samchain/econo-pairs-v1 huggingface dataset:
The banks are the single most important providers of these basic functions. The banks’ income largely consists of payments by consumers to the banks for their specialisation in these functions. This income also reflects the fact that the banks borrow over the short term – for example through our wage accounts – and lend over the longer term – for example  BIS central bankers’ speeches  1  through our mortgages. As it is cheaper to lend over the short term than the long term, the banks also earn money this way. In comparison with companies in other sectors, the banks have little equity. To some extent this is natural, in that the banks’ core activity is borrowing money, which is to say taking on debt. Leverage means that the banks can earn a lot of money by maintaining low equity/assets ratios. Of course, leverage applies to all companies, but, as we will see, banks can have particular reason to take greater risks than other companies. Vulnerability and contagion risks demand special bank regulations The combination of the banks’ central functions and their high indebtedness creates risks. This is a matter of credit risk – the risk of not getting the money you lent back again – and of liquidity risk – the risk of being unable to borrow money. The banks are vulnerable due to their high levels of indebtedness. Problems at one bank also risk spreading to other banks.

Then I made the remark that a separated responsibility for monetary and macroprudential policy, without any coordination, could result in a game between authorities, which could lead to an outcome not desired by any of the authorities. In the United Kingdom, sole responsibility has been given to the central bank. A Financial Policy Committee is to be set up alongside the existing Monetary Policy Committee. Such a solution of course means that the coordination between these two almost parallel committees, although each with a different focus, becomes an important issue. In the EU, the European Systemic Risk Board (ESRB) has been set up at the ECB in Frankfurt. Central banks and supervisory authorities are represented on the ESRB, but the central banks have the majority of the votes when decisions are made. In Sweden, Finansinspektionen and we at the Riksbank set up the Council for Cooperation on Macroprudential Policy in January this year. This council will discuss the assessment of risks in the financial system as a whole and discuss appropriate risk-prevention measures. The Council will also discuss analyses and the development of tools and methods in the area of macroprudential policy. The Council is a temporary solution while awaiting a more permanent distribution of the responsibility for macroprudential policy. At present, the Financial Crisis Commission is working with this issue. The recently appointed inquiry on capital adequacy regulations will focus specifically on responsibility for the future counter-cyclical capital buffer.
3  One explanation of this is that a household’s propensity to consume is affected by how highly indebted the household is. Studies have found that a highly-indebted household reduces its consumption more in a crisis than a lowly-indebted household. See, for example, Andersen, A.L., Duus, C. and Jensen, T.L. (2014), “Household debt and consumption during the financial crisis: Evidence from Danish micro data”, Working Paper, Danmarks Nationalbank and Mian, A. Rao, K. and Sufi, A. (2013), “Household Balance Sheets, Consumption, and the Economic Slump”, Quarterly Journal of Economics 128(4), pp. 1687–1726. 2  BIS central bankers’ speeches  total level of indebtedness. 4 I would also like to point out the difficulties that many individuals experience when bad times coincide with high private debts. An additional factor is that mortgage lending forms an important part of the Swedish banks’ assets, which means that the financial system is sensitive to risks linked with indebtedness. The banks fund as much as three-quarters of their lending for housing purposes on the market for covered bonds and access to funding on this market is based on Swedish and foreign investors being highly confident in the safety of the the underlying assets. If confidence wanes, funding costs may increase and access to funding may decline. This would disrupt the functioning of the financial system and thus have a direct negative effect on financial stability.

It also enables us to follow how debts develop over time and thus also provides some information on the households’ amortisation behaviour. The Riksbank’s credit data is therefore an important piece of the household-debt puzzle. The Riksbank’s credit data confirms our concern Let me now say something about what our data shows and also in some cases place the data in relation to other results that have been presented to us in various contexts. It is of course not my intention to give the impression that other results are incorrect in some way. It is rather the case that data is used in different ways depending on one’s perspective and focus, and this is reflected in the results. The Riksbank’s particular focus is on the risks that household indebtedness may pose to the real economy and financial stability. The aggregate debt ratio underestimates debts among borrowers As I mentioned earlier, the aggregate debt ratio is 174 per cent. However, as this figure is based on the entire Swedish household sector it also includes individuals who have no debts but have an income. Now that it is possible, it therefore seems more relevant to examine the debt ratio for those who actually have debts, that is almost four million Swedes over the age of 17. If the debt ratio is calculated only for indebted households, the figure arrived at is 263 per cent.
On that front we are well advanced in implementing in the UK a programme of reforms to regulation that is unprecedented in scope and effect. To give some examples of reforms and progress: capital requirements for globally systemic banks have increased ten-fold; and since the crisis, major UK banks’ leverage has roughly halved; they have cut the share of total funding accounted for by short-term wholesale funding from nearly 30% in 2007 to 10%; reduced trading assets by a third and cut inter-bank exposures by two thirds. Second, we need to address, through time, the risks that build up in the financial cycle. Financial cycles – the build-up of credit and risk driven largely by the dynamics of the financial system and its interaction with the economy – are generally longer than the “economic” or “business” cycle. The upswing of the financial cycle in Bricks and Mortals lasted from around 1980 until the early 1990s. The last cycle was longer and more powerful. The FPC needs to identify, assess and mitigate risks building up over the cycle both in the financial system and in the economy as a whole. Or to put it in the terms of Alastair’s warning, to make sure that as memories fade, confidence returns and the dynamics of the financial cycle become more powerful we do not simply make the same mistakes again.

Property-related debt – for residential and commercial real estate purposes – makes up around 60% of private nonfinancial sector debt in the UK. And, of course, the counterpart of that is that domestic property-related loans make up around 55% of the domestic loans of the UK banking sector; 76% when financial sector loans are excluded. 1 Moreover, the evidence is pretty clear from history, and across  1  Non-bank lenders are also an important source of finance, providing 15% of all property-related loans according to Bank staff estimates. BIS central bankers’ speeches  1  countries, that there is a strong and special link between booms in property-related debt and financial crises in a way that is much less true for other assets like equities. 2 I want also to reflect a little today on the health of banks in the UK. Since last summer, and particularly since the turn of the year, investors have written down the value of banks in advanced economies. Does this signal concerns about banks’ resilience and robustness? Or about their returns? The Financial Policy Committee The FPC is charged with identifying risks and taking action to protect the resilience of the UK financial system. In essence this means two things. First, we need to be confident that the regulatory framework in the UK addresses the risks not just of individual financial firms, important though that is, but also the risks inherent in the financial system as a whole.
Indeed, the FOMC chose to adjust the policy by extending the MEP to the end of 2012, beyond its planned completion in June 2012, in order to support a stronger economic recovery and help ensure that inflation, over time, reached a rate most consistent with its dual mandate. Market participants recognized the program’s conditionality and adjusted their expectations for additional policy accommodation prior to the announcement of the extension of the program. Indeed, results from the Desk’s Survey of Primary Dealers prior to the announcement indicated that respondents placed 60 percent odds on the Committee either increasing the duration of Federal Reserve holdings, for instance by extending the MEP, or expanding the size of the portfolio through asset purchases without short-term Treasury sales at the June 2012 FOMC meeting.3 There are also other examples of the FOMC adjusting its balance sheet based on its ongoing assessment of the economy. The advantage of the current policy is that it relates asset purchases to economic conditions and the efficacy and costs of the policy in a more explicit and transparent manner. This should enable market participants to recalibrate their expectations more continuously in light of incoming information and may provide some additional reassurance against downside risks. Despite the changes in communication around the current purchases, their intended purpose and the way that I anticipate the purchases will impact the economy are similar to previous policies. The purchases are conducted to help achieve the FOMC’s dual mandate of maximum employment and price stability.

As a result of these decisions, the Federal Reserve is currently adding $ billion in longer-term securities each month to its holdings, in addition to reinvesting principal payments from its holdings of agency MBS and agency debt securities into agency MBS.1 We have bought about $ billion in Treasury securities since January and about $ billion in agency MBS, excluding reinvestments, since mid-September, bringing the total par value of the Federal Reserve’s SOMA (System Open Market Account) portfolio to over $ trillion.2 The FOMC’s current asset purchase program has some key differences from earlier policy initiatives. In the past, when announcing previous programs to change the size or composition of its balance sheet, the FOMC communicated an expected total size of each program and an anticipated date by when it would be completed. Under the current asset purchase program, the FOMC has announced only the monthly pace and composition of purchases and noted that purchases will continue until there is a substantial improvement in the outlook for the labor market in a context of price stability. The Committee has also indicated that, in determining the size, pace, and composition of its asset purchases, it will take appropriate account of the likely efficacy and costs of its purchases as well as the extent of progress toward its economic objectives.
Pablo Hernández de Cos: How to assess corporate sector developments in real (pandemic) time Closing remarks by Mr Pablo Hernández de Cos, Governor of the Bank of Spain and Chair of the Basel Committee on Banking Supervision, at the Bank of Spain and European Investment Bank Conference "Recovering swiftly to limit COVID-19 scarring of Spanish corporates", 29 April 2021. * * * Good afternoon. It is a great pleasure for me to close this conference we have jointly organised with the European Investment Bank. This is the third conference our two institutions have co-hosted on issues related to the Spanish corporate sector, and I greatly appreciate the collaboration between our institutions. A collaboration that it´s now well established. The topic of this conference is most timely and relevant. This morning the European Systemic Risk Board (ESRB) organized a virtual event on which I had the opportunity to participate as chairman of its Advisory Technical Committee, whose focus was precisely on “Corporate insolvencies and public support measures” and where we have presented an ESRB report on “Prevention and management of a large number of corporate insolvencies”. The motivation of this report is indeed very similar to the discussions you have had in this seminar. Economic policies have played an important role in mitigating the impact of the COVID19 shock on our economies. And precisely thanks to these policies, and despite the significant fall in economic activity, we have not so far observed a significant increase in business mortality rates for existing firms.

Some of the results of these analyses have been presented today at this conference. We also plan to regularly update these results to take into account the changing economic environment and outlook. In this regard, let me also stress the relevance of firm surveys as a very useful tool for monitoring real time developments in the corporate sector, especially bearing in mind the long time lags of hard data at the micro level. In this regard, last November the Banco de España launched a new Business Activity Survey to compile first-hand information on a quarterly basis about companies’ activity in the current quarter and about the immediate outlook. The survey compiles qualitative information about firms’ perceptions as to the course of turnover, employment and prices. Given the current economic environment, additional questions were included on the impact of the pandemic, the use of different policy measures and the strategies that businesses intend to adopt in the near term. This new survey is a valuable source of information on how business activity evolves by sector and on other corporate characteristics that will help outline short-term economic developments, but also identify more long-term patterns. As an example, initial results show that the impact of the COVID-19 shock was larger for small, young and less productive firms located in urban areas. Moreover, these firms resorted relatively more to public-guaranteed loans, tax deferrals and ERTEs (furlough schemes).
On behalf of the Board of Governors, I wish to register our profound gratitude to the Centre for Central Banking Studies of the Bank of England and the UK Treasury Department for collaborating with WAIFEM to build capacity for macroeconomic management in the West African sub-region. Our particular thanks go to Messrs. Simon Gray and Tony Smith, who represent these collaborating institutions at this course, for taking time off their busy schedules to share their wealth of knowledge and experience with us. 2.0  The need for liquidity forecasting  This course could not have come at a more auspicious time than now when all the countries in the West African sub-region are operating the indirect approach to monetary management and for that purpose most have instituted monetary policy committees (MPCs). MPCs bring together the major stakeholders in monetary and fiscal management with responsibility, among other things, to derive the quantum of liquidity for mop up from, or injection into, the economy through Open Market Operations (OMO). The overriding objective has been to keep inflation at low and stable level. In recognition of those objectives this course augurs well in filling the capacity gaps in liquidity forecasting as an essential input in the design of sound monetary policy administration in countries of WAIFEM member banks.

James D Rogers: Liquidity forecasting for monetary and fiscal management in West Africa Keynote address by Dr James D Rogers, Governor of the Bank of Sierra Leone, at the opening ceremony of the Regional Course on Liquidity Forecasting for Monetary and Fiscal Management, organised by WAIFEM, Bank of England and UK Treasury Department, Freetown, 17 April 2007. *  *  *  Director General of WAIFEM, Dr. Chris O. Itsede, Distinguished facilitators from the Bank of England and the United Kingdom Treasury Department, Distinguished Course Participants, Ladies and Gentlemen. 1.0  Introduction  On behalf of the President, His Excellency, Ahaji Dr. Ahmed Tejan Kabbah, the Government and people of the Republic of Sierra Leone, it is indeed a pleasure to welcome you all to Freetown on the occasion of the regional course on Liquidity Forecasting for Monetary and Fiscal Management jointly organized by WAIFEM, the Bank of England and the United Kingdom (UK) Treasury Department. l invite you to take some time off your crowded programme to visit tourist attractions and appreciate the recovery the country has achieved since the ruins of the civil war. The smiles are back on the faces of Sierra Leoneans, and visitors now have the peace of mind to savour the beautiful scenery of Freetown.
After taking a close look at the foreign exchange space with economists, traders, and market analysts, the NYIC team zeroed in on settlement of foreign exchange spot transactions as a first area of investigation. FX spot transactions are critical in the context of cross-border payments, and serve as a building block for longer, more complex transactions. Traditionally, settlement generally takes two days after a transaction, which leaves some room for improvement. By demonstrating improvements in settlement of FX spot transactions, the NYIC could address settlement time and risk, which would have implications to speed and access for the broader cross-border market. We are not the first to address this topic, of course, but the NYIC wanted to investigate it from the perspective of the Federal Reserve, through the lens of a wholesale CBDC. The NYIC developed a hypothesis that there is a distributed ledger technology solution for wholesale FX settlement that results in instant and atomic settlement in which a wholesale CBDC is the settlement asset. NYIC then built a working prototype and tested it. Results from the experiment indicated that settlement could occur in fewer than 10 seconds on average and that horizontal scaling was possible. This indicates that a modular ecosystem of ledgers has the potential for continued scalability, and that distributed ledger technology could enable settlement times well below the current industry standard of two days, with the added guarantee of atomic settlement.

It is held by depository institutions as bank reserves or by individuals in the form of paper currency. Demand for central bank money is driven by many fundamental factors, including the settlement  1/5  BIS - Central bankers' speeches  of both retail and wholesale transactions and its role as a store of value. In addition to these factors, which are likely familiar to any of you who have studied monetary economics, demand for the U.S. dollar is also driven by international factors owing to the role of the dollar in the global economy. In fact, while precise estimates are challenging to come by, available data suggests that more than half of all dollars in circulation may be held outside the United States. 5 As a result, innovation related to money provided by the Federal Reserve will have impacts that extend far beyond U.S. borders. A U.S. CBDC – a digital form of the U.S. dollar that is a direct liability of the Federal Reserve– has the potential to offer significant benefits. It could enable a payment system that is more efficient, provide a foundation for further technological innovation, and facilitate faster cross-border transactions. It could promote financial inclusion and equity by enabling access for a broad set of consumers and foster economic growth and stability. In order to fully realize benefits such as these, a digital dollar would need to be thoughtfully designed and implemented.
On the other hand, rising labour demand will lead to higher  3  See Freeman (2005)  4  Rybinski (2007)  2  BIS Review 137/2007  wages and depending on productivity growth may also lead to higher unit labour costs. Higher wages also imply higher consumption and a further rise of demand for commodities in emerging markets. As the tail wind of globalization is reversing these days, the most difficult challenge which CEE countries will have to face with is to keep fast real growth and, at the same time, to manage nominal convergence – indispensable condition of EMU graduation. There are some issues which will make this task even more complicated: 1. Migration. One of the major obstacles is the massive emigration of workforce observed in the New Member States after joining the European Union. In Poland and the Baltic states some 4 to even more than 7 percent of a labour force attracted by higher wages, job availability and better living conditions migrated so far to the EU-15. This has led to severe tensions in many industries pushing wages and unit labour costs up. High corporate profits have provided a cushion yet, but, if this situation continues, many companies will be forced to raise prices to remain profitable. 2. Rising unit labour costs. Growing tension on the labour market is present in all CEE countries, but Baltic and Balkan States seem to be the most threatened by rising labour costs.

Many forecasters suggest that this trend will not end in the nearest future. There are several explanations of such situation. Firstly, rising oil prices increase demand for alternative sources of energy, biofuels being high on the agenda in many regions. In effect industrial demand for food commodities will further rise. By the way, it is worth to mention what may be the ecological consequences of growing biofuels production. Spiegel online on 26th September 2007 described a research led by the Nobel-price winning chemist Paul Crutzen which had found that biofuels emit even 70 percent more greenhouse gases than fossil fuels. In effect, global warming may accelerate and lead to further increase in frequency of disasters such as floods, droughts, and unexpected weather changes that may have negative effects on crops. Secondly, food prices will be lifted up by an increasing demand for agriculture products in the emerging markets, especially in Asia, as the catching-up process progresses. It is worth keeping in mind that the share of food in the CPI basket is some 10 pp. higher in CEE countries than in the eurozone, so agflation, if it materializes, will lead to inflation divergence. 2. Other commodities prices. Demand for commodities, just as for agricultural products, has substantially risen in recent years. The “problem” lies again in the emerging markets. Fast growing economies create still growing demand for all sorts of commodities, especially metals and fuels (for example: oil consumption in China has doubled within last 10 years).