samchain/econo-pairs-v1 huggingface dataset:
The measures approved include using the remaining funds from the EU budget and new financial aid to cover the expenses arising from the short-term rise in unemployment. Financial support is also provided in the form of credit lines to businesses from the European Investment Bank, and to general government through the European Stability Mechanism. True, these are valid measures for alleviating the crisis in the short term. But they cannot make up for the main deficiency: the absence of a framework for sharing fiscal efforts, aside from the indirect role that can be played by the ECB's asset purchase programmes in this respect. Such a framework would enable all agents - public and private alike - in the euro area to fund themselves in comparable conditions between jurisdictions and at low interest rates. This need could be covered through a recovery fund that harnesses the common capacity for mobilising future resources in the present, which would far exceed the individual capacity of each country. In the short term, this instrument should be geared towards funding the public expenditure triggered directly by the pandemic, while in the medium term, it should focus on covering possible needs for restructuring the productive system. The crisis has shown that, in the long term, a bigger EU budget will be key to completing the monetary union and would enable the bloc to deploy sufficient firepower to react to future crises.

In particular, we cannot rule out the possibility of further waves of the epidemic making it necessary to re-introduce or discretely reinforce the limitations on various types of productive activity. Ultimately, this source of uncertainty will not be fully dispelled until an effective vaccine or anti-viral treatment is available. The second factor concerns the effectiveness of the measures, both in Spain and in the rest of the world, that the economic authorities have pursued in an attempt to prevent the shutdown in activity at the height of the pandemic from leading to permanent job losses and company closures. Evidently, the second of these factors (the effectiveness of the economic measures in minimising the damages of the lockdown) depends, in turn, on the first (how the pandemic evolves). It should in any case be stressed that certain characteristics of our economy make it more vulnerable than others to the shock we face. These include the sectoral specialisation of our  1  In the two reference scenarios published by the Banco de España on 20 April and referred to in this testimony, the expected declines in GDP in Q2 stand at around 15% and 20%, respectively, although the information from indicators for this period remains very scant at present to estimate with any accuracy whatsoever the potential scale of the decline in the quarter. 8  productive system, the small average size of companies and the high proportion of temporary as opposed to permanent employment.
While the economy was tentatively getting back on its feet, inflation in the euro area dipped below 2% at the end of 2013 and continued to fall from there. At the beginning of 2015, it slid into negative territory, giving rise to concerns about whether inflation expectations were well anchored (cf. chart 13). In June 2014, the ECB lowered its main refinancing rate to 0.15% and its deposit rate to below zero. Today, they are at 0.05% and –0.3% respectively. In lowering the interest rate into negative territory, the ECB followed the example of Danmarks Nationalbank, which had already introduced negative deposit rates for banks in 2012. The primary goal of the ECB was, however, not the same as that of Denmark (which was to reduce capital inflows); instead, it sought to increase inflation by stimulating lending.6 From mid-2014, the ECB sent ever clearer signals that it would be substantially easing its monetary policy. At the same time, there were increasing signs that the US Federal Reserve would be exiting its zero interest rate policy. Against this backdrop, the euro began to depreciate considerably not only against the US dollar, but also against the pound sterling. Between mid-2014 and the beginning of 2015, the euro lost almost 15% against the pound and more than 20% against the US dollar (cf. chart 14). A phase of general euro weakness set in.

Second, changes in the monetary policy of the euro area have repercussions. Interest rate cuts by the ECB usually lead to an appreciation of currencies in neighbouring countries. This dampens growth and lowers inflation. Third, uncertainty during the euro crisis precipitated capital flight towards neighbouring countries, thereby placing exceptional upward pressure on their currencies and thus rapidly changing their monetary conditions. The monetary policy of neighbouring countries must take into account the influences via these channels on domestic economic developments. The most significant advantage of conducting an independent monetary policy is that it allows the central bank to address the specific needs of its own economy. Countries which join a currency union relinquish this ability to control and stabilise in favour of other advantages – for example, by joining a currency union, a country may take on a more credible and therefore more successful monetary policy than its previous one. For Switzerland, however, the ability to pursue an independent monetary policy has clearly paid off. The structure of the Swiss economy is a singular combination of, first, a strong manufacturing sector specialised in producing high-quality, research-intensive goods (think of pharmaceuticals and watchmaking, but also the specialised machinery industry), and second, a major financial centre which, notwithstanding certain setbacks due to the financial crisis, has retained its global reach. Given this structure, the drivers of economic development in Switzerland are therefore often different to those of other European countries, so it makes sense to have an independent monetary policy.
In the past years, the private sector has raised financing more and more from the capital market. In particular, the bond market’s outstanding corporate debt instruments more than doubled in five years, surging from 180 billion baht or 4 percent of GDP at the end of 1998 to 556 billion baht or 9.4 percent of GDP at the end of 2003. When combining the market capitalization of the equity market to the bond market, the capital market’s outstanding financial instruments stood at 5.4 trillion baht or 91 percent of GDP at the end of 2003, nearly equal lending from the banking sector. With its growing share in the financial market, the capital market offers both opportunities and challenges to the banking sector. Through their extensive branch networks, banks can further enhance fee-based income by increasing their roles as arranger, underwriter, facilitator and custodian. In direct competition with the capital market for corporate clients, banks must sharpen their competitive edge by being cost efficient without compromising quality of services, so that they can offer corporate loans at competitive pricing at par with the capital market. This again underscores the critical importance of risk management-banks with more advanced tools in risk management are likely to have an edge over those without, since the former can better price risk and use their capital more efficiently. Moreover, instead of competing for corporate loans at fine margin, banks can also explore other niche sectors that may have been somewhat neglected such as SMEs.

As you know, I never comment on what my colleagues have said. On the basis of our decision, which was taken by the Governing Council with an overwhelming majority, I would like to emphasise the following points. First, we are totally independent of governments and pressure groups of any kind. It is not by chance that we have guaranteed price stability, but by taking decisions which have pleased neither governments nor lobby groups. Second, our mandate is price stability. From 1999 to the present we have delivered average annual inflation of 1.98% for 330 million European citizens. We are unswervingly committed to price stability. Third, we re-absorb all of the liquidity that is injected through our interventions. We are not printing money and there is no change to monetary policy. Fourth, the aim of our interventions is to enable certain markets to function more normally, in order to ensure the correct transmission of our monetary policy, which is unchanged. Fifth, we have taken note of the decision by governments not only to strictly comply with their undertakings to reduce deficits, but also, on the part of a number of them, to step up their budgetary consolidation efforts. For us, this is absolutely of the essence. BIS Review 76/2010  3  Does the situation of the Spanish banks concern you? I have no particular comments at this stage. On the international level, prudential supervision by the Banco de España has always been regarded as rigorous, particularly with its concept of dynamic provisioning.
At the same time, a high capital buffer reduces the incentives for shareholders to take excessive risks as they would be putting their ‘own money’ on the line. Liquid assets, in turn, ensure that a bank is capable of withstanding sudden, unexpected outflows of short-term liabilities without getting into acute payment difficulties. The bank-specific level of these requirements is today partly determined by the bank’s degree of systemic importance. In contrast to the pre-crisis era, the regulations now expressly take into account the risks to the financial system and the economy as a whole arising from the failure of a systemically important bank. In this way, the regulations also explicitly rein in incentives for excessive growth in the sector. However, even the new, stricter capital requirements cannot eliminate the risk of a systemically important bank getting into existential difficulties. First, the risks are difficult to assess and they also change over time. Second, the very nature of banks’ operations means that they will always be to some degree susceptible to crises. Absolute security can never be achieved if, at the same time, we want to safeguard the useful economic functions of banks. The second pillar of the TBTF regulations comes into play in the event that a systemically important bank gets into financial distress despite increased resilience. It is intended to ensure that the bank is resolvable. In other words: Even a systemically important bank should be able to exit the market in an orderly fashion.

d) The ‘too big to fail’ issue is especially pronounced in Switzerland  As I’ve mentioned, in Switzerland, too, a package of state support measures for UBS in 2008 was unavoidable. The capital injection of around CHF 6 billion from the Confederation amounted to some 10% of federal receipts, while the distressed assets of up to USD 60 billion that the SNB was willing to take on represented some 10% of GDP. 6 In its 2011 dispatch on the ‘too big to fail’ (TBTF) legislation, the Federal Council noted that this commitment was associated with considerable risks for taxpayers, and that future rescue packages might not be financially sustainable for Switzerland. 7 This is because the ‘too big to fail’ issue is especially pronounced here in Switzerland. The two big banks, UBS and Credit Suisse, have very large balance sheets relative to GDP, owing to their substantial international activities (cf. slide 3). At the same time, they also have a significant market share of domestic lending and deposit business, and are major players in the area of payment transactions. Moreover, in an international comparison, three other banks which have been designated as systemically important by the SNB – PostFinance, Raiffeisen Group and Zürcher Kantonalbank – also have very large balance sheets relative to GDP. For example, Raiffeisen and ZKB relative to Swiss GDP are about double the size of the largest US banks relative to US GDP.
To protect against risks that banks think are low but are in fact not, a global definition of a simple leverage ratio has been agreed. In the UK, the Bank of England has just recommended powers to set a simple leverage ratio for domestically-regulated banks, building societies and investment firms. This will enhance the resilience of banks against risks that are hard to model.4 And it will ensure off-balance sheet exposures are properly capitalised. 3  Table 2 shows that the risk weighting of trading book assets has more than doubled. Despite accounting for only 5% of overall risk weighted assets, trading assets contributed more than one third of the overall increase in RWAs resulting from new regulatory requirements. Banks have responded by shrinking trading books. Chart 2 shows that across all advanced economy SIFIs, the share of such assets on bank balance sheets has almost halved. 4  Chart 2 shows that, for more than a decade before the crisis, average risk weights declined and, as they did so, banks increased leverage. This trend was central to the erosion of confidence in risk weightings. Since the crisis, average risk  BIS central bankers’ speeches  3  Retention and capital requirements for securitisations now have more closely aligned incentives between originators and investors. New requirements for money market funds have closed the gap between retail investors’ perceptions and their exposures. International standards are agreed to capture properly and limit off-balance sheet exposures.

With sustainability-focused mandates gaining traction in parts of Asia, Singapore is supporting our asset managers to develop relevant solutions and skills in their investment processes to support this growing and strategic segment, such as the IMAS-WWF responsible fund managers masterclass, with the first run this November. In June, MAS launched the Green Bond Grant Scheme to nurture the growth of the green bond market and enlarge the supply of green assets. The grant defrays the costs of 14.  obtaining an external review for green bonds of up to $ per issuance. With asset owners mobilising capital into sustainability-focused products, green bonds is emerging as an asset class here in Asia. a. In April, Singapore witnessed its first green bond issuance by a Singapore company, City Developments Limited (CDL). CDL successfully financed its investments in energy saving and efficient infrastructures through the green bond. In July, DBS also led the way with a USD 500 million green bond issue, the first such issuance by a financial institution in Singapore. 3/4  BIS central bankers' speeches  b. International green bond issuers are also considering Singapore. Indian Renewable Energy Development Agency (IREDA), the non-banking financial arm of India’s Ministry of new and renewable energy, announced plans to raise a USD 300 million Green Masala Bond at the Singapore Stock Exchange. Conclusion 15. In conclusion, Asia’s economic growth is the bright spot in the global economy, and this will create immense opportunities for bonds in Asia.
Meeting the PRA’s expectations on the PPP has required some firms to take action to substantially reduce exposures to single asset classes or to different asset classes with similar underlying risk drivers. But, as I have explained, we are seeing new types of concentration risks emerging. These raise questions about the strengths and weaknesses in insurers’ investment strategies, governance and risk management. So we will continue to look for evidence that firms are adequately integrating the PPP across these areas in a way that goes beyond just quantitative techniques: i.e. that qualitative considerations are taken into account too. Faced with uncertainty, a prudent person would not be expected to simply rely on quantitative analysis when there are risks that are not, or cannot, be modelled. In addition to engaging with firms on the PPP as part of our core supervision  Page 8  activity, insurers’ assessment of counterparty exposures will also be reviewed in our Life Insurance Stress Test exercise this year. We will look at firms’ reliance on reinsurance following stress, and the extent to which this concentration risk exists. I would emphasise that while we expect greater consistency in the efforts and thought that firms put into meeting the PPP, we do not expect to see the same outputs. It is clear from working with firms that there is no universally right or wrong number for investment limits.

The risk margin reflects the price at which a third-party insurer would be willing to accept the risk in an arm’s length transaction. 2. Mortality risk is the cost that arises from individuals living less than expected while longevity risk is the cost of individuals living longer than expected. 3. i.e. as an alternative to capital from equity and debt markets, or bank lending. 4. DP2/22 – Potential Reforms to Risk Margin and Matching Adjustment within Solvency II 5. A recapture event can arise when the reinsurer defaults (no longer has adequate resources to fulfil a contract) or as a result of triggering recapture clauses in the reinsurance contract (downgrade, breach of solvency requirements, other regulatory or tax triggers). 6. Pension scheme have themselves reinsured in excess of £ of longevity since 2009 according to Hymans Robertson’s Risk Transfer Report 2021. 7. The insurer retains some of the smaller risks including inflation (which is often hedged separately), operational, and expense risk. It may also retain some of the credit risk. 8. This contrasts with a pure longevity swap where the insurer only exchanges fixed reinsurance fees for receivables that are based on deviations in the longevity experience from that assumed, hence there is no upfront capital transfer and hence no collateral requirements. 9.
5 [30]  offers liquidity to households and firms by providing liquid deposits and illiquid loans. This creates a liquidity mismatch for the bank. A further problem here is that the bank's assets can be difficult for an outsider to evaluate. As a result, a bank's financial situation depends to a very large extent on the trust its customers have in it. A bank builds trust by having plenty of equity, good earnings, low loan losses and good liquidity. And not least important: a sound culture where risk management is central. Confidence is essential for a bank, but it can also disappear quickly. If this happens, there is a great risk that depositors and other financiers will want to withdraw their money quickly. The risk is that the depositors who arrive first can withdraw their money while those who arrive later are left without, as the bank's liquid assets are then exhausted. This is precisely the reason why bank runs can occur. It can also lead to other financiers quickly withdrawing their funding. If the bank is bad, it should obviously be wound up. The problem is that it is difficult to tell whether or not a bank is bad, so there can be a run on good banks as well. Experience also shows that even bad banks should be wound up in an orderly fashion. There are several reasons for this. One reason is what I just mentioned: banks are highly dependent on trust and are difficult to evaluate.

3  3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  And all these systems in the UK – whether card or bank payment – still depend on existing core infrastructure meaning they either carry the associated costs and limitations on speed or they require the right point of sale infrastructure for their full benefits to be realised. The scope for improving cross border payments is bigger still. These can cost up to 10 times their domestic equivalent.9 Anti-money laundering checks that are rightly required can be cumbersome, and settlement is slow with money taking up to a week to reach the recipient. Most fundamentally, the new payment system must end the inequity that the people with the least money pay the most for financial services. The revolution of payments may not be driven by the old bank-based systems but by a new architecture. Major changes are on the horizon, bringing enormous advantages but also more than a few new challenges. That’s why the Bank fully supports the Payments Strategy Review the Chancellor has launched this evening. To support private innovation and to empower competition, the Bank is levelling the playing field between old and new. This means allowing competitors access to the same resources as incumbents while holding the same risks to the same standards. The Bank is in the midst of an ambitious rebuild of its Real Time Gross Settlement (RTGS) system, which processes £ billion of payments on average every day.
Seasonally-adjusted data Source: Statistics Sweden. 1  Long-run sustainable unemployment rate here refers to the level of unemployment that is expected to prevail when all cyclical shocks have abated, when ongoing structural changes have had a full impact and when inflation expectations are equal to the actual rate of inflation. See for example “The long-term development of the Swedish labour market”, Monetary Policy Report, July 2012. See also “Correction of the Riksbank’s estimate of the long-run sustainable employment rate”, Appendix 2 of the minutes of the monetary policy meeting, July 2012, for a discussion of the role of expectations in the assessment of the long-run sustainable unemployment rate. 2  BIS central bankers’ speeches  Unemployment has also begun to increase again in recent months and our latest forecast predicts that it will increase further to reach 8.2 per cent in the third quarter of this year. Figure 3. CPIF inflation in Sweden Annual percentage change 4  4  3  3  2  2  1  1  0  0 05  06  07  08  09  10  11  12  Note. The series refers to monthly data. Source: Statistics Sweden. Developments thus indicate that we have had spare capacity on the labour market since 2008. This is one of the reasons why inflation has been low in recent years. It also appears that inflation has in principle shown a downward trend since 2008.

Overall, although liquidity remains ample, it is unlikely at this stage that it will give rise to inflationary pressures, given the current economic environment and the expectation that some of the portfolio shifts will be reversed once the financial market uncertainty diminishes. This assessment is supported by the continuing moderate growth of loans to the private sector, particularly to non-financial corporations. As regards the information under the second pillar, recently published data and survey information indicate that economic growth in the euro area remained subdued around the turn of the year and that the overall sentiment in the economy remained lacklustre. While these indications suggest that growth dynamics will remain weak for the early part of this year, the most likely scenario remains that of a gradual increase of real GDP growth rates, starting in the second half of 2003. The current low levels of interest rates should contribute to this scenario materialising. In addition, while the appreciation of the euro over recent months is likely to contribute to a dampening of export growth to some extent, this should be counterbalanced by the assumed recovery in the world economy. In this respect, it should also be taken into account that the price competitiveness of euro area companies remains favourable in a medium-term perspective. At the same time, uncertainty regarding the economic outlook remains high, in particular due to the ongoing geopolitical tensions.