samchain/econo-pairs-v1 huggingface dataset:
Out of 48 countries considered in the study, 35 adopted some of the macroprudential policies identified. This amounts to 73%, a significant fraction. However, there is large concentration in few policies. In effect, the most commonly adopted policies are those aimed at reducing the vulnerability of borrowers. For instance, the most widely used measure across countries is caps on Loanto-value. They have been present in 24 out of 48 countries studied in the period that ranges from 2000 to 2010. Two more countries should be added that adopted similar policies (Debtto-income caps). Overall, 54% of countries applied this type of measure. The second most common objective of macroprudential policies adopted is reducing credit growth, with 14 out of 48 advanced and emerging countries (29% of the sample) having used one or more of the instruments in this group. Six countries opted for direct caps on credit growth, five for reserve requirements, nine for dynamic-loan loss provisioning, among which two also applied countercyclical capital requirements. Finally, limiting foreign currency exposure was adopted by eight countries, while restrictions on profit distribution by six. 2  BIS central bankers’ speeches  As mentioned before, there have been several studies assessing the impact of macroprudential policies in cross-country settings. 1 For the sake of brevity, I will focus on the results of variables that have been tested in at least five studies.

Jaime Caruana: Risk management trends and the supervisory structure Remarks of Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the 31st General Assembly of the Geneva Association, Madrid, 27-29 May 2004. * I. *  *  Introduction and overview  I would like to thank Mr de Castries, Mr Liedtke, and the members of the Geneva Association for inviting me to participate in your 31st General Assembly. As the chairman of the Basel Committee on Banking Supervision, I am honoured to address another organisation that names itself after a distinguished city in Switzerland. It is a special privilege for me to do so here in Madrid, not far from the Bank of Spain. Our organisations may hail from different Swiss cities and different sectors of the financial services industry, yet both organisations monitor trends in risk management and work to encourage advances in that discipline. This is a difficult but enormously important duty for all of us. Financial organisations whether they are insurance companies, securities firms, or banks - compete on their knowledge of their customers. They seek to tailor products and services to each customer’s ever changing needs. To succeed in an environment where products and services must evolve quickly, financial service providers must understand thoroughly the benefits, costs and risks of their current activities, while watching the horizon carefully for future changes that might alter the balance between risks and rewards.
Conducting ON RRPs for same-day settlement with a broad range of counterparties – including primary dealers, money funds, government-sponsored enterprises, and banks – allows the Federal Reserve to provide a safe, liquid investment to a wider range of money market participants than those able to earn IOER, and thus expands the universe of counterparties that should generally be unwilling to lend at rates below those available through the Federal Reserve. The increased competition that the availability of this instrument provides should help to firm the floor on the level of short-term interest rates – that is, the rate beneath which market participants should theoretically be unwilling to lend funds. Indeed, ON RRP exercise results over the first year suggest that the operations have been successful working with IOER in establishing a floor on the level of key money market rates (Figure 5). 11  6  A reverse repurchase agreement (reverse repo, or RRP) is a type of temporary OMO in which the Desk sells a security from the SOMA portfolio to an eligible counterparty with an agreement to repurchase that security at a specified price at a specific time in the future. It is economically equivalent to a collateralized investment with the Fed in which the difference between the sale price and the repurchase price, adjusted for the time between transaction legs, implies a rate of interest paid by the Fed on the cash invested by the counterparty.

Self-regulation doesn’t work if there is no clear and consistent allocation of responsibility for the public interest objectives of financial regulation to public bodies that are answerable to the government and to parliament. But likewise, public bodies cannot seek to take on the responsibility of managing within firms, something that has to be the responsibility of boards and management. The senior managers and certification regime is vital here because it creates the framework to establish effective responsibility within firms, while maintaining the role of the public authorities, the PRA and FCA, for supervising and enforcing the public interest. A very good example of how this should work can be seen in the recommendations of the Fair and Effective Markets Review, which provide a means to establish and maintain high conduct standards in financial markets. Structural reform I want now to turn to structural reform and ring fencing. This is a subject in its own right, but I can assure you that I intend to be brief on this one tonight. We are now well into implementation. Last week we issued our second consultation paper on implementing the regime, and we plan one more such paper which will be more in the form of a wrap up of points raised and a few outstanding actions. Any structural reform measure involves complex implementation, the devil is always in the detail, and we need to get that right. I read from time to time that we are apparently watering the regime down via the implementation.
Our challenge today is to disseminate these good practices in emerging markets and to establish similar checks and balances in global markets. This could appear an impossible task, as many will pretend that the absence of rules or regulations of any kind has been at the very origin of the developments of these markets. The world community is now coming to a different view, and looks forward for the definition of international standards and codes of good practices, which would be progressively disseminated by the IMF through its surveillance, and could help limit the excesses of an international “casino economy”. Last, but not least, the seventh building block is the option for the multilateral approach to handle problems, which are now more and more global in nature. And the key instruments of such an approach will have to be the Bretton Woods institutions themselves. Let me be immodest for a moment. The experience they have accumulated, the quality of their staff, their demonstrated ability to address new economic challenges promptly and efficiently make them a major asset of the world community and a central pillar of a new architecture, provided they continue adapting themselves, reforming themselves, to this new world. And suggestions for self-reform are in abundant supply. These seven building blocks have been neglected or unevenly utilized for too long. Assembled in the right way, they could offer a rock-solid foundation for a new financial system. Assembling them, nevertheless, will be hard work, each of them implying that vested interests or perverse practices be challenged.

Fourth, on asset bubbles and the linked exchange rate system: the monetary policy objective of Hong Kong is exchange rate stability, rather than to target asset prices or inflation. Asset bubbles are not unique to economies with fixed exchange rates. Economies with floating exchange rates experience similar problems. In any case, it is difficult to tell ex ante whether there is an asset bubble. On the other hand, most research studies find that monetary policy is too imprecise and blunt to be used as a tool for targeting asset prices. Fifth, on the Hong Kong dollar being undervalued: there is no evidence. Recent empirical research by the HKMA and the IMF show that there is no evidence of currency misalignment for the Hong Kong dollar at present. Given the flexible and adaptive nature of the Hong Kong economy, wages, prices and other economic variables would adjust so that any misalignment in the real effective exchange rate would be corrected. Even a flexible exchange rate is not immune to sustained currency misalignment. Exchange rate  BIS Review 139/2007  5  movements are affected not only by economic fundamentals but also by market dynamics. A flexible exchange rate is arguably more prone to currency misalignment, particularly for small and open economies which are more vulnerable to changes in capital flows. Sixth, on widening the exchange rate band: the simple answer is no. It would only serve to undermine the credibility of the linked exchange rate system and invite speculation on the likelihood of further band-widening.
While absolutely nothing can be definitively ruled out, that nightmare now seems unlikely. I shall weigh that in my own policy considerations, as for me the size of the massive monetary stimulus has partly been designed to insure against that catastrophe risk. So a key question over the coming period will be whether or not conditions are developing where some of that insurance could be withdrawn, consistent with leaving policy highly stimulative. 2 But the economy has in actual fact been very weak, with output falling and unemployment rising. The policy debate in the months ahead therefore will turn, as more usually, on the broad outlook for the risks around inflation over the medium term. That will depend on the data and, in particular, whether the data and surveys about real activity and demand come more closely into line, here and overseas. One of the biggest questions is whether, given the policy stimulus, recovery will be anaemic or whether we can attain the above-trend growth needed to absorb the slack in the economy necessary to ameliorate downward pressures on inflation. This will be at the heart of the quarterly forecast round on which the MPC is just embarking. And it could hardly matter more. Anaemic demand growth would lead to inflation undershooting the target for a period. And it would be likely to see firms continuing to shed labour, scrapping capital and delaying new investment, adding to the hardships the crisis has already brought.

We need to assess these systems against some benchmarks or international norms which would help to increase efficiency, safety and the integrity at national and regional level. In doing so, it may also be useful to look at the benchmarks set by the regional initiatives such as CEMLA, SADEC, CIS, API or other advanced payment systems. Third, the framework need not aim to introduce or formalize too extravagant payment mechanisms for the SAARC countries at this stage, but it should focus on the need to elevate the national payment systems of member countries to a level capable of facilitating present and future trade and investment flows and mitigating risks in cross border transactions. This task can be facilitated by setting up National Payment Councils (NPCs) in their own countries and complying with common standards, harmonization policies and international best practice. Fourth, the framework should broadly include the following: • •  • •  A time targeted vision acceptable to all members. A clear mission accompanied by a statement of the roles and commitment and responsibilities of all members. Policy objectives necessary to facilitate the present and future trade and investment flows within the region. Funding sources, budgetary allocations and an appropriate subscription formula. Guiding principles for mitigating risks and reaping benefits. 7. Road map and way forward  •  If SAARC central bank representatives consent to establish a SAARC regional payment initiative, it will be necessary to appoint an apex body which is capable of taking the reforms forward.
(a) Tradable goods or services are defined as those potentially tradable, rather than actually traded. Tradable sectors are defined as: agriculture, forestry and fishing; industry; information and communication services; and financial and insurance activities. Chart 8: Euro-area activity since the pre-crisis peak(a) Contribution to cumulative percentage change in GDP  20 10 0 -10 -20  Imports  -30  Exports  -40  Domestic demand GDP Germany France  -50 Italy  Spain  Portugal  Ireland  Greece Euro area  Sources: Eurostat and Thomson Reuters Datastream. (a) Pre-crisis peak is in 2008 Q1 other than for Italy (2007 Q3) and Portugal and Ireland (2007 Q4). 10  BIS central bankers’ speeches  Chart 9: Global imbalances United States (a) Vulnerable euro-area countries Japan (b) Oil exporters Rest of the world  United Kingdom Germany China Rest of Asia  Per cent of world GDP 3 2 1 0 -1 -2 -3  2000  2002  2004  2006  2008  2010  2012  2014  2016  2018  Source: International Monetary Fund’s World Economic Outlook, April 2013. (a) Includes Greece, Ireland, Italy, Portugal and Spain. (b) Includes Nigeria, Norway, Russia, Venezuela and the Middle East and North African region.

Second, credit conditions loosened substantially, supported by a sharp compression in perceived long-term risk-free rates, which was only unwound when markets began re-pricing in the risk of bank and sovereign default in the periphery (Chart 5). The decline in interest rates in the periphery in the pre-crisis period suggests that it was a case of capital being pushed into the periphery, rather than it being sucked in by a high rate of return as conventional analysis would suggest. The consequence of all this was an increase in demand in the periphery, much of it in construction, financed by borrowing from the core. This is illustrated in the contrasting experiences of Spain and Germany. Domestic demand in Spain consistently outstripped output growth pre-crisis, while the opposite was true in Germany (Chart 6). These growing external imbalances were accompanied by increasing internal imbalances, as the non-tradable sector in Spain expanded at the expense of the tradable sector, driving up unit labour costs in the former relative to the latter (Chart 7). That was not the case in Germany. 2 Restoring the euro area to strong and balanced growth requires dealing not only with the accumulated financial imbalances – the excessive banking and sovereign debts in the periphery – but also restoring competitiveness and rebalancing the structure of demand and production. On the face of it, that rebalancing is under way, with a narrowing in the current account deficits of the periphery.
In the summer of 2014, the persistence of disinflationary forces could be clearly identified: first, measures of underlying inflation had been drifting down in synch with headline inflation for more than a year, and had reached historical lows.7 Second, for the first time since the inception of Monetary Union, longerterm inflation expectations had started to fall as well. Such fundamental risks to price stability required a forceful monetary policy response. Accordingly, the ECB deployed a series of unconventional monetary policy measures to ensure price stability. The comprehensive package of June 2014 comprised targeted long-term refinancing operations (TLTROs) and a cut of the deposit facility rate, moving it into negative territory. This package was combined with a, to start with, small asset purchase programme initially involving only private sector securities, which was later expanded to include public sector securities (becoming known as the public sector purchase programme – PSPP) and then scaled up over time. These measures were accompanied by further cuts in the deposit facility rate and further TLTROs; moreover, they have been complemented by our forward guidance.

Overall, our monetary policy measures are effective, and are gradually bringing inflation back to a path that is consistent with price stability over the medium term. This takes time, and it requires determination and patience. 1 I would like to thank Sören Radde and Fédéric Holm-Hadulla for their contributions to this speech. 2 See Ciccarelli, M. and Osbat, C. (eds. ), “Low inflation in the euro area: Causes and consequences”, Occasional  Paper Series, No 181, European Central Bank, Frankfurt am Main, January 2017, and the references cited therein. 3 At the level of individual euro area countries, a large proportion of specifications also displays a significant  Phillips curve slope, albeit with the exception of some euro area countries, probably on account of confounding factors related to global exposures and persistent structural changes. However, the finding that domestic cyclical conditions were an important driver of the disinflationary period from 2012 to 2014 is common to all countries. 4 Theoretically, the impact of population ageing on inflation may go both ways, but the bulk of the literature points  to a negative effect. See e.g. Bullard, J., Garriga, C., and Waller, C.J., “Demographics, Redistribution, and Optimal Inflation”, Federal Reserve Bank of St. Louis Review, Vol. 94, No 6, 2012; Shirakawa, M., “Demographic Changes and Macroeconomic Performance: Japanese Experiences”, Opening Remark at BOJ-IMES Conference, Bank of Japan, 2012; Carvalho, C., Ferrero, A. and Nechio, F., “Demographics and Real Interest Rates: Inspecting the Mechanism”, European Economic Review, North-Holland, April 2016.
It provides a powerful incentive to increasing economic efficiency - and the higher sustainable growth rate that we need to satisfy our aspirations for improving living standards - by encouraging the concentration of production on those businesses, or regions, or countries, which have, or are able to develop, a comparative advantage in particular products or services. That's not necessarily how it seems at the micro-economic level. Individual businesses and their employees, or regions, or even countries at the international level, tend to think of competition and market-driven resource allocation as a zero-sum game: if one side wins the other necessarily loses. So it's not surprising that existing producers are tempted to resist the opening of their markets to  BIS Review 53/2002  1  greater competition and look for protection where they can. But attempting to stem the tide by acquiescing in protection would be to ignore the benefits which increased competition, and more efficient and innovative production would bring to society at large, including consumers, as well as potentially more efficient producers and their prospective employees, wherever they are located. It is those benefits which make market competition a positive-sum game at the macro-economic level. I don't at all underestimate the pressures on businesses, and their employees and surrounding communities, that struggle to retain their comparative advantage in a market economy. But standing still is not an option in today's world - nor will it be going forward.

“Reducing Skills Imbalances to Foster Productivity Growth of Malaysia,” OECD Working Paper  3/3  BIS central bankers' speeches
I recognise the importance of the efforts that Germany has made. FT: Your plans for a central clearing house for derivatives have provoked controversy in London, where this is seen as a continental grab for business to pass though LCH.Clearnet and people are unconvinced that you need to have this lender-of-lastresort, central bank function. CN: For me, the argument is very simple. If you really want to have a safe system you really need these clearing houses to have the possibility of extensive access to central bank liquidity. I think that is the only way to ensure that in times of stress, when you have eventually defaults of counterparties, you can manage the liquidity in a smooth fashion. Having said that, no central bank would accept large-scale access to central bank liquidity without having the oversight. FT: But market participants say that even after the Lehman collapse, they still managed to unlock a lot of these trades without having to resort to central bank liquidity. CN: Well, the fact that it went well doesn’t mean that it will always go well. It may depend also on the type of instruments that you are clearing. We have the feeling that it may be different for, on the one hand, fixed-income instruments and, on the other hand, derivative instruments. But this is a long-standing position, it is not taken especially vis-à-vis London. FT: What sort of model of European capitalism will emerge after this economic crisis? CN: We will probably return to a more organised, ruled, economic system.

But we have to see how this continues and develops, and whether there are some market segments that do not improve sufficiently or remain impaired. FT: But that means it will be weeks or months before you took such steps… CN: We are working on that. We will see what we feel might be necessary. FT: But if there were measures taken, they would be “credit easing” targeted a specific problems, not blanket quantitative easing in the way that the Bank of England is doing it? CN: Well the Bank of England is apparently concerned about the monetary base. But we don’t have the same problems for the time being with the monetary base in the euro area. I don’t know if it has something to do with the fact that banking intermediation in the euro area as a whole plays a bigger role than in the US or even in the UK. FT: Some of your colleagues on the governing council want to make a very clear distinction between fiscal policy and monetary policy – whereas in the UK and US they have become blurred. Does that prevent the ECB from doing QE? Would you have to go to governments first? CN: No, we have the ability to decide on the instruments that we feel we need to use to implement our monetary policy. The only thing is that of course we are attentive to the level of risks that we are taking as a central bank.
Figure 13 90-day delinquency rate (percent of loans)  6  12  Clearing houses and family subsidies (right axis)  5  10  4  8  3 Banks  6  Retail  2  4  1  2  0  0 11  12  13  14  15  16  17  Source: Central Bank of Chile using SBIF, SUSESO and SVS data. 19  Figure 14  Capital adequacy ratio by country (*) (percent)  30  30 Ireland  Sweden  2017  26  26  Luxembourg New Zealand Norway  22  22  Denmark Germany France Czech Rep. Brazil Colombia Belgium Hungary Japan Switzerland México Peru Turkey Israel Canada Chile  18 14  U.S.  U.K.  18 14  10  10 10  15  2011  20  25  (*) Dotted line marks 45-degree angle. Green diamonds correspond to Latin American countries (red for Chile). Source: Central Bank of Chile using IMF (FSI) data.

The downside risks to households’ disposable income and the likely tightening of financial conditions could curb the recent increases. But the sharp growth in the cost of construction materials, which could pass through to a greater or lesser extent to final prices via a decline in activity in the sector, and the role of real estate property as a safe haven in times of financial market volatility, could have the opposite effect. 3  Year-on-year growth in house prices accelerated from 6.4% at December 2021 to 8.5% in 2022 Q1. 6  There was no substantial change in credit standards for new residential mortgages in 2021. Average borrower loan-to-value (LTV) and loan-to-price (LTP) ratios in new mortgages held steady in the year. Nor were there any significant changes in the proportion of mortgages with a higher level of leverage (those with LTV or LTP ratios over 80%).4 Conversely, the average interest rate spread for fixed-rate mortgages, which currently represent the bulk of new mortgage lending, narrowed in 2021, converging with the average spread for variable rate mortgages and standing at its lowest level in recent years. In this respect it is important to underline that the correct pass-through to interest rates of the risks inherent to lending is an essential condition to guarantee financial stability. The credit-to-GDP gap serves as an indicator for credit market imbalances and as a guide for the potential activation of macroprudential measures.