samchain/econo-pairs-v1 huggingface dataset:
They just say, “What’s my payment going to be next month?” And if the payment is low, they don’t look at the fine print about what the payment is going to be not next month, but a year from now, or two years from now. And that’s how they get into a great deal of difficulty. So, I think not just working on the predatory loans writ narrow, but also on the issue of financial literacy writ large, I think colleges like this one can do a lot in making sure that when people graduate, they 13 / 15  BIS central bankers' speeches  have a level of financial literacy that can help them navigate through the world. The number of scams that are out there now are just extraordinary. Sometimes people will pretend that they’re me and they send letterhead out supposedly from me telling people that if they were to send a bunch of money to someone, the New York Fed would release a check for a large amount of money, and people actually believe this. Now, my advice to people always is if something seems too good to be true, it probably is.

Although they were not necessarily articulated fully at the time, these solutions entailed several goals: preserving a functioning domestic payment system, ring-fencing the sovereign in the case of bank failures, limiting the socialisation of private sector losses, and creating the conditions for rebuilding a domestic banking system. In essence, the adopted solution saved the domestic operations of the banking system and let the international part to go into a resolution process. The new banks were created by carving the domestic assets and liabilities out of the old failing banks. The idea was then that the Government would recapitalise the banks and place compensation bonds in the estates of the failed banks. However, valuing the assets and liabilities proved a complicated process in the middle of an economic and financial crisis, and a solution emerged where the estates of the failed banks became majority owners of two of the banks and kept a small equity stake in the third, which was otherwise recapitalised by the Government. The new banking system amounted to 1.7 times GDP. In order to stop an incipient run on domestic deposits, all deposits in Iceland were declared safe and all deposits in Icelandic-headquartered banks were given priority over other unsecured claims, including the deposits of the Icelandic banks in branches abroad. As a result of these measures, the domestic payment system functioned more or less seamlessly throughout, and there was uninterrupted access to deposits in Iceland.
Instead, it appears that the consensus on wage differentials has been weakened at the same time that opening of the labour market vis-à-vis abroad has put pressure on wage differentials – in some cases, in the direction opposite to that demanded by labour market organisations. As Monetary Policy Committee member Gylfi Zoëga pointed out recently, the greater the sense of cohesion about wage distribution in society, the lower the unemployment rate that is consistent with low and stable inflation. Conversely, the weaker that sense of cohesion, the less individual worker groups will be willing to participate in creating the public good that is price stability, and the higher the equilibrium unemployment rate will have to be. This theory is based partly on the work of Ezio Tarantelli, one of Italy’s leading economists in the second half of the twentieth century, which shows us that our experience is far from unique. If the theory applies to the current situation in Iceland – and a number of factors indicate that it does – increased cohesion in this sense could create the conditions for lower unemployment and lower interest rates, but without losing control of inflation. Whatever the reason, this situation gives rise to the risk of an outcome that is worse for society as a whole, although some groups may gain at others’ expense. In other words, in this situation as in so many others, a cooperative solution is usually better for the whole than a conflict solution.

It will also be a major determinant of potential inflows from non-residents at the same time. It is precisely one of the key factors in preparing for liberalisation to facilitate the recognition of Iceland as a sound, trustworthy investment option, and that resident investors – and not only the sovereign – have access to foreign credit markets on sustainable terms. Under current conditions, this means that we need an economy that is growing and is in equilibrium, both internally and externally. We need a Treasury surplus, and we need to reduce the Treasury debt ratio. We need strong enough national saving to support a normal investment level. Given the current outlook for investment, this means we must have a surplus on the current account of the balance of payments. We need large enough foreign exchange reserves to sustain the confidence of foreign lenders, maintain our credit ratings, and cushion us against volatility. We need a banking system that is solid and resilient. As I mentioned earlier, we are doing well in many of these areas, and the conditions exist for further improvements during the current year. The extension of the maturity of Landsbankinn’s debt to the old bank (LBI), which was finally negotiated towards the end of last year, has improved the situation. It enhances the possibility of expanding the foreign 4  BIS central bankers’ speeches  exchange reserves and increasing the portion not funded with foreign credit. In 2014, the Bank was a net purchaser of foreign currency in the amount of 111 b.kr.
One risk we emphasised at that point was that of overheating in the Baltic countries. Two of the Swedish banks had large and growing operations in these countries, meaning that a sudden slowdown in the economies of these countries could have led to significant loan losses for the Swedish banks. In particular, we analysed the banks’ resilience towards a sudden economic downturn in the Baltic countries. The stress tests we conducted indicated that the banks had enough capital to cope with such a development. Another risk we emphasised before the crisis was the rapid rates of increase in household indebtedness and in housing prices. One repeated statement was that we did not regard this as being an urgent problem, but that the development was not sustainable in the longer term. At this point, we could observe that housing prices and household indebtedness had increased by about 150 per cent over a ten-year period. At the same time, households’ disposable incomes had only increased by about 50 per cent. There may indeed be reasons for household debt to increase significantly faster than income for a period, but, over the longer term, this is not sustainable. A third risk we emphasised was that the price of risk was very low in a historical perspective. The low risk premiums could indicate that the investors had not received sufficient compensation for the risk they undertook in the purchase of various types of assets.

Not least, the Riksbank’s responsibility for financial stability should be clarified. Secondly, we lack tools to prevent crises, a weakness that is partially connected with the unclear allocation of roles. Although Finansinspektionen has the task of promoting stability and efficiency in the financial system and has tools that can be used to influence the banks’ behaviour, it does not have the explicit task of counteracting macroeconomic risks. At the Riksbank, we have interpreted the present laws relatively broadly to mean that we are to safeguard the stability of the financial system, while, at the same time, we lack effective tools to do this. Thirdly, we need a new regulatory framework specifying how the central government is to handle banks in crisis. Today, banks that cannot pay their debts are declared bankrupt – just like any other company in the same situation. This is often a lengthy process and bank customers may have to wait several years to get their money back. Furthermore, it is not enough for each country to have its own solution. Banks are increasingly working across national borders. The government and Riksdag must also decide whether Sweden should have the same regulations for the financial sector as other countries. Financial crises can lead to very high economic costs and there are a number of risks that are specific to Swedish financial stability, not the least of these being the Swedish banks’ great dependence on obtaining funding on the international capital markets.
Indeed, as these costs look set to accumulate further with the ongoing crisis, there is much for us to do. Most of this, naturally will be led by government. A whole of government approach, whole of nation, is absolutely necessary in dealing with the challenges. Development Financial Institutions (DFIs), as instruments of policy and agencies of government, will thus have a critical role to play, in particular to deal with the economic and financial challenges faced by businesses in the economy. We are well familiar with the role of DFIs as complementing the market-based and commercially driven financial institutions. This already calls for DFIs to adopt a balanced approach to financing, promoting and supporting public interest or development initiatives. Some would involve higher risks in particular in new ventures or industries or financing those who, at the margins, are unable to obtain financing under normal commercial terms from financial institutions. All this while at the same time, managing risks and ensuring long term financial sustainability. Let’s not forget DFIs are also generally required to make a reasonable return on capital and are answerable for the use of public funds. In this crisis, we have also emphasised a need to act countercyclically – that is to continue extending, even expanding financing – when most commercial driven financing takes a highly risk averse approach. In 2020, Malaysian DFIs rose to this challenge. Financing outstanding by DFIs grew by 7.7%, outpacing the commercial banks growth of 0.8%.

Increasingly, we see more of Malaysia’s industries and companies face scrutiny and challenges in their international business due to unsustainable and questionable practices. As an example, let’s consider the palm oil industry. This has been one of the largest industries that has contributed immensely to the country’s economy for quite some time. Yet, it’s an industry that needs to overcome real and perceived unsustainable practices and reduce its impact on the environment. If left unaddressed, this could threaten the long-term viability of this sector, and threaten domestic employment and industry. Palm oil players need to transform many aspects of their operations to achieve sustainability, and DFIs can play a catalytic role in this transformation. Firstly, DFIs can prioritise financing agritech to enhance the climate resilience of the palm oil industry, promote trust in terms of product origin and upscale the value chain of palm oil. Some examples of these technologies are; blockchain application which can improve traceability of palm oil inputs and contributing towards better acceptance of palm oil produce from Malaysia; precision farming which benefits the environment through more targeted use of inputs that can reduce wastages from excess applications; as well as financing new growth areas that Malaysia is developing competitive advantages in, such as biodiesel and green oleochemicals. Secondly, DFIs can consider providing sustainability-linked loans to encourage smallholders to work towards adopting relevant sustainability certifications such as RSPO and MSPO.
Jobs will take a different form too, as financial institutions (FIs) speed up on their digitalisation to cater to the extensive shift in customers’ preferences. We therefore need to keep workers employed as much as possible. We are heartened that some FIs, including large employers like Bank of China, Bank of Singapore, DBS, Great Eastern Life, Maybank, NTUC Income and OCBC are committed to avoid any redundancy exercises where they can. MAS urges more FIs to do their part to support their workers and take a longer-term view in investing in their capabilities. MAS will support workers to reskill in functions which are becoming more digitalised to harness the potential of technology in new and expanded roles. 7. The nature of jobs has evolved rapidly as the use of technology becomes more pervasive in the Financial Services sector, from the design, development to delivery of products and services. Therefore, jobs will need to be redesigned and transformed too, and employees will need to acquire new skills and adapt to new work requirements. MAS and IBF, with the support of Workforce Singapore, have worked closely with our tripartite partners over the years, to reskill and redeploy workers into new or expanded jobs. 8. Thus far, 25 local and foreign FIs have committed to support close to 5,000 employees, of whom 3,000 have embarked on this journey. Of these, 900 have completed their training and are in their new roles.

13. The demand for digital services is becoming stronger. This is why financial institutions continue to invest in digitalisation even with the current strong head-winds. More than 400 financial institutions and FinTech firms have applied for the Digital Acceleration Grant launched in April 2020, to strengthen their operational resilience, improve process efficiency, manage risks better and serve customers better. Our efforts to grow the tech pipeline has yielded good results. However, demand continues to outstrip the local talent supply and FIs have responded to the tech talent crunch by tripling the number of traineeship positions available in the second run of the attach-and-train Technology in Finance Immersion Programme mentioned earlier. We will expand the scope of financial sector training support beyond finance and future-enabled skills, to include deep technology areas. We hope that FIs and FinTech firms will avail themselves of this support, which will take immediate effect. 14. Individuals also have a part to play to make this work. I encourage finance professionals to continue to build and upgrade your skills, deepen your knowledge and broaden your abilities, so as to seize these new opportunities created. And we will support you along every step in your career development journey, by extending the enhanced course fee subsidies and training allowance for self-initiated learning, and provide career advisory and job matching services where required, which is also available at the career fair today.
17  The legislative changes also include adding non-bank payment providers to the list of regulated entities to whom the Settlement Finality Regulations apply and modifying the Payment Services and Electronic Money Regulations to enable safeguarded funds held by E-Money Institutions and Payment Institutions to be posted with the Bank. 18 These systems were brought within the Bank’s supervision, under Banking Act 2009 powers, because of the potential they have to threaten the stability of, or confidence in, the UK’s financial system or to have serious consequences for business or other interests throughout the UK in the event of their disruption. 10  All speeches are available online at www.bankofengland.co.uk/speeches  10  Changes to payments and customer relationships may have more fundamental implications for financial stability. Specifically, while FinTech may make conventional banking more contestable, improving efficiency and customer choice, the opening up of the customer interface and payment services business, could, in time, signal the end of universal banking as we know it. If today’s universal banks have less stable retail funding and weaker, more arms-length client relationships, the volatility of their deposits and liquidity risk could increase. In addition, with weaker customer ties, cross-selling (my old preserve as a teller) could be less prevalent, hitting profitability. The system as a whole wouldn’t necessarily be riskier, but prudential standards and resolution regimes for banks may need to be adjusted.

Grill, M, Hannes Lang, J and Smith, J (2015), “The leverage ratio, risk-taking and bank stability”, preliminary version; www.eba.europa.eu/documents/10180/1018121/Grill,%20 Lang,%20Smith+-+The+Leverage+Ratio,%20Risk-Taking+and+Bank+Stability+-+Paper.pdf. Haldane, A and Madouros, V (2012), ‘The dog and the frisbee’, www.bankofengland.co.uk/ archive/Documents/historicpubs/speeches/2012/speech596.pdf. IMF (2009), Global Financial Stability Report, April. Laeven, L and Valencia, F (2010), “Resolution of Banking Crises: The Good, the Bad and the Ugly”, IMF working paper, 10/146. Pozsar, Z (2016), “Money Markets after QE and Basel III,” Credit Suisse June 2016. 6  BIS central bankers’ speeches  BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches
The budget for 2002 adhered to these guidelines. The implementation of monetary policy The inflation target is set at 2½ per cent. In the implementation of monetary policy, we aim at achieving this objective. The interest rate affects inflation through a number of channels. An increase in the interest rate will normally contribute to reducing inflation by curbing demand for goods and services and by strengthening the krone exchange rate against other currencies. A lower interest rate has the opposite effect. Generally, the effects of an interest rate change depend on the situation prevailing at the time and on how the market perceives the interest rate change in each case. The effects may also vary over time. Monetary policy influences the economy with considerable lags. Analyses performed by Norges Bank indicate that a substantial share of the effects on inflation occurs within two years. Two years is thus a reasonable time horizon for achieving the inflation target of 2½ per cent. The regulation says that in general, the direct effects on consumer prices of changes in taxes, excise duties and extraordinary temporary disturbances shall not be taken into account. However, knowledge of such disturbances two years ahead will be the exception rather than the rule. Normally, there will be a correlation between the projections of overall inflation two years ahead and such adjusted projections. However, an adjusted price index reflects where we are today in relation to the target in two years.

After the interest rate increase has been reversed, GDP growth will pick up again. After a period, GDP will approach the level that would have been achieved with an unchanged interest rate throughout the period. The 2 results of analyses in the Bank of England are similar, but the uncertainty, of course, is considerable. The key interest rate is set on the basis of an overall assessment of the inflation outlook two years ahead. Our inflation projections and our views on the balance of risks associated with these projections provide a summary of these assessments. Due to a number of factors, there is considerable uncertainty surrounding the inflation projections. Our knowledge of the functioning of the economy is far from perfect. We base our projections on simulations using the macroeconomic model RIMIMI. As the model is not an exact replica of reality, a forecast error arises. In addition, the different economic mechanisms change. Normally, this occurs gradually, but in some cases the changes may occur quickly. Moreover, it may be difficult to assess the current situation in the light of the information available at any one time. The information is often deficient, both because statistics are published with a lag and data contain measurement errors. We must also make assumptions about a number of factors when working on the projections. The economy will occasionally be exposed to events that cannot be anticipated. The terrorist attacks in the US on 11 September represent such an extreme event.
In 2004, for example, the Board met for about 500 hours, an average of over three hours for each of the three days a week on which the Board normally meets. Board members were given about 70,000 pages of material by IMF staff and produced another 10,000 or so of their own in written statements and other documents – equivalent to 300 pages of reading for each and every working day. The direct costs of supporting the Board account for around 10% of the Fund’s net administrative budget. And the indirect costs, in terms of staff time spent writing and reviewing papers, attending and following up meetings and so on, are much higher. The Board should step back from much of this expensive micro-management, for example by ceasing its involvement in the day-to-day reviews of Article IV reports, and concentrating instead on holding management accountable for the delivery of the mandate. The Independent Evaluation Office, reporting on the Fund’s lending to Argentina, pointed to the difficulty of knowing who was responsible for those decisions: management, the Board, or the national shareholders. The Fund is an institution with exceptionally high quality staff which is not best served by its current governance arrangements. At Savannah, the main issue that divided the Americans and the British was the role of Executive Directors. Keynes argued that the Fund should be under the control of the Managing Director with oversight carried out by part-time Executive Directors.

They are reinforced by economies of scale that benefit large financial companies gathered together in a few locations. One such example of a financial centre is London. Mortgage institutions with standardised products independent of distance to customers and borrowing in an international capital market ought to be activities that can profit from these cluster benefits. The concentration trend that we have been able to perceive over the past 15 years among Swedish mortgage institutions demonstrates that these are also following this structural trend. 4  BIS Review 15/2003  Challenge 2 - International regulations One of the intentions behind the EU's internal market and the introduction of the euro is to create a more efficient market for products and services in which competition increases and customers obtain better products at lower prices. One aspect of this is the EU's Financial Services Action Plan that is to be realised by 2005. The Plan contains 42 measures that aim to remove remaining obstacles to cross-border trade in financial services and to promote financial integration in the EU. At the same time, measures are been taken to support the supply of risk capital in the EU. These action plans will help realise the vision of making the EU the most competitive, knowledge-based economic area in the world by 2010. Three-quarters of the measures in the Financial Services Action Plan have already been decided. This will also affect mortgage institutions, as they are major participants in the markets for both lending and borrowing.