samchain/econo-pairs-v1 huggingface dataset:
And say that the standard households are affected by this and must therefore take on a larger share of unsecured loans at an interest rate of 6 per cent and moreover pay off the unsecured loan over 10 years. This would entail increased interest expenditure corresponding to between 0.4 and 1 per cent of disposable income, and amortisation corresponding to between 2.8 and 7 percent of disposable income. The total increase in expenditure in this example thus corresponds to between 3.2 and 8 per cent of disposable income. This is comparable with how much household expenditure would increase if the mortgage rate instead increased by just over 1.9 percentage points. Amortisation as a form of saving Many of you will know that regulations of this type have often been circumvented in various ways. One way for the banks to make the mortgage cap less binding for their customers and enable them to take on more loans, for instance, is not to require amortisation on first loans. When it comes to amortisation culture, we in Sweden differ quite substantially from what seems to be common in many other countries. In Sweden, around 40 per cent do not amortise at all. Of those who do, a good 40 per cent do it in such a way that it will take 50 years or more before they are free of debt.

Thomas Jordan: Current challenges for the Swiss National Bank in the area of monetary policy Summary of a speech by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the Money Market Event of the Swiss National Bank, Zurich, 27 March 2008. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  With its forecast that GDP will grow by 1.5%-2.0% and the average inflation rate will amount to 2%, the National Bank is cautiously optimistic for the Swiss economy in 2008. However, since the summer of 2007, the international environment has taken a clear turn for the worse: Financial markets are in a serious crisis, the major economies are weakening and inflation rates are rising worldwide. This means that the SNB’s monetary policy is facing challenges on several fronts simultaneously. With regard to economic growth, the SNB is called upon to assess the consequences of the international financial crisis for the Swiss economy as precisely as possible and to analyse their implications for monetary policy correctly and at an early stage. On the inflation front, it must ensure that the measures taken in connection with the financial market crisis do not jeopardise the credibility of a monetary policy geared to long-term price stability or shake established inflation expectations. Finally, the challenge in the money market is two-fold.
In addition to earnings, equity must generate a reasonable surplus so that the Riksbank has profits that can be used to build up equity in the event of losses. The Inquiry’s proposals restrict the Riksbank's equity to SEK 60 billion, calculated only using inflation. As I have said, one interpretation of this is that the Inquiry sees a return to a steady state in which the balance sheet should be small – and, in such a world, a small amount of equity is adequate, assuming that the real interest rate returns to at least 1 per cent and that adjustments to the repo rate are enough to achieve the monetary policy objectives. The proposed act certainly makes it possible for the Riksbank to ask to raise the capital ratio, for example if seigniorage should fall or the real interest rate become lower. The problem is that, if the earnings capacity is initially set to just cover expenditure, there will be no scope to use the profit to build up equity independently. If revenues fall because real interest rates are low, it will not matter if target equity is higher – the Riksbank will make losses until the framework triggers a recapitalisation. When it comes to allowing for a larger balance sheet, the problem is that risks can increase quite quickly – and then, the Riksbank could find itself in a situation where retained profits are not enough to build equity up quickly enough.

We have been able to affect expectations for the following years through our communications. Other central banks that have not traditionally engaged in this type of communication have, as I mentioned earlier, experimented with different forms of rough ‘triggers’ of various kinds. The academic background to the concept is the insight that expectations of future policy rates are at least as important as their current level when it comes to affecting investment and consumption decisions. In normal cases, the central bank is assumed to be able to influence expectations satisfactorily through its systematic monetary policy. But when the policy rate reaches its lower bound, it is possible to communicate an intention to diverge from normal behaviour and keep the rate low for a longer period and thus substitute, to a certain extent, for an immediate policy rate cut. There has been, however, some discussion of how effective such communication actually is, particularly over longer horizons. 12 The Riksbank's method provides a more complete picture of how we see the situation and the development of the economy. But other ways of communicating about the future have their advantages. One variant of this is the state-contingent US approach: saying that the policy rate will not be raised until the outcome for inflation has reached 2 per cent. 13 In situations where the market does not share the Riksbank’s view of the development of inflation, the US way of communicating can provide more information than inflation and interest rate forecasts.
In November 2000, the ECOFIN Council – bringing together the Economics and Finance ministers of the EU Member States – formally adopted the position that unilateral euroisation is not compatible with the Treaty and cannot be a way to bypass the convergence process foreseen by the Treaty for the adoption of the euro. The ECB fully subscribes to this position of the EU Council. Allowing a Member State or a future Member State to take a “short-cut” to the euro, rather than following the official roadmap, could be detrimental to that country and possibly the euro area. Because 1.  a sustainable convergence that is conducive to the maintenance of price stability and the coherence of the euro area may not have been achieved. 2. It would breach the principle of equal treatment. 3. It would not ensure that the country in question pursues the right policies to thrive under the euro. This raises the question of the approach to be taken towards countries, which would in principle qualify for EU membership (Art 49 TEU) but do not formally aspire to join the EU and are thus not candidate countries. This is the category of countries like Iceland. Here, both the rule of law and the principle of equal treatment provide answers. 1. The Treaty does not provide a framework for euro adoption by non-candidate countries.

The economic convergence criteria ensure that the applicant countries have established economic conditions that are conducive to the maintenance of price stability and the  2  BIS Review 17/2008  coherence of the euro area. The framework of analysis comprises developments in prices, fiscal balances and debt ratios, exchange rates and long-term interest rates, together with other factors. A number of general rules are used in the application of these criteria. 1. The individual criteria are interpreted and applied in a strict manner. 2. The criteria constitute a coherent and integrated approach. They must all be satisfied. The Treaty lists the criteria on an equal footing and does not suggest a hierarchy. 3. The criteria must be met on the basis of actual data. 4. The application of the criteria should be consistent, transparent and simple. 5. Convergence must be achieved on a sustainable basis and not at a given point in time only. This approach is firmly based on economic arguments. It is generally recognised that a monetary union requires sustainable macro-economic convergence among the participating countries. Once a country joins a monetary union, it loses the possibility to use the nominal exchange rate as an instrument to correct a loss in competitiveness. As monetary policy decisions in the EMU are taken in the light of the economic conditions prevailing in the entire area, economic convergence is required to ensure that a country’s economy is sufficiently prepared for the monetary union.
From today’s vantage point, it is easy to forget how revolutionary the introduction of RTGS was back in 1996. Before RTGS, all interbank payments were subject to some element of settlement risk – the risk that a bank would fail between the time it promised to make a payment, and the time it delivered on that promise. By allowing banks to settle high value transactions between each other, electronically, in real time, RTGS eliminated settlement risk on the largest payments flows – the ones most likely to threaten financial stability by bringing down the system if they failed. But that is not the only innovation that RTGS has delivered over the years. As the financial system has evolved, RTGS has been regularly updated, introducing a raft of new functions and risk mitigants to respond to changing demands. Today, we are announcing that the Bank has completed, or agreed steps that will complete, all the actions in response to the Deloitte report 4 published in March last year following the RTGS outage in October 2014. Looking forward, as we celebrate RTGS’ twentieth birthday during 2016, it is again time to ask fundamental questions about the shape of the Bank’s settlement operations. The way payments are made has changed dramatically in recent years, reflecting changes in the needs of households and companies, changes in technology, and an evolving regulatory landscape. The range of payment providers is growing rapidly.

The rules and procedures of the various payments systems that settle in RTGS – CHAPS, Bacs, FPS, LINK, Cheque & Credit, and Visa Europe – are maintained by their respective private sector members, though there is close cooperation between the schemes and the Bank’s operational team. The recognised payments schemes are themselves supervised by the Financial Markets Infrastructure Directorate of the Bank. We will want to examine the Bank’s role in delivering payments and settlement services, looking closely at how the United Kingdom compares to elsewhere around the world and the international guidance on risk standards set out in the Principles for Financial Market Infrastructure. The Bank’s experience, particularly during the financial crisis, has been that having direct operational control over RTGS has paid substantial dividends in terms of the delivery of its mission, so I think it is fair to say we start with a certain bias in that regard. But the appropriate model for IT development, service governance and risk management depends quite heavily on the chosen way forward for the RTGS infrastructure. In light of the emerging results of the blueprint, the Bank’s supervisory function will review whether any changes are necessary to the supervisory model for the high value sterling payments system. A blueprint with buy-in The agenda I have set out today is an ambitious one, with important implications both for the many institutions and infrastructures that interface with the system today and for those that might do so in the future.
In some economies, such as the UK, the biggest risks are associated with the housing market, which is why macroprudential actions have been taken. More generally, as the FSB has recently concluded: “there are increased signs of complacency in financial markets, in part reflecting search for yield amidst exceptionally accommodative monetary policies. Volatility has become compressed and asset valuations stretched across a growing number of markets, increasing the risk of a sharp reversal.” Those risks arise against a backdrop in which assets managed by investment funds have reached almost 90% of global GDP – more than two thirds the size of the commercial banking system. The growth of the asset management sector brings welcome diversity to financial intermediation. However, there must also be a focus, as there has been with banks, on the systemic risks it could create. Although the sector is becoming more concentrated, the risks don’t simply arise from the size of asset managers. They arise from the particular activities some in the sector undertake. The biggest risks arise from combining high levels of leverage with holdings of illiquid assets and commitments to provide liquidity at short notice. In the current environment, those types of activities need careful monitoring, and possibly a deliberate policy response. Conclusion There is no doubt that the reforms made thus far, along with a stronger framework for global co-operation mean we are in a better position to face new risks.

The first is an internationally agreed standard on the total loss absorbing capacity (or TLAC) that globally systemic banks must hold. It will be based on clear principles. But it will be much more than a list of aspirations. It will include a detailed indicative term sheet that will cover the amount; the type, and the location of that loss absorbing capacity. It will establish a level playing field between global systemic banks, while taking into account differences in national resolution regimes. It will ensure globally systemic banks finally have the quantum of total loss absorbing capacity that extensive analysis show balances the benefit of greater resilience against the higher funding costs for the banks that results from the removal of public subsidies. It will set clear roles for home and host regulators in a resolution. It will give host nations the confidence that they won’t again be side-swiped by the failure of a large foreign bank. And, by removing the implicit subsidy that systemic banks have long enjoyed, it will reestablish market discipline. Once implemented, it will make our financial systems more resilient and our economies stronger. The proposal will be subject to a rigorous consultation and Quantitative Impact Study and market survey in 2015 and will take into account insights from the FSB’s ongoing Resolvability Assessment Process for every systemic bank’s resolution plan. The TLAC agreement will be complemented by another agreement just announced yesterday.
At the present time, the insurance provided by many monetary authorities may look cheap because inflation is projected to stay low and markets seem to reward those countries which liquefy public debt. However this equilibrium could be unstable and market makers, aware of some inflation “tail risks”, are hedging themselves through gold or currencies like the Swiss franc whose exchange rates have reached historical highs. By contrast, purchases of sovereign debt by the Eurosystem remained very limited and will stay so. Our objective is simple: avoid disruptions in the monetary policy transmission mechanism. Any lasting liquidity backstop has to come from the governments. This is why we are asking for more flexibility in the European Financial Stability Facility (EFSF). Whether amounts are big enough is a matter of opinion but one could envisage to leverage existing commitments to provide greater intervention capacity. At this stage, the euro area is paying a double price. One for its mistakes and one for its virtues. The mistakes were to allow the piling up of debt through unsustainable fiscal policies over a decade, and then to create ex nihilo a doubt as to their ability to pay those debts. But we are also paying a price for our virtue as we refuse to liquefy our debt through massive monetization of our fiscal deficits. Will our virtue be rewarded at the end? I strongly believe so and I will explain why.

At the same time, banks are required to build additional capital buffers, which further constrain their pay-out ratio. So dividend prospects are doubly affected and that explains why share prices are reacting to negative news on growth. This movement has been more pronounced for French banks which are suffering from two specific vulnerabilities, one real, one exaggerated. The real vulnerability is their dependence on dollar funding, due to the scale of their international activities, which they may have been initially too slow to address effectively. It is currently being dealt with through a combination of deleveraging and consolidation. In the meantime, in order to ease this transition, the Eurosystem, together with other central banks across the world, has decided to conduct US dollar liquidity-providing operations with a maturity of three months. A more exaggerated concern about French banks is their exposure to sovereign risk. Let me just point out some facts: total exposure of major French banks to the sovereign risk of socalled “peripheral countries” amounts to € To take an extreme – and from my view point – totally unrealistic scenario – a 50% haircut on Greece and 25% haircut on Italy and Spain would result in a 12% loss of core Tier One capital. In terms of liquidity, the Eurosystem refinancing policy provides for an unlimited provision on an extended period and the collateral held by French banks in eligible assets is much above their present needs.
The growth forecast for 2012 we are presenting in this Report, details of which I will be sharing with you in a few moments, runs higher than what we presented before the Finance Commission of this Senate last June. A number of factors have contributed to this growth, including increased personal income resulting from labor market strength, an expansion of credit to firms and households, as well as the impulse from investment in mining and complementary projects associated to the high copper price. Consumer and business confidence has risen or remained in optimistic levels. Another contributor was the drop in inflation in recent months, reflecting the prices of perishable foodstuffs and fuels. The latter, however, has tended to revert in the past few weeks. However, the macroeconomic scenario entails significant risks and, to some extent, opposing ones, that drive monetary policy to face a difficult dilemma. On one hand, the effects of the frail international conditions on world growth and external financial conditions should help to reduce the strength of the Chilean economy. In addition, there is the possibility of a further deterioration of the external scenario, with more acute consequences on our economy. On the other hand, the recent intensification in installed capacity utilization, as well as the widening of the current account deficit, reflect the persistence of a degree of dynamism of domestic demand that also entails medium term risks for inflation and the vulnerability of the country’s external accounts.

The reserves accumulation carried out by the Bank in the past few years, as well as management thereof – details are provided in an Appendix – should suffice to confront extreme episodes. Chile also has sovereign wealth funds that could help alleviate the financing needs in case of increased external tensions as well. The foreign funds of institutional investors can also act as stabilizing agents in this sense. On the other hand, we must always bear in mind that any intervention has associated costs. First, it can blur the objective of the Central Bank: inflation or exchange rate target. In our case, we have dealt with this problem by carrying out transparent, sterilized interventions, with a publicly known timetable that does not conflict with the formulation of monetary policy. In addition, our communication has been straightforward in stating that the objective of our monetary policy is price stability. Second, an intervention entails a significant financial cost for the Central Bank and the country. International reserves are invested in highly liquid assets abroad, whose yield is lower than the interest paid on the debt securities in pesos that are used to sterilize the purchase. In the current scenario, in which external-domestic interest rate differentials are significant and expected to remain so for some time, the financial cost of holding reserves is substantial and negatively affects the Bank’s balance sheet continually.
It increases the import bill: widens the current account deficit: adversely impacts on the exchange rate stability; raises domestic fuel prices causing a serious supply side shock; and raises both headline and core inflation since domestic inflation becomes adverse with the demand pressure in the economy and supply side shocks. At a time when the entire world is strengthening its security capabilities to meet the threat against terrorism, Sri Lanka too would need to address the prevailing situation. At the same time, it is important that the business community continues with its investment plans in Sri Lanka because the very concerns regarding security provides a certain “discount” which could be of advantage in a highly competitive global business field. External and internal shocks and vulnerabilities may also thrust fresh challenges to financial system stability. Hence, it would be useful to consider a few such shocks and risks as well. The continuing high growth in private sector credit could also pose threats to price as well as financial system stability. First, it could deteriorate the quality of the assets of commercial banks and that situation could increase the risk of high non-performing loans in the future. Second, such expansion of credit could generate inflationary pressures in the economy through increased aggregate demand. With the rapid and intense integration of the Sri Lankan economy with global financial markets, money laundering, terrorist financing and pyramid schemes could threaten financial stability.

This suggests that the industry is ripe for transformation to a new growth trajectory. The industry in essence has not delivered the required results. Jumping the “S-curve”: The need for positive feedback loops Successfully jumping the cusp of the “S-curve” is the only way to realise the aspiration of a deeper and more diverse insurance market. This calls for transformational change, driven and reinforced by positive drivers that will revitalise the industry. In the context of financial services today, these drivers focus on three “T”s – talent, technology and trust. These three factors can be harnessed to catapult the industry onto a path of new and stronger growth, or they can precipitate its decline over time. The industry must secure the former for its future expansion or else it will continue plateauing. Let me speak briefly on these three factors. Firstly, we must grow the talent we need to bring our insurance and takaful sector to the next level. As our economic structure evolves, we will need a deep pool of insurance and takaful professionals who can develop and support new solutions for managing risks. Unfortunately, talent shortage has been a persistent issue which, if not resolved, will not only hold back the industry from gaining new ground; it could lead to a further retrenchment of business growth. The industry needs to make further efforts to attract and nurture new talents.