samchain/econo-pairs-v1 huggingface dataset:
But the extent to which continuing constraints on the supply of bank credit are likely to impede the recovery is less clear. On the one hand, banks still face significant challenges, especially in terms of the ease and cost at which they can refinance maturing funding. This is undoubtedly affecting the ability of some small firms to borrow at affordable rates. On the other hand, many companies started this recovery with increased levels of savings and so are in a position to finance increased investment if and when they wish to. And we have seen “creditless” recoveries in the past. For example, the corporate sector in aggregate repaid bank lending in each of the first three years of the 1990s recovery. I’m hopeful – but by no means certain – that strains within the banking system will exert increasingly less drag on the economy going forward. But what of the tailwinds that are pushing against these factors and ensuring that the burgeoning recovery continues? The most significant factor is the highly accommodative stance of monetary policy. As you know, Bank Rate remains at 0.5% and the stock of asset purchases – quantitative easing –  1  This is an annual survey conducted for the Bank by NMG Financial Services Consulting. This year’s survey was conducted between 24 and 30 September 2010 and covered almost 2000 households. Some results from this year’s survey featured in the November 2010 Inflation Report (pages 22–23).

But despite inflation being above target, monetary policy remains highly stimulatory. Interest rates are close to zero and we’ve injected a huge sum of money into the economy via quantitative easing. This uncomfortable juxtaposition of high inflation and loose policy has led some people to put two and two together and make five. The MPC has gone soft on inflation, they claim. It has taken its eye off the ball. I understand why some people think this. But it is simply not true. The deep recession that we have all just endured has led to a degree of spare capacity opening up in our economy. That’s evident in the increase in unemployment we have suffered. It’s also evident in the relatively low levels of productivity within firms. There is a very real question as to exactly how much spare capacity there is and what impact that’s likely to have on costs and prices. Even so, it seems clear to me that there is some degree of spare capacity and that this is likely to damp inflationary pressures. This is most apparent in the labour market, where annual private sector earnings growth has averaged below 1½% since the start of the recession, around a third of its rate in the preceding five years. But this downward drag on headline inflation has been offset by a sequence of large shocks – to energy and other commodity prices, to VAT, and to the value of sterling – which have  9  6  Borio (2010).
More than 40 European bank groups have a substantial part of their operations in more than three European countries. Names such as Unicredit, Barclays, Fortis and ING are all examples of banks in the forefront of this development. The internationally-active banks are moreover increasingly offering services to households and smaller companies. The integration process has been particularly evident in our own neighbourhood. Nordea and Danske Bank have substantial market shares outside of their respective home countries. With the exception of Iceland, it is in Nordea’s case a question of market shares of more than 10 per cent in all of the Nordic countries. Swedbank and SEB are dominant actors in the Baltic region. But financial integration is now also increasing rapidly in other parts of Europe. The timing of my speech could hardly be more appropriate. Only in recent weeks the media has reported on farreaching plans for a merger between British Barclays and Dutch ABN Amro, two banks which together would become one of the world's largest players in this sector. Parallel to this cross-border integration process there is also another type of integration within the banks. It is becoming increasingly common for these groups to organise themselves so that they in practice function as one bank instead of a number of independent bank companies. What drives the banks to change their organisation is the efficiency gains obtained through greater centralisation and specialisation.

Svante Öberg: Increased financial integration – future challenges Speech by Mr Svante Öberg, Deputy Governor of the Sveriges Riksbank, at the Conference “Bank & Finance Outlook” (Affärsvärlden), Stockholm, 19 April 2007. *  *  *  Introduction To begin with I would like to thank you for the opportunity to come here and speak about financial integration and the challenges this entails. My main message today is that financial integration is increasing rapidly in Europe, and that this leads to better conditions for economic growth, but that it also means that regulations, supervision and arrangements for crisis management must become more international. I have divided my speech into four parts. I shall begin with a brief description of financial integration in Europe in recent years. After that I shall discuss the advantages of greater integration. Then I will go on to talk about the challenges we face as a result of integration and conclude with some possible solutions to the problems. It is a broad subject and we have very little time, so I will limit myself to the banking sector. Financial integration Traditionally, most countries’ bank markets have been almost exclusively national. When banks have conducted operations abroad, these have primarily focused on large corporations and securities markets. Smaller companies and consumers have in principle been obliged to use the services offered by the domestic banks. However, in recent years the bank markets have undergone major changes. Several European banks now offer their services outside of their national borders.
We do want to see firms invest in ways that support the wider economy, including to manage the risks arising from climate change. However when assessing capital requirements, and here I am thinking of ‘green’ assets and ‘productive finance’, we must as a prudential regulator consider the risks in individual assets. A departure from such an approach reduces the resilience of firms and potentially the wider financial system. However, as Sam also said we are open to removing unnecessary barriers. A significant constraint currently is the binary nature of MA approvals, and in the course of supervisory engagement firms have raised the risk of the loss of the MA where breaches have not been rectified within two months. As part of considering the responses to HMTs Call for Evidence on Solvency II reform, we will review the MA approvals process. And, whether changes there need to be balanced by stronger post-approval supervision to ensure the MA framework continues to work as intended. 3. Supervisory analysis on sizing the MA Once assets are in the MA portfolio, Solvency II sets out the mechanism for deriving the fundamental spread (FS), which reflects an allowance for risks retained by insurers. Deducting the fundamental spread from the credit spread, gives the quantum of the MA [Chart 7].

This fixity in the assets results in a higher level of confidence that asset cash-flows will be available as the liabilities fall due; and hence that firms have largely mitigated credit spread exposures arising from being either forced sellers of assets or reinvestors of cash. It is for this reason that assets with prepayment risk are typically not suitable for inclusion in matching portfolios, unless they include suitable protection from the financial consequences of prepayment. We are mindful that being closely matched today does not mean that all is well for the run off of the liabilities. Even for a fixed book of business, changes in demographic experience may result in divergence from initial expectations. Therefore, it is important to us that firms regularly revisit their matching profile; indeed that is why we have set out tests in Supervisory Statement 7/18 “Solvency II: Matching adjustment”4 to assist with assessing ongoing matching. This is another reason why even a well matched firm may need to turn over part of its portfolio over time, suggesting prudence is necessary when deciding how much MA benefit to claim based on its current matching position. 4  https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/supervisory-statement/2018/ss718.pdf 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  In our view the MA does not stop firms investing in assets such as construction phase assets structured as debt, or in pools of assets that might not be MA eligible themselves.
Mr McDonough discusses the changing nature of banking, risk and capital regulation Speech by the President of the Federal Reserve Bank of New York, Mr William J McDonough, at the 29th Annual Banking Symposium, Bank and Financial Analysts Association, New York City, on 17 March 1999. Good afternoon. I am pleased to be here today to discuss the changing nature of banking, risk and capital regulation. With the new millennium on the horizon, it seems a particularly fitting time to discuss some of the key trends that are affecting the way both bankers and supervisors think about these issues. Also, as I’m sure many of you are aware, the Basle Committee on Banking Supervision currently is engaged in a fundamental review of the Accord, which is the cornerstone of existing capital standards. In many ways, the changing nature of banking and its risks have led supervisors to revisit the current capital framework, and so I welcome this opportunity to provide my perspective on these risks and how they relate to the future of capital regulation more generally. In the last several years, we have witnessed an increase in the diversity and complexity of businesses in which banks are engaged. While lending and deposit-taking are still the mainstays for a majority of commercial banks, many banks have grown their derivatives trading, securities underwriting and corporate advisory businesses. Some banks have expanded their traditional credit product lines to include asset securitizations and credit derivatives.

While these ratios were relatively basic, they have proved very effective at achieving their goal over the last decade. Over the years, risk management approaches have evolved rapidly, while the Basle Accord has evolved relatively slowly. As market risk management techniques developed, we were able to incorporate a state-of-the-art value-at-risk approach, in a 1996 Market Risk Amendment. As credit risk management techniques have advanced, and as a new discipline of operational risk has emerged, it has become apparent that the long-run relevance and efficacy of the Basle Accord is waning for the most sophisticated institutions. BIS Review 32/1999  4  Supervisors have long known that analyzing simple capital ratios in isolation can lead to incorrect conclusions about the relative strengths of institutions. Thus, they also have relied on a review of banks’ capital plans and on market discipline to assess bank capital adequacy. As we go forward, banking supervisors are building a capital framework on these three pillars – capital supervision, capital regulation and market discipline – and we look to strengthen each of them. Let me start with capital supervision. The cornerstone of supervisory review is the bank’s process for assessing its overall capital adequacy in relation to its risk profile and its strategy for capital level and structure. Supervisors believe they should review and evaluate bankinternal capital adequacy assessments and strategies, in addition to bank compliance with regulatory capital ratios. The better the bank’s own capital adequacy assessment, the better the supervisor will understand the bank’s capital strategy.
The second key challenge is on the external front as the global environment remains uncertain. The lingering euro debt crisis and fragile US recovery continue to weigh on global growth. Policymakers are still grappling with deep-rooted long-term problems, and policy response has been met with mixed success. The recent improvement in market sentiments is a welcomed relief and some tail-risk events may have been averted. Nonetheless, a full recovery is not yet in sight, which adds to uncertainty. Given this backdrop, it is important that the Bank of Thailand remains alert, and retains sufficient policy space to act if and when necessary. The third key challenge is that of a recent surge of capital inflows, whose causes are both domestic and global in their origin. On the one hand, the relatively robust growth momentum in Thailand has been a “pull” factor, attracting portfolio inflows from those seeking to benefit from better economic prospects. At the same time, the low interest rate environment and subdued growth in major economies have helped “push” investors to search for higher risk-adjusted returns elsewhere, particularly in emerging economies including Thailand. The exchange rates of these recipient economies have appreciated as a result, leading to concerns in some quarters about the prospect of growth momentum. In Thailand, some have called on the MPC to lower the policy interest rate to ease the pressure on the baht. A few have gone further to question the suitability of inflation targeting regime for Thailand.

I would like to also point out that a couple of mitigating factors are currently at play, which can help alleviate the adverse impact of capital flow surge. First, the new investment cycle in Thailand may have taken off, led by both the private sector and large public infrastructure  2  BIS central bankers’ speeches  projects. Many of these projects have high imported contents, and stand to gain from an exchange rate appreciation. Spells of baht appreciation thus provide an incentive for many firms to implement a long-overdue technological upgrading and import more capital goods in an environment where labor is scarce and no longer cheap. In turn, these imports can help slow down the pace of appreciation and mitigate the adverse effects on export industry. Furthermore, corporations that have expanded their operations overseas or plan to do so will also benefit from stronger baht which can help, to some extent, reduce the overall impact of baht appreciation on their businesses. With cooperation from all sides, including policymakers and private sector alike, Thailand could seize this opportunity to strengthen the fundamentals of the economy further, and reap long-term benefits that are likely to be greater than short-term costs of adjustment. Second, it is often overlooked that under flexible exchange rate, adjustments in the currency’s value themselves can be an effective buffer for capital flow volatility. In a wellfunctioning market, a currency that is overvalued relative to its fundamentals would be subject to market discipline that helps slow down further appreciation.
Stefan Ingves: The Riksbank's role in the economy Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, at Umeå University, Umeå, 6 February 2006. *  *  *  Let me begin by thanking you for the opportunity to come here and talk to you! Travelling around the country and meeting representatives of different regions, industries and sectors of society is an important part of the openness the Riksbank wishes to maintain. These trips provide us with input for our discussions at the bank, while we build up confidence in our operations. This is my first public appearance as Riksbank Governor, and it feels good to stand here in front of students, teachers, local politicians, regional business representatives and other Umeå residents. I hope we will have a stimulating discussion and I will certainly do my best to answer your questions. Introduction After living and working abroad for many years, it is an honour, as well as exciting and a pleasure to be back in Sweden and at the Riksbank. The bank I left some years ago is now different in many ways. The most important change is that the Riksbank has been governed since 1999 by an Executive Board, consisting of a Governor and five deputy governors, which makes all of the strategic decisions, including monetary policy decisions. Previously the interest rate decisions were formally made by the General Council, which now instead appoints the members of the Executive Board.

If there is no conflict with the price stability target, the Riksbank should as an authority under the Riksdag (parliament) support the general economic policy objectives of sustainable growth and high employment. At the same time, of course, it is not possible to accept large deviations if the inflation target is to retain credibility. In an attempt to clarify further, monetary policy is guided by a principle that when there is a deviation from the target, the aim is normally to bring inflation back to the target level within two years. This also gives the Riksbank some scope to take into consideration other factors than the path of inflation when setting interest rates, such as growth and employment, while the principle is based on the idea that the deviations will only be temporary. We thus endeavour in normal situations to meet the inflation target within a two-year perspective. We have chosen this because we would otherwise be forced into substantial interest rate adjustments to keep inflation exactly at target level in the short term, which could subject the economy to considerable strain. In certain cases, however, we may need to have greater flexibility than the two-year perspective allows. If the economy were to suffer a very large supply shock – for instance, in the form of soaring energy prices, or during extreme situations such as wars or natural disasters – the adjustment of inflation could need to be even more prolonged. Otherwise, the strain on the real economy could become unacceptable.
I assume, with hope more than knowledge, that this was indeed the extreme of possible financial crisis that could be experienced in a market economy.”  9  8  The Crisis, by Alan Greenspan, March 9, 2010 Draft. BIS Review 81/2010  This motivates a final lesson coming out of this crisis, which is that policy making, whether it is fiscal, monetary, supervisory or other, must always strive to be as forward-looking as possible, and to be robust to the possibility that we will experience situations tomorrow that are unimaginable today. BIS Review 81/2010  9

Legislation to enable the IBC proposals was passed in 20138. The benefits from separation are several. Retail deposits tend to be a cheap source of funding. In part that is because retail deposits are protected up to a limit by statutory guarantee – so they tend be safe, and sticky. Banks that have a range of activities would have an interest in using cheap, protected retail funding to engage in its most risky activities – for which direct funding is likely to be much more expensive. Furthermore, historically, banks with large retail activities have also been viewed by credit rating agencies to have a large degree of implicit government support thus making their public debt issuance cheaper as well. The funding advantage from being seen to be “too big to fail” has been estimated from a range of studies to be equivalent to a subsidy on the scale of hundreds of billions of dollars globally,9 encouraging and enabling greater risk-taking by firms than true costs of funding would justify. Separation also means that the structure of firms is simplified and hence they would be easier to resolve if necessary. The EU more generally is still deciding on its precise approach to structural reform, although the Liikanen report (2012) took a slightly different approach from the IBC.
The krone depreciation has helped start the restructuring process. After a decade of higher growth in imports than mainland exports, export growth is now outpacing import growth. The tourism industry is one of many industries experiencing an upswing. Many export firms have announced plans to increase investments in 2016, which will likely entail an increase in production and market shares. Oil service companies are also benefitting from the krone depreciation. So far, around 75 percent of the field development contracts for Johan Sverdrup have been won by Norwegian companies, a clearly higher share than in recent years 2. The effect of the sharp fall in demand from oil companies is nevertheless predominant in the oil service industry. Both the oil production industry and the oil service industry must now go through a process of restructuring. Costs at many stages appear to have followed oil prices upwards. High prices may have created a sense of complacency. The profits from petroleum activities have nevertheless been substantial. Most of the economic rent has flowed into government coffers via the special taxation of oil production. But wages in oil production and oil services have also been relatively high. The  2  Statoil (2015): Press release of 9 December 2015. BIS central bankers’ speeches  7  rise in input prices and investment in the petroleum industry have been significantly higher than for other industries. The excess costs have reduced the economic rent.

One hard-won lesson was particularly important: the central bank must keep the crown and government at arm’s length and must not extend credit to government. Control of the printing press would promote economic stability and prevent unrestrained money printing to finance spending by the crown. Two hundred years later, safeguarding the value of money remains monetary policy’s main task. Responsibility for monetary policy rests with Norges Bank, but today policy is geared towards maintaining stable inflation rather than a stable currency backed by a precious metal. The Bank’s role has also changed in other areas. From being the country’s only bank, Norges Bank took on the role of the bankers’ bank, with the new responsibilities that entailed. The central bank also has a responsibility to promote robust financial markets. The core of Norway’s payment system is housed in this building. Two hundred years as a central bank in a small open economy The Norwegian economy has changed over the past 200 years. In the early 1800s, eight in ten Norwegians worked in agriculture, forestry and fisheries compared with one in forty today. But some important features have not changed. Norway is a small open economy and developments abroad have an impact at home. Our foreign trade is largely based on natural resources. In the early 1800s, fish, timber and shipping were the mainstays of our economy. In recent times, oil and gas sales have accounted for a large share of Norway’s export revenues.