samchain/econo-pairs-v1 huggingface dataset:
The most uncertain element of the recoverable amounts is the estimation of the outcome of the sale of Catalunya Banc, currently under way, and of the divestment of BFA/Bankia and BMN. However, it is likely that these disposals will entail an appreciable lessening of the cost that the restructuring of the financial system has involved for taxpayers. In any event, the figures are sizeable. However, in terms of GDP they are not higher than those recorded in other European countries during the financial crisis despite the fact that, in most of them, banks have not had to face a real shock with an impact on the scale of that of the collapse of the real estate sector in Spain. As discussed earlier, the banking industry – via the Deposit Guarantee Fund – has also contributed notably to stabilising the financial sector. This contribution has been possible thanks to the maintenance at all times, despite the severity of the economic and financial crisis, of appreciable financial soundness at most institutions, representing more than 80% of the sector as a whole. The DGF’s support was in the specific form of direct injections into CAM, UNNIM and CCM (for a value of € million), the APSs granted to these institutions (whose estimated cost as at 31.12.2013 was € million at present value) and the potential losses caused by the acquisition of shares in NCG and CX, provisionally evaluated at € million. 4.

In the work that has begun on a new architecture for the financial system, measures of three kinds have been singled out as particularly important: more transparent accounting for financial institutions as well as for governments and central banks; a greater involvement of private investors in crisis management; and a reinforcement of the financial system. For work on the third category, there are in principle two different approaches or a combination of these. One involves tightening up the supervision of banks and the other the introduction of higher capital standards to raise the proportion of equity capital in the bank sector. My guess is that the future work to create a more functional banking system will be conducted along both these approaches. In the prevailing situation it is important that the international banks do not become unduly cautious. Banks should take risks but their risk-taking should be properly managed. It would be unfortunate if more countries were to start imposing restrictions on capital exports. That would exacerbate the present state of affairs. Similarly, it would be directly counterproductive to introduce some type of turnover tax, as proposed earlier by Professor James Tobin. That was tried out in Sweden in the late 1980s and simply resulted in trading being transferred to other countries. Even if agreements were to be reached between many countries, there would always be countries that refrained from joining the arrangement. Moreover, the poorer liquidity that would accompany turnover taxes might actually impair the workings of some financial markets.
A third will be how far in advance one needs to act. If you thought that the impact of changes in the CCB happened with a lag, that there were benefits in a CCB above zero that could be relaxed, that risks were building or that there were benefits to moving policy gradually, these would point to moving earlier rather than later in the cycle. This approach is intended to maintain the resilience of the system over the cycle. But, clearly, requiring banks to hold more capital will very probably also have a dampening effect, leaning against the cycle. The third approach to time varying macroprudential policy I mentioned would take this further. It would set policy with the explicit objective of pushing back on the cycle until the level and perhaps the composition of credit was judged to be more acceptable in risk terms. This of course would be a bigger “call” for the macroprudential authority than targeting resilience. Again it requires a very careful assessment of costs and benefits. I do not think the macroprudential policy framework should “start” there; the starting point should be maintaining resilience. But given the history and the objective of maintaining financial stability, I do not think that the macroprudential authority can foreswear making such calls when necessary. Indeed, the FPC has implicitly already done this in taking action on the flow of high loan to income mortgages.

Economists from the so-called Austrian School maintained that if the central bank attempted to stimulate the economy with an interest rate that was below a long-term equilibrium level, it would in itself give rise to sharp fluctuations in the real economy. They also claimed that periods of overinvestment, strong credit expansion and rising asset prices could not be avoided in a world characterised by major technological advances. Rather, it was a precondition for the dynamics that spurred growth. Should expectations of future profits prove to have been overly optimistic, the imbalances in the shape of high debt and unprofitable investment should be allowed to quickly unwind without any attempt through economic policy to soften the resultant fall in output. Discretionary stabilisation policy discredited After the Second World War, the dominant view instead was that economic policy should play an active part to stabilise the economy. Fiscal policy was therefore given a more prominent role, while monetary policy and the long-term aim of price stability were pushed into the background. During the first two decades stabilisation policy worked well in many countries. Unemployment fell, growth was robust and inflation was low. The US currency, which in turn was pegged to gold, served during the period as an anchor for inflation and exchange rates in mainly western Europe, where the majority of countries had joined the Bretton Woods system.
SPEECH DATE:  2022-12-14  SPEAKER:  Martin Flodén  VENUE:  Handelsbanken  My thoughts on the Riksbank's asset purchases* After buying assets for eight years, the Riksbank is planning to conclude the purchases at the end of the year. At the same time, the rapidly rising interest rates mean that the value of the assets we have purchased has fallen. The Riksbank will therefore in all probability report a large financial loss for 2022, and our equity can become negative as a result. How should we actually view the role of asset purchases as a monetary policy tool in the light of recent years’ experience? My conclusions can be summarised into three points:   There are no clear indications that the Riksbank's purchases of government bonds during the period from 2015 to 2019 resulted in lower financing costs for households and companies. The purchases nevertheless appear to have contributed to strengthening confidence in the inflation target, and may therefore have contributed to both inflation and inflation expectations rising from 2015 to 2017, and then remaining close to 2 per cent for a few years.   The Riksbank’s purchases during the coronavirus crisis were important and contributed to the financial markets continuing to function, to the economic recovery being rapid, and helped avoid a prolonged recession. This was of great value to the economy.

In  particular, any situation should be avoided whereby for a prolonged period of time an NCB’s net equity is below the level of its statutory capital or is even negative” (ECB 2022, Section 2.2). 22 [30]  Figure 13. Central banks’ balance sheet totals Per cent of GDP  Note. GDP is calculated as the sum of the present quarter and the three previous quarters. For any quarter(s) that GDP has not yet been published, the most recently published GDP statistics are used. Sources: Eurostat, Japanese Cabinet Office, Statistics Sweden, Swiss State Secretariat for Economic Affairs, U.K. Office for National Statistics, US Bureau of Economic analysis, respective central bank and the Riksbank. It is difficult to compare the accounts of different central banks because different accounting principles are applied in different countries. Many of the other central banks use accounting principles that mean that changes in value have a slower impact on reported earnings. The increase in interest rates this year will thus be reflected directly in the Riksbank’s annual accounts, but will be spread over many years for some other central banks. Moreover, some central banks, such as the Bank of England, have an agreement with their government that the effects on the results of asset purchases should be entered in the government budget, without affecting the performance of the central bank.43 Nordström and Vredin (2022) nevertheless attempt an overview of the effects on the results of the central banks’ monetary policy motivated holdings.
In other words, a small increase from a level that was a good bit lower than in other comparable countries. That applies not least in relation to the United States, which I take as an example because the central bank there has cut its instrumental rate markedly this spring, a development that of course has to be seen in the light of the relatively large increases earlier. It was only in the late spring that the rate in the United States came down to the level in Sweden. And it is little more than a month ago that the Federal Reserve cut its rate so that this became somewhat lower than the Swedish rate. The Swedish repo rate had in fact been lower than the American rate for almost five years, since September 1996. That is something that is sometimes ignored in the public debate. So the Swedish economy was moving towards a situation where there was a risk of total output ultimately rising too rapidly. There was nothing dramatic about this. Considering the strength of economic activity, it was to be expected. An adjustment of demand to the long-term growth path can occur either as a spontaneous economic slowdown - for instance because Sweden is affected by a weakening of international activity - or as a consequence of a monetary policy adjustment; it can also result from a combination of the two.

Pursuing monetary policy to stabilise inflation and raising the key rate to achieve this, the Bank of Russia curbs growth in long-term interest rates in the economy. This quarter experience is a good illustration of the above. Despite the increase in the key rate on three occasions since last March for a total of 125 basis points, the yields of long-term OFZs are currently on the same level as in late March. As far as the pace of lending growth is concerned, it remains high both in corporate and particularly retail segments. Thus, mortgages are rising by more than 25% year-on-year. In addition, retail loans are heating consumer demand. We are also concerned by the fact that lending is growing due to loans to borrowers with a high debt burden. Therefore, we resume prepandemic macroprudential add-ons on unsecured loans from 1 July and on mortgage loans with a low down payment and a high debt-to-income ratio of borrowers — from August. The Bank of Russia will stand ready to further increase macroprudential add-ons to prevent the accumulation of systemic risks and to ensure financial stability. Since our meeting in April, the balance of risks has tilted even more towards proinflationary risks. Elevated inflation expectations as a response to high inflation and low interest rates still pose a major risk. With fears of future price growth, people tend to spend more today and save less for tomorrow. This makes prices grow even more rapidly. Disinflationary risks look weaker.
With the new quarterly data, published by the Scottish Executive, it looks as though in the year to Q1 output growth in Scotland was higher than in the UK as a whole. The latest surveys show business confidence continuing to rise. And most welcome of all, unemployment has continued to fall in Scotland, as in most parts of the UK. Nevertheless, the high level of sterling has undoubtedly caused serious problems for many sectors of the economy. As a result, some critics have argued that, with sterling at its present level, the burden of containing inflation should fall more on fiscal policy. By raising taxes or cutting expenditure this would, it is argued, enable the Monetary Policy Committee to lower interest rates, thus bringing down the pound. There is, it is alleged, a failure of coordination between monetary and fiscal policy. This argument deserves a reasoned answer. So tonight I want to answer two questions. First, why did the MPC feel it necessary to raise interest rates in September, at a time when inflation was a little below target and might fall further in the next few months? Second, is there adequate coordination between monetary and fiscal policy under the new arrangements? 2. Setting interest rates to meet the inflation target  What a difference a year makes. Last October, bankers, especially in the United States, were talking about the worst financial crisis of their adult lifetimes.

The international recovery is progressing It is natural to begin a survey of inflation perspectives by touching upon the international economy. At the end of 2002, the Riksbank and other forecasters expected world economic activity to embark on an upturn. However, during spring 2003, we gradually had to revise down our growth forecasts. While a recovery in the world economy was still expected, it was now judged to occur at a later stage. The weak growth, however, prompted a shift to more expansionary economic policy in many countries. Both the European Central Bank (ECB) and the US Federal Reserve, as well as the Riksbank and other central banks, continued to cut key interest rates to historically very low levels. However, most factors now indicate that both the Riksbank and other forecasters were somewhat overly pessimistic in connection with the Iraq war, particularly regarding the view of economic developments in the US. During the second half of 2003, we have had reason to again revise up our growth forecasts for the world economy. What has happened then since December, when the Riksbank published its latest Inflation Report and forecasts? The most apparent and perhaps the single most important change in the world economy has been the sharp depreciation of the dollar, mainly against the euro. It is likely that the dollar’s weakening against both the euro and the yen is an effect of the US current account deficit, coupled with a growing deficit in the US federal budget.
There also may be externalities to actions taken in one business line that have implications for the risk of the institution as a whole; it is the second line’s responsibility to articulate that perspective to senior management. The second line’s responsibility for establishing a common framework for risk management creates benefits in terms of both efficiency and effectiveness. The second line is an institution’s center of excellence in risk management and is in an ideal position to identify and promulgate best practices and standards. In terms of efficiency, the second line is wellpositioned to collect and analyze risk information coming from all of the business lines, to provide common risk management tools, and to provide guidance to business areas to improve their risk management capabilities. The Bank’s third line of defense, Internal Audit, provides assurance to senior management and the Board of Directors that first and second line risk management and control activities are effective. Although I did not say it before, the second line is not fully independent of management. This is because second line risk management (in our case, the Risk Group) is involved in a broad range of management decisions related to the Bank’s risk controls, and, in terms of reporting lines, I am part of the Bank’s Management Committee and report to the Bank’s president. Our Audit Group, however, provides a fully independent, final layer of defense.

However, Japan has also become an important market for Norwegian products. From the considerable deficits of earlier years, trade in traditional goods with Japan has moved into near balance. Strong growth in Asia is probably one of the prominent factors contributing to high oil prices in spite of low growth in the OECD area in recent years. China accounted for close to 50 per cent of growth in world oil consumption in 2002 and 2003. Trade in Asia has stimulated Norwegian shipping. The Chinese economy could continue to expand at a brisk pace for a longer period, which would open a large market that can also be entered by Norwegian enterprises. Norwegian exports to China have increased, but are still limited. Over several years, enterprises in Central European countries have been a source of competition for Norwegian jobs. Integration is also opening new markets and providing new sources of income for Norwegian enterprises. At the same time, tender requirements and the freedom of establishment have increased the competition facing Norwegian industries that were previously sheltered. A steadily larger share of Norway’s consumer goods imports come from China and Central European countries. Growth in imports from China was provided with an additional impetus after China became a member of the World Trade Organization in 2001. Imports from Eastern Europe have also continued to grow. There are many economic agents in Norway that are benefiting from globalisation. Consumers are enjoying lower prices for goods and services.
But I also believe that, if the exchange rate is reacting to a re-evaluation of real economic prospects – and not to some other inflationary shock – the effect should be a one-off change in relative prices, albeit spread out over time. It is important to stress that the MPC could try to offset all the price level effects of such shocks in order to leave the inflation rate unchanged. The problem with that idea in practice is the time it takes for Bank Rate to affect inflation. To counter short-term movements induced by relative price shocks would need very large and frequent changes in Bank Rate – including to offset the lagged responses of earlier changes. That sort of policy response would be very de-stabilising, likely to cause undesirable volatility in output, and be damaging to the economy as a whole. This is where the full remit of the MPC becomes effective – requiring us to support the Government’s objectives for growth and employment. Once there has been a shock to inflation, the Committee have to decide how quickly it should bring inflation back to target. To do that we have to judge the underlying state of inflationary pressure. And we have to monitor inflation expectations to check that they are not adversely affected by a succession of temporary shocks to the price level.

Although each plan is different in their rationales and implementation, their intended outcomes can be summarized along three key dimensions – (1) to reduce cost of financial services for households and businesses (2) to deepen financial inclusion and (3) to facilitate financial connectivity in the region. Allow me to delve into some details. Starting with reducing costs of financial services. As the Thai economy can no longer compete on supply of cheap labors, cost competitiveness in other areas are critical. In light of this objective, the Financial Sector Master Plan and the Payment System Roadmap envisage  that cost savings in the financial sector due to more efficient operation of financial institutions and the payment system would be passed on to the real sector and the households. Here, I would like to note that the term financial institutions go beyond banks and finance companies to include non-bank players like e-Payment service providers and FinTech (Financial Technology) firms as well. 3/5  BIS Central Banker's Speeches  The Bank of Thailand believes that the very foundation for improved financial services’ efficiency is through the adoption of digital technology and shared infrastructure. The former comprises digitization of operations, product offerings and service channels. An example of the shared services initiatives is the PromptPay system, the Minister of Finance mentioned in the speech. PromptPay is an integrated retail fund transfer system that will allow  individuals, businesses, and government to transfer funds across service providers at low costs with ease, flexibility and resilience.
Only national authorities can decide when to adopt Basel II. Members of the Basel Committee believe that it is beneficial for all countries to move in the direction of Basel II, but the timing for its ultimate adoption should be determined by each country’s own circumstances, and not necessarily the timetable for Basel Committee members. At the same time, I should note that many bankers and supervisors from emerging market countries, including India, were very active in sharing their views and suggestions with the Committee to help make the Basel II framework relevant to banks in many different markets. Indeed, the Reserve Bank of India has played an important role in sharing the perspective of an emerging market country through its participation in the Basel Committee’s Core Principles Liaison Group. In addition, representatives of Indian banks shared their views and even data on how they would be affected by the new framework. I would like to express my sincere appreciation to all of our colleagues in India who contributed to improving the quality and applicability of the new framework. Unlike the 1988 Accord, which was relatively simple to adopt, Basel II is admittedly more complex and demands more of banks and supervisors. Therefore, the Committee does not expect Basel II to be  2  BIS Review 68/2004  adopted as widely and quickly as the 1988 Accord, at least at the outset. However, we expect and hope that the number of countries that adopt the new framework will grow over time.

David Clementi: The Bank of England - a central bank post-independence  Speech by Mr David Clementi, Deputy Governor of the Bank of England, at the Annual Leonard Sainer Lecture, 14 November 2000. *  *  *  Introduction It’s a great pleasure to be asked to give this lecture, the occasion being in honour of Leonard Sainer. One of my first experiences as a young investment banker in the City was working in the mid-1970s with Dick Russell and Michael Smith, then the young Turks of Leonard Sainer’s firm, on the financial reconstruction of a Property Company. We have remained in touch ever since. At the time we were working on the reconstruction of the Property Company, the Bank of England kept a fatherly eye on how the matter was progressing, concerned as it then was, and still is, with systemic risk running from the property sector into the banking sector which funded it. I have to say that it never occurred to me, with my roots firmly based in the private sector, that I would one day be part of the Bank of England. Indeed one or two of my friends, Dick Russell and Michael Smith among them, occasionally express surprise that I have moved from the commercial world of Investment Banking to Central Banking.