samchain/econo-pairs-v1 huggingface dataset:
This was the advice Benjamin Franklin gave to inhabitants of Philadelphia, on the subject of firefighting, writing anonymously to the Pennsylvania Gazette in 1735: “In the first Place, as an Ounce of Prevention is worth a Pound of Cure, I would advise 'em to take care how they suffer living Coals in a full Shovel, to be carried out of one Room into another, or up or down Stairs, unless in a Warmingpan shut; for Scraps of Fire may fall into Chinks and make no Appearance until Midnight; when your Stairs being in Flames, you may be forced, (as I once was) to leap out of your Windows, and hazard your Necks to avoid being oven-roasted.” 32 A firm’s overall loss absorbing capacity is the sum of its capital and subordinated long-term debt which can be bailed in. 33 Of course, it is not the case that changes in banking system capital requirements have no bearing on developments in the wider economy; such changes are likely to impact the price and quantity of credit provided by the banking system and, via this channel, economic growth. But the best empirical estimates we have suggest that this channel is likely to be weak during credit booms, when it’s most needed (Bahaj et al, 2016). Moreover, changes in banking system capital will have no direct impact on build-ups of risk in the market-based financial sector.

Without the confidence that we will do that, expectations of economic downturn will prompt the financial system to become risk averse; to hoard capital; to de-risk; to rein in. To create the very amplifying effects on the real economy we are trying to avoid. A truly countercyclical approach means banks, for example, know their capital buffers can be depleted as they take impairments; Households can be confident that our rules won’t choke off the refinancing of their mortgage. 42  And insurance companies know their solvency won’t be judged at prices in highly illiquid markets. We must be just as bold in loosening requirements when the economy turns down as we are in tightening them in the upswings. 43  Boldness in the upswing to strengthen the system creates the space to be bold in the downturn and allow that strength to be tested and drawn on. Macroprudential fortune favours the bold. Conclusion  To conclude, boldness is needed in general to set policy while the practice is so far ahead of the 44  development of the theory – the playbook. We are many years from having rules to guide macroprudential policy. But the absence of the playbook doesn’t excuse an absence of clarity about what is guiding macroprudential policy setting. The principles I have outlined aim to provide a little more clarity; to begin to fill in the ‘how to’ guide for macropru.
Taking into account the range of values and the uncertainty surrounding this calculation, we consider that the neutral MPR lies within the 3.75 to 4.25% range, that is, 25 basis points below the range we expected until March, partly reflecting the drop in interest rates around the globe (Figure 7). III. Baseline projection scenario  The convergence of inflation to the 3% target is subject to a baseline projection scenario that features the following characteristics. III.1. Activity and demand On one hand, as I mentioned, it considers that the activity gap will close throughout the projection horizon, a period in which the economy will accumulate growth above its potential. This is consistent with GDP growing in 2019 between 2.75% and 3.5%. This range is below the range we expected in March, mainly reflecting the effects of the negative surprise of activity in the first quarter. Actually, this projection assumes that the economy will resume higher rates of annual expansion in the second half of this year. For 2020 and 2021, higher growth rates are foreseen, between 3% and 4% in both years (Table 3). Page 4 of 18  On the expenditure side, compared with March, the biggest adjustments are seen in gross fixed capital formation (GFCF), a component that, instead of growing 6.2% this year as projected, will grow only 4.5%. This revision owes to a great extent to the poor first-quarter performance of the machinery and equipment component. This weakness has continued, according to partial second-quarter data.

Generally speaking, the greater the depth of financial mediation, the larger the relative size of the banking sector in the economy and the higher the level of private sector debt, the more vulnerable the economy, the greater costs of any financial crisis and thus the higher the ensuing requirements as regards quality of banking regulation and strictness of supervision. Therefore, effective prevention of financial crises is an increasing priority for economic policy makers of countries with greater depth of financial mediation. Still, the depth of financial mediation differs systematically, for example, between the founders of the EU and recent entrants. For example, in the case of the Czech Republic, if the worst comes to the worst we can revoke the licence of a major bank, take its liabilities onto the government balance sheet and sell its viable business, as we have done in the past, without increasing our government debt-to-GDP ratio above two or three hundred per cent, provoking a sovereign debt crisis and starting the vicious circle known to many European economies. Most developed European countries do not enjoy such freedom. On the other hand, many segments of our financial industries are still underdeveloped and their space for growth is rather high. I do not believe we have reached the point at which one should question the benefits to the economy of increasing the depth of financial mediation.
We also see wages continuing to increase in the future. Now, you really asked me specifically the question of whether corporations and labour – and I'm using that term in a generic, comprehensive way – will find the terms under which they don't contribute to fuelling even more inflation that would call on us to take harder monetary policy measures. This is the assumption that we make. I think economically it is justifiable, it is rational, but of course humans are humans. It's going to be for the parties around the table to actually determine what they do going forward in terms of allocating profits and organising these social relationships. What they can be certain of in their discussion is that the European Central Bank will take all  8/10  BIS - Central bankers' speeches  necessary measures to return inflation to 2%. That, they can count on, and we are confident that we will get there so I hope it helps in their deliberation going forward. The persistency of inflation, as I said, has a lot to do with this unit labour cost that I have mentioned earlier on. This is really the strong – I don't want to use sticky component, because it is going to be persistent, and we know it. Numbers will continue to be high in the months to come, by the way, because we believe that services are going to continue to grow strongly. Labour-intensive services will. Contact-intensive services will continue to grow strongly.

The journey to get there is not over and we have ground to cover. So, we will be as restrictive as long as needed in order to make sure that we reach that destination. Under the current parameters, 2.2% in 2025 is not satisfactory and it's not timely – which is why we are making the decisions that we are making today, and later on. At the end of June banks will reimburse € billion that they had borrowed under TLTRO, which was this very special facility that we had put in place to help the financing of the economy at the time of the pandemic. Those loans were granted for periods of three years and there were various operations in the course of the pandemic. The repayment which is coming due now, is known and has been known for a long time. Actually it was so well-known that it should have been a lot higher than that but we took measures in order to avoid that we had this sort of cliff effect of a massive reimbursement which would have exceeded € trillion. But banks know about it, they have known about it. They have done their funding plans in order to respond to the situation. In any event, we have the normal facilities available, whether it's MRO or LTRO if that was ever needed, just in case. The APP reinvestment will be completed at the end of June, and we will let run-off take place as of July.
While the transmission mechanism from official interest rates to the economy has been impaired by the dislocation of financial markets, the cuts in interest rates are still having an impact. While the reductions in the income of savers have offset to some extent the benefits to borrowers in the household sector, the net gain to the company sector is clear. The changes in interest rates have also accounted in part for the depreciation in the sterling exchange rate, which is down around a fifth in the past six months. No one who has lived through the 70s, 80s and early 90s will be complacent about a fall in sterling. But there is no doubt that an appreciable fall in the pound, such as we have seen, has been helpful both in supporting exports and import substitution in the short term and in encouraging the rebalancing of the economy that we need in the medium term. My second point is that it is important to distinguish the medium term from the short term goals. In the medium term we need to see a rebalancing of the economy in the UK, and some other countries, with a higher savings rates, less leverage in the financial sector, and higher net exports. However if everyone tries to increase saving and cut borrowing immediately we could prolong the downturn painfully. If everyone plans for the worst, we are more likely to get it.

The social value of such a capital structure might, of course, be greater still – for example, because the social costs of crisis are higher than the private costs. That would justify a regulatory capital backstop. This capital structure shares the risk-sharing benefits of some other reform proposals. For example, it has similar risk-shifting properties to a mutual fund or limited purpose banking model.17 When required, risk is shared across the capital structure, as in a mutual fund whose equity claims adjust in value. But risk-spreading would only kick-in when it needs to. Banks are banks when nature is kind and mutual funds when it is cruel. They can be butterflies in summer, provided they are hedgehogs in winter. From here to there If such a structure is for the best in most states of the world, why does it not already exist? At least two legitimate concerns have been raised. First, might market-based triggers invite speculative attack by short-sellers? The concern is that CoCo holders may be able to shortsell a bank’s equity to force conversion, then using the proceeds of a CoCo conversion to cover their short position. There are several practical ways in which the contract design of CoCos could lean against these speculative incentives. Perhaps the simplest would be to base the conversion trigger on a weighted average of equity prices over some prior interval – say, 30 days.18 That would require short-sellers to fund their short positions for a longer period, at a commensurately greater cost.
Diagram 3:  United States: real profits (S&P 500) 1 00  Trend 1.5% per year  10  1 1 87 0 18 80 18 90 1 90 0 1 91 0 1 9 2 0 1 9 30 1 9 4 0 1 95 0 1 96 0 19 70 19 80 1 99 0 2 00 0 Source: Shiller. The profits of listed companies can, of course, rise comparatively rapidly in the short run. If the profit share moves up from, say, 30 to 35 per cent, this implies a temporary increase in profits of 15 to 20 per cent, spread over the years when the profit share is elevated. Such a temporary increase in the profit share has not been uncommon in connection with technological breakthroughs. It occurred in Sweden in the 1990s and also early in the twentieth century in the era of electrification. 4  BIS Review 90/2001  The profit share followed a rising path up to the end of the 1910s and this was accompanied by higher GDP growth (Diagram 4). It is perhaps hardly surprising that this led many shareholders to believe that profit growth would continue to exceed the historical trend in the longer run. That did not happen. An elevated profit share tends to fall back sooner or later and corporate profits then return to their longterm path.

Jean-Pierre Roth: Foreign trade is Switzerland’s growth driver Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at OSEC Business Network Switzerland, Zurich, 17 April 2008. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  Foreign trade has played a major role during the present economic cycle. Over the past two years, it has made an exceptional contribution to GDP growth – with figures that bear comparison to the two upswing periods of the mid-1980s and mid-1990s. This strong export performance not only reflects a reorientation to accommodate the world economy’s new growth hubs, but is also the result of successful sector specialisation and the Swiss export industry’s premium-quality positioning. Switzerland’s watchmaking and pharmaceutical industries have been particularly impressive in this regard. Thanks to the speed at which its export industry has been able to adapt to global demand, Switzerland is well placed to benefit from the prevailing increase in earnings within the emerging markets. By specialising in the technology segment and tailoring its exports to customer needs, Switzerland is not only able to reap the rewards of upswings in the global economic cycle.
Other than the qualitative guidance I mentioned earlier, and an expectation that the level of reserve balances will be appreciably below that seen in recent years but larger than before the financial crisis, the FOMC has not specified how large the balance sheet should be.8 My colleague Lorie Logan spoke recently on the many technical drivers of this level, which include the mode of policy implementation that the FOMC chooses in the longer run, possible increases in recent years in the financial system’s demand for reserves and Federal Reserve reverse repo liabilities owing to new financial regulations and other factors, and the long-term evolution of demand for paper currency.9  Considerations in reducing the balance sheet size In theory, reducing the size of the balance sheet is quite simple. There are two ways to go about it.10 One approach is to simply let securities holdings mature. Principal matures on the Fed’s securities holdings all the time: Treasury bonds mature at specified dates, and agency MBS principal is repaid over time as home loans are paid back.11 For the past several years, the securities portfolio has been maintained at a steady level by reinvesting these principal repayments.12 This activity can be reduced or stopped. A second approach is to simply sell securities on the open market, using a similar procedure to the way the securities were purchased to begin with. Either way, the securities end up back in private hands. This is obvious in the case of sales.

Norman T L Chan: Strengthening risk management of banks in Hong Kong Statement by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, to the media, Hong Kong, 19 May 2017. * * * In view of the increasing risk of overheating in the property market, I would like to announce that the Hong Kong Monetary Authority (HKMA) has decided to introduce three new counter-cyclical prudential measures today to strengthen the risk management of banks. 2. The first measure requires those banks using Internal Ratings-Based Approach to  calculate capital charges for credit risk to raise the risk weight floor by 10 percentage points from the existing level of 15% to 25% for new residential mortgage loans. 3. The second measure requires banks to lower the applicable loan-to-value ratio (LTV) cap by 10 percentage points for mortgage loans extended to applicants with one or more pre-existing mortgages. 4. The third measure requires banks to lower the applicable debt servicing ratio (DSR) limits by 10 percentage points for mortgage loans extended to applicants whose income is mainly derived from outside of Hong Kong. 5. These three measures take immediate effect. However, mortgage applications for transactions with provisional sale and purchase agreements signed today or earlier will not be affected. 6. Finally, I would like to remind the public that, for most people, buying a property is not only one of the most important decisions in life, it is also a financial transaction entailing significant leverage through borrowing.
The economic policy measures implemented have proven crucial in maintaining households’ and firms’ ability to pay and their net lending. Thus, the NPL ratio for credit to the resident private sector stood at 4.2% at end-2021, down 0.2 pp year-on-year. However, despite this good NPL performance, there are latent credit portfolio impairments. Stage 2 loans4 continued to rise at high rates at end-2021 (14% year-on-year), although notably below the growth rates of previous quarters. At December 2021, Stage 2 loans accounted for 8% of all loans, up 2.2 pp on pre-pandemic levels. Forborne loans5 also rose by 14% (compared with the decline of 9% in 2020), owing to strong growth among NFCs and sole proprietors. At end-2021 they accounted for 5% of total outstanding loans, the same percentage as prior to the pandemic. The economic sectors most severely affected by the pandemic show the greatest signs of deterioration. Here, the combined share of NPLs and Stage 2 loans stood at 4  Pursuant to Circular 4/2017, a loan is classified as a Stage 2 exposure when credit risk has increased significantly since initial recognition, even if no event of default has occurred. 5  Forborne loans are also typically associated with possible repayment difficulties for borrowers; indeed, more than half are classified as non-performing. 6  almost 24% at December 2021, compared with 17.7% in the moderately affected sectors and 15.5% in those least affected.

Although Spanish banks have very little direct financial exposure to Russia and Ukraine, the indirect effects of the war may be significant. Particularly through its impact on households and firms, especially those experiencing a slower or tardier recovery from the pandemic and whose solvency may now have worsened. I will now outline how the Spanish banking industry stood previous to the Russian invasion, before moving on to analyse the economic and financial risks that the new tense geopolitical environment poses. 1  Recent banking industry resilience  Turning to the situation of the Spanish banking industry previous to the start of the war in Ukraine, most noteworthy, first, was the gradual normalisation of bank lending, following the strong growth observed in 2020, underpinned by public policies. Specifically, bank lending to the resident private sector fell slightly in 2021. By sector, the deceleration in lending to non-financial corporations (NFCs) and sole proprietors, essentially explained by demand factors, offset the more expansionary behaviour of lending to households, in particular loans for house purchase.1  1  Specifically, the stock of mortgage loans grew by 1.2% year-on-year in 2021 Q4, while the stock of loans to construction and real estate development continued to decline, albeit at an increasingly slower pace.
I believe that economic integration, brought about by market forces, having regard to comparative advantages in production, can best be served by financial integration of a similar degree. BIS Review 14/2006  1  8. I should emphasize, however, that this is as yet merely a belief on my part. I have so far found it difficult to provide empirical evidence to support my hypothesis that the optimal degree of financial integration is the same as, or close to, the degree of economic integration within a region. To start with, there are theoretical difficulties in identifying measures of optimality. In addition, there is no established measure of the actual degree of financial integration, let alone the actual degree of economic integration. 9. Lack of empirical evidence notwithstanding, one intuitively thinks that the synergy driving economic integration can best be harnessed financially by the stakeholders themselves, who know better what they are doing and take a longer term view, rather than by those, motivated largely by relatively shortterm financial rates of return, and acting in accordance with credit assessments, conducted many miles away from where the action is. 10. Regrettably, for a variety of reasons, financial integration in Asia lags considerably behind economic integration. Currently, a sizable portion of gross savings in Asia finds its way into debt instruments of governmental and quasi-governmental issuers in industrialized economies, while investment in Asia is financed, to a significant degree, by capital from those same countries.

Traditional housing loan finance – a good alternative The Swedish mortgage institutions have traditionally been financed with collateral in their entire balance sheet. There is thus no direct link between a particular loan and the collateral belonging to it on the one hand and certain issued bond loans on the other. In many countries, mortgage companies are obliged to collect a number of housing loans and then issue bond loans in the market with these as collateral. There are different techniques for this to which I will return later. The Swedish model thus has advantages to the extent that borrowing can take place without a fixed link to lending. In this way, large loans can be placed in the market, which will make it easier to maintain regular trade and good liquidity in the loans. This has occurred with the so-called benchmark bonds. However, housing loan institutions, among other things due to considerable loan volumes and a good price formation for domestic loans have also been able to successfully compete in the international bond market. BIS Review 113/1999  2  If one is to borrow on the balance sheet, it must naturally be in such a state as to be accepted by the lenders. The Swedish institutions have managed this by strict operating rules, which place limits on what the institutions may engage in and allow lenders to ensure that the institutions get involved in what they have said they are going to do and nothing else.
BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11

The principle of so-called “insignificant host”, as viewed from home supervisor’s perspective, may contradict with the agreed principle of the need for the host to oversee systemically important institutions. Thus, a host supervisor should receive better information and even be included in supervisory colleges by home supervisor, if the global bank branch operations are systemically important to the host economy. Colleagues, ladies and gentlemen, This is a challenging time, with new paradigm, and therefore leadership by all of us is required to ensure that we set a balanced agenda in our reforms going forward. I believe SEANZA forum would become all the more valuable in the future in cementing our network and friendship. Thank you for your attention. 6  BIS Review 146/2009