samchain/econo-pairs-v1 huggingface dataset:
All in all the potential impacts of this new regulatory approach may be profound and wide-ranging. I would like to explore some of these implications that have received some attention. 6. How Basel II will affect the flow of capital across borders. Let me start reflecting on how Basel II will affect the flow of capital across borders. Some observers suggested that the new capital framework’s heightened sensitivity to risk may reduce the flow of foreign investment in developing economies, since exposures to those economies might typically be considered of higher risk. I believe that, in the short run, Basel II will not have a material effect on the flow of capital, whereas in the medium and long term Basel II’s forward-looking elements will probably take over and higher risk efficiency will improve the financing of all kinds of economies. The first part of this comment, the lack of any short-term material effect on capital flows, is based on the notion that Basel II seeks to align capital regulations more closely to banks’ current practices, which today are already risk-sensitive. Therefore, it will not change the way that banks actually evaluate risk to decide whether to invest in emerging market economies. Yet some observers have assumed that a more risk-sensitive approach might drive up not just capital requirements, but also the pricing of credit to emerging market countries. This argument assumes that regulatory capital drives individual loan pricing decisions.

An important principle established by Exter has been that the principal use of OMO was to offset the effects of surpluses and deficits in the balance of payments. Since the surpluses of BOP raises money supply and deficits would do the opposite, it is necessary to counter their effects by an equivalent change in the domestic assets of the Bank. Hence, any OMO to siphon off the additional liquidity created by the Bank by increasing its domestic assets first, i.e., by investing in primary market Treasury bills, is contrary to the wisdom expressed by Exter in his report. Can Exter be faulted for permitting the Central Bank to lend to the government? Though it is completely contrary to the principles of responsible central banking advocated by him elsewhere in the Report, he should be viewed as a pragmatic person. He argued that “if the Government were determined, even in the face of opposition by the Monetary Board to make excessive use of Central Bank credit, legal limitations could be relaxed” by the government. In such a situation, “the Board being a Government agency would have no  BIS Review 92/2007  5  alternative but to comply”. Thus, legal provisions are not of any use if governments do not function responsibly and the civil society is weak in resisting such dangerous moves by the governments.
3 That made conversion all the more time-consuming, and there were no electronic aids in those days. And although the exclusive right of coinage was really a cantonal prerogative, foreign gold and silver coins actually constituted the bulk of monetary circulation in terms of value. The cantons did not see any reason to mint money which was worth its face value. For everyday use they preferred to produce representative coins whose metal content was worth well below the nominal value. In this way, the cantons used their exclusive right of coinage as an easy source of funds. 4 This resulted in an over-supply of lower-quality representative cantonal coins, which circulated freely between the cantons. Problems relating to the deterioration of coinage were a recurring theme in the legislative assembly. The hopeless confusion resulted in mix-ups, hampered trade and travel, and meant that capital remained idle. 5 Sixty years later, however, in 1890, the Swiss multiple currency period was already past history. Nevertheless, Swiss monetary history had remained eventful. Since 1850, the Swiss franc had been defined in terms of silver, in line with the French franc, and after 1860, it was also defined in gold. 6 At the same time, foreign money was still in use, in the form of coins worth their face value. Unlike the situation in 1830, banknotes played an important role in payments transactions in 1890 (if not, perhaps for buying bread), partly because coins are unpractical for larger transactions. By now, the Federal Banknote Act of 1881 had come into effect.

Almost $ billion of bonds were issued in the first three quarters of this year, establishing a new high when compared to the previous record of about $ billion over the same period in 20114. Over the longer term, emerging Asia’s bond markets are expected to grow 18-fold from $ trillion in 2009 to $ trillion in 20305. 7. There is therefore great scope for financial intermediaries in Asia to play a key role in financing Asia’s future growth, channelling surpluses to meet the region’s needs, and facilitating closer integration of trade and financial markets in the region. DBS, with its extensive network in Asia, is well-poised to be at the forefront of these trends. DBS has done well in this respect - for instance, DBS ranks amongst the top 5 mandated arrangers of Asia Pacific syndicated loans (ex-Australia and Japan). In Singapore, DBS is also part of a bank consortium led by Temasek Holdings to provide long-tenor financing to Singaporebased corporates in infrastructure projects in Asia Pacific. Role of local banks in Singapore’s financial system 8. Even as our local banks like DBS expand into the region to ride on Asia’s growth, it is important that they remain deeply rooted in Singapore, their home market. They have been and will continue to be a crucial part of Singapore’s financial system. Local banks have an important role to play in safeguarding Singapore’s financial stability, particularly in times of crisis.
2 We know that financial intermediation as a whole accounted for about 8.5% of UK Gross Value Added in 2005. And a recent estimate 3 of the professional services supporting financial services accounted for a further 3.6% of economic activity in 2005, giving a total of some 12%. That compares with around 14% of GDP for the UK manufacturing sector and the jobs in financial and business services taken together have increasingly outnumbered those in manufacturing. 1  “Sustaining New York’s and the US’ Global Financial Services Leadership”. Report by McKinsey & Company to Mayor Michael Bloomberg of New York and Senator Charles Schumer (pages 14 and 54). 2  Indeed the ONS has announced that it will be revising its estimates of the level and composition of GDP to incorporate changes to the measurement and treatment of value added for banks and to take better account of in-house software development. 3  International Financial Services, London. “International Financial Services in the UK”, November 2006. BIS Review 29/2007  1  And since 1999 financial services and insurance taken together have accounted for over 20% of the UK’s exports of services. So it is clear that the financial sector is an important industry for the UK. But financial intermediation covers a great deal more than the City. Retail banking and insurance, like other retail services from restaurants to hairdressing, is widely dispersed across the country. In general one would expect this part of the industry to reflect the size of the population and their wealth.

These reforms, by promoting registered employment, will also help us overcome problems in our social security system. Unemployment Rates (Percent) 18 15 12 9 6 3 0 2004  2005 Unemployment Rat e  2006  2007  2008  2009  Non-Farm Unemployment Rate  Source: TURKSTAT, CBRT. Distinguished Guests, 22. The impact of the global economic crisis on Turkey’s foreign trade has been evident, and the contraction in domestic and foreign demand and the slumps in commodity prices, especially in crude oil as well as iron and steel led imports and exports to shrink rapidly as of the last quarter of 2008. Significant declines have been observed throughout the year in imports and exports, which tended to recover as of the second quarter of 2009 as signs of revival in global economic activity appeared. Total exports of goods fell by 22.1 percent to 109.7 billion USD, while total imports of goods fell by 30.7 percent year-on-year to 134.4 billion USD in 2009. Consequently, the foreign trade deficit, which was 53 billion USD in 2008, dropped to 24.7 billion USD in 2009. 23. The adverse impact of the global crisis on tourism revenues was translated as a decrease in expenditures. In 2009, tourism revenues decreased by 3.2 percent. The said decline is mainly attributable to the fall in average tourism revenues. In fact, the number of visitors increased by 3.3 percent in 2009. Due to the recovery in other services items, the slowdown in the services surplus remained limited at 5.3 percent.
Euro area (as of 1999) and German (before 1999) recessions are identified, respectively, by the CEPR and the Economic Cycle Research Institute (ECRI), with the exception of the German recession at the beginning of the 1970s identified by the OECD composite leading indicators. Latest observation: October 2019. At the same time, despite the unprecedented low level of the yield curve, the fact that the slope of the euro area yield curve is fairly flat (but slightly positive) is not at all unusual from a historical perspective (see Chart 2). [5] The yield curve is a central element in the transmission of monetary policy. Standard and non-standard monetary policy instruments affect the whole of the term structure, which in turn is a key determinant of the financing conditions of the economy. Some rates in the euro area economy – such as corporate bond rates or mortgage loan rates – are based on longer-term risk-free yields, while others – such as bank loan rates for firms – are mostly priced off shorter maturities. [6] The financing conditions prevailing for firms and households in turn affect the level of economic activity and inflation. While current monetary policy is an important factor affecting the yield curve, beliefs about future monetary policy and risk premia also play a role. In turn, these depend on a host of factors which determine the inflation or growth outlook of market participants and the evolution of risk premia.

Dimitar Radev: The banks entered the current crisis well-prepared thanks to what has been done in recent years Speech by Mr Dimitar Radev, Governor of the Bulgarian National Bank, at the opening of the jubilee academic year at the UNWE, Sofia, 14 September 2020. * * * Dear Colleagues, Dear Guests, Thank you most sincerely for this opportunity to take part in the opening of the new academic year at the University of National and World Economy (UNW E). This academic year coincides with the remarkable 100th anniversary of our university. This is a good opportunity to once again express our gratitude to the generations of professors, students, administrators, and to all those who helped the UNW E become what it is today – the biggest, the oldest and the most respectable business university in Southeast Europe. This year is unique and not for very positive reasons, including the health crisis which turned into an economic one, and the complicated political situation. Due to these developments we are faced with very difficult challenges, the true response to which must be institutional. In this sense, today’s situation is a test of the institutions. When speaking about institutions, I mean the entire spectrum – from politics, the healthcare and educational sectors and the economy, to public finances and banks. The healthier the institutions are, the stronger the response will be. If we are unable to give an adequate institutional response, the effects could be disastrous.
The economic and financial situation and prospects are characterised by two features: first, a synchronised decline or deceleration in economic activity in all economies which is associated with a collapse in world trade; and, second, growing signs of an adverse feedback loop between the real economy and the financial sector. Although the sharp drop in the value of toxic assets has weakened many banks’ balance sheets, the weakening of economic activity has been impairing the quality of bank loans, adversely affecting their capital positions and their willingness to extend credit to the private sector. This, in turn, constrains the pace of economic activity and the ability of the private sector to service its debts, entailing a risk of a vicious circle. II. Policies for economic recovery and sustained growth  These observations have two general implications for economic policy. First, the economy’s recovery requires the simultaneous implementation of macroeconomic policies to stimulate aggregate demand and of measures that will help repair banks’ balance sheets and encourage the provision of credit to the economy. In this way, a potential vicious circle can be prevented. Second, concerted policy efforts in all economies, especially the large ones, are necessary so that world trade can be revitalised and financial capital flows stabilised. This will help support the emerging market economies and global growth.

There are perhaps two clear lessons from this experience. First, the importance of targeting high-risk, high-infection individuals – the “super-spreaders”. This principle has an impeccable epidemiological pedigree. 30 For randomly distributed networks, targeted treatment has no value. But for networks exhibiting long tails – which is most of them, certainly including finance – targeted vaccination programmes offer a much more effective means of curtailing epidemics. Not for nothing is epidemiology the origin of the 80/20 principle. 31 For a number of diseases, including SARS and measles, the distribution of infection rates suggest 20% of the population is responsible for 80% of the spread. Similar patterns have been found in the transmission of HIV/AIDS, foot and mouth and computer viruses on the internet. In each of these cases, the right response has been shown to be targeted vaccination of the superspreaders. The second lesson concerns the importance of a system-wide approach to the management of network problems. The Australian HIV/AIDS programme was system-wide, tackling both the causes and consequences of the disease and its spread. Fisheries management provides a second revealing case study. Concerns about the collapse of fisheries came to a head during the 1970s and 1980s, leading to the imposition of fishing quotas for various species. The effect of quotas was, at best, mixed. 29  Bowtell (2005, 2007). 30  May and Anderson (1991). 31  May and Anderson (op.cit. ), May (2005). 14  BIS Review 53/2009  Recently, there has been a growing recognition of what went wrong.
3/9  Yet irrespective of the different composition of the risk-diversification channels, what needs highlighting is that in the euro area the combined power of all the private risk-sharing channels is much more limited than in more stable monetary unions. Given that the role of the public sector is also virtually non-existent in Europe’s case, the outcome is that more than 56% of the effect of shocks – as opposed to 28% in the United States – is not shared. Moreover, it is important to note that during the most acute phase of the last financial crisis, the main risk-sharing channel in the euro area − the credit channel – virtually disappeared, owing to the process of renationalisation of bank loans. This was due to the climate of mistrust about banks’ financial health, and to the existence of negative feedback loops between public finances and banking solvency. To sum up, in the euro area our risk-sharing channels are weaker and, what is more, they tend to contract precisely when they are most needed. The limited strength of private risk-sharing channels in the euro area reflects both the underdevelopment of capital markets and a highly segmented banking system at the national level. There are practically no banks with a pan-European strategy, and there is little progress in cross-border lending, especially in the retail markets, or in other words, in lending to households and firms.

4/9  In this respect, an agreement was reached at the Euro Summit in December 2018 to establish a common financial backstop for the SRF. This took the form of a credit line provided by the European Stability Mechanism, to be repaid by the banking system itself through its future contributions. The launch of this financial backstop, currently scheduled for 2024, could be brought forward to 2020 if it is considered that sufficient progress has been made to reduce banking risk. Here it is important to note that the percentage of bad loans on euro area banks’ balance sheets has fallen notably in recent years, down to close to 4% of all loans, albeit still somewhat above the pre-crisis level. Likewise, banks’ capitalisation levels have improved substantially; the total capital ratio for euro area banks overall now stands at 18%. A further key aspect for completion of the design of the euro area is the creation of the common European Deposit Insurance Scheme; this would be the third pillar of Banking Union. In my view, it is difficult to believe that, without this third pillar, the first two will be able to guarantee in a credible manner the same level of protection for all depositors across the euro area, irrespective of where they are located. Sufficient confidence to mitigate the risk of large-scale bank runs and the consequent financial fragmentation in severe crisis situations would thus fail to be generated.
Sweden My view, with hindsight, is that monetary policy in Sweden was also too expansionary in the years preceding the financial crisis. The repo rate was gradually reduced to 1.5 per cent in July 2005. I think it was reduced too much and was too low for too long. Both the nominal and the real short-term rates were lower than normal for most of the period leading up to the crisis. In my opinion, a normal level for the nominal short-term rate is around 4 per cent, while a normal level for the real short-term rate is around 2 per cent1 (see Figure 5). Swedish economic growth was high in the years before the crisis. Resource utilisation was also higher than normal. The GDP gap was positive, while unemployment was lower than the average for the preceding years. Inflation was nevertheless low in the period 2004–2006. Measured in terms of the CPIF2 and in terms of the measure used at that time, the CPIX,3 it  1  Sveriges Riksbank, “What is a normal repo rate?”, article in Monetary Policy Report, February 2010. 2  The CPIF is calculated as the CPI with a fixed mortgage rate and is thus not directly affected by changes in mortgage rates. 3  The CPIX excludes households’ mortgage interest expenditure and the direct effects of changes in indirect taxes and subsidies from the CPI. 2  BIS central bankers’ speeches  was well below 2 per cent.

Particularly strong reasons are required for setting a repo rate over a long period of time that is considerably lower than what can be regarded as a long-term average. Monetary policy can sometimes be used to stimulate the economy and sometimes be used to tighten the economy, but not to permanently stimulate the economy by means of a low interest rate. Long periods with a very low interest rate can namely lead to financial imbalances. They can, for example, lead to a rapid expansion of credit which in the long term may lead to some households being unable to afford to meet the interest and amortization payments on their mortgages. The households’ interest rate expectations are retrospective and long-term expectations are reduced by the low interest rates that have prevailed for a number of years. Problems arise when interest rates then rise. But this is not just about households and mortgages. As I said in the first part of the speech, a too-expansionary monetary policy can also contribute to other kinds of financial imbalances. I therefore usually also look at what the Taylor rule mentioned above would entail for the repo rate level. The Taylor rule indicates, as I said earlier, that the repo rate should have been higher than it actually was before the crisis, which I think is reasonable. The Taylor rule also indicates that the repo rate should have been reduced more or less as quickly and as much as we actually did when the crisis hit.
Further interest rate hikes are expected in the euro area, Sweden and the UK, while interest rates in the US may fall over the next year. In Norway, the interest rate was reduced to a very low level in 2003 and 2004 when inflation fell and approached zero. There is a dynamic inherent in interest-rate setting. Low interest rates stimulated demand and production and eventually led to prospects for higher inflation, to which we are reacting by raising interest rates. Interest rate developments must be seen in the light of actual price developments and inflation, output and employment prospects. 10  BIS Review 47/2007  It normally takes some time for interest rates to have an impact on prices via changes in expectations, exchange rates or capacity utilisation. Consequently, interest rate setting must be based on our expectations of developments ahead. The interest rate was raised in response to the strong increase in capacity utilisation and the associated inflation prospects. The interest rate has thus been increased well ahead of an actual rise in inflation. Growth in capacity utilisation has been stronger than projected one year ago. The interest rate has thus been increased somewhat faster than Norges Bank presented as the most likely path at that time. In the interest of enhancing the transparency surrounding our conduct of monetary policy, we have published our own interest rate forecast over the past year and a half.

Figure 6 Employment by occupational category  Wages (*)  (annual change, percent)  9  15 8  Self employment (right axis)  6  10  3  5  0  0  -3 -6 12  13  14  15  16  17  7  8  Nominal  7  6  6  5  5  4  4  3  3  Real  2  2  1  1  -10 0  0  -5  Salaried  11  (annual change, percent)  11  12  13  14  15  16  17  (*) Corresponds to the average annual change of wage and cost indices, for both nominal and real wages.