samchain/econo-pairs-v1 huggingface dataset:
After a prolonged period of growth, this segment had reached a size which, given the evolving demand for banking services, entailed a clear excess of capacity. From an individual standpoint, the prolongation of the crisis affected the capacity of institutions to generate profits for the following reasons: an increase in non-earning assets (doubtful loans and repossessed real estate assets), the narrowing of margins due to a fall in income associated with rising non-earning assets and to a higher cost of funds, the decrease in business volume, etc. Moreover, the high growth of previous years, due particularly to increased business with the real estate sector, had raised the dependence on wholesale debt markets, exposing savings banks to the liquidity risk associated with adverse developments in those markets. Compounding this is the intrinsic limitation of savings banks when it comes to raising core capital, a limitation which is important because the trend in both the markets and the prudential financial regulation currently under international revision is clearly towards stepping up requirements in this area. Given the need to downsize this sector and the conviction that the productive structure of many credit institutions had to be rationalised to hold efficiency at adequate levels in a sector characterised by growing competition, the time was ripe for the creation of the FROB, under whose auspices many savings banks have arranged their mergers or institutional protection systems (hereafter referred to by the Spanish acronym “SIP”).

Combine this with the strength of some key sectors of our economy; the result is that Paris now stands as the first stock market capitalisation in Europe, ahead of London.2 And as the Bloomberg article points out, despite some political unrest earlier this year, Paris is true to its motto: fluctuat nec mergitur, it is rocked by the waves but does not sink. This motto also perfectly suits French institutions – we have a very strong Constitution – and the French economy, which has proved remarkably resilient. Our growth performed better than most expected in the first quarter, at 0.2%3. The likelihood of a recession in 2023 can now be excluded, and prospects have been revised upwards: this confirms our forecast for 2023 of 0.6%, thanks to stronger than anticipated external demand and a quicker than expected  1/3  BIS - Central bankers' speeches  slowdown in energy prices, before rebounding to 1.2% and 1.7% respectively in 2024 and 2025. Furthermore, despite the recent turmoil in the United States and in Switzerland, from which we can already draw out some first lessons,4 financial stability has been preserved in the EU. Our banks are robust, with substantial capital and liquidity buffers: they are all subject to stringent Basel requirements – and to single and strong supervision within the Banking Union, which makes a big difference with many US banks.
Greater transparency in the financial sphere. This means transparency of sources of capital and combatting instances of financial institution owners financing their businesses. Rejecting dogmas. For example, the dogma that banking regulation is neutral and is aimed at mere risk management. We are starting to gradually transition towards incentive-based regulation. Supporting new technology: focusing on that with greater protection from cyber risks. I will now discuss the Bank of Russia’s main areas of activity in more detail. The first area is monetary policy. Its role is sustaining low macroeconomic risks, thus creating a framework where banks, business, and the public can enjoy an increased planning horizon, create long-term money and realise long-term projects. Over the next five years, the focus of our policy will gradually shift from achieving the inflation target and lowering inflation expectations to keeping inflation close to the target level and maintaining inflation expectations at a low and, importantly, anchored level. However, while transitioning to a policy of fine tuning, there are a number of challenges we must face. Ultimately, inflation is clearly a monetary phenomenon and, if we look to the medium term, the average inflation rate depends first and foremost on monetary policy. Average inflation will near 4%. However, it will naturally fluctuate. Meanwhile, inflation fluctuations around the average level can vary in nature, affect inflation expectations in different ways and therefore have an impact on monetary inflation.

The prudential apparatus has worked in the past on the presumption that all movements in asset prices were based on fundamentals. The burden of the proof was on those who thought that something was going wrong. And, of course, it is impossible to prove the existence of a bubble until it is too late. And, at least in the initial phase of a bubble, there is no lack of rational explanations for observed movements in asset prices. It may be useful, in a macroprudential perspective, to consider some rebalancing in the burden of the proof. Significant and lasting departures from past levels or trends in key asset prices, risk premia or credit aggregates should systematically trigger a macroprudential review, with the implicit assumption that a bubble may be occurring unless proved otherwise. This seems to me justified when looking at the current social costs of previous hesitation. This is also a rational course of action. Bubbles develop because investors have an incentive to ignore the "tail risk" that the bubble may burst. Where does this incentive come from? Bubbles are mostly financed by credit, which makes it possible for investors to shift most of the risk to lenders, while keeping most of the profits for themselves (especially when those profits are booked, and distributed, in real time). This asymmetry in incentives is extremely difficult to eliminate ex ante.
Mario Draghi: The future of the euro – stability through change Contribution from Mr Mario Draghi, President of the European Central Bank, published in “Die Zeit”, 29 August 2012. *  *  *  Across Europe, a fundamental debate is taking place about the future of the euro. Many citizens are concerned about where Europe is heading. Yet the solutions presented appear to them unsatisfactory. This is because these solutions offer binary choices: either we must go back to the past, or we must move to a United States of Europe. My answer to the question is: to have a stable euro we do not need to choose between extremes. The reason this debate is taking place is not the euro as a currency. The objectives of the single currency remain as relevant today as they were when the single currency was agreed. To spread price stability and sustainable growth to all European citizens. To reap the gains of the world’s largest single market and make the historic process of European unification irreversible. To raise Europe’s standing – not only economically but also politically – in a globalised world. The debate is taking place because the euro area has not yet fully succeeded as a polity. Currencies ultimately depend on the institutions that stand behind them. When the euro was first proposed, there were those who said it would have to be preceded by a long process of political integration. This was because sharing a currency would imply a high degree of joint decision-making.

4 The fourth pointer from the current crisis is the importance of preventing regulatory arbitrage, and ensuring a level playing field. With regards to Islamic Finance, in particular, MAS seeks to ensure a level playing field between the conventional and Islamic financial players. Where the economic substance and risks are similar, the same regulatory treatment is accorded, regardless of whether the product is a “conventional” or “Islamic” product. For example, Singapore-based banks treat murabaha-based 5 asset financing as a credit risk exposure to the customer for the purpose of maintaining regulatory capital. As Islamic Finance grows, our regulatory framework must continue to evolve to maintain regulatory consistency in managing the underlying substance of the risks. International collaboration The fifth and very crucial point that emerges from the current crisis is the importance of international collaboration. As Islamic Finance grows, cross border transactions will multiply. We must therefore take an international perspective in preventing and resolving problems right at the outset. Allow me to suggest three areas where regulators can work closely. The first area is that legal, regulatory and supervisory frameworks that are developed should be based on internationally recognised principles and standards. The work done by international standard-setting bodies such as the IFSB, IDB, AAOIFI and IIFM 6 is instructive in this regard. For example, “The Ten Year Framework and Strategies” co-issued by the IFSB and IDB is a thoughtful blueprint. AAOIFI has also produced standards in areas such as accounting, auditing, ethics, Shariah compliance and governance.
In such an environment, it requires a very courageous investor to be willing to step in against such a speculative tidal wave, regardless of how far out of line with reality markets may have gone. Pursuing sustainable exchange rate and monetary policies requires countries to devise defensive strategies against such forces. This is no easy task. Capital controls have been suggested by some. In Hong Kong’s case, such controls would be anathema to our free market philosophy: they are anyway prohibited by Hong Kong’s Basic Law (as they are, with effect from 20 December, in the Basic Law of Macau). But, even for jurisdictions that wish to consider the option, the practical problems are considerable. Traditional types of controls have impeded growth, and have proven difficult to administer. Attempts to impose capital controls may also foster evasion that undermines the transparency and integrity of markets. More recently, innovative schemes have been suggested aiming at taxing short-term capital inflows, or otherwise obliging lenders and borrowers to pay a price that reflects the risk to the overall economy of this activity. Some of these proposals are quite interesting and may be appropriate for consideration by some developing countries, especially those in the process of financial liberalisation. 3  BIS Review 53/1999  There are limits to the amount that regulation of short-term capital inflows can achieve. It would not, for instance, prevent massive speculative positions from being quietly built up in currency and stock markets. It would not stop manipulation of individual markets by large investors.

Much can be done by individual governments to craft exchange rate policies that truly 7  BIS Review 53/1999  complement economic fundamentals. But actions by individual jurisdictions can only go so far towards tackling problems that also arise from defects in the international financial architecture and not just out of local imbalances. Reforms to the international financial architecture are needed to help ensure that capital flows reinforce, rather than undermine, monetary stability. In the long run, we should also be looking towards a more sophisticated and solidly based regional financial system: this would include taking further the debt market and infrastructural development that is already in progress, as well as greater monetary cooperation - perhaps, on the distant horizon, even monetary union. For Hong Kong’s part, the experience of the last two years has left us more firmly convinced of the appropriateness of our linked exchange rate system to the special needs and characteristics of Hong Kong’s economy, and more confident in our ability to defend the link under the currency board arrangements. I am not so complacent as to suppose that there is no room for improvement, and we continue to explore ways of refining the system. Nor do I suggest that such a system is suitable for every economy in the region. But I believe that it has provided Hong Kong with the anchor of monetary stability that such an externally oriented economy needs, particularly during these years of global instability.
However, let me share a few general thoughts. In the short term Large imbalances have been built up in the global financial system over a long period of time. The risks that banks and other financial institutions have assumed have quite simply become too high in relation to the risk-bearing capital. Therefore the risk level must be reduced and capital must be injected. This adaptation process is in full swing and writedowns have been taken globally for a value of USD 637 billion. Lower asset values must be met with lower indebtedness, either by disposing of assets or by increasing equity. This process is also in full swing. Including the measures taken by the US government yesterday, capital injections of about USD 611 billion have been made so far, but additional capital will be needed as further write-downs will be made. To put it succinctly, what is needed is that many financial institutions all over the world must shrink or disappear. This process will be both time-consuming and painful. Iceland is the current example of how just painful and spectacular the process can be. But the fact remains: only when the banks' balance sheets have stabilised and the markets have made certain that solvency levels are satisfactory will the situation normalise. Only then will confidence return to the financial markets, and only then will liquidity also return. Central banks and other authorities need to accept their part of the responsibility while these processes are in progress.

When the  2  BIS Review 125/2008  markets deteriorate or cease to function in this way, individual financial institutions are also hit hard, especially the banks. We have seen the consequences of these developments now during the autumn, causing central banks and governments to take powerful measures to avoid a full-scale systemic crisis. Although most banks have satisfactory solvency levels today, the turmoil has developed into a serious liquidity crisis, based on distrust of the banks' ability to survive in the future. The entire problem can actually be summarised in a single word; confidence. Currently there is a lack of confidence in the financial sector as a whole. So what needs to happen to restore confidence? Before I attempt to answer that question, I thought I would say a few words about the situation in the Swedish financial system and about the role of the Riksbank and other Swedish authorities. The situation in the Swedish financial system Even if the situation has worsened in recent weeks it is important to remember that the Swedish financial system is far from the epicentre of the crisis. According to Finansinspektionen (The Swedish Financial Supervisory Authority) – and according to our own assessment – the Swedish banks continue to have strong balance sheets. Their capital situation is strong, credit losses are low and profitability has reached historic highs. The Swedish banks have been relatively conservative in their lending, and have not been exposed to any great extent to the worst-hit markets or institutions.
But French and European savers are more attached to security – or capital protection – than to liquidity. Therefore professionals should offer them savings products that are less liquid, with some long-term capital guarantee, and that offer the best equity performance over time. A crucial point is to avoid any tax distortions that might penalise these products more than liquid and risk-free investments. Low interest rates are not the disease, but the symptom of an imbalance between savings and investment; and low interest rates are probably an opportunity to speed up the cure towards productive investment. –  At the European level, we need to build an ambitious “Financing and Investment Union” (FIU) bringing together existing initiatives – namely the Juncker plan, the Capital Markets Union and the banking union – which currently work in isolation and therefore do not bring sufficient results. We definitely need to put the pieces of the puzzle together to create a multiplier effect towards private risk-sharing in Europe: with more equity financing and more cross-border flows. The second way forward for raising investment and growth in Europe is to rapidly stabilise the regulatory environment for banks, eight years after the financial crisis. However, in finalising the Basel III reforms we need to avoid two pitfalls. First, as has been stressed by  2  BIS central bankers’ speeches  the GHOS and the G20, the completion of reforms should not result in a “significant increase in overall capital requirements”.

Financial markets experienced sharp corrections, with a significant drop of the Pound, but they did not freeze. Cooperation between central banks to cope with the Brexit vote has been effective. We, on the ECB Governing Council, remain fully mobilised and determined. –  Second, by maintaining the proper functioning of the euro area – a collective asset belonging to 340 million people. More than two-thirds of euro area citizens support the single currency, according to the Eurobarometer survey. Of course, Brexit will have an impact on the euro area economy, but this impact will be more modest than in the UK. Brexit does not change our economic projections for this year in France: we still expect growth of at least 1.4%. But it is important to reduce the uncertainty over Britain: the quicker, the better. –  Third, by preparing the new trade deal between the UK and the EU in a swift, orderly and consistent manner. We can’t make any assumptions at this stage as to the outcome of the negotiations. What is clear, however, is that there can be no cherrypicking and no free-riding. For the UK to maintain access to the single financial market, all the usual EU rules should be strictly respected. 2)  Building on our strengths to raise investment and growth  Despite the gradual economic upturn seen in 2015–2016, our main European challenge is still how to increase growth.
Have an effective resolution regime that allows such firms to fail without threatening to take down the rest of the nation’s financial system, and without requiring taxpayer support. Preserve the important structural changes put in place since the financial crisis that make the financial system more resilient to shocks. These include the centralized clearing of over-the-counter (OTC) derivatives, better supervision and oversight of key financial market utilities, and the reforms of the money market mutual fund industry and the tri-party repurchase funding (“repo”) system. In contemplating changes to the regulatory regime, the good news is that the U.S. financial system is much sounder today than it was on the eve of the financial crisis. The quantity and quality of capital and liquidity for U.S. banks have markedly improved, meaning that the banking industry can support the economy even under considerably more adverse economic conditions. And, although returns on equity have dropped as balance sheet leverage has declined, banks remain profitable enough to cover their cost of capital and continue to serve their household and business customers. Much of this progress is due to regulatory changes enacted since the crisis. In addition to buttressing the capital and liquidity standards for major banks, the regulatory community has made significant strides in many other areas. We developed a resolution framework for systemically important banks that better enables a failing bank to recapitalize with less risk to the rest of the financial system, and in a way that should not require taxpayer assistance.

For this reason, the ECB has been very clear that the measures it has taken are designed to be temporary in nature. Let me also emphasise that our non-standard measures do not in any way impinge upon our capacity to tighten our monetary policy stance in response to inflationary pressures. In all our actions, we have been careful to keep inflation expectations well-anchored and have remained faithful to our mandate to preserve price stability in the euro area over the medium term. Our mandate is what has guided, and will continue to guide, all our monetary policy decisions. But the success of the ECB’s crisis measures in maintaining monetary stability in the euro area should not let anyone believe that monetary policy is the medicine that can solve the underlying, more structural problems in the euro area. The lasting resolution of the crisis is the responsibility of the euro area governments. The euro area governments’ responses to the crisis Euro area governments face three main challenges. First, they need to address the internal and external macroeconomic imbalances. Second, they have to restore confidence in, and stability to, the European financial system. Third, they must deal with the remaining shortcomings in the institutional design of EMU. Let me elaborate on these factors in turn. First, the rebalancing of the euro area economies requires, first and foremost, that public sector expenditure is brought back to a sustainable path and that the debt overhang is reduced.
There is a risk that the shortages we see in the labour market, and which clearly motivate wage increases for certain professional groups, lead to an inflationary rate of wage increase. It is therefore important for the Riksbank to analyse the supply side of the labour market. So far there is mainly a shortage of persons with certain healthcare training and of teachers in science and technical subjects. In the longer term, however, a lower supply of labour is expected and an increase in demand. The population increase that Sweden has experienced during the 1990s will gradually decline and with 13 effect from 2010 growth in the working population will be negative. The large population growth among the younger and older age categories risks reducing labour force participation, as these age groups generally have a lower participation than average. In addition, there is a proposal for shorter working hours with effect from 2004, which risks reducing the labour supply measured in hours even further. Wage development during the forecast period  Over the past year employment has developed at a surprisingly strong rate, despite the subdued demand in the economy. The labour force reserve should be regarded as small, if one uses the registered labour force as a measure. The percentage of unemployed and persons in labour market policy programmes amounted to 6.7 per cent in September.

Another factor that contributed to the strong performance in the stock market is that the Thai market had a relatively low P/E ratio compared to other markets, regional and extra-regional, and the positive price correction might have been at large. But, whether the inflows that have been driving the market up will stay for long will depend on the underlying fundamentals.This is to say that in order to attract long-term investors that they need, Thai companies must persevere with business restructuring and continue to reform their operations. But more importantly at the macro level, the economic recovery process must continue firmly, and be supported by the right policy mix and by further progress on the unfinished reforms. I would like to turn your attention now to what we see as the risks in the process of recovery. The speed and robustness of the recovery will depend in large part on the turnaround of the global economy. On this front, the Bank of Thailand remains cautious in our optimism. Our guarded optimism is based on two reasons. First, the US economy, which absorbs roughly 20 per cent of our exports, is likely to rebound later in the year while Japan, where 15 per cent of our exports go, seems more likely to remain in the mire for the rest of the year. Therefore, the global economy as a whole may not be expanding much. Second, a US recovery, particularly if led by electronics, may not benefit Thailand as much as it will benefit other regional economies.