samchain/econo-pairs-v1 huggingface dataset:
This environment is affecting firms in very different ways. Some companies find themselves with little need for external funds, and so are relatively insulated from tight credit conditions. Indeed, the corporate sector as a whole is currently running an unusually large cash surplus, despite challenging demand conditions. A notable example is energy extraction. UK oil companies have run a large cash surplus – amounting to 1-2% of GDP – for much of the past decade. This accounts for around half of the overall corporate cash surplus over the period. But it’s not just oil companies. The manufacturing sector as a whole is currently a net lender to the UK banking sector: it has more cash on deposit than funds borrowed. Other sectors look to have less healthy cashflow positions in aggregate – construction and real estate, hotels and restaurants amongst them. For many companies, therefore, external finance remains important. For large companies, the bond markets are an option. Some of you have switched the balance of your financing from the banking system to the bond markets. Over the past three years, the Chief Financial Officers of large companies have consistently rated bond finance more attractive than bank borrowing. Such firms seem, on the whole, to have made smaller cuts to investment and employment. Large companies with good access to the capital markets and healthy cash-flow positions may, for the moment, be well placed to support the financing of smaller firms.

But if the overall story of recovery in underlying growth still looks broadly intact, there has been bad news on the inflation front. The recent inflation data, particularly for goods prices, has come in a little stronger than expected. Sterling oil prices and wholesale gas prices have risen by more than 5% since February. Together with duty changes announced in the March Budget, that seems likely to leave the short-term outlook for inflation on a path a little higher than incorporated into the central projection described in the MPC’s February Inflation Report. I think inflation might remain above 3% throughout the second quarter of this year, and possibly into the second half of the year. Already in February, there was a risk that inflation might fall back towards target less quickly than incorporated into our “most likely” central outlook. Not only was there a prospect of supply disruptions to oil production, there was also a possibility that firms might seek to rebuild margins faster than assumed as and when economic recovery becomes more secure. So one possibility is that companies have begun to rebuild or protect their profit margins more quickly than expected. According to the latest ONS data, by the end of last year the profits of mainstream businesses (excluding oil and finance) had fallen to their lowest share of GDP for a couple of decades. Companies’ willingness to tolerate a further squeeze, in the  BIS central bankers’ speeches  5  face of rising import prices, might be limited.
Confidence has risen in both the household and corporate sectors in Sweden, and there are some signs that unemployment is falling. In the euro area, GDP increased in the second quarter, after six quarters in a row of falling GDP. Here, too, the confidence indicators are giving more positive signals. However, one must remember that the economies still have a long way to go to reach a normal status. GDP growth and inflation are at low levels in both Sweden and the euro area. And there are still large downside risks for economic developments. In the euro area, the weak public sector finances and problems in the banks’ balance sheets have scarcely improved in recent months. In the United States, the full effects of the sequester have not yet been realised, and there is also uncertainty over how the debt ceiling will be raised during the autumn. Growth rates in large emerging markets like China and India have fallen, albeit from very high levels. Previously, international capital has tended to move towards emerging markets as interest rates have been low in the more developed economies. However, as yields on US government bonds have been rising since the spring, the capital flows have changed direction. The outflow of capital means that exchange rates are weakening, which may improve the countries’ international competitiveness and contribute to maintaining their high level of economic activity.

But the large fluctuations in growth rates, capital flows and exchange rates are in themselves problematic and create uncertainty regarding economic developments in the emerging markets. A divided Swedish economy The Swedish economy is dependent on developments abroad, and of course has been affected by the financial crisis and economic downturn in recent years. In an international comparison, overall quantities such as GDP and employment have nevertheless developed well since the financial crisis. BIS central bankers’ speeches  1  However, behind the overall picture is a divide, where household finances in particular have been strong. Their disposable incomes have increased every year during and since the crisis (see Figure 1). Growth in consumption has also been good. Housing prices and loans to households have increased rapidly, probably partly due to strong households finances and an expansionary monetary policy (see Figures 2 and 3). Developments in the corporate sector have been weaker, which is reflected in weak growth in exports, low investment and only modest growth in loans to companies (see Figure 4).
Likewise, scientists from the IPBES (which is the equivalent to biodiversity of what the IPCC is to climate change) or the WHO have also been warning us for years that we may enter an 2  Page 3 sur 12 “Era of pandemics” vi if we do not tackle the biodiversity crisis: there is only one planet, and “one Healthvii. The devastating experience we’ve gone through for the past few years with Covid 19 could repeat itself through new viruses if we do not urgently revert biodiversity loss. Thinking through the concept of planetary boundaries therefore enables us to better understand the interconnections between different ecological challenges. For instance, biodiversity loss can accelerate climate change, which can in turn further accelerate biodiversity loss. Likewise, acting on land use change (one of the planetary boundaries) will be critical to move back below the safety thresholds for other planetary boundaries such as climate change and biodiversity. In line with these findings, a recent joint workshop between the IPCC and the IPBESviii concluded that it will be impossible to tackle climate change and biodiversity in silos. The dramatic and unprecedented changes in many Earth subsystems caused by human activity have led many scientists to consider that we have entered a new geological epoch: the Anthropoceneix, literally the “age of humans”.

Finally, it is important throughout the process of restructuring a banking system that the general public does not have to fear for the loss of their life savings. A reliably funded deposit insurance mechanism, a central bank that can provide liquidity to solvent, viable banks and a wellfunctioning payments system are essential elements of the public sector safety net. The safety net’s true beneficiaries are not financial institutions, but the general public. IV. The Role of the Basle Committee What do I see as the near and medium-term role of the Basle Committee and this organization of banking supervisors? What should be our goals to meet before the next such conference, to take place in New York in the Year 2000? Let me begin by saying that the Core Principles lay out the major highway to effective banking supervision, but do not provide a detailed street plan. One important element of feedback we are receiving from the Core Principles Liaison Group, consisting of members of the Basle Committee and members of the emerging markets, along with more informal feedback, is the need to provide more detailed street plans. There are several ways to achieve that. BIS Review 86/1998  -8-  The first is to continue to elaborate on the Core Principles by producing papers on key topics to augment and update the Compendium. The Compendium is the set of relevant papers issued over the years by the Basle Committee which elaborate further on the Core Principles and provide the next level of detail.
As a result of the latter, the balance sheets of all major central banks have increased significantly. One of the major challenges in the years ahead will be the differentiated normalisation of unconventional monetary policies in advanced economies. Many have argued that in this process central banks in advanced economies should be mindful of the spillovers to the rest of the world.6 There have even been calls for a fundamental strengthening of international  4  This has been particularly visible in the rise of the renminbi as an invoicing and settlement currency for China’s international trade: while in 2010 almost none of China’s trade in goods and services was invoiced in renminbi, in 2014 this figure has risen to almost 25%. Similarly, the issuance of renminbi-denominated (“dim sum”) bonds has grown by a factor of about 30, albeit from a very low level. 5  For a discussion of the international role of the renminbi, see Eichengreen, B., and Kawai M. (2014), “Issues for renminbi internationalization: an overview”, Asian Development Bank Institute Working Paper, No 454, January. On recent trends in the IMS, see the latest ECB Report on the International Role of the Euro, Frankfurt am Main, 16 July 2014. 6  See Rajan, R. (2013), “A step in the dark: unconventional monetary policy after the crisis”, Andrew Crockett Memorial Lecture, BIS. 2  BIS central bankers’ speeches  monetary policy coordination. I would like to take this opportunity to elaborate on my views on this discussion.

We noted in a statement to the press that we expect to take account of the remaining issues and complete the text of the New Accord in the coming months and no later than mid-2004. This period of time will also allow us to take careful note of domestic consultations under way in some jurisdictions, including the process for the Advance Notice of Proposed Rulemaking in the United States. Most of the comment letters that the Committee received focused on credit risk and the minimum standards in the first pillar. Respondents identified as one of the most important issues the proposed treatment of credit-related losses. As you know, with respect to the internal ratings-based treatment of credit losses, the CP3 calibrated regulatory capital on the basis of both unexpected and expected credit losses – or “UL” and “EL” in Basel terminology. This was intended as a practical compromise to account for differences in national accounting practices and supervisory authority regarding provisioning. Many respondents – including quite a few here in the U.S. – cautioned against this approach, as they believed that it departed from the traditional view that unexpected losses should be absorbed by capital, while expected losses are best managed through provisioning. Based on those comments, and following additional research, the Committee now intends to align regulatory capital more closely to economic capital by calibrating it on the basis of unexpected credit losses alone. A supplementary mechanism will help to encourage banks to provide sufficiently for expected credit losses.
The development of risk analysis tools is mainly focused on transition risks as related exposures represent a potentially much larger share of their balance sheet (net credit exposure to the most carbon-intensive sectors indeed averaged 12.2% of total exposures in 2017 among 6 of the 7 main French banks) compared to physical risk-related exposures (as most of assets are located in countries displaying a low vulnerability to climate change e.g. Western Europe). A wide variety of tools have  been reported but each of them has still important drawbacks arguing for further refinement and more data collection with certainly a need for support from supervisors. 1/2  BIS central bankers' speeches  Finally, liability risk is not viewed as a material one at this stage despite a growing number of climate change-related litigation cases. Therefore, there is ample room for progress leading the ACPR to lay-out recommendations directed to institutions on the one hand and to regulators and the supervisors on the other hand. In particular, as a supervisor we should be able to quickly come up with a prudential reporting of exposures to unsustainable activities. From this point of view, the forthcoming taxonomy from the European Commission will certainly be useful but not enough to achieve this as a taxonomy of unsustainable activities is needed. We should also anchor expectations of financial institutions about climate-related risks by publishing strategic roadmap about the way the supervisor intends to scale-up the supervision of these risks along the different regulatory pillars.

They needed temporarily to look beyond their traditional markets for funding, and unquestionably these conditions put their resources and management under strain. It can definitely be said that those involved passed this difficult test. The funding problem that loomed around this time a year ago is a thing of the past, terms in the secondary market have been normalised and market confidence has been restored. This  BIS Review 34/2007  1  is to be welcomed. What remains, however, is of course that people are now more aware of the widespread risks that the future may hold in store. Global market conditions can change suddenly. Credit access, which in recent times has been exceptionally favourable for Icelandic and other banks, may change suddenly if unexpected conditions arise. It is important to be prepared for such a contingency. At the height of this furore, I would venture to say that the Central Bank made a strong contribution with its Financial Stability report, which was deemed to be professional, candid and in line with international best practice. The Bank’s next Financial Stability report will be published towards the end of April. Although these were not enviable times for financial companies, they definitely learned a lesson from this ordeal and are both more cautious and more aware of external influences than before. Rapid and sweeping changes in the financial sector put a great strain on regulatory agencies, which may face an uphill struggle to keep up with the swift pace of developments.
It can be very painful for both the economy and society to correct entrenched inflation – as I learned when I left this university in the mid-1970s – or indeed entrenched deflation. But monetary policy works through many channels in the economy. It affects borrowers and savers. It affects wealth – the value of houses and financial assets. It affects jobs and pay. And the impacts on individuals can be difficult to disentangle. Low rates, for example, can increase housing wealth and the value of pension investments while reducing the return on savings accounts. And to the extent that by smoothing the volatility of output monetary policy can prevent the adjustment to economic shocks leading to more persistent damage to the economy, it can prevent longer lasting loss of jobs and loss of pension values. A pension, after all, is in the final analysis a claim on the future economy – it is an investment, public or private, that has to be paid out of future revenues, dividends, capital values and taxes. However, these effects can be felt more powerfully when policy rates are at what appear to be very high or very low absolute levels. We are of course explicitly mandated to make difficult trade-offs. Most notably, when inflation is off track, they have to balance the speed with which it is brought back to target against the impact on growth.

It concludes that there is some concern that the deteriorating performance of sub-prime RMBS could affect the broader market for structured credit instruments, due to the fact that the concentration of sub-prime mortgage loans as collateral for collateralised debt obligations (CDOs) is very high. It cannot be ruled out that further poor performance of this type of collateral could trigger rating downgrades of CDO tranches themselves and lead to a reassessment of risk in other segments of structured credit markets. Financial market liquidity An overarching theme, pertaining to several sources of risk and vulnerability in the financial markets, is the abundant liquidity characterising global markets. Indeed, there appears to be a consensus among market participants that market liquidity has reached unprecedented levels. Financial market liquidity is a measure of the ability of market participants to undertake securities transactions without triggering large changes in their prices. The concept of financial market liquidity is distinct from the concept of monetary liquidity, but there can be links between the two. Although the measurement of market liquidity is rather complex, symptoms of the abundance of liquidity include high leverage, low yields, low market volatility, narrow credit spreads, and high market turnover. Overall, abundant liquidity seems to be intertwined with the “search for yield” which has been discussed in past issues of the FSR and it appears to be dependent on confidence remaining in the smooth functioning of the market.
6 Like the SLS, DWF drawings are typically structured as a liquidity upgrade – exchanging borrowers’ illiquid collateral for UK Government securities (gilts in the case of the DWF). The Bank is willing to accept a very wide range of collateral in the Discount Window – a much wider set than that which is normally eligible in the Bank’s regular open market operations. The Bank’s published documentation sets out four categories of eligible collateral (Level A to Level D). The contents of each are determined by the market liquidity of each eligible asset class. The least liquid collateral set includes own-name securities or pools of loans: that is where a borrowing bank itself has originated, or has some other close financial links to, the assets comprising the collateral. Other features of the DWF are very different from those underpinning the SLS. First, DWF borrowings typically have a term of 30-days. 7 The DWF is intended to act as a bridge in the event of a liquidity shock. For a relatively mild shock that might support a counterparty to the next regular ILTR, 8 or to planned debt issuance. For greater shocks, the solution might require more fundamental changes in the firm’s balance sheet (e.g. asset disposals). In any case, before it will agree to lend in the Discount Window, the Bank of England will need to be convinced that there is a credible path to a point where access is no longer required.

Crucially, the DWF is only intended to provide short-term liquidity support to banks – and is not intended to be used as a replacement for funding, which can only be sourced in a sustained way from private markets. And it is vital to stress that the DWF is not a 100% committed facility. At the point of application, the Bank will make a fresh, independent assessment of whether it deems the counterparty to be solvent and viable. To guard against moral hazard, the DWF charges fees which make it unattractive in normal times, but which would be more attractive under stressed market conditions. Because the  5  For more information, see Fisher (2011), “Recent developments in the sterling http://www.bankofengland.co.uk/publications/Documents/speeches/2011/speech487.pdf. 6  For more information see John, Roberts and Weeken (2012), “The Bank of England’s Special Liquidity Scheme”, in the Bank’s Spring 2012 Quarterly Bulletin. 7  Currently the Bank also offers at its discretion the option of a drawing of up to 364-days, for an additional fee. 8  Although counterparties are not guaranteed an allocation in these auctions, they are able to bid up for liquidity, increasing their chances of being allocated. BIS central bankers’ speeches  monetary  framework”,  3  DWF is structured as a liquidity upgrade, the fees charged are linked to the type and liquidity of collateral delivered. The more illiquid the collateral, the greater the value of the upgrade, and hence the higher the fee.
In this regard, the public can use their ATM cards at participating merchants to make purchases. This would lessen the need for the public to carry cash in their wallets, as well as, reduce the number of cash withdrawals from ATMs. As ATM card is a safe payment card, users ought to use PIN for the authorisation of purchase transaction, similar to ATMs withdrawals. In the event a user lose their cards, fraudster would not be able to illegally transact banking services without the PIN. MEPS and the banking industry should also promote the use of the ATM cards at the Point-Of-Sale terminals. Industry effort should be made to increase the number of Point-Of-Sale terminals to provide the public with the convenience of using their ATM cards for purchases of goods and services and to reduce the need for cash usage. Banks need to address ATM robberies Over the last 24 months, there was a rise in the number of ATM robbery cases. There were only 5 cases in 2010 and in 2011. These numbers had increased to 63 cases between January – September 2013 (51 cases in 2012). This is a serious trend. If the banking industry does not tackle this issue quickly, it could dent public’s confidence in the safety of the ATMs services. Banking institutions ought to take this matter seriously and take remedial measures immediately.

The key thrust of this plan is to develop a new real-time Retail Payments Platform that will serve as both a catalyst and enabler for innovative payments in Malaysia. This should meet the needs of consumers and businesses who increasingly expect payments on-demand where funds are available to the recipient immediately. In this regard, I would like to call upon the financial industry to jointly work with MyClear in the development of such new real-time Retail Payments Platform. Conclusion Payment and Settlement Systems are the foundation that underpin the financial market infrastructure and serve as a catalyst for economic growth. Hence, efforts to promote the  BIS central bankers’ speeches  3  resilience, interoperability and competition of such systems are of utmost importance. This has been and will continue to form the key thrust in Bank Negara Malaysia’s policy work in delivering our mandate of fostering safe, efficient and reliable payment systems. There are immense opportunities and new sources of growth including expanding financial accessibility to the underserved that is made possible from greater standardization and interoperability of the payment systems, as well as, innovation. Hence, in today’s rapidly evolving and highly competitive environment, the financial community should capitalise on such enabling environment, and collaborate through standardisation and interoperability, to lower costs, foster innovation and deliver better value proposition and choices to their customers. 4  BIS central bankers’ speeches