samchain/econo-pairs-v1 huggingface dataset:
The liquidity created by low official interest rates around the world has helped to push down long-term real interest rates and compress credit spreads to unusually low levels. That monetary stimulus is now being withdrawn. Since January, long-term interest rates have moved up, and now other asset prices are responding. So far we have seen little more than a modest correction to the prices of a wide range of assets that had risen sharply over the previous two years. The realisation that such levels of asset prices were unlikely to be sustainable, coupled with a tightening of monetary policy in many countries, has injected uncertainty into financial markets. And it is hardly surprising that, as investors searching for yield realised that they might have underestimated the uncertainties, the price of risk moved up. Even though the monetary stimulus around the world is now being withdrawn, its effects are still being felt. There are some signs of inflationary pressures in the main industrial countries. Even in China, with its growing manufacturing base and large pool of labour, some indicators are showing upward pressures on export prices. And in turn that is raising our import prices, over and above the increases resulting from higher energy costs. At home, we can take some comfort from the fact that, despite sharp increases in energy prices, both consumer price inflation and inflation expectations have remained close to the target.

World Bank (2022) – Remittances Prices Worldwide Quarterly. 9. The Illustrative Scenario assumed demand for the digital pound was around 20% of retail and business deposits, which was equivalent to nearly all transactional deposits in the banking system. This assumption is particularly cautious for higher interest rate environments when deposits would be expected to pay holders somewhat more interest than an (unremunerated) digital pound. 10. Specifically, a limit of £ would allow 75% of UK income earners to hold their salary, pre-existing balances as well as an illustrative 10% bonus or overtime payment. 11. See for example the work the Bank of England has done with regard to omnibus accounts. 12. See for example BIS Innovation Hub projects looking at this topic - such as mBridge  , Icebreaker, Dunbar and Jura. Page 12  13. Last year the Bank set out its thinking and approach on many of these elements through a consultation on the roadmap for RTGS beyond 2024. See also The road to enhanced payments - speech by Victoria Cleland | Bank of England. As noted, this effort is complemented by work ongoing at the BIS Innovation Hub London Centre to look at the potential benefits from synchronisation under Project Meridian. 14. See Bank of England: ‘New Forms of Digital Money (2021)’ - Stablecoins are cryptoassets that aim to reduce volatility by pegging their value to government-sponsored – or ‘fiat’ – currencies. 15. For an overview see Gaining momentum – Results of the 2021 BIS survey on central bank digital currencies 16.
Assuming that developments in Swedbank’s and SEB’s other markets continue to be relatively good, however, the bank groups should be able to cover most of the losses from the Baltic region with the earnings from the remainder of their operations. Swedbank and SEB have subsidiaries in the Baltic countries, while Nordea has a branch. According to EU regulations, the authorities in the country where subsidiaries are located have responsibility for their supervision, while the home country authorities have the responsibility for branches and for the bank group as a whole. Around 80 per cent, equivalent to SEK 320 billion, of the Swedish banks’ lending to the Baltic countries is in euro. These euro are lent almost exclusively in the international loan markets by the parent bank in Sweden. BIS Review 11/2010  1  The Baltic economies developed rapidly after these countries gained their independence, although there have been some setbacks. This development was supported by extensive inflows of capital from abroad, particularly after EU membership in 2004. Much of the money came from neighbouring countries such as Finland and Sweden. The average standard of living for the populations in the Baltic countries increased rapidly from 41 per cent of the EU average in the year 2000 to 62 per cent in the year 2008.

The purpose was to get the countries to cooperate in analysing and solving problems and to clarify the distribution of roles and responsibilities. When the crisis moved into an acute phase in Latvia in December 2008 and large amounts of capital left the country, a loan agreement was signed at very short notice with the Riksbank and Danmarks Nationalbank on the one side and the Latvian central bank on the other side. The agreement totalled EUR 500 million, around SEK 5 billion. The main purpose of the agreement was to support Latvia’s foreign currency reserve up to the point when the first payments from the IMF and EU became available. One condition was that Latvia should sign an agreement with the IMF, as the Riksbank neither can nor should become involved in assessing whether or not the country is making the necessary economic adjustments. The Riksbank’s assessment was that if Latvia had not received extensive financial support from abroad at this stage it could have led to uncontrolled exchange rate depreciation and very large currency outflows. In February 2009 the Riksbank offered an arrangement to the Estonian central bank for short-term currency support. This arrangement was never used. Its purpose was to give the central bank the possibility to provide emergency liquidity support in the event of an acute crisis in local currency to the Swedish subsidiaries. It thus had a different purpose than the agreement with Latvia.
PRA Supervisory Statement 3/19 – ‘Enhancing banks’ and insurers’ approaches to managing the financial risks from climate change’ Dear CEO Letter: Managing climate-related financial risk 15 Climate Financial Risk Forum (CFRF) 13 14  6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  I’m pleased to say the Forum has just this week published a guide by industry for industry, designed to provide practical tools, knowledge and case studies, which all firms can use to help develop their own approaches to managing these challenges.16  We recognise that embedding climate risk management is a multi-year endeavour and we do not yet have all the answers. But this first guide provides a solid foundation from which to build as industry develops its capabilities. My huge thanks go to the Forum members for creating it. Climate action at the Macro-level: Stress Testing and Scenario Analysis  While firms tackle these issues bottom-up, the Bank, consistent with its objective to safeguard financial stability, will also approach it top-down. At the end of last year, we announced that we will stress test the resilience of the UK’s largest banks, insurers and the financial system to different climate pathways.17 Since then, other regulators in France18, Australia19, Singapore20, and at the ECB21 have also announced their own plans for climate stress tests. Recognising that the current circumstances may mean firms are unable meaningfully to engage in this exercise in the immediate period ahead, we have pushed back the launch of the climate stress test until the middle of 2021.

See May 2020 Monetary Policy Report and ‘Millennium of Macroeconomic data’ See 2015 report on the impact of climate change to the insurance sector and 2018 report on the impact to the banking sector 3 Record-breaking temperatures of 38°C were reported in Verkhoyansk, Siberia, Russia on 20 June 2020 1 2  2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  While these risks manifest as the credit, market and operational risks we know well, they have distinctive characteristics and therefore require a different approach if we are to manage them well. First, they are far-reaching in breadth and scope. They will affect every consumer, every corporate, in all sectors and across all geographies. Their impact will likely be correlated, non-linear, irreversible, and subject to tipping points. They will therefore occur on a much greater scale than the other risks we are used to managing. Second, these risks are simultaneously uncertain and yet totally foreseeable. It is difficult to say now what exact combination of physical and transition risks we will experience. But what is absolutely certain is that some combination of these risks will materialise - either we continue on our current emissions pathway and face physical risks or we change our emissions pathway and face transition risks. And we cannot let that uncertainty lead to inertia and inaction.
But it is clear that they are exploitation of smaller countries by bigger nations with more economic clout and technological advancement. These practices still continue to the detriment of the public in smaller nations. Such resentment comes not from the physical harm or destruction of personal properties, but from the feeling that they are living in an unjust world, where the rules favour big nations at the cost of smaller nations. I do not have any solution to this problem, and I do not foresee any elected leader, whose rise to office have been supported by influential business sectors, to make a move on this issue. I only hope that an internationally neutral body such as the United Nations which is the hope and voice of all nations, big and small, would look at the issue of economic exploitation of bigger nation on smaller nations and set appropriate rules of the game to protect the interests of smaller nations. This would help people feel that they are living in a just and fair world. Thank you for your attention. 2  BIS Review 29/2005

More generally, we - like other central banks - carry out macro-prudential surveillance. The main vehicle for reporting externally on the Bank's work in this area is the Financial Stability Review (FSR), which is published twice a year. The purpose of the FSR is to survey potential risks to financial stability, to analyse ways of responding to these risks, and to encourage an informed debate. This type of forward-looking analysis is absolutely key to avoiding the systemic risks of the future. I hope that many of you have had the opportunity in the past to read it. Achieving financial stability in the UK not only helps maintain prosperity, it also makes it an attractive place to do business. Earlier this month, the Bank for International Settlements released the results of its 2001 survey of global turnover in foreign exchange and over-the-counter (OTC) derivatives markets. And, yet again, the UK has done extremely well. Firms operating in the UK took over 31% of the foreign exchange market, and over 36% of OTC business - roughly twice the size of the next largest country, the US. Turnover in the global foreign exchange market has shrunk somewhat in recent years, reflecting in part the introduction of the euro. But there have also been important improvements in market efficiency, with for example the increased use of electronic broking. That is reflected in the sharp rise in underlying customer business with firms like yours, which is a welcome development. Conclusion Ladies and gentlemen, let me conclude at this point.
So it is unsurprising that Statistics Iceland's standard of living study revealed that households with onerous housing costs have declined substantially in number. About 10% of homeowners and 14% of renters consider their housing costs burdensome. This shows that debt service has risen less than could be inferred from public discourse. Just over half of households who have taken loans in the past three years have seen their debt service rise by less than 30,000 kr. per month. After adjusting for wage growth, the ratio of debt service to disposable income is broadly unchanged. As of this past January, the share of households whose debt service exceeds 35% of disposable income had risen by only 2 percentage points, from 7% to 9%. The winds are now changing in the real estate market, and the Central Bank is determined to push real rates upwards, whether through policy rate hikes or by lowering inflation and inflation expectations. This is why, in its most recent statement, the Financial Stability Committee encouraged mortgage lenders to "work with borrowers, as they have in the past, to prevent financial distress insofar as is possible." I expect that we will be taken seriously and that the banks will be prepared to respond when fixedrate clauses expire this coming winter. On the other hand, there is no reason for taxpayers to subsidise borrowers' mortgage interest expense - not at this point in time, at least.

I suspect that societal discourse in Iceland has seldom been as destructive as it was then. I was born in 1970, and I remember well how inflation, the labour market, and the exchange rate dominated the radio and newspapers. I thought a lot about this inflation boogeyman that everyone was always talking about but no one could control. Actually, I was lucky enough to have price-indexed income: I owned two sheep - one multicoloured and one black. And some of the many agricultural pricing committees calculated the present value of the lambs and their wool, which I deposited to the Stykkishólmur co-op in line with inflation each year. On the other hand, money kept in banks and savings banks burned to a crisp under the white heat of negative real interest rates. At that time, interest rates, including Central Bank rates and commercial bank rates, were in principle set by political leaders. This led to real interest rates that were negative by 10 - 20% for quite some time. By 1979, negative real rates had scorched Icelanders' savings to the point where banking system deposits had shrunk 30 - 40% in real terms since the start of the decade. As a result, banks and savings banks had steadily less money to lend. Iceland's key economic sectors were in a state of continuous financial distress. Residential mortgages were in short supply. But perhaps it is incorrect to refer to "burning up" in this context.
Such an approach should generate the productivity gains that are essential for credit, investment and productivity to fuel each other and place the economy onto a sustainable uptrend. Let me now turn to monetary policy. The countercyclical stance during the boom years allowed monetary policy to turn stimulative after the outbreak of the global crisis: the policy rate has been gradually cut from 10.25 percent at the beginning of 2009 to 1.75 percent currently, while the reserve requirement ratios have been lowered to 8 and 14 percent for leiand forex-denominated liabilities respectively. While it is obvious that the NBR did not have to navigate in the uncharted waters of quantitative easing and negative nominal interest rates, there are still challenges to cope with. I would list first the difficulty in designing monetary policy in a context of rapidly improving cyclical position of the economy, while a perfect storm of favourable supply-side shocks – namely oil and food price drops and indirect tax cuts – has been generating low inflation readings for quite a while now, with the potential to alter inflation expectations in the medium term. Furthermore, the already mentioned constraints on credit supply and demand still impair the transmission mechanism of the monetary policy. Specifically, even though the interest rates on new loans in domestic currency have declined further in response to the policy rate cuts, the annual growth of credit to the private sector has leveled off in recent months.

As elsewhere in Central and Eastern Europe, in Romania too the vulnerabilities exposed by the crisis in the model of centralised fund management at the level of cross-border banking groups led to a new paradigm, which emphasises the local funding of credit activities. The cross-border deleveraging which accompanied this switch, while sizeable, has nevertheless unfolded in an orderly manner. The shift towards the domestic market in terms of financing sources was accompanied by an increase in the relative importance of local currency-denominated loans: after a long time, their share exceeded 45 percent and will possibly overtake foreign currency lending by the end of the year. This is, undoubtedly, a positive development for both debtors, who avoid currency risk exposure, and central banks, due to the increased effectiveness of monetary policy. Looking ahead, the constraints on both credit supply and demand are expected to continue to prevail, as the effects of a balance-sheet crisis, such as the one we have recently encountered, tend to be longer-lasting. In such an environment, the quality of credit allocation appears more important than the volume, although the latter is not at all irrelevant in our case given a still low financial intermediation at 31.7 percent of GDP (not even during the credit boom period did it exceed 40 percent). In order to put the economy onto a self-sustained growth path, I believe it is necessary for banks to channel credit to productive investment, avoiding the overburdening of good debtors with the costs of past misallocations.
To facilitate banks’ access to borrowing from Norges Bank during the period of financial turbulence, collateral requirements for loans were temporarily eased. In October 2009, it was announced that the temporary rules for collateral requirements would be changed. Acceptance of new securities eligible under the temporary rules was discontinued in October. Securities already approved under the temporary rules would be eligible as collateral until maturity, or at the latest until 15 February 2012. Changes in the so-called bank quota were also announced. Under the current rules, up to 35 per cent of a bank’s borrowing facility can be based on collateral in bonds issued by other Norwegian banks. Debt instruments issued by foreign banks will be included in the bank quota as from 1 December 2010. Securities issued by banks will no longer be eligible as collateral for loans as from 15 February 2012. Covered bonds will still be eligible as collateral, including, until further notice, bonds to which no credit rating has been assigned and bonds issued by a bank’s own mortgage company. This is expected to contribute to the development of the Norwegian covered bond market. The housing market – a source of disturbances in the economy Banks have had strong incentives to extend credit for house purchases. Even during the banking crisis around 1990, Norwegian banks’ losses on residential mortgages were low. This is reflected in the low risk weights for residential mortgages in banks’ risk models. For an individual bank, residential mortgages are low-risk loans.

Mortgage companies should therefore take housing market fluctuations into account when issuing covered bonds. Conclusion I think it is fair to say that housing finance in Norway is in its infancy. There is a large proportion of adjustable-rate loans. Fixed-rate loans offered in Norway are less customerfriendly than, for example, in Denmark, where it is less expensive to cancel a fixed-rate mortgage and where there is a secondary market, providing risk diversification. Mortgage companies have a limited role in housing finance. Loan-to-value ratios are in some cases alarmingly high. And last, but not least, banks finance their housing loans by means of shortterm asset swaps in foreign markets. This is not a sustainable solution. I hope that this forum can contribute towards the development of a better foundation for housing finance in Norway. 1  See Van den Noord, Paul (2005): “Tax Incentives and House Price Volatility in the Euro Area: Theory and Evidence”, Économie Internationale 101, pp.29–45. This paper shows that house price volatility is higher in countries where tax regimes favour owner-occupied housing. See also IMF (2004): World Economic Outlook, September, p.81, where house price volatility is higher is countries where adjustable-rate mortgages are common. BIS Review 8/2010  3  4  BIS Review 8/2010  BIS Review 8/2010  5  6  BIS Review 8/2010  BIS Review 8/2010  7  8  BIS Review 8/2010  BIS Review 8/2010  9  10  BIS Review 8/2010  BIS Review 8/2010  11
One of the most important things the EU can do in the period ahead is to say to all of the member states “You really must have the elementary regime that exists on the other side of the Atlantic”. That benchmark system enables us, the authorities, to take a distressed bank and transfer the deposits to another viable bank, transfer or sell the good assets, and put the bad assets into receivership or run off. Plainly this requires safeguards if it interferes with property rights. BIS Review 144/2010  1  So that’s the first proposition. I’ll now go on to talk about globally important, systemically important financial institutions (so-called SIFIs), where the issues are much harder, way more important and much more topical. But we should not lose sight of that vital first step. It is the foundation stone; and one that will help us to speak a common language on resolution. The second proposition is that we must, as a global community and as a European community, develop tools to be able to resolve the largest, most complex cross-border systemically important financial institutions. This is absolutely at the core of the work to address the problem of Too Big To Fail. And unless we make real progress with this problem, we won’t bring back into our financial system the market discipline on which capitalism relies.

This sounds quite straightforward but actually it would be quite a step because, of course, all of us are answerable to our national parliaments. But nor do I think it is realistic for countries to engage in or embark on what one might think of as unilateral disarmament, where a country that acts as host to financial institutions says to the home countries “I will let you lead in the resolution of all banks in all circumstances, notwithstanding whether you take account of the interests of my country”. So countries probably need to reserve some powers for themselves but should eliminate from their regimes any automatic triggers that can cut across sensible resolution led by a firm’s home country. The other step that we could sensibly take, I suspect, is for there to be much closer planning on a bilateral basis between host and home countries in respect of particular banks. I mean at the level of entering into more or less binding agreements on who would do what in the event of distress. That, again, sounds easy, but actually it would be embarking on quite a change from where we are right now.