samchain/econo-pairs-v1 huggingface dataset:
In July-September 2005, additional lending requirements were imposed, as follows: –  capping the overall household debt service ratio at 40% of net income on condition that the borrowers’ commitment arising from mortgage loans does not exceed 35% of their net income;  –  capping aggregate exposure from foreign currency-denominated loans at 300% of the credit institution’s own funds, or endowment capital in the case of branches of foreign credit institutions, for loans granted to households and companies earning incomes in currencies other than the loan currency. •  In the context of Romania’s accession to the EU (in 2007), the prudential regulatory framework for lending activity was adjusted in line with the provisions of the acquis communautaire, including the provision on full capital account liberalisation. •  Thus, in order to comply with Romania’s commitment to capital account liberalisation, it was necessary to firstly remove the cap on credit institutions’ aggregate exposure from foreign currency-denominated loans as of 1 January 2007. Keeping the cap in place would have been tantamount to a capital restriction, i.e. a  6  BIS central bankers’ speeches  breach of Romania’s commitment to full capital account liberalisation at the time of EU accession. •  Additionally, in March 2007, the central bank’s regulations on lending were aligned to the relevant EU practices, which did not comprise any administrative restrictions, by promoting the bank self-regulation model.

In our most recent forward guidance we have said that we will maintain our policy interest rates at current levels – including our negative deposit facility rate – until at least through the summer of 2019; Our fourth instrument is the provision of liquidity and credit to banks. The second series of TLTROs are still outstanding, as is FRFA. Such operations could be considered again – possibly with different terms – if warranted. So our quartet will shortly become a trio but the tune will remain strong. The score, however, will change over time and we should continue to play in a harmonious way. In sequence: in my view, we should reduce the rate of reinvestment only after the first increase in interest rates. And so, we are not obliged to rush, as early as at our December meeting, to set out the precise length of our reinvestment period. We should also play the trio in synergy, I would even say in symphony. 1/3  BIS central bankers' speeches  Like any orchestra, we need to be able to adapt the normalisation of our monetary policy tempo (allegro or andante) and intensity, according to economic data. In short, we are very clear about our objective – normalisation following non-standard policies – and about our sequence, but we should remain very pragmatic along our path. Another and somewhat related challenge – as monetary policy cannot be the only game in town – is the continuation of structural reforms in countries where they are needed.
For households, there have been mixed signals from recent surveys, although in most cases their level had also remained elevated relative to historical averages. For instance, the Citi/YouGov indicator of household expectations of inflation in five to ten-years’ time has risen, but the Bank’s Inflation Attitudes Survey for expectations of inflation in five years has fallen back from earlier on in the year. For businesses, data from the Bank’s Decision Maker Panel survey for September was published yesterday and it showed that firms’ expectations for inflation three years ahead had risen further to 4.8 per cent, from 4.2 per cent in August[8]. A market-based measure of longer term inflation expectations I have put particular emphasis on is the two-year swap rate for inflation, five years ahead. This was because it was on a sustained upwards trend through 2021 and peaked at 4.7% in March 2022. I took some encouragement from its subsequent fall back into the early summer but it picked up again  through August. It has been caught up in the wider market turbulence and in the often illiquid markets of the last fortnight it has been very volatile from day to day. This makes it impossible to get a clean read of the recent trend, but in level terms it still remains well above its longer term average, more so than is the case for the Euro area, whereas the equivalent measure for the US remains around its longer term average (Chart 8).

For us, the Taylor rule derives its appeal from three features. The first is its simplicity in describing the behaviour of different central banks by estimating the policy reaction to deviations from the inflation target and to the output gap. The second is its quality as a benchmark in assessing the current stance of monetary policy with respect to the historical average for a similar macroeconomic situation. And, thirdly, the Taylor rule is appealing because it sets the standard by which monetary policy is introduced in macroeconomic models for forecasting and simulation purposes. The SNB’s monetary policy focus is on maintaining price stability, and we do not follow any explicit rule for setting the short-term interest rate. However, the Taylor rule serves as an important indicator in our decision-making process that helps us to conduct a systematic policy. Having talked about John the researcher, I would like to turn now to John Taylor the policy advisor. Time and again, John has merged research with policy making. On this account, his record is long and outstanding as well. He served as a member of the President’s Council of Economic Advisors from 1989 to 1991. He was on the Panel of Economic Advisers of the Congressional Budget Office from 1995 to 2001. And from 2001 to 2005, he served as Under Secretary of Treasury for International Affairs. His responsibilities included setting up a new currency in Iraq and getting terrorist financing under control.
Even though I am not the strongest advocate of our government bond purchases, we do not finance individual governments with them, directly or indirectly. Our aim is to maintain price stability. Thanks to our bond purchases, interest rates go down and loans become cheaper, primarily benefiting households and businesses. Besides, we have a very clear set of criteria for the timing, selection and volumes of our government bond purchases. Our parameters ensure that the private market for government bonds remains intact. One sign of the continuing relevance of this market is the divergence in the prices for German, Italian and Spanish government bonds. Another criticism is that the ECB defers problems rather than solving them. Owing to the low interest rates, cheap credit is even available to firms that are no longer competitive, and would otherwise have gone under long ago. These zombie firms tie up capital and employees, all of which is harmful to economic efficiency. We have only bought corporate bonds with high ratings. This has indeed improved financing conditions predominantly for the companies in question, but also indirectly for the firms with lower credit standing. However, banks lending to companies must take the risk involved into account in their financing conditions. So, basically, the higher the risk, the more expensive the loan. Moreover, European banking supervision requires more capital to cover the risk and looks very closely at credit standards. And indeed: not every group in the euro area can borrow for five years at less than 3% interest.

Sethaput Suthiwartnarueput: Creating a resilient future with sustainable banking Speech by Dr Sethaput Suthiwartnarueput, Governor of the Bank of Thailand, at Sustainable Thailand 2021, organised by the United Nations and the Government Pension Fund, Bangkok, 27 September 2021. * * * Your Excellency the Minister of Finance / distinguished guests, First, let me thank the United Nations and the Government Pension Fund for inviting me to share my remarks on sustainability which is fast becoming the most critical issue of our time. The recent UN Intergovernmental Panel on Climate Change (IPCC) Report was less of a wakeup call and more of a fire alarm. And yet, if we look at the latest UN NDC Synthesis Report, emissions, at least measured in terms of pledges, appear to be headed in the wrong direction. This wake-up call and this alarm are particularly relevant for us here in Thailand. Thailand is a country which typically ranks among the top ten in the world in terms of vulnerability and susceptibility to climate change. This is not altogether surprising. We are a country with a large share of the labor force still in agriculture and a lot of our population centers and industrial areas are located in areas near to the sea and therefore vulnerable to rising sea levels. But not only are we vulnerable to climate change, we are also vulnerable to policies that countries are implementing in response to climate change.
At the same time, stock issuance up to the third quarter of 2007 is higher than that of 1996. Notice, however, that the persistent weakness of expectations indicators and the effect of the recent increases in inflation on families’ purchasing power imply a risk for private consumption growth. 2  BIS Review 120/2007  As a result of the above, the GDP and aggregate demand growth have been somewhat below the forecasts of the September 2007 MPR. There, the GDP growth forecast for this year was 5.75% to 6.25%, with a downward bias. The evidence accumulated so far, indicate that the GDP growth will be in the lower part of the range. The turbulences in international financial markets could be affecting expectations of consumers and entrepreneurs. In fact, consumer expectations have worsened and the forecast of the GDP growth in expectation surveys has fallen. The most important development in recent months, however, has been inflation. Inflation has picked up, reaching annual rates of 5.8% in September, both for total CPI and core CPI (which excludes perishable foods, energy and regulated tariffs). This surprising rise of inflation has been influenced by unusual (and simultaneous) increases in the prices of food items, given rises in their foreign similes and harsh weather conditions in Chile. These high prices have not only persisted but also intensified in the last months. Additionally, electricity power rates have also increased, as a result of natural gas restrictions coming from Argentina, and the replacement of hydro by oil-based electrical generation.

First, agents will need to build their capacity to analyse consumer needs and risk profiles, and be able to match them efficiently to suitable products or combinations of products that are appropriate to the consumer. In practical terms, this has significant implications for the information systems that agencies need to develop and maintain, the training, development and recruitment programs that they have in place, and the kind of information and support that they need to secure from insurers to enable them to properly advise consumers. The role of agents is especially important for an orderly transition to a more liberalized environment. A deeper understanding of risks developed by agents can help address information gaps in the earlier stages of transition and prevent premiums from over or undershooting their technical levels. This in turn will reduce future volatility in premiums which is important to build confidence in the ability of insurers to meet their promises as expected. Consumers should also be informed that in the first year of transition, they can continue to maintain the same motor insurance coverage at prevailing tariff-rates. This is to provide an opportunity for the public to familiarize themselves with new product options that will become available – a process that agents will play a key role in helping with. Second, agents need to be able to provide higher and more unique value in their services, and they need to be able to do this in a highly flexible way.
Physical risks also matter when assessing the ability to pay of borrowers involved in 1  P. Bolton, M. Kacperczyk, H. Hong and X. Vives (forthcoming), “Resilience of the financial system to natural disasters”, IESE Business School and CEPR. 2 See the Financial Stability Board (November 2020): The Implications of Climate Change for Financial Stability. sectors that could be particularly affected, such as agriculture or tourism. Capital destruction could also be very important. Furthermore, since not all geographies would be equally affected, the migration of activities and of the population in some areas will increase, generating an impact on the financial sector as well. Precisely to prevent these risks increasing further, acting to prevent the materialisation of climate change is essential. However, such interventions, and the accompanying changes in consumer and investor sentiment in favour of a greener economy, may also create their own particular risks to the financial sector. Indeed, the transition towards an environmentally sustainable economy implies a sweeping change in production technologies and a reallocation of activity across sectors and companies. Actually, such restructuring will mean that, in the short run, some sectors will increase their profits while others will incur losses, with obvious implications for the financial system and its stability. In this case, for estimating transition risks, the most relevant factors are the carbon footprint and the environmental impact of the sectors and companies to which financial firms are exposed.

In particular, insofar as climate risks affect the macroeconomy, the inflation outlook or the transmission of our monetary policy, then such risks are bound to affect the conduct of monetary policy. One fairly direct channel is the following. Policies aimed at promoting the transition towards a carbon-neutral economy – such as carbon taxes – are likely to affect the volatility of headline inflation, which includes energy prices. Most inflation-targeting central banks, including the ECB, target headline inflation, because it is more representative of the citizens' consumer basket than " other notions of inflation. The ECB’s medium-term orientation of our price stability objective provides us with some leeway to see through transitory energydriven increases in headline inflation. However, persistent upward pressure on, or substantial volatility in, headline inflation stemming from sustained climate policies could  2  lead us to rethink how we formulate our policies in pursuit of price stability over the mediumterm horizon. More indirectly, but not less importantly, climate change and the remedial actions needed to tackle it could affect central banks' ability to achieve price stability through their impact on the so-called natural interest rate3, which is an important benchmark for inflationtargeting central banks when setting our interest rates. Natural interest rates in advanced economies, including the euro area, have declined in recent decades, reflecting structural shifts in the balance between aggregate saving and investment.
In 2015 the ESRB issued a recommendation which provides guidance for a systematic assessment of the cross-border effects of macroprudential policy, and a coordinated policy response in terms of voluntary reciprocity for macroprudential policy measures when needed. The recommendation provides the basis for implementing voluntary reciprocity in the EU and sets guidelines for the analysis, notifications and requests to be carried out. The reciprocity framework is still relatively new but it is a very important part of a macroprudential approach for the reasons just mentioned. I think the ESRB’s follow-up assessment of the recommendation in this area will provide important insights on how we might develop this framework further in the future. The EU needs a strong ESRB as we move ahead So what about the future role of the ESRB? The financial crisis brought with it new rules of the game for financial markets from a systemic risk perspective. We have a new regulatory landscape and framework for financial supervision, and the ESRB is a pillar in that framework. Not only is the ESRB central in identifying and warning against risks to the EU financial system, and recommending measures to mitigate such risk if needed. It has played a key role by providing a benchmark when the new macroprudential policy frameworks were implemented across the EU. The ESRB continues to be vital in developing that framework further, and with that I mean for both banks and for non-bank financial institutions.

Recommendations can be addressed to the EU as a whole, to one or more individual Member States, European Supervisory Authorities, national supervisory authorities, and to the Commission. As I  |2  mentioned, the General Board makes decisions by voting. And several of the votes that have taken place these almost six years have concerned issuing ESRB recommendations. The ESRB recommendations have contributed to reducing risks in different fields The very first ESRB recommendation targeted risks generated by lending to EU households in foreign currency, proposing measures to mitigate those risks. Although it is always hard to assess something against a counterfactual, I think it is fair to say that the recommendation in question is likely to have been both timely and important. Mitigating policy actions undertaken by national authorities reduced the risks at hand. If this had not happened, events such as the sharp appreciation of the Swiss franc in 2015 – the Swiss franc being one of the currencies in which the relevant loans were denominated – could have generated severe problems for many EU households. This would in turn have affected other financial and economic developments negatively, with the potential to spread beyond the countries directly affected. Other recommendations have, much in line with the ESRB’s macroprudential mandate, targeted a wide range of issues in different areas such as money market funds; funding of credit institutions; national macroprudential mandates; intermediate objectives and instruments of macroprudential policy; and the assessment of cross-border effects of, and voluntary reciprocity for macroprudential policy measures.
Indeed, up until 1980, building societies accounted 29  for approximately 80% of UK residential mortgages and over 40% of retail deposits . The first building society was established in 1775. It was known as Ketley’s, the name of the landlord in whose pub the society met (despite the tavern’s formal name The Golden Cross). Perhaps it is a shame your boards don’t meet in pubs any more, but I’m afraid it probably would result in a capital scalar if you did. The original purpose of the societies was for members to pool resources to finance the building of houses; these homes would act as collateral for additional finance and enable more houses to be built. The societies were underpinned by a mutual structure. Over the next 60 years, some societies chose to register under the Friendly Societies Act 1793, but the remainder had no clearly defined legal standing. This was addressed in the Building Societies Act 1836 which provided a legal standing for building societies and, among other things, required their rules to be certified by a barrister. The certifying barrister became, under the Friendly Societies Act 1846, the Chief Registrar of Friendly Societies, and the Chief Registrar remained the regulator of building societies until 1986. I think it pays to have a bit of humility in life, so here in passing, and as the CEO of a regulator only 4 years old, I doff my supervisory cap to an outfit which survived in this hazardous line of work for 140 years.

To bridge this shortcoming, the region’s financial markets need to be substantially expanded and developed so that the region’s markets can effectively allocate surplus savings within the Asian region. The current focus on regional bond market development is therefore a step in the right direction. But my point today is that while developing the bond market is important, two additional areas of market developments in tandem with the work on the bond market should also be looked at to ensure a balanced development of financial infrastructure in Asia. The first is human resource: that is the need to build a steady supply of high quality financial personnel to serve the Asian financial markets. In the short term, this issue can be partly addressed by promoting a greater role of Asian financial institutions in cross-border transactions or businesses within the Asian market. The expanded role of Asian financial institutions will enhance the experience of Asian financial firms in cross-border transactions and help transfer financial skills and technology among market participants in the region. For the long term, we should be thinking of establishing a regional finance institute that aims specifically to train and develop financial personnel for the Asian market. To me, this type of initiative looks practical and is economically feasible because Asia’s large domestic market will always call for substantial demand for trained financial personnel.
With the deficit rising to a peak of more than 10% of GDP before steadily consolidating, fiscal policy effectively recycled elevated private savings and built a bridge to the period when private balance sheets were repaired and confidence returned. Fiscal stabilisers also play an important role in sharing risks across individuals, sectors and regions, thereby reinforcing the resilience of the UK’s currency union. 10 A powerful demonstration of this comes with the recent sharp fall in global oil prices. Because this risk is shared across the entire UK (which on the whole is a net beneficiary of lower oil prices), the net impact on the Scottish public finances is a mere one tenth of what it would have been if there were no risk sharing. 11 There are few clearer illustrations of the benefits of sound fiscal arrangements in a currency union. Third, the UK economy is open and flexible. With a high degree of openness – its imports and exports summing to 60% of GDP – and a flexible exchange rate, the UK has a safety valve that can be used to recycle surplus savings to the rest of the world without driving down domestic demand, wages and prices. The 25% depreciation of sterling that took place in the wake of the global crisis helped smooth the path of adjustment, and also meant a “mark-to-market” gain to the tune of over £ on the UK’s external balance sheet. 12 The UK labour market is also highly flexible.

BIS central bankers’ speeches  11  Table 1: General and central government expenditure as a % of GDP General government expenditure, % of GDP  Central government expenditure, % of GDP  Australia  36  26  Austria  53  27  Belgium  53  30  Canada  44  17  Czech Republic  44  30  Denmark  58  42  Estonia  40  30  Finland  56  28  France  57  24  Germany  48  16  Greece  51  40  Hungary  50  33  Iceland  52  40  Ireland  65  58  Israel  45  39  Italy  50  29  Japan  41  18  Korea  30  20  Luxembourg  44  31  Mexico  23  19  Netherlands  51  31  Norway  45  36  Poland  45  27  Portugal  51  39  Slovak Republic  40  23  Slovenia  49  31  Spain  46  19  Sweden  52  30  Switzerland  34  11  Turkey  40  29  United Kingdom  50  46  United States  43  26  Source: OECD Notes: Table shows ratios of nominal government expenditure to nominal GDP for 2010. 12  BIS central bankers’ speeches