samchain/econo-pairs-v1 huggingface dataset:
This translates into a return on assets (ROA) of -0.21% (down 72 bp on the figure of 0.51% recorded in 2019), which rises to 0.33%8 if the negative extraordinary adjustments applied during the year in three of the system’s main banks are stripped out.9 Notable in these results is the increase in impairment losses, of over 50%, which entailed provisioning that was € billion higher in 2020 than in 2019.10 As to Spanish banks’ external business, the effects were also adverse given the global nature of the crisis. This was the case both for the total volume of lending and its contribution to the consolidated result, while the depreciation of emerging countries’ currencies also came into play.11 In any event, the weight of external business in the main Spanish banks’ ordinary net income has increased. Hence, without taking into account the  5  However, behaviour was uneven in firms (with an increase of 6.6%) and in households (where there was a decline of 5.6%). 6 See, for example, the October 2020 Bank Lending Survey in Spain. Menéndez-Pujadas and Mulino (2020) summarise the results of the survey for the participating Spanish banks. 7 See D. Rodríguez-Miera and R. Vegas (2021), “Impact of the dividend distribution restriction on the flow of credit to non-financial corporations in Spain", Analytical Articles, Economic Bulletin, 1/2021, Banco de España. 8 The return on equity (ROE) stood at -3.1% (10 pp down on the figure of 6.9% recorded a year earlier), and at 4.8% if extraordinary adjustments are stripped out.

Furthermore, European legislation is thus aligned with that of the United States and Switzerland, neither of which deduct these assets from their banks’ CET1. 8  (AMCESFI), which comprises the Ministry of Economic Affairs and Digital Transformation and the different sectoral supervisors. In tandem, new macroprudential tools have been conferred on the Banco de España. These increase our ability to act in response to possible bouts of excessive or inadequate credit growth in the future. Specifically, the reform of Circular 2/2016 currently under way develops three new tools. First, the introduction of a sectoral component to the countercyclical capital buffer, which, as its name suggests, enables this buffer to be established solely for exposures to a certain sector showing imbalances that might contribute to the build-up of systemic risk. Second, sectoral exposure concentration limits are established. Lastly, the ability to set certain limits and conditions on lending and other operations. In addition, once the crisis is over, I think it would be appropriate to reflect on the institutional financial architecture in Spain. After the 2008 global financial crisis, some countries changed their supervisory models, broadly speaking, by adopting more integrated models, with an increased role for central banks. In these integrated models, the responsibilities for preserving the financial soundness of all financial institutions irrespective of their nature (banks, insurance companies, securities firms, etc.)
It is almost as high as median income in the EU, and not that far from the level in Sweden. Nor does the EU definition of low income capture the considerable rise in median income in Norway over the past 15 years. In relation to the 1994 low income threshold, measured in real terms, the low income group has decreased by more than half, falling particularly sharply in the 1990s when unemployment also exhibited a sharp decline. In addition, turnover is high in the low income group. Around a fourth of the group comprises those aged 16-24, while one fifth are aged 64 and over. Many of those with low incomes are students or old age pensioners. Thus, low income only becomes a social problem when people remain economically inactive for much of their lives. Both labour market developments and short-term financial incentives can lead to this kind of social exclusion. Social security schemes can also over time become poverty traps, locking in many people who would have been unemployed for a period in other countries. A cause for particular concern is the rising number of young people that receive benefits on a permanent basis. I will now turn from today’s income distribution across groups to the distribution across generations in Norway. The Norwegian national insurance scheme is a pay-as-you-go system. This means that a given year’s pension payments from the scheme are covered by government budget revenues that year.

Experience has demonstrated that we have to prepare for exceptional situations, and I would not exclude anything, and equally I will not pre-commit to anything ex ante. We'll always look at the situation on the basis of our own analysis, taking everything into account. China Finance: The EU member countries have endorsed somewhat coordinated fiscal stimulating packages. What's your view on the impact of large scale fiscal stimulus on the short and medium term growth and on the soundness of government finance in view of the Stability and Growth Pact? Indeed some Euro members sovereign debts have been downgraded recently as they are seen as overindebted. How serious negative impacts could this have on the credibility of the monetary union, given that the ECB has no fiscal power? Trichet: The most recent forecast of the European Commission shows that this year the budget deficit in the euro area countries will reach an average of 4%, with 7 countries out of the 16 above the 3% threshold. Its important to emphasise that this situation should be temporary and reversed as soon as possible. It should not be forgotten that the rules of the SGP are very important for the cohesion of the euro area. These rules are also underpinned by strong financial and economic principles. Governments have to take into account the fact that if their citizens consider that the fiscal policy of their government would not be sustainable in the long term, confidence would drain away.
The sub-prime mortgages in the United States are an example of how certain risks can be underestimated if they are sold on to others, perhaps with opaque contracts. The loss of trust in certain kinds of financial contract, in particular in relation to their liquidity, has reduced the incentive to finance such operations, giving rise to chain reactions in all the markets. In this case too, the alarm was raised some time ago. I recall, for instance, a Financial Times article at the end of January 2007, six months before the start of the turbulence, which quoted a comment made by the President of the ECB at Davos, namely that international markets were underestimating risks and had to prepare for a substantial adjustment in the prices of financial assets. The response of the market operators to these warnings, in particular from the other side of the Atlantic, was: “We’ll keep dancing until the music stops”. One should not interfere with the market mechanism or lean against asset prices. Financial innovation, also in mortgage  BIS Review 61/2008  1  markets, was a positive development as it allowed households, also the less well-off, to finance consumption and investment. Not everybody shared this position. As early as February 2005, Paul Volcker, former Chairman of the Federal Reserve had drawn attention to the imbalances in the US economy, ranging from the balance of payments deficit and the possible bubble in house prices to the excessive household indebtedness. In his view, a correction of these imbalances was inevitable.

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We are entering an age of new ways to harness knowledge. As knowledge is dynamic, not static, our approach to learning also needs to be in sync. This calls for lifelong learning, interdisciplinary thinking and the ability to convert knowledge into action. An innovative and effective banker would need to constantly push the boundaries of knowledge. One cannot assume that the ‘facts’ that we know today will remain true. Just as in science, we should not take anything for granted, and remain open to insights from other fields of study. This is why the Bank has encouraged greater professionalism through professional qualifications and lifelong learning. As Benjamin Franklin famously said, “An investment in knowledge pays the best interest.” It is from this perspective that we can look forward to the completion of the Financial Education Hub located within the vicinity of Bank Negara Malaysia. The hub is envisioned to advance education, research and nurture innovation in financial services. This will be achieved through its state-of-the-art staff training facilities, a financial services library that will serve the entire financial services community, innovation labs for information technology, a software development hub, a cybersecurity centre and an integrated security command centre. 2/4  BIS central bankers' speeches  Future generations of financial services professionals will be nurtured and cultivated within this space. By congregating tens of thousands of finance practitioners within close proximity, we believe that great and exciting synergies will materialise to develop talent and raise professional standards of the industry.

Our strength can be seen from the current account surplus, a strong reserves position, low level of external indebtedness and strong capital buffers in the banking system. We expect these strong conditions to persist. As many of you here can testify, our financial system is resilient and robust. On numerous occasions over the past decade, we have been able to manage market volatility in our stride. To a large extent, this was due to the continuous measures taken over the years to develop our financial markets. Our market now is balanced, deep and liquid to provide the structural support for orderly market conditions. Conclusion Let me conclude with the wisdom of the great philosopher Socrates. He viewed that any state should be led by wise, noble and exemplary ‘guardians'. These guardians will “...unite themselves in philosophy and spirit and swiftness and strength...and they ought to be wise and efficient." As bankers and guardians, let us aspire to exemplify these traits; to pursue professionalism, agility and wisdom. Thank you and congratulations again to all the graduates. A bright and exciting future awaits you. 4/4  BIS central bankers' speeches
At the start of my testimony, I stressed that the key objective of economic policy at the current stage of the crisis must be to ensure the most favourable conditions possible for when the economy emerges from lockdown. However, more persistent adverse effects on certain sectors after the pandemic has been brought under control cannot be ruled out, although it is undoubtedly too early to anticipate how extensive they will be, or which activities will bear the brunt of the impact. Further, certain tentative indications suggest that, in the long term, demand could fall in some sectors, such as retail trade, and increase in others, such as logistics, technology, and IT systems. In view of this possibility, it would seem advisable to make the relevant preparations through arrangements to ease cross-sectoral and cross-company reallocation and to strengthen the lifelong learning of workers, especially considering that a priori the cross-sector transferability of knowledge between potential losers and potential winners does not appear to be particularly feasible.12  11  For illustrative purposes, if, as a result of implementing structural reforms, potential growth were to rise by 0.5 pp per annum, the debt ratio under the previous simulation would be 6 pp lower in 2030. 12 B. Anghel, A. Lacuesta and A. V. Regil (2020), “Transferibilidad de habilidades de los trabajadores en los sectores potencialmente afectados tras el Covid-19”, Artículos Analíticos, Banco de España, forthcoming.

Second, the possible changes in the sectoral structure of employment, discussed previously, make it advisable to boost lifelong learning, which in itself is desirable in the current environment of rapid population ageing.14 Lastly, the current extent of working from home for some occupations as an emergency solution during the pandemic may not be merely temporary; in this event, firms will be required to invest in resources and knowledge to ensure that the productivity of these workers is as high as possible. 13  See, for example, Banco de España (2019), “The Spanish economy and the more uncertain global environment. Recent developments, outlook and challenges”, Annual Report 2018, Chapter 1. 14 B. Anghel and A. Lacuesta (2020), "Ageing, productivity and employment status", Analytical Articles, Economic Bulletin, 1/2020, Banco de España. 38  The aforementioned labour market duality has significant implications for the economy’s productivity in aggregate terms, as it hinders the accumulation of human capital by workers, who go from one temporary contract to another. All of these reasons make it advisable to undertake an in-depth review of the range of contract types in Spain with a view to aligning the level of protection afforded to the various groups of workers. Crucially, the high weight of temporary contracts in the Spanish economy is not due to its sectoral specialisation. Indeed, certain services sectors with a relatively limited level of occupational skills account for a high proportion of Spain's productive structure.
Debt accumulation is also affected by the business cycle and interest rate changes. Household credit demand is closely linked to developments in the housing market. Home-owners with dwellings that have risen in value can make use of the opportunity to take up new mortgage-secured loans, freeing up home equity to finance consumption and other investments. House prices in Norway have on average risen by 9 per cent annually between 1995 and 2002. House prices have also increased considerably in other countries. A sharp and sustained rise in house prices might contribute to high credit growth even after prices have levelled off. Since only a portion of the housing stock is sold each year, there will for a long period be some dwellings that are sold at a higher price than when they were last sold. This has contributed to sustaining the high level of growth in credit to households in Norway even after the rise in house prices moderated through 2002 and into 2003. It is easiest to sell dwellings in the largest cities and some specific areas are particularly attractive. Residential property is now a fairly liquid and attractive investment. A persistently high rate of increase in house prices may in isolation engender expectations of a further rise and may thus prove to be  6  BIS Review 23/2004  self-reinforcing for a period.

Both banks’ capital ratios exceed requirements and are above average by international comparison. Thanks to these capital buffers, the two globally active banks are well placed to face today’s challenging environment. The direct impact of the war in Ukraine should be limited given the comparatively low exposure of Credit Suisse and UBS to the warring parties. However, an escalation of the war or a further widening of sanctions could adversely affect the economic environment and financial market conditions. The SNB addresses such adverse developments in its analysis of standard stress scenarios. This analysis shows that the loss potential for both banks remains substantial. Taking on risk is an integral part of the banking business. From the financial stability perspective, it is crucial that these risks be backed by sufficient capital. Our stress scenario analysis underlines that the ‘too big to fail’ capital requirements applicable to the systemically important banks in Switzerland are necessary to ensure adequate resilience at Credit Suisse and UBS. Domestically focused banks I shall now turn to the domestically focused banks. The profitability of these banks increased slightly in 2021. Improved cost efficiency and lower provisions for credit losses offset the decline in interest rate margins. As in previous years, the domestically focused banks improved their capital position by retaining earnings. Sustainable profits and large capital buffers are essential, as they allow banks to absorb losses and continue lending to the economy during periods of stress. Two sources of risk are of particular relevance for the domestically focused banks in the current environment.
(2008), “Optimal industrial structure in banking,” in Handbook of Financial Intermediation, Arnoud Boot and Anjan Thakor, eds. Amsterdam: North-Holland, 133–162. Miles D, Yang J and Marcheggiano, G (2012), “Optimal Bank Capital”, Economic Journal. Noss, J and Sowerbutts, R (2012), “The Implicit Subsidy of banks” Bank of England FS Papers Series, FS Paper No 15. Panizza, U and Arcand, J-L and Berkes, E (2012), “Too Much Finance?,” IMF Working Papers 12/161, International Monetary Fund. Philippon, T and Reshef, A, (2009), “Wages and Human Capital in the U.S. Financial Industry: 1909–2006,” NBER Working Papers 14644, National Bureau of Economic Research, Inc. Pulley, L. B. and Y. M. Braunstein (1992), “A composite cost function for multiproduct firms with an application to economies of scope in banking”, Review of Economics and Statistics, 74(2), 221–30. Reinhart, C and Rogoff, K, (2010), “Growth in a Time of Debt,” American Economic Review, American Economic Association, vol. 100(2), pages 573–78, May. Segoviano, M and Goodhart, C (2009), “Banking Stability Measures,” IMF Working Paper 09/04 (Washington: International Monetary Fund). Schanz, J, Aikman, D, Collazos, P, Farag, M, Gregory, D and Kapadia, S (2011), “The long-term economic impact of higher capital levels”, Bank of England, Mimeo Tarullo, D (2012), “Financial Stability Regulation”, Speech At the Distinguished Jurist Lecture, University of Pennsylvania Law School, Philadelphia, Pennsylvania. Wagner, W (2009), “In the Quest of Systemic Externalities: A Review of the Literature”, mimeo Wheelock, D.C., and Wilson P.W. (2012), “Do Large Banks have Lower Costs?

BIS Review 160/2009  13  declined. When the situation on the financial markets normalises we expect the credit multiplier to return to its earlier level (Figure 14). 3 Figure 14 The credit multiplier SEK billion and ratio 2500  20 M oney supply M 2 (left scale) M onetary base (left scale) Credit multiplier (right scale)  18  2000  16 14  1500  12 10  1000  8 6  500  4 2  0  0 02  03  04  05  06  07  08  09  10  11  12  13  Note. M2 consists of the general public’s holdings of banknotes and coins and their deposits in the banks on call and other deposits at longer durations. The broken line gives an example of a possible adjustment to a normal level. Sources: Statistics Sweden and the Riksbank. The Riksbank’s capital currently amounts to around SEK 64 billion. The return on the capital is intended to fund the Riksbank’s activities. It should also cover any losses that might arise in the Riksbank's activities. This could be losses arising in the daily management of the Riksbank's financial assets or when the Riksbank provides liquidity assistance to the banks. One item on the balance sheet that has increased over the past year is the revaluation account. This is where unrealised gains and losses are booked that comprise the difference between the purchase value and current market value of the Riksbank’s assets.
Moreover, as transactions that shift risk become more common and complex, disclosing the associated residual exposures takes on added importance. Such reporting, in turn, requires that banks have in place the appropriate systems to identify and measure these risks so that the risks can be documented for the marketplace. Finally, as we move toward improved disclosure, we must keep in mind that the goal is useful and reliable information - not simply a large volume of information. More is not necessarily better. In the area of disclosure, I should also mention that my colleague, Peter Fisher, is chairing a Multidisciplinary Working Group on Enhanced Disclosure, comprised of representatives from the banking, securities, and insurance industries in a pilot effort to formulate a set of public disclosure guidelines that make sense for an increasingly integrated financial market. The working group will assess the extent to which the pilot data can provide a meaningful basis for comparing risk management practices as well as the level and types of risk across institutions and across countries. The Basel Committee supports this pilot approach. It limits the burden on the banking industry and at the same time makes clear that the private sector has a key role to play in improving disclosure and enhancing market discipline. Firms participating in this program will have the opportunity to shape the exercise and influence the interpretation of its results. Through their participation, these firms will be sending a clear signal about their willingness to improve market discipline.

By working together in the short term to ensure a smooth transition and over the longer term to improve risk management practices for banks and develop a meaningful international capital adequacy framework, I am confident that we can be successful in not only preserving, but also enhancing, our global financial system as we enter the next century. 7  BIS Review 126/1999
Regardless of how the system for managing problems is constructed, it is also important that there is finality in the intervention. There are several examples of what can go wrong otherwise. Any errors should be corrected by means of damages, rather than reversing the decision. There should be many tools If there is a system in place that means there is a credible threat that the owners will lose their influence in a situation where the bank is in serious violation of the regulations, then there is scope to try out alternative methods of solving problems in individual cases. It is desirable that the authorities should have a broad range of tools at their disposal. It is reasonable that the deposit guarantee or the government can take part in a voluntary restructuring where the owners contribute capital, or that the government can issue guarantees in the case of a private takeover. Important is that owners and creditors should not be able to gamble on such solutions always being the cheapest option for the government. Cooperative banks may be converted into a limited liability company One special issue is how to deal with cooperative banks and savings banks. These are often small, but it cannot be excluded that problems in such banks can have systemic implications. It is not realistic to believe that a savings bank facing major problems can be restructured in its original legal form.

Table 1: Average year-on-year changes in Visa Consumer Spending Index since March 2020  %  Food  Clothing  Household  Hea. &  Trans. &  Rec. &  Hot. &  Misc. etc  & Foot  Goods  Edu. Comms  Cult  Rest. Goods  25.7  -18.2  8.0  -30.9  -35.4  -11.2  -41.8  -9.0  Source: Visa  Some of these spending habits are likely to persist. If more people work from home, travel spending is likely to be permanently lower and office equipment spending permanently higher. Other spending switches are likely to reflect pent-up demand and prove temporary – for example, on household goods, cars and houses. Nonetheless, with cumulative spending this year still running significantly below last year’s levels – for houses and cars, 20-40% below – considerable pent-up demand remains. An interesting case study in consumer resilience comes from restaurant spending. Peak to trough, this fell over 90% as restaurants closed. As they re-opened in July, restaurant spending picked-up, if initially slowly. 2  See Haldane and Chowla (2020). 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  In surveys at the start of August, almost half of consumers said they felt very or quite uncomfortable about visiting a restaurant. That suggested considerable caution about eating-out, with many consumers seemingly putting a high price on personal safety. The Government’s Eat Out to Help Out scheme provided a £ subsidy to eating-out during August.