samchain/econo-pairs-v1 huggingface dataset:
Of course, insurers have significantly improved their risk and capital management under Solvency 2, and the insurance market is now more resilient and better equipped to cope with financial crises. The average SCR ratio in the European Union stood at 241% in the first quarter of 2018. It tends to be even higher for mutual insurers But these positives must not be allowed to overshadow the questions that need to be asked after such a radical change, particularly about the impact on equity investment and the financing of the European economy, as well as issues relating to volatility and complexity. Therefore I invite Insurers to play an active role in the discussions that should come with the so-called “Long Term Guarantee Package” or 2020 review. As was the case with the 2018 review, the ACPR will call for further progress towards a significant simplification of the framework. We also expect the review to better take into account the impact of Solvency 2 on the financing of the economy. This said, and irrespective of the outcome of the forthcoming reviews, the proportionality principle and its harmonised application across the European Union will remain a major concern for EIOPA and of course for ACPR. On a topical note, I would add that it is crucial for supervisors to apply all prudential requirements with equal rigour. The string of failures by insurers doing business on the French market under the freedom to provide services, particularly in construction insurance, is a reminder of the importance of this.

There are several reasons for this:  4  BIS Review 65/2008  First, labour has flowed into Norway from other countries. The opening of the labour market to the new EU countries has provided us with access to a reserve of labour. Initially, workers came to Norway on short-term assignments. They produced in Norway, but their consumption largely took place in their home country, with an attendant increase in the economy’s net production capacity. An increasing number of workers subsequently moved to Norway and took up residence here, often accompanied by their families. This still increases production, although the higher number of foreign workers who want to settle in Norway also puts added pressure on domestic resources. Per capita output is not likely to increase as a result of this kind of immigration. Access to foreign labour may nonetheless relieve shortterm bottlenecks in some sectors. In 2007, the population increased by about 55 000, with net immigration coming to 35 000. This is the highest rise in the population ever recorded. This trend seems to have continued so far this year. BIS Review 65/1008  5  Second, businesses in Norway have become more efficient in their operations, resulting in lower costs. It has been profitable to hire more employees despite the high wage level in Norway. The business sector has made use of new technology and businesses have been restructured. The many sweeping reforms of the 1980s and 1990s – the fundamental shift in 1 the Norwegian economy – resulted in more efficient markets.
We export not only goods but also services - primarily transport and travel services - also computer and IT services and the volume of these services has been increasing rapidly during the last three years. The FDI inflow that has reached the 9 billion kroon level in recent years proves our competitive position in the Baltic Sea region as well as a broader region. Equal distribution of investments between the main sectors of economy is an indication of the balanced economic development (in 2001, for example, manufacturing industry - 20%, transport and communications - 23%, wholesale and retail trade - 14%). It is also important to note that the FDI inflow was not contingent on the privatisation of former SOEs. And finally, our competitiveness is demonstrated by the yield of investments made in Estonia and reinvesting of substantial part of annual profits which in 2001 amounted to 3,8 billion kroons. This is also shows our competitiveness. The readiness of Estonian economy for the integration with the European economic system is demonstrated especially well by such key sectors of our economy as the financial and telecommunication sectors. Here we talk about the complete opening of the market to domestic and foreign competition, strong state supervision and integration of Estonian enterprises in the big multinational corporations. What should we focus on in the future? Estonia is no longer a catching-up candidate country as it was three-four years ago. However, we still cannot say that the restructuring of our economy has been completed.

It is obvious that no country, not even Estonia, when planning its economic policies should assume, for example, a 8-8% current account deficit spanning several years. Even if the latter is in the initial years financed through foreign direct investments, the adaptation of the economy is inevitable. The slower the economic growth is during the adaptation period, the more painful it is for the society. The goal of the economic policy should be the prevention of the internal demand-driven boom immediately prior and after the EU accession which will be followed by a significantly slower growth phase. Pre-accession economic programme and macroeconomic risks All these important issues are, to a certain extent, reflected in Estonia’s pre-accession economic programme which was recently approved by the government of the republic. I stress that the projections which form the basis of the national pre-accession programme and the premise that in Estonian economy the real total output is going to increase at the rate of about 6% per year are attainable only if the current economic policy continues. Keeping of the macrobalance is of critical importance for sustaining the economic growth and credibility of the monetary policy. The kroon’s fixed exchange rate and the forthcoming entry into the euro zone are by no means “free lunches”.
I am happy to report that this experience has been a successful one, particularly from the point of view of monetary autonomy. Indeed, the Basic Law has, since 1 July 1997, provided Hong Kong with far greater autonomy in its monetary and financial affairs, and this autonomy has been confirmed in practice by the clear confidence that the Central Government has placed in our ability to manage things on our own. I make this point, not because Macau needs any reassurance from Hong Kong, but because it is a striking illustration of how some of the deepest forebodings about future events can often be the product of the most dismal misjudgements. Two years ago, gloomy scenarios were being painted - not about an Asian financial crisis - but about the impending demise of Hong Kong’s monetary autonomy under Chinese rule: about the breaking of the link between the Hong Kong dollar and the U.S. dollar, the absorption of Hong Kong’s substantial foreign reserves by the Mainland, and so on. Of course, nothing of the kind has happened, and there may well be lessons here to apply to some of the more lurid scenarios that are being drawn up for the first of January 2000. Our topic this morning, however, is not the Year 2000 problem, but the perennial question of how to devise sustainable and realistic monetary and exchange rate policies in an uncertain global financial environment.

The theory is that, in a liberalised global financial system, international capital flows reward countries with sound economic policies and punish those which pursue unbalanced and inconsistent policies. International capital flows also prevent distortions from getting as far out of line as they would if the economy in BIS Review 53/1999  2  question was closed to outside investors. Thus, according to this view, capital flows act as an early warning system that forces quick corrections of policy errors. Undoubtedly, there have been circumstances in the past that have lent substance to this view. In the Latin debt crisis of the late 1970s and early 1980s, for example, many borrowers were clearly pursuing unsustainable and destabilising macroeconomic policies. The resulting outflow of funds and the short-term economic crisis that ensued served to bring policies to task and to trigger lasting economic reforms in some countries, notably Chile. More recent experience, however, raises serious questions about this view of the role of international capital as a robust, reliable and objective referee of the soundness of economic policies. Events during the Asian crisis naturally come to mind. The flight of international capital bore practically no relation to a forward-looking assessment of changes in the policies and macroeconomic fundamentals of the region. It is true that some countries were pursuing quasi-fixed exchange rate regimes that may have allowed pressures to build up for too long.
Market prices suggest the implied subsidy has been substantially reduced as the expectation of public bail-outs dies away.7 However, we have more to do in order to make cross-border resolution the only expected outcome in the event an institution fails. The TLAC standards must be finalised next year and then implemented fully. Resolution plans for individual firms must be finalised and legal and operational impediments removed. Arrangements for the funding of firms in resolution must be put in place. Legislation must be enacted to allow regulators to give effect to the resolution actions of authorities in other jurisdictions. And the solution of the too big to fail problem in banks must be broadened to include all systemic institutions, including insurers and critical financial market infrastructures, through designation, more intensive supervision and standards for loss absorbing capacity. We recognise that our success can never be absolute. Specifically, we can’t expect to insulate fully all institutions from all external shocks, however large. But we can change the system so that systemically important institutions, their shareholders and their creditors bear the cost of their own actions and the risks they take. The future of reform With a safer, simpler and fairer system in place, the FSB can begin to look ahead to how, collectively, we will engage in the next phase of reform and regulate and supervise the global system. 6  Clear principles and a detailed indicative term sheet covering the necessary amount, type and location of loss absorbing capacity are now being consulted on. See FSB (2014a).

Corporate bonds and securitised loans account for only 7%. Chart 5 shows that in each of the US, UK and Europe, the period since the crisis has seen the stock of outstanding bonds move towards the stock of outstanding bank loans. 9  See FSB (2014e). 10  Chart 6 shows the post-crisis collapse in European securitisation issuance, which has been particularly concentrated in residential mortgage-backed securities. 11  Bank of England and ECB (2014) is a consultation paper on the development of such a model of securitisation. The EBA is also consulting on the same issue, see EBA (2014). 12  Menon 2013. 13  Shanmugaratnam (2013). 6  BIS central bankers’ speeches  times. There is a disconnect between developments in real economies and the degree of financial risk taking. It is particularly notable how the search for yield has compressed liquidity premia across markets. This is unlikely to be sustainable over the medium term because it exists against a backdrop of much-reduced market-making activity.14 Fundamentally, liquidity has become more scarce in secondary fixed income markets. It just appears that it hasn’t. The reasons for the changes are clear however. New prudential requirements have reduced incentives for banks to warehouse risk positions. Dealer inventories in fixed income have declined by 70% since the pre-crisis period, while the stock of fixed income assets outstanding has doubled. And the Value-at-Risk in banks’ trading books has retreated to 2002 levels.
Such ratings downgrades may not occur immediately, leaving a window where policyholders may be less well protected. Further, where ratings downgrade by a notch but remain within the same CQS, again the FS is unchanged. Another way of looking at the question is to consider how much of the credit spread the FS strips out in percentage terms [Chart 11]. So, at year-end 2020 perhaps 70% of the credit spread on such assets is removed for retained risks, with a much lower figure if spreads reached the levels seen in the Global Financial Crisis. The insensitivity to market signals is a feature of the current FS construct, and is why for internal model firms we set an expectation in Supervisory Statement 8/18: “Solvency II: Internal models – modelling of the matching adjustment”10, that when determining the FS in stress firms should not simply mechanistically recalculate the FS, but should determine a stressed FS that better reflects the risks retained. To be more forward looking, one alternative could be for an approach where the risk allowance reflects compensation for: expected losses; uncertainty around expected losses; and any further risks retained by investors. Such an approach might place less weight on credit ratings, which particularly in the case of internal ratings present challenges around availability of data, and expertise in the business and risk 9  Illustrative bonds of 10-15 year term, duration c. 10 year at YE20 https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/supervisory-statement/2018/ss818.pdf  10  7  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  7  teams.

Looking back, the convergence process that was triggered, after the ratification of the Maastricht Treaty, was very impressive, in particular in Italy, eventually paving the way for this country to be among the first to adopt the euro. This convergence process has also contributed greatly to macro-economic stability and sound economic policies, both in this and in other European countries, a practice nowadays entrenched in the Treaty, in particular in the so-called Stability and Growth Pact. Where many did not have considered this to be possible, Italy has thus become a member of the stability-oriented family of European nations. Also in this respect, it is a pleasure for the Governing Council to meet here. We are living in a period in which history is made, almost every day. In two weeks time, ten countries will sign the so-called Accession Treaties, making it possible for these countries to become a member of the European Union, in the spring of next year. This enlargement of the European Union to the east  and south of our continent is another historical event, ending the rift that was created after the Second World War. The benefits of this enlargement, both in political as well as economic terms, are clear. However, this does not make it less of a challenge, also for the ECB and the national central banks.
As it becomes clearer that the international environment really is improving, and that external demand really is picking up, then we can look forward to better balanced and generally stronger growth in our own economy. That will in due course mean that domestic demand growth - and consumer demand growth in particular - will need to moderate if we are to avoid a build up of inflationary pressure. But let me be quite clear - that's not a warning, still less is it a threat, as some more excitable commentators suggested earlier this year. It is - as I explained elsewhere recently - essentially a matter of arithmetic! It's quite possible, even quite likely, that the necessary moderation of consumer demand - and I emphasise the word moderation - will come about of its own accord, given the gradual increase in unemployment we are currently seeing, and the build up of household debt. And provided it does not happen too abruptly, that would be the best possible outcome. But if consumer spending were not to moderate of its own accord, we would, in the context of strengthening external demand, clearly need at some point to consider raising interest rates to bring that moderation about. I don't suggest that the timing of any such move is imminent - that would obviously depend upon the timing and the strength of the recovery abroad.

To seize the opportunities and address the risks stemming from highly evolving financial technologies, initiatives often start at the national level. The case of crowdfunding is a good example. In 2014 France was a pioneer in issuing a new bespoke regime for crowdfunding and marketplace lending platforms. This new regime opened a playing field for new players while limiting the regulatory burden and strengthening the protection of consumers and investors. As a result, although crowdfunding will not replace traditional lending in the near future, the French market is today the biggest market in continental Europe for alternative financing for the fourth consecutive year. 1 The latest figures for 2018, released by KPMG and Financement Participatif France (FPF),2 show that more than 33,000 projects, for a total amount of EUR 402 million, were financed by crowdfunding platforms. Compared to 2016, the total amount financed has increased by 20%. In the last three years, it has been multiplied by 2.4. Further to national initiatives, European convergence is always the ultimate goal. National initiatives are beneficial because they can be swiftly implemented and tested. By contrast, the European decision-making process is not known for its rapidity. But the size of the European market is critical for allowing our Fintech start ups to reach an appropriate scale for their activities. That is why the Banque de France advocates a European regulation of crowdfunding platforms based on the French model.
The Committee believes it critical to complement the more risk reflective capital requirements with the added incentives of supervisory review and market discipline. The second pillar of the new framework focuses on the need for banks to conduct their own assessments of the amount of capital they should hold relative to their risk. Supervisors will be expected to review and respond to these assessments. I believe that discussions between bankers and their supervisors will create added incentives for management to assess its risks carefully. No longer will the emphasis solely be on whether a bank complies with regulatory minimums. Rather, banks will be expected to manage their economic needs and operate with a capital buffer at levels above the regulatory minima. Accordingly, there will be a need for strong capabilities by banks and supervisors alike to evaluate banks’ level of risk appropriately. Market participants also will play an important role in evaluating the adequacy of bank capital. Greater disclosure of key risk elements and capital by banks will provide important information to counterparties and investors, who need these data to develop an informed view of a bank’s risk profile. By bringing greater market discipline to bear through enhanced disclosures, I believe the third pillar of the New Accord, the market discipline component, can produce significant benefits. It will help to encourage banks to manage their risks prudently and, by supplementing official supervision, thereby also improve financial stability. 3.

That is, not to introduce large changes in the aggregate amount of capital currently held in the banking system while at the same time to provide tangible incentives for banks to adopt the most advanced and sophisticated approaches to capital adequacy. As we near completion of the New Accord, I am reminded that the tremendous progress we have made is a reflection of the steadfast commitment that so many have put forth to see the revision process through to its completion. The success of the New Accord will be directly attributable to the enormous support and assistance provided by both bankers and supervisors. Yet a Chinese proverb reminds us that, "On a journey of one hundred miles, ninety is but halfway." I suppose the last miles of any marathon are the toughest to finish. The wisdom of that proverb is borne out by the critical nature of the tasks ahead of us to complete, and then to implement, the new capital framework. Adopting the New Accord will be a challenging but also an exciting undertaking for us all. The potential benefits are many - including improving the management of risk, enhancing transparency and promoting greater financial stability. In short, this new framework will make all of us - bankers, supervisors and others - better at what we do. Thank you very much.
Residential construction of apartments in apartment blocks in relation to the population increase has been lowest in Stockholm county, followed by Skåne county and Västra Götaland county. One ray of hope is that the number of building permits granted for apartment blocks is continuing to increase, which indicated a continued increase in new production of apartment blocks. Factors such as regulated rents for rental properties, i.e. the utility value system, a lack of land with planning permission in growth regions, the construction of the municipal tax equalisation system, the imbalance between traffic situations and housing in growth regions and long planning processes probably all contribute to the relatively low level of residential construction, even in areas where demand is high. A further restriction is the lack of competition in the construction sector. This is demonstrated in the developments in prices and wages in the sector. Construction workers’ wages have increased more than those of industrial workers in recent years. Another example is that the costs of construction  2  BIS Review 2/2002  materials, which constitute approximately one-third of total construction costs, have shown price increases over and above other industrial products for some time now, with price rises even during periods of low demand. One important explanation for this is the fact that the construction trade is concentrated to a small number of large companies. In some markets, for instance, those for cement, reinforcement steel and plasterboard, one company accounts for more than 50 per cent of total sales.

The banks’ credit assessment procedure is not a static process. The major Swedish banks currently have well-functioning organisations, methods and systems for assessing loans and managing credit risk. Developments in financial theory and rapid advances in IT over the past decade have created new and improved conditions in this field, and the banks have made good use of this. As a borrower it is important to be aware that the individualisation in the modern credit granting process has also been taken up in the shaping of the new capital adequacy rules, where it will be possible to price loans more fairly. Why do we have capital adequacy rules? As the banks play such a central role in the payment system, and the costs of disturbances in the system and in the credit market would be very large and have to be borne not only by the borrowers and lenders, but by society as a whole, the banks have long been subject to scrutiny and oversight with regard to their risk-taking. Since 1988 we have had an international agreement, the Basel Accord on capital adequacy rules. This involves, in simple terms, regulations as to how much capital a bank must hold with regard to different borrower groups for each hundred krona it lends out. It is much more costly for the banks to finance themselves by holding their own capital than through borrowing, just as for other companies.