samchain/econo-pairs-v1 huggingface dataset:
Yiu-kwan Choi: Launch of the CMU Bond Price Bulletin Remarks by Mr Yiu-kwan Choi, Deputy Chief Executive of the Hong Kong Monetary Authority, at the Signing Ceremony for the Launch of CMU Bond Price Bulletin, Hong Kong, 9 January 2006. *  *  *  It gives me great pleasure to welcome you all to this signing ceremony for the launch of the CMU Bond Price Bulletin. We are pleased to see the launch of the Bulletin. This, we believe, will be a useful tool to help promote the retail bond market in Hong Kong. As you know, financial infrastructure development has always been a priority item on the HKMA's policy agenda. A robust financial infrastructure is important in maintaining the stability and integrity of the monetary and financial systems and in strengthening Hong Kong's status as an international financial centre. Over the years, we are proud that, with the support of banks and other financial institutions, the HKMA has built a sophisticated financial infrastructure that meets the best international standards. Having said that, we are conscious that there is always scope to further strengthen our financial infrastructure to take account of the latest technology and market developments. It was precisely for this reason that the HKMA conducted a comprehensive review last year on financial infrastructure development in Hong Kong. The launch of the Bulletin is one of the recommendations arising from this review. The objective is to provide retail investors with convenient on-line access to information on bond products and bond prices.

Meanwhile, on the global front, the collapse of the Bretton Woods system, with the United States declaring in 1971 that it would cease to redeem US dollars for gold 6  from its reserves, challenged the system of fixed exchange rates that the global economy was used to operate in. In addition, the 1973 oil crisis caused inflation to escalate in all countries, including Sri Lanka, often resulting in a destructive wageprice spiral. In Sri Lanka, inflation increased to 14.4 per cent by December 1973, the highest level of inflation the country experienced until then during its postindependent history. Elsewhere in the world, following the collapse of the Bretton Woods system of exchange rates, the international community was getting used to floating exchange rates, where each currency’s value was determined by the international demand for the currency. This was a new normal, prior to which money has historically been based on a valuable commodity such as gold. Post-liberalisation Monetary Policy Framework In November 1977, Sri Lanka embarked on a major economic liberalisation move, marking paradigm shift from inward looking restrictive policies towards a liberal regime under which trade and payments were liberalised to a great extent. To be consistent with the new liberal regime, the Central Bank abandoned the fixed exchange rate regime and moved to a more market based system of exchange rate management. On 15th November 1977, the prevailing dual exchange rates were unified at an initial rate of Rs. 16 against the US dollar.
As a result, a very high proportion of the stock of extraordinary savings built up during the pandemic was concentrated in the highest income groups, which have a lower marginal propensity to consume. Therefore, going forward, a significant share of these savings is likely to remain in the assets in which they were invested rather than being spent on consumption. To understand the link between households’ savings and their investment, we must first consider the developments in funding flows. Regarding how the savings have been used, a significant share of investment has been channelled towards the real estate sector, where financing tends to be partly in the form of new debt. Meanwhile, some of the savings may have been used to repay outstanding loans. Between early 2020 and 2022 Q3, households’ net acquisition of financial assets amounted to € billion, 77% of which took the form of cash and bank deposits. The remaining financial investment was almost entirely accounted for by the net acquisition of investment fund units € billion). During this period, Spanish households divested, in net terms, from financial assets such as insurance schemes, pension funds and debt securities (in particular long-term debt securities). Meanwhile, a total of € billion was invested in housing. All of these investments were financed out of the new savings that had been built up € billion) and debt (some € billion net of repayments). This analysis of overall savings developments in Spain during the last few years can be divided into three distinct stages.

In 2021 the impact of the health crisis on the economy waned, prompting a decline in household savings, although these remained high from a historical standpoint. There has been a pronounced reduction in household savings flows since end-2021, against a backdrop of high inflation rates in which the nominal consumption growth rate is outpacing income growth. As a result, in 2022 Q3 the household saving rate fell below the levels observed in the years leading up to the pandemic. The high savings levels seen at the height of the pandemic owed to household consumption dropping far more sharply (more than 12% in 2020) than income, with the latter partially underpinned by the public support measures deployed to mitigate the adverse economic effects of the pandemic. The main factor behind the slump in consumption (and the  1  attendant growth in savings) were the health restrictions, which presented a barrier to spending on certain services such as hospitality and entertainment. Bear in mind that the savings growth recorded over the last few years was not distributed evenly across households. On the spending side, the restrictions had a greater impact on the consumption patterns of higher-income households, for whom hospitality and entertainment make up a larger share of the consumption basket. On the income side, they were hit less hard than lower-income households, since low-income individuals account for a larger share of employment in the sectors most severely affected by the health crisis.
A fundamental change within the first Pillar - capital levels - compared to the original Accord is that improved risk management in banks has allowed the proposed new Accord to incorporate greater sensitivity of credit risk capital charges. There will be a menu of approaches, depending on the sophistication of the bank. A 'standard' approach differentiates between credit exposures on the basis of external ratings. A 'foundation' internal ratings based approach will allow banks to differentiate between credit exposures on the basis of their internal estimates of borrower default probabilities; and an 'advanced' approach allows other inputs required to assess credit risk also to be provided by the bank, rather than the regulator. In addition to all this, there will be for the first time an explicit capital charge for operational risk. Systemic Implications of the Revised Accord What I have described so far is how the Accord is intended to be applied to individual banks. But given the Bank of England's responsibilities for the stability of the financial system as a whole, our principal concern is with the overall impact on the system. The Basel Committee has said that the new Accord is intended broadly to deliver the same level of bank capital on average across banks as at present. How should we assess the adequacy of this from the viewpoint of overall financial stability? As I suggested earlier, the role of bank capital is to provide a buffer sufficient to cover unexpected losses.

The direction of some of the trends we have seen in the last few weeks is not unwelcome, in particular the stronger euro and weaker dollar, and the reduction in oil prices; and a soft landing looks more likely as a result. But the speed of the adjustment remains a cause for concern. It is important that the irrational exuberance that marked the run-up in equity prices to their peak last year should not give way to irrational despondency. The view among central bank governors meeting recently in Basel was  2  BIS Review 4/2001  that while the next few months may be difficult, for the year as a whole the US economy will continue to grow, by perhaps 2-3%, and the overall world economy - helped by steady growth in the euro area would grow again this year above its long-term average. No doubt this is a slowdown compared to recent rates of growth and a downward revision of earlier expectations of growth for the year, but it is not a downturn in the sense of contracting activity. A soft landing in the US with the associated benefits for the global economy still therefore seems to me the most likely outcome. Implications for the UK Turning to the UK, the need to avoid irrational despondency is even more apparent. While a slowdown in the US will have some impact on the UK, the direct trade affect will be relatively small.
Depending on each firm’s business focus, geographic reach and customer base, any single scenario will result in variable degrees of stress, potentially undercutting structural macroprudential objectives. In the current stress testing regime, the bank-generated stress tests required as part of the CCAR go a long way to addressing concerns that stress tests based on a single supervisory scenario will not be tailored enough to expose capital vulnerabilities at all firms. In these exercises, banks are supposed to identify scenarios that are uniquely stressful to them. Evaluating these scenarios to ensure that they capture firm-specific risks is a key part of the CCAR qualitative review. This seems a very constructive way to think about consistency across firms, with the emphasis on each firm having robust risk identification and thorough consideration of the kinds of stress environments that would uniquely test its business model. Multiple, Independent Estimates and Diverse Perspectives Our 2009 paper described the benefits of the SCAP’s use of multiple, independent estimates of losses, revenue and expenses, as well as bringing diverse perspectives to bear on the design and implementation of the exercise. At that time, the technology of firm-wide stress testing was in its infancy, and the SCAP results were based on a combination of bank-generated estimates, 3/6  BIS central bankers' speeches  (somewhat primitive) supervisory models, and high-level “top down” estimates of possible stressed loan losses.

Thomas Jordan: Current monetary policy and its significance for the real economy Summary of a speech by Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, at the General Meeting of the Aargauische Industrie- und Handelskammer, Wettingen, 20 May 2010. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  In the current situation, the challenges for the SNB’s monetary policy remain formidable. On the one hand, against the backdrop of the economic recovery we have witnessed since mid2009, there is a danger of inflationary tendencies and the renewed formation of a bubble. This is because the current monetary policy is too expansionary in the long term. On the other hand, downside risks are still present or are again reappearing, and should not be underestimated. They relate, in particular, to the further development of the debt crisis in Europe. A deterioration of this situation entails the danger for Switzerland of renewed deflation and recession as well as the risk of another destabilisation of the global financial system. Between these opposing risks the SNB must walk a fine line, moving in terrain that is constantly and rapidly changing, depending on which risk gains the upper hand. With a monetary policy strategy aimed at maintaining price stability, the SNB is well equipped to face these challenges. What are the short and medium-term consequences for the real economy of addressing these challenges?
The positive behaviour of the economy contributed to and, in turn, was stimulated by the correction of the macro-financial imbalances accumulated during the pre-crisis and crisis periods. Such corrections were particularly significant as regards private sector deleveraging, the reduction of unemployment, the progressive absorption of disequilibria in the housing market, and the balancing of the external accounts, not least due to significant gains in competitiveness. Looking forward, nonetheless, a number of questions remain open. Will this process continue at such a strong pace? Under which conditions would the recovery turn into a sustained and prolonged expansion? Which are the main vulnerabilities and weaknesses that policy-makers should tackle in order to raise potential growth and the well-being of the population? Is the Spanish economy, within the EU framework, well equipped to cope with the next cyclical downturn? Is the euro area as a whole well prepared? The programme of this conference approaches these questions, trying to identify some answers. The discussion is organised around four main topics: how to lower fiscal vulnerabilities; which are the main challenges for the Spanish labour market to function properly; how to raise medium-term growth; how to advance in the euro area architecture. Lowering fiscal vulnerabilities The first session of this conference deals with the policy priorities for addressing mediumterm fiscal challenges in Spain. The panellists are going to explore options to bring down the high level of public debt and to handle rising pressures from ageing population.

The Fed and the Bank of England have introduced a new “collateral swap facility”, under which the banks can temporarily swap their unsaleable securities against liquid government paper. The pressure on banks to refinance their balance sheets is thus reduced without additional central bank money having to be injected into the market. The Fed went even further in providing support during the sale of investment bank Bear Stearns. It took illiquid and risky securities directly onto its own balance sheet. Thus, in the third phase, some countries administered new remedies in addition to the existing ones, and even performed a few emergency operations. In the SNB’s case, the range of counterparties admitted to repo auctions has already been very broad for some time. Indeed, shortly before the turmoil began, we decided to expand the range of eligible securities for money market operations, whilst still retaining stringent quality standards. Measures such as those used in the US and UK have not proved necessary in Switzerland to date. Monetary policy steering during the crisis The measures taken by the SNB, as described above, were primarily aimed at ensuring the smooth functioning of the Swiss franc money market during the turbulence. However, it is also important to look at the actual implementation of monetary policy strategy during the crisis. Of particular interest in this regard are two aspects which have occasionally been misinterpreted by the general public.
However, in recent years, I have seen that there has been an increasing interest in this matter and in other issues, once considered exotic for central banking. Let me give you two examples. First. A few years ago, at a Central Banks’ Governors’ Club of the Central Asia, Black Sea Region and Balkan countries meeting in Shanghai, there was a presentation about the role the central banks could play in reducing pollution. Second. Early this year, in Bruges, within the IMF Dutch-Belgian Constituency, the National Bank of Belgium gathered central bankers to discuss policy challenges related to doing business in the digital era. So, it is not a real wonder that we talk today about Artificial Intelligence here, in Bucharest, at the National Bank of Romania. It is good for central banks to review from time to time what they are doing. As Agustin Carstens, the head of the Bank for International Settlements, has recently said that central banks are ‘acutely aware of the need to adapt’ their frameworks. That opens the way to new ideas, such as allowing inflation to temporarily overshoot to compensate for past years of weak price growth. I will not go into detail regarding inflation and all the variables that allow us to acknowledge and deal with it. Deputy governor Liviu Voinea thoroughly addressed the inflation puzzle and the present whereabouts of Phillips Curve, during dinner last night.

In an open letter published three weeks ago on climate-related financial risks from the Governor of Bank of England Mark Carney, Governor of Banque de France François Villeroy de Galhau and Chair of the Network for Greening the Financial Services Frank Elderson, the significant effects of climate change are highlighted and a call for action from central banks and supervision is issued, with specific recommendations where central banks are encouraged to integrate sustainability into their own portfolio management. In closing, the authors recognize that “climate change is a global problem, which requires global solutions, in which the whole financial sector has a crucial role to play”. Today we have unlocked the gates towards exotic, yet newsworthy debates here, in Bucharest. Therefore, permit me to extend an open invitation to you all for further discussions at the National Bank of Romania about the impact of climate changes on economies, finance and central banking. We will be honored to host such a conference in Bucharest. Thank you for your attention. 2/2  BIS central bankers' speeches
A scenario of greater uncertainty, tight financial conditions and an appreciated dollar is particularly negative for the prices of commodities, especially copper. Fears about the effects of the trade war have been heightened by the further moderation of China’s economic activity figures. The Chinese authorities again intensified fiscal and monetary stimuli, reversing some of the measures adopted during 2017 to limit indebtedness and promote more balanced growth. About the monetary stance, its Central Bank has led interest rates downward and granted liquidity to the banking market by cutting reserve requirements twice during 2018. In turn, it has allowed the currency to depreciate—close to 10% since March—without major interventions, partially offsetting the higher tariffs on Chinese goods. At the fiscal level, they have relaxed the limits of indebtedness of local governments, allowing them to issue debt at lower interest rates and eliminating restrictions 5  on public-private partnerships with the aim of stimulating investment in infrastructure. Tax reductions have also been applied to companies and households for an amount of roughly 1.3% of GDP and the easing of environmental constraints, which already resulted in a rebound in industrial production during the first quarter. How much room do the Chinese authorities have to further stimulate demand? One doubt refers to their level of indebtedness, which is three times their GDP, too high for an emerging economy, and originated in a poorly regulated segment of the financial industry.

This is consistent with lower 12-month growth rates in the second half, which respond largely to a tighter comparison base. For 2019 and 2020, the forecast ranges are similar to those considered in June. Thus, GDP will grow between 3.25% and 4.25% next year, and between 2.75% and 3.75% in 2020 (Figure 4). The lower growth expected in 2020 stems from the economy closing the gaps somewhat faster than expected and, therefore, growing around potential. Moreover, the impulse from abroad will contribute somewhat less growth at that horizon. These projections represent a somewhat less favorable external scenario than in the previous Report, an MPR that will remain below its neutral level for several more quarters, investment outgrowing GDP, no major macroeconomic imbalances and the economy growing around its trend trajectory towards 2020. 3  Compared with June’s Report, the baseline scenario adjusts the gross fixed capital formation (GFCF) of 2018 upwards but maintains the same gradual reduction in its expansion rates over the rest of the projection horizon. On the consumption side, we expect private consumption to grow at a similar pace as GDP during 2018, 2019 and 2020. This assumes that the durable component—largely its imported part—will decelerate from the first half of the year, affected by the depreciation of the peso. The support that household spending receives in the baseline scenario from the recovery of the labor market should help offset this effect (Figure 5).
In order to foster greater economic momentum, reduce downside risks and speed up the return to more normal levels of unemployment and inflation, in early November the Federal Reserve announced its intention to purchase $ billion of Treasury securities. These purchases helped to ease financial conditions, thereby stimulating economic activity. More recently, we have seen signs of a pick-up in the pace of growth, with activity in the second half of 2010 turning out to be considerably stronger than most analysts expected. Real final sales grew at a 4 percent annual rate over the second half of 2010, up from 1 percent over the first half, led by surprisingly strong growth of consumer spending, continued strong growth of exports and slower but still healthy growth of business fixed investment. Several notable forces combined to encourage the resumption of stronger growth. On the policy side, as I mentioned, the Federal Open Market Committee provided further stimulus through purchasing Treasury securities. This, plus the lagged effects of its previous measures, helped to improve financial conditions. Also, the Board of Governors’ Senior Loan Officer Opinion Survey indicates that, while the absolute level of lending standards remains tight, banks did begin to ease standards somewhat in the second half of 2010. The pick-up in the economy has occurred despite renewed weakness in the housing market. Home prices have softened anew and construction activity remains stuck at a very low level, likely reflecting the continued large supply of unsold homes.

Let me now turn to seven more awkward questions for us. First, how do we square the principle of proportionality with the steeper slope of regulatory requirements this inevitably causes for growing firms? This arises in many ways, where we take a softer approach for smaller firms but this has to be withdrawn as they grow. One example is the steps in our Systemic Risk Buffer regime, which we’ve debated with Sir John in the past – it’s true these could be smoothed to some extent by greater granularity and/or an ‘income tax’ approach, but the basic problem of gradient remains. This issue also arises on the resolution side, which is of course outside the scope of the competition objective – it must be right that we exempt small firms from bail-in debt, but this inevitably leads to a moment when successful firms stop being small and need to start issuing. Second, and related to the first, although we have in my view been pretty successful in encouraging new entrants, it is so far notable that no small bank has successfully become a large bank. Perhaps this will change through time, and it may have much more to do with behavioural stickiness of current accounts than regulation, but it would be complacent to be relaxed about it. As an aside, there may be lessons to be learned here from the general insurance market: it is notable that some of today’s largest GI firms started as small challengers within the last 20-30 years.