samchain/econo-pairs-v1 huggingface dataset:
Therefore, the previous evidence suggests that the economic policies implemented at national and supranational level have been successful in dealing with firms’ short-term liquidity risks. 9  Firms’ solvency risks  Let me now focus on firms’ solvency risks, which have also increased as a consequence of the COVID-19 crisis. On the one hand, the contraction in turnover has a negative impact on firms’ earnings, reducing their ability to repay existing debts. On the other, firms posting losses will experience a reduction in their equity while the coverage of liquidity needs with fresh debt implies an increase in their indebtedness. As a result of these trends, firms end up with a weaker composition of their liabilities. Available data for 2020 already show a deterioration in the financial position of the corporate sector. The Quarterly Central Balance Sheet Data Office Survey, which includes information from around 900 firms, mainly large corporates, shows that during the first half of the year the average Return on Assets (ROA) of this sample of firms fell to 2%, 2 pp below the figure for the same period in 2019. Moreover, the percentage of firms posting losses rose by more than 11 pp, to 37%.4 This survey also shows that the average debt-to-asset ratio of these firms rose by 1.5 pp, whereas the debt-to-earnings ratio increased more significantly due to the sharp fall in earnings. 4  See Menéndez, M. and M. Mulino (2020): “Results of non-financial corporations to 2020 Q2,” Analytical Article, Economic Bulletin, Banco de España.

Current corporate tax regulation in Spain and in other European countries gives preferential treatment to debt as opposed to equity, since interest payments are deducted when calculating the tax base for corporate income tax. This bias makes issuance of debt more attractive to firms than issuing equity. In this regard, a more neutral corporate tax system that treats these two instruments equally would incentivise a higher resort to equity. Another friction that may discourage firms from issuing equity is the underdevelopment of equity markets in Europe compared to other areas such as the United States. In this connection, one of the aims of the Capital Markets Union project is to foster the development of these markets through different actions, including the removal of barriers that prevent the integration and development of capital markets. The development of equity markets can have several benefits for the corporate sector and for the economy more generally. The resort to equity finance improves the robustness of corporate balance sheets, as a higher share of equity makes firms less vulnerable to adverse shocks such as an increase in interest rates or a fall in earnings.8 This is because equity is not a redeemable liability. Also, equity is a more appropriate instrument for the financing of high-risk projects such as those involving startups, intangibles and innovation.
If housing prices were to fall, for instance, housing declines in value while mortgages remain constant. Consequently, the loan-to-value ratio of the mortgage increases. As mortgages with an excessive loan-to-value ratio cannot be used as collateral, falling housing prices can thus mean that some of the collateral must be removed or replaced. As the banks have often allocated an extra buffer of collateral, there is scope to remove mortgages that no longer meet the requirements, without having to replace them with other collateral. However, if the banks do not replace the collateral that has been removed, it may limit their possibilities to issue further bonds based on this collateral. The reason for this is that both investors and credit rating agencies often require a buffer of additional collateral. The banks can top up the collateral by earmarking other types of collateral, such as government bonds, by selling parts of their liquidity buffers or by issuing short-term securities and then earmarking the liquid funds they receive. However, the opportunity to top up the collateral in this way presupposes that the financial markets are functioning normally and that investors have confidence in the Swedish banks. Heavily falling housing prices can disrupt market functioning Covered bonds are subject to special legislation that ensures that these securities are very safe. Although this regulation has worked well so far, one cannot rule out the possibility that heavily falling housing prices could disrupt the functioning of the market and thus affect the banks.

In addition, imbalances risk being aggravated in economic upswings, which means that some measures need to be implemented in situations where there is probably a general resistance to them – what is usually compared to “taking away the punchbowl just as the party gets going”.16 Thus, the measures may also be politically difficult to implement in some cases. The extent to which this affects macroprudential policy in practice will of course depend on the institutional set-up chosen. Difficult target to define and assess The inherent difficulty in defining concrete targets for macroprudential policy may affect the ability to implement various measures. A common formulation for the objective of macroprudential policy is “to counteract risks to the financial system as a whole”, or something similar. Regardless of the exact formulation, it is difficult to specify what the target actually entails in practice. When has it been attained? Let us say that macroprudential measures are implemented over a couple of years and that no problems arise in the financial system. Have the measures then been justified or unnecessary? The only thing the general public can observe is a lack of problems, and there could thus be a risk that the need for macroprudential measures is questioned.17 Measures could be circumvented It could also prove difficult to design a system for macroprudential policy that functions efficiently enough, and which inventive market participants are not able to circumvent. In this situation, monetary policy may need to support macroprudential policy.
This diversity of viewpoints is a key strength of the FOMC. In fact, I believe we make better decisions as a committee because we don’t all think alike. But we are united in our commitment to our dual mandate of maximum sustainable employment and price stability and in our belief that preserving the independence of the Federal Reserve in making monetary policy decisions is very much in the public interest. That independence allows us to make tough decisions based on data and analysis – insulated from short-term political considerations. At FOMC meetings, each Committee member presents a current outlook for his or her District and for the nation. In formulating these assessments, we consult with many sources – our boards of directors, regional advisory councils, community leaders and other key stakeholders. My meeting with you today is part of this systematic effort to understand what is going on at the grassroots level of our economy. To add to what I learn from my conversations, my colleagues and I at the New York Fed continually track conditions in our District, and we have created special tools for that purpose. For example, my staff tracks local household credit conditions, including the amount and type of personal debt and whether repayments are timely. We also conduct a periodic poll about the credit needs of small businesses, which are an important source of new jobs in the District.

The government has taken the first step with MyInfo – a single platform containing personal data submitted to and verified by the government. MAS and the Government Technology Agency of Singapore have done a pilot with several 5/9  BIS central bankers' speeches  banks to enable customers to open a bank account online using MyInfo. The pilot saw application timings shortened by as much as 80%. We are now taking the next step. MAS is working closely with local and foreign banks to explore a Banking KYC Shared-Services Utility that will streamline end-to-end KYC. This means centralising processes such as: leveraging on MyInfo for customer identification and verification; collecting and validating KYC documents; and screening against sanctions and blacklists. The Banking KYC Utility is potentially a transformative project. It will harmonise and enhance KYC checks across the industry. It will improve the quality of risk management while reducing cost and time taken. If all goes well, we hope to see the Utility in place next year. Making Trade Finance Safer and More Efficient: Global Trade Connectivity Network Another area that could do with transformation is trade finance. Today, it is largely paper-based. This is not only inefficient, but increases risks such as fraud and duplicate invoicing. Blockchain technology offers good promise to make trade finance safer and more efficient. Last year, DBS Bank and Standard Chartered Bank completed a proof-of-concept that demonstrated how blockchain technology could enable banks to detect if an invoice had already been financed.
The international financial architecture as it was before the crisis lacked appropriate tools to deal with volatility in global capital flows and to prevent crisis contagion. This was an incentive for emerging countries to self-insure against global liquidity  2  BIS Review 93/2010  shocks by accumulating international reserves or protect themselves through capital flows control, both distortive types of protection. Reserve accumulation is costly to emerging economies as they have to restrain consumption and forego profitable investment opportunities in order to buy the low-yield assets that usually constitute reserves. It also has global consequences. For those emerging market economies that ran a current account surplus to accumulate reserves, the process has contributed to current account imbalances. This is why finance has an important role to play to help these economies effectively deal with capital volatility. A lot has already been done by G20 countries and international institutions since the beginning of the crisis. Central banks of large advanced countries have set up swap arrangements with some emerging countries. The International Monetary Fund has created a precautionary lending facility: the Flexible Credit Line. A general SDR allocation of USD 250 bn has been agreed in the London summit of April 2009 and out in place. However, there is still scope for improvement and further work is currently being done to improve global financial safety nets.

And the G20 fulfilled the most optimistic anticipations as it reacted promptly and strongly to the crisis. Beyond this, the G20 has also agreed on an ambitious policy agenda, aiming for the long run. The G20 Roadmap does not only aim at one particular aspect of the global economy; it is very encompassing. One aspect of it is macrorebalancing, another is on financial regulation and global financial safety nets. The G20 agenda is focused on crisis prevention by coordination in order to avoid, or at least dampen overheating and boom/bust cycles. How are these issues related? First I will briefly tackle the important question of the link between the financial crisis and global imbalances. Second, I will go through the main implications of this link and outline the key features of the policy agenda of the G20. In this second part I will mostly focus on the so-called “G20 Framework for a Strong, Sustainable  BIS Review 93/2010  1  and Balanced Growth” and on financial safety nets. In the last section I will focus on financial regulation issues more specifically. Why and how do the financial crisis and global imbalances interact? An overwhelming body of research has established the clear relation between global imbalances and financial issues, some of which were behind the financial crisis. Indeed, global imbalances were not just the result of cyclical factors, such as business cycle fluctuations, changes in oil and other commodity prices, etc.
Back to the future: the next four decades Armed with what we know, can we spot the new growth winners in the next four decades? There are many countries in and outside Asia with the potential to be the "Good". But I will focus only on those in Asia as I am more familiar with developments here. I should add that picking winners in the growth game is a tricky business as we tend to rely on past experience and foreseeable trends. We cannot foresee unexpected, seismic events. I am emboldened, however, because I would not be around to answer for my predictions in 40 years' time! The China growth story is well-known. The Chinese jumbo jet has taken off for some time and is almost reaching cruising altitude. The pilot and his crew are in full control, coping with pockets of turbulence and ensuring a smooth flight. In East Asia, Japan, South Korea, Malaysia and Thailand are expected to continue to do well. Besides them, I think three other countries deserve attention because their leaders have a pragmatic vision for the country, their institutions are being strengthened and there is growing social consensus on the direction of reform. They are India, Vietnam, and Indonesia. India India is a late-comer in economic reforms. The Indian jumbo jet has just taken off the runway and is starting to climb. It has not attained cruising altitude. Its destination is still far away and the plane may have to descend from time to time to refuel.

In complementing the sukuk market as a source for fund raising, also being explored are other funding channels to assist small and medium enterprises, new growth industries and entrepreneurs that have limited access to the sukuk market. A multi-bank investment platform is now being developed for the effective matching of funds from potential investors with targeted industries and ventures in the real sector. Foreign Islamic financial institutions and investors also stand to benefit from this platform, with the offering of multi-currency financing options for foreign projects. The platform facilitates Islamic banks to perform  2  BIS central bankers’ speeches  investment intermediation functions. It enhances further the intermediation role of the Islamic banking institutions to also function as an investment intermediary. In an increasingly internationalised global financial marketplace that has generated significant cross-border flows, one of the requirements as we advance forward is the need for more tradeable cross-border Islamic financial instruments that can cater to the different profiling of investors’ risk appetites. The issuance of the short-term sukuk by the International Islamic Liquidity Management Corporation (IILM) is a breakthrough in innovation towards increasing cross-border liquidity flows that could potentially enhance financial stability and the efficient functioning of the Islamic financial markets. Let me conclude my remarks. There is clear indication of the growing relevance and importance of the sukuk market, with the growing interest from both emerging and developed jurisdictions and the strategic approaches taken to diversify the funding sources through the sukuk market.
What I consider to be particularly important to bear in mind from all this is that there is currently a fairly lively discussion internationally among academics and experts, both on the need to coordinate macroprudential policy and monetary policy and on the question of whether monetary policy may need to be used in certain situations to counteract financial imbalances – even when macroprudential policy is in place. For some reason, one does not see much of this discussion in the Swedish debate. Here it seems rather that there is an assumption from the start that macroprudential policy and monetary policy are not related in any critical way and can be conducted more or less independently of one another without problem. But internationally, this is seen as far from obvious. 12  See, for example, Bayoumi, et al. (2014), Blanchard, Dell’Ariccia and Mauro (2013), Carney (2013), Smets (2013) and Stein (2013, 2014) for discussions of this. 13  This is an argument that I myself and others at the Riksbank have highlighted on various occasion, see for instance, Ingves (2010). 14  For a discussion of “inaction bias” in macroprudential policy, see Chapter 9 in ESRB (2014). 15  For instance, Summers (2014) writes: “[A] strategy that relies on interest rates significantly below growth rates for long periods of time virtually guarantees the emergence of substantial bubbles and dangerous build-ups in leverage. The idea that regulation can allow the growth benefits of easy credit to come without the costs is a chimera.

The progress brought about by this series of reforms approved with broad Parliamentary consensus does not mean that our financial sector does not face significant challenges ahead. During the last upturn households and firms rapidly incurred debt, a process matched by exceptionally high credit growth rates. This setting was conducive to an increase in the size of the banking sector, to the point of reaching a dimension which now, with a much less favourable outlook, will hardly be sustainable. The lower growth in demand compared with the previous stage, combined with the process of corporate and household deleveraging, will entail a fall in the volume of activity. To this can be added various factors which in the near future will act to squeeze unit margins, such as low interest rates, increased bad debts, higher capital requirements for both regulatory and market-related reasons, tighter financing conditions (risk premia are higher than before the crisis) and the increased importance of doubtful asset management. The management of doubtful assets in the real estate sector will be particularly important. In this respect, allow me some brief thoughts on the supervisory activity of the Banco de España. In the last few weeks some opinions have been aired on the lack of transparency of the Spanish banking system, as a consequence of a failure to duly record the excessive concentration of risk in the real estate sector, particularly that in property development companies.
Banks should extend all necessary assistance to help these groups to migrate to the e-payment platform. To realise the full potential of the payment network, banks that offer cheque issuing and ATM cash withdrawal facilities should provide the full suite of funds transfer and electronic payment functionalities over the ATMs. Of the 20 banking institutions that offer ATM services, 17 of them today provide the IBFT service, a real time interbank funds transfer service that enable customers to transfer funds via the ATM in a safe and secure manner. Banking institutions are strongly encouraged to also offer the Interbank GIRO (IBG) via their ATMs as a lower cost option to the IBFT. With over 1,400 new ATMs deployment by MEPS over the next 5 years, in addition to the current 12,000 installed nationwide, there is a significant potential for the ATMs to be used as convenient access points to the public to conduct electronic payment and funds transfer transactions. The widespread availability and reach of the ATMs network should serve the needs of the public not just in the urban areas but also in the rural towns. ATM cards to be used for purchases at Point-Of-Sale terminals Whilst Malaysia has a population of about 29 million, we have a high penetration of 39 million ATM cards. The ATM cards issued by banks that are used for cash withdrawals also have the domestic debit card application which can be used at merchants’ Point-Of-Sale terminals to make purchases.

Stories of destitution among retirees is one but many of the sad stories, I would like you to avoid. Guard the assets that you have acquired in your working life jealously, because retirement does not give you multiple chances to make amends when you make unsound business decisions. It is for this reason that the Bank, through Human Resources Department, has engaged Future Search a Consultancy firm to give you tips on how to live in retirement, I urge you to attend the upcoming workshop. I therefore wish you God’s blessings as your pursue the challenges of life in retirement. Thank you. BIS Review 1/2007  1
I am also reliably informed that the facility will allow eligible companies access financing by assigning receivables for execution of contracts such as extraction and transportation of waste materials, transportation of copper ore from the pits to the smelting plants and contract mining. I have no doubt that the facility will go a long way in supporting Zambian companies grow and actively participate in the economic development of the country. The Fund will not only augment the supply of goods and services to the mining sector but also introduce important institutions that are critically needed to ensure that the supply system in the sector is efficient and sustainable in the long run. The USD 80 million in favour of the Export Fund of Zambia has come at a time when the Government is increasingly promoting the diversification of the economy through export led growth. Strengthening of the external sector performance has continued as evidenced by an improved balance of payments position. This has been on account of higher foreign exchange inflows emanating from increased metal and non-traditional exports earnings coupled with investor confidence in the Zambian economy. The nontraditional exports have continued to record unprecedented growth over the past couple of years. For instance, NTEs rose by 63.4% to US $ million in 2007 from US $ million in 2005 with commodities, such as, sugar, copper wire and tobacco, coupled with receipts from tourism making notable contributions.

The growth of this sector is expected to be further bolstered by the establishment of the Multi-Facility Economic Zones in Lusaka and Chambishi to further diversify the economy and promote trade, stimulate export activities, technology, skills transfer and job creation. In pursuing an export-led growth strategy, the economic zones would actively promote value addition in identified specific products, such as, copper, vegetables, tobacco, gemstones, cotton yarn, leather products, sugar and oil cakes, of which the country has a competitive advantage. For instance, there has been a large increase in tobacco production, which has led to increased export earnings. Unfortunately, much of the tobacco is exported in a raw form with very little treatment or processing in the country. Significant investments in plant and machinery for value-addition will therefore be needed to offset this scenario. Thus, with expected large investments in Economic Zones and Export Fund facilities like the one we are witnessing today, Zambia’s competitiveness through value addition is expected to improve. Mr President let me also commend all the institutions involved in the two syndicated loans. It is gratifying to note that these facilities have been made possible due to the partnerships between the local financial institutions and international ones. I commend such partnerships and challenge other local institutions to enter into similar arrangements to reduce the cost of borrowing and promote growth in Zambia. Congratulations should be extended to the Zambia National Commercial Bank, ALS Capital and Calag Capital, AFREXIM, PTA Bank and Loita Capital to name but a few for the initiative.