samchain/econo-pairs-v1 huggingface dataset:
Of concern has also been lack of adequate information on debt concentrations in the system partly due to the increasingly elaborate ways in which debt is passed on from originating institutions to different investors. The propensity to under-price credit risk, especially under conditions of excess liquidity, has also increased concerns over underwriting standards. The consequent sharp pricing corrections would in turn have the potential to result in broader economic disruptions. Recent developments in the prudential regulatory and supervisory framework have, and will continue to play an important role in promoting sound risk management practices in the light of these changes. These of course, include the modification of capital standards that are more granular in addressing different types of risk. Supervisory approaches globally have also evolved to place a greater emphasis on sound risk management and early interventions to address emerging risks before they become major problems. There is also more emphasis being placed on the expectations of financial institutions to play a greater role in ensuring that financial products offered to customers and investors are suitable given their needs and financial circumstances, and that they have a good understanding of risks assumed with the products.

BIS Review 130/2007  1  While lending and deposit-taking remain the mainstay of commercial banking, the profile of credit markets has changed significantly. Today, conventional credit products are being offered alongside the growing significance of asset securitisation and credit derivative activities. This has had a profound impact on the nature of banking. The rapid development of these synthetic credit markets, coupled with an extended period of ample liquidity in the global financial system, has expanded the avenues for banks to engage in more aggressive lending practices that are funded by borrowing from the wholesale money markets, and by repackaging and selling loans to other investors in the form of asset-backed securities. This represents a significant shift from the more traditional banking models where loans are predominantly funded by deposits. The increasing complexity in the way that debt is created and distributed in the financial system raises important implications for financial stability. The “originate and distribute” strategy that has been adopted by some institutions warrants addressing more comprehensively the full range of risks to which the banks are exposed. This includes the liquidity, foreign exchange and moral hazard risks in banking institutions. Credit risk exposures have also taken on more complicated forms, including counterparty risks on derivatives and foreign exchange transactions. The valuation of such financial transactions and instruments are also often difficult to measure particularly under distressed market conditions. In addition, the correlations between credit and market risk, both within and across national borders, have become more complex.
•  Credit conversion at a monthly average rate (from the credit agreement date to present) would generate losses worth around lei 3.2 billion for the entire banking sector, while two credit institutions would see their solvency ratio fall below the minimum regulated threshold. The solvency ratio across the banking sector would diminish from 17.1% to 15.3%. C.  Conversion of CHF- and EUR-denominated loans into lei at exchange rates other than the market exchange rate applicable on the conversion date. •  Assuming the cumulated conversion of CHF- and EUR-denominated loans at the historical rates in the month of extending the credit, banks would incur losses (calculated as the difference between historical rates and the exchange rates on 23 January 2015, when the CHF/RON was 4.58 and the EUR/RON was 4.49) estimated at lei 9.8 billion. The solvency ratio across the banking sector would diminish from 17.1% to 11.7%. Four credit institutions would see their solvency ratio fall below the minimum regulated threshold and would require recapitalisation. •  Cumulated credit conversion at the historical rates + 20% would generate losses worth around lei 5.5 billion for the entire banking sector. The solvency ratio across the banking sector would diminish from 17.1% to 14.1%. Four credit institutions would see their solvency ratio fall below the minimum regulated threshold and would require additional capital injections. •  Cumulated credit conversion at monthly average rates would generate losses worth around lei 4.5 billion for the entire banking sector.

This fear of counterparty default dented global trading and interbank lending activities. To allow market participants to better manage their counterparty risks, the Singapore Exchange launched a new clearing service for OTC financial derivatives in 2010. This is the first such service in Asia. 10 international and local banks have since signed up with SGX to clear their OTC financial derivatives, and there are intentions to expand the product suite going forward. This initiative also enhances our role as a regional risk management centre. 9. In May last year, MAS published a consultation paper on amendments to the Code on Collective Investment Scheme. Among other things, there are proposals to introduce a number of measures to address counterparty risks. For instance, MAS has proposed that managers may only enter into OTC financial derivative transactions with counterparties subject to prudential supervision. If the financial derivative transaction is performed on an exchange where the clearing house performs a central counterparty role, the counterparty risk can be taken as zero. MAS will be publishing its response to the consultation paper in due course. 10. Singapore is also a key risk management hub for the commodities business. We are Asia’s leading OTC commodity derivatives trading hub, accounting for more than 50% of Asia’s volume. There is also a confluence of users and suppliers of commodities risk management solutions in Singapore. Apart from the critical mass of global commodities traders, many global banks have also based their Asian commodities business in Singapore.
Press release 14 October 2013. (Strengthen  the  Borg, Anders (2010), interview response in radio programme P1-morgon 30 November 2010. Radio Sweden. Dell’Ariccia, Giovanni, Igan, Deniz, Laeven, Luc, Tong, Hui, Bakker, Bas and Vandenbussche, Jérôme (2012), Policies for Macrofinancial Stability: How to Deal with Credit Booms, Staff Discussion Note 12/06. The International Monetary Fund Finansinspektionen (2013), The Swedish Mortgage Market 2013. Hamilton, Carl B. (2011), Dags att minska hushållens ränteavdrag för bostadslån (Time to reduce households’ interest deduction for mortgages), article on debate page of DN newspaper 5 January 2011. Dagens Nyheter. Laséen, Stefan and Strid, Ingvar (2013), Debt Dynamics and Monetary Policy: A Note, Working Paper no. 283. Sveriges Riksbank. Nekarda, Christopher J. and Ramey, Valerie A, (2013), The Cyclical Behavior of the PriceCost Markup. Working Paper No. 19099. National Bureau of Economic Research. Poloz, Stephen S. (2013), Monetary Policy as Risk Management, speech 12 December 2013. Bank of Canada. Smets, Frank (2013), Financial Stability and Monetary Policy: How closely interlinked? Sveriges Riksbank Economic Review 3, 2013. Sveriges Riksbank. Svensson, Lars E. O. (2011), Practical Monetary Policy: Examples from Sweden and the United States, Brookings Papers on Economic Activity, Fall 2011, 289–332. Svensson, Lars E. O. (2013a), “Leaning Against the Wind” Leads to a Higher (Not Lower) Household Debt-to-GDP Ratio. larseosvensson.se. Svensson, Lars E. O. (2013b), Some Lessons from Six Years of Practical Inflation Targeting, Sveriges Riksbank Economic Review 3, 2013. Sveriges Riksbank. Sveriges Riksbank (2012), KIX index better reflects Sweden’s international dependence. Article in Monetary Policy Report, October 2012.

Consequently, the current overall situation of the Swiss economy remains difficult despite the many rays of hope with regard to the economic cycle. Also, the danger of deflation does not yet seem to have been entirely averted. We have not yet reached the moment for a change of direction in monetary policy in Switzerland. After analysing the available economic data and forecasts and taking various risk considerations into account, there is no need for the SNB to take monetary policy action at present. The SNB can afford to adopt a holding stance. However, this holding stance should not be mistaken for inactivity. The SNB continues its firm implementation of an extremely expansionary monetary policy and the unconventional measures launched on 12 March 2009. The Swiss franc money market is still being provided with a generous and flexible supply of liquidity, interest rates remain low, Swiss franc bonds are still being purchased to dampen the level of risk premiums on the Swiss franc bond market as and when needed and the appreciation of the Swiss franc will continue to be prevented. BIS Review 27/2009  1
Possible market-turning events Previous soft phases of the insurance cycle have ended, sometime quite dramatically, with a major loss. Examples include Hurricane Andrew in the early 90s, Asbestos, Pollution and Health losses in the mid-90s and “9/11” in 2001. Whilst it is understandable that some in the industry talk of the need to have naïve capital and capacity cleared out of the market, restricting supply and supporting premium above the technical price level, there is a sense that, this time, things may be different. Many believe that further capital is “waiting in the wings” to invest in the sector in the event that prices rise. Nonetheless, it is sensible to plan on the basis that a significant, market-turning event might occur at some point. Taking this as the starting point, we think there is an opportunity for firms to think through what issues might then arise and to consider what steps can be taken now to plan for these events, not least because we know some firms will be very keen to respond to any improvements in market conditions which might arise after a large loss event. We are publishing today a consultation paper setting out our expectations of firms in planning for these types of extreme insurance loss events; focussing on some of the governance, risk management, capital management and reporting capabilities that we think firms need to consider.

It has to spot at an early stage and to correct deviant behaviours. The overall scope of peers’ surveillance should be resolutely broadened to include the competitiveness as well as structural reforms of individual countries, so as to maintain healthy and sustainable growth as the ECB has constantly asked for during the past year. In doing so we will pave the way for a European economy which will have a higher level of growth potential, and which will be prosperous, stable and resilient. The introduction of the single currency represents the greatest achievement to date in the history of European integration – a process that has ensured six decades of peace and prosperity in Europe. Countries that share a common currency share a common destiny. Thank you for your attention. BIS Review 59/2010  5
As I was able to explain to you here before the summer, the change in cycle in Spain had started before the episode of financial turmoil, making itself felt mainly in the real estate sector, which set in train a correction of the excesses that had built up during the long expansionary phase. These excesses had largely arisen owing to the global environment of financial laxity and undervaluation of risk, and to monetary and financial conditions that were particularly accommodative for Spain following EMU membership. These conditions were based on interest rates that held at low levels over a very extensive period and which were conducive to rapid indebtedness by households and by firms, mainly those related to the real estate sector. In any event, the adjustment of the real estate sector began slowly, mirroring the gradualism with which the determinants of residential investment changed. Hence, as the change in monetary policy stance that began in late 2005 progressively passed through to household and corporate borrowing costs and as the overpricing of housing became more patent, the dynamism of the sector eased off. However, this gradual pattern was altered when the international financial crisis raised credit risk premiums across the board, blocked a most significant part of banks' wholesale funding mechanisms and spread uncertainty and mistrust, most particularly in respect of economies subject to real estate adjustments. Against this background, the demand for housing fell off  BIS Review 122/2008  3  drastically, when the production of houses was still at a very high volume.

Higher growth, a steady reduction in spare capacity in the economy and continued stability in inflation expectations should also slowly begin to reverse the recent decline in core inflation. Inflation was quite low during the second half of 2010, but we expect that to be the low point of the cycle. In short, viewed through the lens of the Federal Reserve’s dual mandate – the pursuit of the highest level of employment consistent with price stability – the current situation remains unsatisfactory. However, we appear now to be moving in the right direction. Regional economic conditions (update since the October regional press briefing) Now, how is our region doing? Overall – in contrast to the pick-up in the nation – the regional economic recovery appears to have paused in the fourth quarter. More similar to the nation, joblessness in the region has retreated somewhat from the peaks recorded toward the end of 2009, but remains unacceptably high. As attendees at previous regional press briefings may recall, the New York Fed produces Indexes of Coincident Economic Indicators to help monitor the performance of the regional economy. Based on these measures, the upturn in economic activity that we saw for much of 2010 in both New York State and New York City has paused. To be sure, activity in both the state and the city is higher than a year ago, but we saw no increase over the prior quarter. This pause is particularly evident in New York City where the economic recovery had been relatively strong.
MFIs’ lending to households for housing purposes and to non-financial companies, new loans and agreements, refers to monthly data. Repo rate refers to daily data and date of implementation. Sources: Statistics Sweden and the Riksbank  BIS central bankers’ speeches  9  Figure 3. Inflation expectations  Note. Per cent. Money market agents. Source: TNS Sifo Prospera  Figure 4. The development of the repo rate  Note. Per cent. Outcomes are daily rates and the forecasts refer to quarterly averages. Source: The Riksbank  10  BIS central bankers’ speeches  Figure 5. Bond purchases 240  240 200  200  65  160  200  160  135 120  45  45  50  50  120  80–90 80  80 40  40  40  30  30  30  30  10  10  10  10  10  February  March  April Policy meeting  July  October  10 0  40–50  0  Note. SEK billion. Government bond purchases will continue until the end of June 2016. Source: The Riksbank  Figure 6. Development of interest rates under a negative repo rate  Note. Per cent. Interest rate to households, lending rate refers to loans for housing purposes. Sources: Statistics Sweden and the Riksbank  BIS central bankers’ speeches  11  Figure 7.

Understanding the Riksbank’s actions first requires understanding why we think the inflation target is so important. We introduced inflation targeting in Sweden in 1993 after we were forced to abandon the fixed exchange rate regime. We used academic research to support this decision, along with the good example provided by forerunners such as Canada and New Zealand.1 A well-implemented inflationary targeting policy benefits economic development by making inflation lower, more stable and more predictable. Sweden’s experiences in the decades before and after the introduction of the inflation target provide a rough idea of the significance of inflation targeting for the development of prices and wages – severe fluctuations in the 1970s and 1980s were followed by very stable development after the introduction of inflation targeting (see Figure 1). It has benefited economic development in Sweden. This is because more predictable price developments make borrowers and savers feel more secure in how inflation will develop and create good conditions for economic decisions. This lowers borrowing costs and thereby benefits investments. Investments and new recruitments are facilitated by companies’ ability to make a reasonably good prediction of price and wage cost increases over the lifetime of an investment. The less uncertainty there is over future price developments, the easier it also becomes to agree on conditions for various contracts, not least the wage agreements negotiated by the labour market parties.
A deterioration in bank profits can reduce the supply of loans and mean that investments that would have been profitable do not get off the ground. In the worst possible scenario, systemically-important banks would suffer a bank crisis. Falling asset prices thus risk triggering processes that could eventually lead to a recession. Psychological factors strengthen both an upturn and a downturn in asset prices and real demand. Sweden, like many other countries, as you know has experience of this type of development. The costs to society during the years following the bank crisis were very high. However, rapidly rising asset prices do not constitute a problem in themselves that requires measures. Deciding factors here are whether there is reason to regard asset prices as fundamentally exaggerated and whether the bubble has led to excessive demand in the real economy, as well as misallocation of resources and excessive indebtedness. However, a financial bubble that only creates winners and losers among the financial operators without spreading to the real economy is hardly cause for concern, as long as the financial system can carry out its tasks efficiently. Inflation targeting stabilises production Although there may be reason in certain situations to counteract exaggerated asset prices and the imbalances they create, the question is what measures are available. There is always a risk that intervention by authorities may in itself create more problems than one is trying to solve.

Large shocks to the functioning of the financial system would also reduce the effectiveness of monetary policy, as the transmission mechanism is affected by the efficiency of the capital supply and the mediation of payments. The fact that there are close links between the central banks' two tasks becomes particularly evident when the effects of financial bubbles are discussed. An important part of the process leading up to large imbalances is credit granting by the banks. The fact that households and companies demand loans for increased consumption and investment when asset prices are rising is one thing, but it also requires that the banks increase their supply of loans. If the banks have well-developed risk systems, and rules and supervision are designed to motivate the banks to utilise them, the risk of exaggerated lending will be reduced. The way that capital adequacy rules are designed and applied is of great significance. The new capital adequacy rules, Basel 2, are aimed at reflecting to a greater extent than now the risks the banks actually take. However, valuating credit risks over a whole economic cycle is very difficult. The indications are that both internal credit risk models and credit rating agencies tend to underestimate credit risks during an upturn in economic activity and to overestimate them during a downturn. There is thus a risk that the banks will tend to strengthen the fluctuations in economic activity, even with the new capital adequacy rules.
These links need to be studied more rigorously, both at a micro and macro level, as well as across sectors. In this regard, regulation and supervision must aim at minimising regulatory arbitrage. Irrespective of the set-up, or technology, institutions transmitting common types of risks should be treated on the same footing. It is also opportune to formulate a holistic strategy for our financial services sector that takes into account a national risk appetite. One must take stock of the risk/benefit quotient of each subsector, and the lessons learnt thus far, and put it in a long-term context on where to focus going forward. During the year, at the request of the Maltese Government, Malta underwent an IMF Financial Sector Assessment Programme, which is an in-depth assessment of the financial sector. Furthermore, a comprehensive update of the 2015 National Risk Assessment (NRA) was carried out in 2017 and published earlier this year. It identified potential money laundering and terrorism financing threats and vulnerabilities that present risks to Malta's economic and societal stability. The NRA forms the basis of Malta’s National AML/CFT Strategy. In fact, some of the initiatives identified in the NRA are already being implemented. In addition, a Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEVYAL) has just ended a rigorous on-site mission to assess Malta’s standing with international AML/CFT standards. The local authorities are eagerly expecting the final results of these evaluations as they represent a standardised global yardstick against which to benchmark our state of play.

The Government’s efforts need to be complemented with a better utilisation of savings accumulated by the private sector. The Malta Development Bank can help in this regard, by identifying gaps in the financing of viable projects and partnering with financial intermediaries and other stakeholders to develop financial instruments that can finance them. Apart from infrastructure bottlenecks, international institutions that monitor the business environment flag other areas that warrant immediate attention. While we have significant  reservations on a number of methodological aspects underlying such surveys, we also share the view that in some areas we do need to step up our efforts very considerably. This is notably the case as regards the efficiency of court proceedings. Although the time it takes to resolve court cases has more or less halved since 2010, it is still among the longest in the European Union. Other challenges we need to address concern the length of procedures to set up a business, the low educational attainment level relative to our peers and a limited capacity to innovate. These are essential elements that support investment and productivity. The development of an intelligent online business portal which ties all Government business-related services into a one solid platform should put businesses in a better position to do business. The new legislation in the area of digital innovation provides the legal framework for business to embrace disruptive technologies.