samchain/econo-pairs-v1 huggingface dataset:
Expectations about house prices, which had started to lose momentum in 2006, changed and prices began to fall, in a much more unfavourable macroeconomic setting and with financial institutions much more cautious about extending credit given the rise in bad debts and provisions, and the tightening of funding conditions. In view of these problems, the Government and the Bank of Spain began to take decisive measures to tackle this “classic” crisis based on credit to the real estate market and to the abrupt change in cycle, as well as to the changes in the markets. Firstly, to address the uncertainty on funding markets, a programme was set up that would allow banks to issue debt with the backing of the State and the ECB started to inject liquidity allowing full allotment. Secondly, the Fund for the Orderly Restructuring of the Banking Sector (FROB) was created in 2009. With the FROB we anticipated the need to equip  BIS central bankers’ speeches  1  ourselves with an instrument to carry out a far-reaching restructuring of the savings bank sector. The scale of the savings bank restructuring process has been huge. Of the 45 previously existing savings banks, only 17 remain. The aims of the process were very clear. First, to take advantage of the concentration processes to restructure assets and correct the excessive fragmentation of this sector. Second, to reduce the excess capacity in the savings bank sector.

First, for the first time, taxpayer funded bailouts were extended to the uninsured creditors of nondeposit-taking entities (the names of Bears Stearns and AIG naturally come to mind) for fears that their failures would have severe negative externalities. Second, the list of globally systemically important banks is now set up and published by an official international body, the Financial Stability Board, on the basis of a mandate given by the G20. In itself, this simple fact could be interpreted by markets as a signal that public authorities will never allow the thirty firms belonging to the list of G-SIBs to fail. On the other hand, expectations of public support for too-systemic-to-fail institution are likely to have been reinforced by the market turmoil that followed the failure of Lehman Brothers. Let me now flag some of the questions/challenges that could be addressed today. The first question that naturally comes to mind is the measure of the phenomenon, i.e. : “How big is the implicit subsidy?” A quick look at the literature shows that measuring the subsidy is difficult, since it is implicit and tied to market perceptions. In addition, differences in funding prices between large or systemic banks and small or non-systemic banks can be due to factors unrelated to potential government support, such as differences in economies of scale and scope, or differences in the size and liquidity of bonds issuance. Overlooking these alternative factors could lead to overestimate the size of the implicit public subsidy.
With the right to create money comes obligations. Competition from new participants Chart: Competition from new participants Many of the services banks offer can be provided by others. In recent years, the competition to provide financial services has taken a new turn. The competition comes from both specialised FinTech companies and from global tech giants (BigTech) such as Amazon, Apple and Facebook.7,8 Technological advances are paving the way for new ways of paying. In addition, payment services have become more of a competitive arena. It will now be up to customers, and not banks, to decide which payment solutions will be linked to their bank account. Payment services have become of greater strategic importance for banks as well as other participants. There is increased competition not only for the way we pay, but for the means of payment.9 An example is the e-money offered by PayPal. This is a means of payment that can only be used within closed systems, and that can be converted into bank money at a fixed rate. E-money is often well integrated with other widely used applications and offers efficient payment solutions, for example across borders. Increased use of new means of payment may make banks’ deposit funding less stable. If keeping large sums in new kinds of money becomes more attractive, the money deposited into our accounts will be quickly converted and remain in our current account for a shorter amount of time.

Innovative technology is paving the way for new and improved financial services, while competition among financial service providers is intensifying. In a digital world, location and national borders become less important. The banking system in Norway is at the forefront of technology. Cash usage is low, and almost four in five person-to-person payments are made using Vipps mobile payment services. Norway ranks at the top in Europe in terms of use of internet banking, and robots are performing tasks such as customer contact and processing of loan applications.3 The largest Norwegian banks have the lowest cost-to-income ratios in the EEA.4 Payment services costs are also low in Norway compared with other countries. Even though Norwegian banks are well positioned to meet growing competition, they are not sheltered, nor should they be. Increased competition for financial services is an intended development. Combined with digitalisation, this engenders better and cheaper banking services for customers, giving more people access to financial services. But new technology and increased competition can also disrupt the very key role banks play in the financial system. The changes we are observing raise big questions: Are we headed towards a monetary system that is fundamentally different from the one we have today? Will tech giants and cryptocurrrencies outcompete banks and national currencies in a few years?
Its commitment is essential, in order for our co-operation to be part of our daily job and add to the efficiency of both institutions and not to remain solely on paper. The Bank of Albania considers the conclusion of this memorandum as a cornerstone which will overwhelmingly affect the enhancement of real competition conditions, in which the banking and financial activity are currently being conducted. It is worth underlining that fair competition promotes the efficiency in the banking business and refines the composition and the functioning of the banking market. The Bank of Albania will make its utmost efforts to make the co-operation deriving from this agreement as concrete as possible and with direct impact on achieving a real, fair and efficient market competition. BIS Review 82/2007  1  I take this opportunity to express the Bank of Albania commitment to carry out all the responsibilities deriving from the law and from this agreement. In addition, allow me to express my appreciation to the Competition Authority and to Ms. Lati for the support granted in the conclusion of this agreement. Thank you. 2  BIS Review 82/2007

At the same time, the fiscal guidelines state that “(in fiscal policy) considerable emphasis must continue to be placed on stabilising fluctuations in the economy with a view to ensuring appropriate capacity utilisation and low unemployment”. We see here that there is an overlap between the tasks that monetary policy and fiscal policy are intended to perform. This naturally raises the issue of whether there is still a need to coordinate fiscal and monetary policy decisions. BIS Review 59/2002  3  A precondition for effective interaction is that decision-making bodies recognise how their decisions will affect decisions of the other body. In the absence of such recognition, a decision will not produce the intended result. The economy may move in a highly unfavourable direction, with high interest rates, sluggish economic growth and a deterioration in the state’s financial position. A situation may, for example, arise in which Norges Bank tightens monetary policy to achieve the inflation target, while at the same time the central government authorities increase the use of petroleum revenues (more than implied in the fiscal policy guideline) in order to increase employment and reduce 1 unemployment. However, even without continuous coordination, a fairly good result may nevertheless be achieved if 2 fiscal policy acts as “leader” and monetary policy as “follower”, to use expressions from game theory. The authorities conduct fiscal policy knowing how monetary policy will react.
To some extent, central banks have partly narrowed this gap between demand and supply by providing financial intermediaries with the safest and most liquid assets of all: their own liabilities, in the form of deposits and reserves held by banks. The importance and usefulness of this function is illustrated by the significant amounts still outstanding in the Eurosystem deposit facility or in the form of non-compulsory reserves. It is, indeed, in the essence of central banks’ historical function to step in when dislocations in financial markets appear and to contain long-lasting damage to the economy. If they fail to act, then self-fulfilling expectations could lead to panic and financial dislocation. A good example is the situation in the euro area in the second quarter of this year. Week after week, there were growing signs of a perceived “convertibility risk” between different parts of the euro area. However unfounded, these self-fulfilling fears destabilised capital flows and led to the rapid and increasing segmentation of financial and credit markets. Financial conditions were increasingly divergent across the euro area, irrespective of the quality of borrowers and the level of policy rates. If left unchecked, this process would have rendered monetary policy totally powerless to combat both inflation and deflation, if either of these risks had materialised. This was, for the Eurosystem, an unacceptable situation. It led the Governing Council to announce in September the introduction of the Outright Monetary Transaction (OMT) programme, whereby the Eurosystem may purchase government debt with a maturity of up to three years.

Should the situation change, nothing has been done that would impair our ability to fulfil our primary mandate and preserve price stability. Many tools are available to absorb liquidity, if it proves necessary. Concerns are also expressed in the euro area about purchases of government debt as a form of “monetary financing” of the government. As you know, such purchases are explicitly allowed for in the Treaty. There is no legal issue, here. What about the economics? This question can be broken down into two. First, the market impact. True, these purchases may lead to lower interest rates. This is their purpose. OMTs will only take place if and when the Governing Council has determined that bond markets are no longer functioning properly, hence interest rates are distorted. A last, serious, concern is moral hazard. Lower interest rates triggered by secondary purchases could give rise to bad incentives, impede market discipline and delay necessary fiscal adjustment efforts. This is the very reason why strict and explicit conditionality is attached to OMTs. 4. Central banks have been active; they have been audacious; but they do not have unlimited power. This may be a good time to reflect upon what monetary policy can and cannot do. I will concentrate on one specific question: the so-called “decreasing returns” of non-conventional monetary policy. The argument goes as follows: balance sheet expansion and low interest rates create potential imbalances in the financial sector.
We have promised to keep the CP scheme under review and give 12 months notice before it is withdrawn. Corporate bonds A corporate bond scheme was also set up last year. In January 2009, the primary market was open for new bond issuance, but spreads over gilts were extremely wide, and were widening further as issuance increased (Chart 4). It was clear there was a substantial  4  BIS Review 23/2010  liquidity premium in the market. Secondary market liquidity was notoriously poor for sterling denominated bonds. The small size of the bond market, relative to euro- and dollardenominated markets, meant that many individual sterling-denominated bonds might not trade for months at a time. There was a risk that secondary market illiquidity might have restricted the strength of the primary market, so constraining the availability of credit. Most corporate bonds are bought by asset managers for long-term investment, but investors do need to actively manage their portfolios e.g. for duration and credit risk. The scheme was designed to meet this need by offering to buy small amounts of bonds in the secondary market on a regular basis. There were two immediate aims. First, by regularly posting traded prices, it was hoped to improve the process of price discovery and hence aid secondary market liquidity. Second, by offering a bid in the secondary market, the scheme should encourage further private sector demand in the primary market. That leaves open the question of whether we could or should have been trying to buy much larger quantities.

Furthermore, a QR Code payment system is safe and reliable since it was developed on existing payment infrastructures of banks and payment service providers such as PromptPay or credit and debit card infrastructures, which are highly secure, compliant with international standard and subject to regular examination. The forth is facilitating further innovations. This open infrastructure will lead to further development of various financial innovations in the future. E-Payment will not only facilitate payment flows but also provide solid foundation for SME’s financial data collection. Data from retail electronic payments can be effectively used to support credit granting, which will provides more alternatives for SME financing. Financial Institutions in many countries have started to provide information based lending instead of traditional collateral based lending. These four important criteria of QR Code will lead to an expansion of QR Code payment services to all merchants in our daily life such as department stores, fresh markets, coffee shops, and convenient stores. QR Code payment services are accessible for all type of merchants, including brick and mortar stores and e-Commerce. Moreover, it can easily be rolled out to various locations such as business districts, tourist destinations, or rural areas. To promote standardized QR Code payment, BOT has allowed banks and payment service providers to propose their projects for consideration in the central bank’s  4  Regulatory Sandbox.
We estimate the full, net present value, economic costs of typical past financial crises to have been catastrophic – around 75% of GDP and in some cases much more. So nobody should deny the economic case for well capitalised banks. And it was obvious in the aftermath of the crisis where bank capital needed to go. Up. A lot. 2  Available at http://www.bankofengland.co.uk/publications/Documents/fsr/2015/fsrsupp.pdf. 3  Major UK banks are required to hold, on average, additional tier 1 capital of 2.5% of risk weighted assets under “pillar 2a” requirements. These compensate for existing shortcomings in risk measures and lift average capital requirements from 11% to 13.5%. Should the shortcomings in risk measures be corrected, measures of risk weighted assets would increase.But at the same time, our expectation for capital as a share of risk weighted assets would fall back. The two effects can be expected to offset so that no extra capital would be required. Ongoing work in the Basel Committee addressing excessive variability in risk weights should not materially affect overall capital requirements. 2  BIS central bankers’ speeches  In fact, with market confidence so low at the time, more capital not only boosted resilience, it was also needed for lending to resume. Capital was good for resilience and good for growth. That’s why countries that recapitalised their banking systems quickly secured earlier and stronger recoveries, with the US leading the way. However, after a point, another unit of capital buys a much smaller fall in the probability of bank failure.

BIS central bankers’ speeches  3  That’s not just a private cost. It’s a social cost too. At the margin, it will force a change in the mix of economic activity. The ability to turn future cashflows into today’s investments will be curtailed. Spending will replace investment. Investment projects will have lower returns. That holds back future economic potential. Although it’s impossible to be precise, it seems that once a baseline degree of resilience has been established, more capital could actually cost the economy. We estimate that a 100bps increase in capital requirements across a banking system could result in an economic cost with net present value of 0.6% of GDP. 7 This all raises an important macroprudential question: how to best protect the real economy without the unnecessary risk of holding it back? Our answer in the UK has three parts. First, to protect the economy from the consequences of bank failure. And to do so at minimal economic cost. Effective bank resolution unlocks this. With minimum disruption to existing funding structures, it opens the door to preserving the functions of failed banks without recourse to the taxpayer. Serious progress has been made in building resolution regimes. An EU-wide legal framework is now in place. Cross-border arrangements have been stepped up. Agreements have been reached on temporary stays to closing out contracts in resolution. And the G20 agreement on Total Loss Absorbing Capacity (TLAC) standards for global systemic banks has a game-changing principle at its heart.
Another, it is sometimes suggested, would be that the economic framework for firms would be perceived as more secure and stable if Sweden adopted the single currency. Once again, the strength of these arguments is difficult to assess, partly because they have evident political purposes. But opinions of this type may clearly have effects if they are current among central decision-makers in the business sector. Political arguments favour participation This brings me, finally, to the political arguments for and against adopting the single currency. The Calmfors report discussed the implications of participation for Swedish policy and its legitimacy, as well as the consequences for Sweden’s voice in Europe and the world. On the first point I shall simply say that I agree about the importance of any decision to participate having a high degree of legitimacy. This in turn calls for an animated discussion of the EMU issue. Having said that, I shall now concentrate on the other aspect. The report considered that if Sweden participated in the monetary union, we would be in a better position to influence EU decisions. The more countries that participated, the greater would be the strength of this argument. The Riksbank agreed but found the argument unduly cautious as regards the political advantages. We saw major political benefits from participation and considered that an outsider position would clearly weaken Sweden’s voice in the European debate and decision-making process. As I see it, since the report was presented and the Riksbank submitted its opinion, the political argument has gained appreciable weight.

The initial participants number 11, instead of the 6 to 9 countries that seemed most probable to Calmfors. That by itself means a great deal. It is a matter of simple logic: if you belong to a club in which 6 out of the 15 members make a move, there is no cause to feel an outsider; matters are different when 11 members decide on a course of action and support it whole-heartedly, leaving only 4 on the sidelines. It is perfectly clear that EMU is a major project – perhaps the most important at present – in the process of European integration. A great deal is being invested in it and the EMU process also affects policies in other areas. But let us not exaggerate: experience differs from area to area and Sweden’s voice is naturally not shorn of all its weight just because we are outside the euro area. As regards economic policy – the only area of which I have direct experience – the pattern is clear. It surprised me how quickly the euro countries saw themselves as a single unit and the ways in which this altered the agenda for our committee meetings. In that the finance ministers of the euro countries have formed a separate group, Euro 11, to some extent Sweden is excluded from the interesting discussions. BIS Review 92/1999  4  The Community agenda is being constructed in the light of needs among the eleven members of the euro area.
The success of the airline industry, in turn, urges us to take action to tap the untapped opportunities of several other service industries abound in our promising region. While it is natural to give emphasis to trade and investment connectivity, we must not forget the great potentials that the service sector have to offer to our region, especially financial services’ role to support trade and investment. Developing domestic financial sectors and enhancing financial connectivity are vital as sound infrastructure and conducive financial eco-system will enable us to ride on the growth potential while ensuring macro-financial stability. Building regional connectivity is like planting a tree. In the very same way that a root network helps the tree grow strong and branch out, financial connectivity is a necessary foundation which nurtures all aspects of regional economic integration – be it trade, investment or tourism. Without a strong root system, it will certainly be difficult for our tree to withstand economic storms in the increasingly volatile world. Like the planters who grow the tree with continued and delicate care, our concerted efforts from both public and private sectors are required to strengthen regional financial connectivity for the better livelihood of our people. Kob Khun Krub. 4  BIS central bankers’ speeches

It would not be until 2011 that, with the reform of the FROB, the way was paved for capital contributions with public funds and, into 2012, with the MoU, for further injections of public funds and for the creation of Sareb. From a fiscal standpoint, the option of massive and early capital injections with public funds could, perhaps, have been viable in Spain until 2007, while public finances were still running a surplus and GDP growth stood above 3.5%; and there was still some leeway in 2008, despite the slowdown in growth and the increase in the fiscal deficit, which rose that year to 4.4% of GDP. Nonetheless, from 2009 it became very difficult, if not indeed impossible, against a background of recession, with a decline in GDP of 3.6% and a rapid deterioration in public finances. In 2009, the budget deficit climbed to 11% of GDP; and public debt increased in only two years by almost 20 pp of GDP to 52.8%, compared with 35.6% in 2007. It should moreover be borne in mind that Spanish credit institutions generally had, in the initial years of the crisis, high levels of provisioning and profitability, which probably contributed to generating excessive confidence in their ability to finance, through exclusively private means, the restructuring and strengthening of their capital.