samchain/econo-pairs-v1 huggingface dataset:
Longer maturities have smoothed the growth of borrowers' debt burden in terms of monthly payments of a mortgage. Of course, looking at total loan servicing costs, the overall debt burden has increased. When we compare Estonia and other Baltic countries with more developed economies, there is obviously room for further credit growth: total bank credit as a percentage of GDP in 2004 was over 100 percent in the euro area, around 60 percent in Estonia, and only 20 percent in Lithuania. And although it is rapidly increasing, the debt burden of Estonian households, at 32 percent of GDP by end-2005, was still about two times lower than in the Nordic countries. Secondly, the increase in incomes enables people to upgrade their living conditions. For example, the number of square meters per capita in Estonia (at around 30) is relatively small compared to Sweden  2  BIS Review 81/2006  (45) or Denmark (50). Moreover, older housing stock needs quality improvements. Both these factors may indicate that real estate markets may continue to perform reasonably well over the medium term, even if some slowdown might be ahead. Indeed, the relative contribution of Estonia's construction sector to GDP is hardly exceptional if compared to many other EU countries. Are risk premia sufficient? However, this rapid growth poses important questions of sustainability and stability, especially in countries with shorter borrowing experience.

Pablo Hernández de Cos: Evidence-based policies - from theory to practice Address by Mr Pablo Hernández de Cos, Governor of the Bank of Spain and Chair of the Basel Committee on Banking Supervision, at the presentation of the collaboration agreement between the Center for Monetary and Financial Studies (CEMFI) and the Ministry of Inclusion, Social Security and Migration, Madrid, 18 January 2022. * * * Minister of Inclusion, Social Security and Migration, General Secretary of Inclusion and Social Welfare Objectives and Policies, director of CEMFI, ladies and gentlemen, good morning. Allow me to begin this short address by saying how pleased I am with the signing of this collaboration agreement between CEMFI and the Ministry of Inclusion, Social Security and Migration. In recent months I have had the opportunity to publicly emphasise the importance of the evaluation of public policies and of incorporating the results of these evaluations into decisionmaking by public authorities,1 in the belief that, in a democratic society, evaluations should play a political as well as a technical role. In the political sphere, evaluating the design and effects of public policies should foster transparency regarding policy-makers’ actions and their outcomes. This facilitates accountability and democratic oversight by Parliament and citizens. It also fulfils a technical function, strengthening the decision-making process by providing it with valuable information to enhance its effectiveness and efficiency.
With qualified intermediaries operating within an environment based on transparency and disclosure, investors would have a suitable basis for making well-informed decisions. This is another step towards realising the “caveat emptor” philosophy. BIS Review 69/2000  4  New licensing principles MAS will therefore adopt the following licensing principles for securities activities conducted through the internet: Interpretation of the activities of an investment adviser and a dealer Context and circumstance Our first principle is that MAS will examine the context and circumstance in which activities are conducted, to determine whether licensing is required. This applies to both investment advice and dealing in securities. Suppose, for example, a web page of a business school provides a tool for calculating the value of shares. Should we require the business school to be licensed? In deciding this, MAS would take into consideration the fact that the business school’s primary mission is education, not investment advice. In this context, we are unlikely to require the business school to be licensed to provide such a tool on its web page. Interpretation of the activities of an investment adviser Fact versus opinion Our second principle relates to investment advice. In determining what constitutes investment advice, MAS will use the “fact versus opinion” test as a general guide, supplemented, where appropriate, by the context and circumstance principle. The presence of interpretation, selectivity or subjectivity will require licensing. Let me explain. A wealth of information on securities is available on the internet.

Once these exercises are complete, we will analyse the feedback we have received and use it to inform our final decision, which will be announced in December. If a final decision is made to move to polymer, we will also use the opportunity to introduce notes which are somewhat smaller than the current series. These will be easier for both the public and the cash industry to handle and will generate further financial benefits in terms of lower production and storage costs. In moving to smaller notes, we will retain the present tiering of denominations by size, which is of particular benefit to the visually impaired. I would now like to invite any questions that you may have. I’ll be joined in addressing these by the Bank’s Chief Cashier and Executive Director for Banking Services Chris Salmon, and the Head of our Notes Division Victoria Cleland. 2  BIS central bankers’ speeches
More generally, supervision and regulation are designed to both support productive financial intermediation and limit disruption and financial stability risks.3 Today, I will talk about a simple framework for one view of policy efficiency in a world of two policy objectives – financial intermediation and financial stability. As in traditional finance theory, one can think about an “efficient policy frontier” that maps the trade-offs among these objectives. One might choose a set of policies that supports a high level of financial intermediation and also accepts a higher risk of disruption or crisis. This might be achieved, for example, with relatively light oversight or low capital requirements. Alternatively, one might choose a different set of policies, such as more intensive oversight and stringent capital requirements that likely reduces risk, but also limits intermediation. An efficient policy is one that minimizes risk for a desired level of intermediation—it is on the efficient policy frontier. This efficiency idea is distinct from the policy choice itself, as any of these policy regimes can be efficient in the sense that risk is as low as possible for a desired level of intermediation. I’ll emphasize that this framework is agnostic to the merits of one policy choice or another. That is, it is a positive framework and not a normative one, and I won’t look at this from a normative perspective. Policy preferences can vary and they are set by policymakers.

While it is difficult to make this distinction in practice, I believe it is useful to keep the difference in mind as we discuss and explain our work. 5/7  BIS central bankers' speeches  In my view, communication is vital, and we should explain our goals as clearly as possible and acknowledge all expected outcomes of policy changes. By recognizing the full set of expected outcomes, including those that are not desired, I believe we can more effectively communicate the goals of supervisory policy, increase accountability and transparency, and better fulfill our mission to promote a safe, sound and stable banking and financial system. Thank you for your attention. 1 I would like to thank Jim Bergin, Dianne Dobbeck, Hampton Finer, Robert Fitchette, Lauren Hargraves, Bev  Hirtle, Michael Holscher, Anna Kovner, Don Morgan, Siobhan Sanders, and Katherine TilghmanHill for helpful comments and discussions. 2 Board of Governors of the Federal Reserve System, Supervision and Regulation Report, November 2018 and  U.S. Department of the Treasury, A Financial System that Creates Economic Opportunities, Banks and Credit Unions, June 2017. 3 This can be thought of as determining optimal policy that considers the net benefits as in Bank for International  Settlement, An Assessment of the Long-Term Economic Impact of Stronger Capital and Liquidity Requirements , August 2010 or as promoting the sustained provision of financial intermediation across a wide range macroeconomic conditions as in Kevin J. Stiroh, A Perspective on Supervisory Objectives, and Trade-offs, February 23, 2017.
Here it is the commercial banks and other private sector stakeholders that choose the best technologies and solutions. The division of roles between central banks and commercial banks results in a good balance between safety and efficiency. At the first level, the central banks facilitate the settlement of interbank transactions on secure systems and in electronic central bank money. In so doing, they minimise the risks in the systemically important segment of payment transactions, beyond which the risks can be borne by the market. At this second level, settlement can take place via alternative channels, without necessarily having to be based on central bank money. This division of roles between central banks and commercial banks epitomises our current two-tier financial system. In the first tier, the central bank acts as the banker to the banks. In the second tier, the commercial banks act as the interface to the end customers. And it is the competing commercial banks that decide which services they want to provide for companies and private individuals. This system is efficient and proven. There is much more to fintech than just DLT In connection with fintech, I have so far focused mainly on DLT. However, there is of course much more to fintech than just DLT. In addition to DLT, a whole array of promising innovations could potentially be applied to traditional financial services. We need only think of mobile payments, robo advisers, crowd lending or big data.

© Swiss National Bank
We owe that to the public we each serve, and we owe it to the rest of the central banking and macroprudential community. As those of us at the Bank of England build the UK’s Financial Policy Committee, we will need the active support of you all here and, in particular, of our colleagues from around the Federal Reserve system, for whom central banking began very nearly a century ago. 12  12  See Tucker, “Developing an EU cross-border crisis management framework”, September 2010. BIS central bankers’ speeches

While there is a consensus about these positive effects, experience has shown that financial openness modifies the balance of risks at the macroeconomic level: •  first, it may reduce some risks, for instance, by decreasing the correlation between investment and savings;  •  second, it may nevertheless increase other risks: for instance, greater competition in the banking system may prompt strong credit growth with a loosening of credit standards, as domestic banks try to maintain their profits and market shares;  •  third, it may even create new risks, for instance through financial contagion, if risk appetite for emerging markets suddenly reverses, given the prominent role played by hedge funds in cross-border investments and the sudden shifts in their asset allocations. In this regard, the Banque de France recently published a special issue of its Financial Stability Review devoted to Hedge Funds, which may be of interest to the RBI (www.banque-france.fr). In contrast with the French experience which took place in the 1980s, the Indian process of financial liberalisation takes place in a context of intense globalisation and accelerated innovation. It is gradual but successful and it is no surprise that India was one of the first countries to participate voluntarily in the IMF Financial Stability Assessment Program (FSAP). In my view, the progressive and transparent character of this process is fundamental to guarantee that a country reaps the full benefits of its integration into the world economy.
28  Companies’ responses are translated to impacts using the assumptions described under Chart 30. 27  All speeches are available online at www.bankofengland.co.uk/speeches  27  Chart 30: Bank of England Agents’ Survey of impact of different Brexit scenarios Approximate estimated change (%) 3 Deal and transition 2  No deal and no transition  1 0 -1 -2 -3 -4 Output  Employment  Investment in UK  Exports  Sources: Bank of England and Bank calculations. Notes: Chart shows aggregated results from surveys from December 2018 to April 2019. Companies were asked ‘Relative to the last 12 months, what is the likely impact on the following for your business over the next year in each scenario: a deal and transition period and no deal and no transition period?’ For each relevant business factor, respondents were asked to choose between ‘Fall greater than 10%’; ‘-10 to -2%’; ‘Little change’; ‘+2 to +10%’ and ‘Rise greater than 10%’. Responses weighted by employment. Half weight was given to the +/- 2-10% response and full weight was given to those that responded 'Rise/fall greater than 10%'. The approximate estimated change for output, employment, investment and exports are based on a simple calculation assuming a midpoint figure for each of the response categories. For “Fall greater than 10%” the mid-point was -15%; for “-10 to -2%” the mid-point was 6%; for “Little change” the mid-point was 0%; for “2 to10%” the mid-point was +6%; for “Rise greater than 10%” the mid-point was +15%.

Of the jobs created since 2012, over 2.7 million or around 80% have been full-time. Around half (over 1.7 million) have been taken by women. Employment rates among the youngest (aged 16-24) and oldest (aged 55+) have both risen strongly, by around four to five percentage points, respectively. The jobs bonanza has been fairly broadly-based across the occupational spectrum too (Chart 4). Unusually, all of the main categories of occupation have seen a rise in employment rates since 2012. As elsewhere, this boost has been largest at the higher-skill (such as managers and directors) and lower-skill (such as elementary occupations) ends of the occupational spectrum, with the mid-skilled benefitting least.2  2  For example, Haldane (2018), Autor (2014) and Autor (2017). 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Chart 4: Change in UK employment by profession Percentage change in employment between 2011 and 2018 25  20  15  10  5  0 Managers, Professional Associate Administrative Skilled Trades Caring, Sales and Directors and Occupations Prof. & Tech and Occupations Leisure and Customer Senior Occupations Secretarial Other Service Service Officials Occupations Occupations  Process, Plant and Machine Operatives  Elementary Occupations  Sources: ONS and Bank of England calculations. Notes: Ordering defined by ONS 1-digit SOC 2012 classification. Despite a slowing economy, this large and evenly-distributed jobs bonanza has continued apace. The stock of available job vacancies – a measure of aggregate demand for workers – currently stands at around 830,000, close to its all-time high.
(iii) For its part, the Governing Council completed the list of committees which will assist in the work of the European System of Central Banks (ESCB). In addition to the eleven ESCB Committees agreed upon at the meeting in July, the Governing Council decided to establish an International Relations Committee and a Budget Committee. The latter was set up in order to provide transparency to the shareholders of the ECB - the national central banks - on matters relating to the budget of the ECB. (iv) Finally, the Governing Council endorsed the draft Headquarters Agreement between the German Federal Government and the ECB, which will be signed here in Frankfurt on 18 September 1998. A number of decisions were also taken with regard to various aspects of the preparatory work for Stage Three. (a) Exchange rate policy co-operation between the euro area and other EU countries The General Council endorsed the text of an Agreement between the ECB and the non-euro area national central banks, laying down the operating procedures for an exchange rate mechanism in Stage Three (the so-called ERM II). You will recall that the European Council in Amsterdam in June last year agreed to set up an exchange rate mechanism in Stage Three to replace the present European Monetary System (EMS). For this reason, the EMI had, on behalf of the ECB, prepared a draft Central Bank Agreement to replace the current exchange rate mechanism (ERM I, if you like) by a new one in Stage Three.

The securitized mortgages, polling of mortgages sold through securities, including the infamous US-sub-prime mortgages, were traded on the market during the upward trend in the prices of apartments and houses, and when the interest rates were low, it disguised the risks of the core loans. With securitization of mortgages in such a volume, the banks have transformed the liquidity in their loan portfolios. They financed that by wholesale borrowing. But when the defaults multiplied, and the prices of the apartments dropped, firstly in the USA, and then wider, the investors had to reassess the risks inherent to these securities. Observed as more risky, they lost their value. The demand for these securities plunged. For the same reasons, the value of the mortgage portfolio went down. The value of their assets reduced, whereas the value of the liabilities which remained unchanged. The negative effect increased with the very high level of borrowing compared to the capital (or the so-called leverage), with which many banks worked, and with the fact that the banks have purchased a large quantity of securitized and more complex financial instruments from one another. Not only the real evaluation was difficult, but the distribution of the losses through the financial system was vague. The price of the banks' shares dropped. The capital became restricted. The market has sent a clear signal: the banks' capital was insufficient. The message? Recapitalize them immediately. What does the latest news from the market say? Since the recapitalization packages and other measures have been announced, signs of improvement occurred.
During the Napoleonic war, Sweden lost Finland to Russia and in the Kiel peace treaty of January 1814 it was decided that Norway, which was then a part of the Danish kingdom, should instead join Sweden. The treaty was of course op-posed by the Norwegians, and during the spring of 1814, when Sweden was occupied with wars on other fronts, the Norwegians took action. They declared their independence, drew up a constitution and appointed a committee to plan a new Norwegian central bank. But in July Swedish soldiers arrived. After a brief battle, Norway accepted the Swedish king as king of Norway. However, the union created was fairly loose. Except for the foreign service, Norway retained all state institutions that characterize an independent state. In June 1816, exactly 200 years ago, Norges Bank was established. The bank was located in Trondheim far from the politicians in Kristiania (which we now know as Oslo) and even further away from Stockholm and the Swedish king. Norges Bank was founded in a challenging environment where the economy was in a state of chaos following the Napoleonic wars, and confidence in the monetary system was low. The previous joint currency with Denmark had col-lapsed, and attempts to restore it had failed. It took a long time before the newly established Norges Bank managed to create credibility for the Norwegian currency. In the first years of its existence, the bank’s main tasks included managing silver tax payments and handling receipts, printing and distributing banknotes and bookkeeping.

An inflation target was adopted and the krona was allowed to float free. In Norway, the situation was somewhat different. The Norwegian krone had not depreciated as much when Norway left the exchange rate mechanism. Norway therefore returned to a fixed exchange rate regime, although this regime gradually changed and in 2001 Norges Bank also formally adopted an inflation target and a new fiscal framework was introduced. So our two countries have had a similar strategy for monetary policy based on an inflation target and a floating exchange rate since 2001. During this period there have been frequent and deep contacts between our staff, and I am thankful for all that we at Sveriges Riksbank have learned from these exchanges of methodologies and other experiences. However, the emergence of Norway as an oil nation has made Norges Bank unique in many respects, not least in managing a sovereign wealth fund. Norges Bank is one of very few central banks charged with such a task. In fact, this fund is one of the largest investors on the Swedish stock exchange. When Norway became an oil nation in the 1970s, the country started its journey to become one of the richest nations in the world. We Swedes have some-times been a little envious of this, and perhaps even thought it was a shame we no longer have the union! Huge oil revenues also create major challenges, and many countries have not managed so well. But Norway has.
Stress testing is an example of a top-down tool we could consider: does the capital position suggested by the detailed, bottom-up modelling deliver resilience at both firm- and sector level to common, real world shocks that we can reasonably expect them to withstand? Stress testing may not be the only additional tool. The government has an objective of facilitating productive investment to aid recovery and adaptation – not just to the structural changes wrought by the experience of the pandemic, but also to the equally severe, long term threat of climate change. Insurers are embracing the part that they can play in financing the transition to a net zero carbon economy with their long term investment. But many of the projects that take us to net zero will be innovative and lacking an historical track record: there is a legitimate concern that the riskiness of such projects will be overstated by capital modelling that relies heavily on historical data for its inputs and for validation. At the same time the prudential regime has to reflect the economic risks involved. We are interested in the possibility for equally innovative risk measurement tools that have the flexibility to cope with any such bias in existing modelling methods, and deliver a balanced risk assessment: I welcome your thoughts on this directly or in responses to the Solvency II call for evidence. Conclusion In finance, the ‘Greeks’ have become synonymous with the inner workings of models for pricing derivatives – a fox-like activity if ever there was one.

Solvency II review, internal models and the solvency capital requirements calculation Having mentioned the Solvency II review, I do not propose to try and cover the many topics that it encompasses. I do want to talk about one aspect which risks being overshadowed by the familiar headline topics of risk margin, regulatory reporting, and matching adjustment. That is, the overall approach to setting capital requirements, and the potential role of sector-wide stress testing in that. Under the existing implementation of Solvency II, there are many firms for which the standard formula is not appropriate, and internal models are the near-exclusive determinant of capital requirements for all or part of the business. And those models either have to be approved or, if not, rejected in their entirety, using a bottom up approach of assessing compliance with a large number of technical tests and standards. The philosophy is, in effect, that everything can be modelled, and that determining capital adequacy is essentially a technical exercise. This denies the reality: first that some risks are simply not conducive to modelling; and second that even for those that are, there will always be a chance that the model is wrong. It hinders supervisors in responding flexibly to risks not well captured by a specific model, or by modelling in general. And it has led to huge expenditure of effort by both firms and supervisors in the approval of models and model changes.