samchain/econo-pairs-v1 huggingface dataset:
The lender is taking a risk on the option it offers the borrower to buy the car at a fixed price three years down the road. It’s not difficult to see how this could be self-reinforcing. If used car prices were to fall, and PCP purchasers opt to give back their cars as their contracts expire, the supply of used cars onto the market could increase substantially, pushing prices down further. The advent of PCP means – as the small print always says – the past may not be a good guide to the future. 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  Mortgages  Developments in mortgage debt are much less striking than those in consumer debt and car finance. Mortgage lending has increased by just 3 % over the past year. But even here there are some tentative signs of boundaries being pushed. Lenders have been reporting that their objectives to grow market share are pressing them to make credit more available (Chart 16). But of course, not everyone can gain market share. Some of that fierce competition for business has shown up in reduced fees for those taking out a new mortgage. Nearly a half of mortgages were extended without fees in the first part of 2017 – four times the rate in 2011 (Chart 17). Boundaries are being pushed in less benign ways too. Lending at higher loan to income multiples has edged up.

In addition, trading income recovered strongly as financial markets rebounded after the first quarter of 2009. Finally, revenues from fees and commissions held up remarkably well throughout the financial turmoil. At the same time, a number of significant risks remain and some may have even increased. First, the slowdown in the growth of assets held by euro area banks limits their future earning capacity in terms of interest and investment income. Second, a deterioration in the credit quality of borrowers may put a drag on banks’ future earning capacity. In fact, while large and complex banking groups seem to be gradually absorbing the losses they suffered on their securities holdings, driven in part by the reclassification of assets, they have reported sharply higher provisions for loan losses. Let me now turn to capital ratios. The recovery in the earnings of large and complex banking groups in the euro area, together with a slowdown in the growth rate of both risk-weighted and total assets and an increase in capital, from both public and private sources, has meant that the capital ratio of the average banking institution has typically been relatively stable. There is, however, considerable divergence between groups. A somewhat reassuring finding is that the institutions which reported the largest increases in loan loss provisions also seem to have the highest capital buffers. This may mitigate the solvency risks originating from deteriorating asset quality in the future.
In particular cases where monetary policy is supported by capital controls, however, internet banking may make enforcement of such controls more difficult, since it would be operationally easier for those wishing to evade regulations to maintain offshore bank accounts. Of course, every bank in reputable jurisdictions has in place rigorous procedures to combat money-laundering, but these procedures do not normally result in customers being turned away if they are merely trying to escape capital controls or the tax regime in their home countries. Similar considerations lead some observers to enquire whether the internet might encourage substitution out of the national currency, resulting in dollarisation and also perhaps weakening the central bank’s influence over domestic monetary conditions. If internet facilities enable or encourage people either to economise on the usage of money (for example by netting payments due among two or more parties or by practising barter) or to reduce the frequency of movements of money (for example by leaving export receipts in an internet account in order to pay for imports, rather than repatriating them first), then there may be a prospect of a general reduction in transactions traffic in all currencies. The usage of some may fall more than others. I do not, however, see anything particularly sinister in such developments, except to the extent that the internet might facilitate avoidance of rules on remittances.

The financial authorities within countries, and on a collective basis internationally, may also have a role to play in developing recognised common standards in these arenas of technology and security. The second characteristic deserving our special attention is the nature of the person or company which is offering us banking or payment services over the internet. If we are merely using electronic services provided by our usual bank, which we know to be sound and to be supervised by an acknowledged regulator in a known jurisdiction, then we should be in no more danger of losing our money than we would be by banking with the same bank in the conventional manner, provided of course that both the bank and the regulator have kept pace with the requirements of internet banking, such as in respect of the security aspects discussed already. But it is quite a different story if we are tempted to part with money to some organisation masquerading as a bank, or which actually is a bank but is registered in a jurisdiction with lower supervisory standards than those to which we are accustomed. In Hong Kong, in order to protect the public we already have legislation governing usage of the word “bank”, and governing the advertising for deposits within our boundaries by anyone not authorised to take deposits in Hong Kong. But we cannot protect people from the possible consequences of clicking onto a website in a far-off place which is luring them to part with their money.
The economy is in a good place, but not without risk and uncertainty (there, I said it!). Persistently low inflation is a key area of my attention, with the core PCE inflation rate—which strips out volatile food and energy prices—running at 1.6 percent, nearly half a percentage point below our 2 percent longer-run target. 1/3  BIS central bankers' speeches  On its own, inflation somewhat below our longer-run goal would not be such a big deal, especially with our economy strong. But the broader context is important. Ongoing disinflationary pressures from abroad, and the risk that inflation expectations in the U.S. may have drifted down after many years of inflation running below 2 percent, form an important part of this picture. If we look beyond the headline GDP figure, which remains good, there are more mixed signals coming from different sectors. Robust consumer spending is balanced by signs of slowing business investment. We’ve also seen a decline in exports and weakening manufacturing data, reflecting slowing global growth and uncertainty related to trade and geopolitical risks. I am carefully monitoring this nuanced picture and remain vigilant to act as appropriate to support continuing growth, a strong labor market, and a sustained return to 2 percent inflation. Monetary Policy Adjustments This brings me to our decision to lower the federal funds rate in July and how that fits into recent history. Cast your minds back to a year ago, when the Fed was continuing along the path of normalizing monetary policy.

Since its inception, SAMA has supported banks to develop human resources by establishing the Institute of Banking, which contributes to training and qualifying a large number of national cadres in the financial services sector. The Institute continues to professionally exercise this role and make efforts to cope with the developments in the financial and banking sector by providing information solutions and diverse educational programs consistent with individual bank needs. The Institute's programs have covered important banking fields, such as treasury, investment and credit, and contributed effectively to developing and qualifying national cadres. Thus, Saudization in the banking sector exceeded 85 percent by the end of the first half of 2006. Dear Audience, These developments, which have diversified and expanded the services provided in the Saudi market, have given rise to substantial challenges to financial institutions. One of the most important challenges is to provide a sufficient number of qualified human resources to meet the needs of these institutions. Despite the employment efforts made by banks to cope with this expansion, and though 4,246 employees were appointed during the first half of 2006, the total needs of these institutions are still not satisfied. Hence, SAMA has promptly exerted expeditious efforts in search for solutions to these challenges. To this end, it has instructed the Institute of Banking to study the situation and propose practical solutions to help banks bridge such gap over both the short and long terms.
For issuers, green bonds are a way to tap the huge $ trillion pool of patient private capital managed by global institutional fixed-income investors. The shift to the capital markets from banks will also free up limited bank balance sheet capacity for early-stage project financing and infrastructure lending. Over the last two years, the City of London has been glowing green with sixteen renewable infrastructure funds with a value of $ listed on the LSE. The City has been the centre of a series of landmark global green bond issuances, from China’s first Green Covered Bond – the country’s first ever international issuance of a green bond – to the first green Masala Bond worth INR 20bn. In our view, such local currency green bonds will be particularly important to the climate transition in emerging market economies (EMEs). However, while they are important catalysts, green bonds will not be sufficient to finance the transition to a low carbon future. They accounted for only 3% of global bond issuance in 2018. Achieving the transition will require mobilising mainstream finance. Advances in reporting and risk analysis are paving the way for investors to realise the opportunities in climate-friendly investment by re-orienting their focus to broader, more sustainable long-term value creation. Such investment approaches are becoming increasingly common.

These long and short-term risks are, of course, linked – any overall misalignment with climate goals increases the short-term risks from a disorderly transition, possibly caused by extreme weather events or abrupt shifts in climate policy. A system-wide stress test can help supervisors and climate policymakers judge the adequacy of the current transition and whether further actions could be expected. As the Bank of England considers the timing and design of such a stress test, we are working with colleagues in the Network for Greening the Financial System (NGFS) to develop a small number of highlevel scenarios.16 And in our Climate Financial Risk Forum we will work with banks, insurers and asset managers to ensure these scenarios are rolled out effectively within their organisations. Together with our work on this year’s insurance survey, these initiatives will provide a basis for our future assessments of the system-wide exposure to climate risks. The third and final area is return A new horizon brings new opportunities. The IEA estimates that the low-carbon transition could require $ in energy sector investments every year for decades – twice the rate at present. Under their scenario, in order for carbon to stabilise by 2050, nearly 95% of electricity supply will need to be low carbon, 70% of new cars electric, and the CO2 intensity of the building sector will need to fall by 80%. With an estimated $ trillion of infrastructure investment expected between 2015 and 2030, smart decisions now can make sure that investment is both financially rewarding and environmentally sustainable.
Households live forever and have standard intertemporal preferences over consumption (Ct) and hours worked (Ht). Investment (It), which is subject to adjustment costs, cannot be funded directly by households and instead must be financed by borrowing from a bank. Bank loans (Lt) are financed by the capital of bankers (Bt) and deposits (Dt) from households. Banks are owned and run by bankers. A proportion (1-γ) of bankers die at the end of each period and are replaced by a new generation. Bankers reinvest all their earnings in the capital of the bank whilst they live, and leave their net wealth to households when they die. In log-linear form (carets denote log-deviations from steady-state), the standard block of the model is described by: 1)  Market-clearing condition for output (Yt);  2)  Production function (Zt is TFP and Kt is capital);  3)  Labour market equilibrium (Xt is marginal costs);  4)  Price of physical capital (qt);  5)  Return on capital (rkt);  6)  Law of motion for physical capital;  7)  Consumption Euler equation (rnt is deposit rate);  8)  New Keynesian Phillips curve (πt is inflation rate). The special ingredient is a moral hazard friction in the banking sector.

Such confidence is, in its turn, of fundamental importance in ensuring that the occupational pension system can perform its key economic role. This consists of giving people the certainty that the assets they have saved in their pension scheme during their working lives will actually be available to them in their old age. A good pension system makes it possible for people to reliably plan their future material needs, and fosters security for individuals and stability for society. It is therefore a key precondition for the prosperity and development of a modern economy. A healthy pension system is central to ensuring social cohesion and is one of the cornerstones of Switzerland’s success. With its three pillars – AHV, occupational pension schemes and private pension provision – Switzerland has for several decades operated a comprehensive and well-functioning pension system. Our pension arrangements have been envied abroad, which is also reflected in the relevant rankings. In recent years, however, our country has lost considerable ground in this discipline (cf. chart 1). Have we become worse, or have the others improved? Whatever one might think about such comparisons, it is in Switzerland’s own interest to do everything it can to ensure that the pension funds – as key players in the whole system of pension provision – are able to manage the numerous challenges facing them as effectively as possible. In what follows, therefore, I will look at two important and specific challenges: the ongoing low interest rate environment and the rise in life expectancy.
The Central Bank is doing its utmost and intends to boost its efforts and the quality of these efforts by providing top quality and highly reliable public domain quantitative and qualitative information. Our research capability is one of our top priorities. This enhancement of our capability to produce reliable knowledge will benefit all discerning stakeholders including the policy maker (who we are statutorily committed to advise) and the potential investor (who abhors any vacuum of knowledge concerning the target location). Promoting a healthy business environment also requires action to reduce excessive bureaucracy, to increase the efficiency of our judicial system and to ensure that our legal and regulatory frameworks remain appropriately flexible. At the Central Bank of Malta we have taken initiatives to help the business environment by launching the Credit Register and by promoting the setting up of the Development Bank to give better access to credit for SME’s and to infrastructure investments on the Public Private Partnership (PPP) model. We are also piloting changes to pre-insolvency procedures in an effort to curb unnecessary liquidations and save businesses that deserve a second chance through financial restructuring. We are also leading efforts to amend legislation to achieve more efficient contract enforcement procedures to address the long duration of NPL’s on bank balance sheets. These initiatives will help us climb the admittedly steep ladder of international rankings measuring business efficiency.

I would put particular emphasis on the tasks of completing the creation of a credible bank resolution regime that will work on a crossborder basis, and developing effective recovery regimes for key financial market infrastructures. I also agree with Hélène that monetary policy in the United States—given the size of its financial markets and the U.S. dollar’s status as a reserve currency—can have a significant impact on 1/4  BIS central bankers' speeches  global financial conditions, including exchange rates, and that shifts in U.S. monetary policy can lead to consequential shifts in global capital flows. However, it is also important to note that the impact of U.S. monetary policy restraint on emerging market economies (EMEs) has varied widely across tightening cycles. The impact depends on many factors, including EME fundamentals, asset valuations, and the extent and composition of prior capital inflows to those economies. Importantly, the impact has tended to be more benign when U.S. yields rise in response to good U.S. growth prospects. In contrast, spillovers have tended to be more adverse when increased monetary policy stringency is associated with a deteriorating U.S. economic outlook.2 These observations point to the need for the United States to keep its own house in order. Promoting economic growth and financial stability in the United States, I believe, is the most important contribution we can make to promoting growth and stability worldwide. Like nearly all central banks, the Federal Reserve has a domestic mandate set for it—in our case, by the U.S. Congress.
Ex post transparency of aggregate amounts lent is provided immediately for market-wide liquidity provision, and with a lag for any usage of the bilateral Discount Window. The Bank also publishes an annual report on the operation of its published facilities 3. The Bank’s published facilities now provide a rich toolkit for responding to a wide range of sterling liquidity needs. But not every eventuality can be predicted in advance – and UK institutions might on occasion require assistance in larger size, against alternative collateral, or in currencies other than sterling. The terms and conditions for any bilateral lending done outside of the Bank’s published facilities – so-called “Emergency Liquidity Assistance (ELA)” – would use as a starting point those in the SMF, including pricing and collateral eligibility and haircuts. But, recognising the potential for discretionary deviation from these terms, and the large sums of money that such lending can involve, ELA is also subject to enhanced governance and accountability arrangements, published in a Memorandum of Understanding (MoU) 4 between the Bank and HM Treasury. These arrangements are somewhat shaped by history. In his autobiography 5, the then Chancellor of the Exchequer Nigel Lawson records his deep annoyance at being given only half an hour’s notice by the Bank in October 1984 to decide whether to provide a government guarantee to back a large loan to Johnson Matthey Bankers, “a bank of no great consequence”, which the Bank had been working for some time to save.

Taken together, these steps mean that LOLR no longer has to shoulder as much of the burden of preventing insolvency ex ante, or dealing with it ex post. As such, the Bank is now able to state, as a presumption, that all banks and building societies meeting the supervisory threshold conditions for authorisation may sign up for, and access, the Bank’s published liquidity facilities 2. So changes designed to reduce the risks of lending “too much” have actually allowed the UK to offer a more effective LOLR scheme. The second lesson drawn in the UK was that, to avoid the twin pitfalls of “too little” and “too much”, the central bank should have access to the best possible information to judge solvency; and wherever possible be ready and willing to lend on pre-defined terms, against pre-defined collateral. Prior to the crisis, the Bank said very little about the terms on which it would be willing to provide LOLR, or the collateral against which it would lend. Indeed the provision of liquidity insurance wasn’t explicitly acknowledged in its public framework, in large part with a view to minimising moral hazard. In addition, the Bank had limited access to information on the financial position of firms to whom it might have to provide LOLR, because banking supervision was carried out in the Financial Services Authority, a separate organisation. In practice, efforts to tackle moral hazard had little effect: in the absence of formal regulatory requirements, banks took minimal steps to self-insure against liquidity risk.
One point worth noting to begin with, is that the Swedish nation as a whole has not increased its indebtedness in recent years. On the contrary, the large surplus on the current account indicates that external debt has declined. This should have contributed to making the economy as a whole less vulnerable to a rise in interest rates. In this respect we differ from a number of other countries, where household indebtedness has increased rapidly, while they have had a deficit in their current accounts for several years. This applies, for instance, in the United States, the United Kingdom and Australia. Developments in household indebtedness in Sweden are not remarkable when seen in relation to other OECD countries. It is clearly difficult to compare the level of debt ratios between different countries. Differences in taxation systems, credit terms and the percentage of the population that are home-owners are just some of the factors that complicate this analysis. On the other hand, a comparison of how much the debt ratio has increased in different countries in recent years can provide some perspective for developments in Sweden. It appears that developments in, for instance, the United Kingdom and Australia have been much more dramatic than in Sweden. Property prices have also risen more rapidly in these countries. However, in the United States, which deregulated its credit market at an earlier stage than the other countries, indebtedness has increased at a slightly slower rate, although it did not show any decline in the mid-1990s, as there was in Sweden.

It is also worth mentioning that during the property crisis at the beginning of the 1990s, it was not the households that caused problems for the banks. As I mentioned earlier, the Riksbank, like many other central banks, conducts a flexible inflation-targeting policy. In addition to taking account of price stability, monetary policy may in certain cases wish to take into account developments in the real economy as a whole. This can mean, for instance, conducting a less aggressive interest rate policy and thereby allowing inflation to return to the target gradually after a disturbance to avoid excessive fluctuations in production and employment. In connection with the build-up of household debt and price trends in housing, there could be a situation where households may have based their decisions on incorrect expectations and the trend may have proved unsustainable, or that we see a tangible risk of this situation arising. This could lead to an adjustment process, where house prices fell heavily and there was a decline in the real economy as a whole. We explained in a clarification of monetary policy published in 1999 that, if we choose to take these considerations into account, we will clearly motivate our decision. If flexible inflation targeting functions well, it leads to smaller fluctuations in production, without this causing average inflation to rise. The scope for conducting such a policy is determined by households’ and companies’ confidence in monetary policy.