samchain/econo-pairs-v1 huggingface dataset:
But the point has been made, and I think it is a valid point, that competition – so necessary to ensure that customers get the best possible service at the least possible price – depends more heavily on the variety of business models rather than on having a large number of institutions giving roughly the same kind of services in more-or-less the same way. Increased competition does not result from just adding more firms with the same business model, but also, indeed perhaps more, by adding firms with different business models. Where there is more diversity, and where there are more alternatives to choose from, competition is enhanced and its benefits increased. Perhaps I should point out that several decades ago there were many people, including many of the local business community, who were afraid to approach a bank for a loan. They were prepared to give and receive credit directly to and from each other, believing they were neither charging nor being charged interest, but not to borrow from a bank that explicitly charged interest and made a profit “at their expense”. Never mind that the implicit rate of interest in the credit being given and received in this way was probably higher than that being charged by the banks. I should not be at all surprised if there were still people around, potential entrepreneurs, who still reasoned that way, and who therefore may be “financially  2  BIS central bankers’ speeches  excluded” from the economy.

Perhaps it is not because there is no scope for one, because there is no niche to be exploited, but because our legislative framework, as it has evolved so far, doesn’t permit it! For the truth of the matter is that while we have laws governing banking activities and a law governing cooperatives in Malta, we do not have laws governing cooperative banks! In our current legislative framework, the latter seem to fall between two stools. Our Banking Act envisages only joint stock banks, that is banks whose customers are not their owners, while the law governing cooperative societies in Malta, though it provides for the establishment of a fund into which all registered cooperatives are obliged to deposit 5% of their annual operating surplus to help pay for research and the education and training of their members and the general development of the cooperative movement, does not provide for the establishment of cooperative banks – that is institutions that are licensed to accept deposits and make loans. Clearly, for such a bank, or banks, to be able to be established here, either our Banking Act, or the law governing Cooperative Societies, or both, will have to be amended. But this is precisely what Minister Azzopardi said he has proposed to do in his introductory speech: to amend the relevant legislation. Then, once the amendments being proposed by the Minister come into force, we will be in a better position to judge whether or not there is scope for setting up a cooperative bank in Malta.
This suggests quite strongly that improved access to good education, childcare and affordable housing would help. As I noted in a recent speech, an important aspect of a city’s vitality is the ability of its residents to develop the skills necessary to be successful and achieve their dreams.1 A big asset for New York City is its access to affordable education. Each year, tens of thousands of low-tomoderate-income New Yorkers send their children to one of the city’s specialized high schools. When it comes time for college, many of these same students have access to the City University of New York (CUNY) and State University of New York (SUNY) systems. A recent highly regarded study assessed how much of an opportunity children born to less advantaged 5/6  BIS central bankers' speeches  families in different parts of the United States have of moving up in the world. New York City ranked 10th out of the 50 largest U.S. metro areas.2 This is a better than average performance, but I think New York City should aspire to do even better. To conclude, while the near-term outlook for the U.S. economy is reasonably good, there is considerable work to do over the longer term to improve our nation’s productive capacity and foster an environment in which the gains are spread more evenly. Monetary policy is limited in what it can do to address these broader structural issues.

It would likely be difficult to maintain confidence in the inflation target by using such a strategy. Inflation has already undershot the target for several years and would in that case continue to undershoot the target for some years to come. The fact that inflation has been 6  BIS central bankers’ speeches  low for a long time is probably a major reason why long term inflation expectations have fallen. Conversely, the trend we have witnessed over the past year of a slowing fall in inflation expectations has coincided with monetary policy becoming very clearly expansionary and underlying inflation beginning to rise. Against this background it would likely be difficult for the Riksbank to maintain confidence in the target solely by communicating that the inflation target is still valid, without in any way reinforcing that claim with policy measures. A higher repo rate would weaken economic development The idea behind the Riksbank needing to have more patience and accepting that inflation will continue to remain below the target for an even longer period seems to be that the policy rate could then be raised to slow the rise in debt and housing prices. But the Swedish repo rate does not exist in a vacuum. Interest rates are also low internationally. Higher interest rates in Sweden in relation to those abroad would strengthen the krona and lead to a weaker real economic development. This would dampen inflation.
The introduction of the Act did, though, formalise some of the basic supervisory activities carried out by the Bank as well as introduce some new conditions, not least the requirement for the Bank to authorise deposit-takers. In fact, the Bank did indeed withdraw licences and wind up deposit-takers on at least two 22  occasions following the Act’s introduction . In addition, there was an increased focus on the fitness and propriety of individuals running the banks, and an acknowledgement that “this emphasis on qualitative assessment has been born of experience, as 23  management problems and inadequacies have typically provided the first sign of difficulty” . Moreover, the Bank now received and reviewed on a quarterly basis returns which included a more detailed breakdown of assets and liabilities as well as profitability. The Act also contained powers for the Bank to commission third party expertise to review aspects of a firm’s business, a commonly-used tool by the Bank in a bid to make 17  http://www.bankofengland.co.uk/education/Pages/resources/inflationtools/calculator/default.aspx Ibid, p.74 Ibid, p.96 20 Ibid, p.77 21 Ibid, p.86 22 Ibid, p.107 23 Ibid, p.104 18 19  7  All speeches are available online at www.bankofengland.co.uk/speeches  7  the most of its resources – something akin to a modern-day section-166.

The Bank of England: 1950-1979, Cambridge, Cambridge University Press, 2010. Debbage, S. and Dickinson, S. ‘The rationale for the prudential regulation and supervision of insurers’, Bank of England Quarterly Bulletin, Q3 2013  De Ramon, S J A. Francis W B. and Milonas, K. Staff Working Paper No. 652: An overview of the UK banking sector since the Basel Accord: insights from a new regulatory database, 17 March 2017: http://www.bankofengland.co.uk/research/Pages/workingpapers/2017/swp652.aspx  Fforde, John. The Bank of England and Public Policy: 1941 -1958, Cambridge, Cambridge University Press, 1992. Financial Servies Authority (FSA) website  Finsinger, Jorg. and Pauly, Mark V. The Economics of Insurance Regulation: A Cross-National Study, London, Macmillan, 1986. 25  All speeches are available online at www.bankofengland.co.uk/speeches  25  Foot, Michael. ‘The FSA: The first six years’, Journal of Financial Regulation and Compliance, Vol. 12 Issue. 3, (2004), pp. 201-205 Gardener, Edward (ed). UK Banking Supervision: Evolution, Practice and Issues, London, Allen & Unwin, 1986. Goodhard, Charles. The Basel Committee on Banking Supervision: A History of the Early Years, 1974 – 1997, Cambridge, Cambridge University Press, 2011. Gower, L.C.B. ’Review of Investor Protection’, Presented to Parliamnet by the Secretary of State for Trade and Indutstry, January 1984. Hall, Maximilian, J.B. Banking Regulation and Supervision: A Comparative Study of the UK, USA and Japan. Hants, Edward Elgar Publishing, 1993. Hall, Maximilian, J.B. Handbook of Banking Regultation and Supervision, Hertfordshire, Woodhead Faulkner, 1993  Hansard: http://hansard.millbanksystems.com/commons/1997/may/20/bank-of-england-and-financialregulation  Kynaston, David. City of London: the history, London, Vintage Books, 2012. Moran, Michael.
Indeed there are at least two situations where the use of capital controls and limits on gearing might not be a very effective means of maintaining financial stability, namely if either: 1.  the link between an institution’s leverage and its robustness to real (or imagined) risks to the value of its assets were very weak.....OR...  2.  there were great sensitivity of the overall cost of funding to changes in equity capital – so that requiring an institution to hold much more capital came at a very high price. If either of these things were true it would strengthen the case for using monetary policy directly to help preserve financial stability. But I think there is strong evidence that neither of these things are very likely. The only reason why a financial firm’s leverage (the ratio of assets to equity capital) would be irrelevant to robustness is if that equity were not truly loss-absorbing or if it was already so large relative to assets that the chances of losses being that great becomes virtually zero. But in fact bank equity capital that is truly loss absorbing has been 10% or less for most banks, and generally a great deal less. That is certainly not so high that chances of losses this big are of negligible probability. Value-at-Risk (VAR) models might have suggested otherwise. But those models have weaknesses that reflect the difficulty of accurately assessing risks. Assessing the probabilities of losses on bank assets is not easy.

From the onset of the financial crisis that started towards the end of 2007 real output in the UK has fallen about 10% relative to the upward path it might have been expected to follow. In Ireland the fall in economic activity has been greater: the level of output is about 13% lower than at the end of 2007; if one had expected growth of 3% a year – significantly lower than the average in the preceding 10 years – output is now more than 20% below where it seemed likely to be. I want to ask two questions about monetary policy prompted by the financial crisis and the resultant recession. First, should we fundamentally re-think the inflation targeting framework for monetary policy? Is the focus on a target for consumer price inflation flawed? This is a long-term issue. There is a second, in some ways more immediate, question. How should monetary policy be set now in what I hope it is not too optimistic to call the aftermath of the financial mess? In considering that issue I will be talking specifically about the UK, as befits a member of the Monetary Policy Committee (MPC) at the Bank of England. I want to start with the longer-term issue of the appropriate goals of monetary policy.
A tightening of monetary policy in Norway specifically aimed at curbing property prices and credit growth can result in a rising krone exchange rate, a weaker labour market and excessively low inflation. Should we seek to avert bubbles in the housing market even when medium-term inflation prospects are moderate? On this point, it is our judgement that a distinction must be made between giving greater weight to credit growth and house price inflation in the reaction function and defining house price inflation as an independent monetary policy objective. Socalled “leaning against the wind” would not require adjustments to Norges Bank’s approach, bearing in mind that our reaction function already gives weight to asset price movements and credit growth. 16 Should central banks also set explicit targets for asset prices? In our judgment the answer is no, but we should probably apply a fairly long horizon for achieving the target so that we seek to take account of any imbalances that might disturb activity and inflation further ahead. 16  See for example White,W.R. (2009): “Should Monetary Policy “Lean or Clean”?”, Working paper no.34, Federal Reserve Bank of Dallas. 16  BIS Review 131/2009  Household behaviour in the housing market is a considerable economy policy challenge. This is primarily because demand for housing and housing loans is heavily subsidised by the tax system and loan supply is marked by the near-absence of an equity capital requirement for providing housing loans.

The interlinkages between financial institutions amplify risk in the financial system. In our assessments, it is important to be aware of any build-up of systemic risk. Residential mortgages provide a good illustration of the difference between the individual risk for a bank and systemic risk. Even during the 1990s banking crisis, Norwegian banks’ losses on residential mortgages were low. Today’s low risk weights for residential mortgages provide strong incentives for banks to extend these mortgage loans. However, housing market fluctuations, which go hand in hand with shifts in saving behaviour, are nonetheless a source of business cycle fluctuations and substantial losses when banks have to write off loans to firms selling goods and services to households. 8  BIS Review 131/2009  The Norwegian housing market is vulnerable. Both a high level of tax incentives for house ownership and a large volume of adjustable-rate mortgages contribute to wide fluctuations in activity and prices. 8 The rise in house prices in the past two decades has also been very strong compared with countries where housing bubbles have burst. To finance strong growth in residential mortgages, banks have to rely to a great extent on borrowing, thereby increasing their vulnerability to a liquidity squeeze. Thus, low risk weights for residential mortgages also lead to higher liquidity risk in the banking system as a whole. It is important to be aware of the similarities between developments in the Norwegian housing market and bank lending and developments in the countries most severely affected by the crisis.
20  16-24 45-54 75-84  25-34 35-44 55-64 65-74 85 and over £ million 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 -500,000  Sources: Sources: Wealth and Asset Survey, ONS, and Bank calculations. BIS central bankers’ speeches  Chart 22 – Proportion of individuals by age that rent 1977  1987  1997-98  2007  Per cent  Chart 23 – Proportion of individuals by age that have a mortgage Per cent  70  70  60  2014  60  50  50  40  20 10 0  40  1977 1987 1997-98 2007 2014  30  25 30 35 40 45 50 55 60 65 70 75  80  30 20 10  25 30 35 40 45 50 55 60 65 70 75  0  Source: ONS. Source: ONS. Chart 24 – Real income before and after housing costs  Chart 25 – Rent as proportion of disposable income in 2014*  Indices 07/08 = 100  104 102 100 98 96  Median real income before housing costs Mean real income before housing costs Median real income after housing costs Mean real income after housing costs  2007/08  2009/10  2011/12  Sources: HBAI and Bank calculations.

Expectations regarding the United States are that it will continue to recover at a slow pace, and that moderate adjustments to the fiscal policy will take place. The downgraded outlook for Japan needs mention, due to both its relation with the Eurozone and some fiscal adjustment measures foreseen for 2014. In the emerging world, incoming data from China suggest that the slowdown of most of 2012 may be reverting. Thus, again y-o-y growth rates around 8 percent are forecast for the Chinese economy for 2013 and 2014. Growth prospects for Latin America are revised downward for this and the next two years. In this scenario, commodity prices will not change much from forecasts a few months back. In the two-year period 2013–2014, the baseline scenario foresees average prices of $ per pound of copper and $ per Brent oil barrel. Accordingly, terms of trade estimates for Chile continue to be high, but lower than they were this year (table 2). External financial markets have shown some calm these months. However, as I noted at the beginning, there is still a long way ahead before the Eurozone crisis can be resolved. The commitment of various organizations to work out a solution seems to be bearing fruit in the market’s evaluation. Anyway, the baseline scenario again considers the possibility of new stress episodes in the world markets. Such greater calm has also reflected in stock markets and currency parities. In recent months, the U.S. dollar has depreciated slightly against the main currencies.
(Many economists remember the famous  9  All speeches are available online at www.bankofengland.co.uk/speeches  9  result of Brainard (1967) that uncertainty implies caution; few recall the more interesting result that 38  uncertainty motivates diversity – the use of all available policy tools in concert. ) A diversified policy is also more comprehensive. It guards against regulatory arbitrage; of lending moving to foreign banks or non-bank parts of the financial system. And by reducing the risk of debt overhangs and high levels of debt, it makes the economy more stable too. Why use the cure that creates just resilient banks when you can use the prevention that gives you a stronger economy too? 39  Consideration must now be given to how far to take these road safety standards. Is it optimal to address risks from the commercial real estate market and consumer credit solely with the cure of bank capital? Or might a preventative approach be more robust and comprehensive? Similar consideration must also to be given to the feedback loops in the financial system. Where should they be addressed directly? That is a topic for another day, but robustness and completeness will call for some to be addressed directly. Macroprudential policy – at home and internationally – is moving into this space. 40  So this is my third – and final – call to arms for academic research: where – in building resilience – is an ounce of macroprudential prevention worth a pound of cure?

The reforms since 2011 to the public pension system (the progressive raising of the retirement age; the definition of a sustainability factor linking the initial pension to changes in life expectancy; the introduction of a new pension indexation system; and the segregation from the system of specific non- contributory pensions that should be financed through general taxes and not through social security contributions) have been in the right direction as far as the sustainability of the system is concerned. Apart from these reforms, there are insurance and saving mechanisms that can help supplement the unfunded pension system. But, as I said earlier, a key factor for the public pension system is the buoyancy of employment. It is in this nexus between employment, pensions and public finances where, I believe, the “hard core” of the difficulties facing our economy in the years ahead is concentrated. 3. The reduction in private debt and in the net external debit position  The third challenge facing the Spanish economy is high private debt and the heavy dependency on external financing. The Spanish economy’s net external debit position stood at around 93% of GDP at end2015, far above the level in other euro area or developed countries in a debit position, not to mention core Monetary Union economies such as Germany, Belgium and the Netherlands, which run an external credit position.
Migration and reforms behind labour force participation Various structural changes have meant that the Swedish labour market differs considerably from the structure in the mid-1990s, and in the ten years since the financial crisis alone, a great deal has happened. One such change is that the number of persons at the disposal of the labour market has grown significantly. Since 2006, the number of persons in the labour force aged 15–74 has increased by over half a million. 9 This means that the share of the working-age population participating in the labour force is now the highest for almost thirty years. Several factors lie behind this. The working-age population has increased, much as a result of Sweden’s substantial intake of refugees. Various reforms in recent decades have also increased the incentives to participate in the labour force by making it more profitable to work and to continue working to a more advanced age. Relatively better health and level of education also seem to have contributed to a rather large increase in the labour force participation rate among older people. 10 We should also remember that the increasingly strong economic 8 See Finocchiaro, D. et al (2016), “Macroeconomic effects of reducing household debt”, Economic Review 2016:2, Sveriges Riksbank. 9 See Flodberg, C. and Löf, M. (2017), “Labour supply has increased surprisingly rapidly”, Staff memo, Sveriges Riksbank. 10 Laun, L. and Palme, M. (2017), “The recent rise of labor force participation of older workers in Sweden,” Report 2017:18, Institute for Evaluation of Labour Market and Education Policy.

And I would like to share with you that some banks have launched what we may call a “pre-vetting” process for account opening. This means an applicant may request to first submit the documentation and information required for opening an account to the bank by mail, fax or email, and the bank will “pre-screen” or “pre-vet” them before arranging the applicant to have a face-to-face meeting in Hong Kong. I trust this change in process flow would be welcome by customers based overseas. 8. We are also working closely with the industry to explore the use of technology to enhance the efficiency of account opening processes, such as KYC Utilities (“KYCU”) and technology to allow remote account opening. You may have heard about KYCU, which are third-party platforms that aim to manage data as a strategic asset across banks to reduce duplication and cost and assist banks in making decisions, on all types of risks, including but not limited to AML, and as a result to make smarter business decisions. For example, a single source of customer data or documents would remove the need of a customer to provide KYC documentation to every bank, and may shorten the turnaround time for new account opening. We have had a number of discussions with major banks and relevant technology providers and steps have already been taken by both the HKMA and some major banks to take this work forward.