samchain/econo-pairs-v1 huggingface dataset:
Given the size and scale of the concentration of financial market activity in the UK, that is particularly true for the Bank of England. The events of eight years ago are receding into time. But I very much doubt that the generation of regulators that lived through the great financial crisis will revert to their pre-crisis tolerance and ignorance of systemic risk. And I very much hope that our successors do not forget those lessons either. The regulatory reforms now being implemented will not in practice prove perfect in every specific. There will be places where reforms aimed at one part of the financial sector will cut across changes made elsewhere. And where reforms have both an unintended and an undesirable effect greater than their benefits. The Bank has made very clear that we will look carefully at hard and clear evidence of such effects. Where justified we are prepared to adapt the reforms. In this respect, I would point to the changes we and the ECB have championed to the EU regulations on securitisations. And to the change the Financial Policy Committee recently announced to exclude reserves held by banks at the Bank of England from the application of the UK leverage ratio capital requirement. We will offset this elsewhere to ensure that the overall stringency of the capital requirement is not weakened. But while I can envisage that there might be specific and targeted change based on clear evidence, I do not envisage wholesale changes to the reforms.

In fact, as you know, the result of the European Council meeting some days back was, I would venture to say, most satisfactory. First, agreement was reached on the EU multiyear budget for 2021-2027, the negotiations for which had faced many difficulties in recent months, for an amount of € billion. Further, a recovery fund (Next Generation EU) has been created. This is additional to the budget and introduces a pan-European recovery financing framework that is unprecedented in the history of the EU. This fund will be financed by the European Commission’s recourse, on behalf of the Union, to the capital markets, for a maximum amount of € billion between 2021 and 2026, i.e. it is temporary in nature. The funds will be assigned to tackle the consequences of the COVID-19 crisis, both through loans to the Member States (48% of the total) and through direct transfers (essentially the remaining 52%). The gradual amortisation of this debt will run to 2058, through new EU own resources. To swiftly mobilise the aid, which will take the form of investment project financing and structural reforms, in areas such as research, progress in digitalisation and combating climate change, the European Commission will, before the European Council’s October meeting, submit proposals on how to accelerate and smooth procedures in the Member States.
Monetary policy was responding as required, by tightening to bring inflation sustainably back to target in the medium term. The MPC increased interest rates, and announced its intention to start selling UK government bonds – known as gilts – as part of this more general tightening of monetary policy. Subsequently, and following the Government’s fiscal announcements on 23 September, we found ourselves facing an acute stress in the gilt market, which had started in a small corner of the pension world[20]. As gilt yields spiked, some liability-driven investment (LDI) funds found themselves over-leveraged and needing to reduce their borrowing. With insufficient time to raise new capital from their pension fund investors, they faced having to sell gilts into a falling market, further depressing prices and increasing the amount they needed to sell[21]. To stop this self-reinforcing spiral of asset sales the Bank intervened, buying gilts on financial stability grounds. This targeted action over 13 days stabilised the gilt market and in so doing allowed LDI funds to reduce their leverage to sustainable levels. But unlike in the GFC or 2020 ‘dash for cash’, the actions needed for monetary policy and financial stability seemed to point in opposite directions. The MPC had announced its intention to start selling gilts, but to support market functioning and financial stability the Bank needed to buy gilts. This was one of the more limited examples of times when monetary and macroprudential policy weren’t pushing in the same direction.

Another measure of this type is the employment rate from the labour force surveys (AKU), which shows the proportion of the population of working age that is in employment. Figure 12 shows that the employment rate this year is close to the average for the years 2000–2008. 13  The assumed long-term GDP growth in Figure 7 after the end of the forecast period in 2013 is 2.3 per cent per year. 14  Reinhart, C. M. and Reinhart, V. R. (2010), “After the Fall”, National Bureau of Economic Research Working Paper 16334. 15  Svante Öberg, “Potential GDP, resource utilisation and monetary policy”, 7 October 2010. 6  BIS central bankers’ speeches  The Riksbank’s indicator of resource utilisation (the RU indicator) summarises about thirty such economic variables regarding levels.16 The RU indicator includes survey data from the National Institute of Economic Research’s Economic Tendency Survey for private services, the retail trade and the construction and manufacturing industries. In addition, capacity utilisation in the manufacturing sector from Statistics Sweden, the employment rate and unemployment from the labour market surveys, and unfilled vacancies from the Swedish Public Employment Service are also included. According to the RU indicator, resource utilisation is slightly higher than normal (see Figure 13). Figure 14 shows unemployment together with an average for the period 2000–2008 and an assessment of long-term unemployment.17 Seasonally-adjusted unemployment is presently higher than this long-term level. But assessments of long-term unemployment are fraught with great difficulties.
In October 2019, according to CoinMarketCap, total outstanding crypto-assets represented EUR 205 billion globally; in comparison, the euro area’s M3 monetary aggregate amounted to EUR 12.5 trillion in August 2019. In addition, the diversity of views on the contributions that crypto-assets can make to the efficiency and safety of our payment systems mirrors the one in their forms. Some see crypto-assets as a disruptive innovation poised to radically change the way our monetary and financial system operates, and changing it for the better. Others believe that for the time being they do not provide a new and attractive answer to the classical trilemma payments solutions face between low cost, high execution speed and low risk, and would change the way our monetary and financial system operates for the worse. To share with you a few thoughts on this debate, speaking from the perspective of a central banker and a supervisor mindful of the benefit of innovations but also of the risks they could bring to financial and monetary stability, I will focus my remarks on: 1- whether and how crypto-assets can contribute to improve our payment systems, 2- the public policy challenges they raise, in particular for central banks, and how to address them. I – Crypto-assets and the future of payment systems 1- In the payment instrument landscape, there is currently a twin trend: the share of cash  payments dwindles while cashless payments undergo a transformation driven by behavioral changes and technological innovation.

House prices have, as I mentioned in the introduction, increased by 140 per cent since 1996; annual changes are now in the vicinity of 8 per cent, down from around 13 per cent a year ago. As in many other countries, these developments have been the subject of much attention in the media, and calls have been made for the Riksbank “to do something about it”. Here some pedagogical challenges arise. We must explain that we do not target house prices but that we do not ignore risks associated with them. This is far from having a target for house prices. House prices vary in response to changing economic conditions, one of them being the stance of monetary policy. In Sweden, as in many other countries, house prices have increased in an environment characterized by strong macroeconomic conditions, rising disposable incomes and increasingly sophisticated financial markets. In this environment it is impossible to pin-point an appropriate rate of change in house prices. But policy makers always have to take decisions under a high degree of uncertainty. BIS Review 96/2007  5  Concluding remarks In conclusion, let me say that we have tried to be open and honest about the uncertainties surrounding the effects of house price developments on the rest of the economy and the appropriate monetary policy response. We have, in fact, been open about our own uncertainties and the differences in opinion, albeit small, that have arisen at times. This may have given rise to “confusion about the confusion”.
The nontradable goods sector will require more domestic resources. 2/6  BIS central bankers' speeches  Graph: Labour market in a three-sector model As a result of higher labour demand from the non-tradable sector, the general wage level will increase, and the non-tradeable sector will expand at the expense of the two tradable sectors. Graph: “Spending effect” But this is only half of the story. The second part is the resource movement effect. Also the oil related-sector will demand more labour. As a result, wages will move up further, and the manufacturing sector will shrink even more. Graph: “Resource movement effect” This crowding-out of manufacturing is unavoidable if the benefits of the oil resources are to be enjoyed. But the process may go too far. The economy may find itself in a difficult situation when resources are exhausted. The structural changes in the economy have to be reversed. Workers who become unemployed must find new jobs in manufacturing. This could be quite challenging. It is at this stage you can really assess whether a resource economy has escaped the “Dutch disease” or not. Gagnon (2018) argues that the necessary adjustment costs will be minimised if spending follows the permanent income principle, i.e. the expected real return of the resource wealth should be spent every year. On this background he claims that Norway has saved too much and that spending should rather have been based on a modified version of the permanent income principle.

Banks were therefore willing to approve credits in order to establish a relationship with such a profitable customer as LTCM. At the same time, the fund’s reticence about its risk profile made it difficult for creditors to form an accurate picture of the total risks. The banks were evidently unaware of the size of the credits that other players had provided, which by itself is remarkable. Neither did they fully appreciate what the large positions might have for consequences if the collateral had to be called. In other words, the banks ought not to have relied to such an extent on the collateral, in the form of securities, they had accepted for their loans. Lending of this type requires that even the banks obtain a picture of the borrower’s total situation. Had they done so in the case of LTCM, the outcome would certainly have been different. The problems last autumn also revealed shortcomings in current risk models and the management of certain types of risk. The banks must pay more attention to how the models work in the event of a pronounced change in market conditions. The markets moved to such an extent that historical estimates of co-variations ceased to apply. The crisis accordingly offers several lessons:  7  BIS Review 23/1999  •  In the light of what happened in international financial markets last autumn, all participants in the financial system must improve their credit policies.
We are implementing Professional Conversion Programmes (PCPs) to pre-emptively reskill employees whose roles are impacted by change. We launched the IBF Careers Connect two months ago to help our workforce navigate career changes, acquire relevant skills, and be job-ready. We are working with SkillsFuture Singapore (SSG) and Workforce Singapore (WSG) on a Skills Framework for Financial Services that will provide individuals with information on employment, career pathways, occupations, job roles, emerging skills and competencies, as well as relevant education and training programmes. As leaders of our institutions and businesses, we have a special role to play. If each of us can commit to plan for our own workforce, to develop them and give them the best opportunity to stay relevant, the transformation of our workforce will be that much 2/3  BIS central bankers' speeches  smoother. Let us mobilise and inspire our staff to inculcate a growth mindset to stay competitive and step up to take action. To help do that, IBF is pleased to launch of the #FutureMeNow movement. This is a call to action, for industry professionals and leaders to take ownership and contribute to enabling our workforce for the future. Individuals can pledge to learn something, talk to someone about their career plans or be a mentor. IBF will work with the pledgees to realise their pledges. There are about 500 of us gathered here today. I invite you as industry leaders here tonight to be the first to be active multipliers.

Others are related to the effects of the crisis on the real and financial position of households and firms in a setting in which private-sector deleveraging and fiscal consolidation must continue. The start-up of the SSM, the assessment of significant institutions and the new European resolution authority. As earlier stated, I feel bound to refer to the imminent start-up of the Single Supervisory Mechanism. Further progress has been made in recent months on the project to create a banking union. As we know, this project is vital to ridding Europe of the financial fragmentation which, at the height of the crisis, jeopardised the very survival of the euro and which has affected economies such as Spain so adversely. I shall broach three issues: the Single Supervisory Mechanism; the assessment of the solvency and soundness of the European banks directly supervised by the ECB; and, thirdly, the Single Resolution Mechanism. 1) The first pillar of the banking union is the Single Supervisory Mechanism, whose aim is to improve supervision in the euro area and make it more uniform, to promote financial integration and to break the negative link between confidence in banks and doubts over the sustainability of public finances. Since the approval by the European Council of the SSM Regulation, in October 2013, work has proceeded apace to ensure the SSM commences operating on 4 November. In particular, the ECB has approved a Framework Regulation which defines the supervisory function, its attendant arrangements and the distribution of responsibilities between the ECB and the national authorities.
Ardian Fullani: Microfinance in Albania Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the Euro Mediterranean Conference on Micro Credit, Rome, 5-6 December 2005. *  *  *  Distinguished participants! I’m glad to participate in the Euro Mediterranean Conference on Micro Credit, an important event associated with the announcement of the Year 2005 as the “International year of micro credit” by the United Nations. Authorities of a country usually aim at achieving sustainable economic growth in a non-inflationary environment. Ideally, in a free market, capital will go to those opportunities that represent the most efficient and profitable investments. But, in a developing country, markets have several imperfections and issues and capital could easily be misallocated. It could go in those investment opportunities that provide high but risky quick returns and on other low efficiency ventures that are nearly safe. This behavior could however be problematic for future economic growth of the country. Many sectors of enormous long term growth potential can be left unexploited. This means that some areas of the economy will be booming, while other areas will be considerably lagging behind leading to a very unbalanced economic development. Also, various groups of population, particularly low income groups, will most probably be excluded from financing opportunities increasing the odds of becoming poorer. As a result, social problems and issues may arise such as: job losses, loose population movements and illegal establishments, etc, which will stretch public facilities to cope with this situation.

While acknowledging the role of the microfinance as an important tool for ensuring development opportunities to small businesses that otherwise may never access financial resources, one should keep in mind that microfinance is sound if it is provided by sound institutions. There is not much benefit if such institutions fail because of lenience of their internal rules and procedures, and/or because the supervisory authority has closed an eye on them because of their social role. This will also make other institutions become hesitant in engaging in microfinance. The relationship between the microfinance institutions and the banking sector regarding their interaction in the economy financing, is a delicate issue. Their coexistence is certainly “peaceful” at the early development stage of at least one of these groups of institutions, but as the economy grows and competition increases, they tend to move toward each-other. At that stage, it is important to pay special attention for ensuring clear “rules of the game” for their activity and to provide adequate policies that allow for structural reforms of these institutions and of their market influence. In conclusion, microfinance is a very important mean to achieve a balanced economic growth, by providing financial support to small and medium businesses which are vital for the medium and long term economic growth. Compared to some other countries in the region, microfinance in Albania have shown higher growth rates with good quality. However, there is ample room for enhancing it further.
Standard & Poor’s (2010), Potential $ Trillion Bank Contingent Capital-Style Issuance Faces Uncertain Investor Interest. BIS central bankers’ speeches  11  Annex Chart 1: Distribution of capital ratio for the retail mortgage book with model error 0.10 0.09 Model error  0.08  Original capital ratio  0.07 0.06 0.05 0.04 0.03 0.02 0.01 0.00 75  80  85  90  95  100  105  110  115  120  125  130  Sources: 2009 Pillar 3 disclosures of Lloyds Banking Group and Royal Bank of Scotland and Bank calculations (a) The model error takes the probability of default (PD) for each given risk bucket of mortgagees as the realisation of a uniformly-distributed random variable across the range of possible PDs within that risk bucket. This maps to a new risk-weighted assets number for the retail mortgage book, and a new capital ratio for this portion of the bank’s book (assuming the initial capital ratio is 100). This error is simulated 5,000 times for each of two banks and the chart shows the resulting distribution. Chart 2: Distribution of capital ratio for the retail mortgage book with model and mapping errors  Sources: 2009 Pillar 3 disclosures of Lloyds Banking Group and Royal Bank of Scotland and Bank calculations (a) The mapping error maps the PD for each mortgagee to the next higher risk bucket. It compounds with the model error described in Chart 1.

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