samchain/econo-pairs-v1 huggingface dataset:
In the 10 years between 1997 and 2007, the annualised growth rate of real credit was 7%, relative to real GDP growth of 3%. That meant credit grew at more than double the rate of the economy over the period. Had this trend continued the stock of credit would have been 200% of GDP by 2012 and 300% of GDP by 2023. The great recession that followed the financial crisis saw a sharp correction. Credit went into reverse, shrinking annually by around 2.5% a year in real terms from 2010–2014. By 2014 the stock of credit had dropped from its peak of 177% of GDP to 140% – and remains around that level. To put it in context, we are now back to where we were in 2002. Credit to GDP would have to fall another 25 percentage points to get back to 1997. Credit, of course, is another way of saying debt. As most of the lending during the long period of pre-crisis credit growth was to UK households, the stock of UK households’ debt relative to their income not surprisingly follows a similar path to the stock of credit to GDP. In 1964, it was 54% and remained around this level until 1980; but by 1990 it had exceeded 100%. It surged again from the late 1990s – by 2007 it had grown to 155%. It fell to 135%, its 2004 level, in 2012 and remains around there.

I would say that market confidence is essential for the stability of the financial system. 1  The Riksbank usually discusses household indebtedness from a financial stability perspective in its twiceyearly Financial Stability Report. See, for instance, Financial Stability Report 2013:2. Sveriges Riksbank. 2  Previously, mortgages were often financed through housing bonds, which had maturities of around 30 years. Today, covered bonds are used instead, where newly issued covered bonds had an average maturity of around 4 years in the autumn of 2013. At that time, the average maturity of the outstanding covered bonds was approximately 3 years. BIS central bankers’ speeches  1  We saw in the most recent financial crisis that high indebtedness in the household sector can create problems, with some countries suffering a severe fall in house prices. When the value of houses declines, households begin to save more. When savings increase, consumption decreases and thus demand in the economy falls. Ultimately, this can lead to lower production and higher unemployment. We do not want to see this kind of development in Sweden. It is also important to remember that there is interplay between developments in the financial markets and developments in the real economy. If we were to experience a fall in housing prices during a recession and thus similar problems to those experienced by other countries, it is likely that we would suffer both a decline in demand in the economy and that the banks would experience greater difficulty and greater cost in obtaining market funding.
5 Also including jobs related to exports from the oil-service industry, see Nordbø and Stensland (2015): “The  petroleum sector and the Norwegian economy”, Norges Bank Economic Commentaries 4/15. 6/6  BIS central bankers' speeches

In the 20 years since the Monetary Policy Committee was created, inflation has averaged pretty much exactly 2%. In the preceding 25 years, it averaged 8%. In financial stability, the benefit of committing to take the long view can be even greater than in monetary policy. In monetary policy, the upside of living for the moment is enjoyed only for as long as inflation remains a surprise. And inflation is not something easily hidden. 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  In financial stability, the benefits of being underinsured can be enjoyed for a long time before the costs are felt. And the complexity of the system means it can be easy to let good intentions slip without notice. The consequences of today’s actions for tomorrow’s crisis can be hidden away, just as they were in the run up to the financial crisis. So in the aftermath of the crisis, Parliament created the Financial Policy Committee in the Bank of England – the institutional memory of the financial crisis and its costs.3  An independent committee, free of short-term political considerations, and with members drawn from inside and outside the Bank, its job is to take the long view. 4  Its aim: to ensure the UK financial system has the resilience to serve households and businesses in bad times, as well as good. The Committee has considerable powers with which to deliver that. And it has used them to build a more resilient financial system.
The Board estimates that the disaster had a negative effect of about 3 percentage points on first-quarter GDP growth. In the second quarter, assuming a gradual normalization of productive processes, the effect is reduced to around 2 percentage points. These assumptions are based on a scenario in which the reduction in output is concentrated in Regions VI, VII and VIII, and primarily affects the manufacturing sector. It is important to consider that the difficulties caused by the catastrophe in the making of spending decisions may hold down demand, and it is likely that some short-term effects will be seen in consumption and inventories. With respect to inflation, problems in production or distribution will probably increase the price level immediately, an effect that should be temporary for the most part. The usual economic statistics for March could give a better approximation of the immediate effects of the earthquake and tsunami. Overall, the complexity of an accurate reading of the data must be taken into account, partly due to difficulties and delays in the collection of information used in the construction of official statistics. Actually, the task of gathering February’s information – carried out in March – has already proven problematic. In the medium term, the dynamics of demand, economic activity and output gaps will depend not only on usual concerns about the world economy, but also on the size and specific characteristics of reconstruction efforts.

The Federal Reserve has made substantial investments in data and analytical staff for financial market monitoring. Each day, the Trading Desk at the Federal Reserve Bank of New York analyzes and internally distributes reports on market developments, focusing on those markets where prices and volumes are changing rapidly, where news or policy is having a major effect, or where there are special policy concerns. Those analyses begin with quantitative data, supplemented with information obtained through conversations with market participants and reviews of other analyses available in the market. Over the past few years, the Desk has worked closely with our research staff in developing new quantitative tools and new data sources. BIS Review 16/2010  13  This ongoing monitoring requires continual evaluation of new data sources and analytical tools to develop new data as new markets and practices develop. For example, information on market volumes and prices can be collected from new trading platforms and brokers, data on instruments such as credit default swaps, or CDS, are provided by vendors or market participants, and fresh insights are gained from new methods of extracting information from options data. In some cases, publication of data by the private sector may be mandated by legislation (such as, potentially, trade data from over-the-counter derivatives trade repositories); in other cases, the Federal Reserve or other government agencies or regulators require or encourage the gathering and publication of data.
Based on the examinations and assessments it undertakes, the NBR ascertains to what extent the management framework, the strategies, processes and mechanisms implemented by a credit institution ensure the proper management of risks given the particular risk profile of the credit institution. Thus, the supervision carried out follows the risk-based approach rather than the compliance-based one. In exercising its supervisory task, the NBR issues recommendations, adopts measures and imposes sanctions on the credit institutions themselves or on their executive and governing bodies in order to ensure that the proper remedial measures are adopted and compliance with the regulations in force is restored. D.  Implementation of recommendations of the European Systemic Risk Board (ESRB) on lending in foreign currencies  At EU level, the first recommendations on lending in foreign currencies were issued by the ESRB in 2011 (with implementation deadline in December 2012). The recommendations were not aimed at banning foreign currency-denominated loans by way of administrative measures, but at setting forth measures that would ensure borrowers have the capacity to service their debt even in the context of adverse developments. With some of these recommendations already regulated, the NBR supplemented the national legislation with the required provisions. Following up on the action steps of the Romanian authorities, the ESRB concluded that the aforementioned recommendation had been fully implemented by Romania.

VI.1. Unrealistic solutions  We deem the following solutions as unrealistic given their cost-benefit ratio:  8  BIS central bankers’ speeches  A.  NBR intervention to bring the CHF/RON at the level of 14 January 2015, which would involve an appreciation of the EUR/RON from around 4.4 (where it currently stands) to 3.7; such an operation would keep the desired level in place only in the short run, because the level would be unsustainable and would entail arbitrage. The associated costs would translate into substantial FX reserve losses, seriously detrimental impact on exports and larger disequilibrium on the FX market  B. Conversion of CHF-denominated loans into lei at exchange rates other than the market exchange rate applicable on the conversion date. •  Assuming credit conversion at the historical rate in the month of extending the credit, banks would incur losses (calculated as the difference between the exchange rate on 23 January 2015, i.e. 4.58, and the historical CHF/RON rate) estimated at lei 5.66 billion (around 0.85% of GDP). Four credit institutions would see their solvency ratio fall below the minimum regulated threshold. The solvency ratio across the banking sector would diminish from 17.1% to 14%. •  Credit conversion at the historical rate + 20% would generate losses worth around lei 4.5 billion for the entire banking sector, while three credit institutions would see their solvency ratio fall below the minimum regulated threshold. The solvency ratio across the banking sector would diminish from 17.1% to 14.6%.
Chart 6: Correlation of capital flow volatility and the share of FX-denominated corporate debt Volatity of capital flows 2.0 ZAF RUS 1.5 KOR THA MYS ISR  POL CZE CHN  IND  IDN  CHL TUR ARG BRA  1.0 MEX  COL  0.5  0.0  0  10  20  30  40  50  Share of non-financial corporate debt denominated in USD Sources: IMF and IIF. Notes: Measured as coefficient of variation of gross inflows scaled by external liabilities. 11  For example, see Bridges, J, Jackson, C, McGregor, D (2017) Down in the slumps: the role of credit in five decades of recessions, Bank of England Staff Working Paper N. 659; Borio, C, Drehmann, M, Xia, D (2018) The financial cycle and recession risk, BIS quarterly review; Taylor, A, Schularick, M (2012) Credit Booms Gone Bust: Monetary Policy, Leverage Cycles, and Financial Crises, 1870-2008, American Economic Review and Cesa-Bianchi, Eguren Martin, Thwaites, (2019), Foreign booms, domestic busts: The global dimension of banking crises, Journal of Financial Intermediation, Elsevier. 12 Hoggarth, G, Jung, C. and Reinhardt, D. (2016) Capital inflows — the good, the bad and the bubbly. Bank of England Financial Stability Paper No. 40.

The PRA is well aware of the need to have regard to facilitating long-term productive investment in the economy when pursuing its statutory objectives.5 Insurers active in the bulk purchase annuity market tell us that they intend to continue this diversification into direct investments, targeting on average a c.40-50% share of total assets backing annuity obligations, significantly higher than before Solvency II. Overall, I think the PRA’s implementation of Solvency II works well for annuity business. That is why we recommended adoption of a similar framework for superfunds. Solvency II does though have one significant flaw as a regime for annuities business: the design of the risk margin. Particularly in relation to long-dated insurance risks, such as longevity, the risk margin calculation is too sensitive to interest rates. As a result, the risk margin is too high when interest rates are low and too low when they are high. With interest rates currently low, insurers have responded to a too-high risk margin on annuity business by reinsuring longevity risk on new business offshore. Meanwhile Transitional Measures on Technical Provisions (TMTP) offset the risk margin on the pre-Solvency II back book. The irony is that UK insurers do not hold an especially high level of risk margin (net of TMTP) on their annuity books in practice. This outcome is unwelcome from our perspective because UK insurers are increasingly exposed to offshore reinsurers and TMTP is higher than it otherwise would be, giving the impression that UK insurers are more reliant on transitionals to meet capital requirements.
22  Such an approach would be consistent with the 2008 CGFS report on Central Bank Operations on this issue: “Insofar as central bank actions might lead to degradation of market participants’ management of liquidity and other risks, a possible offset would be to implement tighter supervisory and prudential policies concerning the management of liquidity and related risks.” It would also seem to comply with the 2008 BCBS Principles on Liquidity Risk Management and Supervision, which say that: “With respect to the composition of its liquidity  BIS Review 67/2009  9  That is the approach that the UK’s Financial Services Authority will be adopting in due course, after a number of years’ discussion. We greatly welcome that outcome. Of course, in the midst of the crisis, any such requirement has to be carefully transitioned, but the eventual destination should be clear enough. For such a policy to deliver its potential, it would be good if regulators, internationally, required all banks regularly to turn over a meaningful share of their “stock liquidity” in the market on a reasonably regular basis. That would also help to put banks in a position to reap the benefits of the Bank’s Discount Window Facility, through which, as I have described, sound banks can borrow gilts.

From that discussion of LOLR as Bagehot would have recognised it 2 , I shall go on to air some developing thinking about two other instruments available to the authorities to address financial system distress: Market Maker of Last Resort, and Capital of Last Resort. The implementation of monetary policy in stressed conditions Most of the time, central bank operations revolve around the implementation of monetary policy. For the Bank of England, in routine circumstances that means, of course, establishing overnight money market interest rates in line with the Monetary Policy Committee’s policy rate (Bank Rate). It is vital that we should be able to achieve that primary rate-setting Objective in stressed conditions, as well as in peacetime. Since mid-decade, the reserves part of the Bank of England’s operational framework has, accordingly, made explicit provision for three broad types of contingency: a bank finding itself temporarily short of reserves at the end of the banking day due to technical problems or frictions in the money markets; a widespread shock to the sector’s demand for reserves; and, thirdly, a pronounced shift in the degree to which banks collectively find themselves needing to manage their reserves directly with the Bank rather than via the money markets. To cater for those eventualities, banks can, first, borrow unlimited amounts overnight against the highest-quality collateral, for a modest premium of 25 basis points, designed to leave intact incentives to manage liquidity in the markets rather than with us.
The third open is open data because we realize that data will become an important asset. We have recently launched the D-Statement program that allows people to use the information at one bank to apply for financial services at another bank to improve access to services and competition. The other key element in the new financial landscape is sustainability which comprises two key components. One is the sustainability of the household debt. We have recognized that the household debt is very high in Thailand at about 90 percent of GDP, and hence it is crucial to design measures that attempt to put the household debt burden on a more sustainable basis. There is also another aspect of sustainability which is on the green and environmental issues. We are putting in place key building blocks that will be an essential part of the sustainability landscape. They include the green taxonomy and better disclosure to measure progress in the sustainability area. The last part of our financial landscape paper is about a more flexible regulatory framework. I think that this paper is important because it lays out where we see things evolving in the financial sector, and we would welcome your input. The paper is available on our website in both Thai and English. And if we look beyond the financial sector? I have talked about our policy responses to Covid-19 and then some of the longer-term issues we are addressing on the financial front through the financial landscape paper.

It is when the investors sell off assets that are seen as risky and return to safe assets. Typically, they sell off things in emerging markets then move their money to safe things like the US Treasury. We see that happening today but fortunately for us in Thailand, risk-off trade is not a very substantial risk because we are solid on the balance of payments or the external front. We have a low level of external debt compared to our high level of international reserves and are running large current account surpluses consistently in the years preceding the crisis. Therefore, our overall external position is strong. Unlike other countries in the region, which have lower international reserves or higher external debts, they are more vulnerable to these swings in investor sentiment and resumption of risk-off trade. This transmission channel is thus not very worrisome for us as we are in a good position to handle capital outflows given our external strength. The second channel is the impact on the real economy from trade and investment, both direct and indirect. The direct channel is very small as the share of Thai exports to Russia and Ukraine are only about 0.4 percent of total Thai exports, and the same applies to investment flows. The main issue we are more concerned about is the indirect effects that the situation will lead to supply chain disruptions or other impacts on the world economy that will have a knock-on effect on Thailand.
Given the similarity of the financial systems, the SEE region as a whole faces similar challenges also sharing the common concerns. This raises considerations for stronger regional cooperation as important tool to effectively address future challenges. The recent Bank of Albania’s initiative for region’s joint participation within Vienna Initiative 2.0, advocated by the Bank of Albania as Steering Committee member, can be considered as a huge step forward in building consistent cooperation framework. In it’s very first joint initiative, the region focuses on homehost coordination including the confidentiality, cooperation and exchange of information between supervision authorities in the home and host countries, the need for EU banks to adequately adapt their strategies to local needs in host countries as well as some coordination issues among non EU host countries and ECB/SSM. The NBRM strongly welcomes this joint cooperation initiative hoping for it to highly contribute toward strengthening region’s effectiveness in tackling various future problems that concern as all. BIS central bankers’ speeches  3

Stable money, stable prices: these are the very foundations of a well-functioning market economy. There is a strong economic case for price stability, which today is - again - widely accepted. However, the case for price stability goes beyond the purely economic sphere. Price stability, the ability to rely on stable money, is the basis for trust in the interaction among economic agents, trust in property rights, trust in society and trust in the future more generally. Trust in stable money is also the basis for a free society, the ability of people to take decisions and plan their future for themselves. This is particularly evident with respect to life-time savings for retirement, which is a topical issue at the moment in the context of discussions over a greater role for private pension schemes. Private provision of retirement savings crucially requires the trust of savers in the long-run stability of money. Conversely, a loss of such confidence inevitably leads to calls on the state to step in and provide for the future collectively. Inflation undermines trust in money and in property rights more generally. This mechanism was apparently recognised by Lenin who allegedly remarked that the “most effective way to destroy civil society is to destroy its money”. 3  BIS Review 96/2000  There is a saying that “peace is not everything, but without peace everything else comes to nothing”. I am tempted to say the same thing for price stability.