samchain/econo-pairs-v1 huggingface dataset:
I see at least two reasons for not going down that road. The first is that the technologies that allow these changes in scale carry progress. Technological revolutions, from the early stages of the internet to the boom in blockchain protocols to artificial intelligence, have given rise to, and can still continue to do so, new services, many daily improvements for consumers, in particular financial services including, and we are extremely attentive to that, better financial inclusion. Second, there is no reason to assume that the current framework for regulating financial  services is intangible and cannot be adjusted to respond to changes, including in scale, brought about by technological innovation to ensure that potential risks are properly managed. A simple example: the customer experience for opening a remote account in France, compared to other European countries, wasn’t sufficiently fluid. The players that we have met often mentioned as a potential impediment the French transposition of the 4th European antimoney laundering directive, which would not make it possible to fully capitalise on the advantages of technology. We have taken note of the problem and set up a working group, led by the ACPR Fintech – Innovation unit within the framework of the ACPR-AMF Fintech Forum, bringing together technology providers, financial institutions and public authorities. The aim was to co-construct proposals based on an objective assessment of regulations and technological state of the art, while ensuring the efficiency of AML/CFT frameworks.

These factors explain why French banks' CDS premiums remain lower on average than those of banks in the United States, the United Kingdom and the rest of Europe. At the European level, the banking authority – the EBA with the SSM – will carry out new stress tests in 2023 on the resilience of EU financial institutions. The underlying scenarios will need to be sufficiently severe and credible in the current environment of uncertainty and volatility. But we see nothing at present that justifies an industry-wide restriction on dividend payouts, such as that imposed temporarily in 2020. There is,  2/4  BIS - Central bankers' speeches  however, a need for everyone to show prudence in terms of the future trajectory of capital, and in particular regarding share buybacks, which furthermore have to be explicitly authorised by the supervisor. 3. Are there any non-bank risks that could potentially trigger a crisis? The first area we need to pay close attention to is the less regulated players: while we have largely reinforced banks and insurers, we still have a long way to go on non-bank financial intermediaries (NBFIs). All episodes of financial instability in the last three years have been caused by the non-bank, non-insurance sector: from the money market fund "dash for cash" in March 2020 to UK pension funds in September. The vulnerabilities stem from excessive use of leverage, insufficiently controlled exposure to margin calls, or liquidity mismatch in open-ended funds which leaves them vulnerable to large and sudden capital outflows.
A partial representation of the economic structure can only partially help in monetary policy decision-making, notably in real time. For instance, it is very difficult to find empirical models that allow for an integral view of both non-financial (‘real’) and monetary-financial phenomena. So, it may be impossible to arrive at a convincing explanation of the origin and propagation of a significant financial shock, say, on the basis of sets of equations that do not elaborate on the role of the financial sector or account for only tenuous links between that sector and the rest of the economy. Another example is provided by the many pitfalls that come with using “synthetic” indicators of inflationary pressure. The most famous of these “synthetic” indicators is the so-called “output gap”. The “output gap” can be defined as a measure of the deviation of the aggregate output of an economy from the maximum level that would be consistent with price stability. This maximum level is then the “potential output”. When current output is above potential, the pressure on the scarce resources should then translate into an increase in prices, that is, inflation. In the real world, the monetary authority constantly faces the challenge of observability and measurement. Unfortunately, we cannot “assume” to know the “potential output”. The best we can do is to try to “estimate” the output gap by using observations of many other correlated variables. We all know how imprecise and model-dependent this “estimated” measure can be.

By way of example: geopolitical considerations, present and future macroeconomic scenarios, regulatory and supervisory developments, technological developments and the emergence of new competitors. The bank must also take into account its starting point, its strengths and weaknesses, and how it compares with its peers. As you all know, new competitors need not be other banks, but the so-called fintech companies, which are destined to exert pressure on and accelerate the ongoing technological renewal of financial institutions. Undoubtedly, therefore, part of banks’ strategic drive should focus on how to face this challenge and the competition. 4/8  I would next like to address four key aspects from the strategic standpoint: capital; the legacy of non-productive assets; liquidity; and governance. As regards capital, while Spanish banks have strengthened their capital base and, consequently, have improved their ratios in recent years, duly meeting the minimum requirements, there are no grounds for complacency. Firstly, although the current situation is that Spanish banks have, on average, high asset density (measured by their risk-weighted assets) and low leverage levels, it is also a fact that they continue to have lower capital ratios than their European peers. On EBA data for March 2018, Spanish institutions’ CET1 solvency ratios are below the EU average at that date (14.4%). This shows that Spanish banks must continue making headway in one of the key elements of the new rules of play, namely that they must have more and better-quality capital than before the financial crisis.
In addition to the low level of housing construction, demand for housing has risen mainly in metropolitan areas due to the greater numbers moving to these regions during the latter part of the 1990s. It is not surprising that a relatively constant, low supply, as well as high demand, should have contributed to the substantial price rises. Thus, low interest rates, an increase in disposable income and a low supply of new housing, together with high demand, are the fundamental factors that I believe have driven the rate of price increases from the mid 1990s. They also suffice to show that current price rises should not be described as an expectations-driven “bubble”. The same analysis can be performed for several other countries experiencing similar developments in their housing market, in particular the US. So did we have a housing market bubble during the crisis years at the beginning of the 1990s? I don't really believe that we did, at least not in the sense that homes were being bought for the purpose of speculation with a view to being sold once prices had risen further. Yes, prices rose sharply, especially in metropolitan regions, but these were due to reasons of a fundamental nature. Households' willingness to pay increased in line with their income during the economic upswing, the deregulation of the credit market led to the removal of some financing obstacles, and the supply of housing was, in the short term, highly inflexible. This is enough to fuel a steep rise in prices.

At that time, the credit expansion which was caused partly by the deregulation of the credit market resulted in a debt ratio of around 130 per cent, while the interest ratio increased rapidly over a couple of years from around 6 per cent to almost 10 per cent. However, there is no doubt that the recent rise in indebtedness has made households increasingly sensitive to changes in interest rates. Households tend to focus on their cash flow and are unperturbed as long as their debt-servicing costs can be accommodated in their monthly budget. But an interest rate rise of just a few percentage points would have a much bigger impact on cash flow today than when levels were around 15 per cent. An interest rate rise of four to six per cent would cause monthly costs to increase by 50 per cent. Higher mortgage rates could therefore prompt households to increase their saving and reduce their consumption more than expected or intended. Hopefully we will be able to avoid sharp, quick interest rate rises in our conduct of monetary policy, although mortgage rates are also influenced by events outside Sweden. To some extent though, the effect of any increases in rates could be alleviated by the fact that an increasing number of households have recently been switching over to fixed-rate loans. Developments in the commercial property market Prices in the commercial property market have been driven by somewhat different forces than in the housing market.
12  The new committee for financial stability at the Bank of England will take responsibility for decisions on macrostability, but not traditional supervisory issues, which will also be moved to the Bank of England. The new committee partly consists of the same people as the monetary policy committee. 12  BIS central bankers’ speeches  the krona’s exchange rate if necessary. However, it has not been used for this purpose since 2001, and, when it was used, the results were unfavourable. The financial crisis made abundantly clear that the foreign currency reserve was also needed to provide the banks with liquidity in foreign currency in the event of a crisis. This is a matter of the central bank’s fundamental function as lender of last resort. As I mentioned earlier, it can no longer be seen as only concerning liquidity in kronor. Of the four major banks’ lending to the public of about SEK 7 000 billion, about SEK 2 500 billion was funded with securities issued in foreign currencies, of which about half had times to maturity of less than one year. The Riksbank’s gold and foreign currency reserve was not enough to meet the need for dollars that arose during the crisis. This amounted to about SEK 200 billion and was invested in various currencies and different types of asset. During the autumn of 2008, our lending in dollars peaked at about SEK 250 billion.

The weakening of the US currency resulted in a further decrease in the dollar’s share of foreign currency reserves. Recently, in an effort to prevent the dollar’s share from dropping too low and with a view to rebalancing, we bought dollars again on a number of occasions. Furthermore, as part of the 2004 strategy, the proportion of government bonds was also reduced in favour of other borrowers’ bonds. The required minimum rating for bond investments was lowered from A2 to BBB, thus covering the entire “investment grade” range. Corporate bonds have now also been added to the National Bank’s investment universe, albeit only those of foreign companies. Currently, roughly 4% of both foreign currency reserves and free assets are invested in corporate bonds. The credit quality of all our investments is still very high. Borrowers with the top rating AAA account for over 70% of the investments. Close to 20% bear the AA rating. The remaining investments have an A or a BBB. The average residual maturity (duration) of all bonds held by the National Bank was kept at 4-5 years. The first investments in equities issued exclusively by foreign companies will be made at the beginning of 2005. The addition of equities and corporate bonds is likely to improve the degree of diversification of the investments and will contribute to the achievement of slightly higher returns in the medium term. The main difference between the investment structures of foreign currency reserves and free assets is their currency profile.
So far, the bond purchases have generated a profit but our interest rate forecasts indicate future losses and thereby lower or zero dividend payments to the  18 Sveriges Riksbank (2010). 19 See, for instance, my own reasoning in the minutes of the monetary policy meeting in February 2015 (Sveriges  Riksbank, 2015b) and Annika Alexius in Svenska Dagbladet (2016). 10 [12]  government. Despite the increased risks, my assessment is that the Riksbank’s financial position remains healthy. The Riksbank’s equity has increased from just over SEK 70 billion before the financial crisis to its current level of just over SEK 120 billion. Even though it is likely that equity will shrink substantially in the coming years, it is my opinion that profit fluctuations are unlikely to be large enough to cause equity to fall to worryingly low levels. Finally, I would like once again to remind you that the aim of the Riksbank’s operations is not to make a profit and deliver dividends to the government. Our task is to maintain price stability, and we do that by safeguarding the credibility of the inflation target. In this way, we promote efficient price-setting and wage formation in the economy, which forms the basis of sustainable economic development with high employment. References af Jochnick, Kerstin (2015), “Does the Riksbank have to make a profit? Challenges for the funding of the Riksbank", speech, 23 January 2015, Sveriges Riksbank.

Sources: TNS Sifo Prospera and Statistics Sweden  For the Riksbank, this development led us during the spring of 2015 to reduce the Swedish policy rate, the repo rate, to negative levels and to start purchasing government bonds. One purpose of the bond purchases was to push down interest rates on longer maturities. 4 My assessment is that this monetary policy has, on the whole, been successful. The bond purchases seem to have pushed down interest rates more or less in the way we expected. 5 And the monetary policy also seems to have had the intended effect on inflation and inflation expectations. The downward trend has been reversed and both are now on significantly higher levels than at the end of 2014 (see Chart 2). At the same time, the Swedish economy has developed positively, with high growth and falling unemployment. … but the effects on the Riksbank’s finances must nevertheless be taken into account The purpose of the Riksbank’s bond purchases is thus to support the inflation target’s role as nominal anchor for price-setting and wage formation, and thereby to contribute to a positive development in the Swedish economy. How the Riksbank’s financial position is affected is therefore of subordinate, but not negligible, importance. I see at least two reasons to monitor how the Riksbank’s finances develop. First, the Riksbank’s finances are part of public finances. The size of the Riksbank’s profits and losses affect the dividends we can deliver to the government.
Regulators used to worry about institutions that were “too big to fail”; now, they worry about institutions that are “too connected to fail”. Size matters ; but connectivity matters more. 21. This high degree of interdependence means that governments in major economies can no longer act in isolation. Regulatory policies must be globally consistent to minimise the risk of arbitrage. Supervisory actions must be internationally coordinated to maximise their effectiveness. 22. Yet, regulation and supervision is essentially a national prerogative, that must cater to the domestic context and circumstances to be effective. Recognising this tension, international policymakers have focused on reaching consensus on international standards that serve as a minimum benchmark, while allowing countries the freedom to choose appropriate regulatory tools to fit individual circumstances. A uniform, one-size-fits-all international regulatory regime will not work. 23. The most striking application of this principle is in the approach being taken for the regulation of global systemically important financial institutions, or G-SIFIs. These institutions, because of their size, complexity, cross-border nature, and interconnectedness, would cause significant disruption to the global financial system and economic activity, if they failed in a disorderly manner. There is thus a need for global supervisory cooperation, in order to identify the key points of failure within such institutions. The Financial Stability Board, together with other international standard setting bodies, is rethinking its approach towards the monitoring, sharing, and mitigation of systemic risks posed by G-SIFIs. BIS central bankers’ speeches  3  24.

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It is aiming at preserving and improving the situation of employees and of all our fellow citizens in the euro area. Such a responsible policy directly benefits those who are unemployed by significantly improving their employment possibilities. It benefits all our fellow citizens by supporting the purchasing power of their income, thus preserving the well-being of euro area households. And it contributes to meeting one necessary condition for sustainable long-term growth and active job creation in the euro area, which is price stability. Naturally there are also a number of other factors that are contributing to sustainable growth and job creation, in particular sound public finances and, as I already said, structural reforms that enhance competition, increase productivity and foster economic flexibility in order to elevate the growth potential of our vast euro area economy. Augmenting the growth potential of Europe is a major goal for all of us. Background information Table 1: Compensation per employee growth (whole economy) across euro area countries  2  BIS Review 52/2007  Table 2: Unit labour costs growth (whole economy) across euro area countries  Table 3. Labour productivity growth in the euro area countries  BIS Review 52/2007  3  Table 4. Employment growth in the euro area countries  Table 5. Unemployment rates across euro area countries  4  BIS Review 52/2007

Economic policy cannot shield the economy totally from shocks that may arise, but can dampen their impact. A framework that provides monetary policy predictability makes it easier to succeed. Thank you for your attention. 5/5  BIS - Central bankers' speeches
The banks were urged to show restraint and downsize, and to follow that up, the Central Bank specifically collected information from them on their downsizing efforts. They realised, of course, that they were in a tight position, and they responded by selling assets and discontinuing selected activities in a number of countries, among other things. Kaupthing Bank’s decision to abandon its plans to acquire NIBC in the Netherlands was very important in this regard, not just for Kaupthing itself but for all of the banks. The Central Bank supported all of these actions wholeheartedly; however, it did not have the statutory authority power to force the banks to change their conduct. It is known that the Central Bank expressed its growing concern over the position of the banks during meetings with governmental authorities. Early last year, the Central Bank’s concern centred not least on the banks’ large near-term refinancing requirement for the coming years, which I have already mentioned, and the opinion, expressed by leaders of a number of international banks, that the global credit crunch was unlikely to ease in the foreseeable future. The Central Bank feared that credit markets could remain closed to Icelandic banks for some time to come. Although various explanations have been given for the swift rise in the Icelandic banks’ CDS spreads, first in early 2008 and again that summer, it is perhaps possible to claim that the most important explanation lay in growing scepticism about the banks’ ability to obtain the medium-term funding they needed for refinancing purposes.

It therefore represents an enormous potential market that remains yet untapped. Takaful operators assume an important role as economic or financial agents as they essentially mobilise long-term funds in the form of contributions and invest them in the available Islamic investment avenues. As custodians of public funds, takaful operators must ensure that the takaful funds are invested in compliance with Shariah and are soundly managed to instil public confidence. For the takaful industry to be developed into a viable alternative to the more entrenched conventional insurance industry, the need for it to be supported by the core components of a comprehensive Islamic financial system cannot be over-emphasised. As takaful operators are both mobilizers of long-term funds and fund managers to the policy holders, their ability to generate returns to fulfil the obligation to the policy holders depends very much on the range of financial instruments available in the market place. Without an effective financial system, takaful operators may not be able to perform as effectively and as efficiently in terms of delivering their promise on the profit sharing basis and to be able to keep pace with their conventional counterparts in the area of fund performance. In the absence of a viable Islamic capital market, there would not be an adequate supply of quality financial instruments for which the takaful funds can invest. It may have to depend on low yielding returns from bank deposits.