic developments and monetary policy in Sweden, with particular attention paid to the development of prices and wages. The functioning of the financial markets continues to improve, but they have not recovered completely The functioning of the financial markets is continuing to improve, both in Sweden and abroad. One sign of this is that various risk premia in the money and credit markets continued to decrease during the second half of 2009. The levels of a number of risk premia now seem to have stabilised within a historically normal interval. Possibilities for various market participants to acquire funding at longer durations through the securities market have improved. Moreover, the Riksbank’s risk survey shows that access to funding without government support has increased. The developments on the financial markets can be illustrated by the so-called TED spread, the difference between the three-month interbank rate and treasury bill rates (Figure 1). However, despite this, the situation has still not completely normalised. There are still markets that have not recovered. There also exists some uncertainty regarding the extent of as-yet unrealised loan losses, particularly in European banks, leading to negative consequences for confidence among financial market agents. Furthermore, it must also be expected that bank lending in the United States and a number of other countries will be restrained for some time to come.

Through our monetary policy, we are attempting not only to keep inflation at a low and stable level, but also to support production and employment in the current recession. A divided economy The Swedish economy is divided, with a significantly worse situation in export-dependent industries than in the private service sector. Even though the lowest point of the recession has passed, we are still experiencing the effects of the crisis on world trade. The Swedish export market has experienced a significant decline. At the same time, the expansionary fiscal and monetary policies have enabled the activity level of those areas of the economy focused on the domestic market to be maintained. This is clearly reflected in the development of different sectors during the economic downturn. While industrial production fell by over 20 per cent during the year leading up to the start of 2009, the production of private services only declined by approximately 5 per cent during this period. This divided economy has also been visible in the labour market. The labour market in export industry dependent areas outside the major cities is far bleaker than it is in the servicedominated major cities. While industrial employment decreased by approximately 100 000 between the autumn of 2008 and the autumn of 2009, employment within the service sector remained largely unchanged (Figure 18). Low inflation during the forecast period We expect low inflation during the forecast period (Figure 19).
Tail risks with counterparty risk correlation The first category of contracts falls under the broad headline of “wrong-way” risk in tail events, and is purely statistical in nature. The particular issue is focussed on contracts that can be perceived of as providing insurance yet, in a stress scenario, when the contract is sufficiently in the money to be worth calling, there is a significant conditional probability that the insurance provider is no longer in business to pay out. In what follows, we look how such problems arise using practical examples and consider what lessons should be drawn. 1  For example, the Squam Lake Working Group on Financial Regulation, July 2009, “Credit Default Swaps, Clearinghouses, and Exchanges”. BIS central bankers’ speeches  1  When investor “A” decides to buy protection from bank “B” on exposure to a third company “X,” she may or may not explicitly take into account that in the event of default by X, B may in fact also be in trouble. Whether or not she does so would depend on the reason for the trade. If A wants default protection then that default correlation certainly should be taken into account2. But if, for example, the goal is just to reduce the price volatility of holdings of a certain corporate bond issued by X, this default correlation may not be seen as that relevant. As a practical example, take the case of a pension fund managing its corporate bond portfolio.

Despite that initial investor reaction, however, Deutsche was able to keep market access and to successfully issue further capital instruments in the months thereafter. The theme we have encountered in these examples is that many of the decisions taken during times of extreme pressure seem to be affected by (apparent) considerations outside of the immediate financial contract – at least, rejecting options which were perceived to be acceptable when the original contract was struck. Or that the financial consequences of particular decisions were more adverse for the decision maker (or more generally the markets) than anticipated. In that sense they are classic examples of time inconsistency. We have tried to illustrate how acting narrowly rationally when it is perceived to be outside the realm of “what is normally done”, can carry massive risks. The problem that this creates is that when we are dealing with tail events and disaster insurance, it is hard to determine ex ante what such insurance contracts (or options delivering insurance) are worth. How should investors and regulators evaluate these contracts? If the reputation and signalling implications of exercising are too damaging in case of extreme stress, it would be naive to attribute full value to them when determining the risk profile and hence the appropriate capital buffer. It is also worrying from a financial stability perspective if these considerations force possible systemic implications to be more extreme rather than less. Stress tests and contract design considerations So what have we learned?
Overall, the 22  credit-to-GDP gap, which serves as an indicator for credit market imbalances and the potential activation of macroprudential measures, continued to correct in 2021 following the rise recorded at the onset of the pandemic, but remains wide. Credit intensity and the debt service ratio, both of which are complementary indicators, stand at moderate levels. In the housing market, the volume of new residential mortgage lending rose significantly in 2021, standing at the highest levels since 2010. However, given the sizeable volume of repayments, the stock of this credit grew by just 1.2%. The stock of loans to construction and real estate development held on its downward trend, albeit at a progressively slower pace. The indicators of real estate market imbalances have remained at positive values since 2020, albeit very close to the equilibrium level. Meanwhile, there was no substantial change in credit standards for new residential mortgages in 2021,21 although the average interest rate spread for fixed-rate mortgages narrowed to its lowest level in recent years. Overall, close monitoring of this market is required, as it could be impacted in opposite directions by the war, given the real erosion of agents’ income by higher inflation and the possible tightening of financing conditions, but also because it is a safe haven in the face of financial asset price corrections in a context of real interest rates holding at negative values.

The symmetry refers to the commitment to fight both upside and downside deviations of inflation from target. At that time, this framework took shape in the form of forward guidance which makes the first interest rate rise subject to: (i) expected inflation standing at 2% over an 18-month horizon; (ii) it holding at 2% in the medium term; and (iii) the course of underlying inflation being compatible with inflation stabilising at 2% in the medium term. Net purchases under the APP are also linked to these conditions, with the guidance stating that interest rates will only rise some time after the net purchases come to an end. Given this strategy and in the current context, a gradual withdrawal of the extraordinary monetary stimulus is appropriate: inflation expectations over intermediate horizons and in the medium term stand at around 2%, underlying inflation is clearly above 2% and there are risks of upside deviations from the projections. Thus, net asset purchases under the PEPP were discontinued in March 2022 and we announced in April that net purchases under the APP would end in Q3. In my view, given that the inflation outlook fulfils the conditions in our forward guidance, purchases under the APP should conclude very soon, in early Q3, so that the first interest rate increase can take place shortly after in July and we can exit the current negative rates at the end of Q3.
4  BIS Review 112/2008  rate is a fully satisfactory summary statistic; other rates fall into line through arbitrage, with differences reflecting risk premia. More practically, it can typically be assumed that the rates charged on private sector loans are maintained at fairly stable spreads relative to the riskfree yield curve (ie given the expected path of the policy rate). And, related to that, it can also typically be assumed that the degree of credit rationing in the economy is broadly constant over time. Obviously, neither of those things is true at present. The most unusual, and stretched, circumstances lie within the global financial system itself. The premium on unsecured interbank lending has risen (Chart 1); and growth of such lending has slowed. This reflects a desire to hoard liquidity in a hazardous environment; and heightened aversion to taking on unsecured credit exposures for term maturities. Banks are, in consequence, deleveraging 7 their balance sheets. Broadly, they can do so in two ways – raise extra capital, or shrink (the pace of growth in) their balance sheets. Both have been underway. The balance sheet shrinkage is reducing the supply of credit to households and firms. But there is differentiation across the banking industry, according to size and strength. In that environment, spreads on corporate bonds are higher. Many corporate and household lending rates have been affected by the rise in Libor relative to risk-free rates. And retail rates – for both loans, and some deposits – have risen relative to the relevant risk-free rate.

And in the US, the housing market has not yet obviously stabilised, which is probably a precondition for broader recovery there. Domestically, the output data have been on the soft side, moving into line with the battery of surveys and the Bank’s regional Agents. The labour market also appears to have softened, with unemployment rising and fewer vacancies advertised. It is perhaps not surprising that, compared with recent slowdowns, there should be less hoarding of labour if firms expect the adverse environment to persist for a while; and with tighter credit conditions, stretching  the export-oriented euro area would be adversely affected, and the UK with it. But, seriously, should the UK cut the policy rate to head off the risk of a dent to output from a dollar collapse that hadn’t yet occurred? I don’t think so. 2  BIS Review 112/2008  working capital, making it harder for firms to finance the retention of a less-than-fully-occupied labour force. In the manufacturing sector, input and output price inflation have edged down very slightly. In the service sector, the data are less timely, though surveys have started to indicate some slowing in the pace of inflation. Commodity prices – not only energy, but food too – have continued to fall, perhaps reflecting the effects on global demand of the earlier price rises and the reduction of subsidies by a raft of emerging-market countries. Equities have fallen around 3%.
For those who might be concerned about the change, let me reassure you that the new polymer notes will retain the familiar look of Bank of England banknotes, including of course the portrait of Her Majesty the Queen, as well as depictions of historical characters of national significance. That continuity of design helps explain why people who have had a chance to handle specimen notes were even more likely to view polymer favourably. The depiction of historical characters will remain an integral feature of our banknotes, providing an opportunity to celebrate individuals that have shaped the United Kingdom. In  BIS central bankers’ speeches  1  order to ensure public confidence in banknotes, it is essential that the choice of characters commands broad public respect and legitimacy. That is why in July, at the same time as announcing that Jane Austen would feature on the new £ note, I promised that we would review the way in which the characters featured on banknotes are selected. Today we are announcing a new set of principles to guide the choice of characters and a new process to ensure that those principles are, and are seen to be, followed. The new principles for character selection state clearly and positively the Bank’s aims in using historic characters on our notes. They put diversity and inclusivity at the heart of the selection criteria. And they make clear our intention to portray a diverse range of characters over time, with each new decision taking into account previous choices.

It will be followed around a year later by a polymer £ note featuring Jane Austen. The decision to move to polymer for these notes follows a three-year review and a broad public consultation exercise. Our research has shown a compelling case for polymer notes. Polymer notes bring three main benefits: •  They stay cleaner than paper banknotes because they are resistant to dirt and moisture;  •  They are more secure because they incorporate advanced security features that make them difficult to counterfeit;  •  And they are more durable, lasting at least 2½ times as long as paper banknotes, ensuring that notes in circulation remain of high quality. Because replacements are needed less often they are both cheaper over time, and more environmentally friendly. These advantages mean that a switch to polymer is a natural step in the evolution of banknote design. But you don’t have to take our word for it. Nearly 13000 people have told us what they thought, in surveys and at over 40 events up and down the UK, and 87% – the vast majority – were in favour of polymer notes, especially once they had a chance to see and handle prototype notes. After that public consultation, we’re confident that the switch to polymer will have broad public support.
The significant CHF appreciation in early January 2015 has entailed measures tailored to the particular features of each country. Specifically, Polish authorities recommended banks to come up with individual solutions to cut down on debtors’ debt service. Croatia introduced a fixed exchange rate of the kuna against the Swiss franc for a one-year period. The Hungarian authorities took over much of the effort of managing the consequences of the developments in the CHF/HUF rate; it should be mentioned, though, that CHF-denominated loans accounted for approximately 50% of local government borrowings and would have had a significant impact on the budget assuming inaction on the part of the authorities. VI. Pseudo-remedies vs. realistic and balanced solutions  There may be various ways of action to solve the issue of CHF-denominated loans, but any negotiated solution should be based on the following principles: •  target those individuals in real need of support;  •  reasonable burden-sharing;  •  not generate moral hazard, i.e. not lead to unreasonable expectations in the future (related to not paying the debt service) and not discriminate debtors in other currencies (RON, EUR, USD);  •  not impair financial and banking system stability. Financial system stability is essential for: (i) ensuring financial intermediation and hence the funding of economic growth, (ii) job creation, (iii) higher household income, (iv) paving the way for credit repayment, (v) preserving depositors’ confidence in the banking sector;  •  comply with the EU Treaty and Romania’s accession conditions, i.e. not restrict free capital movement.

Apart from the adverse economic effects, the NBR’s intervention to help the domestic currency appreciate against the CHF to a level similar to that recorded prior to the Swiss National Bank removing the 1.2 EUR/CHF floor would also impact public policy. Such an intervention would result in changing the benchmark currency on the foreign exchange market from EUR to CHF, contradicting not only the economic reality, but also the EU membership legally binding Romania to adopt the single currency at a certain point in time. As for the possibility of the NBR imposing a ban on CHF-denominated loans, such a decision would have entailed the restriction of CHF-denominated capital flows, thus violating one of the fundamental prerequisites of Romania’s accession to the EU: full capital account liberalisation, completed in 2006. Besides, even assuming such a measure had been possible, it would have affected trade with and investment from Switzerland, as well as the financing of CHF hedged borrowers (exporters, as well as employees of companies with Swiss capital, whose incomes are expressed in CHF). The relevant presence of Swiss capital in Romania is pointed out by the direct investment from Switzerland, which totals around EUR 2 billion, as well as by the number of companies with Swiss capital (over 2,000). These companies’ annual turnover is worth about EUR 7 billion, while the number of employees has ranged between 50,000 and 60,000 (nearing the number of CHF borrowers).
The current state of the Maltese economy The prospects for the creation of new economic activities opened up by EU membership come at an opportune moment. For while Malta’s growth rate in 2004, estimated at around 1.5%, registered a marked turnaround since 2003, it was low compared to the rates achieved by other new EU members whose level of development is comparable to Malta’s. This relatively weak performance, moreover, did not suddenly materialise last year, but has now been persisting since 2001. A relatively sluggish pace of export activity underpinned the low growth rate in 2004, while imports rose at a faster pace, partly in response to the removal of tariffs on certain products. This wider trade gap led to a current account deficit of over 10% of GDP, a development that was to a certain extent anticipated. For, while it is possible to absorb larger volumes of imports at short notice, penetrating new export markets is a medium-term project. It is nevertheless imperative that the country manages to exploit the new market openings, because the current account deficit experienced in 2004 is not sustainable. The economy’s relatively subdued performance last year can also be attributed to the short-term effects of the process of fiscal consolidation aimed at narrowing the budget deficit. Malta is still one of the EU Member States with the highest levels of general government deficit and debt expressed as percentages of GDP.

The free flow of goods in import-competing sectors such as agriculture implies unrestricted access for Maltese products to EU markets, while allowing reciprocal access to imported products. This represents both an opportunity and a threat, however, so that it should be met with appropriate restructuring of the sector so as to enable it to face foreign competition. In this regard Malta can obtain considerable market and development assistance from the EU for the agricultural and fishing sector, including for processing activities. As an EU Member State, Malta can also benefit from programmes aimed at promoting industrial restructuring, particularly with regards to SMEs. The freedom of movement of capital which Malta is experiencing as a Member State of the EU has significant implications. For one, it signals to investors that Malta is a developed market economy with a well regulated financial system where financial resources can find profitable employment. This contributes to the development of the sector, including of its intermediation function of transforming savings into productive investment. It also encourages the inflow of capital from abroad. For these same reasons, however, international investors will maintain a close scrutiny of developments in the local economy, and move capital according to their evaluation of prospective risks and returns. Freedom of movement of capital thus implies the need for more vigilance by the Central Bank of Malta not only to protect the exchange rate but also to preserve financial stability.
Joint ICMIF/AMICE Regulatory Affairs conference Paris, Tuesday 4 December 2018  Keynote address Denis Beau – First Deputy Governor  “Old and new challenges for the insurance sector, its regulators and supervisors”  1  Good morning to all of you, dear Presidents and members of ICMIF and AMICE,  I am very happy to be here with you today to exchange views on the stimulating and no less challenging developments that the insurance sector, and especially mutual insurers, as well as their regulators and supervisors, will have to face in the upcoming months and years. After a few words on the economic and financial context and its related challenges for insurers, I will first focus on those brought by regulatory developments currently in the making, and will finish with the new risks that insurers, their regulators and supervisors will have to address, namely cyber-risks and climate change-related risks. Overall, the macroeconomic environment has been favourable. The recovery of the global economy strengthened last year. Global GDP grew at 3.8% in 2017 and is expected to grow at a similar pace for the next two years. The European economy performed well and the inflation rate in Europe is in line with the European Central Bank’s target (2%). Even if recent survey data have been somewhat weaker, the medium-term outlook for the euro area remains broadly positive. However,  global  and  domestic  uncertainties  are  growing.

Muhammad bin Ibrahim: Issues surrounding intellectual property Welcoming remarks by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Intellectual Property Financing Conference 2014, Kuala Lumpur, 23 September 2014. *  *  *  It gives me great pleasure to welcome you today to the 2014 Intellectual Property (IP) Financing Conference – themed “IP Potentials in Financial Landscape Evolution”. I would like to thank the Malaysian Intellectual Property Corporation and the Asian Institute of Chartered Bankers for co-organising this event with Bank Negara Malaysia. We are also grateful to Secretary General Dato’ Sri Alias bin Haji Ahmad for joining us today to deliver the keynote address and officiate the conference. In the age of the information economy, the importance of intellectual property as a key enabler of productivity and economic growth has become significantly more pronounced as intangibles make up an increasing proportion of business investments. This conference was carefully designed to raise issues surrounding IP. Many issues and questions require resolutions and insights. How do we achieve strong and effective IP protection that will encourage companies to bring new innovations to the market? How do we unlock the value of IP within businesses and encourage the financial system to make better use of this value in financing decisions? How do we start to develop a more transparent market for IP assets? These are some of the issues and questions that the Conference should explore to optimise the full potential of IP in Malaysia.