samchain/econo-pairs-v1 huggingface dataset:
In comparative terms, the NPL ratio of the Spanish banking industry in consolidated terms stands at similar levels to the European average, although it is still above those of some of the main European countries. 2 Challenges That said, as I indicated at the start, the banking sector needs to address important challenges, affecting not only Spanish banks but also the other euro area countries. 2.1 Profitability The first challenge I wish to mention is profitability; adequate profitability is essential to ensure banks’ viability for the medium and long term. Since the onset of the crisis, the banking sector’s profitability has been quite low, well short of the double-digit figures observed in earlier periods. Last year, Spanish deposit institutions overall saw their return on equity fall by 1.3 percentage points, from 5.6% in 2015 to 4.3% in 2016, although it remains slightly above that of the main European countries and the European average. As you are aware, there are several factors exerting downward pressure on banking sector profitability. The very low interest rate environment, in response to a euro area inflation rate that is below the ECB’s target rate, is one of the main factors behind the low levels of profitability in recent years. Against this low interest rate backdrop, both financial revenues and costs have fallen, although it is increasingly difficult to achieve further cuts in the cost of liabilities, now that levels close to zero have been reached, and this has a direct impact on the net interest income of Spanish banks.

This, however, must be done in conformity with personal data protection regulations. We must not forget that customers trust a bank to observe the confidentiality of their transactions. Similarly, services known as “cloud computing” have been on the rise for some time now. They unquestionably offer big advantages for banks: they reduce processing and storage costs and provide great flexibility for adjusting information systems to current needs, and, moreover, they are an efficient means of big data analysis. However, this increased dynamism is not free from a risk of data loss which must be controlled. Much the same goes for automated advisory services, known as “robo advice”. It is increasingly common to see automatic tools which act through digital channels in the process of providing advice. These solutions may be useful, for example, in the purchase of a product, because they simplify communication between banks and customers, but this service must conform to marketing regulations. It is necessary to ensure that customers have unrestricted access to sufficient and relevant information that allows them to fully understand the product in question, and that the product is not purchased automatically without understanding the conditions and the risks involved. In short, technological innovations offer banks a way to reduce costs and better adapt their products to customers’ needs, but their implementation in banking operations requires close monitoring of the new risks introduced into the system.
The FPC’s judgement is that, if risks were to build above standard, then increasing the CCyB above 2% and bearing this cost would better optimise the balance between primary and secondary objectives. The cost would be warranted because, by building resilience, it would reduce the likelihood and severity of future downturns.28,29 The grey triangles in Chart 18 estimate GDP-at-risk (proxied by the 5th percentile of the forecast distribution of GDP in 3 years’ time, conditional on risks at time t on the x-axis), versus on the y-axis the Bank of England’s 1-year ahead median GDP forecast at time t. The blue line illustrates how this trade-off could have changed if in 2004 capital levels (as measured by the total capital equity ratio) had been increased from 2004 levels. GDP-at-risk in 2004 (proxied by the estimated change in the level of GDP expected by 2007, based on information in 2004, at the 5th percentile of the  27 The CCyB is a particularly powerful policy tool in this regard because it can be removed altogether in a stress. Banks entering the capital conservation buffer, by contrast, are subject to restrictions on their dividends and other capital distributions. 28The FPC’s CCyB decisions are informed by results of the Bank’s annual concurrent stress tests of the UK banking system. These tests provide a gauge of the sensitivity of banks’ balance sheets under stress.

Third, the heightened aversion of financial institutions to risk has led to fears of a “credit crunch”. A credit crunch occurs when lending institutions try to reduce their exposure to risk and, in so doing, the size of their balance sheets. In recent weeks, the desire of these institutions to reduce the scale of their leveraging and move to less risky portfolios has led to a reduction in the amount of capital available to support liquid financial markets. As a result, asset prices of all kinds have been volatile. So far the consequences of turbulence in financial markets have been largely restricted to securities markets, especially in the United States. These markets are somewhat less important in the provision of corporate finance in the UK, although if the reduction in security market issuance were to persist this could affect the ability of the personal and corporate sectors to obtain finance from both banks and the capital market. As yet lending by UK banks has not been  BIS Review 86/1998  -3-  affected to any significant extent. The monetary statistics published yesterday show that total bank credit grew by 0.7% in September, leaving the 12-month growth unchanged at 8.7%. The MPC will watch carefully for any signs of a credit crunch developing. The Bank monitors indicators of credit conditions in the financial markets on a daily basis.
Chart 6 Real residential property prices in selected euro area countries  Note: Quarterly; 1998Q1=100. Source: Hiebert and Vansteenkiste (2010). BIS central bankers’ speeches  11  Chart 7 Growth in real housing construction works between 2000–2007  Note: Growth rate shown in the chart is the percentage increase between 2000 and 2007. Sources: Haver Analytics and Eurostat. Chart 8 Current account balances in selected euro area countries  Note: 2009; % of GDP. Source: Haver Analytics. 12  BIS central bankers’ speeches  Chart 9 General government budget balance in selected years  Note: % of GDP. Sources: Haver Analytics; European Commission. Chart 10 Consequences of the global financial crisis Household credit growth (annual % ) – General government budget balance (% of GDP)  Source: Haver Analytics, European Central Bank and Eurostat. BIS central bankers’ speeches  13  Chart 11 Credit growth to the private sector  Note: annual averages of monthly growth rates. Sources: Haver Analytics and IMF. Chart 12 EMBIG spreads in the run-up to the Asian crisis Philippines – Malaysia  Note: in bp. Source: Haver Analytics and JP Morgan. 14  BIS central bankers’ speeches  Chart 13 Sovereign credit ratings of selected East Asian countries  Sources: Moody’s based on a linear conversion of the ratings (with Aaa equal to 100 and Caa equal to 5). Chart 14 Average estimated real effective exchange rate overvaluation as of late 1996  Note: in percentage.

Second, the financial tensions led to a disruption of domestic financial intermediation, with severe consequences for both private and public financing. In Greece, the banks – which were reasonably strong in a “stand-alone” sense – were undone by revelations about the weakness of public finances. In Ireland, causation ran in the opposite direction: the bloated and failing domestic banking system imposed an intolerable burden on what, prior to the crisis, had been a superficially strong fiscal position. Regardless of the causation, the consequences were the same: as confidence eroded, the inflow of foreign capital dried up. Subject to a “sudden stop” in external financing, 4 the European sovereign debt crisis – itself inextricably linked with problems in the financial sector – erupted, forcing Greece and Ireland to seek financial assistance from the European Union and IMF. 3. What can we learn from the emerging market crises of the past thirty years? The developments I have just described might give those of you living in emerging economies a sense of déjà vu. And indeed it has become commonplace to draw comparisons between recent events in Europe and the periodic financial crises seen in emerging market economies (EMEs) over the past three decades: Latin America’s debt crisis in the 1980s; the Mexican tequila crisis of 1994; the Asian financial crisis in the second half of the 1990s; and the Argentine crisis of 2001. Extensive economic literature has analysed these events and identified important roles for many of the phenomena I have just described.
As such it will be important to adopt an appropriate regulatory framework for stablecoins in advance of their launch. If it quacks like a payment system…  Stablecoins pose two unique challenges for regulators:  The first is that we need to decide how to regulate them. Proposed use cases for stablecoins vary. And some stablecoins may appear to do more than one currently regulated economic function. 5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  But many stablecoin arangements will facilitate the transfer of ‘money’ for buying goods and services – effectively substituting all or part of existing payments chains. While my ability to pay for coffee with my phone may feel innovative, it still ultimately relies on card payment - a payment method that has existed for well over half a century. Stablecoins could mean that in future, when I tap my phone at a coffee shop, I may be able to pay with a token that provides a new payment method entirely – and which would not rely on either my bank or my credit and debit cards. If stablecoins are substitutes for existing payments chains, it follows that they could pose the same financial stability risks as existing payments chains. Failure to regulate them accordingly could leave a stablecoin-shaped hole in our payments regulation. This is why the Financial Policy Committee of the Bank of England has judged that:  Payment chains that use stablecoins should be regulated to standards equivalent to those applied to traditional payment chains.

We have refrained from changing the repo rate when energy prices have risen, although they have meant that inflation, and the forecast of inflation two years ahead, have periodically deviated from the 2 percent target. If energy prices remain at a high level over a longer period or continue to increase, the inflation rate could be higher than we have assumed. The conclusions for monetary policy would be different if this development begins to leave a mark on inflation expectations. All in all, the risks of lower inflation stemming from weaker economic activity are judged to be approximately balanced by the risks of higher inflation stemming from wage and energy price developments. The balance of risks therefore does not change the forecast I have reported earlier. It indicates that the underlying, cyclically-related inflation rate will be in line with the inflation target at the end of the forecast period. The Executive Board of the Riksbank therefore found it natural to leave the repo rate unchanged. The future stance of monetary policy will depend as usual on the new information received and on how this affects the overall assessment of inflation prospects in the coming years. BIS Review 44/2003  3  Long-term growth prospects Allow me at this point to shift focus and speak about long-term growth prospects. These are of course a decisive factor for welfare and deserve therefore to be given considerable attention in the economic policy debate. But they also have a huge impact on the Riksbank's operations, which I shall return to.
Figures for 2010 and 2011 as well as the March forecast, with the national accounts with 2008 as the base year, using chained indexes. Sources: Central Bank of Chile based on a sample of investment banks, Consensus Forecasts, the IMF and statistics bureaus of respective country or region. Table 2 Economic growth and current account (*) (annual change, percent) 2012 (f) Sep.11 Report  GDP  Dec.11 Report  6.25-6.75  2013 (f) Sep.11 Report  Mar.12 Report  6.2  6.0  Dec.11 Report  4.25-5.25  Mar.12 Report  3.75-4.75  4.0-5.0  Domestic demand  9.1  9.5  9.4  4.5  3.7  5.3  Domestic demand (w/o inventory change)  9.7  10.2  10.3  5.4  4.8  5.8  Gross fixed capital formation  14.4  16.9  17.6  7.1  5.8  8.9  Total consumption  8.2  8.1  7.9  4.9  4.5  4.8  Goods and services exports  6.5  7.4  4.6  5.0  3.7  3.8  Goods and services imports  12.0  14.3  14.4  4.6  3.0  5.9  Current account (% of GDP)  -1.0  -1.5  -1.3  -2.1  -3.3  -3.4  (f) Forecast. (*) September and December forecasts were done with national accounts with 2003 as the base year. Figures for 2010 and 2011 as well as the March forecast, with the national accounts with 2008 as the base year, using chained indexes.

Forward guidance on the path is today less important than commitment on our end objective First, in the current normalization phase, there is much less need and space for detailed forward guidance: we are no longer at the effective lower bound and  Page 5 sur 8 are coming back to our more normal reaction function—all the more so in the current uncertain environment. Accordingly, in our ECB July statement President Christine Lagarde emphasized optionality dependent on economic data, and taking decisions on a meeting-by-meeting basis. More importantly still, we strongly reiterated our commitment to our end objective of bringing inflation back to 2% in the medium-term, i.e. 2024 in our present forecasts. The more open we are about the path, the more committed we must be about the destination of the journey. Don’t get me wrong: market expectations of future policy rates remain a key driver of long-term interest rates, which are what matters most for investment and spending decisions. But forward-guidance—at least in the form of a commitment to an unconditional and/or prolonged path for the policy rate—is today an unadvisable way of steering market expectations. If you go to the hospital, it is certainly unpleasant not knowing how long you will stay there. But you certainly do not want a doctor who decides to keep you 7 days regardless of how your health evolves. Without question, you would rather have a firm commitment that he will cure you of your ailment! II.B.
Under the Maastricht Treaty, the design of EMU had two core elements: an independent common central bank targeting price stability, and a framework to coordinate national fiscal policies. The former was entrusted with monetary policy, while the latter was based on a set of fiscal rules geared towards ensuring that national fiscal policies did not endanger the price stability mandate. This meant that Member States could no longer rely on monetary policy to stabilise asymmetric economic shocks (domestic, or common with highly uneven domestic effects), while the exchange rate could not act as an adjustment mechanism between countries. Instead, they had to rely on additional adjustment channels, such as capital and labour mobility, and, especially, countercyclical fiscal policy. 1  In addition, the set of fiscal rules included in the Treaty acknowledged that the fiscal behaviour of one country would affect the rest of the members and the monetary union as a whole. In particular, unsustainable fiscal policies in one country could generate economic and financial instability across the monetary union and influence the single monetary policy. Thus, the Treaty stipulates that Member States should avoid excessive deficits, and that the European Commission should monitor public finances to identify significant deviations that could endanger the macroeconomic and financial stability of the monetary union. In practice, the Protocol operationalises these principles by means of two quantitative reference values: 60% for the ratio of government debt to GDP and 3% for the budget deficit-to-GDP ratio.

In general, it can be stated that all these elements depend on: •  The moment the responsible deposit insurance institution is put into function, as in the case of the Albanian experience;  •  The degree of banking market development;  •  The way of its integration and of banking institutions’ integration into more developed markets;  •  The development degree of financial markets in general;  •  The level of legal and regulatory framework completeness and perfection (not only the one closely related to deposit insurance); and  •  The level of public education in relation to services provided by the banking industry and by the financial market in general. The more advanced we are in the above developments, the higher in quality and number are the alternatives that allow the responsible deposit insurance institution a major role in administration of crises the insured institutions may be faced with. In fact, besides the “wealth” they provide in approximation of deposit insurance practices in the banking activity, the above changes in the legal framework and in the practices of deposit insurance activity, lay down the need of a more general harmonization, in regional level and maybe even further. In this way, we would prevent any legal stipulations, which in practice may prove to be non-functional or at high cost.
Confidence in the inflation target is then weakened and it will not be able to fulfil its role as a benchmark for expectations in the economy as well as it could. But there is one more reason why the inflation target should not be lowered – and this is in my opinion, probably the most important. It is that there needs to be enough scope to lower the policy rate if inflation falls substantially or the economy weakens. When the inflation target is, say, 1 or 0 per cent, then inflation will vary around that level. The nominal interest rate will of course also be lower for a lower target on average. And the lower the interest rate is in normal conditions, the less scope there is to lower it before it hits its lower bound and can no longer be used to stimulate the economy. With an inflation target of 2 per cent and a real interest rate which on average is expected to be around 2 per cent, the policy rate will be around 4 per cent in normal conditions. 8 Before the financial crisis, this was usually considered to be a sufficient distance to ensure that the  8  4  The Riksbank’s assessment is that in the long term the repo rate will be in the range 3.5 to 4.5 per cent on average.

Also, moderate growth of monetary indicators, low increases in global prices and well-anchored inflationary expectations have generated contained inflationary pressures. In general, this situation is expected to continue over the period ahead. Data on third-quarter economic activity are partial and are based on indirect indicators. Their analysis suggests positive but low growth of the domestic economy over this period. Industry, agriculture and services are the sectors that have supported the economic growth, while construction does not highlight any signs of improvement in the current and expected activity. In the aggregate demand, foreign demand remained the main driver to economic growth in the third quarter. The domestic demand appears to have weakened due to lack of fiscal stimulus and sluggish private investments and consumption. Fiscal policy was consolidating in 2012. It is reflected in the 19% decline in the budget deficit of the first ten months of the year, leading to maintaining of fiscal indicators sustainability over this period. On the other hand, the performance of expenditure and budget deficit did not support the aggregate demand growth. Public spending for the first ten months of the year resulted 0.2% less than a year earlier, reflecting the low increase in the budget revenues. The latter increased at low annualised rates during the year, resulting at the end of October only 2% higher than a year earlier.
But to develop and manage such an app, a bank has to assemble a highly skilled and diverse technology team: product owners – who create the vision for the app and work with business and tech teams to deliver it; business analysts – who work with customers to understand their requirements; system and security architects – who design the app based on its security, data, and infrastructure requirements; API designers – who develop APIs that provide and pull data from various financial institutions onto the app, taking into consideration data security; UI/UX designers – who design the look and feel of the app to provide a good user experience, such as minimising the number of clicks to perform an action; so ware developers – who write the programmes that underpin the functionalities of the app and seamless integration across its diﬀerent components; testers – who ensure that the app performs according to the requirements; production supporters – who monitor the performance of the app, manage incidents, and ensure timely resolution of issues; and data analysts – who analyse app usage statistics and customer feedback, in order to recommend improvements to the app. Let me catch my breath here. The multitude of technology talent needed to develop and manage just this one single product is staggering. The technology workforce in our financial sector is an estimated 25,000; 30% more than in 2014. Singaporeans make up just over one-third of this workforce.

The capital adequacy ratio followed a downward trend, even though it remains clearly above the minimum level required by the regulatory framework. Analysis of resilience to various shocks and risks indicates that credit risk is the primary source of banking sector risk. Furthermore, the banking system is more protected from direct market risks, but it continues to be exposed to the effect, on credit quality, of undesirable exchange rate and interest rates fluctuations. Therefore, in its supervisory capacity, the Bank of Albania requested commercial banks to timely and properly identify non-performing loans, establish relevant reserve funds and take determined action to recover loans through execution of collateral. These actions, combined with reduced operational costs, would establish gradually the conditions for a positive and stable financial position, which would support better the banking sector’s need for capital. In a shorter term, the Bank of Albania has requested the banking sector to strengthen activity capitalisation, through increased shareholders capital. The Bank of Albania has oriented and monitored this process closely, so that it takes place in compliance with the development strategy and relevant risks performance. The process to strengthen capitalisation indicators in the banking sector includes creation of adequate capital above the required minimum. The 2  BIS central bankers’ speeches  process continues in line with specifications that the Bank of Albania has discussed and communicated with the banking sector. As a result of this measures, the banking sector would remain stable and establish conditions for its higher contribution to Albania’s economic growth.