samchain/econo-pairs-v1 huggingface dataset:
And the fact that the BRRD has to be applied before any loan by the European Stability Mechanism is made to a bank means that, very likely, there will not be any direct recapitalisation on a European level. So there is a long list of things, not to mention the reduction in non-performing loans. NPLs have been subject to intense action by supervisors. The average amount of NPLs compared with the total amount of credit came down to 4.8% last year, from slightly above 8% in 2013. Of course, there are around 30 banks that still have higher – in some cases, much higher – NPL ratios, but the targets are there. And the banks beat their targets to reduce their bad loans last year. So it’s working, it’s going in the right direction. In a nutshell, enough risk reduction has been achieved to justify introducing elements of risksharing in the banking union project. And that would be a European Deposit Insurance Scheme? That would be EDIS and the backstop for the Single Resolution Fund, which, in practice, is not so important. How do you think this taking on of responsibility for banking supervision is working? There are risks in everything, of course, but I have always been in favour of having banking supervision with the central bank. That has been the tradition in my country, and there are many good arguments for that.

The idea is that if the central bank uses an active policy to do so, then it’s to correct distortions that exist in financial markets and ensure that lending rates to businesses and households in the economy as a whole are at the right level to get to the level of activity that would be desirable. If there are rigidities and distortions in the private sector that do not engineer the smooth functioning of the economy, then public intervention is fully justified. It does not add up to manipulation because the reality is not perfect to start with. I’m just now thinking in very abstract terms; this was never discussed at the ECB’s Governing Council. This is my personal take on possibilities; it is not more than that. We didn’t start any discussion about the medium-term future of monetary policy, it’s too soon in Europe to start thinking about that. But I’ll just say it’s a possibility and it can work. We could buy more bonds to enforce it – the 33% 1/8  BIS central bankers' speeches  limit [that the ECB has on buying all of the outstanding stock of a country’s government bonds] is a self-binding decision by the Governing Council. That decision could be slightly changed, theoretically, of course. What about the use of the other non-standard measures? There is a view that some of the tools, such as the Outright Monetary Transactions (OMT) programme, are closely linked with the current ECB leadership and not as much with the ECB itself.
All these factors have one consequence in common: they encourage homogenous behaviour and reactions to the detriment of the diversity that is indispensable to the smooth functioning of financial markets. For this reason, the authorities might reflect on some ways – in conjunction with the financial industry – to foster behavioural diversity in global markets Monetary policy alone cannot guarantee the stability of financial systems, which may be jeopardised by shocks from both the financial and the real economies. However, it must be stressed that an adequate monetary policy is a fundamental prerequisite to smooth the financial cycles. An appropriate monetary stance is crucial for banks and monetary participants to base their decisions on solid ground. The objective of price stability lowers economic agents’ uncertainty regarding future price developments. In addition, by committing itself to a long-term objective, the central bank reduces market uncertainty, which can be a source of disruption to the financial economy. Interest rates and money supply are less volatile as a result, which is of benefit to the long-term growth of the economy. However important, a sound monetary policy is not enough. To safeguard the smooth functioning of the markets, and in particular an efficient pricing mechanism, it is essential to protect, and even reinforce, the diversity of behaviour on the markets. This necessary diversity is merely the echo of the different time horizons, strategies and reaction functions of market players. On this point, I would like to explore a few possible avenues for future action.

In this respect, I must stress that the Basle Committee, as illustrated by the new Capital Accord, is encouraging banks to use more sophisticated and accurate risk measurements techniques. In addition, supervisors might help –and obviously they are already helping- to spread the idea that financial institutions should round out their current range of risk management tools to include extensive use of stress testing. This technique offers a better reflection of the varying situations of institutions and of the diverse perceptions that institutions have of exceptional events. The application of stress testing techniques and their results are thus inherently more diversified than those resulting from methods based on the value-at-risk approach. These are only examples of options to help improve the functioning of markets. There is probably some merit in an overall review of regulatory, accounting and tax rules and regulations, as well as of codes of good conduct and good practices, and of structural developments of market themselves, to identify possible amendments and improvements that could help protect and enhance the behavioural and conceptual diversity of modern financial markets. In conclusion, let me stress the important role played by central banks in preserving monetary and financial stability in an increasingly globalised world. The recent years have shown the benefits of monetary stability in terms of growth in a globalised world. It is of course closely linked to central bank’s independence, which is no longer a matter of debate.
Zeti Akhtar Aziz: Finance and the real economy – fostering sustainability Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Islamic Development Bank (IDB) Regional Lecture Series on Islamic economics, finance and banking: “Finance and the real economy – fostering sustainability”, Jakarta, 19 December 2012. *  *  *  I am most honoured to be invited to deliver this inaugural lecture of the Islamic Development Bank Regional Lecture Series. I am also most delighted to be back here in Jakarta. I would like to thank the Islamic Development Bank for the invitation, and Bank Indonesia for kindly hosting this event. For more than three decades now, the Islamic Development Bank has had an important role in promoting economic growth and development in so many parts of the world, and associated with this, has been its role in fostering the development of Islamic finance. It has supported the building of key international financial infrastructure that has been important for the orderly global development of Islamic finance and for safeguarding financial stability. The Islamic Development Bank has also supported research and education efforts in this area, while its strategic interests in financial institutions in different jurisdictions have been an important catalyst for their establishment and expansion.

In the current more uncertain environment, in the aftermath of the recent global financial crisis, the role of the Islamic Development Bank will continue to be important, given that the goal of sustainable growth and development in the world economy has now become even more challenging. As the conventional financial system currently confronts what is perhaps its most defining period, several important lessons can be drawn for our collective efforts to build more resilient financial systems. Important considerations need to be accorded to the issues that have emerged, and on the policy directions affecting growth and stability. My address today will discuss several of these issues, and discuss how Islamic finance, given its nature and inherent features, can contribute to the process of enhancing the discipline that contributes to ensuring growth and financial stability. At the core, the financial system needs to serve the real economy. The purpose of the financial system is intermediation – that is, to match savings and investments for the purpose of generating economic growth. Yet, in recent decades, a number of factors have contributed to the weakening of the link between financial intermediation and productive economic activity. Deregulation opened up new opportunities for financial institutions to enhance performance and expand the scope of their activities. Greater competition, reinforced by significant advances in technology, intensified the pace of innovation. And, the extended period of low inflation and low interest rates incentivised greater risk-taking. Cumulatively, these developments contributed to a dangerous build-up of financial imbalances.
For this reason, it is important that a detailed strategy be designed as soon as possible for achieving a gradual and sustained reduction in fiscal imbalances, to be implemented when the pandemic has been overcome. This strategy should also place the emphasis on improving the quality of public finances, from the viewpoint of their composition, in terms of the various types of revenues and expenditures, to ensure that it is geared towards boosting long-term economic growth. And it is important to stress that although, as I have already mentioned, this fiscal consolidation strategy should only be implemented when the economic effects of the crisis have been overcome, the design and communication of its basic aspects should be undertaken without delay, as this would boost economic policy credibility and, in consequence, the expansionary effects of the current fiscal measures. The size of the challenge is so large that successfully addressing fiscal consolidation will require a comprehensive review of the tax system and of all expenditure items. Also, this objective will be facilitated by the implementation of the structural reforms that I spoke of earlier. 4 Conclusion I should like to conclude with a reflection which I think needs to be clarified, especially in this seat of popular sovereignty. In the last part of my address, I have referred to a set of economic policy actions that involve changes (some of them substantial) to the institutional 10  See J. Pijoan-Mas and P. Roldán-Blanco (2020), Dual Labour Markets and the Equilibrium Distribution of Firms, mimeo.

So despite the market analysts’ own interest rate expectations being in line with the Riksbank’s published interest rate path for the coming six months and higher further ahead, they were surprised by the Riksbank’s upward revision of the interest rate path. One might ask why market agents’ expectations of the Riksbank’s interest rate path differed from their own forecasts for the repo rate. One interpretation is that they believed they had weighed together information on inflationary pressures in the economy in a different way than the Riksbank. This is nothing strange in itself. Assessing economic developments is not an exact science and different forecasters may very well draw different conclusions regarding the underlying inflationary pressure in the economy. But what surprises me, if this is the  4  BIS Review 111/2007  correct interpretation, is that the market nevertheless reacted so strongly to the assessment we made in June. Another interpretation might be that some analysts thought the Riksbank’s assessment of inflation prospects and interest rate development did not differ significantly from their own assessments, but that the Riksbank did not want to revise the interest rate forecast made in February by that much, for reasons of prestige. I do not know whether this could have been part of the explanation, but I believe and hope that it was not. We Executive Board members have always been careful to point out that the interest rate path we publish is a forecast, and like other forecasts is reconsidered each time we make a decision.
Investment projects amounting to more than USD160 billion to be financed by the Gulf states in Asia have been announced since 2005 2 . In 2006 alone, mega-deals 3 involving corporate acquisitions and real estate purchases from the Gulf to Asia, are estimated to total more than USD18 billion, including multi-billion dollar IPO purchases in financial institutions in China, large oil refineries and telecom companies. The value of such investments are expected to increase to between USD20-30 billion in 2007. For economic regions with high savings and surpluses such as Asia and the Middle East, the challenge is to recycle part of these surplus funds to productive investments in the region. The supply of savings in Asia and the Middle East is by far higher than in any other part of the world. Savings rates here in Asia are expected to remain in the region of 30-40% of GDP for some years to come. 1  The Gulf Cooperation Council represents Saudi Arabia, UAE, Bahrain, Qatar, Oman and Kuwait  2  "A route to riches on the new Silk Road", Financial Times, 21 Dec 2006  3  Worth more than USD1 billion  BIS Review 31/2007  1  Similarly, savings in the Middle East economies have been rising in the recent decade and is expected to average about 30-35% of GDP in the coming years. In 2006, the current account surpluses as percentage of GDP for Asia and the Middle East were about 5% and 23% respectively 4 .

In closing, Malaysia is committed to be part of the New Silk Road to facilitate greater cross border economic and financial flows for increased inter-regional trade and investment transactions. InsyaAllah, the greater inter-regional economic and financial linkages would bring greater benefits which will be mutually reinforcing and contribute towards raising the prospects for greater global shared prosperity. BIS Review 31/2007  5
Information about the state of the Norwegian economy is available earlier than information provided by official statistics, and it is useful to have closer contact with business and industry throughout the country. The main impression from the latest round of interviews is that demand and output are rising in all sectors. The market outlook is reported to be positive, and the enterprises Norges Bank has contacted indicate that growth will be at least as strong six months ahead as it is now. The figures show that capacity utilisation in the business sector is gradually increasing. Some petroleum-related activities and parts of the construction sector are experiencing capacity problems, but so far, the pressure on factors of production does not seem to be particularly high in other industries. All industries report plans for moderate to solid growth in investment. In tandem with the economic upturn, employment is also rising throughout the private sector, with in general little evidence of wage pressures. Developments in Hedmark and Oppland counties are largely consistent with the overall picture for Norway. The industry structure in Hedmark and Oppland does not differ substantially in most sectors from the country as a whole. The exception is the primary industries, which play a far more important role in these two counties than in the rest of the country. The largest farming areas in Norway are to be found in Hedmark and Oppland, and employment is high in the primary industries.

The share employed in the public sector is also somewhat higher than in Norway as a whole. Unemployment has also been markedly lower in the inland region than in most other regions in recent years. 2  BIS Review 79/2005  According to the most recent reports, the economic situation in the region is favourable. Participating companies report rising employment and solid growth in all industries. In retail trade and in the construction sector, activity is brisk and increasing, with a somewhat wait-and-see approach to future developments. Growth in manufacturing has slowed slightly, but is likely to stabilise. Investment is rising in all sectors. Enterprises in the region envisage a slight rise in prices in the period ahead. Inflation has edged up since the beginning of 2004. In October, the year-on-year rise in consumer prices adjusted for tax changes and excluding energy products (CPI-ATE) was 1.2 per cent. Adjusted for the estimated direct effect of the interest rate fall on house rents, the rise in prices is estimated at 1.3 per cent in October. Total consumer prices (CPI) rose by 1.8 per cent in the same period. Prices for domestically produced goods and services rose by 2.0 per cent in the twelve months to October this year. The rise in prices for domestically produced consumer goods exposed to international competition has been very low this year. In October, prices for these goods were 0.2 per cent higher than in the same month one year earlier.
Some are easy enough to answer – your age, where in the country you work and long you’ve been in your job. Others, those related to respondents’ qualifications, or the sector they work in, offer a long list of potential answers. There are over eighty sectors from which to choose, hundreds of detailed occupational descriptions. Table 1 People are also asked about their pay. And, unsurprisingly, there are clear correlations between wages and characteristics. Pay is higher in some sectors and occupations than others; it’s also higher, at the level of the individual, for people who have better qualifications and more experience, in terms both of age and job tenure. Overall, if you take the post-1994 sample as a whole, the spread of individuals’ characteristics statistically explains around one half of the variation in their pay. This distribution can also change over time. Individuals’ characteristics can evolve – people become more experienced, in principle they can also switch occupations or become better educated. The distribution will also shift if there are differences between the characteristics of those entering and leaving employment. We’ve already seen how large those gross flows can be. So even a relatively modest contrast between the two groups can lead to significant changes at the aggregate level. The compositional effects, which are simply the fitted values of a regression of pay on characteristics, attempt to track the effects of these shifts from one quarter to the next. In aggregate, the estimated effects amount to a “hedonic” adjustment for labour quality.

Whereas the interest rates were increased by 50 basis points in November 1999, on the past two occasions the main refinancing rate and the rates on the marginal lending facility and on the deposit facility were each increased by 25 basis points, so that they now stand at 3.50%, 4.50% and 2.50% respectively. All three decisions were taken in the context of the monetary policy strategy of the Eurosystem to address upside risks to future price stability in the euro area. Both pillars of the monetary policy strategy indicated that the balance of risks to price stability in the medium term had been shifting upward in late 1999 and early 2000. Starting with monetary developments in the context of the first pillar, the three-month average of annual M3 growth exceeded the reference value throughout 1999 and in January 2000. Together with the continued strong expansion, at annual rates of around 10%, of credit granted to the private sector, this signalled that liquidity in the euro area is ample, contributing to upside risks to price stability in the medium term. In the context of the first pillar, let me briefly take up the issue of the reference value for monetary growth. As you know, the reference value is an expression of the prominent role of money in the first pillar of the monetary policy strategy of the Eurosystem. Following its meeting on 2 December 1999, the Governing Council confirmed the reference value for the growth of the broad monetary aggregate M3 at 4½% per annum.
But given the nature of the problems at the source and in the development of this sovereign debt crisis, the role that any ECB decision may play in resolving it can hardly go beyond mitigating the risks of serious accidents and of providing more time so that the decisions that must be taken in areas other than the ECB may come to fruition. The Spanish economy Let me now turn to the key features of our current economic situation. The Spanish economy has been greatly affected by the financial tensions in the euro area, which emerged with the outbreak of the international financial crisis in 2007–2008, and the public finances problems of several euro area members, beginning with Greece. In our case, the crisis reached us and, in turn, we contributed to its unfolding as a result of the doubts over the sustainability of our public finances, our poor growth expectations and the scale of our foreign debt, which essentially built up during the real estate boom. Economic policy has striven to overcome various factors of vulnerability in a very adverse macroeconomic setting. The results of the reforms undertaken are still incipient, and we must persevere with this strategy, which is the only realistic way of resuming sustained growth. As recent events in Europe show, there are feedback loops from public finances and their problems to the banking system and its problems, and from the latter to activity and  2  BIS central bankers’ speeches  employment.

The increase from 2011 to 2012 will amount to 16 pp of GDP, of which: 7 pp are explained by the deficit (4 pp by the primary balance and 3 pp by interest); nearly 1 pp is due to the fall in nominal GDP nominal, and 8 pp are attributable, essentially, to the financing of the Plan to Pay Suppliers and € billion of the amount estimated by the FROB to be drawn down from the European Financial Facility before year-end. This ratio is projected to grow more moderately in 2013, from 85% to 91% of GDP, i.e. an increase of 6 pp compared with the 16 pp we will record in 2012, and will be almost exclusively due to the increase in the interest burden on public debt because, if the projections are fulfilled, the primary deficit will be 0.7% of GDP in 2013. Clean-up and restructuring of the banking system I would not like to conclude without commenting, albeit very briefly, on the programme for the clean-up and restructuring of our banking system. As you know, a further step has been taken with the publication of the estimates of capital needs, based on the stress tests performed by an independent appraiser, supported by audit firms and real estate appraisal companies under the supervision of the European Commission, the European Central Bank, the International Monetary Fund and with the participation of the Ministry for Economic Affairs and the Banco de España.