samchain/econo-pairs-v1 huggingface dataset:
22  See TMPG Best Practices for Treasury, Agency Debt, and Agency Mortgage-Backed Securities Markets. 23  Selling dollar rolls when concerns arise about the availability of certain TBA contracts is conceptually similar to making SOMA Treasury holdings available to the market through our securities lending program. One key difference is that the Desk offers settled Treasury holdings to the market through its securities lending program, whereas the Desk only rolls unsettled MBS holdings. 8  BIS central bankers’ speeches  Fuster, Andreas, Laurie Goodman, David Lucca, Laurel Madar, Linsey Molloy, and Paul Willen. 2012. “The Rising Gap Between Primary and Secondary Mortgage Rates.” Paper presented at the The Spread between Primary and Secondary Mortgage Rates: Recent Trends and Prospects conference, held at the Federal Reserve Bank of New York, December 3. Gagnon, Joseph, Matthew Raskin, Julie Remache, and Brian Sack. 2010. “Large-Scale Asset Purchases by the Federal Reserve: Did They Work?“ Federal Reserve Bank of New York Staff Reports, no. 441, March. Hancock, Diana, and Wayne Passmore. 2011. “Did the Federal Reserve’s MBS Purchase Program Lower Mortgage Rates?“ Journal of Monetary Economics, Vol. 58 (July): 498–514. Krishnamurthy, Arvind, and Annette Vissing-Jorgensen. 2011. “The Effects of Quantitative Easing on Interest Rates: Channels and Implications for Policy.“ Brookings Papers on Economic Activity, no. 2: 215–65. Li, Canlin, and Min Wei. 2012. “Term Structure Modelling with Supply Factors and the Federal Reserve’s Large Scale Asset Purchase Programs.“ Finance and Economics Discussion Series 2012–37. Washington: Board of Governors of the Federal Reserve System, May. Rich, Robert and Joseph Tracy.

It must dispel the image of takaful as being an overly-complicated form of insurance suitable only for Muslims. Market positioning should have broad appeal. Products should be easy to understand and live up to public expectations of fair treatment, transparent and efficient service. In operational terms, this means using plain and simple language and always seeking to do what is right for the customer, rather than only what is legally required. Over 50% of insurance and takaful complaints that we received in 2017 were of mis-selling or misrepresentation. Remember, when our staff or agents misinform or mistreat a customer, they harm the institution and industry’s reputation, undoing all the hard work that went into building the system that we have today. As a society we need to take care of our own, specifically for the B40 group. There is a lot of work to be done. As at end-2016, insurance and takaful penetration in the B40 segment of working age stood at 30.3%, compared with the overall penetration rate of 46.8%. The roll out of affordable, accessible and easy to understand products under Perlindungan Tenang is a start in meeting the needs of the underserved. Unfortunately, to date, only three takaful operators have developed products under this initiative. Given the importance of financial inclusion for the nation and takaful being a product with pseudo-social leanings, we should expect much more from takaful operators.
Sensing his options will improve in future, and rather than switching spending to some other, imperfect substitute today, he’ll instead want to shift it to tomorrow. Spending on these other things would probably still go up, but by less than the decline in the taxed activity. Aggregate consumption would therefore decline. The way to understand this is to recognise that the amount you save involves a decision about how to allocate your spending over time. And for that decision to change, the future has to look different in some way from the present. Unless it affects your income, a permanent change in relative prices won’t do much to overall spending. Temporary changes, which shift the relative attractiveness of spending at different points in time, can have much more powerful effects. 6  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  6  The cut in VAT in late 2008, for example, enacted at the height of the financial crisis, was by design in place for only a year. It improved households’ real incomes and therefore their capacity to spend. But the more important thing was that it was an explicitly temporary policy. If you know something’s going to cost more in future there’s an added incentive to buy it now. The same is true of the various policies designed to boost spending in 2020: the VAT cut for the hospitality sector, the “Eat Out to Help Out” scheme and the reduction in Stamp Duty.

There are many sides to this. One has to do with whether monetary policy ought to allow for other matters besides inflation, for instance the real economic situation or the risk of problems that might threaten financial stability. I shall be returning to that shortly. Another is the timing of an interest rate adjustment. It is, of course, primarily the inflation forecast that guides monetary policy. But there may be room at the margin for other aspects. Normally it is a matter of whether a measure can be taken a little sooner or later than otherwise. This may be desirable to ensure that the measure is well received in the financial markets, for example. On other occasions we have prepared the general public for future decisions in order to avoid unnecessary conflicts and discussions in society. When we raised the interest rate in 1997, for instance, the decision was timed with a view to sending a clear message in advance of the wage negotiations at that time. 4. Should we take output and employment into account? Price stability is the Riksbank’s policy objective. The antecedents to the Riksbank Act state that, without prejudicing this objective, the Riksbank should also endeavour to promote other economic policy goals that the Riksdag has established, for example a favourable development of growth and employment. One reason for focussing on low inflation is that most things suggest this is a prerequisite for a favourable long-term development of growth and employment.
1  The scale of the phenomenon is truly unprecedented, yet the causes are well known. There are two main and quite clear reasons behind this demographic transformation. First, the fertility rate has dropped substantially since the second half of the 20th century. Specifically, the number of live births per woman has halved, from 5 in 1950 to 2.5 in 2020. And second, life expectancy has increased dramatically, in parallel with extensive improvements in health and nutrition. While world life expectancy at birth stood at only 47 years in 1950, it exceeds 72 years today. In other words, since 1950 life expectancy has increased by 3.5 years for every decade. The fall in fertility and the rise in longevity also mean that, in the coming decades, the working age population will grow significantly more slowly than total population. Not only  2  that: it is worth noting that in some geographical areas this divergence might become dramatic. For instance, the United Nations (UN) estimates that in Europe the number of deaths has outnumbered that of births since the mid-1990s. As a result, the UN projects that the workforce in Europe will shrink by close to 80 million people from now to 2050. This is equivalent to saying that Europe will lose 1.6 out of 10 workers over the next 30 years. Note also that this projection already incorporates a positive net inflow of migrants that would offset, to a degree, the labour supply shortage.

Currently, the portfolio of euro area households at the age of retirement is tilted towards real estate rather than financial assets, especially in the Mediterranean countries. There are, however, various financial products that can be used to extract liquidity from real estate assets. 13  For example, reverse mortgages are loans, guaranteed by the borrower's property, in the form of either a lump sum or a regular income stream until the accumulated debt reaches the loan limit, which is a fraction of the property value. Other forms of reverse mortgages include the possibility for borrowers to borrow funds as they need them up to a pre-agreed limit. Another option is the so-called sale and leaseback contract. In this case the ownership of the dwelling passes to the cash provider who in turn leases the property back to the seller. Some of these products could be combined with annuities, which are insurance products that guarantee an income stream for life. However, in the era of low interest rates the income stream per unit of asset is comparatively low, and tends to decrease even further with the increase in life expectancy. These changes in the demand for financial products could have implications for the structure of the financial system. The traditional role of banks in their intermediation of funds from short-term deposits to loans may diminish.
The first is the international level. The Asian names have been issuing bonds in the international market for quite some time, in major currencies – mostly US dollar. This market is already well developed. Some people may say that nothing needs be done further by Asian governments at this level. The market will do it. However, efforts are being made by Ministry of Finance officials to introduce new products – perhaps by securitization, by combining Asian names or a few Asian currencies, hoping to come up with an attractive product. They hope to bring new benefits to bond investors, but it will be up to the market to determine whether the ideas bear fruit. The second level is, however, more important. This is the local level – the local bond markets in each Asian country – in their local currencies. The importance of these markets can only be seen clearly in the events of the 1997 Asian Crisis. The first problem was that of capital outflow. Even though foreign borrowings of many industrial companies in Thailand were long term. But a lot of the loan contracts had default clauses imbedded within. This allows the foreign creditors to recall the loans early when certain events occur. One example is the clause requiring borrowers to maintain debt to equity ratios above certain thresholds. If the borrower makes a loss, it will eat into the debt to equity ratio. When that happens, the borrower has to increase capital, or face a default.

Until relatively recently, the emerging economies have been considerably more dynamic, partly offsetting the greater slackness in the more industrialised countries such as the United States. However, doubts over the real ability of these economies to continue posting robust growth rates amid the virtual stagnation of the more advanced countries are ever greater. The increase in oil and commodities prices is the second of the basic factors behind recent developments in activity and inflation at the global level, despite the relative easing since the summer. The effects of these price rises have been fully felt in the more advanced economies, while in the emerging economies the pass-through of higher energy costs is proving slower and is still far from complete. BIS Review 122/2008  1  But it is the third of these factors that will most likely influence developments in the world economy in the coming quarters. I refer here to the severe worsening of the financial crisis in United States and in much of Europe, and to the turmoil on international financial markets. Somewhat more than a year back now, when the US subprime mortgage crisis broke, there was great uncertainty over the scope and duration of the episode then beginning. Today, there is unfortunately no doubt that we are facing a global financial crisis of enormous proportions. Although at first the difficulties appeared to be confined to just a few investment funds and relatively minor US mortgage institutions, the overall number of banks affected has since widened considerably.
3  Perhaps a more commonly-used concept in this context is financial stability. However, I consider it more appropriate to talk about financial imbalances. Problems with financial stability are often associated with shocks to the credit supply and with banks defaulting. Financial imbalances can in a worst case scenario lead to this type of situation, but they can also cause major problems for the economy without creating financial instability. One example is that households find they have borrowed too much and thus reduce their consumption over a long period of time to adjust their balance sheets. This can lead to widespread problems of macroinstability in the form of a very deep and prolonged recession. 4  See, for example, Bernanke and Gertler (1999, 2001) and Greenspan (2002). 5  See, for example, Blanchard (2000) and Borio and White (2003). 2  BIS central bankers’ speeches  An excellent status report on this debate can be read in a jubilee issue of the Riksbank’s Economic Review, published in November last year. It is a paper by Frank Smets, adviser to the President of the European Central Bank, which he also presented at a conference organised by the Riksbank last summer.6 Mr Smets argues that after the crisis one can discern three different views with regard to the question of to what extent monetary policy should deal with financial imbalances.

In addition, imbalances risk being aggravated in economic upswings, which means that some measures need to be implemented in situations where there is probably a general resistance to them – what is usually compared to “taking away the punchbowl just as the party gets going”.16 Thus, the measures may also be politically difficult to implement in some cases. The extent to which this affects macroprudential policy in practice will of course depend on the institutional set-up chosen. Difficult target to define and assess The inherent difficulty in defining concrete targets for macroprudential policy may affect the ability to implement various measures. A common formulation for the objective of macroprudential policy is “to counteract risks to the financial system as a whole”, or something similar. Regardless of the exact formulation, it is difficult to specify what the target actually entails in practice. When has it been attained? Let us say that macroprudential measures are implemented over a couple of years and that no problems arise in the financial system. Have the measures then been justified or unnecessary? The only thing the general public can observe is a lack of problems, and there could thus be a risk that the need for macroprudential measures is questioned.17 Measures could be circumvented It could also prove difficult to design a system for macroprudential policy that functions efficiently enough, and which inventive market participants are not able to circumvent. In this situation, monetary policy may need to support macroprudential policy.
In doing so, I would draw upon Thailand’s experience by touching on, first, a quick overview of the retail banking sector; second, I will draw the link to its social aspects - focusing on what’s moving and shaking in the Thai financial landscape; third, going through supervisory concerns and challenges - our policies to promote retail banking sector, while preserving financial stability, and concluding the session by attempting to answer “What do Regulators Really Want?” - from Thailand’s perspective, some elements of which I hope would be true or applicable to other countries’ experience as well. 1. Market developments of the retail banking sector in Thailand  The past few years have witnessed a steady increase in the share of retail credits to total credits of the Thai banking sector, climbing to 16.6 percent as of September 2003 from just slightly over 10 percent in 1998 - right after the Asian crisis. This remarkable trend can be explained by both push and pull factors. Laden with excessive liquidity and mired with sizeable unresolved NPL in the corporate sector within the banking system, commercial banks are under pressure to extend credit to the retail sector. In addition, lending to retail sector imposes lower possible loss in case of defaults given its much smaller average size of credits and greater diversity of portfolio than those of the corporate sector.

Although the adjustment would ultimately be greater if it occurred slowly, a very rapid contraction would deliver such a jolt to the finances of many households and businesses that loan losses would result. It is likely that a range of risks will have to be faced, but efforts must be made to minimise the probability of a financial crisis that could harm potential output and living standards. In the final  2  BIS Review 41/2007  analysis, the critical factor is how strong and well equipped the financial system is to withstand shocks, i.e. its resilience. The crucial factor behind the Central Bank’s assessment that the financial system is now more resilient to shocks is the banks’ stronger liquidity and equity positions than a year ago. The major commercial banks have a diversified income base that extends to many countries. Another advantage is the somewhat different business models they have used in their expansion. Their diversified assets give less reason to fear the consequences of an unexpected strain on the financial system. Iceland’s strong fiscal position underpins the banks’ international credit ratings. Other important factors have been the strengthening of Iceland’s foreign reserves and the Central Bank’s capital. Both measures represent natural responses to changes caused in the Central Bank’s operating environment by the very rapid expansion of the commercial banks, especially abroad. Although the main function of a financial stability report is to highlight risks, factors conducive to strengthening the long-term economic outlook should also be duly noted.
Such is the case, for instance, with leveraged buy-outs (LBOs) and the socalled monolines, which specialise, as you know, in insuring the payment of numerous bonds, including those linked to the securitisation of US subprime mortgages. In these circumstances it is easy to understand why the profits reported by Spanish banks in 2007 have scarcely been affected by the financial turbulence and have continued to increase at a rate of around 19%, firmly underpinned by their improved efficiency ratios. Their profitability, both in terms of assets and in relation to capital, also grew compared with 2006. Indeed, the ROE stood at almost 20%. Profitability is obviously the first line of defence for Spanish banks against any adverse shock. But their resilience is also based on two other pillars: a significant volume of provisions, accumulated by the system during the period of strong credit growth thanks to the prudential mechanisms set in place by the Banco de España in the past; and a comfortable solvency position. To quantify these two aspects, loan loss provisions widely exceed doubtful assets, while the system’s solvency ratio, measured in accordance with the Basel regulatory standards, is 11.4%, 3.4 percentage points higher than required. These factors mean that Spanish credit institutions face the current situation from a position of soundness which, in the international context, is fairly unique. Soundness however is not a synonym for immunity and it would be imprudent, and not befitting a supervisor, to fail to consider thoroughly the potential risks.

In the March Monetary Policy Report, we projected a pronounced rebound in activity in the Norwegian economy in the second half of 2021 as a large proportion of the population is vaccinated, and a continued upswing into 2022. Unemployment was projected to fall in pace with the rise in activity. At the same time, inflation was expected to moderate ahead, to somewhat below the inflation target, before moving up again. We projected that house price inflation would be dampened as a result of a gradual rise in lending rates, a normalisation of household consumption patterns and an increase in residential construction. With regard to fiscal policy, we have assumed that public spending – in line with the fiscal rule – would be reduced as and when the situation permits. Conclusion Let me conclude. When I was here last year, the economic outlook was gloomy. We had just set the policy rate lower than it had ever been, and we were highly uncertain about what lay ahead. Since then, we have been through several waves of higher infection rates and strict containment measures. Nevertheless, economic activity has rebounded strongly from the trough in spring 2020, and many of those who became unemployed have fortunately re-entered the workforce. We are now pleased to note that infection rates are heading downward and that the reopening of society is underway. There is still uncertainty about the road ahead, but we can see the light at the end of the tunnel. Thank you for your attention.
If so, one wouldn’t expect to pick up any levels effects, even when they genuinely exist, in simple cross-country comparisons like that in Chart 3. Those might simply be telling you that, for various structural reasons, a  3  All speeches are available online at www.bankofengland.co.uk/speeches  3  pound of debt is not quite the same thing, or equally risky, from one country to the next.2 Besides, the distinction between levels and growth rates is in any case a bit fuzzy. If one country has a higher debt burden than another it’s probably gone through a period of faster growth as well. That’s got to be the case if one’s comparing levels of debt in the same country but at different points in time. Nevertheless, the comparatively poor predictive power of the level of debt is quite striking and I think there may be a few lessons one can draw from this. First, if there are structural differences in the nature or terms of debt, whether across countries or over time, it is important to try and take account of them. One example in the UK is within unsecured household debt. This is now a pretty broad category. It includes two things – PCP (“personal contract purchase”) contracts for car purchases and student loans – both of which are relatively new and neither of which, arguably, is really unsecured debt in the conventional sense or at least carries the same risks for borrowers. PCP contracts are more like rental agreements.

Much more importantly, and after a lot of detailed work across the Bank, the FPC has identified some big differences with the subprime boom. Post-crisis reforms mean there’s less opacity in the associated securities – investors know much more about what they’re buying in a CLO than was apparent, ahead of the crisis, in most Mortgage Backed Securities. The rates of securitisation are in any case much lower (30% versus 80%). Most critically, the banks – and particularly UK banks – have significantly less exposure. Subprime mortgages were often held in special purpose vehicles that were not formally on banks’ balance sheets but heavily financed by them. They still owned the risk. During the crisis UK-owned banks lost huge sums of money – far more than on comparable domestic lending – from their exposure to US mortgages,  12 A large proportion of leveraged loans have been used for M&A and leveraged buyouts, which effectively replaces equity with debt for the corporate sector as a whole. 16  All speeches are available online at www.bankofengland.co.uk/speeches  16  some of it directly, much of it via these constructed securities.13 Their exposure to CLOs is materially lower. Chart 18, reproduced from the most recent Financial Stability Report, shows that UK banks own only a small fraction – around 1% - of the overall stock. All this is important and reassuring. It means that the mechanisms that so amplified the impact of US mortgage defaults are much diminished, particularly for the UK.