samchain/econo-pairs-v1 huggingface dataset:
The analyses show that a credit gap of more than 4 percentage points can predict almost 80 per cent of banking crises in a selection of countries. In some cases, the indicator also signals some banking crises that do not materialise. Accuracy improves when other indicators are included in addition to the credit gap. The credit gap for Norway was above the "critical" level prior to and during the crisis in the 1920s. This was first due to high debt growth and later to a fall in GDP. During the Second World War, private sector debt fell sharply, but was followed by a catch-up period. The next episode of a high credit gap was in the 1980s, prior to the last banking crisis. The gap is also high today. 4  Borio, and Lowe (2002): "Asset prices, financial and monetary stability: exploring the nexus", BIS Working Papers No. 114. 5  IMF (2003): World Economic Outlook, April. 6  Source: Norwegian Association of Real Estate Agents, Association of Real Estate Agency Firms, FINN.no (Norwegian search database for classified advertising, including real estate, on the Internet) and ECON. 6  BIS Review 25/2003  More sluggish developments in the Norwegian economy have contributed to a sharp rise in the number of bankruptcies over the past year. In spite of the pronounced reduction in interest rates in recent months, we must expect a large number of bankruptcies and somewhat higher bank losses in the period ahead as a result of continued rather weak economic growth in Norway.

Muhammad Al-Jasser: Review of the latest economic developments in Saudi Arabia Speech by His Excellency Dr Muhammad Al-Jasser, Governor of the Saudi Arabian Monetary Agency (SAMA), to the Custodian of the Two Holy Mosques, on the presentation of the 46th Annual Report of the Saudi Arabian Monetary Agency, Riyadh, 25 September 2010. *  *  *  It is a great pleasure for me that the celebration of our National Day coincides with the submission of the 46th Annual Report of Saudi Arabian Monetary Agency which reviews the latest economic developments in the Kingdom for fiscal year 1430/1431H. (2009) and the first quarter of the current year. Custodian of the Two Holy Mosques, The impact of the global financial crisis on the world economy continued during 2009, with the world production of goods and services recording a downturn of 0.6 percent in 2009. However, economic variables over the past months of the current year indicate positive growth rates. Given that our national economy is characterized by its openness to the external world and high levels of trade integration with it, it is natural to affect and be affected by developments in the global economic system. The growth rate of GDP at constant prices declined to 0.6 percent in the Kingdom during 2009 compared to 4.2 percent in the preceding year. The non-oil sector maintained good growth rates, growing by 3.8 percent in 2009 compared to 4.3 percent in the preceding year.
One central area where I believe we should have achieved more is legislation and regulation with regard to how and by whom banks in distress should be managed. Following the previous crisis I saw important reforms in legislation being investigated over a long period of time only to be more or less forgotten with nothing implemented. I fervently hope this will not happen again. Quite simply, it must not happen again. Towards a cohesive and efficient financial regulatory framework The Executive Board of the Riksbank and the General Council of the Riksbank have presented a joint report to the Riksdag where we propose that one or several commissions of enquiry should be appointed to review the regulatory framework in the financial sector. We need to create a cohesive and efficient regulatory framework. It should contribute to maintaining financial stability and if a crisis nevertheless arises, it should minimise the costs to consumers and to society as a whole. These are questions that should neither be discussed endlessly nor allowed to come to nothing when the situation stabilises. If we are to  BIS Review 25/2010  11  prevent costly crises in the future, we must together investigate and implement changes. Urgently! Around the world there is already extensive work being carried out in this field, particularly with regard to the international supervision perspective. But implementing changes at international level can take time.

We have passed the worst economic trough in several decades and have now entered a new phase of economic recovery. Monetary policy will probably begin to be adjusted to a more normal economic downturn situation in the summer or early autumn this year. And this is a healthy sign. The road ahead of us is certainly not an easy one. New challenges and considerations await us, but we are at the same time more than ready to meet them. The resources that we were forced to use some time ago for more or less acute crisis management can now be partly used for analysis, development of our methods and the work on preventing imbalances in the economy and future crises. No one can say that the latter is a simple task. There are many problems that need to be solved. But we are not alone in this work, which must be conducted on both a national and an international level. As long as we have the motivation and the will to succeed our chances are good. In the most acute phase of the crisis many of the countries of the world joined together and took action to prevent a total collapse. When it has been necessary, the authorities here in Sweden have showed an excellent ability to cooperate. We must make use of the drive and spirit of cooperation that were demonstrated in the crisis.
Mario Draghi: Opening statement at Deutscher Bundestag Speech by Mr Mario Draghi, President of the European Central Bank, at the discussion on ECB policies with Members of Parliament, Berlin, 24 October 2012. *  *  *  Dear President Lammert, Honourable Committee Chairs, Honourable Members of the Bundestag, I am deeply honoured to be here today. As President of the European Central Bank (ECB), it is a privilege for me to come to the heart of German democracy to present our policy responses to the challenges facing the euro area economy. I know that central bank actions are often a topic of debate among politicians, the media and the general public in Germany. So I would like to thank President Lammert and all Committee Chairs most warmly for this kind invitation – and the opportunity it gives me to participate in that discussion. It is rare for the ECB President to speak in a national parliament. The ECB is accountable to the European Parliament, where we have scheduled hearings every three months and occasional hearings on topical matters. We take these duties of accountability to the citizens of Europe and their elected representatives very seriously. But I am here today not only to explain the ECB’s policies. I am also here to listen. I am here to listen to your views on the ECB, on the euro area economy and on the longer-term vision for Europe.

We have all the necessary tools at our disposal to maintain it and to withdraw any excess liquidity in case of upward risks to price stability. Conclusion Let me conclude these opening remarks. BIS central bankers’ speeches  3  Three elements are essential for understanding the policies of the ECB: immutable focus on price stability; acting within our mandate; and being fully independent. The ECB’s new measures help to ensure price stability across the euro area. They also contribute to improving the economic environment. But completing that task of economic renewal demands continuing action by the governments of the euro area. It is governments that must set right their public finances. It is governments that must reform their economies. And it is governments that must work together effectively to establish an institutional architecture for the euro area that best serves its citizens. We are already moving in the right direction. Across the euro area, deficits are being cut. Competitiveness is being improved. Imbalances are closing. And governments are working seriously to complete economic and monetary union. It is important that Europe’s leaders stay on course. In doing so, they will be able to unlock fully the enormous potential of the euro to improve living standards and carry forward the project of European integration. Thank you for your attention – and I look forward to our discussion. 4  BIS central bankers’ speeches
The Economist Journal, 122, November 2012. Michael Lewis “Flash Boys, A Wall Street Revolt”. W.W. Norton and Co, 2014 Roland Meeks, Benjamin D Nelson and Piergiorio Alessandri “Shadow banks and macroeconomic instability” Bank of England Working Paper No 487 – 2014. http://www.bankofengland.co.uk/research/Pages/workingpapers/2014/wp487.aspx Morgan Stanley and Oliver Wyman, “Wholesale and Investment Banking Outlook, Liquidity Conundrum: Shifting risks, what it means, March 2015. Benjamin Nelson, Gabor Pinter and Konstantinos Theodoridis “Do contractionary monetary policy stocks expand shadow banking?” Bank of England Working Paper 521, January 2015. Adrian, T. E. Eutula and J Muir, “Financial Intermediaries and the cross-section of Asset Returns”. The Journal of Finance 2014 http://www.bankofengland.co.uk/research/Pages/workingpapers/2015/wp521.aspx Simon Potter “Challenges posed by the Evolution of the Treasury Market”. Remarks at the 2015 Primary Dealer meeting, New York City. Chris Salmon “Financial Market Volatility and Liquidity – a cautionary note. Speech given at the National Asset Liability Management Europe Symposium, 13 March 2015. http://www.bankofengland.co.uk/publications/Pages/speeches/2015/809.aspx. Senior Supervisory Group, “Algorithmic Trading Briefing note” April 2015 http://www.ny.frb.org/newsevents/news/banking/2015/SSG-algorithmic-trading-2015.pdf. BIS central bankers’ speeches  9  US Primary Dealers’ corporate bond inventories  Source: Federal Reserve Bank of New York, as reproduced in the Bank of England Financial Stability Report – December 2014. 10  BIS central bankers’ speeches

These were the factors behind the MPC’s decision at the last meeting to raise rates: but it may well be that there is now an opportunity to wait and see for a period how the economy develops; and this need not damage our prospects of meeting the inflation target; and it might improve the chances of continued sustainable growth in output and employment, and, perhaps, of a return of sterling to a more realistic level. I would like to finish by thanking the Cardiff Business Club and Sue Camper for providing me with the opportunity to speak to you tonight. I believe most of you know Sue and the work she does as the Bank’s Agent in Wales. The Agents play a vital role as a channel of communication not only for the  BIS Review 19/2000  4  Bank to explain more widely the monetary policy framework and the reasoning behind MPC decisions; but also to hear the views of others on the economic conditions they are facing. And I am grateful, on behalf of the MPC, for the support you give her. 5  BIS Review 19/2000
I am aiming at the need for the existence in any bank, of a real concern and of a positive pressure to make sure that those structures and procedures are applied to their real meaning, throughout the institution and down to any single employee. At the same time, I mean the real willingness of the bank for a careful and proactive role in the inter-institutional relationships, with the aim of leaving away the formalism and qualitatively improving the process of AML. I will be focusing in more details on these issues, as I proceed. Prior to proceeding with more details, allow me to put myself in each of your’s position. I feel I can do this, since I was one of you, as the executive director a commercial bank and head of the Association of banks. We have shared common concerns about the speed and about the quality with which the legal requirements on AML were approved and implemented in practice. I still believe that a law is good when its requirements are applicable in practice and when they represent affordable costs for its subjects. I must say that the existing law on AML, needs to be revised under these considerations. At the same time, we have often discussed about the concern that the way this process is being implemented is endangering to go in the opposite direction to our major objective of reducing the informal economy and bringing down the cash in circulation.

Jean-Pierre Roth: Monetary policy and credit markets Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the University of St Gallen, St Gallen, 22 January 2004. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The economic slump of the past two years has affected the credit markets. Corporate loans declined, and on the capital market redemptions of shares and bonds of private borrowers exceeded new issues. In this speech, a few general points concerning credit financing and monetary policy will be discussed. The financing opportunities and, concomitantly, a borrower’s expenditure behaviour depend on the value of capital assets eligible as collateral or, more generally, on the borrower’s balance sheet structure. Due to the major significance of real estate as security, the situation on the real estate market in turn has a considerable bearing on credit conditions. The Swiss National Bank thus keeps a careful eye on price development in the real estate market. Monetary policy influences the prices of investments and thus impacts on the economy via the borrowers’ balance sheets. This is not the only channel - and certainly not the most important one through which monetary policy exerts an influence; it may, however, be relevant under certain circumstances. Since corporate balance sheets differ considerably from one enterprise to another, monetary policy has distributive effects.
This is especially the case if the collateral is lower quality and markets are already illiquid. Moreover, if creditors are left with the collateral instead of being repaid, fear of widespread collateral liquidation might further erode collateral values. If investors respond by seeking more collateral to ensure they will be secured – that is, that they will be made whole in a liquidation scenario – the firm may run out of high-quality collateral that the firm can borrow against. This is a significant risk when a financial firm is highly leveraged and equity is only a very small proportion of total assets.5 The risks of liquidity crises are also exacerbated by some structural sources of instability in the financial system. Some of these sources are endemic to the nature of the financial intermediation process and banking. Others are more specific to the idiosyncratic features of our particular system. Both types deserve attention because they tend to amplify the pressures that lead to liquidity runs. Turning first to the more inherent sources of instability, there are at least two that are worthy of mention. The first instability stems from the fact that most financial firms engage in maturity transformation – the maturity of their assets is longer than the maturity of their liabilities.

Even if the borrowing firm ultimately turns out to be solvent, there may be a delay in a lender getting its funds back, and this delay may prove to be unacceptably costly to the lender. This second cause of liquidity runs – the risk of untimely repayment – is significant because it means that expectations about the behavior of others, or their “psychology”, can be important. This is a classic coordination problem. Even if a particular lender judges a firm to be solvent, it might decide not to lend to that firm for fear that others might not share the same assessment. The less certain any one lender is about the willingness of other lenders to provide liquidity to a firm, the greater the risk that too few loans will be extended to prevent liquidation. In that case, even if the lender turns out to be correct in its judgment of the firm’s solvency, there still will be a cost in terms of delay in receiving repayment. A few pictures can help to illustrate these concepts. Figure 1 illustrates what a creditor’s assessment of the net worth of a financial firm might look like in normal times. Creditors have uncertainty about what that value is, thus, the valuation is represented by a probability distribution. The higher the degree of uncertainty, the greater is the degree of dispersion in the probability distribution.
The absence of a sufficiently thorough system of banking supervision and the lack of transparency not only became problematic before the crisis, but also caused confidence problems later on. Fourth, the quality of the assets of the banking system is vital for the soundness of macroeconomic policy. In allocating savings to investment use, the banks should be extremely careful about the risks that must be taken for a variety of reasons. There are five main types of risk that the banking system and of course the appropriate authorities have to deal with: interest risk; foreign exchange risk; maturity risk; loan risk; and market risk. A sound financial system is the best assurance of efficient monetary and fiscal policies. In my view, all four of these factors contributed to the change of foreign perceptions and sentiment and produced a cutback in normal financing (in fact, 95 percent of external flows to emerging market countries come from the private marketplace). This cutback, in turn, weakened the external reserve positions of these countries. Then the combination of weak reserves and a weak financial sector brought on a liquidity crisis. We are now in a position to draw some lessons from the East Asian crisis. First, policy implementation must pursue sound macroeconomic policies in order not to lose the confidence of the markets. And second, four main principles must constantly be kept in mind: •  The currency should not be allowed to appreciate, except as part of a bold anti-inflation program.

What is clearly more important than the amount of information given is that the communication policy, as part of the strategy, is consistent with the structure of the internal decision-making process. I can assure you that this is indeed the case. During the monthly press conferences, I make an introductory statement summarising the Governing Council’s discussions and conclusions before answering questions from journalists. As the statement is agreed, in substance, with all the Council members beforehand, it is similar to what others call BIS Review 128/1999  2  minutes. I am convinced that, for the purposes of establishing credibility and reducing uncertainties in the market, informing the public of such an agreed position on the part of the Governing Council is superior to publishing details of a Council discussion which are naturally difficult to assess for those who are not present at the meeting. Moreover, as mentioned, we should not pretend to know more than we do. It is thus important not to try to give guidance when the ECB itself is not sure. I very much agree that giving too much information is not always helpful. I am convinced that the Eurosystem already provides timely, high-frequency information of good quality, but, as I have said, trying to further improve our communications is an ongoing exercise. 3  BIS Review 128/1999
However, in presence of externally generated and domestically generated shocks the banking system in the countries of the region can be vulnerable to lower profitability, less willingness on the part of the banking group to provide capital, and, ultimately, generate a credit crunch. Among the external shocks were listed rises in euro zone interest rates, adverse shocks to one or more of the countries of origin of the foreign banks, and contagion from an adverse shock elsewhere in the CEE region altering investor perceptions regarding the domestic economy. On the other hand domestic shocks such as declining margins from foreign banks fighting to gain market share, and lowering of credit portfolio induced by a  8  BIS Review 119/2007  weakening economy or an unexpected domestic political event could have large effects in the presence of less adequate risk management in the context of foreign owned banks rapid expansion and increasing euroization of financial assets. 5. Policies to mitigate financial vulnerabilities: constraints and challenges  In some cases supervisory authorities (Serbia, Croatia) have recurred to less market oriented macro prudential measures to contain credit growth. While credit controls create the incentive to route lending through less regulated non-bank intermediaries, the imposition of such credit controls in Bulgaria and Croatia was accompanied by a jump in cross-border loans. Watson (2007) argues that prudential policy needs to allow for the fact that foreign-owned financial institutions, with a majority of assets in most cases, have deep pockets in terms of capital and liquidity.

Financial Sector Assessment Program (FSAP) calls for further strengthening of the underlining of the supervisory framework, even though unified supervision under a single supervisory agency was considered premature. Capital and money markets are small or nonexistent. At this stage of development it is necessary that the policy of regulatory institutions should focus on enhancing infrastructure and governance. -  Banking system in the region is close 100 percent privately owned, with clear dominance of foreign capital. The banking system in the region amounts from 40 percent of total assets to GDP in Macedonia to 119 percent of total assets to GDP in Croatia and is dominated by private foreign owned/joint ventures banks. The privatization of large state owned banks has been completed in all countries, except Serbia and representing approximately only 38 percent of total capital in the banking system respectively. The system is dominated by a restricted number of big European banks that have set presence across all countries in the region. Lately there is evidence of increasing interest of other banking groups as well. -  Increased financial intermediation of the recent years has lead to a rapid credit expansion. This trend reflects increasingly deep financial integration with EU Member States and supports rising trade, investment flows, and institutional  6  BIS Review 119/2007  strengthening. The expansion of the financial sector and inflows of foreign savings can strongly support real convergence.