samchain/econo-pairs-v1 huggingface dataset:
In the case of borrowing, transaction costs include any payment which the borrower has to make other than the payment of interest to the lender. Such costs, therefore, comprise legal fees, application fees, loan processing fees, any bribes or commissions payable, stamp duties and other taxes and, finally the opportunity cost of the time spent for pushing the application through bureaucracy and the waiting time. This can be compared with a village money lender who is alleged to be charging an exorbitantly high interest rate. Yet, the transaction costs involved in borrowing from a money lender is practically zero. Hence, from an efficiency point of view, a village money lender is preferable to a microfinance institution with a high transaction costs. In Sri Lanka, in late 1980s, the Central Bank ran an agricultural credit scheme of which the interest rate payable by the farmer had been fixed at 9 percent when the market interest rates amounted to about 20 per cent. The subsidy was intended to reduce the farmers’ cost of production and promote agriculture. A study conducted by ADB revealed that the effective interest rate paid by farmers, after taking into account all the costs, amounted to 30 percent, much higher than even the free market rates. The difference between the actual cost incurred by the farmer and the rate paid by him to the lending bank was wastage of resources. It had not been the income of anyone. Hence, such costs are known as deadweight losses.

Sweden had built up large surpluses in both its public finances and on its current account prior to the start of the crisis (see Figure 21) and the public sector’s indebtedness is low. This has provided a greater degree of freedom with regard to managing the crisis. Public finances will deteriorate substantially this year and next year as a result of expansionary fiscal policy combined with a decline in public income and an increase in expenditure related to unemployment, etc. as a result of the economic downturn. Our assessment is that the public sector financial balance will fall from +4 per cent of GDP in the peak year 2007 to a trough of -4 per cent of GDP in 2010. But this is a much better situation than in many other countries, such as the United Kingdom, where public finances have also deteriorated substantially, but where they had a deficit to start with. The ambition in Sweden for public finances to show a surplus when regarded over an economic cycle has made it possible to dampen the economic downturn with an active fiscal policy without this leading to an unmanageably large deficit. 8  Labour Force Survey (AKU) June 2008, Statistics Sweden, 3 August 2009. 9  Consumer Price Index (CPI) July 2009, Statistics Sweden, 11 August 2009. BIS Review 98/2009  5  The current account is also showing large surpluses.
For me it is not important that it is the Riksbank, rather than any other authority, that is given the responsibility and the instruments to conduct  22  See, for example, Apel, Mikael and Carl-Andreas Claussen (2012), “Monetary policy, interest rates and risk taking”, Sveriges Riksbank Economic Review 2012:2, pp. 66–80, for an outline of the relationship between low interest rates, increased credit expansion and the boom on the property market in many countries that to a large extent lay at the centre of the crisis. BIS central bankers’ speeches  15  macroprudential policy. But it is important that someone is given responsibility, otherwise we will have created a framework that is no clearer than the one we have today. Exactly how responsibility should be allocated is an issue that I am not prepared to discuss further today. It is an issue that will have to wait until the Riksbank submits its response to the interim report of the Financial Crisis Commission later in the spring. References af Jochnick, Kerstin (2013), “Monetary policy and macroprudential policy”, speech, Länsförsäkringar, Stockholm, 25 January 2013, Sveriges Riksbank. Apel, Mikael and Carl-Andreas Claussen (2012), “Monetary policy, interest rates and risktaking”, Sveriges Riksbank Economic Review 2012:2, pp. 66–80. Borio, Claudio and Mathias Drehmann (2009), “Assessing the risk of banking crises – revisited”, BIS Quarterly Review, March, pp. 29–46. Englund, Peter (2011), “Swedish house prices in an international perspective”, The Riksbank’s inquiry into risks in the Swedish housing market.

The corresponding figure for Sweden was a surplus of over 1 per cent; in line with the so-called surplus target.4 The much stronger state of public finances than in many other countries was largely a consequence of the fiscal policy framework that has gradually been developed since the 1990s.5 This put Sweden in a much better initial position in terms of its public finances when the financial crisis began. Fiscal policy contributes to stabilising business cycle fluctuations without any specific decisions being made through the so-called automatic stabilisers; that is through the fact that tax revenues fall and expenditure for various grants and benefits increases automatically when economic activity declines and unemployment increases.6 However, in addition to this, active decisions can also be made that affect revenues and expenditure. Despite the severe downturn in 2008–2009, public net lending in Sweden fell to only –1 per cent of GDP in 2009. This is much less than in the euro area, the United Kingdom and the United States (see Figure 6). Public indebtedness has increased substantially in the United States and in many European countries in recent years, partly as a result of the automatic stabilisers and partly as result of government intervention in the financial sector to deal with systemically-important banks that have experienced problems. In these countries, the scope to influence the economy using fiscal-policy stimulation measures is therefore very limited today.
Other requirements on maximum LTV ratio and debt-servicing ratio applicable to commercial and industrial property mortgage loans also apply to standalone carpark space mortgage loans. The above measures take effect immediately. However, loan applications in respect of property transactions with provisional sale and purchase agreements signed today or earlier will not be affected. The HKMA is also aware that the risk weight allocated by Hong Kong banks adopting the Internal Ratings-Based (IRB) Approach under the Basel Capital Accord to residential property exposures is at a relatively low level. This may not fully reflect the existing and future risks of property market volatility. To further enhance the risk management of banks in Hong Kong, the HKMA has decided to introduce a risk weight floor of 15% for residential mortgages approved by banks on or after 23 February 2013 under the IRB Approach. Mr Arthur Yuen, Deputy Chief Executive of the HKMA, will explain the above-mentioned measures in more details later. BIS central bankers’ speeches  1  Meanwhile, the Hong Kong Mortgage Corporation will introduce revisions to its Mortgage Insurance Programme in line with the latest developments in the property market and will announce the details later. I hope the public would understand that Hong Kong is facing an extremely unusual macromonetary environment. The ongoing quantitative easing by advanced economies is unprecedented in both scale and duration. Interest rates have been artificially maintained at extremely low levels, and we see huge volumes of liquidity flow into emerging markets like Hong Kong.

Norman T L Chan: Recent economic and financial developments in Hong Kong Remarks by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, Hong Kong, 22 February 2013. *  *  *  The property market in Hong Kong moderated briefly after the introduction of the fifth round of prudential measures on property mortgages by the HKMA in September 2012 and the new tax measures by the Government in October 2012. However, activities in the property market picked up again recently, with significant increases in transaction volume and prices of residential properties as well as commercial and industrial properties. The risk of overheating in the property market has, once again, risen sharply. Moreover, the recent increase in intensity of the quantitative easing by central banks in Europe, the US and Japan has made it more difficult and uncertain for them to “exit” these measures in the future. It will be particularly so when inflationary pressures emerge again in the advanced economies, and the pace and extent of interest rate hike could be greater than originally expected. In fact, in the last quarter of 2012, the HKMA already started requesting local banks to assume a of 300 bps increase in interest rate above the baseline scenario for its mortgage portfolio when conducting stress testing.
BIS Review 105/1997  -2For a currency union to function “smoothly and in a sustainable way, it is absolutely necessary that all participants agree on either a single common policy or closely coordinated policies”. All costs and benefits of the union must be shared equally. Any member acting with the “free-rider” mentality, and benefiting from the system at the expense of the others, will eventually cause the system to disintegrate. Therefore, a single common currency requires a single monetary policy with a clearly defined target, which is price stability. This basic principle of monetary policy has already been embedded in the Maastricht Treaty. And the European System of Central Banks (ESCB) has been made responsible for achieving it. In order for the ESCB to fulfil the task assigned to it, it must act in full independence from national governments or from European institutions. The ESCB Governing Council, which is composed of the Board of Management of the ESCB and the governors of the participating central banks, will not be representing respective national interests. Although there are some differences between the two systems, the ESCB is like the Federal Reserve System of the US. For the ESCB to act independently, individual national central banks must already be acting independently of their governments, because the ESCB will be built on individual national central banks. That is why the Maastricht Treaty made it obligatory for the national governments to grant independence to their central banks in the period leading to the formation of the ESCB.

2  BIS central bankers’ speeches    Second, monetary policy is about setting interest rates, but also involves observing and analyzing leverage and liquidity. Monetary aggregates as well as the volume and modalities of maturity transformation reveal very useful information on the transmission mechanism. This is actually the conventional wisdom within the Eurosystem, through the use of the second pillar. Although less acceptable outside the euro area, I conjecture that the lessons of the crisis will trigger some rethinking here and there.   Finally, the debate on whether monetary policy should also aim at financial stability must give more consideration to the awkward interaction between instruments and the diversity of accountability regimes. Both create the potential for additional confusion about the ultimate objectives of each policy. It seems to me that most of the discussions are conducted under the implicit assumption that price stability will be as easy to maintain in the next decade as it was in the past. So, there would not be much to lose in “diverting” some of the power and credibility of monetary policy to seeking financial stability. It is very clear that this assumption is severely tested, perhaps sooner than we thought. It will be important, in this environment, to maintain clarity of purpose and robustness in institutional arrangements in order to limit the risk of weakening the benefits of Central Bank independence, which were so hardly won over the last decades. BIS central bankers’ speeches  3
As these countries have adopted the euro, weakening the currency is not a possible escape route for them, providing that they wish to remain within the monetary union. The best way for these countries to increase their competitiveness is instead to employ what is usually called internal devaluation. This means that wages and prices must increase at a slower rate than abroad for a while. Another important measure in this context is to implement reforms that increase long-term growth and productivity. There are also various political problems that have to be resolved. Difficult dilemmas arise when economic cuts lead to discontent on the part of the public, whose support is needed. In this context the politicians also have to meet a number of pedagogical challenges. They have to be able to explain the choices the country is facing and the consequences of various courses of action. There is a great difference between what you want to achieve and what you can achieve. For example, the desired standard of living is a value judgement, while the possible standard of living is a result of how well the economy works in terms of the potential for long-term growth, how sound public finances are and so on. Another problem is that interest rates rocket when there is a lack of faith in the ability of the political sphere to take action, which further aggravates the problems. So, how can one overcome these difficulties?

Then we will move on to the impact of the recent global financial crisis on the rising issue of financial education and financial awareness. Taking into account the importance of benefiting from other countries’ experiences while formulating national financial education strategies and programs, in the second session we will focus on financial education practices around the world. I believe that this session will yield very useful inferences. In the third session, we will listen to experiences of those countries that have made significant progress in designing their national financial education strategies and we will learn their methods, challenges and suggestions for solutions as well as the outcomes they obtained. On the second day of the Conference, we will elaborate the current efforts on financial education in Turkey and the roles and responsibilities of all relevant stakeholders. At this point, the cooperation between institutions will play an instrumental role in designing national strategies. The implementation of education programs is as important as designing financial education strategies and this issue will be thoroughly discussed in the sixth and last session of the Conference. As the Central Bank of Turkey, we strongly believe that the significance of financial education is far beyond its conceptual meaning and we attach great importance to collaborating with national and international institutions in this area. We believe that this Conference with the valuable contribution of the Capital Markets Board will be a milestone. I wish the Conference every success and thank everyone who has made a contribution. 2  BIS central bankers’ speeches
Some of those funds have been recovered, but Bangladesh Bank is still working to recover most of its loss. We at the New York Fed are still helping them to do so. Simply put, it was not just Bangladesh Bank that was wronged. The New York Fed—my client and employer of more than 20 years—was wronged as well. So I come to you today not as a dispassionate observer. I come to you today bearing the scrapes and bruises and scars of our own experience at the New York Fed. This morning, I will speak about where we are and where I think we should go from here. My message, in brief, is that we are all in this together. The integrity of the payment system is critical to the U.S. and global economy. Financial institutions and the official sector must do their utmost to protect the system from financial crime. 1/6  BIS central bankers' speeches  Where Are We Now? The payment system can be used to facilitate many types of crime. Fraud and theft have accompanied money transfers for as long as there has been money. The Romans considered counterfeiting to be a form of falsum, which was a fraud against the public.2 And, of course, Willie Sutton provided the timeless, common-sense explanation for bank robbery. Money laundering is, by contrast, a more recent development in criminal law. In the United States, anti-money laundering law reflects an evolution in focus from banknote tracking to combatting narco-trafficking to counterterrorism.

We have incorporated substantial improvements in the generation of regional statistics, and we are moving forward in experimental statistics with greater timeliness and scope, but potentially at the detriment of accuracy costs. We have focused on quarterly regional GDP and expenditure releases, gender statistics and, recently, business demographics. 1  We also developed and deployed a new financial market infrastructure with the derivatives repository. This platform makes it possible to enhance market transparency, promote financial stability and facilitate supervision by regulators. We have continued with the internationalization of the peso, the rules for savings accounts have been made more flexible and we launched a Payments Report that will be published annually. And in connection with payments, we are compiling the views of various agents and government agencies on the issuance of digital currencies by central banks, a work that will be released early in 2023. This year also saw the beginning of our financial policy meetings. We opened new communication channels and strengthened our financial education program. We have continued working with microdata, which has allowed us to enrich our analysis, parts of which have been shared with the public in different reports. Another line of work is related to environmental issues, which we are addressing from different areas within the scope of our competencies, and we are participating as advisors in some governmental bodies such as the Preparatory Committee for a Green Taxonomy.
Last year, MAS launched the Securities Repo Facility, under which eligible banks can borrow certain Singapore Dollar corporate bonds via repo transactions to facilitate their market making activities. These efforts will take time to bear fruit. We are also engaging investors, issuers and intermediaries to assess if more can be done to facilitate an active repo market and whether this will help deepen liquidity in bond markets. 26 Before I conclude, I should address the issue of defaults and restructuring exercises in the domestic bond market recently. These have so far mostly been from the oil and gas sector, and reflects the protracted weakness in the sector arising from a slump in energy prices. Rising defaults over the late part of the credit cycle and difficulties in particular sectors are to be expected, but MAS’ stress test suggests that most corporates in Singapore remain fairly resilient, and banks’ exposures to weaker issuers are likely to be manageable. The key here again is to ensure that one has a diversified portfolio. Following the recent restructurings and defaults, we have also received feedback calling for a review of the regulations and market practices around the Singapore bond market. Some ideas include enhancing sales practices, recourse for investors when a bond defaults, and the need for credit ratings. We are considering these feedback and will respond soon. Conclusion 27 To sum up, Asia’s capital markets have enjoyed a very good run, owing to a confluence of macroeconomic fundamentals and policy liberalisation.

Together, these initiatives benefit both issuers and investors by streamlining and lowering the cost of access to capital and investment, 2/7  BIS central bankers' speeches  and help to recycle capital within the region. 12 Singapore’s capital markets have likewise developed well on the back of Asia’s growth and capital market liberalisation: a. Bonds. The size of the corporate bond market grew 2% year-onyear to reach SGD 315 billion in 2015 comprising SGD 140 billion in Singapore Dollar bonds and SGD 175 billion in non-Singapore Dollar bonds. This represents an annualised growth rate of 12% over the past five years. The market serves a diverse range of issuers, raising funds in various currencies and instruments, including: (i) One, Covered Bonds: DBS issued the first covered bond of USD 1 billion in July 2015. UOB is the first global issuer to publish its Harmonised Transparency Template (HTT)12 which was developed by the European Covered Bond Council, and aims to promote an enhanced level of transparency and comparability for covered bond investors. (ii) Two, Masala Bonds: Following India’s liberalisation, as I mentioned earlier, three Masala bonds were issued in Singapore and listed on SGX this year: Adani Transmission, NTPC Limited and Indiabulls Housing Finance. They also represent the world’s first green corporate Masala bond and first privately-owned enterprise Masala bonds. (iii) Lastly, Green Bonds: To meet the demands of an expanding pool of socially responsible investors, a Singapore property company is set to roll out the first green bond in Singapore. b. Foreign Exchange.
Another channel through which an exceedingly large financial sector may have a negative impact on the real economy is the brain drain of human capital from other sectors, owing to the high compensation schemes in the financial profession. The overexpansion of the financial sector has induced banks to increase their demand for highly skilled employees, driving up the average wage of the industry. The depletion of human capital from other – potentially more productive – sectors may have a long term effect on economic growth. Although theoretical and empirical research on this channel has just started, I believe it is important for policy makers to have a better understanding of how financial excesses may produce significant macroeconomic distortions. And I have not mentioned the impact on fiscal balances yet. 3. Improving the resilience of the financial system  Market economies are based on the simple principle that economic agents reap the benefits and bear the risks from their actions. It is this trade-off which leads to optimal decisionmaking, given the available opportunities and the tolerance of risks. If, however, the costs of bad decisions are not entirely borne by the economic agent, significant distortions are introduced, leading to misallocation of resources. Therefore, as a fundamental principle, one has to ensure that incentives of all agents are correctly aligned with the cost and benefits of their financial decisions.

4 For announcements of the various programs, see Board of Governors of the Federal Reserve System, Federal  Reserve Board Announces Establishment of a Commercial Paper Funding Facility (CPFF) to Support the Flow of Credit to Households and Businesses, March 17, 2020; Board of Governors of the Federal Reserve System, Federal Reserve Board Announces Establishment of a Primary Dealer Credit Facility (PDCF) to Support the Credit Needs of Households and Businesses, March 17, 2020; Board of Governors of the Federal Reserve System, Federal Reserve Board Broadens Program of Support for the Flow of Credit to Households and Businesses by Establishing a Money Market Mutual Fund Liquidity Facility (MMLF), March 18, 2020; Board of Governors of the Federal Reserve System, Federal Reserve Announces Extensive New Measures to Support the Economy, March 23, 2020; Board of Governors of the Federal Reserve System, Federal Reserve Will Establish a Facility to Facilitate Lending to Small Businesses via the Small Business Administration’s Paycheck Protection Program (PPP) By Providing Term Financing Backed by PPP Loans, April 6, 2020; and Board of Governors of the Federal Reserve System, Federal Reserve Takes Additional Actions to Provide Up to $ Trillion in Loans to Support the Economy, April 9, 2020. 3/3  BIS central bankers' speeches