samchain/econo-pairs-v1 huggingface dataset:
CEMFI is the outcome of the ambition of the leadership of the Banco de España in the late 1980s, who saw the possibility of innovating in the organization of a graduate programme comparable to the best programmes in Europe. It was Luis Ángel Rojo, at that time the Banco de España's Director General of Research, who invited Rafael Repullo to lead this venture. Precisely as a token of appreciation for his decisive contributions in the early days of CEMFI, the prize for the best Master student bears his name. The Banco de España is very proud of its ongoing support and collaboration with such a special institution providing first-class graduate education and research, contributing a host of public goods to the Spanish economy and generating valuable ideas for public policymaking. An excellent example of this collaboration is the co-organisation of the biennial Financial Stability Conference that concluded this morning at the Banco de España. Demonstrating an outstanding academic level and policy relevance, it has enjoyed the presence of a large number of distinguished visitors, including the Federal Reserve Board Chairman, Jerome Powell. Building on this example, I am pleased to announce a new collaboration between the Banco de España, CEMFI, and the Universidad Internacional Menéndez Pelayo, an annual conference on the Spanish economy, the first edition of which is due to take place next week in Santander.

They have all done high quality research and have secured good placements, two of them at the Banco de España. I am sure that we will see many papers from their theses appearing in academic journals. The 20 students who graduate today from the Master in Economics and Finance come from seven different countries: Argentina, Australia, Colombia, Chile, China, Costa Rica, Italy, and Spain. They will join more than 700 alumni of CEMFI's Master programme. Most of the students of this year's class will continue their graduate studies towards a PhD, five of them at CEMFI, while the rest have found or are about to find jobs in accordance with their high qualifications. It is for me a great privilege and honour to be given the opportunity to present the certificates of the Master Degree in Economics and Finance to the students in the graduating class. I am also pleased to announce the winner of the "Luis Ángel Rojo Prize" for the best student of the class of 2023 of the Master in Economics and Finance. The winner is: Kenneth Lai. Congratulations to Kenneth and to all the students in the graduating class. Finally, I would like to conclude my remarks by once again thanking Manuel Arellano, Samuel Bentolila, and Rafael Repullo for their commitment to CEMFI over more than 30 years.
In my November 2013 speech, I noted that an important foundation for making the resolution of our largest banking firms feasible would be to require, at the holding company level, sufficient minimum amounts of long-term debt that could be used to absorb losses in a single point of entry resolution. Important progress has been made on this front, both in the form of the Federal Reserve’s recent issuance of a proposed rule to establish long-term debt and total loss-absorbing capacity (TLAC) requirements for U.S. GSIBs and the announcement last week by the Financial Stability Board (FSB) of an agreed upon international minimum TLAC standard. It is notable that in several important respects the proposed U.S. rules are stronger than the FSB standard. With these new proposed requirements, if losses were to wipe out a firm’s capital and push a firm into resolution, a sufficient amount of long-term unsecured debt would be available to absorb additional losses through a “bail in” process, recapitalizing the firm with no taxpayer  BIS central bankers’ speeches  1  bailout and without generating systemic financial contagion. These proposed requirements should also improve market discipline by ensuring that each GSIB has a class of creditors who are clearly “at risk,” and therefore have an incentive to monitor the firm’s risk-taking. In my 2013 speech, I also called for further work to address the challenges in a resolution scenario posed by potentially disruptive close-out of cross-border derivatives contracts. Here too, important progress has been achieved over the past two years.

Towards this goal, a series of wide ranging reforms and policies were implemented in order to improve the investment climate and to attract greater private sector participation in the economy as well as facilitating inflow of foreign direct investment into the country. In the last decade, significant progress has been made and the Kingdom has enacted and implemented forty-two new trade-related laws and regulations; nineteen of them were required for our WTO accession in 2005. The last and most important of these initiatives was the reform of the Judicial System. In addition, to stimulate economic activities and attract foreign investment, the rate of corporate taxation has been reduced from 45 percent to a flat 20 percent, and the requirements for minimum start-up capital were abolished. The negative list of investment was also revised and now allows foreign investment in vital sectors like insurance services, wholesale and retail trade, air and train transport, and communication services. The Government has set itself an objective to place Saudi Arabia amongst the world’s top ten most investor friendly economies by 2010 and, therefore, the opening up of new economic sectors to FDI is in line with the ongoing economic reforms with the aim of improving the Kingdom’s investment climate. The Kingdom’s efforts towards economic reforms in order to attract foreign investment have come to fruition.
I am glad that MEFMI and the FSI are conducting this seminar on Consolidated Supervision for the region at a time that our region is also exploring these topical issues. It is my hope that this seminar will equip participants with relevant skills as senior examiners to develop appropriate policies for their jurisdictions with respect to Consolidated Supervision as well as prepare them for the daunting challenge of actually implementing Consolidated Supervision in our various jurisdictions. It is also my expectation that you will leave this forum after three days, with a new mindset and a renewed commitment to practice what you will have learned so that you could contribute to improving supervisory frameworks in our various countries. I trust that the seminar will also provide you with an opportunity to network and establish durable and valuable professional contacts within the region. I wish to take this opportunity, on behalf of the MEFMI board and indeed on my own behalf, to thank the FSI for their continued support to MEFMI activities over the years. As our cooperating partners, they have always shown willingness to go an extra mile in providing the necessary expertise that helps to sharpen our skills and groom the MEFMI Fellows on gratis terms. I have looked at the programme planned over the next three days. It has a comprehensive list of topics, which I believe will enable you to broaden and deepen your knowledge and skills.

Therefore, a key lesson learnt from the crisis is that in order to fully reap the benefits of EMU, it is essential to strengthen the rules that govern macroeconomic policies in the euro area so as to ensure their alignment with (1) sound economic principles (such as fiscal discipline and a commitment to a market-based economic system) that foster macroeconomic and financial stability, and (2) with the needs of the single currency. Some concrete legal initiatives in these areas have been proposed by the European Commission, on the basis of the final report of the task force chaired by the President of the EU Council Herman Van Rompuy. In a nutshell, the European Commission recommends strengthening the Stability and Growth Pact, which represents the framework of rules and procedures preventing countries from accumulating excessive public debts and deficits. In addition, the European Commission proposes the establishment of a broader macroeconomic framework for the monitoring of economic policies, which – if not sufficiently sound – can give rise to imbalances such as a loss of competitiveness, current account imbalances and excessive private indebtedness. In addition to these EU-wide proposals at the legislative level, a separate pact (the “Euro Plus Pact”) has been drawn up by the euro area countries and several other EU Member States in order to further strengthen the economic foundations of EMU. The ECB is of the opinion that, in both areas, the current reform efforts are not sufficiently extensive.
For both these reasons, banks did not know how much their balance sheets would grow. This created uncertainty as to their own liquidity requirements. Banks were also uncertain about the size of potential losses in other banks. Information was not available to indicate which banks were exposed to losses in the US subprime market. In addition, it was difficult to pin down the actual risk associated with subprime-related securities. Banks became highly reluctant to lend to each other, resulting in a marked increase in risk premia in financial markets. Several funds began to lose money on securities that were linked to the US housing market. As a result, customers wanted to redeem their investments. The funds were forced to sell securities in order to meet their customers’ demands. Since a number of the securities they held were not easy to trade, the funds were pressured into selling highly rated paper. This led to a fall in prices even for highly rated securities. BIS Review 115/2007  3  Equity prices fell, and bond markets saw a pronounced rise in credit spreads. In spite of high earnings and a low level of defaults, credit spreads have risen for both US and European corporate bonds with a BBB rating. Credit spreads have also increased for US bonds with speculative-grade ratings, i.e. ratings lower than BBB-, even though there are no signs of more widespread problems in these markets.

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The average debt ratio is then higher than 200 per cent in all of the income groups, and in fact highest in the lower income groups (see Chart 3). If we look at households instead, which may be reasonable considering that many borrowers in fact live in a household with more than one income earner and thus share responsibility for servicing the loan, the picture is till one of high debts in relation to incomes in all of the income groups. And here too it is clear that the highest debt ratios are mainly to be found among low and middle-income earners. Our results thus contradict the picture that it is only those with high incomes that have the highest debt ratios, that is those who are traditionally regarded as having a higher level of  BIS central bankers’ speeches  5  eduction, a stronger position on the labour market and wealth that they can draw from in difficult situations. Chart 3. Debt ratios in different income groups Per cent 800 700 600 500 400 300 200 100 0 1  2  3  All households (SOU)  4  5 6 7 Income deciles  Indebted individuals  8  9  10  Indebted households  Sources: SOU 2013:78 and the Riksbank  High debt ratios are not only a metropolitan phenomenon It may also be of interest to look at the geographical distribution. It has often been claimed in the debate in recent years that debts are mostly a “Stockholm problem”.

This may involve a risk that capacity utilisation will remain high and that inflation will eventually overshoot the target. Household debt has increased at a faster pace than income over the past ten years. Norges Bank’s calculations indicate that debt growth may largely be due to the sharp rise in house prices in recent years. Higher house prices have a fairly prolonged effect on household debt growth. Even though the rise in house prices is expected to slow, credit growth will therefore remain high for a fairly long period. Given the assumptions underlying our projections, it is likely that debt will continue to grow at a faster pace than disposable income through the entire projection period. The household debt burden has increased over the past year and is now record high. The interest rate burden is, however, relatively low. A normalisation of interest rates will increase households’ net interest expenses, but according to the projections the interest burden will not be higher than it was at the end of the 1990s. Households will be vulnerable if unexpected disturbances result in higher-than-expected interest rates. Challenges ahead Petroleum activities give us an economic base that is not available to many other countries. But it also presents us with many challenges. 5/7  First, our petroleum resources are part of our national wealth. When oil is extracted and sold, petroleum wealth is transformed into financial assets. This wealth belongs not only to our generation, but also to future generations.
Risk measurement and management  The return on the SNB’s assets – particularly on currency reserves – fluctuates dramatically from year to year. The absolute loss can be considerable. While it is true that earnings fluctuations have been reduced by the scaling-back of dollar and gold holdings in recent years along with the improved diversification of currencies and investment categories, it is not possible to continue reducing risks ad infinitum. Hence, hedging the currency reserves’ dollar and gold risks to a high degree, for instance, is impracticable, as these reserves would then no longer serve their intended purpose. Professional risk measurement and management is thus crucial for the SNB. The risks attached to the National Bank’s assets are primarily assessed using the value-at-risk (VaR) method. This widely used risk indicator quantifies the level of loss that will most probably not be exceeded within a specific period of time. The SNB calculates the VaR based on a 95% probability and a time horizon of one year. Value-at-risk analyses are undertaken both for individual portfolios and the total assets. The current VaR for the total assets of approximately CHF 100 billion amounts to roughly CHF 4.5 billion. A value-at-risk analysis gives no indication of how much could potentially be lost beyond the specified level of 95%. Furthermore, it is based on current risk and correlation structures that are not necessarily an accurate reflection of future risks. This is particularly the case at the moment – at a time when market volatility is low by historical standards.

The SNB therefore backs up the VaR calculations with stress and scenario analyses. These simulate extreme market fluctuations and examine the impact of such fluctuations on the assets. Scenarios that have an especially severe impact on the SNB’s assets include a fall in the gold price and a depreciation of the dollar and euro. Such scenarios show that serious losses could potentially be sustained. The volatility of the SNB’s earnings therefore remains high despite the new investment universe. Experience has shown, however, that major losses tend to even themselves out in the medium term, i.e. over a period of three to five years. 2  BIS Review 46/2005  BIS Review 46/2005  3
Ravi Menon: Two problems for FinTech to solve - cross-border payments and ESG data Keynote speech by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Annual SWIFT International Banking Operations Seminar (SIBOS) 2022, Amsterdam, 10 October 2022. *** Distinguished guests, ladies and gentlemen, good afternoon. I am grateful to SWIFT for the opportunity to speak to this distinguished gathering of finance and business leaders from across the world. Most of us here have an affiliation to finance or to technology, or more likely to both. Indeed, the extensive application of technology to enhance the design and delivery of financial services has become a defining feature of the last decade – the FinTech phenomenon. FinTech is increasingly pervasive across not just traditional financial institutions but also non-financial players ranging from small start-ups to large technology firms providing financial services. If its benefits are properly harnessed and its risks well managed, FinTech can be a powerful force for good – solving problems and creating opportunity. In keeping with the theme of this conference, I want to focus today on two challenges in financial services where FinTech can potentially play a positive transformative role:  one, cross-border payment and settlement; and two, high quality, trusted ESG data. These two challenges are what I would call foundational issues that need to be addressed before broader progress can be made. Payments is the life blood of the modern economy.

We still seem to be going through the same arguments, the same structural issues. In fact if anything a potential new government in Italy could scrap some of the reforms that the ECB so applauded. Certainly the advice we are giving to governments, insofar we can give advice to governments, because they are independent from us as much as we are independent from them. The only advice we can give is to use that environment of strong growth, of lower rates to build the buffers in the economy. That includes building fiscal buffers but that also includes doing structural reforms so that the economy can become stronger. Listening to some of the more recent speeches from Mr Draghi and hearing comments from yourself and others, I don't get the impression that the ECB feels that their opportunity has been taken. Am I wrong? There has been some disappointment on the fiscal side where we believe that governments generally could have made better use of the windfall of lower rates to reduce their deficits, to consolidate their finances in a more permanent way, in a more structural way. That's true. Now, when it comes to reforms in the real economy we've seen a lot going on. Look at how much Spain has reformed its labour market. That's now yielding very positive results in terms of job creation. Look at what France is doing, which really goes in the right direction, so reforms are being done. Are they being done in Italy?
In such cases, it pays for the country to try to reduce its current-account deficit by restraining domestic expenditure or increasing production. Many of the euro countries that are having problems have had both current-account deficits and deficits in their public finances. Probably the most effective way of reducing the deficit in such cases is to improve competitiveness and reduce domestic expenditure at the same time. Postponing consolidation in such a situation would only entail domestic demand continuing to be higher than it should be. Figure 4 shows the current-account balance in a number of euro countries last year. 4  BIS central bankers’ speeches  Figure 4. Current-account balances Per cent of GDP, 2011 6  6  4  4  2  2  0  0  -2  -2  -4  -4  -6  -6  -8  -8  -10  -10  Source: European Commission  Like the Riksbank, most forecasters expect a tighter fiscal policy to dampen growth in Europe in the period immediately ahead. It is difficult to assess the precise effects as these will depend on how and when the measures are implemented. But the measures will of course have an impact, particularly when several countries reduce their public spending and/or raise their taxes at the same time. This will happen, furthermore, in a situation in which there is little scope for monetary policy to further stimulate demand. But what’s the alternative?

According to projections by the National Statistics Institute, in the next 50 years the over-65 population, which currently accounts for less than one-fifth of the total population, will grow to represent more than one-third. This phenomenon will exert – and is already doing so – an adverse effect on the economy’s participation rate, employment and productivity, and most singularly on public finances, raising spending on pensions, health and long-term care. The scale of this challenge means a broader and longer-term strategy must be defined where, along with revising the arrangements for our welfare state and its financing, in order to ensure its sustainability, it will also be particularly important to have policies encouraging worker participation in the labour market, to align migratory policy with labour market needs and to pursue policies promoting the birth rate so as to draw it closer to the rates in other European countries. The Spanish economy also evidences very poor figures in terms of productivity. Reversing this dynamic will require measures in various areas including, among other aspects, improvements in education, the quality of institutions, competition in product and service markets and investment in research, innovation and development, along with a reduction in temporary employment in the labour market. I would like to conclude by stressing the importance of making Europe’s challenges our own. In short, on the economic front, this currently involves two goals: completing the Banking Union and shoring up the fiscal stabilisation capacity of the euro area countries.