samchain/econo-pairs-v1 huggingface dataset:
And why, for countries where there have been larger and faster increases in household debt levels, recessions have tended to be deeper still. The Financial Policy Committee has already acted in response to the growing momentum in the housing market. As well as the general strengthening of bank capital, the FPC, in conjunction with other regulators and the Treasury, withdrew both the cheap funding and favourable capital treatment of mortgage lending introduced after the crisis to help support the housing market. And, we have asked the FCA that when lenders test whether prospective borrowers can afford, through time, the mortgages they seek they should bear in mind future Financial Policy Committee recommendation on the appropriate interest rate stress test to use in assessments of affordability. Whether and how to act further if, following the pause of the last couple of months, momentum continues to build will be the most challenging judgment the FPC will have to take in the coming months. The FPC’s response will depend on the nature of the risks to stability identified. The FPC’s powers of direction in relation to the capital banks and building societies bear most directly on mortgage lenders’ ability to weather a downturn and housing bust once it has emerged. Others, like the FPC’s powers to make comply or explain recommendations to the PRA and FCA could bear more directly on the crucial underwriting standards and affordability constraints like debt service to income, loan to income and loan to value.

Jean-Pierre Roth: The long path to restoring faith in financial markets Speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the CEO Luncheon of the Swiss-American Chamber of Commerce, Zurich, 4 September 2002. *  *  *  At the outset I would like to acknowledge the long-standing ties between the Swiss-American Chamber of Commerce and the Swiss National Bank. In the past, members of the Governing Board have been invited to speak before this select audience. It is a great pleasure and honor for me to continue this tradition. My remarks today will focus on the present challenges faced by the global economy: a crisis in confidence which has pushed equity prices to unexpected lows and an economic recovery which does not seem to take the desired path. Nevertheless, I am convinced that the fundamentals are in place for a return to sustained growth. Inflation is low in almost all industrial countries, monetary policy is supporting the recovery, household consumption still plays a stabilizing role and public finances despite short-term difficulties - are not far from equilibrium. While numerous factors are responsible for the present economic uncertainty, the prolonged volatility witnessed in equity markets has hit investors particularly hard. In hindsight the stock market correction fits partially the classic story of fundamentals; one that is driven by a bubbles collapse in dotcom companies and the anticipated slowdown in economic activity.
A pedantic approach to monetary policy in much of the developed world has led to near zero and negative interest rates in many of these economies. Yet growth has remained stubbornly weak. Such policies also risk merely creating the transfer of growth across time rather than promoting sustainable growth over time. It is perhaps time to start asking whether the best way to recover from the blow-out of one debt bubble is to create the conditions for another. Central bankers and financial markets seem to be caught in a cycle of brinkmanship and central banks are caught in a trap of their own making. The outcome has been almost a decade of worsening financial repression, the progressive build-up of risks in the global financial markets, accompanied by weak investment and weak growth. It is clear that the lessons of the financial crisis have not been fully learnt in these economies – not by the financial markets and not by the policymakers. Similarly, fiscal policy is supposed to be a tool that should be useful in supporting demand. But that is only if it is used prudently and has been used prudently.

Sukhdave Singh: The rise of the South at a crossroad – a view from East Asia and Latin America Opening address by Dr Sukhdave Singh, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the World Bank Knowledge and Research Hub Conference “The Rise of the South at a Crossroad: A View from East Asia and Latin America”, Sasana Kijang, Kuala Lumpur, 16 May 2016. *  *  *  I am pleased to welcome you to today’s Conference on “The Rise of the South at a Crossroad: A View from East Asia and Latin America” organised by the World Bank Knowledge and Research Hub in Kuala Lumpur. For those of you who have not been here before, I would also like to welcome you to Sasana Kijang. I congratulate the World Bank Knowledge and Research Hub for organising this conference on economic integration. Economic integration within the current global context It is indeed an opportune time for us to look at economic and financial integration and what it can offer to emerging economies in Asia and Latin America. It is an opportune time because the world seems to have been unable to bounce back towards a healthy growth path after the financial crisis in the developed world. It is an opportune time because policymakers have not been successful in generating strong sustainable growth. The traditional tools for nursing the economy back to health don’t seem to be working as well – possibly because of overuse or misuse.
While that diversity should be welcome – it should be a source of strength – it can be a source of weakness if it simply moves gearing into a shadow on our radar screen. It’s essential that our radar technology keeps up. The Bank’s Commercial Property Forum, ably chaired by Ian Marcus, helps us minimise the shadow on the screen. But we also want systematic data. That’s why I welcome the efforts of your industry, in partnership with us, to build a database of CRE loans: a dataset that will be run and managed for the public good, while respecting commercial confidentiality. It can give you, and us, the information we need to manage the risk of loosening underwriting standards. Long-term valuations But still more is needed to nurture a resilient market environment. You can become overgeared without technical slipping of underwriting standards. We’ve seen in the past how a change in sentiment can drive commercial property prices up even without the prospect of improvement in the cashflows which the property will generate. That creates headroom for those already in the market to borrow more without breaching their loan-to-value standards. And the use of that headroom drives prices up further. An ultimately pernicious spiral of sentiment and debt begins. Valuations and debt increase sharply relative to the cashflows that support them. When the music stops, the process goes into sudden reverse. As valuations fall, borrowers are left struggling to service loans that are greater than the value of the property. Firesales begin. Sentiment deteriorates.

And if the flow of foreign capital were to dry up or even reverse, there would be wider consequences for spending, output and exchange rates. So your continued success is important to everyone. And yet, as you know all too well, the UK’s commercial property market hardly has a record as a beacon of stability. But we shouldn’t be fatalistic. We’re not doomed to repeat the past. Yes, the cycle is a force of human nature. But resilience to it can be nurtured. It will be a battle of nurture against human nature. The time to start it is when people most feel like celebrating: when your market is on the up. We have to start now. And if we’re going to have any success, we – the Bank of England, you – the industry, and us – together, need to step up and act. So this evening I want to set out what is being done. At the heart of it is the need to ensure finance supports you through the whole cycle. The need to avoid the pattern – all too familiar to you – of financing conditions going from conservative to careless and then to completely closed, all too rapidly. BIS central bankers’ speeches  1  The need to replace financing that magnifies cycles of sentiment with financing that mutes them.
International efforts range from the creation of specialized units of behavioral risk experts to risk culture assessment frameworks to supervisory guidance that directs supervised institutions to develop and promote a sound corporate culture. I view this variation in approach as a feature and not a bug of the official sector focus on culture reform. There is rarely a single solution to a complex problem with many interdependencies and deep uncertainty. Rather, the official sector must experiment and innovate; probe and adapt; and try new approaches to foster a healthy culture that promotes appropriate conduct. One common thread of the recent innovations, however, is that supervisors can provide a horizontal perspective on culture reform that reflects broad social goals in a way that the private sector cannot. To be clear, it is not the supervisors’ job to dictate the internal culture of a firm, but when there are market failures such as externalities or information asymmetries, then there is a role for the official sector to push firms to do more to address these issues and mitigate misconduct risk. We should be cautious, however, about our ability to influence precisely and predictably. Public health studies, for example, document “policy resistance” where interventions are defeated by the system’s response to an intervention.8 As an example, a rules-based regime that focuses on reducing conduct risk by prescriptive regulatory fiat runs the risks of creating a “check-the-box culture” where everything not explicitly banned is considered acceptable behavior.

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Companies can also come forward and test their ideas in Bank Negara’s Regulatory Sandbox, and we will facilitate a safe environment for companies to develop viable solutions to identified problems. This is the time for MSB companies to be forward-looking, not hold on to the past; to be agile and responsive to change, not slow to evolve; to be bold and ambitious, not reactive; and to be secure in strong professional and ethical standards for conducting business, and not exposed to practices that can harm the industry’s image and reputation. The Bank has every confidence in the industry’s ability to grow and develop further from strength to strength, well supported by a dynamic Association that has had a key role in driving many of the accomplishments that have brought the industry to this point. On that note, thank you for having me here this evening. Congratulations to all the recipients of the customer service excellence awards, and all MSB companies that are present here for supporting the important work of the Association. On the part of the Bank, we look forward to the implementation of the industry’s five-year strategic blueprint up to 2020. Bank Negara Malaysia will continue to engage constructively with the Association and industry on these initiatives to develop a modern, dynamic and progressive industry. 3/3  BIS central bankers' speeches

High and volatile inflation causes lenders like banks and other financial institutions to demand a higher fixed interest rate on loans to compensate for the risk that inflation will move around, thus raising  2  the cost of finance for investment. At the same time, financial institutions need to offer higher nominal and real interest rates to encourage savers to deposit their money to mitigate the risk of high and volatile inflation eroding the real value of their savings. High and volatile inflation increases the margin between lending rates and deposits, and this high cost of financial intermediation penalises both savers and borrowers. High and volatile inflation encourages workers to bargain for higher wages. High and volatile inflation also prompts producers and sellers in the economy to add higher markups in pricing of goods and services. The combined result of this self-fulfilling cycle will be lower economic growth and higher current account deficits, depleting reserves and volatile exchange rates, and the country will end up with a commercial capitalist class of buyers and sellers of imported goods, or a class of middlemen! Then the question is, what is the appropriate level of low and stable inflation, which will result in more desirable outcomes? Most advanced economies set their inflation target in the low single digits around 2 per cent. For example, the United States and the United Kingdom desire to maintain inflation at around 2 per cent, while in the Eurozone it is below but close to 2 per cent.
But what is meant by a lesser or greater stability of inflation and resource utilisation? Determining this requires a quantitative measure of stability, the mean squared gap. The mean squared gap for inflation measures how much the inflation forecast deviates from the inflation target. The mean squared gap for unemployment measures how much the rate of unemployment deviates from the sustainable rate. A smaller mean squared gap entails better stability. Panel b in Figure 7 shows the mean squared gaps from the latest monetary policy decision. They are calculated by taking a mean value of the sum of all the squared deviations for the respective target variables and calculating the size of them. The closer to zero the mean squared gap is, the better the stabilisation of the respective target variables; that is, the better the target attainment. Normally, it should be the case that it is not possible to stabilise one of the target variables better without stabilising the other variable less well. Otherwise, monetary policy is not “effective”. Which interest-rate path is chosen then depends on the relative importance one attaches to stabilising the respective variables. Different members of the Executive Board may attach different levels of importance to the two variables and thus advocate different repo-rate paths. The point of the mean squared gaps is that they give us clarity and transparency regarding the various monetary policy alternatives.

The difficult thing about using the unemployment gap as an indicator of resource utilisation is to determine the sustainable rate of unemployment. However, this is not more difficult, in fact it is probably easier, than determining potential output and potential hours worked. On closer inspection, it can be seen that the sustainable rate of unemployment has several advantages compared to other measures of normal resource utilisation. The sustainable rate of unemployment can be expressed as a stable percentage – for example 5.5 or 6 per cent. It changes slowly and lies within a limited range. Estimating potential GDP is, in comparison, like shooting at a moving target. It grows over time, and in the view of many, can be seen as a random process, similar to a so-called random walk with drift. The sustainable rate of unemployment can be determined using several different methods – structural search models similar to those developed by the Nobel prize-winners Diamond, Mortensen and Pissarides, so-called UC-models, DSGE models and NAIRU estimates. The results of these different estimation methods can be compared and their robustness and reliability assessed. We can then calculate the average of the estimates and weight this with the assessed reliability of the various estimates. When estimating the sustainable rate of unemployment it is also important to include the assessed effects of labour-market reforms (Forslund 2008).
Today over 60 per cent of foreign direct investment into the Mainland is routed through Hong Kong. A similar figure applies to China’s outward investments. Hong Kong is the pre-eminent fund-raising venue for Mainland corporates, through equity IPOs, debt issuance, bank lending, and various forms of private investment. In recent years, two major developments in financial linkage have been gaining momentum. One is the continuous opening of the Mainland’s financial markets to global investors through the various northbound Connect schemes with Hong Kong. The other is the increasing southbound traffic, again through the Connect schemes, that enables Mainland investors to invest in overseas financial assets. These are significant developments. They demonstrate China’s confidence and willingness to be connected to the global financial markets. The southbound schemes also send a clear 2/4  BIS central bankers' speeches  message: as China’s economy grows and its people become more affluent, both institutional and retail investors look for more diversified allocation to overseas assets. Let me offer some context here. When we think about the northbound traffic, we should bear in mind that, in global terms, China’s stock and bond markets are second in size only to their US counterparts. For the southbound traffic, we are talking about managing the wealth of the world’s second largest economy and most populous country. And we are only in the early stages of these two-way flows through the Connect schemes. Hong Kong is the natural choice of venue to host the Connect schemes.

The new regulatory framework also made it harder for originators to get capital relief insofar as the conditions that must be met in order to qualify for a significant transfer of risk (a necessary condition to free-up capital) are now much more stringent. This was unfortunate in the sense that the contribution of this class of securities in alleviating systemic effects, which should warrant a more reasonable regulatory treatment, was overlooked; in at least two ways. First, ABS sales are, from an aggregate perspective, a better way for banks to deleverage vis-à-vis credit supply restrictions. In fact, if many banks deleverage simultaneously by restricting credit, this will have an aggregate impact on the total supply of credit, which might end up in a credit crunch. In contrast, deleveraging through securitisation does not mechanically induce a credit supply restriction, even if many banks do it simultaneously. In fact, deleveraging through securitisation could provide banks with enough funding and capital to enable them to increase lending, or, it could help transforming zombie banks into active players in the economic recovery. Second, there is considerable home bias in the loan portfolio of banks whereas diversification of assets and reserves across the euro area, something which is achievable through cross-border purchases of ABS, could act as an absorber of asymmetric shocks. 2  BIS central bankers’ speeches  All this suggests that the next regulatory steps could justifiably give a more favourable treatment to ABS.
Monetary policy response  The CBRT has been clear about its approach in responding to inflation resulting from factors beyond its control: Monetary policy will tolerate the first round effects, but will promptly respond to any deterioration in overall pricing behavior. I want to emphasize that the policy pursued since September 2007 should be interpreted in this context. In September 2007, the Monetary Policy Committee (MPC) decided to initiate the rate cuts, which had already been signaled earlier in the year. Accordingly, policy rates were lowered by 225 basis points between September 2007 and February 2008 (Table 2). Table 2: Monetary Policy Committee (MPC) Decisions in 2007 and 2008 Dates for MPC Meetings  Decision on Interest Rates  Interest Rate  January 16th, 2007 February 15th, 2007 March 15th, 2007 April 18th, 2007 May 14th, 2007 June 14th, 2007 July 12th, 2007 August 14th, 2007 September 13th, 2007 October 16th, 2007 November 14th, 2007 December 13th, 2007 January 17th, 2008 February 14th, 2008 March 19th, 2008 April 17th, 2008  No Change No Change No Change No Change No Change No Change No Change No Change -0.25 -0.50 -0.50 -0.50 -0.25 -0.25 No Change No Change  17.50 17.50 17.50 17.50 17.50 17.50 17.50 17.50 17.25 16.75 16.25 15.75 15.50 15.25 15.25 15.25  Source: CBT. In the January 2008 Inflation Report, we indicated that uncertainties in the global economy, hikes in electricity prices, and risks to price setting behavior had compelled the CBRT to be more responsive to incoming information.

Michael Gondwe: Economic and financial sector developments in Zambia Speech by Dr Michael Gondwe, Governor of the Bank of Zambia, at the official launch of the Zambia National Commercial Bank Limited (Zanaco) Ndola West Branch, Ndola, 27 June 2013. *  *  *  The Managing Director, Zanaco Members of the Executive Management Team Members of the Press Distinguished invited Guests Ladies and Gentlemen Let me begin by tendering apologies on behalf of the Governor of the Bank of Zambia, Dr. Michael Gondwe who is not able to be with us this evening as he is attending to other commitments. He however requested that I represent him at this important occasion. It is therefore my honor and privilege to officiate at this important occasion to launch the new Ndola west Branch of Zambia National Commercial Bank Limited. I am told that the Branch was initially on Maina Soko Road opposite Barclays Bank and that the bank decided to move here because the place is bigger, which I believe will provide a better and spacious environment. Distinguished Guests, the Bank of Zambia is reliably informed that since the inception of the bank more than 37 years ago, Zanaco has grown its customer base to over 640,000 and has grown its network of branches and agencies to 64, in addition to the branch being launched today, 53 Zanaco Xpress offices and 26 Zanaco agents. The bank has also invested in more than 162 ATMs and 465 Merchant POS terminals.