samchain/econo-pairs-v1 huggingface dataset:
However, this adverse result was influenced by the negative extraordinary adjustments made during the year at some of the system’s main institutions.3 Excluding these adjustments, the sector’s profitability would be positive, albeit considerably down on the previous year, with ROA standing at 0.3% and ROE at 4.3%. The decline in the sector’s return on ordinary activities essentially owed to the reduction in net interest income and fees and, particularly, the increased provisioning in anticipation of credit impairments. Meantime, the appreciation of the euro against other currencies, particularly those of some emerging countries, has lessened the contribution made to results by business abroad, whose figures, measured excluding the exchange rate effect, have been more stable. In the year as a whole, losses due to provisions for impairment losses on financial assets amounted to € billion, up on the 2019 figure. In any event, the bulk of this increase was recorded in the first half of the year,4 and slowed significantly from June. The sector’s results were positive in 2021 Q1, albeit largely conditioned by the positive extraordinary results arising from a merger.5 These extraordinary elements aside, the 3  In particular, the two largest institutions recorded adjustments to goodwill for an amount in excess of € billion, along with other adjustments such as those linked to tax assets € billion). As a result of the approval of its merger, another institution recorded a fair value adjustment for an amount exceeding € billion in its year-end accounts, in accordance with accounting regulations.

6  The latest macroeconomic projections point to robust growth in the coming quarters once the vaccination programme has gathered pace and restrictions on movement have been progressively lifted. However, significant uncertainties remain as to the course of the pandemic itself, private consumption, tourism flows, the economic impact of the NGEU funds and the damage to the productive system caused by the pandemic. Against this background, there is still the risk of credit quality impairment being more pronounced in the future than has been observed to date, especially in the sectors hardest hit by the pandemic, and particularly once the support measures are gradually withdrawn. In fact, some signs of credit quality impairment were already observed in 2020. Specifically, Stage 2 loans6 increased substantially in 2020 (24.3%), and their growth has quickened in 2021 to date (37.5% in March). Meanwhile, although forborne loans continued to fall year-on-year, these declines have been far more moderate since the onset of the pandemic (-2.3% in March 2021, compared with -19.6% in March 2020). Lastly, NPLs increased in the consumer portfolio in 2020, growing by 23% (but slowing to 15.9% in March 2021). Deeper analysis of the growth of NPLs and Stage 2 loans in the business lending segment reveals that the sharpest increases occurred in sectors severely affected by the pandemic.
Underlying inflation appears to have stabilised at a relatively high rate close to 3% in recent years. This persistence relates partly to the presence of factors that add inertia into the inflation rate, such as the indexing mechanisms in collective bargaining. The differential with the euro area is particularly high in the case of services, standing at around 2 pp. Against this background, the recent reduction in the inflation rate offers the perfect opportunity for this containment of inflation to be incorporated fully into the price formation process, providing for a moderation in expectations of price increases. That would allow it to have a lasting effect on future inflation and, thereby, we would see progress in the narrowing of our differential with the euro area. The lesser impact that the activation of the indexation clauses will foreseeably have in 2007, along with the fact that wage bargaining next year may unfold while the main inflation reference is at a rate of below 3%, substantially down on the related rate in the first half of 2006, should be conducive to such moderation. This improvement would, moreover, be important for further re-balancing domestic and external demand and ensuring the continuity of economic dynamism in the medium run.

Miguel Fernández Ordóñez: The international economic scene and analysis of the Spanish economy Speech by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, before the Senate Budget Committee, Madrid, 23 November 2006. *  *  *  Ladies and Gentlemen, Appearances by the Governor of the Banco de España before Upper and Lower House committees, as part of the discussion and approval of the State Budget, have traditionally been one of the main occasions for Parliament to deliberate on the analysis of the Spanish economy that forms the basis of the central bank's actions. As this is my first appearance as Governor before the Senate, allow me to reiterate, as I did in the Lower House, the importance that I attach to relations with the people’s representative bodies for the proper performance of the tasks entrusted to the Banco de España. Tasks which are of great importance in the light of macroeconomic and financial stability, and which justify the independence granted by European laws and treaties to the Banco de España. Indeed, this is one of the Bank’s main identifying features, but one whose corollary is full transparency and fluidly operating accountability. At issue here, therefore, is an institutional arrangement whose balance hinges significantly on relations between the Banco de España and Parliament. Before moving to the analysis of the Spanish economy, I should dedicate some time to the external environment, focusing on the euro area, which is where our monetary policy is designed and decided.
Over the time remaining until January 2000, we hope to use the Joint Year 2000 Council as a means of gathering a better picture of the state of global preparations, and to help direct resources and attention to those regions that appear to be faltering in their efforts. We will use the information provided for our web site and the discussions with members of our External Consultative Committee as our primary resources in seeking to identify “hot spots” where more urgent efforts are needed. If we identify regions where more needs to be done, our first step will be to work through the relevant national financial supervisors and regulators to increase the urgency of efforts in their jurisdiction. We may also involve multilateral institutions, such as the World Bank, to help increase national attention on the issue. I do not believe that calling public attention to problems in specific countries would be a constructive step for us to take at this stage as we are still trying to build cooperation and our current information is incomplete. In this context, I would also point out that the market itself will begin to bring strong pressures to bear on specific firms and markets that exhibit signs of being ill-prepared during the course of 1999. In conjunction with preparations for Y2K, the recent discussion of the Joint Year 2000 Council with the External Consultative Committee raised several important issues.

Encouraging banks to take risks that result in large dividend and remuneration payouts when things go well, and losses for taxpayers when they don’t, distorts the allocation of resources and management of risk. That is what economists mean by “moral hazard”. The massive support extended to the banking sector around the world, while necessary to avert economic disaster, has created possibly the biggest moral hazard in history. The “too important to fail” problem is too important to ignore. There are only two ways in which the problem can – in logic – be solved. One is to accept that some institutions are “too important to fail” and try to ensure that the probability of those institutions failing, and hence of the need for taxpayer support, is extremely low. The other is to find a way that institutions can fail without imposing unacceptable costs on the rest of society. Any solution must fall into one of those two categories. What does this mean in practice? Consider the first approach. To reduce the likelihood of failure, regulators can impose capital requirements on a wide range of financial institutions related to the risks they are taking. This is the current approach underpinned by the Basel regime. In essence, it makes banks build a buffer against adverse events. It has attractions but also problems. First, capital requirements reduce, but not eliminate, the need for taxpayers to provide catastrophe insurance.
The SNB is concerned about exchange rate developments. The SNB forecasts are based on the premise that the exchange rate developments will stabilise in the medium term. Should the exchange rate again be subject to significant changes, a reassessment of the inflation outlook would be required. Since the last monetary policy assessment, the M2 and M3 aggregates have been growing at about 7% year-on-year. Some of this high growth rate is attributable to the current low interest rates. Overall, ample liquidity is available in the economy and this means potential risks for price stability in the long term. Mortgage lending has also continued to increase substantially, growing at a rate of 4.7% in April. In an environment of low interest rates and substantial advances in real estate prices, a high rate of growth in mortgages can harbour risks for financial stability. In the speech that follows, my colleague Thomas Jordan will outline for you the SNB’s Financial Stability Report. In view of the potential risks for the financial sector, the SNB continues to closely observe the situation on the mortgage and real estate markets. 2  BIS central bankers’ speeches  Chart of conditional inflation forecast The (dashed) red curve on the chart represents the new conditional inflation forecast. It shows the future path of inflation, assuming that the three-month Libor remains constant at 0.25% over the next twelve quarters, and it covers the period from the first quarter of 2011 to the first quarter of 2014.

Although the international economic outlook is somewhat less favourable than in March, the upswing in the global economy is likely to be maintained in the months ahead. In the US, in particular, the latest production and labour market indicators have been disappointing. Due to the high commodity prices and the production losses in Japan, the SNB has revised its 2011 growth forecast for the advanced economies downwards to some extent. Moreover, numerous countries are planning to undertake additional cost-cutting measures in the year  BIS central bankers’ speeches  1  ahead. The rise in commodity prices since autumn of last year is expected to result in significantly higher inflation worldwide in 2011. Swiss economic outlook According to the SECO estimate, the growth of real GDP in Switzerland slowed in the first quarter, mainly because of the muted advance in private consumption and equipment investment. By contrast, exports recorded a marked gain as a result of robust international demand, particularly from Germany and Asia, despite the strength of the Swiss franc. The strong momentum in construction also supported growth. Utilisation of technical capacity continued to pick up and was above the long-term average in manufacturing; in the construction sector it actually attained a record high level. The recovery on the labour market also continued. After a massive increase during the crisis, measures introducing short-term work have largely been retracted. In May, the seasonally-adjusted unemployment ratio decreased to 3.0% and companies are reporting more difficulties in recruiting qualified employees.
Lorenzo Bini Smaghi: Presentation of the book entitled “L’acqua e la spugna” by Franco Bruni Speech by Mr Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, at the Center for American Studies, Rome, 24 June 2009. *  *  *  Above all, I should like to thank the Center for American Studies for inviting me to present this book by Franco Bruni; a book which is a real pleasure to present because it actually shows to be untrue what many have claimed recently, namely that the economists did not foresee the crisis and that they did not send out the alarm signals. Some economists, such as Franco Bruni, had been pointing out the imbalances accumulating on the financial markets for a long time, and, whilst they may not have anticipated the full extent of the crisis, they did, for sure, signal the risks. Franco Bruni’s book is a book well worth reading, because it helps us understand how the science of economics, is, at the end of the day, linked to common sense, and also that the “new paradigms”, which are increasingly cited to justify events that cannot be easily explained, should be questioned. If you base your own judgements on sound analytical grounds, albeit unsophisticated – and the book has the great advantage of also being accessible to non-specialists in economics – you can get to grips with the general trends, at least in the medium term.

This level of growth is expected to exceed the growth potential output, giving rise to a positive output gap, particularly in 2015. Other things being equal, this will contribute to higher inflation. GDP growth in 2014–2016 will be driven by domestic demand, both private consumption and investment, and the contribution from net trade will be negative for the entire period. As a consequence, the sizeable current account surplus we have seen in 2013 and 2014 will shrink rapidly next year and give way to a small deficit by 2016. This is cause for concern in and of itself, and we hope that this forecast will not materialise, as Iceland needs to maintain a current account surplus in the next several years as it focuses on putting its external debt onto a more solid footing and building up FX-reserves that are not financed with foreign loans. Economic policy and economic incentives would then have to centre on improving the outlook for the current account balance. According to the forecast, which extends until end-2017, inflation will be at target for the entire forecast horizon, apart for the last quarter of 2015 and the first quarter of 2016. It will average 2.6% for the three-year period from 2014 through 2017, which is well in line with the 2½% inflation target. But the current equilibrium is fragile, the future is highly uncertain, and there are important known risks ranging from the global economy to the liberalisation of Iceland’s capital controls. We will doubtless discuss some of these at this meeting.
3  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  3  Chart 3: Real GDP per capita more than doubled since 1960  Chart 4: Life expectancy at birth up around two decades since 1960  Index 1960 = 1  Years 75  3.0 GDP per capita (constant 2010 $  World life expectancy at birth, total (years) 70 2.5 65 2.0 60 1.5 55  50  1.0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: World Bank  1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Source: World Bank  Real income growth has been meagre, compounding unequal distribution. The cry for more inclusive growth starts with a crisis of growth itself. To put it mildly, the performance of the advanced economies over the past ten years has consistently disappointed (Chart 5). Chart 5: Global growth serially disappointing Actual GDP growth  2011  2012  2013  2014  2015  2016 Per cent 8.0  Dotted lines = Emerging economies Solid lines = Advanced economies 6.0  4.0  2.0  0.0 2010  2011  2012  2013  2014  2015  2016  Source: IMF World Economic Outlook. Each line shows how forecasts for a particular calendar year have evolved over time. The diamond shows the eventual outturn.

Here I am using the term in a broader sense, to describe the view that monetary policy is the only tool necessary to stabilise the economy. Friedman advocated the control of money as superior to fiscal measures for stabilising the economy. In Friedman (1948) he argued that financing variations in the government deficit or surplus with monetary expansions or contractions would be stabilising. Later, in Friedman (1960), he advocated a constant growth rate of the money stock as a means to stabilise the economy effectively. Following the experiences of the 1980s, there is today great scepticism that the velocity of money circulation exhibits the kind of stability necessary to make the quantity equation operative as a means of inflation control, although money may still have useful information content as an indicator. As Gerry Bouey said, “We didn’t abandon the monetary aggregates, they abandoned us.” See Friedman, M. 1948. A monetary and fiscal framework for economic stability. American Economic Review 38, 256–64; and Friedman, M. 1960. A Program for Monetary Stability. New York: Fordham University Press. ii Growth in India and China in particular has contributed to a marked fall in the global Gini coefficient, from 0.74 in 1975 to 0.63 in 2010. Niño-Zarazúa, M., Roope, L. and Tarp, F. (2016), “Global Inequality: Relatively Lower, Absolutely Higher,” Review of Income and Wealth, July. iii Reinhart, C. and Rogoff, K. (2009), This Time is Different, Princeton University Press.
MAS will continue with our three pillar approach of sensible rule-making, effective supervision and partnership to achieve the desired outcome. 29. We should take advantage of the global reform agenda to strengthen our regulatory and supervisory regimes, consistent with international standards and best practices, but at the same time, doing it in a manner that is sensitive to our regional environment and needs. I am confident that with financial supervisors and the industry working together in partnership, we can further enhance the resilience of our financial system to better serve the economic aspirations of Asians going forward. I wish you a fruitful conference. Thank you. 4  BIS Review 51/2010

On discussing this transaction, the bank authorities of the National Bank expressed their concern that it was now even more obvious that the National Bank’s profit transfer was reaching a level that cannot be maintained in the long term. The Governing Board shares the bank authorities’ concern that a later return to the “normal level”, which will only amount to approximately Sfr 1 billion, is likely to create considerable political difficulties. From today’s vantage point, it cannot be ruled out, moreover, that as a result of the additional distribution on the income-yielding free assets the National Bank’s provisions will be reduced more rapidly than had been assumed when the main agreement on the National Bank’s profit distribution was concluded in April 2002. At 2.9% a year, the income forecast on which this agreement was based is rather optimistic given the low yield level on the financial markets for some time to come. It may therefore well be that a downward adjustment will become necessary as early as 2007, when, in terms of the agreement, the level of distribution will be reconsidered. In any case, the National Bank does not consider an annual profit distribution of Sfr 3 billion from 2007 onward as by any means a certainty. We think it is important to draw attention to these risks well in time. We also explained them to the Head of the Federal Department of Finance and asked him to advise the responsible persons of the cantons of our misgivings.
It is high time therefore that we made progress on reinforcing the regulatory framework for NBFIs, both on a micro and macroprudential level. As an example, in the case of money market funds, in times of extreme liquidity stress, the competent authorities should be able to release liquidity buffers for funds that are in difficulty, but should also be able to activate appropriate liquidity management tools. I would also like to draw your attention to three other non-bank risks: cyber risk, the frequency and cost of which are very likely to rise with the war in Ukraine. In the EU, the DORA regulation will come into force in 2025 and will at last provide a solid and common framework for making the financial sector more resilient to cyber attacks and for monitoring critical third parties such as cloud platforms. real estate markets, where housing prices had risen by close to 9% (year-on-year) in June 2022 in the euro area, much faster than household income. At this stage, the risks linked to a turn in the cycle are limited in France, thanks, among other things, to our macroprudential measures to make housing loan production sounder. We remain very vigilant, however, including with regard to the other segments of the market such as commercial real estate. crypto currencies, with the successive collapses, the most recent being FTX, that have triggered sharp market corrections and a "crypto winter" that has lasted for nearly a year: their recurrence shines a stark light on the need for stronger supervision.

Stronger analytics around funding •  Firms should have be able to produce analyses by material legal entity on a timely basis about its funding arrangements, including: –  Inter-affiliate funding arrangements;  –  Where liquidity reserves are held;  –  Stressed funding and liquidity outflows and inflows at the legal entity level; and  –  Impact of restrictions on transfer of liquidity between entities imposed by regulatory or resolution regimes. MIS by legal entity •  Firms should be able to produce on a timely basis detailed monthly balance sheets by material entity, as well as identify all credit exposures with a level of specificity including type of exposure, counterparty and maturity. •  Firms should also have inventories of key management and support functions; property owned, leased or licensed; internal shared services; and key third party contracts. •  Finally, firms should have inventories of key legal information, including legal entity types, purpose and relevant licenses, physical location, regulator, senior management and directors; and applicable resolution regime and authority, as well as sufficient information on legal agreements, such as parties to the agreements, key terms of agreements, and any relevant interdependencies. Arrangements for shared or outsourced services •  The final area for additional work is ensuring robust arrangements for the continued provision of shared or outsourced services needed to maintain operations.