samchain/econo-pairs-v1 huggingface dataset:
This line of reasoning applies when demand grows rapidly, as now, and when capacity utilisation rises. In my opinion, the interest rate effects would be different if the growth in demand slowed down, the labour market weakened and capacity utilisation ceased rising. Then there would be less upward pressure on house prices and I believe that an interest rate cut would be less risky in these terms. International developments could also be so weak that insufficient export market demand would curb the recovery. The weak developments in our most important trading partner countries, the euro area, are particularly worrying. Like Sweden and the United States, Germany, France and Italy are affected by globalisation, but in these countries the labour market seems to be finding it particularly difficult to cope with change. Germany is at the same time undergoing extensive structural reforms, such as the reduction of compensation levels for unemployment benefits and other transfers, and also longer working hours without full compensation. In the long term, these measures are aimed at increasing the labour supply and competitiveness of the German economy. However, in the short term they lead to uncertainty for many individuals and thereby curb consumer confidence and demand. At the same time, fiscal policy is tied by weak government finances due to a lack of fiscal consolidation during the good times at the end of the 1990s which has made the obligations under the Stability Pact more or less binding, while monetary policy is common to the entire euro area.

In particular, the flow of new mortgages slowed considerably in the second half of 2022, falling 5.4% year-on-year in Q4, in line with the moderation in house purchases and prices. - The stock of lending to non-financial corporations and sole proprietors fell by 1.5%, with a more marked drop in the sectors hardest hit by the pandemic (6.9%). This despite new loans growing 15.2%, while the principal drawn on available credit lines rose by 23.3%. 4  - The average interest rate on loan portfolios increased during 2022, particularly in the last quarter of the year. However, the pass-through of the changes in reference rates (around 30%-40%) was lower than that implied by the historical sensitivity to the cycle. Credit quality  - In 2022 the non-performing loan (NPL) ratio4 fell by 0.8 pp to 3.5% at December, the lowest level since 2008, with cumulative declines since the start of the pandemic of 1.6 pp for the corporate sector and 1.4 pp for households. In the sectors hardest hit by the pandemic, the NPL ratio fell by a lesser degree (0.3 pp in 2022, to 5.6%). 4  The faster decline in NPLs in 2022 was driven both by smaller inflows and larger outflows. 5  - Stage 2 loans likewise declined, falling by 0.9 pp to 7.1%, as a result of both lower inflows and larger outflows to performing status. However, the stock of Stage 2 loans remains 24.5% higher than pre-pandemic levels.
Though we are recording some early signals of a price acceleration – such as the services component of the HICP estimated at 1.6%6 in January –, we observe a weakening in the pass-through from wages to prices: here also, is this weakening temporary – due to an increased time lag – or attributable to more structural factors? We have to consider this issue carefully, which is also currently at stake in the United States. In this context, I still believe that the gradual normalisation of our monetary policy is desirable. Our chained guidance of last December has been less noticed than the successful end to our net asset purchases. But it is efficient in combining clarity about the sequencing – full reinvestments will last for an extended period after a first rate-hike – and flexibility about the timing of each step. Consequently, financial markets tend to adapt their calendar expectations – and hence financial conditions – to the perceived outlook: our chained guidance already provides some stabilisation function, without prejudice to our future decisions. Beside flexibility in the calendar, let me stress another capacity of our monetary policy: pragmatism in its intensity, thanks to the powerful “trio” of instruments at our disposal: the reinvestments of assets, interest rates and liquidity. Concerning this third instrument (provision of liquidity), everybody is aware of the forthcoming expiry of the TLTRO-2 programme, starting in June 2020. The Governing Council will decide about this in due time, with two prerequisites.

And in the US, there is a divergence between weaker soft data like the ISM manufacturing survey index and still rising hard data on industrial production. Hence, restoring confidence should be the priority and it is the responsibility of political leaders: the best antidote to the current slowdown is to reduce geopolitical risks, more than changing economic policies. The French economy has been slowing down but less than in some other European countries, due to increasing purchasing power and resilient domestic demand. In 2019, French growth is expected to be higher than that of Germany and close to the euro area average. Beyond internal demand, the second pillar of European resilience should be the extension of domestic reforms. I would like here to take the example of the Portuguese recovery since 2014, after a severe crisis and courageous adjustment efforts: GDP is now growing at 2.1% in 2018. Ambitious reforms have improved cost competitiveness, boosted export performance and led to a sharp fall in the employment rate, which has more than halved since 2013. This clearly demonstrates that, in Europe, reforms do have a positive impact. 2. Our monetary policy is able to combine clarity and flexibility. Let me turn to the consequences for our monetary policy: to deal with uncertainty, we have to combine clarity and flexibility, as we did in our December’s chained guidance. I will come back to this. In the present context, we should favour state-dependent analysis over time-dependent variables.
Economic recovery continuing... If we begin with economic prospects, we can observe that the recovery is continuing, both in Sweden and abroad. For a small economy that is dependent on foreign trade, like Sweden, developments abroad are important, particularly in the euro area, which is our most important export market.1 The euro-area economy has for some time shown positive growth figures once again, but the recovery is progressing slowly and marked by repercussions from the sovereign-debt crisis. Things look rather better in the United States and the United Kingdom, and growth there is expected to be higher. All in all – when foreign countries are aggregated according to the KIX index – it seems we can expect a relatively good recovery in the coming years. At the same time, geopolitical developments over the past six months cast new clouds of doubt over global growth. Here I am mainly thinking of the effects on the euro-area economy of developments in Russia and Ukraine. It is still too early to draw any definite conclusions with regard to the effects on growth prospects in Europe. But there is a risk that developments abroad will be worse than we have previously assumed. Given that international developments are in line with our forecasts, however, we envisage improved economic activity in Sweden. However, the picture is divided. Household consumption has so far held up relatively well in recent years, while exports have developed less well, against the backdrop of the weak developments in the euro area.

I consider it very important that we continue to carefully analyse the reasons for the low inflation, both in Sweden and abroad. An interesting question is what role global and domestic factors respectively will play for inflation in individual countries, something that the BIS discusses in its most recent report.4 The BIS points out the structural effects of globalisation and increased world trade that have increased competition and may have contributed to squeezing prices in many parts of the world. Household indebtedness has been considered in the monetary policy decisions As you know, I and my colleagues on the Executive Board have also discussed the high level of household indebtedness at monetary policy meetings in recent years, as it could comprise 2  An article in the July Monetary Policy Report, “Why is inflation low?” describes the possible reasons for the low inflation in Sweden. 3  We will return to our analysis of the questionnaire in the early autumn. 4  See “84th Annual Report, 1 April–31 March 2014”, Bank for International Settlements, 2014. 2  BIS central bankers’ speeches  a risk to the economy in the longer run. Swedish household debt has risen very substantially since the mid-1990s. Even if the increase in indebtedness, measured in terms of debt in relation to disposable income, has slowed down in recent years, the level is still very high in a historical perspective (see Figure 7).
The average annual real rate of GDP growth in Bulgaria in the period 1998–2011 stood at 4% and the real cumulative growth in the same period was 63.5%. At the same time, the added value posted by the sector, classified by the national statistics as “finance and insurance”, boasted an average annual real growth of 13.3%, and cumulatively for the same period – a notable 384.9%. All that time, around 1/6 of the country’s GDP growth was contributed by this sector, which is largely dominated and represented by the banks. Besides being a factor of economic growth, the banking system has played a significant role for attracting foreign direct investments to Bulgaria. A total of BGN 76.6 billion in foreign  2  BIS central bankers’ speeches  direct investments inflow was registered over the period from 1998 to 2011, of which over 1/6 (BGN 11.9 billion) were direct investments in the banking sector in particular. Not lastly, the banking sector accounts for a large part of the “brightest” share in Bulgaria’s economy. The role of banks in Bulgaria should not be considered in isolation from the fact that they are among the biggest and most immaculate employers. In 2011 the number of full-time employees in the banking system reached 33 677 at year-end. With the BGN 77.6 million in tax costs and BGN 722.8 million in personnel costs paid in 2011 only, for example, the banking sector ranks among the largest taxpayers and contributors to the social security system in Bulgaria.

Denis Beau: Opportunities and challenges of the tokenisation of finance Introductory statement by Mr Denis Beau, First Deputy Governor of the Bank of France, at the European and American Chamber of Commerce event, New York City, 17 January 2023. *** Digitalisation is far from being new in the financial sector, but tokenisation based on DLTs may be a new turn. In my initial remarks I would like to explain why, at the Banque de France and the ACPR, from the standpoint of our financial stability mandate, we have a strong interest in the development of tokenised finance, and how it impacts the policy tools we use to fulfil our mandate. I/ The tokenisation of finance is of prime interest for two main reasons: 1/ It is part of the significant transformation drivers of our financial landscape Indeed, digital technologies are profoundly transforming finance, ushering in a wave of new players at the crossroads of IT and finance, digital assets in new, tokenised form-usually referred to as crypto-assets, for investment and settlement, and new exchange and settlement infrastructures. Their combination is translating in activities and services that first swept into the payment sector and are now spreading more broadly. Among them, so-called decentralised finance, DeFi, is emerging as a crypto-based alternative to traditional finance where the provision of services is disintermediated and their governance decentralised, and is enabled notably by permissionless blockchains, smart contracts and decentralised applications (Dapps).
Looking ahead, how well these new pieces of legislation are able to mitigate the shortcomings in Spanish business dynamics will need to be assessed. (v) The challenge of fully capitalising on the roll-out of NGEU One of the main challenges that we face in the coming years is how to fully harness the possibilities offered by NGEU to drive a profound structural transformation of our economy. The short-term economic impact of the take-up of these funds in 2021 was smaller than that included in our macroeconomic projections. Nonetheless, a significant part of the expected economic growth for 2022 and for the next few years crucially hinges on the potential multiplier effect on activity of the use of the NGEU funds. In this respect, the rigorous selection of the investment projects to be funded under NGEU is one of the key drivers for maximising this impact and, therefore, the success of this mechanism in Spain. The available evidence suggests that the most successful public investment policies are generally those that supplement private investment (in the form of employee training or capital modernisation). Further, the efficacy of the projects should be assessed on an ongoing basis. Moreover, a recent paper by the Banco de España suggests preference should be given, among solvent, equally productive projects, to those of businesses that find it hardest to access external finance, since this would generate a larger multiplier effect.

Zeti Akhtar Aziz: New leaders with energy and optimal performance Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the ICLIF Leadership Energy Summit Asia 2014, Kuala Lumpur, 1 October 2014. *  *  *  It is with great pleasure that I welcome you to this year’s Leadership Energy Summit organised by the ICLIF Leadership and Governance Centre. While I am not able to be here in person, most certainly I am here in commitment to the leadership development agenda and to this Leadership Energy Summit Asia. We are also most pleased to host this Summit at Sasana Kijang. Let me also take this opportunity to express our gratitude to the distinguished speakers that have come from different parts of the world to share with us their knowledge and experience on the subject of Leadership Energy. In this current and future environment, leadership has become even more important than ever before. The global economic and financial environment in this recent two decades has now become dramatically transformed, to become more interconnected, more complex and more competitive. The world has also become more unstable and less predictable with frequent shocks and crisis that requires for their effective management. These challenges transcend corporations, nations and cuts across industries, institutions and jurisdictions.
However, the adverse second-round effects felt in the Macedonian economy were far weaker than those registered in the other countries in the region, although the Macedonian economy is more open than the other economies in South East Europe (with the exception of Bulgaria). The average decrease in GDP in SEE countries was nearly 2%. At the same time, the pace of economic recovery in the post-crisis period is faster than the average for the region. Thus, in the period 2010 – 2013, the cumulative increase in the economic activity is close to 8 percentage points, which is nearly 3 percentage points more compared to the average cumulative growth for the region. In fact, Macedonia is one of the few countries in the SEE region, which has already exceeded the pre-crisis maximum economic activity. Therefore, quite logical is the question: what are the factors that provided a relatively good response to the crisis and a relatively solid economic recovery of the domestic economy, amid an anemic global setting? And more importantly, whether these factors will continue to be the engine of growth in the medium term, determining the future prospects of the economy? Domestic factors are also very important. Sound macroeconomic policies in the pre-crisis period prevented major imbalances in the economy and left room for conducting countercyclical policies in the wake of the crisis relieving its effects (which was not the case with the other countries in the region).

As before, these solid growth rates are a consequence of the growth of the activity of the foreign facilities, the announced new foreign investments, with some of them expected to employ a larger number of people, but also the expected additional fiscal impetus in infrastructure. Their positive secondround effects are expected to continue to be felt in the labor market by increasing the demand and price of labor. Current projections show room for growth in the number of employees and the nominal wages of around 3%. Partial effect on the wage growth is expected from both the realized and the announced increase in the wages of the public administration. Under such assumptions, our projections show that domestic demand will be a source of economic growth, while net exports would have a negative contribution. By the end of the time horizon of the projections, there are assessments for gradual balancing of the growth structure, with a gradual reduction of the negative contribution of net exports. Consumption and investment decisions of the entities are still expected to be financially supported by domestic banks. The performances of the credit market in 2014 are better than our initial expectations, and lending surveys show that these performances are a combined effect of the growth of both the supply and the demand for loans. These performances and the assumptions about the movement of the sources of funding for banks indicate credit growth in 2014, which is assessed at 8.7%, and its acceleration to 9% in 2015 and 10% in 2016.
Mounting losses in residential mortgage backed securities (RMBS) backed by US sub-prime loans have seemed to trigger a wide loss of confidence in the correctness of underlying assumptions and therefore in the valuation of structured credit products more generally. This apparently has set a vicious circle in force in which heightened uncertainty about the future value of complex assets and rising risk aversion caused many investors to withdraw from the market. Prices dropped massively, and investors incurred large unexpected losses, contributing to further pressure to sell. A second lesson that can be drawn is that structured credit markets provide a pressing example of the need to increase transparency in financial markets. That the market disruption spilled over into interbank markets can be explained by another key shortcoming of structured credit markets, namely the opacity of exposures of financial institutions to complex instruments and off-balance sheet vehicles. This lack of transparency about exposures of other banks exacerbated counterparty risk concerns, impairing the well functioning of interbank markets. In periods of turbulences, whatever the origin of those turbulences, opacity and absence of transparency are a recipe for propagation of turmoil and generalised contagion. Third, the recent events have stressed again the particular role rating agencies play in structured credit markets. The growing complexity of instruments has clearly induced some investors to overly rely on ratings. This is the more risky as ratings in structured finance are not yet as much tested as those of corporate issuers.

2  BIS Review 137/2007  And finally the ongoing process of significant market correction which we experience since August should trigger a very deep and candid review in all the areas which have a substantial influence on the functioning of the global financial markets. This review process should concentrate on what could be done to promote financial stability and to diminish to the maximum extent possible the elements of procyclicality that may be inbuilt in a large number of fields. The financial stability forum, which has been set up by the G7, under the proposal of Hans Tietmeyer, to draw the lessons of the Asian crisis, is in an ideal position to identify the areas where appropriate improvements could be introduced. I encourage very strongly the Financial Stability Forum and all the Committees that are actively working at a global level, including the Basel Committee, to draw all the lessons of the present turbulences and to examine the situation without any complacency.
Note that this takes into account only first mortgages held by the banks. If loans with second mortgages were included, the number of cases would undoubtedly be larger. Residential property prices fell on average by 7% in the first quarter of this year. So the negative equity problem will have got worse, as the latest figures to be published shortly will show. This poses some threat to the profitability of banks. So far, however, even mortgage loans in negative equity have continued to perform reasonably well, although the delinquency ratio of around 2.5% is worse than for those with positive equity. The impact of SARS Even before SARS arose as an issue, 2003 was expected to be another challenging year for the banks. But the prospect of lower charge-offs for credit cards encouraged a number of banks to forecast that they would achieve higher profits. Performance in the first quarter seemed to bear this out. As usual, some banks did better than others, but aggregate profits in the first quarter did show an improvement over the same period of last year. The SARS outbreak is now affecting the business of the banks in various ways and the banks are having to react to this. The first priority has been to maintain business continuity and to protect the health of bank staff and customers. Banks have therefore activated, and where necessary reviewed and updated, their business continuity plans, demonstrating in the process that these are not just paper exercises.

If the headwinds have not dissipated to a meaningful degree in the seven years since the recession ended, then why should one expect them to necessarily diminish quickly over the next couple of years? Evidence is accumulating that some of the headwinds are likely to prove more persistent. For example, the reduced availability of mortgage financing for those with lower credit scores seems likely to continue. Lenders now appreciate that home prices can decline significantly. Thus, they cannot rely as much on the value of the housing collateral in securing their mortgage loans, and consequently now put more weight on the credit histories of the borrowers. Market participants may also be taking some signal from the gradual decline in the median long-run federal funds rate projection of FOMC participants shown in the FOMC’s Summary of Economic Projections (SEP). I think this indicates a growing consensus that the neutral real short-term rate will not return anytime soon to its historical norm of 2 percent. A second reason for the downward adjustment in U.S. interest rate expectations is that U.S. financial market conditions depend, in part, on the stance of U.S. monetary policy relative to monetary policies abroad. If the economic outlook abroad deteriorates and this causes foreign countries to pursue a more accommodative set of monetary policies, then the dollar would likely appreciate – other things equal – reflecting expectations of lower interest rates abroad relative to U.S. interest rates. In this case, the U.S. may need to adjust its own monetary policy path.