samchain/econo-pairs-v1 huggingface dataset:
One important contribution will be to ensure that those who take financial risks on behalf of others hold more capital. However, regulation must not be seen as a panacea for future financial crises. Good banking is essential for a sound and stable economy. Resilient banks are the first line of defence against shocks to the financial system. This is a responsibility I hope and believe Norwegian banks are willing to take. Thank you for your attention. 6  BIS central bankers’ speeches  BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11

The second challenge is that economic modeling requires reliable and regular data. This entails significant financial and human resources that are sorely lacking in statistical institutes in several countries. In this respect, I think that central banks, owing to their autonomy, can play an important role in research development and have a ripple effect on its ecosystem. This is exactly what we are trying to do in Bank Al-Maghrib. 4  In fact, we have always put research and human capacity building at the core of our strategic plans. Thus, alongside the various operational entities, we have set up since 2007 a division dedicated to research, whose task is to reflect on all strategic matters and issues related to the Bank's missions. Several cooperation programs were developed with the national and international academia, as well as with many central banks around the world. More particularly, we have launched the "fellow researcher" program which allowed the Bank’s executives to collaborate with experts from central banks of other countries such as the United States, Canada and Poland, and I hope we will soon be able to extend this cooperation to African researchers. In addition to our institutional publications, a series of working papers were drawn by the Bank staff, and are gradually becoming a reference for research in various areas directly or indirectly related to our missions. Moreover, the Bank organizes a series of timely or regular scientific meetings, such as the International Days of Macroeconomics and Finance, which we hold each year.
However, in order to give us an idea about what could happen to household indebtedness beyond the forecast horizon three years ahead, we have made a rough estimate of developments over the coming 10 years, which uses our forecast for the coming three years as a starting point. We assess that the rate of increase of indebtedness will slow somewhat when the repo rate gradually begins to be raised (according to our forecast for the first six months of 2017) and slowly rises to a normal level. 17 In the Financial Stability Report from the spring, we published an extensive analysis of Swedish household indebtedness. One conclusion drawn from this was that international studies and experiences from the Swedish 1990s crisis indicate that if indebtedness approaches 180–210 per cent, measured as a proportion of disposable income, risks in the Swedish economy are heightened. This is due to households’ interest expenditure – at a high rate of interest than today’s – becoming so high that it could lead to a major fall in demand and ultimately a crisis. 18 It is clear that we are approaching a critical level with leaps and bounds (see Figure 11).

Despite the consensus among policy-makers on the importance of financial stability, the economic literature lacks adequate theoretical and empirical studies on the details of the transmission mechanism from financial stability to macroeconomic stability. At this point, academia is expected to do their share in this respect. The two-day conference will stage parallel sessions, panel discussions and presentations on these issues. Banking sector dynamics, macroprudential measures and their impact on macroeconomic stability, systemic risk issue and sovereign debt dynamics are among the topics that will be addressed at the conference. Two of our distinguished guests, Mr. Ricardo Caballero and Mr. Franklin Allen, will be delivering speeches. Mr. Caballero will be presenting a speech on the first day of the conference and Mr. Allen’s presentation is scheduled for the second day. On the second day of the conference, the panel discussion titled “How did the crisis challenge the Central Banking as we knew it? What should (not) change?” will be held, at which senior central bankers will be sharing their country experiences. I think this panel discussion will be very interesting and beneficial for all the participants. The studies that will be presented throughout the conference will contribute to better understanding of the factors threatening financial and macroeconomic stability and developing policies to achieve these two objectives simultaneously. I believe that the conference will also serve as a forum for the participants for exchanging views.
In my opinion, fintech firms are at an early stage of development in which it is not yet clear which of them will become credible alternatives, so it is still early to say how they will evolve. In any event, the greater the likeness between their financial activity and traditional banking activity, the more they will be subject to requirements and controls similar to those of banks, tailored to the risk of the activity in question. That is to say, it is necessary to set fair rules of play ensuring neutrality on the basis of the risk involved and the activity carried out. 3 Final reflections In short, the Spanish banking industry, and other European institutions, face major challenges at a time of far-reaching transformation of traditional banking business. Regulatory reform, with the tightening of capital requirements and the introduction of the new resolution requirements that I have described, and the development of new technologies are two of the vectors of change. In this new environment, it is difficult to imagine that it will be possible to sustainably achieve the pre-financial crisis levels of profitability (in double digits). However, following the transformation undertaken in recent years and the progress achieved in terms of solvency and cleaning up balance sheets, the industry is today more resilient and in a better position to face these changes with confidence. In terms of efficiency, for example, Spanish banks are in a better position than the average institution supervised by the SSM.

23.06.17  “The challenges facing the Spanish banking industry” Closing address to the seminar “La Cuarta revolución. ¿Cómo afecta la agenda digital a la economía y a la industria?” (“The fourth revolution. How does the digital agenda affect the economy and industry?”, UIMP – APIE (Santander) Javier Alonso Deputy Governor  Good morning. It is a pleasure to be here in Santander today, at the Universidad Internacional Menéndez Pelayo, continuing the tradition for the Deputy Governor of the Banco de España to participate in the closing session of this seminar. Thank you to the University, to its Rector, to the APIE (Association of Economics Journalists) and, in particular, to Miguel Ángel Noceda, for organising this event and for his kind invitation. This year, the focus of the seminar is technological developments and, in particular, the socalled “digital agenda”. This gives me the opportunity to speak about one of the main challenges facing the banking industry (new technologies and the entry into the banking market of what are known as “fintech” companies). However, I do not wish to overlook other important challenges for the industry, such as its profitability, compliance with the new regulatory requirements (in particular on resolution) and the need to maintain customer confidence: the most important and fragile of bank assets and the fundamental basis of banking activity. 1 The Spanish banking industry In order to clarify the background, before addressing the challenges, allow me to briefly describe some of the main features of developments in the Spanish banking industry as a whole.
Federal fiscal consolidation appears to be over for now, and employment and spending are increasing at the state and local government level. That said, economic performance in this cycle has been disappointing compared to historical patterns. Even though household wealth relative to disposable income is nearly at its prefinancial crisis level and conditions in labor markets are substantially improved, consumer spending growth has been slower and the personal saving rate higher than what we would have expected based on past historical relationships. Similarly, even with low mortgage rates, single-family housing construction has been surprisingly sluggish. And, despite very accommodative financial conditions and record corporate profits, growth of business fixed investment has been tepid. Looking forward, my outlook for 2015 is that economic growth will be close to the pace of the past two years, supported by continued solid fundamentals and accommodative financial conditions. If I am correct, then this would lead to a further reduction of labor market slack, with the unemployment rate approaching 5 percent by the second half of the year. An important element of this forecast is continued strength in household spending. This strength is supported by the restored health of household balance sheets, improved household income prospects and the benefit of significantly lower energy prices. The data for the second half of 2014 reflect these positive forces: real personal consumption expenditures grew at a 3.2 annualized rate in the third quarter and a 4.4 percent rate in the fourth quarter.

We still seem to be going through the same arguments, the same structural issues. In fact if anything a potential new government in Italy could scrap some of the reforms that the ECB so applauded. Certainly the advice we are giving to governments, insofar we can give advice to governments, because they are independent from us as much as we are independent from them. The only advice we can give is to use that environment of strong growth, of lower rates to build the buffers in the economy. That includes building fiscal buffers but that also includes doing structural reforms so that the economy can become stronger. Listening to some of the more recent speeches from Mr Draghi and hearing comments from yourself and others, I don't get the impression that the ECB feels that their opportunity has been taken. Am I wrong? There has been some disappointment on the fiscal side where we believe that governments generally could have made better use of the windfall of lower rates to reduce their deficits, to consolidate their finances in a more permanent way, in a more structural way. That's true. Now, when it comes to reforms in the real economy we've seen a lot going on. Look at how much Spain has reformed its labour market. That's now yielding very positive results in terms of job creation. Look at what France is doing, which really goes in the right direction, so reforms are being done. Are they being done in Italy?
The opening of the border with Kosovo in particular has provided us with real opportunities to perceive the Northern Alps as a single complex with their continuity to Kosovo and why not to Montenegro. I think the completed airport, which  4  BIS Review 115/2008  could very well be used for the transportation of winter sports fanatics, is another strong point. It is the local authorities’ task, to undertake in co-operation with the local stakeholders projects and feasibility studies, which in a later time may be submitted and presented to the central authorities or the specialized international operators. I would like to inform you that at the moment, their interest is overwhelming and concrete. Time is ripe for you to increase the marketing of these potentials and point out their strong advantages accurately. Second, your district is well-known for being rich in minerals. I do not know if you have any geological inventories or maps which accurately identify the mineral resources. If you don’t, this is too late. The current price structure is very favourable and I believe that any reactivation of existing mines and the opening of new mines implies more employment, more hope for this region and fewer migratory movements. Third, your district, in particular the town of Kukës, finds itself in a crucial economic crossroad, not only in terms of roads but also of air. Unfortunately, statistical information related to cross-border economic and financial activity is missing. Nonetheless, I have to admit that the potentials are not being rightly handled.

In addition to providing a measure of individual forecast uncertainty, these density forecasts yield richer information about how expectations vary across people and over time than do single-value forecasts, or “point predictions.” The SCE is the outcome of a five-year collaborative research project involving economists, psychologists, and survey design experts. During this period, we conducted a large number of experimental surveys to assess the information elicited with existing survey questions and to develop new questions, including those for measuring forecast uncertainty. This preliminary work and the probabilistic format of the new survey questions represent an important innovation that builds on academic work over the past 20 years by economist Charles Manski, as well as some early pioneering survey work conducted by the Bank of Italy. Creating the CCP and SCE has yielded some important lessons. First, data innovation requires an ability to think outside the box, and it benefits from the collaboration of people with diverse skills and backgrounds – academic economists, but also representatives of other academic disciplines and individuals with business and public policy experience. Skills in identifying valuable but underutilized data, the creation of data linkages, the development of appropriate sampling procedures, and survey methodology and questionnaire design experience are all particularly valuable. In this respect, our experiences mirror those at the many new interdisciplinary data and social research centers and numerous “Big Data” university centers being created across the country.
To the extent that sovereign bonds are risky, their yields have to rise by more than the rise in the risk-free rate to compensate investors for the increase in credit risk. [24] The larger public debt is as a share of GDP, the stronger this effect should be. The empirical literature suggests, however, that there is no mechanical link between changes in the riskfree rate and credit risk premia. The relationship is often non-linear and highly time and state-dependent. [25]  The euro area’s experience over the past 15 months fits this pattern. The correlation between policy rate expectations in one year’s time and the spread between the ten-year GDP-weighted yield over the OIS has been far from perfect since December 2021 (Slide 14, left-hand side). There have been persistent periods during which this correlation has been weak or even negative. Last year, for example, after the announcement of the transmission protection instrument (TPI), expectations for the future policy rate increased sharply from around 1% to 3%. Risk premia in sovereign  bond markets, however, remained broadly unchanged (Slide 14, right-hand side). These developments suggest that other factors were also at play. One of these factors is financial market participants’ attitude towards risk, over and beyond changes in expected default losses. There is a growing literature suggesting that risk tolerance by global investors can explain a substantial portion of movements in asset prices. [26] Monetary policy, in turn, is often an important driver of risk tolerance.

As markets repriced the future path of short-term interest rates and uncertainty increased, the two-year Bund-overnight index swap (OIS) spread fell to record lows, while segments of the euro area repo market  came under significant strain. At times, around half of the repo volume backed by German collateral was trading more than 40 basis points below the general collateral rate (Slide 5). Such asset scarcity can delay, or even impair, the transmission of monetary policy. A persistent negative Bund-OIS spread, for example, implies that sovereign yields in the euro area’s largest economy remain more accommodative than intended by our policy stance. Similarly, it took more than a week for the policy decisions taken in September and October of last year to be fully reflected in many segments of the repo market (Slide 6, left-hand side). The dispersion across repo market rates was particularly large in the week after the September Governing Council meeting when the DFR turned positive (Slide 6, right-hand side). At that point, uncertainty about the remuneration of some of the Eurosystem’s non-monetary policy deposits exacerbated investors’ concerns about collateral scarcity. [10] The Eurosystem responded by temporarily removing the 0% interest rate ceiling for government deposits and announcing a further adjustment as of 1 May 2023, providing incentives for a gradual and orderly reduction of such deposits in order to minimise the risk of adverse effects on market functioning and ensuring the smooth transmission of monetary policy.
I want to briefly mention two possible factors that may be affecting investors’ perceptions of risks and hence of the returns necessary to compensate for them. First, there may be a collective action problem on the part of asset managers. Around half to two-thirds of the shares of the largest UK banks are owned by institutional  BIS central bankers’ speeches  7  investors and managed in-house or by asset managers. 14 These tend to operate to common benchmarks and are subject to rigorous peer comparison. Asset managers, particularly those managing assets on behalf of institutional investors that have fixed liabilities, are currently under great pressure to find returns in a low return environment. Before the crisis, banks made high double-digit returns on equity boosted by very high leverage. There may well be a reluctance among managers of institutional money and investment funds to be the first to drop required returns. This could account for some of the stickiness that we have seen in banks’ return on equity targets. The behaviour of institutional investors may also explain the so-called “low risk” anomaly. In theory, lower risk ought to be matched by lower returns. But some research suggests that this may not be a simple relationship. The “low risk anomaly”, under which lower risk stocks generate no lower – and in some cases higher – returns than higher risk stocks has been identified for banks.

Property-related debt – for residential and commercial real estate purposes – makes up around 60% of private nonfinancial sector debt in the UK. And, of course, the counterpart of that is that domestic property-related loans make up around 55% of the domestic loans of the UK banking sector; 76% when financial sector loans are excluded. 1 Moreover, the evidence is pretty clear from history, and across  1  Non-bank lenders are also an important source of finance, providing 15% of all property-related loans according to Bank staff estimates. BIS central bankers’ speeches  1  countries, that there is a strong and special link between booms in property-related debt and financial crises in a way that is much less true for other assets like equities. 2 I want also to reflect a little today on the health of banks in the UK. Since last summer, and particularly since the turn of the year, investors have written down the value of banks in advanced economies. Does this signal concerns about banks’ resilience and robustness? Or about their returns? The Financial Policy Committee The FPC is charged with identifying risks and taking action to protect the resilience of the UK financial system. In essence this means two things. First, we need to be confident that the regulatory framework in the UK addresses the risks not just of individual financial firms, important though that is, but also the risks inherent in the financial system as a whole.
The Swiss franc money market is still in a position of structural liquidity surplus vis-à-vis the Swiss National Bank (SNB). Consequently, our focus is on liquidity-absorbing open market operations. Currently, a large proportion of the surplus Swiss franc liquidity is being absorbed through SNB Bills amounting to around CHF 110 billion and daily repo auctions (reverse repos) of around CHF 25 billion. The volume being absorbed has not been increased over recent months. Consequently, the total sight deposits of domestic banks have, at approximately CHF 25 billion, remained almost unchanged. This is a significantly higher level than before the financial crisis. It exceeds the minimum reserve requirements many times over. As a consequence, interest rates on the Swiss franc money market are still close to zero. Despite the fact that interest rates are still very low, the volume of activity on the secured Swiss franc money market remains at a relatively high level. By contrast, the volumes traded on the unsecured Swiss franc money market are still markedly lower than their pre-crisis level. The management of the three-month Libor is, however, not affected by this, and can still be guaranteed. The management of the foreign exchange reserves Allow me to conclude with a few words on the management of our foreign exchange reserves. First, let me stress that the increase in the foreign exchange reserves in 2009 and 2010 was a direct consequence of monetary policy measures. It had nothing to do with the pursuit of investment goals.

Zeti Akhtar Aziz: Malaysia as an international Islamic financial centre Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the dialogue with industry participants on MIFC (Malaysia International Islamic Financial Centre), Kuala Lumpur, 1 November 2006. *  *  *  The MIFC initiative was launched on 14 August 2006 amidst strong foundation and steady performance of the Islamic financial industry. It marks the beginning of a new era for the future landscape of the Islamic financial system in Malaysia. Several landmark measures were announced to initiate the MIFC agenda. It is to set the stage for Malaysia to position itself as a centre for the offering of Islamic financial products and services in international currencies to the global and domestic financial community. This presents new prospects and business considerations for financial institutions to realise the potential of evolving a vibrant Islamic financial hub. Today's dialogue, the first of its kind among key stakeholders, is aimed at promoting greater awareness on the initiative, to discuss implementation issues and to foster greater collaborative effort for the MIFC's overall success. We have with us here today the members of the MIFC Executive Committee, the country's high level coordinating body that has been set up to advance forward this national agenda. Objectives of MIFC This national agenda aims to achieve several major objectives.