samchain/econo-pairs-v1 huggingface dataset:
Even though probabilities of default may be higher for individual SMEs, our research identified persuasive empirical evidence that most banks’ holdings of loans to SMEs benefit from a greater degree of diversification than their holdings of loans to larger corporations do. Diversification helps to reduce both a bank’s exposure to the credit risk posed by SME lending and the commensurate need for capital. Moreover, we’ve taken a closer look at the precautions banks take when lending to smaller businesses, such as asking for guarantees or collateral. These measures help to lower further the potential losses a bank might incur in lending to a small business and can similarly reduce the need for capital. Our findings motivated revisions to the proposals that will prevent an across-the-board increase in capital requirements for SME lending. What’s more, our “quantitative impact studies” have generated solid proof showing that, on average, many banks’ requirements will actually decrease. Three changes to the New Accord are especially relevant. ·  First, in addition to an overall flattening of the risk-weight curve for corporate credits, we have reduced directly the capital charges for loans to smaller businesses. For example, banks on the IRB approach will be permitted to adjust downward the capital requirements on exposures to small businesses with up to € million in annual sales. This adjustment will reduce the capital charges on a loan to an SME by as much as 20% compared to the new requirements for larger companies and may in many cases be lower than the current requirements.

At the same time, an increase in life expectancy for each cohort will reduce the annual pension. This motivates the individual to remain in employment and to ensure that the system is sustainable. The National Insurance Scheme’s expenditure is financed directly over the central government budget. Decisions about national insurance benefits have a substantial influence on future taxpayers. These costs are not transparent when the budget is decided. Developments since 1967 show that such a pay-as-you-go system is not robust. Benefits change over time and costs can easily be pushed into the future. The alternative is a system where pension expenditure is covered by accumulated capital, i.e. a funded system. In a funded system, a decision to increase pensions or reduce the age of retirement will require the allocation of capital today to cover future expenditure. Such a fund provides a measure of the cost of increasing pension expenditure. Our pension system is complicated. In addition to the National Insurance Scheme, many other operators, including the central government, have established additional pension schemes. There are different rules for coordination and entitlement. Any shift to a fund-based system for the National Insurance Scheme will probably require transitional rules for many years ahead. However, I believe that it will be possible to find solutions to these practical problems. Distributional and practical considerations imply that minimum benefits in the pension scheme cannot depend on earlier employment, but should apply to everyone.
For its part, the SNB monitors developments on the credit and real estate markets continuously and reassesses the need for an adjustment of the countercyclical capital buffer on a regular basis. Thank you very much. Page 10/10  Negative interest rates: necessary from a monetary policy perspective – but with what risks for the banks?

Who would have thought that, four years later, we would be confronted with an even stronger franc and even lower – indeed negative – short and longterm interest rates? These extraordinary developments are ultimately a consequence of the global recession which hit the economy after the credit bubble on the US real estate market burst in 2007. As slide 1 shows, the banks around the world were, and continue to be, especially hard hit by this crisis and its consequences; since then, their share prices have performed significantly worse than those of other companies. This is principally due to the fact that many banks are still engaged in cleaning up their balance sheets and, where necessary, adopting costly restructuring measures. Furthermore, banks have been obliged to implement stricter regulatory requirements in the wake of the financial crisis. These requirements, which are needed to ensure systemic stability, are aimed at curbing excessive risk-taking. From the banks’ point of view, however, today there are lower potential returns in areas which were previously often lucrative but also highly risky. Banks are also faced with structural challenges. The accelerated pace of change in information technology and altered customer behaviour require high levels of investment. At the same time, the increasing digitalisation of distribution channels has stiffened competition, since it is easier for new rivals to enter the market. Another significant challenge for banks is the current economic environment. Weak global growth and persistently low interest rates in recent years are weighing on profitability in the banking sector.
BIS Review 85/2009  7  Chart 3: Return on assets and leverage for global banks, end-2007  Pre tax profit/Total assets 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% 0  10  20  30  -1.0%  40  50  60  Total assets/Tier 1 capital  Source: Bankscope  Chart 4: Tier 1 Leverage ratio and Total assets for global banks, end-2007  Tier 1 Ratio (%) 8 7 6 5 4 3 2 1 0 0.0  0.3  0.6  0.9  1.2  1.5  1.8  Total Assets £  Source: Bankscope  8  BIS Review 85/2009  Chart 5: Capital injections and balance sheet size, end-2007  Capital injections $ billions) 60 50 40 30 20 10 -  0.5  1.0  1.5  2.0 2.5 3.0 Total assets $ trillions)  Source: Bank of England  Chart 6: Probability Densities of UK GDP Growth  Density 1857-2007 1998-2007  -15  -10  -5  0 5 10 Annual GDP Growth (%)  15  Sources: Office for National Statistics and Bank calculations.

BIS Review 85/2009  9  Chart 7: Long-run capital levels for US commercial banks, 1840-1993  Chart 8: Daily volumes and values settled in CLS  10  BIS Review 85/2009  Chart 9: CDS premia and network uncertainty – pre-crisis  Chart 10: CDS premia and network uncertainty – in-crisis  BIS Review 85/2009  11  Chart 11: LCFI return on common equity  Per cent 30 20 10 0 -10  US securities houses US commercial banks European LCFIs UK LCFIs  -20 -30 -40  Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2003 04 05 06 07 08 Sources: Bloomberg and Bank calculations. (a) Data for European LCFIs and UK LCFIs are half-yearly. Chart 12: Spreads on new mortgage lending by the major UK banks Per cent 4  Maximum-minimum range Interquartile range Median  3 2 1 0 + 12 Jan  Apr  Jul  2007  Oct  Jan  Apr 08  Jul  Oct  Jan 09  Source: Bank of England. 12  BIS Review 85/2009
The petroleum industry and oil revenues have given us a solid economic foundation compared with other countries. At the same time, the oil revenues and the high cost level pose certain challenges to the Norwegian economy. With today’s high oil prices, petroleum investment is likely to expand sharply in the years ahead. Petroleum-related industries are faring well. Public sector enterprises are also enjoying a favourable and stable environment. Internationally exposed industries are facing sluggish markets and high costs. Norway’s dual economy is coming into clearer evidence. Petroleum activity influences the Norwegian economy partly through actual production activity and partly through government spending of petroleum revenues. In 2011, petroleum revenue spending over the central government budget was below 5 percent of mainland GDP, while demand from the petroleum sector was about 17 percent. 6  BIS central bankers’ speeches  High oil prices and investment growth are fuelling demand for labour in the oil sector and the supplier industry. In an economy with close to full employment, this leads to intensified competition for skilled labour. The result is reduced profitability in other internationally exposed industries. The phasing in of a new, profitable industry and increased spending over public budgets have the effect of crowding out other activity. Some decline in other industries is an inevitable consequence of domestic spending of oil revenues. For the economy to be sustainable over a longer horizon, it is important to find an appropriate balance and prevent excessive crowding out of exposed sectors.

It already provides for an automatic revision of the situation in the event that the National Bank's earnings should permanently exceed the expected level. Inflation Forecast December 2002 with Libor at 0.75%  Annual average inflation in %  BIS Review 73/2002  2002  2003  2004  2005  0.7  0.7  0.9  1.6  3
However, I think the evidence shows that over the past 25 years most supply shocks have been transitory – and have had no long-lasting imprint on longer term inflation, or on inflation expectations. Nonetheless, recent historical trends do not always continue, so it is important to monitor inflation dynamics very closely to make sure that this pattern is continuing in the incoming data. In particular, I will look intently at whether there is any evidence that the expectations of underlying inflation have changed. To date, expectations seem quite stable and show no evidence of diverging from the recent past. I am committed to responding decisively, and as forcefully as necessary, to ensure that long-term inflation expectations remain stable and that food and energy price increases are not passing through to other prices.7 Given the important role of labor costs in a developed, services-focused economy such as the United States, it is important to closely monitor trends in labor markets. Currently, wages  6  The average annual expected price change they expect over the next 5 to 10 years. 7  See for example the comments on commodity price pressures and monetary policy by my colleague William Dudley, president of the New York Federal Reserve Bank and Vice Chair of the Federal Open Market Committee: “Inflation expectations are well-anchored today and we intend to keep it that way.

New forecasts have not been prepared for this monetary policy meeting, but we have assessed new information against the forecasts we presented in March. Chart 3: International inflation has slowed Inflation among trading partners is also high but has eased in many countries in recent months. Gas and power prices have come down from the very high levels seen last year. Problems at some US and Swiss banks led to large movements in financial markets in March. Global equity indexes have risen since the March Report, and bond risk premiums have fallen. US and European households and firms appear to be finding it more difficult to obtain loans. Chart 4: The krone has depreciated High inflation has prompted central banks in many countries to raise policy rates quickly and more than in Norway. The Norwegian krone has depreciated in recent months and  1/2  BIS - Central bankers' speeches  is now at its weakest level since the onset of the pandemic in spring 2020. The krone is weaker than we projected in March. Activity in the Norwegian economy is high. Household consumption has continued to increase despite high inflation and higher interest rates. The employment rate is high and employment has risen further so far this year. The labour market is tight. Economic growth has nevertheless slowed recently. Unemployment moved a little higher in April, and the number of job postings has declined. Chart 5: Wage growth has risen The tight labour market has led to a pick-up in wage growth.
It is a shame that such an understanding of the intricacies of development and human satisfaction are not more widely understood and appreciated. As for Thailand, we may begin to foster this philosophy through adopting a more diverse array of measures of development and success. Agencies such as the NESDB should publicly announce and raise awareness of the diverse aspects of development, success, and prosperity. For example, these indicators can include rates of water accumulation for use and amount available in reservoirs each year, the number of villages that face water shortages each year, increase (or decrease) in forested areas, ratios of industrial factories with substandard water treatment procedures, oil dependency ratios of the industrial sector, or teacher-to-student ratios, to name a few. Our country’s leaders need to commit to certain goals and targets that are clearly and publicly announced. The public’s perception that growth and development is reflected only in growth of GDP should be corrected. Listening to me today, I am sure many of you may think that my visions are only a dream that will be hard pressed to find their way into reality. I do admit that many of these proposals will be difficult to put in place in practice, but they are not impossible. They are actions which we need to push towards, and  4  BIS Review 43/2006  at the soonest. I have discussed these issues in other venues and fora and with many positive reactions.

However, given that vulnerabilities on these markets are still high, the resilience of the banking system remains crucial. In January 2022, the Federal Council approved the SNB’s proposal to reactivate the countercyclical capital buffer. This buffer will come into effect at the end of September and will contribute to maintaining banking system resilience. Page 1/1
Investment has been dragged down, by weaker domestic demand and higher private debt burden in advanced economies, and slower foreign direct investments in emerging economies. Productivity growth has slowed significantly after the shock of the crisis and has still not recovered to pre-crisis rates. A striking feature of the post-crisis landscape is that while investment in the real economy has been sluggish, the appetite for risk-taking in financial assets has been voracious. Investors are extrapolating into the future, current low interest rates and realised asset price volatility, and continuing to reach for yield. Developed market bond and equity valuations are rich compared to history. The cyclically-adjusted price-to-earnings ratio for US equities is at the 97th percentile. There has been some dampening of exuberance in recent months. Even so, the question 1/6  BIS central bankers' speeches  remains: have markets over-priced the good news and under-priced the potential bad news? What are some of the risks? First, markets appear to be expecting macro outcomes that may be inconsistent with what economies need for medium-term sustainability. In the US, markets still expect – or hope – for some fiscal stimulus in the short-term, even though the economy is at full employment. What ought to matter is not the size of any stimulus but its composition. The key question is not how much the stimulus boosts demand in the short-term but whether and how it increases the medium-term supply capacity in the economy. Similarly, in China, markets are keeping close track of quarterly GDP growth rates.

Ravi Menon: opportunities  Global  outlook,  Asian  promise,  alternative  Speech by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the DBS Institutional Investor Symposium 2017, Singapore, 22 June 2017. * * * Mr Piyush Gupta, CEO, DBS Bank Ladies and gentlemen, good afternoon. I am happy to join you today, and I thank DBS Bank for the invitation. The American author John Maxwell once said, “The pessimist complains about the wind. The optimist expects it to change. The leader adjusts the sails.” As investors, you too seek to adjust the sails, to avoid being knocked over by market turbulence and to find new harbours of opportunity. So, what are the winds facing us like? Let me offer some thoughts in three areas: First, the global economy and financial markets – where are we today, what are the risks? Second, Asia’s medium-term prospects and the promise it offers to investors. Third, opportunities in alternative assets as investors look to unlock new sources of value. Global economy and financial markets The global outlook seems rather straightforward at this point. Growth is on a positive momentum and is increasingly broad-based, across both advanced and emerging economies. Global trade has picked up, manufacturing has recovered, and commodity prices have bottomed. Most measures of confidence are looking up. But the factors that underpin sustained growth – capital investment and productivity – remain weak in most parts of the world.
The first is that the new Accord should provide an improved and more comparable way to look at risktaking across organizations. Accordingly, it will allow market participants, supervisors, and the banks themselves to be more effective in detecting changes in risk levels, and to better assess the appropriateness of particular capital levels supporting such risks. A second major contribution of Basel II to financial stability is that the preparations for, and the final implementation of the Accord, will result in increased resources applied to improving bank risk management practices. This should result in pricing becoming more reflective of risk, and in better capital allocation across firms, borrowers and industries. Basel II has, without question, already led financial institutions to deepen and accelerate their efforts to improve the evaluation, quantification and disclosure of risk. These beneficial effects will not just happen, but rather will require major efforts on the part of the private and public sectors. Moreover, there are also possible negative effects of Basel II to evaluate and factor in to our approaches - a topic that I will also touch on briefly. Limitations of Basel I and current supervisory approach In thinking about the effects of Basel II, it is useful to step back and look at the current supervisory and regulatory framework - taking into account the Capital Accord currently in effect and how it is used in our supervisory processes.

The new rules will remove these incentives for short-term lending - a form of lending that can be especially destabilizing to emerging markets during financial stress. The adoption of Basel II internationally will have the benefit of spreading stronger risk management practices to all countries, including emerging market nations. This is not to say that Basel II is the right answer for all banks or all countries at this time, but rather that all countries should work to adopt various of its underlying principles in assessing banks’ risk management systems and in promoting transparency and disclosure. Investors and rating agencies would then have a better understanding of the risk profile of emerging market banks, which could result in a reduction of the risk premium currently applied to some emerging market lending. Conclusion In wrapping up, I would emphasize that implementation of Basel II should help supervisors and market participants better detect increases in risk in individual institutions and across the financial system through a more risk sensitive capital measure. Basel II also promises to reinforce and accelerate improvements in bank risk management globally, as well as promote future innovations through its reliance on banks’ internal methodologies. How well these improvements unfold will depend critically on the actions of supervisors in integrating the new regulatory capital requirements with their overall supervisory and regulatory approach. Thank you very much. BIS Review 35/2005  5
This regime some times involves drastic exchange rate adjustments, which can be costly to many firms. The alternative is a more rigid exchange rate, where fluctuations in foreign currency supply are mirrored by fluctuations in domestic credit cost and availability, which can be very detrimental to the financial system’s soundness and to firms. More rigid systems simply put off real-sector adjustments, but in the meantime capital flows, credit availability for firms and inflation are all affected and eventually the value of the currency is eroded and the higher nominal exchange rate does not lead to a higher real exchange rate. On the other hand, a floating exchange rate allows more rapid adjustments and the next movements of the exchange rate are uncertain, preventing the market from betting on one direction. Thus we avoid repeating past mistakes and returning to the days where prospects of gradual appreciation artificially cheapened foreign borrowing and induced massive capital inflows. Another important factor in determining the exchange rate are pressures from fiscal policy. For more than twenty years, Chile has benefited from a responsible fiscal policy, using it counter- cyclically when the situation warranted. Questions of budget go beyond macroeconomic considerations but the fact is that in the present circumstances our economy has started to take off and does not require an additional boost from fiscal policy. The Finance Minister’s recent statement on the budget aims towards reducing the structural fiscal deficit and is fully coherent with assumptions in our latest Monetary Policy Report.

Peter Pang: Islamic capital and money markets Welcoming remarks by Mr Peter Pang, Deputy Chief Executive, Hong Kong Monetary Authority, at the workshop on “Islamic capital and money markets”, Hong Kong, 19 March 2013. *  *  *  Distinguished guests, ladies and gentlemen, 1. It is my great pleasure to welcome you to this Islamic finance workshop. We are particularly grateful to Mr. Mohd. Radzuan, Mr. Azidy and Mr. Azahari, the experts from Malaysia, who have flown all the way to Hong Kong to share with us their knowledge on Islamic capital and money markets and their valuable experience in developing these critical components of Islamic finance. I would also like to thank Mr. Najmuddin of Bank Negara Malaysia for bringing the Malaysian delegation here. Two fast developing asset classes in the global markets 2. This workshop comes at a very opportune time as Hong Kong is looking to develop Islamic finance as a way to diversify our financial platform and further enhance our capability as an international financial centre. In my view, to be a truly international financial centre, one needs to develop a conducive platform for the two fast developing asset classes in the global markets – Islamic financial products and RMB-denominated investment assets. 3. The development of Islamic financial markets has been phenomenal in the past two decades.