samchain/econo-pairs-v1 huggingface dataset:
The fiscal adjustment drive has been most significant, as shown by the structural primary balance (the cyclically adjusted balance, excluding interest payments), which posted a correction of 1.2 pp of GDP. 2013 was the first full year of application of the mechanisms of the Budgetary Stability and Financial Sustainability Law approved in 2012. Moreover, measures were taken to improve the sustainability of public pensions (the sustainability factor and revaluation index). Private-sector deleveraging and bank lending To conclude this section, I will refer to the correction of private-sector overindebtedness. The Spanish economy’s cyclical position suggests, along with past experience, that several quarters of economic growth will still be necessary before lending at the aggregate level resumes positive growth rates. However, there were actually signs of an improvement in this connection in 2013. Since mid-year, lending to companies has been shrinking at increasingly lower rates, a change which has begun to be discernible also in the case of households since early 2014. The more disaggregated analyses conducted by the Banco de España support the idea that the contraction in debt at the aggregate level is proving compatible with a shift in the mix of  BIS central bankers’ speeches  3  debt towards those companies in a sound position which are, therefore, better placed to channel funds to new investments that translate into more growth and more employment. Spanish banking sector I will now refer to the position of and outlook for our banking sector.

It is just as important a prerequisite for increasing prosperity now that the world is on its way into a new millennium as it was over a hundred years ago when Sweden was industrialised. The smoother we make such a continuous transformation, the greater the chances will be of looking forward to a new fantastic century. 9  BIS Review 137/1999
They can set the level of both taxes and expenditure, although there are, a priori, no clear guidelines on the optimal levels. In order to ensure that fiscal and monetary policy authorities do not exploit their discretionary freedom, but instead use their instruments in a targeted way with the aim of achieving sustainable economic policy, there need to be clear and binding rules. In the monetary policy domain, the “rules versus discretion” debate started early. Its origins can be traced back to the beginning of the 19th century. At that time, disciples of the so-called currency school were demanding that the issuance of paper money be closely tied to the central bank’s gold reserves, whereas advocates of the banking school took the view that a stability-fostering expansion in the money supply would also come about without such a rule. The first arguments in favour of rules appeared early on in the literature on monetary policy. 2 Today, there is a consensus that a rules-based monetary policy is more successful in ensuring price stability. The lack of clarity in past rules had led to monetary policy being more exposed to political pressure. As a result, monetary policy authorities were tempted to focus more on short-term growth stimulus than on the long-term repercussions of such stimulus on price stability. This is why monetary policy needs to be conducted by a rules-based, independent central bank, with the main focus on the assessment of the future path of inflation.

More generally, if house prices and household indebtedness are regarded as a problem, then this problem needs to be analysed and specified in greater detail to assess which means can be used to deal with it. Is the problem some form of market failure? Does it involve an externality? Is it due to a lack of information to borrowers, and is it thus a consumer protection issue? It is only when we have specified the problem that we can determine suitable measures to deal with it. However, as far as I can see, there is hardly any indication that current house prices and household indebtedness are a problem. In Sweden, mortgages do not present any threat to financial stability. This is because – unlike in the United States – mortgages are personal (what are known as full recourse loans). They do not lead to any loan losses of significance for the mortgage institutions. Mortgages did not lead to any loan losses worth mentioning even in the 1990s crisis – the banks’ loan losses were primarily caused by loans for commercial property. Household debt thus does not present any threat to financial stability in Sweden. Can house prices and household debt involve any other problems? I cannot see any indications that a house price bubble is building up or that house prices will become unsustainable in the longer run. The house price indicator published by The Economist usually points to Swedish house prices in relation to rent levels being over-valued by up to 40 per cent.
Net Stable Funding Ratio (NSFR) and the Leverage Ratio for banks. NSFR will be applicable by 01 January 2018 and the necessary Banking Act Directions on NSFR will be issued in line with the international timeline. By implementing the Leverage Ratio, it is intended to restrict the build-up of excessive leverage in the banking sector. In addition, we intend to strengthen  Accordingly, in 2017, we will begin to  capital positions in line with minimum  monitor the level of compliance under  requirements and Basel III capital  the leverage ratio. standards. Implementing Basel III capital and liquidity standards were identified as key policy measures in the Road Map for  Central Bank of Sri Lanka – ROAD MAP 2017  It is also our intention to finalise the Crisis Preparedness Plan, and Recovery  20  and Resolution Framework as a  framework of non-bank financial  precondition for effective supervision. institutions. Accordingly, guidelines will be issued on  The capital levels of licensed finance  recovery and resolution frameworks of  companies (LFCs) and specialised leasing  banks and the crisis management  companies (SLCs) are expected to be  frameworks will be strengthened and  strengthened further. Accordingly,  streamlined in order to minimise the  existing LFCs and SLCs will be required  adverse impact, both on the troubled  to maintain a higher minimum core  banks and, on the banking and financial  capital than the prevailing requirement  sectors as a whole. of Rs.

4.0 billion to the needy sectors of  Central Bank of Sri Lanka – ROAD MAP 2017  30  the economy and is expected to  implemented with the collaboration  commence in January 2017.  of the Ministry of National Policy and   National Strategy for Financial Inclusion: Based on the findings of the Financial Inclusiveness Survey (FIS), a comprehensive draft of National Strategy for Financial Inclusion will be developed considering the contemporary  Economic Affairs, Ministry of Power and Renewable Energy, Sustainable Energy Authority and other stakeholders, with the intention of promoting rooftop solar power generation in the country.  Promoting Green Financing: In  national financial inclusion strategies  addition, the Central Bank will  of peer countries. The views of  promote Green Financing through  domestic stakeholders, obtained  enhancing awareness to encourage  through continuous dialogue, will be  enterprises to protect the  considered in drafting the proposed  environment, conserve resources  national strategy. and to achieve carbon neutrality.  Promoting Commercial Scale Organic Agriculture and Dairy Entrepreneurship: Addressing the increased concerns of the public and  Banks will also be encouraged to provide financial facilities to green enterprises with the intention of protecting the environment.
It would be beneficial to have more discussion of, and attention paid to, the question of how to stimulate competition. In this particular case a beneficial change appears to have strongly stimulated competition. If we are to achieve increased competition in other areas, too, it is necessary to constantly emphasise consumer interests so that allocation of resources becomes as efficient as possible and protected sectors are not allowed to operate inefficiently to the detriment of potential growth. 2  Statistics Sweden calculates households’ consumption of pharmaceuticals to be approximately SEK 10 billion a year. BIS Review 37/2003  5  What can we learn from 150 years of history? To summarise, there have been many changes in the Swedish economy in recent times. The external framework is currently characterised by considerable fiscal policy and monetary policy stability, which facilitates planning and decision-making for both households and companies. Both our own history and that of other countries shows clearly that a stable external framework is an important basis for economic growth. We have also gone back to being open towards the outside world. During the war we were not, for obvious reasons. After that we were open for a long period according to the rhetoric, but less so in practice. Today we have regained a freedom for ideas, products, services and production factors that is reminiscent of the late 19th century and early 20th century. In both of these aspects we appear to have done our homework.

A change in this field was introduced in October last year, which in principle means that pharmacies are obliged to exchange a drug in a prescription for a cheaper equivalent (generic) unless the customer is willing to pay the difference. The effect of this new regulation, combined with patents expiring, has led to significant price competition. Pharmaceuticals companies have gradually lowered their prices through more than 3,500 reductions, which benefits us as individuals when we purchase prescription drugs and as tax-payers as the cost of the county councils’ subsidies for prescription drugs declines. Pharmaceuticals’ costs are included in CPI as one of many sub-indices and are intended to reflect the average household’s costs for prescription drugs. Over the past ten years this index has risen at an average rate of 12 per cent a year. Now this increase has been turned around to a small decrease. The difference between the historical rate of increase and the current price fall corresponds to a 2 saving of approximately SEK 1 billion a year for Swedish households. Correspondingly, the county councils’ costs have been reduced by approximately SEK 2 billion. There are large sums involved here and they deserve some attention. Nevertheless, it is difficult to find articles dealing with these large savings and with the increase in competition. The main aspect appears to have been lost in the media. Instead, one finds articles on the difficulties for our monopoly company Apoteket to adapt, as it exists on a margin of approximately 20 per cent.
A breakdown of banks by size Against this background, it is not surprising that banks’ balance sheet constraints played a greater role during the recent financial turmoil, leading to a tightening of credit standards by banks, as shown in Chart 2. The bank lending survey for the euro area, from which this information is taken, distinguishes between large banks and smaller banks. In particular with respect to the greater relevance of smaller banks for SME financing, it is therefore of interest to distinguish between the lending  2  BIS Review 129/2009  of large banks and that of smaller banks in the euro area. Since mid-2007, and in particular during the initial phase of the financial turmoil, large banks have overall tightened their credit standards for loans to enterprises somewhat more than smaller banks. The outlook for the economy in general and for individual firms contributed most to the tightening, in Italy as well as in the euro area as a whole. The deteriorated access to capital market financing during the financial turmoil contributed significantly to the tightening of credit standards. It played a much more important role for large banks than for smaller banks, which rely less on capital market financing. The difficult liquidity conditions in the market also played a somewhat more important role for large banks, possibly because money market financing represents a greater share of their overall financing. All this may explain why the net tightening of credit standards was greater for large banks than it was for smaller banks.

This has led not only to a reduction in the interest rates on such transactions, but also to a revival in a market which had dried up, or even to the establishment of such markets in countries where they did not yet exist, such as Italy. It is difficult to ask more of monetary policy in a market economy. Our role is limited to the provision of liquidity to solvent banks. This role does not include the recapitalisation and restructuring of the banking system, which is an important step to restore trust in the financial sector. We expect banks to take a more active role in the process of recapitalisation. As the ECB has stressed a number of times, banks must take full advantage of government measures to support the banking sector, in particular as regards recapitalisation, not least because the banking system cannot be supported indefinitely by the extraordinary measures taken by central banks. An exit strategy will inevitably need to be implemented in due course. Banks which decide not to make use of government support measures must find alternative sources, in the market, in order to be ready to step up their lending to the real economy once the recovery begins. While the slowdown in bank lending observed in recent months can perhaps in part be explained by the fall in economic activity, the failure of banking flows to pick up when demand recovers would be more difficult to justify.
Once the new regulatory framework will be fully implemented in Europe and worldwide, the scope and magnitude of changes in regulatory requirements will yield – in my view – several long-term benefits. First, the implementation of harmonised, world-wide rules on capital requirements will level the playing field for banks with international reach, boosting competition and increasing the availability of financial services to both households and non-financial corporations. 2  The capital conservation buffer will equal 2.5% of risk weighted assets, setting the target CET1 ratio (together with the 4.5% minimum requirement) at 7%. The counter-cyclical capital buffer will vary between 0% and 2.5% of risk weighted assets. 2  BIS central bankers’ speeches  Second, cyclical buffers will help to protect the banking sector and the real economy from the system-wide risks associated with the boom-bust cycle in aggregate credit growth. And third, the new liquidity requirements will ensure that the banking sector has enough highquality liquid assets to withstand acute funding stress, as well as guarantee that longer-term assets are funded by more stable medium or longer-term sources. Perhaps the most important benefits of a safer financial system are those stemming from an effective prevention and mitigation of banking crisis that are associated with substantial economic and social costs. Indeed, as history shows, systemic banking crises can produce losses that are multiples of annual GDP, which undoubtedly makes the benefits of reducing the likelihood of costly financial crisis very high. The costs of the recent crisis were in fact sizeable.

Recent years have seen a financial system that   has outgrown in size,    lost track of its core functions,    and became a major source of risk itself. Overall, the financial sector has veered from its genuine role of servicing the real economy. The current process of overhauling financial system regulation are an important factor to help the financial sector become safer and thus eventually to contribute to sustainable economic growth. It is now important not to lose momentum and to strictly follow the schedules for implementation. At the same time, the adequacy of the regulatory system needs to be assessed on a regular basis. This helps avoiding the mistake of the past that regulators fail to spot new sources of risk arising in the financial sector. The guiding principle on all regulatory measures and any re-dimensioning of the financial sector must be: finance has to regain its core role of servicing the real economy without becoming a source of risk itself. In this way we are heading towards a safer financial system for the benefit of all of us. Thank you for your attention. 13  See http://www.marketwatch.com/story/blackrocks-fisher-banks-must-shrink-by-25-2011-09-23. BIS central bankers’ speeches  7
Where the central bank chooses to position itself on this front depends on how important it considers stabilising the real economy to be in relation to stabilising inflation, that is, which λ the central bank has. 1  I have simplified somewhat. Without simplification, the loss is often written as  where t, is the time when we make the forecasts, and T is the “horizon”, that is, the period our forecasts cover. 2  The method with a mean squared gap is presented in the article “Evaluation of different monetary policy alternatives” in the Monetary Policy Report, October 2009. A presentation and an analysis using this method were also included in Material for assessing monetary policy 2009 and Material for assessing monetary policy 2010. For a more detailed description and references to relevant literature, see Lars E.O. Svensson’s speech “Assessing monetary policy”. The speech was held at Uppsala University on 13 March 2009. 2  BIS central bankers’ speeches  Figure 1. Mean squared gap for resource utilisation and inflation, and the effective front. The step from theory to practice is not uncomplicated This theoretical approach, where the central bank minimises a squared loss function with inflation and resource utilisation has been in the monetary policy toolbox for a long time, and it has been useful in developing flexible inflation targeting. It captures in an illustrative and relatively simple way the essence of inflation targeting and it has helped to structure our thinking.

This could mean that the central bank chooses a repo rate path that, while it does not give the lowest squared deviations over the three-year forecast period, is nevertheless judged preferable from a longer-term perspective. For instance, the bank may hold the policy rate higher to try to prevent a credit boom that is feared would cause problems – with large squared deviations – beyond the forecast horizon. A closely-related reason is that the central bank under certain circumstances gives consideration to specific risks when setting interest rates. This is something I personally find to be one of the most important factors missing in the simple analytical framework. This could also be expressed as the central bank holding the policy rate at a higher level to reduce the risk – within or beyond the forecast horizon – that, for instance, a credit boom would continue too long and cause problems. The central bank might also wish to hold the policy rate at a higher level to reduce the risk of inflation expectations rising too high, which could also be problematic. The higher policy rate could give larger deviations during the forecast period, but may nevertheless be preferable as it reduces the risk of a really poor outcome. Framework more difficult to apply with an Executive Board Another circumstance that I perceive as complicating matters with regard to putting the theoretical approach into practice is the fact that there are six of us making the monetary policy decisions.
The Eurosystem has made headway on the design of the digital euro, ii including through regular exchanges with consumer associations, merchants and financial players, and the testing of dedicated prototypes. iii To put it in a nutshell, the e-euro will be a digital banknote, or ‘Cash+’. Naturally, it will feature the same characteristics as existing cash. Notably, it will ensure privacy, iv with the offline functionality ensuring the highest level of confidentiality; it will be the safest of assets; thanks to its likely legal tender status v, it will be accepted everywhere across the euro area; and its basic functionalities will be free of charge for individuals. vi But ‘Cash+’, bringing significant advantages compared with banknotes: it will allow each and every one to use central bank money in e-commerce, in remote peer-to-peer payments, as well as for conditional payments. I think it’s our duty to build this capacity for our fellow citizens, but it will be their freedom to use it. The digital euro will offer European citizens an additional option in the way they make purchases and transactions, and they will determine the pace of its development, and its ‘market share’. A digital euro will not replace physical cash or other forms of money, and this brings me to this alleged ‘competition’ issue. Money is and will remain a public-private partnership For a long time now, money has been a public-private partnership.

American trade, investments, technology are vital. The US is also the preponderant military power which underpins regional stability. This is something which the region, including ASEAN, India and China, welcomes. Europe remains another important political player. It is also a major trading and investment partner. Asia also welcomes other players and regions like Russia, the Middle East and Latin America to engage us. When we engage each other, there is potential for finding common ground. And when we find common ground, we think of ways to share experience, collaborate and grow together. BIS Review 76/2007  3  Asia and the Middle East rediscovering each other What has transpired between Asia and the Middle East recently is a good example. Over the past few years, Asia and the Middle East have started a process of rediscovering each other. Asia and the Middle East have had a long, fruitful and ancient history of exchanges. But this flow ebbed some time in the last century or so. Recent global developments have drawn countries from these two regions closer again. Post-Sept 11, Middle Eastern countries became more interested in Asia. Their leaders began stepping up engagement with Asia for collaboration in management, science and technology, education, governance systems and development models. At the same time, Asian countries began to recognise that the Middle East is an increasingly important global player. Strategically, the leaders in the Middle East are committed to harnessing the various forces to tip the region in the direction of peace, cooperation and development.