samchain/econo-pairs-v1 huggingface dataset:
5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  Adapting to the impact of Covid  Despite Covid, work on transition in sterling markets has continued. Indeed, there has been considerable progress since John and I spoke on this topic last year – both here in the UK and the US. We have not been blind to the disruption to businesses and the challenges for banks in communicating with clients caused by Covid. In co-operation with the Working Group on Sterling Risk-Free Rates, in the UK we have worked to change the phasing of some of the key milestones that were put in place for transition at the start of this year. Communication and education for those households and businesses exposed to Libor is a huge challenge. The early focus has rightly been on raising awareness across those in the financial industry that generate Libor linked exposure that will need to support their clients through transition. Increasingly though, regulators’ and markets’ efforts need to turn to much broader communication to ensure the end users of Libor understand the weaknesses with the rates, why they need to move to alternatives and what the timeline is for the action they will need to take to prepare for that move. This remains a difficult balance given the challenges faced by many. We are working to make this process as accessible and straight forward as possible, cooperating with bodies such as the Association of Corporate Treasurers and the Confederation of British Industry.

By reducing the probability of a systemic financial crisis, the actions taken by the Fed on and after March 14 have helped avert substantial damage to the economy, and they have brought a measure of tentative calm to global financial markets. Relative to the conditions that existed on March 14, risk premia have narrowed, foreign exchange markets are somewhat more stable, energy and commodity prices are lower, perceptions of risk in the financial system have diminished, and the flight to quality is less pronounced. Nevertheless, liquidity conditions in markets are still substantially impaired and the process of de-leveraging remains underway. And this will amplify the headwinds facing the U.S. and global economy. In this context, policymakers and financial market participants need to continue to act forcefully. And their actions need to be proportionate to the challenges. Financial institutions need to continue to improve the quality of disclosure, and even the strongest institutions face compelling incentives to raise new equity capital so that they can take advantage of the opportunities ahead. Actions to strengthen the capacity of the major government sponsored enterprises, the Federal Housing Finance Board and the Federal Housing Administration to provide finance to the mortgage market and help reduce the risk of avoidable foreclosures are a very important complement to the broader policy actions already in place to contain the downside risks to the economy. The Federal Reserve, working closely with other major central banks, will continue to provide liquidity to markets to help facilitate the process of financial repair.
6  BIS central bankers’ speeches  system is so large and important to the Swedish economy, this cost can be considered small in relation to the costs that might arise if the banking system ceased functioning. The reinforcement of the foreign currency reserve thus reduces the Riksbank’s profits by around SEK 400 million a year. This is one of the reasons why it is has been discussed in various contexts whether the banks should contribute to the costs of the reinforcement. The Riksbank has previously argued that it would be reasonable if the banks stood for the cost of the part of the foreign currency reserve needed to manage emergency liquidity assistance5, and we will probably have reason to return to this question in the future. How can the Riksbank obtain funding in the future? By going through the balance sheet in this way, we can clearly see that the Riksbank has little opportunity to influence how it obtains funding. We have already observed that the banknotes and coins item is declining and that there is nothing the Riksbank can do about this – it is part of the technological developments taking place. With regard to foreign currency loans, I mentioned that the interest expenditure for them exceeds the income on the assets the loans fund. The Riksbank’s equity exceeds SEK 100 billion. This means that the Riksbank has a good capacity to manage potential losses. And it is important for our credibility.

The Eurosystem has made headway on the design of the digital euro, ii including through regular exchanges with consumer associations, merchants and financial players, and the testing of dedicated prototypes. iii To put it in a nutshell, the e-euro will be a digital banknote, or ‘Cash+’. Naturally, it will feature the same characteristics as existing cash. Notably, it will ensure privacy, iv with the offline functionality ensuring the highest level of confidentiality; it will be the safest of assets; thanks to its likely legal tender status v, it will be accepted everywhere across the euro area; and its basic functionalities will be free of charge for individuals. vi But ‘Cash+’, bringing significant advantages compared with banknotes: it will allow each and every one to use central bank money in e-commerce, in remote peer-to-peer payments, as well as for conditional payments. I think it’s our duty to build this capacity for our fellow citizens, but it will be their freedom to use it. The digital euro will offer European citizens an additional option in the way they make purchases and transactions, and they will determine the pace of its development, and its ‘market share’. A digital euro will not replace physical cash or other forms of money, and this brings me to this alleged ‘competition’ issue. Money is and will remain a public-private partnership For a long time now, money has been a public-private partnership.
Deposit withdrawal from the banking system was withstood, thanks to liquid assets adequacy, capital availability and Bank of Albania’s intervention to supply the market with liquidity, aiming at maintaining its stability and mitigating any expected contraction of the banking system’s intermediary role. To this end, the Bank of Albania has supported the demand of the banking system for liquidity through open market operations. After cutting interest rate by 0.5 percentage point in January 2009 and mitigating inflationary pressures at home, the monetary policy paid special attention to financial stability, keeping base interest rate unchanged for the whole period. Thus, it was aimed to support the demand for financial assets denominated in the national currency in the short run. At the same time, the Bank of Albania carried out with a strong supervisory regime on banking sector developments. Such a stance supported the efficient management of liquidity situation of the banking sector, oriented credit towards national currency and influenced the maintaining of financial stability parameters and capitalization of activity. The situation entered into a qualitative improvement stage, following the re-starting of the process of public deposit growth in the banking sector. This process, which took place gradually and steadily in the second quarter of 2009, continued at satisfactory paces. During this period, banks acted with due prudence and accountability. Therefore, I would like to avail myself of the opportunity to thank you, the staff you manage, as well as the shareholders of your institutions, for their commitment and cooperation during this period.

The effect of this specific scenario you are referring to on the balance of banks turned out to be negligible, which is why we did not have to seek corrective actions during our talks with the ECB. The new IFRS 9 accounting standard was applied in this review. According to experts like Assoc. Prof. Sariyski, this standard allows for more subjective models and does not provide for any arbitration that could resolve disputes between appraisers and those evaluated. Are such criticisms founded? We are talking about a new international standard that is mandatory for banks. Bulgarian banks were well-prepared for its introduction. This was also one of the main recommendations we made after the asset quality review in 2016. There are established platforms for discussing and amending existing, as well as adopting new international accounting standards. BNB will have to start applying the measures and recommendations of the Single Supervisory Mechanism with the eventual entry into a “close cooperation” mechanism. What practical changes would this bring to the work of banking supervision? The changes are of a regulatory and administrative nature. A large part of them have been prepared already and we are ready for their introduction on the date of our effective accession. Under the close cooperation mechanism the ECB exercises direct supervision over the largest banks and there the BNB will be involved with the participation of BNB’s experts in the supervisory teams.
As a result of this trajectory, there has been fresh headway in Spain's real convergence with the EU and with the euro area. On the latest provisional estimates available, Spanish per capita GDP stood in 2005 at over 98% of the EU average, more than five percentage point up on its level in 2000. There were also significant improvements in the form of greater labour market participation and a lower unemployment rate, aspects where the traditional differences with the core European countries have narrowed substantially. The decline in the unemployment rate is particularly noteworthy. It now stands  4  BIS Review 60/2006  at a similar level to that observed in the main European countries, following several decades in which a high unemployment rate was singled out as the most characteristic problem of the Spanish economy, even in cyclical upturns. The performance of the Spanish economy in 2005 and early 2006 reflects the continuity of the expansionary impulses operating on the growth rate and on job creation. Monetary and financial conditions have remained markedly loose in the light of the economy's domestic situation, having been determined by the prevailing price stability and sluggishness of activity in the euro area as a whole. The low levels of interest rates have continued to combine in Spain with the significant rises in financial and real-estate asset prices (although in the latter case they have tended to ease off), which has reinforced their impulse to spending.

We are setting out a roadmap for mandatory climate-related financial disclosures for all our financial institutions. Next year, we will conduct stress tests for the financial industry under a range of climate scenarios. We are supporting capacity-building among central banks and supervisors in addressing environmental risks, such as through the COP26 Climate Training Alliance initiative. A successful transition to net zero will require collective efforts across governments, businesses, and industry leaders globally. We must act now, and we must act together, to secure a cleaner and greener future. 1 Link  to “NGFS Glasgow Declaration Action”: www.ngfs.net/sites/default/files/ngfsglasgowdeclaration.pdf  2/2  Committed  to  BIS central bankers' speeches
To illustrate this uncertainty, the Riksbank is considering the use of a so-called variation band for the CPIF outcomes in its future communication. The variation band is +/- 1 percentage point around the target of 2 per cent, which captures almost three -quarters of CPIF outcomes since 1995. The design of the variation band is thus linked to the historical development of inflation and should therefore be reviewed as necessary. As I see it, the changes now being considered do not entail any change to the monetary policy being conducted. For some time, the CPIF has functioned as the Riksbank’s operational target variable. We are now considering formalising this practice by allowing the inflation target to be defined as an annual change in the CPIF of 2 per cent. The aim of monetary policy will continue to be the stabilisation of inflation at 2 per cent. In other words, the proposed variation band is not a socalled target range. 1 This means that the Riksbank will always strive towards 2 per cent inflation, regardless of whether inflation is inside or outside the variation band. Our deliberations are now being referred for consultation. If we adopt a new target variable and variation band, these changes are expected to be applied as from the autumn. Unusual times create new challenges The Swedish economy is going through unusual times. We have good growth, high resource utilisation and inflation is rising and approaching the target of 2 per cent. But despite good economic activity, monetary policy is still expansionary.

Other ways of making monetary policy more expansionary could be by intervening on the foreign exchange market and giving loans directly to companies via the banks. Mortgage borrowers more sensitive to interest rate changes The falling real interest rates are one of the reasons that indebtedness has risen over the last twenty-year period. Inflation targeting was formally introduced in 1995 when households’ debt-to-income ratio – debt in relation to disposable income – was around 90 per cent. Today, just over 20 years later, indebtedness has pretty much doubled and is almost 180 per cent. 12 The rising indebtedness and many people choosing a variable interest rate on their mortgages has made households more sensitive to interest rate adjustments. The importance of monetary policy for households with high indebtedness, in practice mortgage borrowers, has therefore become greater. In an example calculation, four economists from the Riksbank have attempted to shed light on how an interest rate rise today would affect mortgage borrowers’ consumption, compared with 20 years ago. 13 The following scenario could provide a backdrop to these calculations. To fund loans for housing, the Swedish banks issue mortgage bonds, among other things. These are partly funded by foreign investors. If these foreign investors, for whatever reason, should lose confidence in the Swedish economy and the mortgage bonds, the banks may become very vulnerable. They may find it more difficult to obtain funding on the international markets, at the same time as interest rates start to rise.
If an upward shift in public spending is perceived as permanent, forward-looking households and firms will increase saving to meet higher tax payments in the future. Consequently, the effects of increased public spending on demand for goods and services may be limited. If households know that the increase in public spending is temporary, and is subsequently matched by lower spending, state finances will not be a source of concern for households and firms further ahead. In that case, they do not have to increase saving and increased public spending today will have a stronger effect on total demand. It is therefore important to tighten the fiscal stance in favourable periods to secure the effectiveness of economic policy in difficult periods. Norway is in a favourable position in this respect. The fiscal rule provides a good framework for tightening the stance when the economic cycle turns. Fiscal policy in Norway is conducted with the knowledge of how monetary policy will react. Today’s flexible inflation targeting provides a monetary policy framework and guidelines as to how monetary policy is to be conducted in different situations. The fiscal authorities can internalise the monetary policy response pattern. It is also natural for them to do so as the government and the Storting (Norwegian parliament) have laid down the mandate for monetary policy. When the monetary policy response pattern is known and is consistent over time, the social partners can factor in a monetary policy reaction when setting wages. This viewpoint is most relevant when wage formation is centralised.

Rising affluence and a strong savings culture, coupled with increasing financial sophistication, will mean more Asians moving away from speculation in property and stocks, towards more systematic planning for wealth enhancement through a globally diversified portfolio of assets. 34. There are now more high net worth individuals in the Asia Pacific than in Europe. And they are younger – 41% of the high net worth individuals in the Asia Pacific are aged 45 years and below, compared to only 10% in North America. They have a longer time span for wealth accumulation, and a more global outlook in their investment strategies. At the same time, Asians are living longer and more Asian countries are seeing the need for welldesigned pension systems to provide adequate retirement incomes for their people. These pension funds will require professional management. 35. In the same vein, I expect the demand from the official sector for Asian financial assets to grow. Central banks and sovereign wealth funds will likely look to allocate more funds to Asian markets, both to diversify risk and to enhance returns. Speaking for the MAS, we have always invested our official foreign reserves in a highly diversified global portfolio. As Asian markets develop in depth and sophistication, our allocation to emerging markets, especially in Asia, will grow. 36. To be sure, asset management in Asia is not a one-way bet. Asian markets are more fragmented and harder to operate in, compared to the advanced economies.
Structural shifts in the economy and changes in underlying trends have also created uncertainty about what the “new normal” will be in the future. It is sometimes said in the debate that these changes have made it more or less impossible for the Riksbank to keep inflation at such a high level as 2 per cent. We should therefore either relate to our existing inflation target more freely or simply lower it. I think this line of reasoning is misdirected. There is no doubt that it is possible to get inflation to pick up, but it can be done in different ways. The challenge is to create the right amount of inflation in an orderly manner and with reasonable precision. This is the challenge facing monetary policy and it is in this context that the new environment plays a role. ∗ In particular, I would like to thank Björn Andersson for assistance writing this speech. I would also like to thank Charlotta Edler, Jesper Hansson, Per Jansson, Tomas Lundberg, Ann-Leena Mikiver, Åsa Olli Segendorf, Cecilia Roos-Isaksson, Marianne Sterner, Ulf Söderström and Anders Vredin for valuable comments. 1 The Bank of the Estates of the Realm, later renamed Sveriges Riksbank, was founded on 22 September 1668. The inflation target was announced in a press release on 15 January 1993. The press release specified that the target of 2 per cent inflation would begin to apply from 1 January 1995. The Riksdag approved the Swedish Government’s proposal to strengthen the Riksbank’s position on 4 March 1998.

Facilitating also means helping players in the ecosystem to engage with each other and find solutions without necessarily resorting to regulatory measures. It is in this spirit that we run the ACPR-AMF FinTech Forumand that we have created working groups or task forces in order to make concrete progress on important issues for the ecosystem, such as the access of digital asset service providers to the bank accounts and banking services they need. Admittedly, dialogue does not solve everything, but we very often find that many difficulties can be ironed out through improved dialogue and a better understanding of the practices and technologies used by the various stakeholders. Second objective: experiment. Here I would like to give two different illustrations of this approach. The exploratory workshops conducted by ACPR on the use of artificial intelligence in the financial sector are an example of what experimentation can bring not only to a supervisory authority but also to the entire ecosystem. Indeed, these concrete experiments have enabled the ACPR, based on specific use cases, to examine the code of the algorithms, their intrinsic performance, their integration into operational processes, and their control and governance environment. Drawing on this experiment, in order to share widely the lessons it has learned, the ACPR published astudy last June outlining what the framework for the proper use of these future tools could look like.
The coast is not completely clear – the healing process in the aftermath of the crisis takes time and there are still several areas of vulnerability and weakness. In particular, housing activity remains unusually weak and home prices have begun to soften again in many parts of the country. State and local government finances remain under stress, and this is likely to lead to further spending cuts, tax increases, or job losses in this sector that will offset at least a part of the federal fiscal stimulus. And we cannot rule out the possibility of further shocks from abroad. For example, higher oil prices cut into household purchasing power, and the situation in the Middle East and Africa remains uncertain and dynamic. Also, we cannot ignore the risks stemming from the longer-term fiscal challenges that we face in the United States. But in the near-term, the most immediate domestic problems may recede rather than become more prevalent. On the housing side, stronger job growth should lead to more household formation. For example, more young people will be able to move out of their parents’ homes when they get jobs. This trend should provide more support to housing demand. And anxieties about the large overhang of unsold homes represented by the foreclosure pipeline may overstate the magnitude of the excess supply of housing. Families that have lost their homes through foreclosures are likely to seek new homes as their income permits, even though many may re-enter the housing market as renters rather than buyers.

It therefore represents an enormous potential market that remains yet untapped. Takaful operators assume an important role as economic or financial agents as they essentially mobilise long-term funds in the form of contributions and invest them in the available Islamic investment avenues. As custodians of public funds, takaful operators must ensure that the takaful funds are invested in compliance with Shariah and are soundly managed to instil public confidence. For the takaful industry to be developed into a viable alternative to the more entrenched conventional insurance industry, the need for it to be supported by the core components of a comprehensive Islamic financial system cannot be over-emphasised. As takaful operators are both mobilizers of long-term funds and fund managers to the policy holders, their ability to generate returns to fulfil the obligation to the policy holders depends very much on the range of financial instruments available in the market place. Without an effective financial system, takaful operators may not be able to perform as effectively and as efficiently in terms of delivering their promise on the profit sharing basis and to be able to keep pace with their conventional counterparts in the area of fund performance. In the absence of a viable Islamic capital market, there would not be an adequate supply of quality financial instruments for which the takaful funds can invest. It may have to depend on low yielding returns from bank deposits.