samchain/econo-pairs-v1 huggingface dataset:
There was an inability to see through the veil of modern finance to the fact that the balance sheets of too many banks were an accident waiting to happen, with levels of leverage on a scale that could not resist even the slightest tremor to confidence about the uncertain value of bank assets. For all the clever innovation in the financial system, its Achilles heel was, and remains, simply the extraordinary – indeed absurd – levels of leverage represented by a heavy reliance on shortterm debt. Modern financiers are now invoking other dubious claims to resist reforms that might limit the public subsidies they have enjoyed in the past. No one should blame them for that – indeed, we should not expect anything else. They are responding to incentives. Some claim that reducing leverage and holding more equity capital would be expensive. But, as economists, such as my colleague David Miles (2010) and Anat Admati and her colleagues (Admati et. al., 2010), have argued, the cost of capital overall is much less sensitive to changes in the amount of debt in a bank’s balance sheet than many bankers claim – a proposition demonstrated forcefully by Professors Modigliani and Miller over fifty years ago (Modigliani and Miller, 1958). And the benefits to society, most obviously through greater financial stability, but also through factors such as higher tax revenue, are likely to swamp any change in the private costs faced by banks. What does reduce the cost of capital is the ability to borrow short to lend long.

On that note, I would also like to take this opportunity to record my appreciation to all steering committee members and the panel of jury of the Royal Award for Islamic Finance 2016, led by Yang Amat Berbahagia Tun Musa Hitam for their unwavering support and commitment. Ampun Tuanku, Demikianlah sahaja sembah ucapan patik, dan sebelum mengundur diri, patik sekali lagi merakamkan ucapan menjunjung kasih, kepada Seri Paduka Baginda Tuanku di atas limpah perkenan berangkat ke majlis pada malam ini. 1 Thomson Reuters estimation, June 2016. 3/3  BIS central bankers' speeches
(3) Includes Brazil, Colombia, Mexico and Peru. (4) Australia, Canada, New Zealand and South Africa. Sources: Central Bank of Chile, Bloomberg and International Monetary Fund. Figure 8 Real exchange rate (*) (index, 1986=100)  120  120  110  110 2003-2017 average  1998-2017 average  100  RER  100  90  90  80  80  70  70 89  93  97  01  05  09  13  17  (*) The May 2018 figure is preliminary estimate. The June 2018 figure uses information up to the statistical cutoff. Source: Central Bank of Chile. 11  Figure 9 Projected growth of selected Latin American economies (annual change, percent)  4.5  4.5  2018  4.0  4.0  Peru  3.5  3.5 Colombia  3.0  3.0  Brazil  2.5  2.5  2.0  2.0  Mexico  Argentina  1.5  1.5 1.17 17  5.17 May  9.17 Sep.  1.18 18  5.18 May  Source: Consensus Forecast.

In addition, in the most recent period, corporate indebtedness has decreased after being driven by loans related to foreign direct investment. Likewise, currency mismatches have continued to decline. Among households, in Chile, consumer debt is made up of close to 75% of term bank loans, 18% credit cards and 7% credit lines. Virtually all consumer loans bear a fixed interest rate, with an average maturity of between 4 and 5 years. In turn, mortgage loans account for most of the increase in household debt in the last six years. As is well known, mortgages are issued almost entirely at fixed rates (adjusted for inflation), long maturities, and a prudent housing loan-to-value ratio. Together, these elements reduce the potential impact of an increase in interest rates on the financial burden of households. Regarding the government sector, the mitigation of interest rate risk depends also on the behavior of the economy’s investor base. This makes the way in which the demand for and supply of bonds behave in stressful times particularly relevant. The importance of the participation of pension funds and mutual funds in sovereign bond holdings and the fact that in the face of external shocks, the less risky funds—and with a greater share of sovereign bonds—become more attractive, also offers a cushion to the effects international interest rate shocks. Even so, this is an especially important moment to strengthen potentially vulnerable flanks in emerging economies. As I have said before, it is important to restore the slack that has helped sustain Chile's macroeconomic policy framework.
Should there be a greater fiscal adjustment, for example if the structural primary balance improves by 0.5 pp of potential output each year until reaching equilibrium – a path more consistent with the Stability and Growth Pact rules –, public debt could fall to 82% of GDP by 2040. Were this adjustment also accompanied by an ambitious package of structural reforms, the government debt ratio could be around 79% of GDP by 2040. In short, in order to bolster the sustainability of public finances, a multi-annual fiscal consolidation plan will have to be implemented once the pandemic is over and the adverse economic effects of the war in Ukraine have diminished. Although the necessary fiscal adjustment should be carried out gradually, the definition and early communication of this plan – in which all tiers of general government should participate – would be desirable, as this would help boost confidence and certainty about Spanish economic policies. Such confidence is particularly important amid the current context of monetary policy normalisation and the consequent tightening of financial conditions. As part of this plan, government expenditure policies must be subject to an exhaustive review to increase expenditure efficiency and to optimise the distribution between items in order to promote more robust and equitable economic growth. For instance, the weight of education and public investment expenditure in Spain is below the EU average,18 despite the broad consensus regarding the importance of these items to drive economic growth and mitigate inequality.

For example, consumers could use their credit cards to make such investments and increase their indebtedness. The higher the leverage, the greater the risk as well. The fourth risk is the operational and technical immaturity of the technology. We are open to the technology of distributed ledgers. But that is something different from bitcoin. Bitcoin itself belongs to no one; no one is backing it, no one is issuing it. The mining is happening to a large extent in remote places and involves very high energy consumption. Bitcoin’s estimated annual energy consumption has now reached more than 52 terawatt hours per year, which is more than the total energy consumption of Portugal. We see that, for example, when approval is sought, it sometimes takes several hours to get one block validated. The ECB, by contrast, is about to offer instant payments in all European countries. An instant payment costs 0.2 cent and the recipient has it within 10 seconds. This is efficient and pan-European, and it is also operated by trusted authorities as well as regulated and supervised entities. Then you have contagion channels for the risks of virtual currencies. If households are heavily involved in bitcoin and the whole thing collapses, it could create a wealth effect on the economy, depending of course on the scale of the market. With official currencies, you have central banks, like the ECB, you have governments who put political capital into maintaining a currency and supporting it.
The second pillar of European financial sovereignty concerns the efficiency of retail payments and market infrastructure. Regarding retail payments, while the Single Euro Payments Area (SEPA) has proved to be successful, further convergence is still needed in response to the growing influence of major third countries’ firms in payments solutions. In order to preserve our sovereignty, a European strategy for retail payments would be necessary, with a view to (i) addressing market fragmentation and promoting unified European-based solutions, (ii) improving the protection of payment data and (iii) encouraging European players to take part in the current concentration in retail payments. Regarding infrastructure, the European System of Central Banks shouldered its responsibilities in strengthening European post-trade integration, notably through the Target2Securities platform. In the coming years, the set-up of a unified collateral management platform operated by the Eurosystem will be another key step directly contributing to an effective Capital Markets Union. Moving on to the third pillar, the international role of the euro is a key component of our European financial sovereignty. After a significant rise, the international use of the euro has declined since the financial crises of 2008–2012 and remains limited in comparison with the dollar. The US dollar is a clear advantage in the exercise of American power, while China cares about the internationalisation of the renminbi. A larger use of the euro would help to protect our businesses against foreign exchange risks or legal disputes abroad. In this regard, the concrete measures identified by the European Commission in December are particularly relevant.

The development of fully unified European instant payment systems, integrated capital markets, and the possible creation of a safe euro-denominated asset should among others contribute to the international expansion of the euro. ** At this critical time, let me conclude with verses from Othello: “To mourn a mischief that is past and gone is the next way to draw new mischief on”. In modern English it means: “when you lament something bad that’s already happened, you’re setting yourself up for more bad news.” Making the best of such a misfortune as Brexit is the surest way to overcome it. Our collective response to Brexit should be the further integration of Europe: if we remained mired in technical nit-picking with self-satisfaction in some quarters and attacks from others, and distrust on all sides, we would not only have missed an opportunity, we would, collectively, have failed in our duty. Thank you for your attention. 3/3  BIS central bankers' speeches
This can reduce the supply-side flexibility of the world economy. Combined, these shifts can make the job of keeping inflation low more demanding. How this will play out is highly uncertain. But there is one thing I am certain about. The global economy must make an absolutely necessary transition to a low-carbon economy. There are evermore signals of the urgency to achieve that transition. The number and intensity of heat waves, floods and droughts are on the rise. The transition is fraught with uncertainty and proceeding too slowly. For each year the transition is too slow, the more likely it becomes that stronger and more costly measures will be needed later on. To reach the targets, governments have a range of instruments at their disposal. Carbon pricing is particulary effective in that it sends a clear message as to what we should do less of and what we need more of. The rising costs of emissions is one of the main drivers behind today’s investments in renewable energy and more energy efficiency solutions (Chart 9). We can see that price mechanisms work. Chart 9 Transition to a low-carbon economy Carbon price in the EU Emission Trading System. EUR per tonne of CO2e 100 90 80 70 60 50 40 30 20 10 0 2010  2013  2016  2019  2022  Source: Refinitiv Datastream  Norges Bank  Economic perspectives 2023  11  The transition will not be seamless.

To do this the MPC has to assess the prospective balance between demand and supply in the economy as a whole. That requires an analysis of both demand and supply developments. The interesting feature of recent quarters has been the combination of strong demand growth and a tight labour market, on the one hand, with weak wage and price pressures, on the other. So the MPC monitors monetary data as well as signs of tightness in both labour and product markets in order to detect early warning signs of inflationary pressures. The MPC needs as much timely and accurate information as possible. Official statistics and surveys provide an excellent starting point. But they often need to be complemented by more timely and focussed information on particular aspects of the economy. So the Bank has a network of twelve Agencies, which gather economic intelligence from all parts of the United Kingdom – from Cornwall to the Highlands, and from County Tyrone to the Norfolk Broads. The task of these Agencies is to provide information on the state of the local economy. In total, the Agents have around 7,000 business contacts covering all sectors of the economy from farming to finance and textiles to tourism. Our Scottish Agent, Janet Bulloch, who is with us tonight, is well known to many of you. I would like to thank those of you who give your valuable time to see Janet and her team.
How to deal with systemic risk – the traditional approach While these arguments are not profoundly new, the policy consensus before the current crisis was dominated by a reluctance to address systemic risk issues directly. This consensus was based on two key arguments. First, it was largely assumed that securing the solidity of individual financial institutions would also grant system-wide stability and thus that regulation at the level of individual firms – micro-regulation – would suffice. The crisis has shown that this view is clearly questionable. As just described, risk in a financial system can arise quasi endogenously, even if individual financial institutions appear to be robust. 3  For more details, namely on ways to address TBTF issues, cf. Danthine (2011). 4  Bank of England (2011). 2  BIS central bankers’ speeches  The second critical element of the pre-crisis policy consensus is known as the “Greenspan Doctrine”. This states that pricking an asset price bubble is in general more costly than cleaning up after the bubble has burst. The foundation of this doctrine is that it is simply too difficult to identify ex ante when a bubble is forming. Specifically, it is inherently difficult to disentangle situations where a credit or asset-price boom is justified by fundamentals from those where it is based on misplaced expectations and is thus a threat to financial stability.

Third, given the geographical diversification of the two big banks, an activation of the CCB focused on domestic risk-weighted assets would not have a material impact on these banks’ overall capital situation. Finally, by contributing to financial stability and hence reducing the risk of domestic banking crises, the CCB should help increase the overall long-term attractiveness and competitiveness of the Swiss financial sector. How the CCB works Let me now address four key questions pertaining to the functionality of the CCB; and, for that matter, of any macroprudential instrument targeted at containing the cyclical dimension of systemic risk. First, how do we know that imbalances have reached a level such that an activation of the CCB is warranted? 12  These minimum requirements are twofold: First, at least 10% of the value of the collateral must be provided in equity from sources other than borrower’s pension assets. Second, the mortgage debt on residential properties has to be repaid such that it amounts to no more than two-thirds of the collateral value after 20 years. BIS central bankers’ speeches  5  As mentioned earlier, identifying unsustainable developments in asset and credit markets is inherently difficult. Thus, the aim cannot, and should not, be to surgically prick bubbles or to fine tune asset-price or credit market developments. It is easier, however, although not trivial, to identify situations of intensified financial stability risk. In such cases, taking precautionary action is fully justified.
Before we do a stocktaking of the current external imbalances, it would be useful to provide for a longer-term view of their evolution. The occurrence of the global crisis had a strong impact on narrowing the global current account surpluses and deficits. In the aftermath of the global financial crisis, global current account imbalances (the absolute sum of surpluses and deficits) declined sharply from about 6 percent of global GDP in 2007 to about 3½ percent in 2013. The narrowing of aggregate current account imbalances was led by the United States on the deficit side and by China, Japan, and oil exporters on the surplus side. Meanwhile, the current account balance of the euro area moved from a close balance in 2007 to a surplus of about 2½ percent of GDP in 2013, driven mainly by sharp external adjustments in most euro area debtor economies, while surpluses in Germany and the Netherlands remained large. In key emerging market and developing economies, current account deficits expanded, supported by easy global financing conditions enabled by quantitative easing policies in advanced economies. Yet, after 2013 this process stalled, and we do see immense concentration of imbalances in advanced economies. These economies on aggregate have seen some increase in their current account deficits, led primarily by the United States, and a rise in current account surpluses, mainly in the euro area and Japan.

It is therefore important for the Islamic financial institutions personnel to enhance their own knowledge on the products and services offered, as well as customer service orientation. Ladies and Gentlemen, While the level of public awareness on Islamic banking and finance has significantly improved, more efforts can be done to reach out to the wider population, in particular the sub-urban and rural areas. Existing infrastructure must be utilized in an efficient manner to effectively disseminate information on Islamic financial products and services including by leveraging on the information and communication technology. Information can be in various forms, with the objective of enhancing financial literacy in Islamic finance in our community. The advancement in ICT has also had significant impact on the operations of Islamic financial institutions with respect to information management systems, product development, risk management and distribution capabilities. Significant application of IT would enhance efficiency by bringing down costs for consumers and businesses. As part of our initiative for the extensive dissemination of information effectively and efficiently, Bank Negara Malaysia has developed a website on the Islamic money market. More specifically, the website aims to serve as a source of information on domestic Islamic financial instruments. It would provide greater transparency of the Central Bank’s Islamic money market operations, thus facilitating investment decisions and enhancing public confidence in their investments. The website also provides an analysis facility to chart historical data, in addition to reference to the rules and regulations in the conduct of the Islamic money market transactions.
The main thing to do to prevent new crises for stabilisation policy is to develop and possibly reinforce the framework for budget policy that has applied in recent years. Government debt can then be run  BIS Review 6/2002  5  down more quickly and reserves can be built up so that the automatic stabilisers can be left to do their work. An important issue in this context is the construction of the social security system. Changes will be needed and there may well be reasons for increasing the element of funding. It may be asked whether some institutional changes are also needed to facilitate a discretionary fiscal policy. This is certainly not a minor question but it has taken up too much of the discussion about economic policy. The possibility of implementing a discretionary fiscal policy in a meaningful way is limited. The discussion should therefore concentrate on what can be done to manage situations when more serious shocks are likely to occur. The problem here has been a lack of knowledge, plus the difficulties in mobilising sufficient support for a restrictive policy when the economy is overheating. There are presumably some things that can be done to improve our knowledge, though it is mostly a matter of trimming an existing structure. But that must be done in the light of the limited competence for empirical economic analysis in Sweden and the numerous challenges that lie ahead in other respects than stabilisation policy.

An analysis of the economic situation is published by the ECB in a monthly bulletin, which aims to ‘explain to the public the monetary policy decisions taken by the Governing Council of the ECB’. The bulletin will also consider fiscal policies, economic structures and labour market tendencies in the euro area. But the ECB does not publish either forward-looking assessments and forecasts of inflation or the minutes of decision-making meetings and the positions of individual members. Press conferences with the ECB Executive will be held, however, in connection with meetings of the Governing Council. In addition, policy will be explained continuously by Executive Board members in speeches and appearances before the European Parliament. Inflation assessment The ECB and the Riksbank both have price stability as the monetary policy objective but they have given this objective different operational definitions. The ECB’s formulation mirrors a different view of monetary policy’s ability to fulfil an explicit target. Presumably it also reflects a different view of the margin a central bank shall have for tolerable deviations from the desired price stability. The Riksbank has specifically targeted inflation, measured by the CPI, at a rate of 2 per cent, with a declared tolerance interval of ±1 percentage point, thereby clearly identifying the preferred level of inflation. It is still too early to say what the differences between the formulations will signify in reality, just because we do not yet know how the ECB will act in practice.