samchain/econo-pairs-v1 huggingface dataset:
Thanks to robust capitalisation, most of these banks would be able to absorb the losses likely to be incurred in adverse scenarios; given the risks I have outlined, this is welcome. In the future, too, it will be decisive for the stability of the financial system that banks hold sufficient capital to cover the risks on their books – irrespective of ongoing margin pressure. 2 Single-family houses and privately-owned apartments. Page 2/3  Berne, 14 December 2017 Fritz Zurbrügg  News conference  The SNB will continue to monitor developments on the mortgage and real estate markets closely, paying particular attention to the residential investment property segment as well as to risks emanating from mortgage lending. In parallel, it will continue to regularly reassess the need for an adjustment of the countercyclical capital buffer. Ninth banknote series  Allow me to close with a few remarks about the new banknote series. This year, the SNB issued two further denominations: the new 20-franc note was released in May and the new 10franc note in October. So, half of the denominations in the new banknote series have now entered circulation. I am happy to report that things have been progressing well and the issuance of the new banknote series has been very smooth so far. To date, returns of eighthseries banknotes to the SNB have also been in line with our expectations. As announced, the next denomination, the 200-franc note, will be issued in autumn 2018. The 1000-franc note and the 100-franc note will follow in 2019.

The SNB will announce the precise issue dates well in advance. Page 3/3
At the same time, banks are required to build additional capital buffers, which further constrain their pay-out ratio. So dividend prospects are doubly affected and that explains why share prices are reacting to negative news on growth. This movement has been more pronounced for French banks which are suffering from two specific vulnerabilities, one real, one exaggerated. The real vulnerability is their dependence on dollar funding, due to the scale of their international activities, which they may have been initially too slow to address effectively. It is currently being dealt with through a combination of deleveraging and consolidation. In the meantime, in order to ease this transition, the Eurosystem, together with other central banks across the world, has decided to conduct US dollar liquidity-providing operations with a maturity of three months. A more exaggerated concern about French banks is their exposure to sovereign risk. Let me just point out some facts: total exposure of major French banks to the sovereign risk of socalled “peripheral countries” amounts to € To take an extreme – and from my view point – totally unrealistic scenario – a 50% haircut on Greece and 25% haircut on Italy and Spain would result in a 12% loss of core Tier One capital. In terms of liquidity, the Eurosystem refinancing policy provides for an unlimited provision on an extended period and the collateral held by French banks in eligible assets is much above their present needs.

And unemployment has fallen from a peak of 10½% on a claimant count basis at the beginning of 1993 to the present rate of 4%. That is the lowest for 20 years in the UK as a whole, and just about the lowest in nearly every region. In Yorkshire and Humberside unemployment is 4.7%, the lowest rate since June 1980. Our problem - and it is a real problem, as we have recognised for some time - is the imbalance, within the overall economy, between the domestically-oriented businesses and sectors, and those that are most internationally exposed. In part that imbalance is a hangover from the slowdown in global activity from the end of 1997 through to the start of 1999 - though the welcome recovery in global demand means that this influence is now diminishing. The more important factor now is the persistent weakness of the euro - not exclusively against sterling but equally against the dollar and the yen. The impact is particularly severe on the UK because of the closer ties between our economy and that of the Eurozone. I’ve not heard a wholly convincing explanation for the euro’s persistent weakness. Many analysts relate it to market concerns about structural rigidities in some parts of the Eurozone, which are encouraging direct capital outflows attracted elsewhere by higher prospective earnings growth. Whatever the cause, few of those I talk to expect the weakness of the euro to persist.
student loans)  Percentages of households  NMG Survey  3.00  160  2.50  140 120  2.00  100 80  1.50  60  1.00  40  0.50  20 0 1994  97  00  03  06  09  12  15  18  Sources: Bank of England, ONS and Bank calculations. 0.00  91 93 95 97 99 01 03 05 07 09 11 13 15 17 Sources: British Household Panel Survey/Understanding Society (BHPS/US), NMG Consulting survey and Bank calculations. There has been a substantial reduction in corporate debt since the crisis as commercial real estate companies have repaired their balance sheets after over-extending them before the crisis (Chart 9). Banks  7  All speeches are available online at www.bankofengland.co.uk/news/speeches  7  and investors have had strong appetite for corporate lending but corporate debt has only just outpaced the growth of the economy (Chart 10).

Jean-Pierre Roth: Role of the central banks with respect to the financial market crisis Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Forum Suisse de Politique internationale, Geneva, 23 May 2008. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  The central banks have been working extremely hard to respond appropriately to the turmoil that has beset the financial markets in recent months. Aimed at enhancing the resilience of the markets and safeguarding the stability of the financial system, the measures they have taken have been drastic and innovative at times. As this episode has also shown, a policy of preserving financial stability is not always easy to reconcile with monetary policy. The central banks must therefore tread carefully and avoid compromising their price stability objectives when intervening to defend financial stability. While money market conditions deteriorated over the past nine months, the Swiss National Bank put off interest rate hikes so as not to provoke a tightening of credit conditions in Switzerland. Effective action by banking supervisory authorities is key to ensuring long-term financial stability. However, the central banks also have a role to play in reinforcing the markets during times of need.
Pre-euro economic policy required careful monitoring of the balance of payments and the foreign exchange and interest-rate markets. The authorities received constant feedback on key indicators affecting national economic performance and could then react accordingly. These indicators were sensitive, multiple and very reactive. At present, with the advent of the single currency, economic managers must monitor the relevant competitiveness indicators with even greater vigilance, as economic policy errors  BIS Review 96/2001  5  could have slower and more insidious repercussions, such as rising unemployment and weak growth. The rules of a market economy continue to apply to all euro area countries. Jobs are created by consumers – totally free to purchase whatever they wish – when they choose the goods and services that they deem to be best value for money. Companies – totally free in their investment choices – locate their business according to the relative competitiveness of the different possible sites. It is therefore necessary to monitor competitiveness even more closely than before, in particular unit production costs, and the tax and regulatory framework. The multilateral surveillance carried out in the context of the Eurogroup, will help monitor competition trends in each euro area country and in the zone as a whole and, where necessary, suggest appropriate adjustments. III. A smooth changeover to the Euro will also be a determining factor for Europeans’ confidence in their new currency  Of course, the Eurosystem is at the heart of the euro cash changeover process.

–  From the beginning of January 1999, cross-border money market transactions increased sharply, to reach almost two-thirds of total activity on all money market segments. The unsecured deposit interbank market —which is mainly concentrated on the shortest maturities— is highly integrated. The integration of interest rate markets within the euro area is a key achievement which deserves to be underscored. EONIA and EURIBOR have provided the market with uniform benchmarks that are fully accepted by all market participants. This is reflected, for instance, in the amount of daily transactions and the huge development of the euro interest-rate swap market. These structural changes in the euro area money market have prompted market participants to concentrate their euro cash management activity in order to take advantage of the higher liquidity levels on the secondary market. Needless to say, such integration has to be brought to fruition in the other segments of the money market, i.e. the repo market and the short-term securities market. Further integration will enhance the efficiency of the euro area financial markets and will be beneficial to both borrowers and investors. –  As regards stock markets and bond markets, major progress has been made in terms of integration. According to recent statistics, the euro, together with the dollar, appears to have been a major bond issuance currency in the first semester of 2001, with the euro accounting for close to 40% of total issuance.
For today’s purposes shocks are new, unanticipated developments which are clearly distinguishable from more routine developments. As an MPC member I want to try and bring out how I’ve been thinking about each shock in terms of the impact on demand or supply in the economy and the time frame over which these impacts persist. Demand being what we actually observe in terms of output, income and expenditure. Supply being more about the capacity of the economy. In terms of inflation, if a shock pushes up demand relative to supply then inflationary pressures are likely to build. Similarly if an unanticipated development pushes up supply relative to demand then inflationary pressures will subside. Back in February I focused on Brexit, the coronavirus pandemic and energy prices as three major shocks which were working through the economy. Today I want to cover four developments since then: the Russian invasion of Ukraine, the fall in UK labour market participation, UK fiscal policy and financial market turbulence. All four of these shocks matter to differing degrees to the economic outlook and to our policy response. Four shocks My February speech was two days before Russia began its illegal invasion of Ukraine. Today is Day 225 of the ensuing war and over that period global energy prices (as well as food and other prices) have risen further and also been highly volatile, particularly in the case of wholesale gas prices.

It should, therefore, be clear that if it is to prosper, Malta will have to seek an accommodation with the EU. The prevailing view among countries on the periphery of the existing EU-15 is that the prospective longterm benefits of membership outweigh the costs. That is why they are anxious to become members. 25  European Commission, Directorate General for Economic and Financial Affairs. (2001) “The Economic Impact of Enlargement.” Enlargement Papers No 4. June. http://europa.eu.int/economy_finance. The report notes that between 2005 and 2009 the average growth rate in 8 of the accession countries (the first wave of exceeding countries excluding Malta and Cyprus) will be 2.9%, 4.6% and 6.1%, respectively under the baseline scenario, a central scenario and an optimistic scenario. In a similar vein, a recent report by the National Bank of Hungary concludes that the adoption of the euro could boost economic growth in Hungary by between 0.6 to 0.9 percentage points annually for 20 years. Most of the growth will come from increased international trade. See National Bank of Hungary, Occasional Paper 24, “Adopting the Euro in Hungary: expected costs, benefits and timing”, by Attila Csajbok and Agnes Csermely. 8  BIS Review 69/2002  Until such time as an equally well-documented argument is made which seriously questions this view, the case for membership remains a compelling one. BIS Review 69/2002  9
There is widespread incertitude regarding the potential effects of such a shock on financial markets, since the resilience of the new financial securities and intermediaries to this type of shocks is yet to be tested. ; (4) deeper distortions and tensions created by severe global imbalances, which might result in an increase of protectionism and a disorderly correction of international parities to sudden changes in capital flows financing those imbalances, affecting financial markets and asset prices; and (5) the ever present geopolitical perils. The Chilean economy The Chilean economy has reaped the benefits of the dynamic world economy through a very significant terms-of-trade improvement that accumulates 70% since 2002, and through a strengthening of markets for our exports. Part of the better terms of trade goes to foreign owners of mining projects in the form of profits and dividends, but a substantial fraction stays in Chile in the form of greater profits and dividends paid to companies owned by nationals (including the State as the owner of the copper corporation CODELCO), increased tax collection and better salaries and bonuses to workers producing the commodities. The expansionary effects of this gain in terms of trade become larger as it is believed to be more permanent. The favorable external conditions, the stronger fiscal impulse – associated to the more permanent portion of the copper price increase – and the good financial conditions are behind this solid expansion, leaving behind the unexpected deceleration experienced by the Chilean economy in the third quarter of last year.

4  BIS Review 59/2004  Developments in recent years With hindsight, we can certainly see that the Riksbank has not always succeeded in predicting inflation correctly and that monetary policy therefore could have been conducted somewhat differently on a number of occasions in the past ten years. This applies, for example, to 1995 and perhaps also to 1999-2000, even though the latter period’s probably too low interest rates did not have any consequences since the upswing in the economy and inflation was broken when the equity price bubble burst. This has also been the case in the past few years. Since the second half of 2003 inflation has been below target, and it is likely that it will continue to be so for at least another half year or so. This suggests that interest rates could have been lower in primarily 2002 and 2003. One conclusion from this is that we must deepen our understanding of factors such as productivity and of the impact on international prices of tough global competition. In these respects we are essentially in the same boat as other forecasters. As far as we can see, no Swedish forecasters have presented forecasts that have differed markedly from our own. In discussions with colleagues abroad, moreover, I have noted that all have been surprised by the low international inflation in the past year.
Fiscal stabilization adopted in 1976, later associated to a new fixed exchange rate experiment with financial liberalization, without proper regulation and supervision, resulted in only temporary inflation control, a generalized collapse of the banking system and a profound economic recession. By 1985, the main macroeconomic concerns were to regain fiscal order, normalize external payments, restore the financial system and prevent the acceleration of inflation. In 1989, a new Central Bank’s Constitutional Organic Law was enacted that mandated it to secure monetary stability and domestic and external payments, and granted it considerable autonomy to comply with this mandate. When the renewed Central Bank began operating in 1990, inflation was close to 30% per annum. The new autonomous Board designed a strategy to gradually bring down the inflation rate and adopted, beginning in January 1991, a partial regime of explicit inflation targets announced each year. All that took place in a context of a foreign exchange band that still lacked the institutionality and transparency that any full-fledged inflation targeting regime must have. Despite these limitations, the Central Bank  1/5  was very successful in achieving inflation rates very near its annual goals, along a gradual but monotonic convergence path to single-digit inflation. Average annual inflation dropped from 12.1% in the five years from 1991 to 1995 to 4.8% in 1996-2000. With the adoption of a floating exchange rate in 1999, the inflation target emerged as the only nominal anchor of monetary policy.

This is particularly important in a country such as Spain where the business sector consists basically of small firms, since these firms generally lack collateral, have highly uncertain future cash flows and do not have credit ratings allowing investors to get an idea of the risk associated with investing in them. Furthermore, the high uncertainty surrounding the return on investment in R&D&I and the long time horizon at which it materialises (above five years)13 are arguments for government involvement in their financing, particularly in the area of basic research. This is all the more so in view of the positive – and potentially disruptive – effects which certain investment in these areas may have on the population as a whole. It should be noted in this respect that the seed of the Internet was a basic research project for military use undertaken by an agency of the US Department of Defence, an initiative which would have had little chance of obtaining finance from the private sector. Moreover, the range of possible government actions go beyond providing an R&D&I investment budget. For example, they also encompass the introduction of changes to the researcher promotion and career system so as to stimulate the entry and development of promising new researchers, or the overall 11  See E. Moral-Benito (2018), The microeconomic origins of the Spanish boom, Occasional Paper 1805, Banco de España. 12 See Chapter 2, “Financing and investment decisions of Spanish non-financial corporations”, Annual Report 2016, Banco de España.
I will structure my observations around four points: •  First, the factors that have led to the crisis and in particular how the euro area became engulfed first in the global financial crisis and then in the sovereign debt crisis;  •  Second, the crisis response in the euro area, including both monetary policy as well as other policies;  •  Third, the key lessons we have learned from the global financial crisis in the euro area and in particular the institutional weaknesses that were uncovered during the crisis;  •  Finally, I will touch on institutional reforms at the level of the euro area and the European Union at large, which have also contributed, in my view, to an improvement of the foundation of our monetary union which is, we hope at least, the harbinger for a better performance in future. Work in this area is still in progress, and for that reason I will then conclude by sketching the challenges that still lie ahead of us. 1. The factors leading to the crisis  As I have argued on previous occasions, it might be useful to think about the development of the global financial crisis and subsequently the euro debt crisis in the last five and a half years as the gradual discovery of an iceberg. As you probably already know, because the density of ice is lower than the density of sea water, normally only one-ninth of the volume of an iceberg is above water.

This underscored the pitfalls of a design that relied too much on the national level to fulfil the stabilisation function. Second, the financial crisis demonstrated that financial contagion is the unintended consequence of financial market integration. The euro area, however, was lacking effective instruments to mitigate contagion. Policy instruments that can act as circuit breaker, limiting thereby negative feedback loops, are an essential crisis management tool in a monetary union. To summarize, one of the key lessons that we have learned from the crisis is that the design of the euro area was incomplete. Indeed, the euro area lacked certain institutional elements which are associated with federations and which act as crisis prevention mechanisms ex ante as well as shock absorbers ex post. The logical corollary is that we need to compensate for these “missing institutions” by establishing a much stronger financial and economic union. I will now outline the main elements of that endeavour. I will first discuss reforms implemented at the national level – though sometimes also decided in the context of EU-IMF lending programs – and then move to the reforms at the EU or euro area level. 4. The road ahead towards deepening the union  4.1  Reforms at the national level  Almost six years down the road since the start of the financial turmoil that turned into a crisis, many euro area countries have experienced a significant, although to date still partial, correction of external and domestic imbalances.