samchain/econo-pairs-v1 huggingface dataset:
In comparative terms, the NPL ratio of the Spanish banking industry in consolidated terms stands at similar levels to the European average, although it is still above those of some of the main European countries. 2 Challenges That said, as I indicated at the start, the banking sector needs to address important challenges, affecting not only Spanish banks but also the other euro area countries. 2.1 Profitability The first challenge I wish to mention is profitability; adequate profitability is essential to ensure banks’ viability for the medium and long term. Since the onset of the crisis, the banking sector’s profitability has been quite low, well short of the double-digit figures observed in earlier periods. Last year, Spanish deposit institutions overall saw their return on equity fall by 1.3 percentage points, from 5.6% in 2015 to 4.3% in 2016, although it remains slightly above that of the main European countries and the European average. As you are aware, there are several factors exerting downward pressure on banking sector profitability. The very low interest rate environment, in response to a euro area inflation rate that is below the ECB’s target rate, is one of the main factors behind the low levels of profitability in recent years. Against this low interest rate backdrop, both financial revenues and costs have fallen, although it is increasingly difficult to achieve further cuts in the cost of liabilities, now that levels close to zero have been reached, and this has a direct impact on the net interest income of Spanish banks.

This fact has attracted the attention of analysts, who point to the confluence of various factors to explain why the response by wages to the fall in unemployment is not following the usual patterns. First, it is pointed out that the number of workers who are employed part-time, involuntarily, increased notably after the crisis and has scarcely fallen with the improvement in economic activity. 5/7  In parallel, there has also been an increase in the weight of some groups that are not included in the habitual definition of unemployment, such as economically inactive individuals whose reason for not seeking a job is because they believe they will not find one; or who do not seek a job for whatsoever reason, but are available and wish to find a job; or who, although they are seeking employment, are not available to immediately take up a new job. The measure of the unemployment rate that were to include these groups would, for the euro area as a whole, stand at around 18% of the labour force, practically double the habitually estimated rate. In terms of their influence on wage bargaining, these workers could exert downward pressure on wages. Additionally, the excess supply of unskilled labour, which in some cases is amplified by immigrant inflows, may also reduce upward pressure on wages; and, moreover, there is some evidence of changes in wage-setting mechanisms which, against a background of low growth in prices, would be setting greater store by past or actual inflation, as opposed to expected inflation.
And, going forward, are we thinking hard about how technological change will influence incentives, behavior and culture? We’ll hear these issues discussed in several panels today. These issues require thoughtful reflection by the industry. The need for reflection, though, is not limited to boards, or even to banks. Regulators and bankers alike can benefit from such a habit. In that vein, I want to share with you an everyday checklist proposed by Ignazio Angeloni of the European Central Bank.7 He has posed six questions that seek to make responsibility for culture both individual and routine: Are you doing what you promised to do? Are you using your best knowledge and intention in doing it? Are you doing what public authorities, superiors, colleagues and business partners expect you to do, and if not why? Are you conforming to the mission and the values of your company, as they are publicly 2/3  BIS central bankers' speeches  stated? Will your actions enhance public confidence in your company and in the financial sector? Finally, and crucially, would you behave similarly if your actions were publicly observed? I suspect that while seemingly simple, the discipline of asking ourselves these questions on a regular basis and answering them thoughtfully and honestly may be more challenging, thought provoking and effective than one might initially think. I thank the staff at the New York Fed who put together today’s program, and their colleagues who are in the audience and watching today.

However, after several years of strong growth, resources are now in short supply. With the substantial number of businesses now facing capacity constraints, we can expect inflation to pick up. It is uncertain whether inflation will then rise quickly or only gradually near target. Strong export growth, high oil investment and after a period higher growth in general government demand have contributed to the upswing in production and employment. But the low level of interest rates has also been a prominent driving force. This reflects the dynamics inherent in interest-rate setting. Low interest rates have stimulated demand and production and should lead to higher inflation, to which we are now reacting by raising interest rates. Under inflation targeting, it is important to be mindful of the effects of higher interest rates on the krone exchange rate when inflation is low. Interest rate developments in other countries are thus of importance to interest rates in Norway. BIS Review 15/2007  5  Unemployment has declined sharply in recent quarters. The pace of decline and the level of unemployment are reminiscent of two earlier cyclical peaks, one in the mid-1980s and the one that began at the end of the 1990s and continued into the present decade. Both booms culminated in sharply accelerating cost and wage inflation. Some of the driving forces that have boosted the growth potential of the Norwegian economy and restrained inflation may diminish. Prices for imported goods are no longer decelerating at the same pace. Labour market conditions are tightening in Sweden and Poland.
19 For loan markets, SC-STS will publish by April 2021 market guidance on the transition of bilateral corporate and retail loans, and set out further guidance on market mechanisms for converting legacy syndicated and hedged loans by the third quarter of this year. This is expected to rely on active SOR to SORA transition in the derivatives market to establish relevant pricing references for the transition of syndicated and hedged loans, where coordination across lenders and borrowers is essential. 20 The key message is this: Banks should actively engage their corporate customers to pro-actively undertake legacy transition wherever possible by end 2021. While some customers may be inclined to adopt a wait and see approach, particularly since LIBOR and SOR discontinuation could be extended to mid 2023, it is important to bear in mind that SOR derivatives liquidity will start to decline in 2021. 21  There are two reasons for this: Liquidity in derivatives will start shi ing to SORA, particularly from April onwards, given the stop to new SOR cash products, and as all hedges on new cash product shi to SORA. Likewise, with SC-STS considering a cessation timeline for new SOR derivatives, likely before end-2021, market participants should expect SOR liquidity to decline further as  https://www.mas.gov.sg/news/speeches/2021/pushing-ahead-with-sor-sora-transition-in-2021  5/7  12/02/2021  "Pushing Ahead with SOR-SORA Transition in 2021" - Keynote Speech by Mr Leong Sing Chiong, Deputy Managing Director (Markets …  key banks will not be able to undertake new SOR derivatives transactions.

The knowledge you have acquired through your training here is only part of the cherished objective. The more important requirement is to conduct yourselves in a sound professional manner, comply with regulations, and invest your capabilities and knowledge to attain real professionalism. May Allah render your knowledge useful to you and your country. I wish you all success, and may God bless you. BIS Review 14/2007  1
Another relatively low-hanging fruit would be a common stabilisation fund equivalent to 1 to 2% of euro area GDP, which could provide us with a proper macroeconomic stabilisation capacity. I note that this largely converges with the Commission’s proposal to create a macroeconomic stabilisation function for the euro area. This common stabilisation fund would be used under efficient rules – but not conditional to an adjustment program, contrary to the ESM – to support, through loans, Member States’ counter-cyclical policies when they are faced with asymmetric economic shocks. The fund itself would be financed by borrowing. To definitely succeed in this ambition, the euro area will need a common keystone: an institution that fosters confidence. Because, as Tommaso Padoa-Schioppa put it: “ complete and systematic consistency of [national] policies achieved without any institutional infrastructure is a dream"8. This is why the new French President has proposed creating a euro area “finance minister”, which probably requires modifying the existing Treaties. This finance minister would embody and bring to fruition the shared commitment of our Member States. As I also mentioned this idea before9, let me share some personal views on the issue.

Europe is lagging far behind in this area: such financing only represents 68% of GDP in the euro area compared with 128% in the United States in the fourth quarter of 2016. Creating the Financing Union would magnify the impact of national reforms: whereas they foster firms’ willingness to invest, the Financing Union would foster firm s ’ ability to invest, and they would together foster microeconomic dynamics and competitiveness. 5/8  BIS central bankers' speeches  The efforts so far are going in the right direction, but work should now be accelerated. The building blocks already exist: the Juncker investment plan; the Capital Markets Union (CMU), which supports the diversification of private financing; and the Banking Union, which tackles the fragmentation issue. These initiatives have to be brought together into the FUII in order to go beyond administrative or bureaucratic borders, create synergies, and therefore give new impetus to this agenda. Think for instance of a real European venture capital. To be more concrete, progress towards a Financing Union for Investment and Innovation requires fleshing out proposals in four key areas: First, completing the Banking Union. This means, as a priority, finalising the Banking Union’s second pillar, namely the single resolution. Within a strong Banking Union framework, banks in the euro area will thus be able to engage in cross-border consolidations on a sound and safe basis and therefore contribute to further reducing financial fragmentation. This also includes harmonising insolvency regimes for businesses.
Further liberalization of financial services, progressing as planned in Financial Sector Master Plan II, will provide Thailand opportunity for firms to have better access to funds at a more competitive price, especially small businesses which comprise a large part of the workforce. This adds another dimension to Thailand’s competitiveness and will help strengthen economic growth. Now, let me turn towards the Bank of Thailand’s other major responsibility – to balance between financial stability and economic growth. The role of monetary policy is to manage the financial environment to ensure macroeconomic and financial stability. The Monetary Policy Committee, or MPC, has maintained an accommodative monetary policy stance throughout the adverse shocks in the last couple of years. In the current episode, we are conducting monetary policy to maintain a right balance between economic growth and financial stability, including inflation. The current policy rate which is negative in real term has already helped alleviate small businesses and households’ interest burden and can help the private sector survive the short term slump. Turnaround is coming! Weak sentiment due to the uncertainty about the political situation is the root cause of the faltering domestic demand. Political resolution is beyond our scope, so it may be appropriate to focus more on the medium and long term strategy necessary to support the economic rebound once the political status improves. The collaboration between private businesses and financial sectors to deal with the mentioned structural challenges is required to lay a solid foundation of the future economy.

In terms of performance evaluation comparison of actual and benchmark portfolios returns are going to be monitored daily and reported to the top management periodically. For credit risk management side, a transaction limit is assigned to each counterparty, covering all types of credit risks and market risks. The limits are marked to market daily and reflect the amount of exposure that the bank is willing to take with each counterparty. The credit limits are set by employing an internal scoring model that incorporates the counterparty’s external credit ratings, financial information, and some other qualitative information such as the quality of relationship with our bank and the support status, ie the possibility of getting help from the government in case of financial difficulty. The credit rating of the country in which the bank operates is also considered. Reports about limit monitoring are produced regularly. I would like to conclude my remarks by underlining once again how important it is to have an efficient risk management to protect our reserves from financial instabilities all over the world. We need to watch the rapid changes in reserve management in terms of technological developments and in terms of economic conditions very closely and adapt our institutions to these changes right away. 3  BIS Review 38/2000
Over the past few decades, these flows have facilitated the efficient cross border utilisation of capital and have provided liquidity in financial markets. By adding an international dimension to financial intermediation, the mobility of international capital has clearly been helpful in promoting growth and development in both the capital exporting and the importing economies. The mobility of capital has more recently been boosted by advances in telecommunications and information technology, allowing capital to move into or out of an economy in huge amount and within a very short space of time. The virtue of capital mobility therefore carries the risk of capital volatility. The volatility is destabilising in both directions. Too rapid a build-up of capital inflows places severe upward pressure on domestic asset prices, fuels inflation, and exacerbates macroeconomic imbalances. Conversely, sudden and massive reversals of these flows place intense downward pressure on the exchange rate, and therefore upward pressure on interest rates, causing asset bubbles to burst and splatter. When rapid build-up is followed suddenly by massive withdrawal, we see the kind of crisis that swept across this region in 1997 and 1998. The volatility of international capital flows is also attributable in part to the phenomenal growth of derivatives and the global over-the-counter (OTC) market in the past decade. A survey by the Bank for International Settlements (BIS) in June 1998 estimated the size of the global OTC derivatives market at an aggregate notional value of $ trillion.

As a consequence, the Basel Committee has come up with a new proposal known as Basel II. This proposal is intended to be more risk sensitive than the 1988 Accord, in order to provide a better alignment and calibration of regulatory capital and capital adequacy with the underlying economic risks that banks face. Categorizing debtors into a fewer risk ‘buckets’ was certainly a progress in 1988, but it open the gap between the regulatory risk measurement of any given transaction and its actual economic risk. This favours high risk loans over the low risk ones, given the 100% risk weight charged, irrespective of the risk profile of firms receiving the loan. Consequently, it adversely affects the accuracy of assessing capital requirements and allocation. The most concerning side-effect has been the distortion of financial decision-making which is, loans and investments made on basis of regulatory constraints rather than genuine economic opportunities. The new Basle II accord tries to improve on these issues by encouraging banks to become more sophisticated in their risk assessment and aligning more rigorously regulatory requirements with internal risk measurement methodologies. It is important to recognize that the application of the New Accord is principally intended for large international banks, which are complex institutions usually operating in developed countries. Therefore, Basel II has often been questioned about its implications and appropriateness for banking in emerging market economies, and it is on this point that I would like to focus my remarks.
Should it now be the case that we are entering a longer period of persistently higher inflationary pressures – which we do not know yet, of course – then my assessment is that the framework of wage-formation we have today will act as a built-in and useful brake in the system. Thirdly, a stricter and more robust fiscal policy framework was introduced after the crisis in the early 1990s. This has contributed to public finances now being in a much better shape than they were in the 1980s and 1990s. A large and growing sovereign debt may raise inflation expectations, if agents suspect that the government may eventually try to solve the problem of by inflating the debt away. This means is that the central government reduces the real value of the debt by letting inflation rise. However, unlike in the 1970s and 1980s, we have now a number of control mechanisms in place, which means that this potential source of excessive inflation has in practice been eliminated. My reflections on the current situation So, in conclusion, how do I view the current situation more specifically? And what can we learn from history? During many of the periods of high inflation in connection with war, the effects of monetary policy have been heavily dependent on the expectations of companies and households regarding future economic developments. There is an example of a deflation spiral after the First World War when expectations of lower prices in the future led to falling aggregate demand.

The same is true if a rise in infection rates is expected to be permanent. If the future looks exactly like the present there’s no reason for saving – or therefore total consumption – to change. These conditions are obviously unrealistic. Some things are good substitutes for risky activities during the pandemic. Perhaps it’s not much harder to buy things online than in a shop. At a stretch, watching a film on a screen at home can replace a trip to the cinema. But going out with family or friends to a pub or a restaurant, listening to live music or watching a play – for many of the things we’ve been denied for much of the past year, there is no good proxy. As for the dynamics of the pandemic, one thing they’re not is permanent or even slow-moving. Infection rates went up very rapidly in the spring and, once lockdown was in place, they fell almost as rapidly in the early summer. With the promise of looser restrictions as that happened, it would make sense for people to hold off on some spending until the day itself arrived. Nevertheless, it’s clear that a fair degree of expenditure switching took place: some areas of consumption fared unusually well last year, even as others declined extremely sharply. Because it’s hard for economic resources to respond to large and rapid shifts in demand this may have softened somewhat the immediate impact of the downturn, enormous as it was, on inflation.
My point is therefore that it is up to the critics to present proof of why more digitalisation would necessarily mean that inflation was held below the target for a long period of time. In the longer run inflation is determined by the monetary policy that is conducted on average and its effects on inflation expectations. A better explanation for the differences in inflation rates between countries around the world is therefore that they conduct different monetary policies. Having a credible benchmark for price setting and wage formation facilitates longterm planning for both individuals and companies. The inflation target is needed in particular when the world is changing rapidly as a result of major upheavals such as digitalisation. The alternative would be a less stable development and poorer opportunities for good economic growth. Clear game rules for a smoothly-functioning economy Let me summarise my thoughts: My assessment is that digitalisation contributes to a new way of producing, pricing and demanding goods and services. By maintaining a stable rate of inflation close to our target, monetary policy helps this changeover. To do so, we need to understand the development of economic activity, as well as the effects of structural changes in the economy. What we know is that labour markets change. They become more polarized, which makes it more important for people to update their skills to the new circumstances. The game plan for companies is changing. E-commerce can for example mean that companies’ prices change more often and become more sensitive to shocks.

We look forward to engaging with our oversight bodies and those appointed under the CARES Act to ensure that the American people understand the steps we are taking on their behalf as faithful stewards of the public trust. 4/4  BIS central bankers' speeches