samchain/econo-pairs-v1 huggingface dataset:
Lending is significantly higher in the Swedish banking system than in many other European  2  4  According to Finansinspektionen’s mortgage survey 2013. BIS central bankers’ speeches  countries (see Figure 2). This is partly because Swedes to a large extent save in funds rather than in bank accounts. Another reason is that Swedish banks retain their mortgage loans on their balance sheets, while banks in many other countries “sell” them or securitise them. Figure 2 Lending in relation to deposits in the banking systems of European countries Per cent 350% 300% 250% 200% 150% 100% 50% 0%  Note. Refers to monetary financial institutions Sources: The ECB and the Riksbank. Swedish banks are thus highly dependent on the capital markets to fund their lending. A large proportion, almost 45 per cent, of the funding from the capital markets is in foreign currencies. This borrowing funds assets in both Swedish kronor and foreign currencies. This dependence on market borrowing in foreign currencies gives rise to two risks. The first relates to the extent to which participants are prepared to buy the banks’ mortgage bonds and when necessary convert borrowing in foreign currencies to Swedish kronor. The second lies in the fact that the maturities for assets and liabilities in foreign currency differ. Few counterparties fund the long-term lending in Swedish kronor The borrowing in foreign currencies also funds lending in Swedish kronor to some extent, for example for housing purposes.

Mortgages were amortised to a greater extent a few decades ago, at the same time as inflation automatically reduced the real debt ratio. I believe that more amortisation may be needed, especially in the current situation with low and stable inflation. However, before the authorities impose amortisation requirements it may be worth reviewing other aspects of the provision of loans. One example may be how different amortisation alternatives are presented to the borrowers. Another may be to demand that the borrowers have the financial scope to amortise their loans at a certain rate. The important thing is to restore an amortisation culture so that the households’ margins are safeguarded and the economy is protected. The Riksbank focuses on these issues because we wish to safeguard the Swedish financial system. All our analysis and all our measures aim to reduce the risk of Sweden incurring major economic costs when the banking sector gets into trouble. As a complement, Sweden also needs to put a clear framework for macroprudential policy in place. The global financial crisis demonstrated the need to complement traditional financial supervision – micro supervision – which focuses on risks in individual institutions, with supervision that focuses on the risks in the financial system as a whole. In January, the Financial Crisis Commission presented an interim report which proposed how responsibility for macroprudential policy could be allocated in Sweden. We will therefore need to consider the Riksbank's stance on this issue.
Current economic and monetary policy outlook Today, a mild recession in the euro area around the turn of the year is quite plausible, as ECB President Christine Lagarde recently highlighted.1 Today, we face euro area inflation that continues to be far too high, having reached double digits in October. Today, long-term interest rates in the euro area are around 2.5 percentage points higher than when I was first due to speak to you last year. Today, as Bundesbank President Joachim Nagel said just last week, - "muss die Geldpolitik auf der Hut sein".2 Monetary policy must be on its guard. And monetary policy is not just on its guard but is taking action. The increase in interest rates reflects several steps in the monetary policy normalisation which the ECB started in December 2021. These were the phasing-out of our pandemic support measures, the subsequent full phasing-out of our net asset purchases, and three consecutive policy rate hikes across our July, September and October monetary policy meetings totalling an unprecedented 200 basis points. Today, it is not evident that the observed turn in macroeconomic sentiment will substantially alter the inflation outlook, even if a mild recession were indeed to materialise. Against this backdrop, we have communicated that we will continue to promptly withdraw monetary policy support and move policy rates further to a level that is consistent with inflation reverting back to our 2% target in the medium term.

This calls for an adjustment of demand to the economy’s productive capacity. It is important that structural measures which primarily improve the workings of the economy are implemented in good time. The good consumption trend can then be met by rising output and high growth can be maintained without this necessarily leading to unduly high inflation. As I have already made clear on several occasions, I consider that tax cuts, in tune with the established guidelines for budget policy, are motivated. The tax-to-GDP ratio has risen in recent years as a consequence of the growth of private consumption and rising wage bills; today the ratio is above 50%. The Swedish economy would probably function better with lower taxes. The reforms that are needed in the tax system – as well as those I consider should occur in the labour market – can be arranged, however, in such a way that they promote the aims of stabilisation policy. Tax cuts in Sweden are probably needed that confer long-term benefits on both the supply and the demand side of the economy; a long-term tax reform with those ambitions would be desirable. In the present situation, however, with growth seemingly reaching around 3.5% this year and 3% in 2000, tax cuts and labour market reforms that primarily favour the supply side would increase the opportunities for good growth without contributing to increased inflationary pressure. That would lessen the risk of overheating and facilitate the interaction of fiscal and monetary policies.
The future regulatory framework: rules and statutes Now you may be thinking: “quelle surprise, the regulator wants to have more control over the rules!” In fact, I can tell you that the PRA has no pro-active desire to increase its responsibilities. We have enough on our plate already. It’s just that it seems clear that, for our market, putting the details in the regulator’s rules rather than in statute (as the EU typically does) is a better approach. I say better for our market, but in fact this is the norm in all major jurisdictions apart from the EU and Switzerland. As a point of principle, it is consistent with the established model of an independent regulator taking time-consistent decisions in pursuit of long-term objectives given to it by Parliament. This follows the same logic as the arrangements in this country and many others for setting monetary policy. And on a purely practical level, it ensures that rule-making is closely informed by the day-to-day risk assessments that we have to make as supervisors. This approach also helps ensure that rule-making keeps pace with developments and supports innovation. A changing world requires a tough but flexible regulatory regime that can adapt itself rapidly as needed – both to remove unnecessary barriers to innovation and to give policyholders reasonable protection from any new risks that arrive with it. The alternative is a more sluggish regime, more conservatively calibrated to compensate for its lack of manoeuvrability.

I think our track record is good here so far, but there is more to be done. The UK does not yet have a resolution authority for insurers, as recommended in the FSB’s key attributes. Assessing firms’ preparedness for exiting the market in an orderly manner, and working with boards to make improvements where needed, will be an increasing focus of our supervision in the next few years. Nor is there generally an inherent conflict between prudential and other government objectives, as is sometimes suggested. For example, take the government’s three objectives for the review of Solvency II:  2/5  BIS central bankers' speeches  to spur a vibrant, innovative, and internationally competitive insurance sector; to protect policyholders and ensure the safety and soundness of firms; and to support insurance firms to provide long-term capital to support growth. These are consistent and mutually supportive objectives. Safety and soundness underpin the other two: the sector can only be internationally competitive if it operates within a robust and reliable infrastructure, which includes the prudential regime as well as things like the legal system; and only a financially sound insurance sector can make a sustainable contribution to long-term investment. Likewise, an innovative sector, in which business models adapt to changes in circumstances, is ultimately a sounder one. In this context I am wary of calls to encourage specific forms of investment with prudential regulatory incentives, which is usually polite code for lowering capital requirements.
But the change was small, and then CDS spreads increased once again, as they did for many banks. The fact that Moody’s announced a change in its outlook for the banks’ credit ratings was no help. To some degree, the sizeable CDS spreads arise from suspicion vis-à-vis Icelandic banks. In their penetration into new markets, Iceland’s banks have doubtless threatened competitors that were established in those markets and were subjected to stiff competition as a result. Perhaps it also matters that Iceland’s banks are in a peripheral area and that such banks are generally subjected to higher premia than are banks in large countries. The size of the banks in comparison with the national economy is doubtless a factor as well. Otherwise, higher premia could be explained by the fact that in recent years Iceland’s banks sought out credit in the global bond market. When conditions for such transactions were most beneficial, there was considerable demand for the banks’ bonds because they were considered to fit unusually well with the various CDOs that were then popular among investors. They generated relatively good yields, especially given the banks’ credit ratings. Conditions have changed dramatically, and there is no longer a demand for such instruments. It would seem that many of them are unwinding – that is, that bonds are being sold off, including bonds from Icelandic banks.

Repeated US interest rate cuts have allowed a timely easing of monetary conditions in Hong Kong. But, up to a point, further cuts in interest rates are akin to pushing with a string. Given the gloomy mood that now prevails, it may therefore take some time for monetary easing to have an impact on economic activity. Of particular concern now is the unemployment rate. Having declined from a peak of 6.3% at the darkest time of the Asian financial crisis to 4.4% in late 2000, it has been slowly rising, and is likely to edge up further. Part of this is the result of the global slowdown. But unemployment is also complicated, and aggravated, by the structural transformation of our economy, as our manufacturing sector continues to contract and as skill mismatches make it difficult for the growth industries - such as financial services and, until recently, IT - to take up the slack. Behind all the figures are stories of individual pain and hardship - of lost jobs, negative equity, bankruptcies - and a general sense of insecurity and pessimism in the community. These are the conditions for very unfavourable, and potentially destabilising, interactions between the real economy and the financial sector. The Hang Seng Index has dropped by more than 30% since the beginning of the year. Sluggish lending is hurting banks' profits. The delinquency ratio for credit card receivables is on the rise.
On the one hand we have the strong  BIS Review 32/2007  1  growth of household debt, linked to intense house purchases in a property boom, and which is the other side of the coin of the high external deficit I referred to earlier. And on the other is the persistence of an inflation differential with our European partners, which raises doubts about the future behaviour of our competitiveness. The Banco de España has issued warnings about these risk factors and will continue to monitor them closely and analyse the attendant developments in depth. Today, however, as initially stated, I should like to take advantage of the opportunity the Círculo de Economía has given me to take a longer-term perspective in examining recent developments in the Spanish economy and its future possibilities, moving beyond the usual short-dated horizon of economic forecasting exercises. Looking back, we can see how favourably the Spanish economy has fared over the past 20 years, which is an incontrovertible fact. With the exception of the 1993 recession, which was fairly widespread in Europe, our country has been growing since 1986 systematically at or above the level of growth in other European countries. And since 1994 we have had 13 uninterrupted years of growth, with mild oscillations around a generally high average rate. Spain's higher relative growth has many causes.

Conceivably, these differences might be heavily influenced by the relatively recent nature of our educational development; but looking at the percentages for young people in the 25-34 age group, it can be seen that, despite the progress recorded, a gap exists which, though moderate (64% in Spain compared with figures of over 80% in most of the major countries), remains illustrative of our continuing laggardness. In the current decentralised State, the central government retains few responsibilities in respect of education, which means that educational progress in Spain is fundamentally in the hands of the regional governments. These may thus be said to have a major responsibility in determining our longterm growth prospects and the future functioning of the Spanish economy. And this conclusion is further reinforced when considering the changes that have come about in budgetary policies. Hence,  4  BIS Review 32/2007  insofar as the decentralised structure of the State has played a very positive role in growth in the recent past, as I said at the start of my address, when speaking of the future it emerges once again as a determinant of the first order. As is known, public spending by territorial governments is more than two and a half times that of central government. It is clear from this that what regional and local governments do is, for the purposes of maintaining the public spending/GDP ratio, much more important than what central government does.
There is no mechanical link between any piece of data and inflation – despite the impression often created by newspaper headlines. Policy cannot be set by a simple scorecard. There is no substitute for asking the question “why?” One of the achievements of Alan Greenspan during his time as Chairman of the Federal Reserve Board was his recognition that when output growth picked up in the United States in the late 1990s it reflected an increase in supply capacity as productivity growth rose in the wake of the application of IT to business processes generally. This “supply shock” meant that output could expand faster without generating inflation. “Spotting the shock” is a perpetual challenge for us. The shocks we have identified are the reasons we raised Bank Rate four times over the past year. We spotted them by asking three questions, all beginning with “why”. So let me give you those questions and our answers. The first question is why total output has grown steadily at an annualised rate of around 3% for 18 months – the longest run of stable output growth since 1997 and much stronger than most commentators anticipated, even though interest rates and the sterling exchange rate have risen. And why are business surveys even more upbeat? Notwithstanding a slowdown in the United States, the world economy, especially the euro area, our largest export market, has been surprisingly buoyant. World GDP growth over the past three years has averaged over 5% a year, the strongest such period since the late 1960s.

And business investment has expanded at the fastest rate for almost a decade. These upside demand “shocks” have not – at least so far – been offset by a slowing in consumer spending. Given past relationships, we might expect some upward pressure on inflation. But we should be cautious. Like the US in the late 1990s, we have experienced our own positive “supply shock” in the form of a significant wave of inward migration, especially from the accession states, of people looking for work. That has reduced the risk of a rising demand for labour leading to faster wage inflation. But despite greater availability of labour, businesses have not over the past year expanded employment sufficiently to prevent stronger demand from increasing capacity pressures. The Bank’s Agents report that capacity utilisation is now at an unusually high level. These pressures encourage businesses to raise prices. And that is exactly what the business surveys suggest has been happening. A position in which growth is above its long-run average and businesses are already operating with pressures on capacity is unlikely to be one without inflationary risks. That is one reason why the Monetary Policy Committee has raised interest rates over the past year. The second question is about money and credit. The quantities of broad money and bank lending are now around 14% higher than a year ago – rates of growth last seen in 1990 when inflation was more than 8%. But again, we should be cautious.
It is still too high but is going in the right direction. For France, after 1.2% of GDP growth in 2015, we are likely to see a growth rate above that range for 2016 and 2017. In the short term, we expect growth at 0.4% in the last quarter of 2016. The Banque de France will publish its new growth and inflation projections for France on 9 December. Inflation developments 1/3  BIS central bankers' speeches  [Slide 3] Inflation, which was nil in the euro area in 2015, rose steadily in 2016: it should reach 0.6% in November. Monetary policy has helped and will continue to support a move toward the Eurosystem objective of an inflation rate below, but close to, 2% over the medium term. In addition, oil prices have bottomed out since the beginning of this year and this should directly help inflation to increase beyond 1% in the first months of 2017. [Slide 4] The comprehensive package of measures adopted on 10 March 2016 made euro area monetary policy more accommodative. One of its distinctive features is that it targets the financing of the real economy. The second series of targeted refinancing operations (dubbed “TLTRO 2”), for an amount of EUR 444.6 bn allotted so far, should continue to improve medium-term funding conditions for banks and foster bank lending to companies and households. 2/ Structural policies Progress has also been made regarding structural reforms. Several European countries, including Germany and Spain, are showing the way forward to Europe.

3/ How can we give further impetus to Europe? Getting back to the European level, I would like to point out that many improvements have also been made in the field of crisis prevention and management. Prevention is based on much more 2/3  BIS central bankers' speeches  efficient financial regulation and on a European governance framework that is better organised now with well-designed monitoring mechanisms on fiscal performance as well as on macroeconomic imbalances and structural reforms. Banking Union contributes to strengthening financial stability in the euro area and the EU as a whole and to ensuring that the banking sector is safe and reliable. The global European picture is of substantially enhanced resilience since the crisis. The Common Equity Tier 1 ratios of significant banking groups in the euro area have risen from 7% in 2008 to 14% today. Crisis management – including for Greece – has also evolved considerably with the creation of the ESM. So you can be fully confident about the resilience of the euro and of the euro area. It is not only an economic asset, it is also a political one, supported by each of the 19 governments and – which is still more important – by 68% of euro area citizens (and even by 70% of French citizens and 73% of German citizens). Moreover, monetary policy played its full part to maintain euro area cohesion. Europe has clearly succeeded with monetary union, but monetary policy should not remain the only game in town.
I also appreciate that you accepted that I slipped from the shoes of the President of the Romanian Association of the Club of Rome into the ones of the Governor of the National Bank of Romania. Selected bibliography Crockett, Andrew: “What financial system for the 21st century?”, Per Jacobsson lecture, Basel, June 2011 Eichengreen, Barry and Bordo, Michael: “Crisis Now and Then: What Lessons from the Last Era of Financial Globalisation”, in P. Mizen (ed. ), Monetary History, Exchange Rates and Financial Markets: Essays in honour of Charles Goodhart, Vol. 2, Cheltenham, UK: Edward Elgar, Ch. 3, pp. 52–91, 2003 Goodhart, Charles: “The Changing Role of Central Banks”, BIS Working Papers No. 326, 2010 Greenspan, Alan: “The Age of Turbulence: Adventures in a New World”, Penguin Press, pp. 462–464, 2007 Haldane, Andrew: “Control Rights (and Wrongs)”, Economic Affairs, Vol. 32, 2012 Haldane, Andrew and Vasileios, Madouras: “The Dog and the Frisbee”, Fed Reserve of Kansas 36th Policy Symposium, Jackson Hole, Wyoming, 2012 Haldane, Andrew and Vasileios, Madouras: “What is the Contribution of the Financial Sector?”, Voxeu.org, 2012 Padoa-Schioppa, Tommaso: “Markets and Government Before, During and After the 2007–20xx Crisis”, Per Jacobsson lecture, Basel, June 2010 Financial Services Authority: “The Turner Review: A Regulatory Response to the Global Banking Crisis”, 2009  8  BIS central bankers’ speeches

We must strategically adapt and adopt technologies now to remain relevant and competitive and provide support for sustainable improvement in the standard of living of the Thai people. 5  In closing, I would like to congratulate the IOD once again for fittingly organizing this Call for Action conference. Actions taken at the firm level can determine the direction of our country and whether we can efficiently catch up with rapid technological changes. These changes will also inevitably affect the whole ecosystem of Thailand. Therefore, I urge you all to think on a bigger picture on how your firms can help make Thailand’s digital transformation successful and fruitful. So, think big, stay informed, and act wisely. Only then we can be certain that together we could truly rise above disruptions. Thank you for your attention. *********  6