samchain/econo-pairs-v1 huggingface dataset:
If we assume that financial crises would otherwise occur once in every 25 years (an annual frequency of 4%) then a rise in banks capital by 10 of riskweighted assets would be justified if it reduced the probability of financial crises so that they occurred with an annual probability of 3.2%, or once every 31 years. Alternatively, taking the most favourable assumptions on cost (full tax offsets, partial Modigliani Miller offsets, a lower use of bank debt and lower sensitivity of investment spending) the blue line indicates a 10% rise in capital relative to assets would be justified if it reduced the probability of financial crises from 4% a year to 3.9%, or from once every 25 years to once every 25.4 years. (The final column in the table shows that calculation for each case). Such a small decline in the likelihood of a financial crisis would not appear to be overly ambitious for such a sharp rise in the capital ratio. For typical banks the capital ratio starts out from a level under 10%, so that a rise in capital of 10% of risk assets is more than a doubling in the amount of bank capital.

Asian banks already have the advantage of deep understanding on local and regional market conditions and are relatively well-capitalised, an outcome of comprehensive reforms undertaken in the wake of the Asian financial crisis. They are therefore well-placed to seize new opportunities that emerge in the region. Financial institutions that can develop the right capability to execute the right strategy will be availed with the potential of positioning  2  BIS central bankers’ speeches  themselves ahead in the race of being Asia’s Premier banking player, and even position themselves as global force. To move markets into the next phase of growth, financial institutions must be willing to innovate and improve offerings in new growth segments. This has to be supported by good risk and capital management practices, or even develop entirely new skills to embrace new technology and business models. Moreover, Asia’s local banks with the aspiration to expand their regional or global footprint will need to develop talent to enhance their capacity and capabilities to compete beyond borders. This changing landscape should see the level of technical expertise, and skilled resources in the industry advance to new heights. The rapid pace with which change is occurring is not only demanding shorter time to competence, but also heightening demand for professionals with a broader range of skills including leadership and interpersonal skills as well as global business acumen. It is with this in mind that we advocate for professional development standards to be raised.
The distributional effects of the central banks’ asset purchases have been in focus in, for instance, the United States, the United Kingdom and in Germany, where there has been considerable discussion of the effects of low interest rates for savers.1 In Sweden, the Riksdag Committee on Finance has included distributional effects in the questions that are to be included in the ongoing review of the monetary policy framework and the Sveriges Riksbank Act – in the terms of reference for the review it says that the committee making the review shall consider in particular whether the Riksbank should give consideration to the consequences that conventional and unconventional monetary policy may have on, for instance, the distribution of income in the economy.2 Explaining why the distribution of income and wealth changes is a challenge that is not made easier by the fact that the statistics in some cases lag behind and in other cases have large gaps. Those of you who have read Piketty's best-seller Capital in the Twenty-First Century also know that one can give the question of distributional effects much greater room than I have scope for today. What I want to say with these reservations is that those of you who are expecting to hear exactly how great the distributional effects of monetary policy have been will  1 See, for instance, the Bank of England (2012), OECD (2015), Bindseil et al. (2015), Deutsche Bundesbank (2016),  European Parliament (2016), Domanski et al. (2016) and Amaral (2017).

Somewhat simplified, the income comes from two main sources: remuneration to the labour force in the form of wages and other benefits and remuneration to capital in the form of yield and profits. Both of these types of remuneration have increased over the past three years, and GDP has increased by a good three per cent on average in  4 See, for instance, OECD (2015) and Furceri et al. (2016). 6 [14]  real terms. 5 But the question is how the growing incomes have been distributed among households. Households differ with regard to the size of the income they receive from different sources. In general, labour income is in relative terms the most important source of income for households in the lower and middle parts of the income distribution, while capital income has the most significance for those at the top – particularly the very top – of the distribution. As monetary policy affects wages and capital income in different ways, the overall effect may differ from one household to the next. It is this channel from monetary policy via the composition of household income on which the debate has focused the most – rising asset prices should have benefitted households at the top of the income distribution to a relatively large degree and thus contributed to a greater income dispersion. Higher asset prices, lower yield and cheaper loans However, households do not only differ with regard to the composition of labour and capital income.
The Bank’s forecasts at the time were conditioned on the declining futures curves for energy prices for the first six months of the forecast but were assumed flat thereafter. On that basis the MPC concluded that “while the risks around energy prices are judged to be to the downside those towards wage growth are judged to be skewed to the upside”. Fast forward a year and the November 2022 MPR forecast shows just how much has changed for the worse (Table 2). Inflation is now expected to peak at 10.9% in 2022Q4, over three times higher than was forecast only a year ago, before falling sharply from the middle of 2023, to well below target by 2024Q4. With the economy already likely to be in a recession which is forecast to be prolonged, GDP growth is negative in the year to 2023Q4 and 2024Q4, to 7.5 per cent below what was forecast a year ago3. Despite much weaker growth, unemployment looks likely to be lower in 2022Q4 than was forecast a year ago and wage growth is forecast to be much higher, 5 ¾% compared with 1 ¼%. As the recession is forecast to deepen, unemployment rises sharply throughout the forecast period, a significant degree of spare capacity opens up and wage growth falls back. 2  This was the average outside forecast included in the November 2021 MPR.

Continued implementation of prudent monetary and fiscal policies, fairly favourable developments in the exchange rate coupled with pro-growth and pro-poor agricultural policies that have led to an increase in food supply and subsequent improvement in the country’s food security largely explain the favourable developments in inflation. For instance, the country recorded an increase in maize surplus to 250,000 metric tons (mt) this consumption period from 160,000 mt during the 2006/2007 consumption period. With respect to the money market, given lower inflation and yield rates on Government securities, commercial banks lending rates have been on the downward path. This can be illustrated by the nominal average lending rates which declined to around 28% in December 2006 from about 34% in December 2005, and further fell to 24.3% in September 2007. This is consistent with Government’s desire of making more funds available for priority sectors of our economy at reasonable cost, in line with the objectives the Fifth National Development Plan, 2006-2010. Ladies and gentlemen, testimony to this was the recent lowering of the statutory reserve ratio by the Bank of Zambia to 8% from 14% effective 1st October 2007. We expect this action, will release more funds to the commercial banks for on-ward lending to the priority sectors. Availability of investible funds to sectors such as agriculture, manufacturing, tourism and mining will stimulate further growth in the economy, create more employment and incomes, and contribute to alleviation of poverty.
15  Figure 7  Current-account deficit (percent)  2  Current account: percent of GDP in last 12 months Current account: percent of quarterly GDP  0 -2 -4 -6 -8 -10 -12 -14 18  19  20  21  22  Source: Central Bank of Chile. Figure 8  Inflation in developed economies  Growth forecast for 2023 (1)  (annual change, percent)  Headline 15  10  U.S. Eurozone U.K.  (percent)  Core 8  6  U.S. Eurozone U.K.  3.0 3,0 2.5 2,5 2.0 2,0 1.5 1,5  4  5  1.0 1,0 0.5 0,5  2  0  U.S. Eurozone 6.0 6,0 Latin America (2) China (rt. axis)  5.5 5,5 5.0 5,0 4.5 4,5  0.0 0,0 0  -5 05 08 11 14 17 20 23  05 08 11 14 17 20 23  -0.5 4.0 -0,5 4,0 Jan.22 Jul.22 Jan.23  (1) March 2023 forecasts were made in different periods during March. For this reason, in some cases, these forecasts contain only partial information on the recent financial developments. (2) Considers Brazil, Argentina, Peru, Colombia and Mexico. PPP-weighted growth, shares of each economy according to WEO (IMF). Sources: Bloomberg, Consensus Forecasts and IMF.

3  The slow decline in consumption is consistent with a recent rebound in employment and reduced local political and economic uncertainty. Developments in the global economy, prior to the banking turmoil, operated in the same direction. Thus, seasonally adjusted, recent months have seen an increase in employment, especially salaried jobs, which has contributed to a slight rebound in the wage bill. Indicators of domestic uncertainty have declined significantly, approaching the levels observed prior to the October 2019 social outbreak. The slower adjustment in consumption also coincides with an increase in revolving consumer credit flows, which reflects a greater use of credit lines and credit cards (figure 5). In contrast with consumption, investment has been performing poorly for several quarters. The revision to the National Accounts also shows that, seasonally adjusted, the level of gross fixed capital formation has been stagnant since mid-2021. This is consistent with the increase in the cost of credit; for some quarters access to long-term financing was severely constrained; and business expectations deteriorated amid high local political-economic uncertainty. Some of these factors have eased their importance in recent months (figure 6). As for the current account deficit, in the last quarter of 2022 it showed a significant decrease, and partial first quarter data suggest that this trend will continue. Considering the data for the end of 2022, the cumulative deficit for the last four quarters narrowed to 9%of GDP (10% in the third quarter).
Mojmír Hampl: Central bank independence in practice - the case of the Czech Republic Speaking points by Mr Mojmír Hampl, Vice Governor of the Czech National Bank, at the Annual Research Conference of the Central Bank of Ukraine, Kiev, 1 June 2018. * * * Ladies and Gentlemen, Before I begin my talk in earnest, I would like to thank the organizers for inviting me to this inspiring event. It is an honor to participate in such a distinguished panel. And it is a particular pleasure for me to visit Kiev, one of the great historical pivots of Europe and also a city with immense economic potential. The latter, I believe, can be said about Ukraine in general. The topic of this panel and the entire conference is monetary-fiscal interactions. This is an important issue, and I am convinced that a good working relationship between the central bank and the government is imperative for the proper counter-cyclicality of economic policy. My intention today, however, is to offer a related but cautionary tale. I will talk about central bank independence, with an emphasis on the experience of my own country. Few economists nowadays doubt the importance of central bank independence for achieving price stability. For example, the latest meta-analysis of this research question summarizes 300 empirical estimates from dozens of studies and finds strong evidence that independence is crucial for delivering low inflation (Iwasaki and Uegaki, 2017). This finding holds for both developed and emerging economies, as the authors clearly show.

The total capital ratio remained adequate, above the EU average, but the capital reserve shrank once with the marking to market, because of the fast-paced interest rate rise. Asset quality continued to improve, with the non-performing loan ratio falling to European levels and the NPL coverage by provisions staying at significantly higher levels than the European average; profitability increased. Yet, Romania's banking sector faces a number of vulnerabilities: (i) expectations on a higher risk of default on private sector loans amid worsening macroeconomic conditions, the uncertainty about future developments, and growing debt service due to higher interest rates, (ii) the close link between the banking sector and the government sector, and (iii) the polarization of credit institutions by size. The slowdown in lending, which started in the second semester of 2022, was also due to the rise in financing costs amid the tightening of both monetary policy stance and  2/3  BIS - Central bankers' speeches  credit standards. In the second quarter of 2022, banks tightened credit standards for loans to non-financial corporations and to households, and were expected to continue to do so in the third quarter of 2022. The prolonged energy crisis, the heightened geopolitical tensions and the mounting uncertainty about the economic outlook prompted banks to reassess the level of risk. In respect with challenges raised by climate change and energy efficiency, as of May 2022, the NBR started collecting information on green loans from banks.
And though the euro area unemployment rate is declining – down almost 1.5 percentage points from its 2013 peak – a great deal of slack still remains in the labour market. Indeed, if unemployment continues to decline at its current pace, it may take years before the euro area returns to its pre-crisis unemployment rates. And as we have seen in the UK and the US, even at that point – when the so-called “NAIRU” is reached – there may still be a substantial time lag before a tight labour market translates into higher wages. This suggests that, for services inflation to rise over the medium-term, we will need to see a faster closing of the output gap in the euro area and a quicker return towards full employment. 2  “Understanding Inflation Dynamics and Monetary”, Policy Panel remarks by Vítor Constâncio, Vice-President of the ECB, at the Jackson Hole Economic Policy Symposium, Federal Reserve Bank of Kansas City, 29 August 2015. BIS central bankers’ speeches  3  The ECB’s monetary policy response So putting the picture together, we have seen two factors that could endanger medium-term price stability in the euro area and warrant a monetary policy response: a global environment of volatile oil and commodity prices that could feed into expectations; and a domestic environment where persistent slack continues to constrain price pressures. But as we have shown, even with interest rates at zero, we have an array of conventional and unconventional measures to deliver that response.

Specifically, we decided to lower the interest rate on the deposit facility by 10 basis points to –0.30% and to extend the APP. The monthly purchases of € billion under the APP are now intended to run until the end of March 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its aim of achieving inflation rates below, but close to, 2% over the medium term. We will also reinvest the principal payments on the securities purchased under the APP as they mature, for as long as necessary. To help you appreciate the import of the overall recalibration of our asset purchase programme, you should consider that the extension of our net purchases to at least March 4  BIS central bankers’ speeches  2017 and the decision to re-invest the principal payments on maturing securities for as long as necessary will add EUR 680 billion – some 6.5% of the euro area GDP – in liquidity to the system by 2019, relative to the situation that would have prevailed under previous policies. This will strengthen our forward guidance on interest rates and ensure that liquidity will remain very supportive in the long term. There was very broad support among members of the Council for recalibrating our instruments to put inflation trends back on the path towards 2% that we envisaged when we launched our purchase programme.
Retaining the reserve asset status of the resulting claims is paramount. This requires that the claims remain highly liquid and of high credit quality. The direct financing of multilateral development banks by national central banks of EU Member States through SDR channelling is not compatible with the monetary financing prohibition. Bolstering the recovery to transform the global economy This pandemic is a prime opportunity for us to build a more resilient future and make progress towards the global economy we want to see, namely a greener, more digital and more inclusive one. We welcome the plans to further integrate climate change-related issues into IMF surveillance. At the ECB, we have recently established a climate change centre to help us harness internal expertise and shape our climate agenda in line with our mandate. Reflections on climate change and environmental sustainability were central to our recent monetary policy strategy review, as we examined how the risks posed by climate change feed into our monetary 3/4  BIS central bankers' speeches  policy framework. The resulting climate action plan we announced in July presents a comprehensive roadmap to step up our involvement in climate change-related matters, in line with our obligations under the EU treaties. The ECB has already taken concrete steps to strengthen the role of climate risk in both financial stability monitoring and banking supervision.

So targeted macroprudential measures for residential real estate markets and the activation of macroprudential capital buffers 2/4  BIS central bankers' speeches  should be considered in some euro area countries to build resilience in a timely manner. In the medium term, after the COVID-19 crisis it will be important to look at the capital framework for banks holistically, with a view to simplifying it and removing potential obstacles to its effectiveness. In particular, the functioning of capital and liquidity buffers warrants further consideration, and an assessment needs to be made of whether there is sufficient releasable capital in place to address future systemic shocks. Specific attention may need to be paid to the non-bank financial sector, where the COVID-19 market turmoil revealed significant vulnerabilities. Taking into account its growing role in financing the real economy and the interlinkages with the rest of the financial system, the sector needs to be made more resilient through regulatory reforms and the further development of a macroprudential approach. Longer-term financial stability vulnerabilities have been also building up. The pandemic has left a legacy of significantly higher debt in non-financial sectors. Residential real estate prices have continued to rise sharply in many euro area countries, underpinned by strong lending dynamics, which raises concerns of potential overvaluation. Vulnerabilities in financial markets have also increased amid strong risk exposure and deteriorating liquidity at non-bank financial institutions.
Inflation targeting has gradually become the standard monetary policy regime in developed economies. In Norway, the Government introduced an inflation target in 2001. The target is set at 2.5 per cent. The various components of economic policy in Norway have varying effects. This is why they have different functions: •  Monetary policy steers inflation in the medium and long term and can also contribute to smoothing swings in output and employment. •  The central government budget – growth in public expenditure – influences the krone and the size of the internationally exposed business sector in the medium term. Government expenditure and revenues must be in balance in the long term. •  Wage formation, the structure of the economy and incentives determine how well and how efficiently we utilise our labour resources and other economic resources. There is also an interaction: •  In its budget resolutions, the government authorities will attach importance to the effects of the budget on the Norwegian economy and will therefore take account of interest rate effects. In this way, they avoid a situation where growth in public expenditure and the interest rate push the economy in different directions. •  With a known monetary policy response pattern, the parties to the centralised income settlements can take interest rate effects into account when wage increases are negotiated. •  Moreover, the parties to public sector negotiations can take into account that the higher pay increases are, the fewer people that can be paid over government budgets.

The effects of the interest rate decline on demand, output and employment have been pronounced. It has taken time for inflation to pick up. This partly reflects low external interest rates and high oil prices, which have moderated the impact on the krone exchange rate. Higher imports from low-cost countries, competition and improved efficiency in Norwegian production have also kept inflation at a low level. Initially, it was the fall in prices for imported consumer goods that pushed down underlying inflation. After a period, the rise in prices for domestically produced goods and services also slowed. This was due in particular to increased competition in some goods and service markets. At the same time, wage growth eased as a result of lower capacity utilisation in the economy. A more subdued rise in house rents also contributed. Inflation measured by the CPI-ATE reached its lowest level in the first months of 2004. Inflation remained at below ½ per cent until the end of summer and then picked up through the autumn. Inflation moved up primarily as a result of a slower decline in prices for imported consumer goods. The depreciation of the krone since the beginning of 2003 has contributed to these developments. In addition, the rise in prices for domestically produced goods and services stabilised, and towards the end of 2004 there was a tendency towards a higher rise in prices for these goods and services. At the beginning of 2005, inflation measured by the CPI-ATE was lower than expected.