samchain/econo-pairs-v1 huggingface dataset:
In this connection, the heterogeneity in households’ financial situation is proving very significant from the financial stability standpoint. Taking the Banco de España’s Survey of Household Finances (EFF), we find that the industries most affected by the pandemic used youths and women proportionally more than other sectors, also employing a higher percentage of low-wage workers. These lower wages would be partly offset by the fact that the employees concerned lived with other household members with higher income. As regards their finances, 28% of workers in the social industries lived in 2017 in households whose financial assets amounted to less than one month’s income, and around 8% had bank debts whose payments exceeded 40% of the household’s gross income. Accordingly, the labour income and financial situation of the households of workers in the social industries were in 2017 more fragile than those of employees in other, regular industries. Overall, then, the non-financial private sector’s financial position has worsened. The consequences of this for credit institutions’ results will become fully patent in the coming quarters. Clearly, too, the improvements in the quality of the Spanish banking sector’s balance sheet and in its solvency levels in the past decade have placed it in a better position to absorb this crisis and to continue providing the financing the economy needs. And the sector’s risks to financial stability have been mitigated by the various economic policy measures adopted. In any event, banks’ income statements have already been adversely affected.

M R Chatu Mongol Sonakul: Thoughts and reflections on the development of the domestic bond market in Thailand  Speech by Mr M R Chatu Mongol Sonakul, Governor of the Bank of Thailand, at the ADB Conference on Government Bond Market and Financial Sector Development in Developing Asian Economies, held in Manila, 28-30 March 2000. *  *  *  Mr Chairman, distinguished Guests, Ladies and Gentlemen, I am honored for the opportunity to share with you some of my thoughts and reflections on the development of the domestic bond market in Thailand. The Asian economic crisis, which started in Thailand in 1997, posed the most severe challenges to policymakers - how to contain the crisis, how to ease the burden of the poor and how to ensure a sustained recovery. But the biggest challenge to us all must be how the crisis could have been avoided in the first place. If I can turn back the clock and have a wish, my list may be long. But high in its ranking would be a well functioning Thai baht bond market. Benefits of bond markets A bond market provides a basic infrastructure for the development of the financial system and the overall economy. The bond market is an important alternative to bank lending. During a crisis, banks themselves often come under liquidity pressure, from both domestic and foreign withdrawals. Not only do they cease to lend, they also recall loan from their best debtors.
Our use of early warning indicators is precisely because we have learned the hard way with banks that excessive reliance on modelled capital requirements lends itself to cutting capital levels too low. In banking supervision we are playing catch-up by working to raise capital levels from ones that were too low. We can avoid that outcome for insurance by acting now to introduce sensible backstops. Turning finally to the broader global environment, the financial crisis has led to a great deal of debate around whether insurers contribute to systemic risk in the financial system. The IAIS has been considering whether there are insurers which can be classed as Globally Systemically Important. In doing so, it has developed a methodology to identify insurers whose distress or disorderly failure, because of their size, interconnectedness, and the nature of their activities would cause significant disruption to the global financial system and economic activity. This work is at an advanced stage and we should hear shortly from the Financial Stability Board on a list of global systemically important insurers. The implications for being labelled as a GSII will then need to be considered. The PRA recognises that insurers are not systemic in the same way as banks. However, we strongly believe that failure of some insurers could have the potential to pose risks to the stability of the financial system or to directly disrupt economic activity through the availability of risk transfer.

The transfer of risks related with the debt is prohibited in Islamic finance. Therefore speculative transactions such as derivative are nonexistent. Transferring the risk related with the debt and speculative financial activities could cause unnecessary booming of the financial transaction volume well above the size of the real economy. Moreover, linking credit supply to growth rate of the economic activity, Islamic finance acts as a natural hedging scheme. In other words, financing extended by means of Islamic institutions can be used only with the real economic activity, and thereby, help restrict excessive credit boom. Credit is mainly extended for the purchasing of the real goods and services. In Islamic finance, Islamic financial institutions should own and possess the real goods and services and the buyers of the real goods and services should want to take delivery. Therefore, stakeholders share profits in good times, and losses in bad times. Distinguished Guests, There is ample room to improve Islamic financial system, more specifically on regulatory and supervisory side. While the high growth rate of the Islamic financial institutions is expected to continue in the coming years, they maintain certain market risks such as reputation and liquidity risk. Liquidity management is difficult under Islamic finance rules as practical instruments in accessing liquidity are limited. However, Islamic financial institutions, being aware of the limits in liquidity management, sustain higher liquidity ratios compared to conventional banks. Similar case is valid for their capital ratios.
That observation may imply bonus payments are a useful cyclical indicator, although interpreting the data is potentially complicated by changes in taxes that shift the incentive to pay bonuses over time. 27  Accounting for the mis-measurement of clothing and footwear prices, which existed until 2010 and biased measured annual CPI inflation downwards by around 0.4 percentage points. See Bank of England (2011), Inflation Report, February, box on page 39. 28  One way to illustrate the impact of import prices is to consider measures of core inflation adjusted for import intensity. These measures suggest that the current rate of core inflation is being dragged down by import prices by around 1 percentage point. That is a sizeable effect, and reflects, in part, changes in the value of sterling. The core measure referred to here is CPI inflation excluding food, energy, education, alcohol, tobacco and VAT, and the measure adjusted for import prices weights each component of the core index by the inverse of its import intensity. BIS central bankers’ speeches  9  Over the past few years, core inflation has been particularly subdued, and it remains less than one per cent. We need to see increases in core inflation to have a reasonable expectation that, in the absence of further shocks, overall CPI inflation will return to 2 per cent within the MPC’s stated objective of two years.

Examples are loan-to-value or loan-to-income limitations, and add-ons to the risk weights on relevant bank exposures. The latter instrument is being used in New Zealand, where supervisors have recently introduced a 15 percentage point risk weight add-on to property lending. Since these instruments are also microprudential, they are all in the domain of the Financial Supervisory Authority and are needed there. But the macroprudential objective is different from the microprudential, and may call for different calibration of the instruments. The implementation may for practical reasons need to rest with the FSA. But Norges Bank can make strong recommendations on how these instruments shall be used for macroprudential purposes. We shall seek very close cooperation with the Financial Supervisory Authority to implement our macro prudential agenda. The Nordic region is currently close to being a separate banking market, where non-Nordic banks have small market shares. But branches with parents in other Nordic countries have substantial market shares in all national markets. There is scope for fruitful cooperation between the Nordic supervisory authorities. The countercyclical buffer proposal from the Basel committee includes a prescription to that effect. It stipulates that the time-varying capital buffer targets shall be applicable to all banks operating in a jurisdiction, including branches of foreign banks. The home supervisor shall impose the buffer decision of the host supervisor. This is a step in the right direction, but differences in risk modeling will remain.
Consequently the vulnerability of the financial system and its resilience are currently being reevaluated. •  Three major sources of vulnerability have been identified: economic concentration, geographic clustering and connectivity and interdependency. Networks by their very nature can act as channels as well as origins of systemic crisis. •  The awareness of vulnerability leads to new and substantial demands for investment in resilience. For instance, crisis management is a demanding activity. It involves private firms, financial market infrastructures, public supervisors and oversight institutions. Without the cooperation of all of them crisis management cannot succeed. •  Investment in resilience, however, is costly. The benefits of the financial sector’s value growth cannot be enjoyed without paying this price. Should the price not be paid value growth would turn out to be unsustainable. There are no stable financial systems that are not at the same time highly resilient under crisis conditions. Allow me to expand on this last point: as a representative of a central bank I assure you that central banks are not likely to close an eye on this issue. Resilience of financial service providers in general and of the financial market infrastructure in particular has been placed at the top of regulatory authorities’ agendas. Indeed, it will stay there. As much as public bodies are contributing to the  4  BIS Review 55/2002  resilience of the financial system as a whole, they will make demands of the private sector.

A third source of vulnerability is the large degree of connectivity and interdependency of the financial sector. Y2K and the terrorist attacks of September 11, 2001, highlighted this type of vulnerability. One key lesson learnt was that vulnerability extends beyond these systems since they crucially rely on utilities such as electricity and telecommunications or on service providers like S.W.I.F.T. Let me sum up again. There are three major sources of a financial system’s vulnerability: economic concentration, geographic clustering, and connectivity and interdependency. The latter are an obvious characteristic of financial networks. Networks contribute to increased efficiency and facilitate risk management. At the same time they also can act as channels as well as origins of systemic crisis. From vulnerability to resilience Hand in hand with a new awareness of the vulnerability of the financial system, those responsible for its safety and stability in private firms, in financial market infrastructures as well as in the regulatory agencies have recently been taking a new hard look at the financial system’s capacity for resilience. In retrospect the Y2K problem was a first mild but nevertheless rather valuable test. The Y2K test was mild in the sense that everybody had enough time to prepare for it. What helped in Y2K was the clear deadline. All the contingency and communication networks could be set up before the event. Many of us gathered here today knew exactly where we had to be on December 31, 1999, what we had to do and whom we had to call if there were problems.
At the same time, more and more conventional investors are also looking to diversify their portfolios into sukuk as a new asset class. So, issuing sukuk would enable fund-raisers to enjoy a wider and more diverse investor base. 20. Second, you would be able to diversify your funding sources. With the additional option of sukuk in your arsenal, you can choose to issue either conventional bonds or sukuk, depending on the pricing and liquidity in the market at the time of issuance. This would provide more flexibility and a more stable source of funding to fund-raisers, particularly at a time when the funding cost of sukuk is more attractive than that of conventional bonds or when there is difficulty in obtaining liquidity in certain markets. 21. Having said that, sukuk remain a relatively new product type in Hong Kong’s financial market. Some of you may have questions about the mechanics of sukuk, such as what would be suitable underlying assets, how to ensure Shariahcompliance, etc. Malaysia’s experience has clearly shown that there are readily available solutions to address these issues. In particular, while sukuk are assetbased, a number of different sukuk structures are available. So, for companies that do not have much fixed assets, some asset-light sukuk structures may be utilised to  BIS central bankers’ speeches  3  overcome issues concerning availability of tangible assets. I am certain that the experts present here today will be able to provide more guidance and address such questions in detail in later sessions. Concluding remarks 22.

The global roadshows of the Government sukuk will also provide an ideal opportunity for us to reach out to global investors and showcase our credit strengths and Islamic finance capability. 16. As the Government’s representative under the Government Bond Programme, the HKMA is now working closely with the Government to prepare for the inaugural issuance of Government sukuk. A detailed issuance plan is being devised with reference to international practices and market conditions. According to our current plan, the inaugural Government sukuk would be based on the Ijarah structure and target institutional investors globally. What’s in it for fund raisers to issue sukuk? 17. As I have mentioned earlier, the key objective of the Government sukuk is to play a catalytic role, paving the way for local and international fund-raisers, no matter from the public or private sector, to follow suit. 18. For the potential sukuk issuers sitting here today, you may wonder what benefits you will get by issuing sukuk. Well, let me highlight two key benefits here. 19. First, you would be able to broaden your investor base. By issuing conventional bonds, you will only be able to tap conventional investors. But by issuing sukuk, you will be able to get both conventional and Islamic investors to participate. In particular, issuing sukuk will help you to gain access to the large pool of liquidity in the Middle East and other Islamic countries, where investors are progressively looking for Shariah-compliant assets in this part of the world.
The difficulties monetary policy is faced with when markets cease functioning normally has also been underestimated, despite previous experiences from, for instance, Japan. Monetary policy and financial stability overlap in several areas. Following the past year’s dramatic economic developments, it should be evident that insufficient financial stability leading to a major financial crisis seriously impairs the preconditions for monetary policy. Strategically important markets must be made to function in order to avoid a total collapse. Central banks have thus been compelled to undertake a series of unconventional measures, partly aimed at maintaining a functioning payments system and partly aimed at improving the functioning of the financial markets, thereby contributing towards the desired effect of the expansionary monetary policy. At the same time, there exists greater awareness of the fact that a monetary policy that does not adequately consider financial factors can lead to the accumulation of serious financial imbalances. Financial stability has been demonstrated to form an important restriction to the manner in which monetary policy can be applied in crisis situations. 3 Monetary policy models must become better at capturing the functioning of financial markets. In my opinion, the present monetary policy framework, in which monetary policy is aimed at stabilising both inflation and real development, still works well. However, monetary policy analysis needs to be developed, in certain respects, to enable us to make better forecasts within this framework.

The above reasoning is of a highly principle nature and it would require further analysis and better models before anything more concrete can be said regarding the manner in which monetary policy should be formulated when financial imbalances are present. However, I am prepared to make a few observations on the subject. To start with, there are probably many asset bubbles that monetary policy should not directly attempt to counteract, particularly those not associated with strong credit growth. Furthermore, Swedish monetary policy can hardly prevent stock market bubbles as these are primarily affected by international factors, in particular international stock market developments. If, on the other hand, credit growth were to develop in an unsustainable manner at the same time as housing prices were increasing rapidly, in my opinion, it would be reasonable for monetary policy to take this into consideration, even if short-term inflation may be low. Such considerations characterised the formulation of monetary policy during the years 2005– 2007, when the development of housing prices and loans to households restrained the Riksbank from cutting the repo rate as much as would have been the case if monetary policy had only been guided by inflationary assessments for the next two years. It is, of course, difficult to determine which role this played in counteracting the development of the housing market. At any rate, prices undeniably rose rapidly.
The Central Bank of the Republic of Turkey was one of the central banks that cut their policy rate in the said period. The rapid policy rate cuts on a global scale were accompanied by massive asset purchasing programs led by advanced economies and rapid balance sheet expansion. Meanwhile, the speed of asset purchases has outpaced the previous crisis. The objective of the financial policies introduced to provide liquidity to the banking sector was to protect the fiscal structure of the financial sector and to ensure credit flow to the private sector. Many central banks provided additional  4  liquidity to the banking system by lowering reserve requirements and easing capital and liquidity buffers. With the regulations introduced, existing loan payments of the real sector experiencing a halt in cash flows were postponed or restructured. We can analyze the fiscal policy measures under some main headings such as new credit channels and government guarantees for loans, tax exemptions and reductions, and direct expenditures. Incentives of this kind are widely used in all major economies. During the pandemic, countries supported their economies with direct public spending, other financial supports and incentives. In some countries, direct public expenditures were more widely used depending on the fiscal space, while in others, capital, credit and other liquidity supports were used. In advanced economies, public incentives exceeded 20% of their national income. For example, in the USA, the economic support provided via public spending and forgone revenues reached 25% of the national income.

The economic environment in which we operate today is a direct consequence of the demographic and productivity shifts taking place. Low neutral interest rates are very real, and they’re here to stay. Conclusion The facts have changed, and so it is time to change our minds also. It is often said that change is hard. But, experience teaches us that it is better to prepare for the future than wait too long. Ultimately, failure to prepare often means preparation for failure. 1 United Nations, World Populations Prospects: Key Findings and Advance Tables, 2015 Revision. 2 Antonin Bergeaud, Gilbert Cette, and Rémy Lecat, Productivity Trends in Advanced Countries between 1890 and  2012, Review of Income and Wealth, Volume 62, Issue 3, pp. 420–44, September 2016. 3 Shigeaki Fujiwara, Yuto Iwasaki, Ichiro Muto, Kenji Nishizaki, and Nao Sudo Fujiwara, Developments in the  Natural Rate of Interest in Japan, Bank of Japan Review, October 2016; Kathryn Holston, Thomas Laubach, and John C. Williams, Measuring the Natural Rate of Interest: International Trends and Determinants, Journal of International Economics, Volume 108, Supp. 1, pp. S59-S75, May 2017. 4 Thomas M. Mertens and John C. Williams, Tying Down the Anchor: Monetary Policy Rules and the Lower Bound  on Interest Rates, Federal Reserve Bank of San Francisco, Working Paper Series, May 2019.
The Banco de España is very proud to have created CEMFI 35 years ago and to have supported it since then. I believe in the rigorous evaluation of activities, and in this sense CEMFI has been exemplary, commissioning regular independent external evaluations. The last one was conducted in 2021 by three distinguished economists, Marianne Bertrand and Raghuram Rajan, of the University of Chicago, and Nobel laureate Jean Tirole, of the  Toulouse School of Economics. The report started with a bold statement: “CEMFI is a remarkable adventure, both on the research front and in terms of educational achievements. A relatively recent introduction in the landscape of European higher education in economics, CEMFI has succeeded in establishing itself as one of the premier research centers and postgraduate schools (in Europe).” The report contained a number of recommendations for further improvement. And, as a testament to our commitment to excellence, the CEMFI Board of Trustees has taken steps to implement these recommendations with the financial support of the Banco de España. In fact, following the presentation of the evaluation report to the Banco de España’s Governing Council, we issued a press release stating that “CEMFI is an exemplary institution, whose activities provide an important service to the Spanish economy and society in general and to the Banco de España in particular.

The Governing Council therefore supports the implementation of the ambitious objectives described in the evaluation report.” In terms of the broader service to Spanish society we have just mentioned, let me remind you that three CEMFI faculty members currently participate in the Council of Economic Advisors of the Spanish Ministry of Economic Affairs, two have recently been appointed members of the Advisory Committee of the Ministry of Inclusion, Social Security and Migration, one is a member of the Advisory Board of the Spanish Independent Agency for Fiscal Responsibility, and another one is chair of the Scientific Committee of the Spanish State Research Agency. In addition, last December, CEMFI signed an agreement with the Ministry of Inclusion, Social Security and Migration to collaborate in the evaluation of 34 pilot projects to improve the design of poverty reduction policies. CEMFI will participate both in the design and the evaluation of the projects, and researchers will be able to use the data generated by these evaluations for the production of papers publishable in scientific journals. Carrying out these evaluations will allow CEMFI to take a qualitative leap forward, positioning itself as an academic institution of reference in the evaluation of public policies in Spain. I would like to thank Samuel Bentolila and Mónica Martínez-Bravo for leading this important initiative.