samchain/econo-pairs-v1 huggingface dataset:
For example, regulatory requirements on banks could be raised to lean against a credit boom and lowered in the teeth of a credit downturn. In the public houses for credit, intake would be monitored, opening hours restricted and the Happy Hour abolished. This approach has become known in policy circles as macro-prudential policy. 17 Although the name is new, it is in the time-honoured policy tradition of “removing the punchbowl” from the party as it is getting started – a fitting analogy if the aim is to prevent a debt hangover. Had such a party-pooper been in place over the past decade, today’s debt headache would plausibly have been less acute. 14  Krugman (op.cit). 15  For example, Zingales, L (2008), “Plan B”, Economists’ Voice. 16  See, for example, http://scotland.shelter.org.uk/getadvice/advice_topics/paying_for_a_home/mortgage _arrears/mortgage_to_shared_equity. Bank of England (2009), “The Role of Macro-Prudential Policy”, available at www.bankofengland.co.uk. 17  BIS Review 10/2010  7  Regulation might also be used to lean against the collective tendency of banks to payout high even when profits are low. Among regulators internationally, there are proposals to introduce capital conservation rules, requiring banks to distribute less of their profits in adverse states of the world. By ensuring prudent profit retention on a collective basis, these rules ought to be in the long-term interests of banks and their shareholders, as well as the authorities.

The resulting near-term refinancing schedule is estimated by Moody’s at $ trillion over the next three years. Among UK banks, it is in excess of £ trillion between now and 2014. As hangovers go, this one is large and will linger. Dealing with today’s debt hangover The road to balance sheet repair is likely to be long and winding for both the real economy and financial system. Adjustment needs to be neither too fast nor too slow. Too fast and lending and spending fall, jeopardising today’s recovery. Too slow and balance sheet fragilities persist, jeopardising tomorrow’s stability. So what principles should guide the transition? Let me highlight two drawn from the past. The first comes from monetary policy. Over the past 30 years, many economies have sought to bring down inflation – so-called disinflation. The optimal rate of disinflation is usually felt to be gradual to limit damage to short-run growth. But there is an important exception to this gradualist rule. If a downward inflation surprise comes along, it is optimal to pocket this windfall as this accelerates the path to low inflation without harming growth. Disinflation is “opportunistic”. 9 The same general principles apply to the repair of indebted balance sheets. Take banks. Over the medium-term, their capital ratios are likely to need to rise. If this is achieved too fast, by constraining lending, it poses a risk to growth. As with disinflation, there is a strong case for gradualism.
Although a sharp fall in sterling has been the fervent wish of many manufacturers over the past four years, I recall the words of the person who told me: "think very carefully before you make a wish – it might come true". The only problems worse than those of an excessively strong currency are those of an excessively weak currency. The existing imbalances pose risks also to the inflation outlook. Prices of services have tended to rise faster than those of goods – about 2% a year faster since 1990. But over the last twelve months the gap between the two inflation rates has exceeded three percentage points. Services inflation has been in the 3-4% range for some time, but goods inflation declined steadily from over 3% in late 1995 to close to zero in the spring. The strength of sterling was the main factor that lay behind this fall in goods inflation. But there are now tentative signs of a pick up in goods prices and the retail sales deflator. RPIY inflation has also risen during the course of this year from 1.5% to 2.8%. The MPC will monitor the price data extremely carefully. But there is likely to be significant short-run volatility in the inflation figures over the coming months, and it would be unwise to read too much into the latest inflation figure because the rise from 2.0% to 2.4%, although the lar gest one-month increase since October 1996, was largely accounted for by jumps in the prices of seasonal food and petrol.

For that part of the economy producing internationally tradable, not just traded, goods and services, output is falling while consumer spending is buoyant. As a result, there is a "tale of two cities" in which some industries are experiencing the worst of times, with declining manufacturing output, and others the best of times, with the latest retail sales figures showing an increase in the volume of sales over the past twelve months of 6.4%. Such imbalances are not uncommon. Indeed, I first used the phrase "tale of two cities" in early 1995 to describe the contrast between strong demand for manufacturing output and weak retail sales, the opposite of the position today. Since then the economic see-saw has lurched from external to domestic demand, partly as a result of the continuing weakness of the euro which has led to a large and persistent rise in the sterling effective exchange rate. The scale of the imbalances at home can be seen in figures for domestic and external demand. Whereas aggregate demand and output have risen at a fairly steady rate of around 2¾% over the past five years, domestic demand, supported by rapid money and credit growth, has risen much more rapidly than net external demand. Indeed, private final domestic demand grew at an average rate of nearly 5% over this period, and its growth was in excess of 4% a year in four of the last five years. This imbalance between domestic demand and output has resulted in a rising trade deficit.
I would thus like to share with you now some thoughts on the nature of these challenges and the contribution that central banks can make to address them effectively. 1.The digitisation of the economy and its challenges for sovereignty A- The digitisation of the economy has led to a profound change in financial ecosystems. The development of an Internet-based network economy has provided businesses with more direct access to consumers, while reducing the fixed costs of launching and operating services This change has gone hand in hand with changing lifestyles and increased expectations in terms of simplicity, availability, immediacy and even personalisation of services. This is commonly referred to as the “customer experience". The emergence of digital banks, where interaction with the customer is mainly carried out via a mobile application, is an example of a response to this new standard in terms of practices. Changing patterns in practices have also prompted some companies to position themselves between customers and traditional service providers in very specific segments in order to offer value-added services. This “re-intermediation” has given rise in Europe to a continuous adaptation of regulations in order to regulate and secure data sharing, which is the driving force behind open banking. This trend benefits both relatively small players (FinTechs) and technology giants whose business model is based on the monetisation of data (Gafams and BATX, whose entry into the European market is more recent). These changes are the natural result of a process of creative iteration, and promise to simplify practices by diversifying them.

2/4  BIS central bankers' speeches  In the exercise of their supervisory mandate, central banks can contribute to this by reconciling the need for openness and support for innovation, which is inherent to an economy integrated into world trade for the benefit of consumers, with their fundamental mission as guarantors and promoters of sound risk management. But they can also contribute through their two other traditional channels, namely as a catalyst and a provider of settlement services in central bank money. A- I believe that this catalyst role is important in the field of retail payments. Commercial bank money is the predominant settlement asset in France, even though the use of banknotes and coins remains significant in this country, as in most of the European Union. This variety of means of payment, based on settlement assets that can be exchanged at any time at par, is an advantage that I believe should be preserved for several reasons: on the one hand, because of the financial inclusion responsibility, since the most vulnerable populations are also the least banked; but also with a view to diversifying risks, in the event of a widespread failure of electronic payment systems. However, it is commonly believed that in Europe there is a risk of a fragmentation of cashless means of payment and a dependence on dominant foreign players that benefit from the effects of global networks.
It is a particular coincidence that TARGET2, the next generation of the Eurosystem’s large value payment system, will be launched today. TARGET2 is an important milestone. It will offer Europe a more uniform wholesale payment infrastructure, with a harmonised service level and a single price structure. Thus, TARGET2 is another good example of progress in the creation of a common payments area. Let’s now turn to this year’s SEPA Summit, which is called “Ready for SEPA?”, and rightly so. In my view, this question is not limited to the mere operational readiness of the industry to offer SEPA payments. I consider the topic of this conference to be broader. The question  BIS Review 134/2007  1  should perhaps be understood as, is the industry ready to create a “truly integrated” Single Euro Payments Area? The ECB sees SEPA as a major catalyst for more financial integration in Europe. SEPA will influence the payment landscape in Europe for many years to come and this will involve a rethink by all the parties involved. Indeed, it is not enough to defend current market positions or current practices. Rather, the point is that SEPA will benefit those who bring innovative services to their customers. SEPA will benefit those who are future oriented. Today I would like to focus in particular on two issues, both of which are much discussed by banks and which are needed to create a truly integrated SEPA. The two main questions are, first, what about the readiness of customers?

And second, what about the readiness of other payment instruments, in particular payment cards? Let me first give you my views on the readiness of the customer. Readiness of customers? A parallel can be drawn with another major project, namely the changeover to the euro notes and coins in 2002. Indeed, as with SEPA, many of the preparations for the euro changeover were not visible to the citizens, as they were carried out by technical experts. Furthermore, the banknotes’ security features were disclosed only four months before the launch. As with SEPA, it was difficult to predict how the customer would react. On the other hand, well before the euro changeover took place, the central banking community discussed customer readiness in depth with the aim to ensure acceptance of the euro notes and coins. Well in advance of 2002, the Eurosystem started organising a “partnership programme” that involved the main bodies in the various sectors. This partnership programme emerged from the “megaphone idea” and the understanding that communication on the changeover to the euro had to be at national level by the national public authorities, banking communities and end-user associations. Each sector was encouraged to inform their target groups. Indeed, as if with a “megaphone”, the Eurosystem passed on a common set of key messages to target groups, and they in turn passed on the information to others. Applying the principle of subsidiarity in this context proved itself as the correct way to deal with differences in culture, language and institutional setting.
Ida Wolden Bache: A somewhat faster rise in the policy rate Speech by Ms Ida Wolden Bache, Governor of Norges Bank (Central Bank of Norway), during "Arendalsuka", on the outlook for the Norwegian economy and the policy rate decision, Arendal, 18 August 2022. * * * Accompanying slides of the speech. Good afternoon everyone and let me first of all thank Sparebanken Sør for allowing us to use this lovely building. This was once the Arendal branch of Norges Bank. The branch was closed in 1989, and at that time inflation in Norway was on its way down from a high level. Today, after a long period of low and stable inflation, inflation is again high. The central bank’s role is to ensure price stability and promote economic stability. The decisions we take affect people’s finances. I was acutely aware of this responsibility, as were the other members of the Monetary Policy and Financial Stability Committee, when we convened yesterday to set the policy rate. Chart: A somewhat faster rise in the policy rate After thorough discussions, we decided to raise the policy rate by 0.5 percentage point to 1.75 percent. The decision was unanimous. This means that we are raising the policy rate somewhat faster than indicated by the policy rate forecast published in June. The policy rate will most likely be raised further in September.

In just under a year, we have raised the policy rate five times. This means higher interest expenses for two out of three households. Both in terms of hard cash and as a percentage of disposable income, interest expenses will increase most for households with the highest incomes, which is also the group with the highest debt to income ratios. As things stand now, the rise in prices will be notably higher than wage growth this year. Indebted households will face both higher interest expenses and higher electricity and food prices. Many households will be facing a tighter financial situation, and I am fully aware that some of them will also be facing a financial struggle. Most households will be able to cope with higher interest rates on their loans. Unemployment is very low. Many will be able to cut down on other expenses or draw on their savings. Chart: Monetary policy meeting on 17 August We could have decided to raise the policy rate more gradually. But then we would have run the risk of inflation becoming entrenched at a high level. That would have made it more difficult to bring inflation down and could have required a sharper tightening of monetary policy somewhat further out, increasing the risk of an economic downturn. Inflation has surprised to the upside in recent months. This is why the policy rate has been raised somewhat more rapidly than signalled earlier. And the economy might evolve differently from what we have envisaged. The level of uncertainty is high.
A normalisation of long-term interest rates would increase UK companies’ debt servicing costs from 17% of profits currently to around 33%. 6  Reinhart, C M and K Rogoff (2009), This Time is Different – Eight Centuries of Financial Folly, Princeton University Press. 7  Data are not available for all ten countries, so period averages are based on slightly different samples. 8  Bank of England Financial Stability Report, December 2009. 4  BIS Review 10/2010  That is significantly below the levels reached in the early 1990s, when debt servicing peaked at 58% of profits. But the distribution of debt across companies again paints a less promising picture. In 2007, around 25% of UK firms made insufficient profits to cover their interest payments (Chart 11). This is a long tail. For sovereigns, debt servicing costs among the G7 economies are currently low, at around 3% of GDP. But were medium-term interest rates to normalise, against a backdrop of rising debt ratios, the combined effect would be significant. Over the medium term, debt servicing relative to GDP in the G7 economies would double. Finally, banks’ refinancing burden in the next few years has grown as a result of a shortening of debt maturities during the crisis. The average maturity of US banks’ rated debt is estimated by Moody’s to have fallen from 6.7 years to 3.2 years since 2005. Among UK banks, it has fallen from 6.8 years to 4.3 years.

Almost all NPLs of government banks have been transferred to AMCs, and all multi-creditor NPLs of private commercial banks have been transferred to the TAMC. And we will speed up our effort to clear them out. However, please be informed that when similar financial crises occurred in the US in 1982, the US economy was not in as bad a shape as Thailand has experienced in the past four years. At that time, Japan, Europe and the Middle-Eastern economies were strong and contributed certain capital flows into the US economy. But now, under current world economic conditions, where every country has its own problems to solve, we know well that we cannot expect foreign investors to help us clear this NPL mess, so we have to help ourselves. I do not see why we cannot do it. And we will do it. Back to the economic forecast for next year. One important source of growth in 2002 will be fiscal spending, and the projected central government deficit of 224 billion baht or 4.4 percent of GDP strikes a good balance between improving the economic infrastructure, raising external competitiveness, and fostering economic recovery. It is very important, however, that the fiscal stimulus program meets its spending target. 2  BIS Review 99/2001  Safeguarding the recovery would require timely as well as effective disbursements of the 58 billion baht emergency spending plan.
Anne Le Lorier: Bailouts, bail-in and financial stability Welcome address by Ms Anne Le Lorier, First Deputy Governor of the Bank of France, at the conference “Bailouts, bail-in and financial stability”, jointly organized by the Bank of France and the Toulouse School of Economics, Paris 28 November 2014. *  *  *  It is a great pleasure to welcome you here today at the Banque de France for this joint conference organized with the Toulouse School of Economics. It is the seventh conference jointly organized with TSE since the beginning of our partnership on financial stability issues. In the previous events, we tackled “Extreme events” in 2008, and then “Liquidity” in 2009, “the Future of Financial regulation” in 2010, “Debt crisis in the euro area” in 2011, “Banking models and banking structures” in 2012, and “Bank liquidity, transparency and regulation” last year. Today’s topic is “Bailouts, bail-in and financial stability.” In the follow up to the last financial crisis, almost all regulatory initiatives have been motivated by the objective of ensuring no future public bailouts of banks or, in the language of economists and banking regulators, ending the Too-Big-Too-Fail problem. This objective is to be reached for all systemically important financial institutions, be they banks, insurance companies, market infrastructures or entities belonging to the so called “shadow banking system” (asset managers, hedge funds and so on).

Second, one would also like to ascertain whether the presence of an implicit subsidy does lead to higher risk taking, and the quantitative importance of this effect. The third question has to do with regulation, i.e. : “what can be done to address this issue?” It seems that there are three main approaches: •  Some regulatory measures try to eliminate possible symptoms of the implicit subsidy. For instance, proposals on restrictions on bank market activities have been justified by the objective of limiting the implicit subsidy to non-traditional banking activities. •  Another approach is to directly target the underlying cause of the problem, for instance by making easier the resolution of problems at large banks without resorting to taxpayer money. Some progress has been achieved in the US (through the Orderly Liquidation Authority), and in Europe (through the Recovery and Resolution Directive). •  A third approach, illustrated by the G-SIBs framework, is to offset the implicit subsidy with additional capital and bailinable debt requirements the so called TLAC or other regulatory measures. Concluding remarks To conclude, I would offer two remarks which you may want to keep in mind. The first remark has to do with the comparative advantage of too-systemic-to-fail institutions, and in particular of global systemically important banks. In reaction to the crisis, many regulatory reforms have been put in place on capital and liquidity, credit exposure to counterparties, supervision, and trading activities.
Recent decades have brought notable achievements in this area. They were possible thanks to the institutional strengthening of central banks, including statutes of autonomy and advances in the design, implementation and communication of monetary policy. It is important to persevere on these lines whilst also bearing in mind possible adjustments or improvements. Central banks, however, also have an important responsibility for financial stability. Although this responsibility had lost prominence over time, the experience of recent years has clearly underlined its importance. Moreover, because of their monetary policy tasks, they are in direct contact with the markets and, therefore, have access to first-hand information about  4  BIS Review 142/2010  the functioning of the financial system. This puts them in a privileged position to undertake tasks related to financial stability. Central banks must, however, be realistic in setting their objectives. It is critical to ensure that they do not result in a more than reasonable level of protection for the financial system since this would encourage banks and other financial institutions to take excessive risks. The responsibility of central banks as regards financial stability must be geared principally to strengthening the reaction capacity of the system as a whole. If problems occur in specific institutions – which cannot be ruled out – the aim must be to minimize their systemic impact. Central banks must have a set of instruments that allow them to contribute effectively to financial stability.

Between 2000 and 2008, Greece and Ireland posted cumulative labor productivity growth rates, as measured by the output per employee, of 14.7% and 10.2% respectively. Both significantly outpaced that of Germany (6.1%). This is exactly what you would expect in an integrated economic and monetary area and this process should continue in the future, provided that appropriate policies are implemented. Economic convergence will therefore boost growth and support the return to debt sustainability. It is true that, looking at nominal developments, a different picture emerges. During the same period, nominal wages grew by a total of 42% in Ireland and 52% in Greece, compared with only 7.4% in Germany. There has to be a regime change in the way in which nominal wages and prices are set in some parts of the euro area. As central bankers, we have been putting forward this argument for years. Strong reforms are now being pushed in labor market legislation as well as in wage determination in the public sector in many countries. What about banks? I would like to end with a few words about the banking sector. Revenues for the twelve biggest European banks grew, in aggregate terms, by 8.6% in 2010 (as compared to 2.5% for the main US banks). As a result, European banks’ Core Tier 1 ratios stood at between 8.5% and 15.3% at the end of 2010 (corresponding numbers for US  4  BIS central bankers’ speeches  banks were between 8.4% and 13.3%).