samchain/econo-pairs-v1 huggingface dataset:
Going a step forward, it is also noteworthy that emerging market economies, and in particular Asia – with China at its centre – may become some kind of a “spare engine” to world growth, buffering the impact of the turbulence on global activity. This idea of a “second pillar” for growth relies mainly on the observed strength of domestic demand in Asia, and the key issue here is whether this strength could be self-sustaining. Maybe, we will not be able to answer this question thoroughly until the macroeconomic impact of the turbulence unfolds completely and the trade channel works itself out. But, one aspect that is clear – even now – is that some rebalancing from the current investment-led pattern to a more consumption-based model is required. This is not a simple task, since the underlying causes of the current growth pattern in some Asian countries – including China –  2  BIS Review 56/2008  are manifold. Issues such as the catching-up process, the need of a large part of the population to secure future incomes, or the role of the public sector in providing schooling and pensions, have all a role to play as has been widely discussed in recent years by scholars and policymakers in the region. In fact, the recently published Asian Development Outlook delves on some of these issues at great length. As we will have the opportunity to discuss today, more developed financial systems can also greatly help to rebalance growth.

Let me start with labor income, which for most households is the dominant source of household income. As one would expect, differences in labor income across individuals of a given age tend to increase as people get older. Some of this is due to education and occupation choices – and how they impact income growth―and some is due to various events that individuals face in their working lives. Unemployment risk is an example of an adverse development that can substantially affect people’s careers and labor income during their lifetime. Over the period from 1976 to 2015, the overall unemployment rate averaged around 6.5 percent, but unemployment varied substantially across regions and across worker backgrounds. Unemployment was especially high for workers with lower earnings, a group that tends to have little savings to draw upon. Looking across demographic groups, younger workers, less-educated workers and those in manual occupations, as well as workers who identify as Black or Hispanic, experienced significantly higher average unemployment rates when compared to older and college-educated workers. These stark differences across demographic groups in terms of levels of unemployment are also evident in terms of how unemployment changed over business cycles, including the Great Recession. While the overall unemployment rate increased from 5 percent in December 2007 to 10 percent in October 2009, it increased substantially more for workers with lower earnings. In other words, looking at the national unemployment rate tells only part of the story of the labor market experiences for different groups of individuals.
In my view—and I really cannot say this strongly enough—ensuring that the largest and most systemically important banks do robust capital and liquidity planning, have strong internal controls, do good risk identification and have very healthy amounts of capital (especially common equity) and liquidity resources is fundamental to fostering a stable banking system that can perform its critical financial intermediation role in both calm and stressed economic environments. What I hoped to do today is simply to point out that one of the key objectives of the original SCAP stress program—leaning into the wind during a severe economic downturn— might be getting less emphasis as the time since the financial crisis grows, the economic expansion continues, and the supervisory stress testing regime evolves. Thanks for your attention this morning. I hope that you enjoy the rest of the conference. 1  See, for example, Viral Acharya, Irvind Gujral, Nirupama Kulkarni and Hyun Song Shin. 2012. “Dividends and Bank Capital in the Financial Crisis of 2007 2009.” CEPR Discussion Paper No. 8801. February 2012; Beverly Hirtle. “Bank Holding Company Dividends and Repurchases during the Financial Crisis.” Federal Reserve Bank of New York Staff Report No. 666. March 2014; and David S. Scharfstein and Jeremy C. Stein. 2008. “This Bailout Doesn’t Pay Dividends.” New York Times. October 21, A29. 2 Beverly Hirtle, Til Schuermann and Kevin Stiroh. Macroprudential Supervision of Financial Institutions: Lessons  from the SCAP, Federal Reserve Bank of New York Staff Report no. 409. November 2009. 3 Randal K. Quarles.

In the medium term, the renewed service will enable access with a simpler and more proportionate onboarding processes including streamlined testing requirements and interfaces such as Application Programming Interfaces (APIs). And increasing capacity significantly to facilitate more participants. This in turn should support greater innovation and competition within the payments sector in the future. Wider interoperability: Further down the line the CHAPS implementation of ISO 20022 will align with the UK’s forthcoming new retail payment system – the New Payments Architecture (NPA) for retail payments. The implementation of a common messaging approach – through the UK’s ISO 20022 Common Credit Message (CCM) – will deliver wider interoperability between payment types and makes it easier to switch between payment systems should the need arise. The Bank also continues to work with other central banks and operators to ensure that as a global standard, this provides greater interoperability and harmonisation with other international payment infrastructure – leading to an improved user experience, more efficient fraud detection and increased efficiency. Improved user functionality: The new system will be designed to better support the needs of users, for example enhanced liquidity management, the introduction of APIs and greater data availability. 3/6  BIS central bankers' speeches  Strengthened end-to-end risk management: Since the operation of CHAPS was brought inhouse in November 2017, we have introduced a more robust system with greater oversight and governance.
In the meantime, however, there are significant implications for emerging market economies, as global investors search for better returns – better than the near-zero rates they get on cash and treasury bills. With large amounts of liquidity now moving between markets, short-term shifts in investor sentiment leads to volatility in capital flows. We have seen how a shock in the European periphery can send money that was invested in emerging markets rushing back to the US or other safe havens. To be clear about it, there is a lot that is good about capital flows, including even short term flows. They add liquidity to markets, by bringing more buyers and sellers together. However, we know too that capital inflows can also be too much of a good thing. They can lead to asset prices, or exchange rates, becoming disconnected from fundamentals. And the sudden withdrawal of capital from emerging economies when investors switch from ‘risk on’ to ‘risk off’ in their portfolios can be destabilising. As I mentioned, the current global condition is unprecedented. The policy responses in the advanced countries too are without precedent. Globally therefore, we need some humility in understanding the benefits and costs of QE3 and easy monetary policies in the advanced countries. But it will be wise to strengthen our policy toolkits in Asia, so that we can deal with unpredictable and often excessive capital flows. There are some lessons that come out of our experiences in Asia and elsewhere, and policy responses that we can learn from each other.

As a matter of fact, the faster-than-expected economic recovery and falling interest expenditures have helped to improve Turkey’s fiscal outlook. The increase in tax revenues amid rapid economic growth and tax adjustments were the major drivers of the improved budget balances in 2010. Moreover, the relative slowdown in the growth of non-interest expenditures as well as the significant decline in interest expenditures driven by falling domestic borrowing rates contributed to the improvement in fiscal balances. 10  BIS central bankers’ speeches  31. Fiscal indicators in the MTP suggest that the positive outlook, which was also underpinned by the stronger-than-expected recovery in 2010, would continue in the upcoming period. Indeed, the recent data imply that the favorable outlook persists in tandem with the robust economic activity. Nevertheless, I would like to remind that in order to maintain fiscal discipline and ensure that Turkey continues to have more positive readings than other emerging economies, implementation of the institutional and structural reforms set out in the MTP remains critical. Esteemed Guests, 32. In the last part of my speech, I would like to mention monetary policy decisions in 2010 and the monetary policy strategy that we currently implement. In this context, I will first summarize inflation developments, and then, I will move on to monetary policy implementations within the inflation targeting framework. Monetary policy decisions and implementations 33. Inflation was mainly determined by tax adjustments and the course of unprocessed food prices in 2010.
During the lockdown phase in March and April, it was of particular importance to support workers and firms affected financially. Unnecessary bankruptcies had to be avoided and the ties between employers and employees maintained. The fact that the Norwegian economy has weathered the crisis fairly well reflects the strong contribution of targeted fiscal measures, along with good welfare arrangements. The primary task of monetary policy is to maintain low and stable inflation, with a target of annual consumer price inflation of close to 2% over time. But monetary policy shall also contribute to high and stable output and employment and to counteracting the build-up of financial imbalances. By lowering the policy rate quickly and sharply, we helped to dampen the downturn by making it easier for indebted Norwegian firms and households to weather a demanding period. A policy rate cut generally strengthens household finances given the large proportion of residential mortgages, primarily at floating rates. Even though containment measures constrain activity in some sectors, low interest rates contribute, all else equal, to boosting consumption and investment. An example is the lift in housing investment from high turnover and price rises in the housing market, which then boosts overall economic activity. The interest rate level also has an impact on the krone exchange rate, which in turn is important for firms that compete in a global market.

At yesterday’s monetary policy meeting, the Monetary Policy and Financial Stability Committee decided to keep the policy rate unchanged at zero percent. At the same time, we stated that the policy rate would most likely be raised in the latter half of 2021. In the Bank’s latest Monetary Policy Report, which was published in March, we presented a policy rate forecast that indicated that the policy rate would be raised gradually over the coming years. The forecast implied a somewhat faster rate rise in Norway than expected among our trading partners. Developments in the real economy and inflation in the coming years suggest a gradual approach. Raising the policy rate too quickly may stifle the recovery. We would then run the risk that the unemployed would remain out of work longer than necessary. The low level of global interest rates also has a bearing on how quickly it would be appropriate to raise the policy 3/4  BIS central bankers' speeches  rate in Norway. An interest rate differential that is too wide may result in a stronger krone, which in turn will have a dampening effect on both economic activity and inflation. The economic outlook is still clouded by uncertainty. The pace of vaccination and relaxation of containment measures are crucial for when we can begin to live more normally.
With our unique advantages and strengths – including the common law system and world2/4  BIS central bankers' speeches  class financial regulations and market practices – Hong Kong will remain the leading portal for international investors seeking opportunities on the Mainland. 21. T he second trend that is creating opportunity in – and for – Hong Kong is fintech development. We already have a thriving ecosystem for finance and technology businesses here. This has been bolstered by the HKMA’s Smart Banking initiatives, which have catalysed digitalisation in the banking sector, driving faster and more efficient services for customers. I’m sure many of you are finding banking and payments much more convenient than before. 22. We will continue to work with the banking industry to apply technology to enhancing finance for customers in Hong Kong. We will explore greater use of artificial intelligence and data analytics in banking operations. We will also explore improvements to Hong Kong’s data infrastructure so that bank customers, particularly small businesses, can make better use of their own digital footprint to enhance their access to finance. And we will adopt the latest technologies for cross-border applications, such as international payments and trade finance. Our vision for Hong Kong to become a leading global fintech hub will create a wealth of opportunities for local and international players. 23. The third trend driving opportunity is green finance. Hong Kong is already at the forefront of promoting the role of finance in driving the transition to a more sustainable economy.

For a relatively 2/3  BIS central bankers' speeches  small market, such as Albania, it is proved that the costs of non-performing clients are borne by the whole system, and individual strategies have no effective results. To provide an effective restructuring for clients in distress, it is indispensable to have an honest collaboration between banks, which ensures not only a more fair assessment of the client’s repayment capacity, but also optimises the time and cost of assessment for both the bank and the client. The Bank of Albania remains committed in supporting energetically such collaborative projects, by guaranteeing impartiality; meanwhile banks should show a good will in this regard. Last, in these days of daily technology advancement, banking business would not be able to survive without investing in technology, in the right time. All banks are fully aware of this, but the pace of development in each of them has been different. Thanks to the strong relations and exchanges with our European neighbours, and the firm aspiration to be part of the EU, a postponing of the necessary investments in this regard would be at the cost of competitiveness. But, investments in technology only, without the support of internal human resources, may expose banks to high operational risks and irreparable consequences.
This has a direct bearing on ensuring financial stability. But because Basel II is developed from the current practice among banks in developed countries, some banks in emerging markets may have a large gap to fill. For example, in moving away from collateralbased to credit-based loan approval, banks must focus more on the ability to pay of customers and to make loan decisions in a forward looking manner. This requires a different set of expertise that focuses on risk assessment in the environment of changing economic cycle and asset quality. Next is the information system which is the most important foundation for achieving financial stability through capital adequacy. Whereas developed countries generally already have in place the necessary infrastructure in this regard, financial institutions in emerging countries have to build the system from the ground up, involving areas such as data collection, storage, analysis, and ways to effectively embed the information in the decision-making  8  BIS Review 98/2008  process. This step may take more time and effort because it involves building a knowledge base for quantitative analytical skills and ability to apply international best practices to the unique local settings of emerging markets. Another difficulty in Basel II implementation is that other players in the wider financial industry will be playing more active roles in the banking sector’s risk assessment.

However, market fluctuations, accompanied by shifts in saving behaviour, are nonetheless a source of business cycle  2  BIS Review 8/2010  fluctuations and substantial losses when banks have to write off loans to firms selling goods and services to households. With low risk weights for residential mortgages, banks can lend extensively, operating with a substantially reduced equity ratio. As a result, banks are more vulnerable to disturbances in funding markets. Thus, low risk weights for residential mortgages also lead to higher liquidity risk in our banking system. A high level of tax incentives for house ownership and a large volume of adjustable-rate mortgages contribute to wide fluctuations in activity and prices in the Norwegian housing market. 1 The rise in house prices over the past two decades has also been very strong compared with countries where housing bubbles have burst. We have been through the longest period of uninterrupted house price inflation. In real terms, house prices in Norway have tripled since the trough in 1992. House prices fell in 2007 and 2008, but have picked up again and have, in nominal terms, surpassed the summer 2007 peak. Norwegian household debt is high compared with households in other countries. The number of residential mortgages with a high loan-to-value ratio, i.e. above 80 per cent, has also increased. Periods of sharply rising house prices have historically been followed by periods of declining prices. House prices can fall considerably over only a few years. Loan-to-value ratios will then increase.
Since the middle of 2003, inflation has been below the target of 2 per cent, and periodically far below this (Figure 2). It is really only during the past six months that inflation has once again begun to approach levels reasonably in line with the target. At the same time, growth has been high. Since 2004, GDP has increased by slightly more than 3 per cent a year on average. This is a fairly remarkable figure, both in historical terms and in comparison with many other countries, in particular Europe. All in all, inflation has been remarkably low, while growth has, if anything, been higher than usual. Despite the good growth, employment has developed weakly. The high demand for goods and services does not appear to have resulted in any great demand for labour. However, the labour market situation recently appears to have begun to improve. So, how can inflation have become remarkably low and employment have developed as weakly as it has, despite economic activity chugging along nicely? The economy appears to have been affected by forces that have held back both inflation and employment. What can these forces be? To begin with, it is worth noting that it is not only in Sweden that inflation has been unexpectedly low in recent years (Figure 3). In Norway, for instance, inflation fell heavily a few years ago in a similar manner to Sweden. In Finland inflation has been even lower than in Sweden.

As a result, they have been forced to rationalise and make their operations more efficient. This could also explain why employment has developed so weakly. More efficient production processes have enabled companies to meet rising demand without needing to recruit new staff to the same extent as in previous economic upturns. The fact that inflation has been below target for a good three years indicates that this was a development the Riksbank had not succeeded in predicting, although we did assume that inflation would fall when the previously rapid upturn in energy prices rebounded. Had we been able to foresee that inflation would be as low as it has been, we would possibly have maintained a lower interest rate than we did. However, we were far from the only ones to make inaccurate forecasts (Figure 6). On the whole, in recent years, analysts of the Swedish economy appear to have been surprised by both the strong growth and low inflation. For example, it was not until some way into 2005 that most analysts began to assume that inflation for the year would be below the Riksbank’s tolerated deviation interval. Of course, all analysts were aware that the economy was affected by, for instance, globalisation and the rapid developments in information technology. But it is a long step from there to being able to predict exactly how great the impact of these forces will be on, for instance, productivity and prices.
Lim Hng Kiang: The Singapore financial services sector Address by Mr Lim Hng Kiang, Deputy Chairman of the Monetary Authority of Singapore and Minister for Trade and Industry, at the ABS Annual Dinner, Singapore, 29 June 2007. *  *  *  Chairman, ABS Council Members of ABS Ladies and gentlemen It is good to be here tonight. The ABS Dinner is an excellent opportunity for the Singapore financial services community to get together, catch up and look ahead. State of the Singapore financial sector 2006 has been a good year for Singapore. The financial services sector has done particularly well. All in, financial services grew 9.2% in 2006, outperforming Singapore’s overall GDP growth of 7.9%. This momentum has carried into this year. 2007 first quarter growth for the financial services sector came in at 13% on a year-on-year basis. Growth has been broad-based, with brokerage, treasury and advisory-related services being the largest contributors. Volumes in the Singapore foreign exchange market have also grown steadily. The equity markets have been hot. Volume of securities traded has gone up sharply. The local debt market has also registered good growth in 2006. In the latest Annual Corporate Debt Review for 2006 which MAS released today, the total market capitalization of the Singapore bond market has reached $ billion. Indeed, the Government’s efforts to grow the Singapore Government Securities (SGS) market have produced results. Since 1996, outstanding SGS has grown from $ billion to $ billion in December 2006. This year we issued the first 20-year SGS.

This is what we have assumed in our latest Inflation Report forecast, where conditional on a smooth Brexit investment growth resumes in 2020 and 2021 (Chart 9). But we are unlikely to achieve full certainty until the final outcome of negotiations is known, and there is a risk that more persistent uncertainty could push out the pick-up in investment and continue to drag on growth. The weakness of investment also casts further doubt on how durable the resilience of the labour market has been. Usually business investment and employment rise and fall together – in aggregate, businesses either increase hiring and investment at the same time, or they cut them both. For businesses to be increasing employment at the same time that they are reducing investment suggests something unusual is going on. One explanation would be if they are substituting labour for capital, perhaps on the grounds that hiring would be easier to reverse in the event of a shock than capital expenditure. Another would be if demand is shifting away from capital-intensive, export-oriented businesses and into labour-intensive, domestically-focused ones. Either way, this shift away from capital and towards labour matters for the economy. Bank staff calculations suggest it has left the economy around 1½% less capital-intensive than we were forecasting ahead of the Brexit referendum. By itself that reduction in capital intensivity accounts for a ½% reduction in labour productivity, even before allowing for the additional impacts of foregone innovation and process improvement.