samchain/econo-pairs-v1 huggingface dataset:
As discussed in this report, a depreciation of the króna coinciding with a fall in asset prices – possibly originating in tighter global financial conditions – could amplify the forecast contraction. The necessary reduction of pressures in the economy will squeeze businesses and households, many of which are vulnerable due to heavy debt. They could withstand a short-lived reversal, but a lasting contraction would be difficult to weather. In late autumn 2005, after a surge in borrowing by Icelandic banks in international bond markets, investors revised their risk assessments of the banks. CDS spreads and secondary market yields on their issues increased. The banks deferred further borrowing in the European bond markets, which had been their main source of funding. Foreign analysts and agencies published negative reports about the banks and the state of the Icelandic economy. The climate turned most adverse at the end of February 2006 after Fitch Ratings changed Iceland’s sovereign outlook from stable to negative, claiming inter alia that the banks’ tight financing could have implications for the Treasury. This situation and its aftermath squeezed the banks for a while, forcing them to respond firmly to the uncomfortable position that had arisen. They made efforts to explain the structure and organisation of the Icelandic banks. The banks adjusted certain aspects of their operations and cross-ownership in response to relevant criticisms, and refuted what was less relevant with both communication and successful business performance. Temporarily they needed to look beyond their traditional markets for funding, with issuance in the US and Japan.

The problem that loomed around this time a year ago is a thing of the past and terms in the secondary market are more favourable again. The Central Bank underlines that global market conditions can take a sudden turn for the worse and it is important to be on the alert and prepared for such a contingency. The current episode of ample liquidity and lower interest rates which has been ideal for risk-seeking investors may change unexpectedly. Short-term interest rates have been rising in most markets recently and capital costs are no longer so favourable. The Icelandic banks are better equipped for such a reversal than a year ago, because experience has taught them to extend and disperse their borrowing, and build up substantial liquid reserves in foreign currency. In 2006 the spotlight was on the banks’ liquidity risk. Now that this risk has ebbed, the focus has shifted to credit risk and the potential impact of higher interest rates and a depreciation of the króna. Amidst the turbulence of 2006, the banks slowed down their credit growth and expansion of their balance sheets. No major foreign financial companies were acquired and equity exposures were reduced. Nonetheless, it is natural to consider their credit risk and vulnerability towards a fall in asset prices. Icelandic households’ debts with credit institutions have soared in recent years, especially averageincome and young households.
Ladies and Gentlemen, we see the growth in manufacturing emanating from increased investment in agro-processing whose potential has not yet been fully exploited. It is in this respect that current and future initiatives emphasise forging of stronger linkages between agriculture and manufacturing, particularly through upstream linkages to agro-related processing. The other aspect of manufacturing that we see as stimulating growth in future is increased processing of minerals, key being copper (given the rapid expansion in copper output) and precious stones. Distinguished guests, the processing of copper into various high products at ZAMEFA is commendable. However, there is still a lot of room for other investors to invest in the processing of copper and indeed gemstones and precious stones that are mined in the country and exported as rough stones. Investing in downstream processing of gemstones and other minerals will not only enhance our export earnings but create employment for our people. Government on its part will among other things facilitate improved access to capital and equipment, enhance skills, rehabilitate support infrastructure and facilitate linkages for marketing of processed gemstones and other minerals. Mr. Chairman, it is worth noting that the construction of Zambia’s third cement company by Zambezi Portland Cement and the planned establishment of an assembly plant by Tata Ltd of India, here in Ndola are all welcome developments following improved confidence in our economy, which should boost growth and create employment. I would like to urge the business community to invest in similar ventures.

The current unusual circumstances are one of the main drivers for the prolonged boom in the local property sector. The risk of over-heating in the property sector to financial stability in Hong Kong is no smaller than that seen in 1997. We should note in particular that while mortgage rates were generally over 10% in 1997, after the burst of the property bubble, US interest rates have fallen, and mortgage rates in Hong Kong have spiralled down reaching about 2% in 2004. The situation we faced now is just the opposite. Mortgage rates are around 2%. And, even if the low interest rate environment were to remain until 2015 as anticipated by the US Federal Reserve, the US interest rates are bound to head back to more normal levels. Will mortgage borrowers in Hong Kong then be able to withstand the impact of interest rate hikes and property price falls? For example, under a 30-year mortgage, even though the borrower will be able to enjoy a low interest rate in the first two years, the repayment burden could become much heavier as a result of interest rate hikes in the years that follow. This could have serious consequences for the well-being of those families in the coming years. Therefore, I hope that the public will be cautious and should not underestimate the risks that rising interest rate could have on repayment ability, asset prices and the overall economy in Hong Kong. 2  BIS central bankers’ speeches
However, as I shall set out later, the launch of the Next Generation EU (NGEU) European recovery fund, which was not taken into account in the aforementioned scenarios, given the still-high lack of specifics for key tenets of the programme, is a factor operating in the opposite direction. The NGEU fund is a significant reaffirmation of the European construction process. Spain, moreover, would be one of the Member States with potentially most to gain, given the comparatively more serious impact of COVID-19 on our economy to date and the high likelihood that its consequences will be more persistent. 2 The risks to financial stability The unprecedented impact of the pandemic on economic activity has entailed a very significant increase in the risks to global financial stability. The forceful economic policy response (by the monetary, fiscal and supervisory authorities) and the effect of the farreaching international financial reform implemented in the past decade are helping mitigate and manage these risks. Indeed, the financial system has been acting to date as a mitigating rather than an amplifying factor of the impact of this crisis. But we should not be complacent. As I have stressed, the scale of this shock is very great, and its duration uncertain. I shall now review how the main risks in this area have evolved recently, drawing on the analysis of the effect of the crisis on various agents in the economy: non-financial corporations, households, the real estate and financial sectors, and general government.

Both the fund’s investment strategy and investment management have tolerated substantial return volatility over the past 20 years, partly owing to transparency about the consequences of strategic choices and performance. Regardless of how the GPFG is organised in the future, it is essential to maintain the established confidence in and legitimacy of the fund. Transparency about investment management will continue to be important in this regard. The investment strategy and organisation have evolved in parallel The investment strategy for the fund has evolved gradually since the beginning in 1996, with decisive changes along the way. The initial capital in the fund was invested exclusively in government bonds. Already in 1997, it became clear that the fund would grow larger than assumed and the saving horizon longer. It was therefore decided that 40 percent should be invested in equities to attain a higher long-term real return. From 1998, the fund therefore went from being a lender to just a handful of countries to becoming part owner of a wide range of private companies. Chart: Evolution of strategy and governance structure over time From 2002, fixed income investments were expanded to include bonds issued by corporates and international organisations. Important new steps were taken in 2007, when it was decided to increase the equity allocation and invest in new markets. The fund could thereby become a larger shareholder in more companies and in more countries.
“Recent developments in financing and bank lending to the non-financial private sector”, Analytical Articles, Economic Bulletin, 4/2020, Banco de España. Arce, Ó., M. García-Posada, S. Mayordomo and S. Ongena (2018). Adapting lending policies in a “negative-for-long” scenario, Documentos de Trabajo, No 1832, Banco de España. Banco de España (2020a). “The role of economic policies internationally in the face of the pandemic”, Chapter 3, Annual Report 2019. —(2020b). “Review of the Federal Reserve’s monetary policy strategy: main aspects and impact on the financial markets”, Box 2, “Quarterly report on the Spanish economy”, Economic Bulletin, 3/2020. Bernanke, B. S., M. T. Kiley and J. M. Roberts (2019). Monetary Policy Strategies for a LowRate Environment, AEA Papers and Proceedings, No 109, pp. 421-426. Brunnermeier, M. K., and Y. Koby (2018). The Reversal Interest Rate, NBER Working Paper 25406. Fiorentini, G., A. Galesi, G. Pérez-Quirós and E. Sentana (2018). The rise and fall of the natural interest rate, Documentos de Trabajo, No 1822, Banco de España. Galesi, A., G. Nuño and C. Thomas (2017). “The natural interest rate: concept, determinants and implications for monetary policy”, Analytical Articles, Economic Bulletin, 1/2017, Banco de España. Holston, K., T. Laubach and J. Williams (2017). “Measuring the natural rate of interest: international trends and determinants”, Journal of International Economics, No 108, pp. 5975. 19  Lane, P. (2021). “The compass of monetary policy: favourable financing conditions”, Speech at Comissão do Mercado de Valores Mobiliários. Menéndez-Pujadas, Á., and M. Mulino (2020).

He is supposed to explain both what is happening and what would happen if such and such an action were taken.” 10 However, as he also points out: “The purpose is not that he should reach a conclusion of the type: this is how you should act now! … Any economically important decision must also be based on a number of human, ultimately political, assessments that the expert, the economic scientist, is by no means more qualified to decide on than other good citizens.”10 It can often be difficult to distinguish the object, ie exercise objectivity, from the perception of that object, ie subjectivity. Ragnar Frisch discusses this too. In an article written in 1936, he draws a line from the natural sciences through to the social sciences, where “… the difficulties of arriving at such unconditionally valid results become greater and greater. The reason for this is first and foremost that the whole system of ideas on which the natural sciences are based becomes increasingly more diffuse as one approaches the social sciences.”10 When I was a student here at the University of Oslo at the beginning of the 1970s, there was a fairly broad consensus that the problem of unemployment had been solved once and for all. The belief was that the economy could be fine-tuned through government management, control and regulation. A similar optimism prevailed with respect to economics in the years prior to the financial crisis.
This should be done not by measures that stifle financial innovation and market efficiency, but by actions and an institutional framework that encourage prudent behaviour and adequate risk assessment and management. More specifically, the securitisation of bank loans and other assets and the “originate and distribute” model should not be abandoned. Securitisation and the new bank model do entail economic and social benefits as they contribute to a better allocation of financial resources and a wider diversification of risks across markets and frontiers. At the same time, it is evident that this bank model and the securitisation process should be strengthened by improving incentive structures, risk assessment and management practices, and by increasing transparency. Similarly, the structured finance market, in order to be revitalised, will require actions that address the valuation problems and increase transparency and disclosure, so as to enhance the understanding and assessment of the embedded risks and to improve the practices of agencies and financial entities involved in their creation, rating and distribution of such products. Standardisation of some of the structured finance products could facilitate the market’s functioning. More generally, the risk management systems and practices of banks and other financial institutions should be further improved. This will require better and more extensive stress-testing in order to enable them to better assess the potential impact of tail risks and correlated risks.

And, finally, before 1 April the following year, the Minister of Finance and General Government has to submit a report to the Government on the degree of fulfilment by all tiers of government of the objectives in the initial budget. I consider that these reports should in fact offer this complete picture of the budgetary projection that we are today lacking. I would further remind you that the Government has announced the creation in 2013 of an Independent Fiscal Authority to ensure compliance with budgetary regulations. This type of institution has proven useful in other developed countries in enhancing budgetary policy credibility. It is, however, crucial that such an institution should enjoy a degree of independence, effective responsibilities and resources in line with best international practices. I will now discuss the essential features of the State and Social Security budget for 2013. Macroeconomic setting and fiscal deficit The draft State Budget for 2013 is part of a macroeconomic setting in which real GDP is estimated to decrease by 0.5% as a result of a negative rate of change in national demand of 2.8%, which would be partially offset by a 2.3 pp contribution from the external sector. BIS central bankers’ speeches  5  This projection of a 0.5% decline in GDP in 2013 is clearly optimistic compared with the fall of around 1.5% currently projected by most international organisations and analysts. That said, I would like to make two observations.
The latter will call for a careful assessment of the inflation risk and the recovery strength so that the calibration of monetary policy going forward will be well-timed and consistent with the objective of maintaining growth with price and financial stability. Also, developments on the growth outlook next year are not without risk. An overarching risk is that the global economic recovery could stall. This could occur given the many headwinds and uncertainties that remain in the global economy as I already noted. Next, the second area of risk is the possible effects on business sentiment and consumer confidence at home from our own domestic political situations which could stifle the recovery in private sector demand. If this was to happen, the benefits that we expected to have from fiscal policy stimulus to lead a rebound in private sector spending would be weakened, rendering a missed opportunity for public sector spending to ignite the needed rebound in private investment. And finally, a resurgence of strong capital flows to Asia and a return of asset price inflation could pose a risk to financial stability and complicates further the conduct of monetary policy. The Bank of Thailand is mindful of these risks and is alert to their possible impacts on the economy. I hope I have given you a clear enough picture of what can be expected next year in terms of the economic outlook and the challenge for policy.

My talk today is to update you on the recent economic and financial developments, and to share with you our assessment of the prospect for next year, including the challenge for policy. Let me begin first with the global economy. Recent economic data, especially of the last few months, point to a picture of greater stabilization and more consistent signs of recovery in the global economy. The severity of the early economic contractions has eased while the levels of economic activities are gaining traction on a worldwide basis. In most major economies, final demand is showing signs of strengthening along with improvements in consumer confidence and business sentiment. More importantly, although the financial system in the advanced economies has not returned to normalcy, financial conditions have improved markedly with lower market volatility, reduced risk premia, and the unfreezing of interbank and other short-term funding markets. These positive developments have led to a view that the worst of the global crisis is now behind us, and forecasts of economic growth have been revised upwards for this year and next year. On the financial front, reflecting these recent developments, appetite for risky assets has returned, leading to a resurgence of capital flows to emerging markets and strong rallies in equity markets especially in Asia. And for economies that the prospects for recovery look most certain, policy interest rates have started to increase to return policy accommodation to a more normal level, as is the case of Australia and Norway.
Regulatory decisions and economic drivers will affect the status quo These examples give a sense of the level of integration between UK and continental financial markets, in particular for certain complex and sophisticated financial services linked to derivatives markets and investment banking activities. However, Brexit will change this status quo and a degree of decoupling is likely. It is difficult to make firm predictions about the extent to which our two financial systems may drift apart or remain integrated. The contours of the future EU-UK relationship in financial services are still uncertain, and the economic drivers and regulatory choices which could reshape this relationship will probably only be felt over time. The EU will need to balance the benefits of continued integration with the UK financial system against potential risks to financial stability, consumer and investor protection, the level playing field and the integrity of the Single Market. As I have said in the past, this path will not be easy for either side of the Channel, and the risks linked to regulatory divergence and a potential race to the bottom should not be taken lightly. Allow me to briefly discuss the regulatory dimension of this question. A possible scenario is that the United Kingdom will not seek to remain a member of the EU Single Market once it leaves the EU. This means moving away from a fully-integrated relationship underpinned by the EU’s single rulebook and single passport for financial services, and relying instead on the EU’s equivalence framework for third countries.

Our reliance on London also stems from the fact that, in some cases, the City represents a gateway to global financial markets for euro area financial and non-financial firms, allowing them to tap into global capital and liquidity pools. In other areas, however, reliance on London is quite limited. For instance, UK-domiciled banks play a marginal role in direct lending to euro area households and non-financial companies. Had it not been for Brexit, certain global and regional trends might even have led to an increase in the EU’s reliance on the City of London as a centre for market-based finance. Indeed, the 1/5  BIS central bankers' speeches  balance between banks and non-bank financial institutions in the EU has been evolving in recent years: although still very much bank-based, our economy is increasingly financed by non-bank institutions. In the euro area, total assets held by non-banks have almost doubled over the last ten years, growing from € trillion in 2008 to € trillion in June 2019. Non-banks currently account for around 55% of the euro area financial sector. Their fast growth reflects their expanding role in financing the euro area real economy. Whereas in 2008 non-banks accounted for 14% of the euro area financial sector’s loans to non-financial corporations, that share roughly doubled in a decade. Non-banks provide a steady net flow of financing to non-financial corporations through the purchase of debt securities.
The relaxed monetary  and third quarters of the year and  policy stance pursued in the past and the  subdued demand conditions in the major  increase in wages in the economy also  export destinations affected this  exerted some demand pressures on  growth. Industry-related activities grew  prices. Accordingly, headline inflation, as  substantially in 2016 with considerable  measured by the year-on-year change in  contribution from the recovery of the  the Colombo Consumers’ Price Index  construction sector. Notable growth  (CCPI, 2006/07=100), was 4.1 per cent in  was also witnessed in manufacturing,  December 2016 compared to 2.8 per  and mining and quarrying activities. cent in December 2015. Headline  Meanwhile, the growth in Services  inflation, as measured by the year-on  activities also remained buoyant,  year change in the National Consumer  supported by improvements in financial  Price Index (NCPI, 2013=100), was 4.1 per  services, and wholesale and retail trade  cent in November 2016 compared to 4.2  activities. Based on these developments  per cent at end 2015. Accordingly, overall  so far, it is projected that the economy  inflation has been contained within our  would grow by around 4.5 – 5.0 per cent  mid-single figure target of 4 – 6 per cent. in 2016.

Bank by engaging in risk mapping of all  In line with this endeavour, the Central  departments in order to develop a risk  Bank of Sri Lanka intends to continue to  profile for the Central Bank of Sri Lanka. apply the “Three Lines of Defense” risk  Central Bank of Sri Lanka – ROAD MAP 2017  25  5. Policies to Strengthen the Broader Economy Currency Management: We want to  Management of the Employees’  make sure that the Sri Lankan Rupee  Provident Fund: Employees’ Provident  notes and coins are available to the  Fund (EPF) is the largest superannuation  public in required denominations upon  fund of the country having total assets  demand without any shortage. We plan  of Rs. 1.8 trillion. During the last year, we  to develop a new mechanism for  have introduced several initiatives to  islandwide coin distribution and arrange  enhance the overall risk management  programmes with banks to collect the  framework and greater oversight over  coin tills issued to the public. the organisational performance of the  In 2017, the Central Bank plans to issue a new coin series to reduce the cost of minting. In addition, measures are also being taken to improve the quality standards of currency notes issued by the Central Bank. Fund. In addition, the completion of Phase I of the Image Scanning Project and the automation of certain functions will improve the operational efficiency of the Fund.