samchain/econo-pairs-v1 huggingface dataset:
In this sense, we, at the BNB, just as we have done so far, will always support an economic policy in Bulgaria that does not threaten long-term economic interests at the cost of achieving quick economic effects – such as the policy of continuing structural reforms, enhancing the efficiency of institutions and improving the general environment for doing business in this country. The BNB traditionally supports conservative fiscal policy owing to which Bulgaria today demonstrates excellent fiscal indicators and given the stable banking system we have reasons to expect that our new issue of euro-denominated Bulgarian global bonds will be well received. We would also welcome efforts at speeding up privatization and active concessioning – inasmuch as they would not only strengthen our country’s fiscal position, but would also improve the long-term competitiveness of the Bulgarian economy. We, however, cannot be indifferent to any ungrounded economic experiments whatsoever. At the same time, the range of working solutions for Bulgaria’s economic prosperity must also take into account the analysis of the comparative advantages of the Bulgarian economy in a global context. In fact, it is exactly the current crisis that has highlighted and provided empirical evidence of the resilience of Bulgaria’s economy. Allow me to recall that before the crisis many argued that the currency board in Bulgaria was restraining the economy’s flexibility and that the high current account deficit (above 1/4 of GDP in 2007) was a dreadful “imbalance” that could in no way be funded in the event of capital flight from the country.

Against the background of this interest to higher education in economics, the VUZF University gained a reputation as one of the most attractive higher education establishments for young people seeking the optimum combination between theoretical knowledge and practical training. One of the reasons is that VUZF University is known for its policy of attracting as priority professors of great experience, acclaimed as practiced professionals in their area of expertise. This is very gratifying for me, because as an employer in large financial institutions since 1997 I have been aware that the discrepancy between theoretical knowledge and practice is a serious issue facing newly-minted economists upon their graduation. And practical experience gives a great momentum at the beginning of any young person’s career – because it not only teaches them specific professional skills, but also develops their comprehensive qualities, such as team work skills, efficient time management, motivation to seek alternative solutions in a competitive environment, etc. VUZF University however is not just a place of education, it is a centre of research, discussions and generation of ideas. Today’s forum is another proof of this. A year ago, again before the audience of a scientific conference organized by VUZF University, I expressed my purely professional dissatisfaction with the fact that we rarely hear the prudent voice of the Bulgarian academia.
Experience has taught us that the price of shares and other assets is an important part of the dynamics of economic growth. Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of households and their consumption. Therefore, central banks tend to keep an Argus eye on the development of the stock market and reflect on how the financial system functions. Another reason is the oversight of financial stability. Today, I would like to confine my brief remarks to some aspects that have to do with the fact that shares now weigh considerably more heavily in household portfolios than was the case thirty years ago. What are the implications of this trend? Increased interest in stock market investment In recent decades the financial system in most western countries has undergone a remarkable transformation. One feature of this development is disintermediation. A portion of the funds involved in saving and financing flows directly to the financial markets instead of being routed via banks’ traditional lending and deposit operations. The general public’s heightened interest in investing in the stock market, either directly or through mutual funds, has been an important component of this process. Statistics show that in recent decades shares have made up an increasingly large proportion of households’ financial assets in many countries.

At the same time, individual investors, immersed in chat rooms and message boards, are exchanging questionable and often misleading tips. Yet, despite all this available information, investors find it increasingly difficult to profit. … Stock prices skyrocket with little reason, then plummet just as quickly, and people who have turned to investing for their children’s education and their own retirement become frightened. There appears to be no rhyme or reason to the market, only folly.” This is a quote from the preface to a recently published biography about the well-known and long term 1 value oriented investor Warren Buffet. Buffet began his career forty-five years ago with only 100 U.S. dollars and has over the years built himself a multibillion-dollar fortune. I quote the passage to illustrate a view held by some of what was going on in the stock market during the end of the 20th century and the beginning of the 21st. Learn from new theories From experience we know that investors may temporarily pull financial prices away from their trend level. Over-reactions can occur so that excessive euphoria drives prices unduly high, just as undue pessimism can push them down too far. New theoretical and empirical arguments have been put forward against the notion that financial markets are efficient. According to the efficient market hypothesis, it is only changes in fundamental factors, such as profits or dividends, that ought to affect share prices.
Changes observed in the market features of the business in other countries also foreshadow what may in time characterise the mortgage market in Malaysia. In some markets, brokers of home loans are commonplace and a growing proportion of loans are protected by insurance. In an increasingly challenging environment, banks will need to demonstrate that they have sufficiently strong balance sheets, processes, and management plans in place to contain the risks, while providing continued support for portfolio expansion and product innovation in the mortgage financing segment. This will entail continuous assessments of the changing profile of risk and the appropriate consideration of new and alternative ways to manage risks. The board in particular is responsible to ensure that product innovation and the re-packaging of risks in the mortgage portfolio do not outstrip the bank’s capacity to manage the associated risks. Today, we are pleased to have three distinguished speakers address some of these issues and developments in greater depth. They are Dr. Yeah Kim Leng from RAM Holdings Berhad and Dr. John Lee from KPMG who will share an overview and their perspectives on risks in mortgage markets in Malaysia, as well as their experiences with approaches to managing these risks in the light of the many changes taking place in this area. We are also especially honoured to welcome Mr. Peter Pang, the Deputy Chief Executive of the Hong Kong Monetary Authority, who will speak on Hong Kong’s experience in the area of mortgage financing.

Christine Lagarde: The path out of uncertainty Remarks (via videoconference) by Ms Christine Lagarde, President of the European Central Bank, at the inaugural session of the Italian National Consultation, 13 June 2020. * * * There is no doubt that the economic situation we face today is characterised by profound uncertainty. Looking into the future has rarely been harder. But, as Abraham Lincoln said, “the best way to predict your future is to create it”. And this is the theme that I want to emphasise in my remarks today. Obviously there are some major unknowns that we cannot do much about, such as possible second waves of the virus or when exactly vaccines will arrive. But there are steps we can take to help navigate out of the fog of uncertainty. Most importantly, we need to elaborate and propose a reliable compass – that is, a positive vision of what our economy will look like after. Our economies are entering an inevitable phase of transformation, but if policymakers can demonstrate that we will emerge together from the crisis stronger – with more agile, more modern and more equal economies than before – we can ensure a more resilient recovery today and more sustainable growth in the future. Uncertainty in euro area economy The crisis is weighing heavily on the euro area economy. Business investment looks to have collapsed in the first quarter, even more strongly than GDP.
the net return for the near future and instead reflected pure hopes of what a future buyer of a property might be prepared to pay. When the property bubble burst, prices plummeted, in some cases by over 60 per cent in around 18 months. There were several weaknesses in risk management with regard to property loans: –  An incapacity (or unwillingness) to see the price trend as a speculation bubble. Some people did realise the dangers, but had trouble making themselves heard in the prevailing atmosphere. –  The emphasis on the loan collateral, i.e. the property itself, at the cost of an assessment of the borrower’s capacity to repay. –  The fact that no one saw the substantial concentration of risk through exposures that were ultimately dependent on property price trends. It has been calculated that more than 60 per cent of the banks’ loan losses during the crisis can be attributed to property loans. –  The bank’s “self-delusion”, which consisted of high-risk loans, i.e. loans against collateral of low priority, being granted by financial companies that were closely linked to the banks. It was among these companies that the financial crisis began. In other words, there was a lack of overall group perspective in the risk management. As the rise and later the fall on the property market played such a central role in the banking crisis, it is worth a special mention. However, it was not the only risk factor the banks should have managed better.

Thus the structural analysis reveals that for the region as a whole, before the crisis in 2007 the role of the direct investments was significantly larger than that of the debt creating flows in creating international liabilities, whereas it turned balanced in 2013. By the end of 2018 as expected, mostly through deleveraging, the level of debt creating flows decreased. 13  Chart 10 Structure of NIIP  Source: IMF BOP data. The simple analysis of the external sector profile in the region, reveal compression of the current account gaps, slowdown in financial flows, and adjustment of the IIP position. Some of the adjustments might be a reflection of the unsustainable pre-crisis imbalances, some of them are cyclical, and some might be a result of structural shifts that boost competiveness, enable export to grow and gaps to be narrowed. Whichever the cause, it is critical to assess whether the adjustment and the current level are in line with what the fundamentals and policies would suggest. For this reason, we use the latest available results from the IMF external sector assessment and we construct a heat map to have broader vision of where the region stands in terms of the external sector imbalances. The current account focus offers a general conclusion that the region is broadly in line with fundamentals, with five out of eleven counties have current account in line with fundamentals according to the IMF estimations, and four have stronger position, while three show weaker position than what the fundamentals suggest.
Investors are still feeling their way: for example, deciding on a benchmark yield for the euro, when there is a significant spread of perceived credit risk even between member state governments, is one area where fund managers may still be finding their feet. Although I am not close to it myself, it is my impression that the industrial and commercial sectors have also adapted well to the euro, although the amount of adaptation that has been required differs across individual cases. Many may not be affected, but equally many may be experiencing a drift towards more quoting and invoicing in euro; in some cases there will be pressure to do so which, on competitive grounds, they can ill afford to ignore. And there will be some who find themselves at a slight competitive disadvantage if they are bidding for business in a euroland country against a competitor from another euroland country; previously both bidders had to take account of exchange risks and conversion costs, but now it is only the Hong Kong bidder who faces these. Finally, I understand that among the general public there was an initial burst of interest in euro deposits (over and above mere redenomination of existing ones in the parent currencies), but that this interest waned somewhat with the euro’s subsequent depreciation.

New financial sector regulation (I am referring to the CRR/CRD and the forthcoming BRRD) and single banking supervision will add new aspects and new partners to Nordic-Baltic cooperation. The goal of harmonisation of cross-border regulatory and supervisory practices is to create an operating environment for banks and other financial institutions that fosters mutual trust and helps ensure that the provision of financial services is continuous and satisfies the needs of the real economy. When the SSM becomes operational, it will have important effects on the routine supervisory work in the Nordic-Baltic region. The home countries of several subsidiaries that will be included under direct supervision by the SSM/ECB will probably remain outside the SSM. This presents a new challenge for the Nordic-Baltic cooperation framework. In the light of the success of our regional cooperation it is rational that we build the new principles of supervision on the existing foundation wherever possible. I hope and believe that in this new and more complex framework we will be able to preserve an important value – the spirit of cooperation. In view of the development of the single market it is also important that the building of the banking union be completed – the SSM must be followed by the SRM. Ideally, this would create the balance between rights and responsibilities which has been the guiding principle in safeguarding cross-border financial stability for nearly a decade.
A bank holding a buffer of reliable high quality liquid assets, such as Treasury bills or other government securities, can draw on them immediately and directly in the event of a sudden withdrawal of market liquidity or an unexpected increase in its funding requirement. Of course, safe, liquid assets offer lower returns than other types of assets, so there is an opportunity cost in maintaining such a liquidity cushion on the balance sheet. But such assets nevertheless provide the most readily available and reliable provision against a crystallisation of liquidity risk. Unfortunately, banks’ reserves of reliable liquid assets have proved insufficient to meet the recent funding shock. With hindsight, incentives to raise the efficiency of maturity transformation have lowered this safety valve in the system too far. I would like to examine in a little more detail the UK experience in this respect. In the midnineteenth century, UK banks held on average sixty percent of liquid assets as a proportion of total deposits, an extremely high ratio explained by the frequency of liquidity crises around that time. Shortly after the 1866 Overend and Gurney crisis, the Bank of England accepted a role as lender of last resort, leading banks to relax their extremely conservative (and inefficient) approach to liquidity. The average liquidity ratio dropped to around thirty percent of total deposits.

It is calibrated to ensure that a bank has enough highly liquid assets to meet its outflows for the first week of a liquidity crisis without recourse to the market for renewed wholesale funding, in order to allow the authorities time to explore options for an orderly resolution. It was designed as one component of a wider crisis management regime, and not as a means for a bank to manage its precautionary buffer for addressing liquidity strain on a going concern basis 3 . Chart 4 shows how actual liquid reserves fell in line with minimum requirement levels until 1981, and continued to decline afterwards, albeit more slowly. Clearly, over this same period, banks also diversified their liquid asset holdings to include other currencies, and started using repo markets extensively. So the chart may exaggerate the decline somewhat. Nonetheless, the overall historical pattern has clearly been one of a marked secular decline in cushions of high quality liquid assets. Similar trends also prevailed in countries other than the UK, such as the US, Canada and Sweden. 4 And focusing on the past decade, whilst holdings of very high quality liquid assets have remained relatively stable, they have not increased to match banks’ rising vulnerability to liquidity risk described above. 3  See Financial Services Authority: “Review of the liquidity requirements for banks and building societies” Discussion Paper 07/7. December 2007. The UK regime is under review. 4  See Goodhart, C.A.E. (2008), “Liquidity and Money Market Operations: A Proposal”, London School of Economics, mimeo.
If fiscal policy is systematically too expansionary during booms and when petroleum revenues are higher than expected, Norway will in periods experience pressures in the economy and rising price and cost inflation. This will often give rise to situations where the krone depreciates, thereby undermining the credibility of our monetary policy. There is a price to be paid for this. Market participants will lose confidence in the krone and demand a higher interest rate for maintaining krone positions rather than switching to other currencies. The result is a permanently higher interest rate level in Norway compared with other countries. Intricate relationships Earlier, monetary policy was based on extensive use of interventions – in other words, purchases and sales of foreign exchange in order to defend the krone exchange rate. Denmark has used this instrument with positive results. There are probably many reasons for this in addition to its stable terms of trade. For instance, fiscal policy in Denmark has on numerous occasions made a substantial contribution to exchange rate stability. Over time our experience of large-scale and persistent interventions has been mixed. When the central bank intervenes heavily to defend the krone, market participants may easily move into a game situation and perceive central bank intervention as an interesting opportunity to make a profit. Market operators know that a situation in which the krone is being propped up only because Norges Bank is buying kroner cannot continue. It is then tempting to take reverse positions in the foreign exchange market in relation to the central bank.

In such an environment, companies too will have to carefully manage the higher input and other costs and how much of that to pass on to consumers, to preserve your margins without losing either competitiveness or affordability. BIS Review 60/2008  1  Subprime crisis and Asia’s continued push to deepen capital markets The second issue is the turmoil in global financial markets. The transmission of the crisis is a good illustration of how inter-connected financial markets are today. The problem started with US subprime mortgages, in fact a relatively small part of the US mortgage market, but it rapidly escalated into other securitized markets, to more generic debt capital instruments and eventually into the wholesale or LIBOR money markets. From there, as central bank surveys have shown, there is now a general tightening of lending conditions to end-borrowers, which are exerting a drag on the US and Western European economies. Asia has felt some of the tremors of this crisis, but as yet we have been relatively unscathed. In the banking sector, a number of banks in the region wrote off losses on their US sub-prime mortgage related assets. Compared to their peers in the US and Europe, the impact on their balance sheets and profitability has been less severe. This can be attributed to a combination of factors. Following the Asian financial crisis, banks here had taken active steps to improve their credit standing by enhancing their capital base.
The BIS Review 7/1999  –4–  counterpart is a sharp decline in net external demand in the industrial countries, which, if it is not offset by action to stimulate domestic demand in those countries, could lead to weakening global activity and price deflation. In fact to varying degrees – reflecting differing assessments of how far their particular currency area is expected to be affected by the slowdown in external demand, and different starting points in their assessment of trends in domestic demand, and of how close they were initially to full capacity, in their respective overall economies – both the UK and the euro-zone, as well as the US, have acted fairly aggressively to reduce interest rates since the autumn; and Japan has moved to more active fiscal stimulus. And if the global economic prospect, and net external demand in the industrial countries, were to deteriorate further, then it would be right to contemplate further moves in the same direction – consistently with our aim of effective price stability. What we are trying to do, as I said earlier, is to keep aggregate demand in line with the supply capacity of our economies. We have no interest in the creation of unnecessary spare capacity in our economies as a whole or in a fall in the underlying general price level.

In the labour market this was reflected in a rise in employment of some 1.65 million to an all-time high on the latest figures (for the three months to last November) of 26.6 million. It was reflected, too, in a fall in the rate of unemployment from a peak of 10.6% (on LFS figures) to the current rate of 6.1%, which is the lowest rate for almost 20 years. As far as the regional impact is concerned, I would note that over this period unemployment in Scotland – though still higher than in the UK as a whole – has also declined – to 7.6% on the latest LFS data, compared with a peak of 10.8%; and on a claimant count basis it, too, is currently lower than for 22 years. These developments in the labour market produced only a fairly gradual pick up in pay settlements and earnings growth compared with past periods of labour market tightening – though we have, of course, been unsighted on what has happened to earnings growth more recently. And underlying retail price inflation – on the Government’s inflation target measure (RPIX) – averaged some 2¾% a year through the expansion, and is currently exactly on target at 2½%. By the time of your last dinner it was already becoming clear that overall output growth needed to moderate if we were not to run into overall capacity constraints and a pick-up in inflation.