samchain/econo-pairs-v1 huggingface dataset:
This has historically been the case for many of the emerging countries in which Spanish banks have international activity. Second, the characteristics of the banking markets in which they operate (much more concentrated, and with less banking penetration) are conducive to the existence of higher margins (see Chart 4). Returning to the profitability of the banking business in Spain, its comparatively low level is explained by a variety of factors. First, as I have already mentioned, the high volume of unproductive assets has a direct negative impact on banks’ income statements by reducing interest income and increasing impairment provisioning. Second, low profitability is also explained by the significant fall in income associated with banks’ deleveraging. In addition, the current levels of interest rates have squeezed banks’ 4/11  net interest income. That said, the ECB’s monetary policy has also had a positive effect on economic activity (thus reducing the losses from loan defaults) and on banks’ capital gains. In short, the ultimate net impact of low interest rates on bank profitability seems to have been smaller than that of the other factors I have mentioned. As regards operating expenses, they remain on the downward trend seen in recent years. This containment of expenses is taking place against a background of adjustment of the operating capacity of Spanish banks and has basically taken the form of a significant reduction in the numbers of staff and branches in their business in Spain.

This has led to growing concern about conduct risk in the social, political and supervisory domains, and naturally in the industry itself. This concern is also shared internationally, as reflected in the recent work of the Financial Stability Board to strengthen the governance and remuneration frameworks in order to mitigate the risk of misconduct. The Banco de España strengthened its supervisory activity in relation to conduct four years ago. This greater supervisory presence, along with regulatory requirements, the need to adapt to new and more demanding customers and judicial rulings in defence of consumers, is prompting banks to react, and they are making efforts to implement the measures needed to correct these practices. However, much remains to be done. Banks must be more proactive in developing a strong culture that is not only oriented towards complying with customer transparency regulations, but also fundamentally towards identifying and satisfying customer interests. This requires the involvement and commitment of governing bodies and the spread of these values throughout the institution; especially to the sales network, which must have an incentive mechanism that does not give rise to perverse or counter-productive incentives. In short, banks must incorporate the customer protection perspective into their risk appetite framework, making it a cornerstone of their governance and decision-making processes. For this process to be successful, the control of regulatory compliance in the marketing and management of banking products and services needs to be strengthened.
17 The model combines a macro part – capturing macro variables that shape household balance sheets over time – and a micro part – built around a household member level logistic model for its employment status – in a fully integrated manner. The framework allows us to compute probability of default (PDs) and loss given default (LGDs) for mortgage exposures directly at the household sector level and link them to macroeconomic stress scenarios. The model-framework offers, for example, insights into how borrower-based instruments – such as LTV and DSTI ratio caps – influence the economy Intuitively, the effect of LTV caps derives primarily from reducing loss given default (LGD) parameters, as the LTV ratio is directly related to the value of the underlying collateral in a mortgage loan. The effect of DSTI caps, on the other hand, stems mainly from the reduction in household capacity to serve the debt, thus their probability of default (PD). These results are confirmed by the model. This module is being integrated in the ECB top-down stress testing framework to account for a consistent stress scenario and for dynamic adjustments of individual households’ balance sheets in response to shocks and related second round effects. Finally, as just illustrated, enhancements to the ECB macroprudential toolkit go beyond stress testing as the complete set of models also provide a tool for impact assessment of macroprudential policy instruments.

The focus on the Internet as a distribution channel is eroding boundaries between financial service providers and technology firms. Banks are increasingly providing technology services to customers, such as providing account reconciliation software. Likewise, technology firms are making inroads into services once thought the domain of banks and brokerage firms, such as financial planning or paying  BIS Review 32/2000  2  bills. Banks and brokerage firms are also partnering with Internet “portals” such as Yahoo! and America Online to offer services to Internet users. It is still far too early to determine just how, or to what extent, the Internet will change the financial services sector. For instance, it is important to note that, with few exceptions, most banks view the Internet as an important supplementary distribution channel and not as a replacement for branches that give you a physical presence in the communities you serve. Moreover, the true value of cross-selling remains uncertain, and the ability to collect and use personal data will have to be balanced against the demand for more protection of consumer privacy. On the commercial side, the largest institutions are actively pursuing the emerging “business-to-business” e-commerce markets, but the experience there is still too fresh to offer much insight into how those markets will evolve.
The plus and minus signs show the extent to which Norges Bank has signalled upside or downside risks. As a reference for the extent of the effect, the lines around the time axis show the average daily absolute change in the three-month money market rate. As from the monetary policy meeting on 21 July 1999, the date of the meetings have been made public in advance. We see that changes in the money market rate are modest in connection with most monetary policy meetings. The money market rate changed by more than 0.20 percentage point in connection with only four of the nearly 30 meetings included in the chart. We have also made similar estimates for a number of other countries in order to have a basis for comparison. The next charts show changes in connection with monetary policy meetings in the European Central Bank, the Bank of England and Sweden’s Riksbank. BIS Review 7/2002  7  The effect is not systematically different from the effects in other countries. If interest rate decisions are largely anticipated, adjustment costs will decline. This is an advantage. What we must be measured against primarily is whether we are setting the interest rate correctly in relation to the inflation target. Guidelines for fiscal policy The fiscal policy stance is a key factor for developments in domestic demand. Towards the end of the 1990s politicians were facing new challenges in the formulation of economic policy.

Øystein Olsen: Launch of the new 50-krone and 500-krone banknotes Speech by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at RS Noatun, Horten, 18 October 2018. * * * More information on the banknotes are available on Norges Bank's website. Good morning. It is a great pleasure to be here in Horten and Noatun to mark this important occasion for Norges Bank. On 30 May 2017, we went to Lofoten to launch the new 100-krone and 200-krone banknotes – the first two denominations in Norway’s new banknote series. Today, we are in Horten to celebrate the launch of the new 50-krone and 500-krone banknotes. So why did we choose Horten? This is an easy question to answer. The primary motif of the new 500-krone banknote is a rescue lifeboat. Since its foundation in 1891, the Norwegian Society for Sea Rescue has saved more than 6 000 lives at sea. Through their tremendous efforts, largely based on volunteer work, the Norwegian Society for Sea Rescue has contributed to making Norway’s coastline safer and more prosperous. Many of the lifeboat crews are trained where we are today, here at RS Noatun. These crews are on stand-by around the clock to assist people and vessels along the entire Norwegian coast. The boat you can see on the front of the 500-krone banknote is the lifeboat RS 14 Stavanger, launched in 1901.
Assessing its impact is difficult. Opinions may differ as to whether volatility in capital flows and exchange rates is excessive or, rather, a pure reflection of variations in fundamentals. By the same token, movements in asset or commodity prices can be seen to reflect the balance of supply and demand forces, or, alternatively, to be the product of speculative activity. Looking at the behaviour of most countries during the crisis, however, it is very apparent that they felt threatened by the instability of capital flows and, accordingly, sought to protect themselves from its consequences. The provision of international liquidity, in particular, has been severely disrupted during the crisis. Emerging (and some industrialised) countries have suffered from acute dollar liquidity shortages which had to be remedied, inter alia, through a network of currency swaps between central banks. The crisis is a powerful reminder that liquidity – both domestic and international ‐ can never be taken for granted. In today’s world, most international liquidity is privately provided and represented by claims on private institutions. Interbank markets play a crucial role in this process. The more capital markets become integrated at the short end, the more international liquidity is provided by the private sector. 2  BIS Review 127/2010  The importance of global private liquidity conditions was apparent in the period which followed Lehman’s failure. Output and trade fell across the world with astonishing simultaneity. It seemed natural to assume, at the time, that “traditional” forms of contagion – through goods or capital markets – were at work.

Mortgage and real estate markets remain the biggest source of risk. I would like to make two observations in this connection. First, the imbalances on the mortgage and real estate markets persist. Both mortgage lending and prices for single-family homes and privately owned apartments have continued to rise at a moderate rate over recent months. And while prices for residential investment property have not increased any further, the risk of a price correction in this segment is particularly high. The renewed increase in vacancy rates indicates that the robust activity in rental apartment construction may have led to oversupply, exerting downward pressure on rental income and, in turn, on the prices of these properties. At the same time, initial yields on residential investment property, in other words the ratio of rental returns to transaction prices, are at historically low levels. In the event of an interest rate rise, initial yields on investment properties will also have to increase upon a change of ownership. This would place additional pressure on prices. Second, the risk appetite of domestically focused banks remains high. This is partly due to the fact that interest rate margins of these banks fell further in the first half of 2018. As long as this pressure on margins persists, incentives for domestically focused banks to increase risktaking will remain substantial.
It is of course difficult to identify the exact impact of individual factors on inflation, but it is nevertheless possible to highlight some things that have played a part. One factor that affects the CPIF in rather a direct and straightforward way is changes in the international market prices for energy. Particularly in 2017, higher energy prices helped fuel CPIF inflation. Earlier in the period, the contribution from energy prices was instead negative. Another factor, which is more difficult to capture and had an inhibitory effect for a long time, is international economic activity. In Sweden, resource utilisation has been rising for quite a long time, which should have made it easier for companies to raise their prices. At the same time, however, a weak and uncertain economic situation abroad has contributed to lower external price pressures. Recently, however, increasingly strong international economic activity has pushed inflation upwards in many countries. More inflation impulses from abroad should also have further improved the conditions for an inflation rate in line with the target. A factor that has probably also contributed to higher inflation is the rise in both short- and long-term inflation expectations, as they are measured in surveys, since 2015. Since the end of 2016, more long-term inflation expectations have been close to the inflation target of 2 per cent. Actual inflation obviously affects expectations, but the converse is also true. When confidence in the inflation target is strong, it becomes easier to reach the target, as price and wage formation are adapted to these expectations.

For the insurance industry, more needs to be done to provide products that cater for the OKUs’ needs and to address the issue of high loading of insurance premium imposed by the insurers. Another area for consideration – employment opportunities for OKUs On another aspect, the Government has issued a service circular to implement a 1% policy on employment opportunities for OKUs in the public sector as well as provided incentive by giving double tax relief for employers of OKU. It is encouraging to note that several financial institutions have provided opportunities for the OKUs to be employed in the financial industry and recognized that they have the necessary capabilities to contribute to the financial industry. Nevertheless, more needs to be done and I hope financial institutions will provide the opportunity for more OKUs to be employed in the financial industry. Global trend-benchmarking with financial sector in other countries showed that they are more advanced On the global front, looking at the trends and initiatives by other countries, especially the developed countries, we observe that the industry associations are very proactive and undertake a leading role in ensuring the OKUs’ rights are met. For example, the Australian Bankers’ Association issued Guiding Principles for Accessible Authentication to provide guidance to financial institutions to adopt stronger authentication technologies to facilitate the access of people with disabilities.
There may be several explanations for this, for instance, that investors have confidence that the United Kingdom will manage to consolidate its budget successfully. But I believe that it is mainly because the euro area countries lack the defence mechanism that the United Kingdom has.8 The reasoning is as follows: When investors in, for instance, Italian government bonds are concerned over Italy’s creditworthiness they sell their bonds and buy something else, such as German government bonds. Then the Italian bond yields rise at the same time as liquidity leaves the country. Other investors become worried that the yields will rise further – which is the same as the value of their bonds falling – and therefore sell their holdings, which means that yields continue to rise. This becomes a spiral of falling liquidity and rising yields, which is difficult to stop. The Italian central bank is unable to do very much, as it cannot create liquidity in euro. Only the European Central Bank, ECB, in Frankfurt can do this. The Italians can ask for help, but they cannot do very much themselves – at least not in the short term. And the investors are aware of this, of course. 8  See, for instance, De Grauwe, P., “The Governance of a Fragile Eurozone”, CEPS Working Document No. 346, May 2011.

First, domestic demand, supported by the large and fast-growing middle income and young population in the region, will increasingly have a greater role in driving economic growth in Asia. This would contribute towards a greater balance between domestic and external sources of growth. Second, the diversification of external markets will accelerate, towards greater economic inter-linkages with emerging economies in other parts of the world. Part of this trend includes the creation of the ASEAN Economic Community by 2015 in which ASEAN will transform into a single market with free movement of goods and services. This will include the lifting of restrictions to the flow of capital in the region. And third, is the greater financial integration within Asia that will result in an increased part of the savings in Asia being reinvested in Asia. The new spending patterns as incomes rise in the region will drive the modernisation of the retail sector across the region. Financial services to the household sector will become increasingly important in this new environment. Reforms to pensions and retirement benefit systems will be key to providing a more comprehensive social safety net, thus reducing the need for high precautionary savings and encouraging consumption. In addition, the large trade sector in Asia and large capital investments required to move towards higher valueadded activity will also provide an expanding market for financial services. The more regionally integrated financial system will allow firms and investors increased options in the regional financial markets for financing and investment.
5  See ECB Opinion of 22 March 2012 on (i) a proposal for a directive on markets in financial instruments repealing Directive 2004/39/EC of the European Parliament and of the Council, (ii) a proposal for a regulation on markets in financial instruments and amending Regulation [EMIR] on OTC derivatives, central counterparties and trade repositories, (iii) a proposal for a directive on criminal sanctions for insider dealing and market manipulation and (iv) a proposal for a regulation on insider dealing and market manipulation (market abuse) (CON/2012/21). 6  See e.g. Madhavan, A., “Consolidation, fragmentation, and the disclosure of trading information”, The Review of Financial Studies, Vol. 8, No 3, pp. 579-603 and Bloomfield, R. and O’Hara, M., “Can transparent markets survive?”, Journal of Financial Economics, Vol. 55, No 3, pp. 425–459. BIS central bankers’ speeches  3  opacity enables the extraction of rents and can lead to increased price dispersion7, with negative consequences for market integrity and fairness. Furthermore, a low level of posttrade transparency can significantly distort the informational role of prices by preventing the diffusion of value-relevant information, which may hamper market liquidity because of adverse selection. In line with this rather positive view of post-trade transparency, a number of empirical studies8 have found that the introduction of mandatory trade reporting has significantly improved formerly opaque market segments, such as the market for US corporate bonds. At the same time, one must be aware of potentially negative side effects.

The ECB also provided an opinion on the MiFID II proposal.5 As you know, the MiFID II proposal extends pre- and post-trade transparency requirements from equity instruments (MiFID I) to additional asset classes such as bonds, structured finance products, derivatives admitted to trading or traded on a regulated market, a multilateral trading facility or an organised trading facility and derivatives considered eligible for central clearing. The aim is to enhance price formation and to support the evaluation process of such instruments. The requirements cover pre-trade transparency – i.e. the provision of quotes and market depth to market participants ahead of a trade – and post-trade transparency – i.e. the timely publication of the prices and volumes upon trade execution. These mandatory transparency requirements represent a major change, especially for the fixed income market. For brevity, I will only address the issue of post-trade transparency. As we have known since the publication of the seminal work of the Austrian economist and philosopher Friedrich Hayek, prices reveal information that is dispersed among the numerous individual members of an economy. As a consequence, market outcomes are directly influenced by the time and degree to which prices and volumes are disclosed to the public. In reality, different markets are subject to different transparency regimes and disclosure requirements, which are a consequence of the existing heterogeneity among both financial assets and market participants.
To be clearer in our communication, though, we also need to better understand the businesses you are in and how your businesses operate. As I indicated earlier, we need more context to understand your operations – and your sharing more global information with us does provide that necessary context. •  Second, improve collaboration and communications with other supervisors – both U.S. and foreign. For true consolidated supervision to work, information has to flow  BIS central bankers’ speeches  3  freely among supervisors. We need to eliminate the legal impediments for supervisors on the ground to be able to share information in a more routine and natural way. There are many efforts underway, through such venues as the FSB and the Senior Supervisors Group, to promote enhanced information sharing and collaboration among supervisors. We also need to work more collaboratively together. This means sharing concerns about issues and agreeing on work necessary across the global firm to address the issues. This means jointly conducting examinations, as well as concurrently conducting work with similar scopes so that the full picture of the firm can be drawn, and we can capture all the relevant insights of these globally managed businesses. Finally, it also means leveraging the results of work from other supervisors and not undertaking duplicative work.

Sarah Dahlgren: Supervisory reform for global banks Remarks by Ms Sarah Dahlgren, Executive Vice President of the Financial Institution Supervision Group of the Federal Reserve Bank of New York, at the Center for Transnational Legal Studies Seminar on “The impact of US regulatory reform on global banks”, New York City, 12 February 2013. *  *  *  Thank you for the invitation to speak today. Please note that the opinions I express today are my own and do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System. Although the topic of the seminar is “regulatory reform”, I will focus my comments on “supervisory reform”. Regulation and supervision work together to ensure a strong global financial system. While rules and regulations set out the standards that must be met, supervision provides the necessary oversight and enforcement to ensure firms are following the rules. It’s a challenge to supervise a large internationally active firm. Many businesses are truly global and often include complex booking models that may involve trades being originated in one domicile with various sub components being booked in one or more other jurisdictions. As Governor Tarullo noted in a recent speech, there are unique challenges in regulating and supervising the U.S. operations of a global institution. Although we have full authority over the local operations, we see only a piece of your global operations and regular access to information can be limited.