samchain/econo-pairs-v1 huggingface dataset:
© Swiss National Bank

Macroprudential policy As you all know, a macroprudential authority (AMCESFI) has been in place in Spain since the start of the year. Its main task involves contributing to the coordination and exchange of information on financial stability-related aspects between the Banco de España, the Ministry of the Economy and Enterprise, the National Securities Market Commission and the Directorate General of Insurance and Pension Funds. In parallel, the supervision of the financial system as a whole has been bolstered by the extension of the macroprudential tools available to the sectoral supervisory authorities. Some of these new tools, in particular those of the Banco de España based on borrowers’ ability to pay, aim to prevent an excessive easing in lending standards on the part of banks and to contribute to the sustainability of household and corporate debt. These new instruments complement those already being used by the Banco de España: the countercyclical capital buffer, the systemic risk buffer and the buffer for systemically important institutions, among others. Overall, this new institutional framework and the attendant powers mark progress and the strengthening of financial stability in Spain. In fact, in my opinion1, the introduction of macroprudential policy instruments to complement monetary and fiscal policy is probably one of the most significant advances in the wake of the international financial crisis. For countries which, like Spain, belong to a monetary union, these tools are particularly important. They are some of the few instruments available in the national realm to ensure the stability of the domestic financial system.
from assessing the resolvability of banks and drawing up resolution plans, to deciding on resolution schemes for failing banks and whether to make use of the Fund in such cases. These tasks are shared between the Board at the European level, which is directly responsible for all banks under direct ECB supervision and all cross-border banks, and the national resolution authorities, which are responsible for the other banks. However, the Board may at any time decide to directly exercise all the relevant powers under the Regulation with regard to any of the indirectly supervised banks. In addition, the Board also becomes directly involved whenever a resolution of an indirectly supervised bank will make use of the Fund. Finally, there is also an option for Member States to choose that the Board will be responsible for all banks in their jurisdiction. These features make the SRM a single system. The Single Resolution Board At the centre of the SRM there needs to be a single authority with operational independence and sufficient decision-making authority to take resolution action in the interest of the euro area and of the Union as a whole. This is achieved with the setting up of the Single Resolution Board. The Board will meet in two different compositions: the plenary and the executive sessions. The executive session will consist of a Chair, four independent full-time members and two observers from the Commission and the ECB, respectively.

But I think this is a somewhat misleading view as I will explain later. The SSM and the SRM, both components of the Banking Union thus contribute to reducing the negative feed-back loop between banks and sovereigns. One important objective of the SSM Regulation is to improve the quality of supervision and to ensure strong homogenous supervisory standards across the euro area. The essential contribution that European supervision can give to the separation of banks and sovereigns is the build-up of trust in the robustness of banks as stand-alone entities, so that enhanced confidence by their peers can help normalise interbank markets and overcome financial fragmentation. The establishment of the SRM also addresses the problem of breaking the bank-sovereign nexus because the orderly resolution of banks, even large ones, helps to avoid costly rescues by sovereigns that may endanger their own finances. In practice, however, the SSM and SRM may not be sufficient to completely sever the ties between sovereigns and their domestic banks. The effect of SSM and harmonised supervision on trust among banks may be more limited than expected, while the SRM, important for organising orderly resolutions, is limited in the amount of resources it can contribute to recapitalisations. The Bank Recovering and Resolution Directive (BRRD) is in my view the most crucial regulatory change in Europe in relation to breaking the bank-sovereign nexus. It represents a true paradigm change, ending the culture of bail-out and ushering in a culture of bail-in.
Norges Bank has launched a project to assess the payment and settlement system as a whole. The aim is to ensure that we have an efficient and secure payment infrastructure also in the future. Some key issues are: Should our payment infrastructure continue to be all-Norwegian or could it be more international? In that case, how do we resolve the questions relating to national contingency preparedness? Should payments continue to be cleared between banks prior to settlement at the central bank, or is it more efficient to settle payments one-by-one directly at Norges Bank? When the current settlement systems were introduced, technological limitations and costs placed restrictions on the volume of payments that could be settled in real time at the central bank. The main rule has been for large interbank payments to be settled individually at the central bank, while payments between banks’ customers are sent to a clearing house before banks’ positions are settled at the central bank. At Norges Bank, these positions are settled five times a day Monday through Friday. Technological developments in recent years – with cheaper and more secure IT infrastructure – now make it possible to settle retail payments as well directly and in virtually real time at the central bank. Unlike the traditional settlement systems, the new systems can be kept open around the clock seven days a week. This will pave the way for more efficient general purpose infrastructures directly operated by central banks.

From having increased by almost one million during the years 1950 to 2000, they will now increase by only 70,000 over the coming fifty years. This will increase the demands on the older population to participate in the labour force. According to a study by Statistics Sweden, half of old-age pensioners will need to work to support themselves in year 2035. The age composition will also make tremendous demands on welfare services, which will further increase pressure on the labour market and the need for an increased supply of labour. The average costs for care and welfare increase drastically as people become older and public expenditure on pensions, medical treatment and care of the elderly can be expected to increase from approximately 18 per cent to approximately 23 per cent of GDP around the year 2030. When the long-term growth rate receives a weak contribution, or none at all, from the labour supply, the dependence on labour productivity will increase. Compared with other countries, Sweden has managed fairly well in this respect; it is productivity growth rather than labour supply that has created growth in recent years. Labour productivity increased particularly strongly during the 1990s, which was due to several factors. One important factor was that many companies with a low level of productivity were put out of business in connection with the recession at the beginning of the 1990s, while other companies chose to cut back on unqualified employees with simple work tasks.
Moreover, however, unemployment in Spain has historically shown very marked cyclical changes: in episodes of crisis, the unemployment rate has easily exceeded 20%. This means that each recession expulses extensive groups of workers from the market, particularly those with less work experience, low skills and, generally, those on temporary contracts and, therefore, with a lower degree of protection. True, the marked temporary employment ratio in the Spanish labour market shows its most damaging effects in periods of crisis. But it also has adverse economic effects in expansionary phases (e.g. in terms of firms’ and workers’ human capital investment decisions). In addition, insofar as the temporary employment ratio is essentially affecting the young, whose unemployment rate is very high, this Spanish labour market shortcoming also influences key decisions in people’s life cycle such as those relating to household formation. For all these reasons, reducing the high duality of our labour market is, in my view, an inescapable objective. Thus, employment protection mechanisms should be reviewed under the prism of squaring employee protection with flexibility needs, but, above all, with the aim of achieving a fairer distribution of protection among workers with a different contract status. We should also recall how, before the current crisis, almost 43% of the unemployed had been seeking a job for more than a year and that around 30% had been looking for more than two years.

In addition financial market participants as well as regulators are facing the global challenge of the new economy and technological revolution. The new technological revolution is pushing for change everywhere in the world, and with no concern for those in need of time to heal the wounds inflicted by crisis. It has become an inevitable development which needs to be embraced with the right attitude, mindset and understanding. The new economy in itself poses challenges, not exclusively to financial service providers, but to regulators, business operators and the financial industry as a whole. The challenge, on this last aspect, is particularly crucial to the government sector; for they need to make sure that the legal, regulatory and supervisory framework are there to create the right competitive environment and operating conditions. This is to ensure that when their own private operators are ready for the technological challenges of E-banking, internet-broking and the electronic trading platform, then the appropriate legal and regulatory framework is there, rather than becoming an obstacle to development - by which time we may no longer be able to catch up with major global players. In the world of E-commerce and trading, banks have become important intermediaries as the operator of the payments system, to facilitate the payment for the goods and services which are being traded on-line. As regulator of the commercial banking business, the Bank of Thailand is working in earnest to support the development of the country’s payment system, by both the public and private sectors.
They could complement banks as a source of financing and could: 1) unlock more investment for all companies, especially SMEs and for infrastructure projects, 2) attract more investment to the region through external financing, and 3) make the financial system more stable and resilient by opening up a wide range of funding sources 8. Thus, capital markets have potential to foster growth. Despite the continuous progress, capital markets in the CESEE region still lag behind the more advanced EU countries. In most of the countries in the region, the financial system is bankbased. Capital markets in CESEE countries have expanded significantly, since they were originally created9. Despite the growth from the low base, and given the impact of the global crisis on the market growth momentum, the capital market depth (listed shares and bonds) in the region is hovering around 50% of GDP, far below the EU average for 2008-2016 of around 200% of GDP. Similar is the assessment of the region on the financial market development in the Global Competitiveness Report. The region is positioned in the middle of the scored countries, and the SEE region has the poorest ranking. While some of the reasons for the low capital market development might be linked to demand factors (dominance of 8  EU Green paper on capital markets, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52015DC0063&from=EN.

At some point, QT will drive reserves below the level reserves holders are comfortable holding at the prevailing policy rate, and that scarcity will begin to push short term market rates up above Bank Rate – and make them more volatile – as firms bid up to borrow between themselves. At this point, if we were to do nothing, the existing framework would cease to maintain interest rate control (Chart 8).13  Market rates would not rise without limit: under the Bank’s ‘Operational Standing Facilities’, firms can borrow against high quality collateral at a spread of 25 basis points above Bank Rate. 13  8  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  8  Chart 8: Upwards pressure on short term interest rates under the floor system  Waiting for the exit: (c) Ensuring a smooth transition. Findings from the Discussion Paper To judge where this instability might kick in, we need to understand why firms demand reserves – what they use them for and how readily they would swap them for other liquid assets in different states of the world. In economists’ language, we need to understand the shape of the demand curve for reserves. The difficulty is that this concept is not directly observable. That’s why we issued our Discussion Paper, as a way of beginning a conversation with firms. Since then we have met a broad and representative range of our counterparties: large and small, simple and complex, old and new, UK-based and overseas businesses.
Employment was indeed somewhat higher in 2003 as a whole than we expected at the beginning of the year. But this was primarily because the unexpectedly robust growth in the public sector countered weak growth in the private sector. We have no reason to expect any such pattern during 2004. The strained financial situation in the public sector points to weak employment growth in the public sector, while the economic upswing is likely to be reflected to a rather small extent in a rise in employment during 2004 in the private sector. Of course there is a risk that the weak labour market growth will affect households’ expectations of the future and propensity to consume, which is a risk that we highlighted back in December. The higher the rate of unemployment, the more cautious households are likely to be when it comes to purchasing and consuming. This in turn could entail a risk of lower growth in 2004. Nor as regards domestic economic activity is there now reason to make any large revisions compared with our assessment in December. A number of factors are indicating possibly weaker growth, but at the same time there are factors that are pointing in the opposite direction. Compared with the picture we had in December, however, developments in the labour market at the end of the year constitute a somewhat greater risk to economic activity at least in the coming year.

Christian Noyer: The euro area perspectives Keynote speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the Paris Europlace International Financial Forum, Paris, 10 July 2013. *  *  *  Ladies and Gentlemen, I am very pleased to have this opportunity to speak to such a distinguished audience and I thank Paris Europlace for the invitation. As Arnaud de Bresson just mentioned it, I take this opportunity to express, again, my strong support to the ongoing development of financial activities in off shore RMB out of Paris. In that regard, let me also commend the work undertaken by Paris Europlace to federate and coordinate the variety of initiatives that we have seen develop over the recent months. We are lucky, here in Paris, to benefit from the presence and the dynamism of the major Chinese banks, which are among the main international banks. This is an asset for Paris. Similarly, the main French banks are active on the Chinese markets, out of Hong Kong and out of mainland China. This is another major asset for Paris as a financial center. Both will benefit Chinese corporates in France, and French corporates in the Chinese markets. Both these assets will guarantee that liquidity in RMB does and will flow smoothly from China to Paris. Furthermore, Paris ambitions to serve as a hub for the development of yuan denominated business throughout the euro area.
This will both increase our economic resilience and decrease our reliance on the traditional markets for our export growth. Encouragingly this trend of export market diversification has already started before the onset of the crisis. A decade ago, the share of Malaysia’s exports to emerging and developing economies were below 50% of our total exports, but now, the figure has exceeded two-thirds. Going forward, it is important that this trend is reinforced. However, to achieve a more balanced growth, we need to not only leverage on our competitive advantage in the external sector, but also expand the strength of our domestic sector. Since 2003, domestic demand has been a main contributor to our economic growth, especially private consumption, in which growth has consistently outstripped that of the overall economy. Going forward however, a more sustainable balanced growth would require higher contribution from private investment. It is important to recognise that no country has ever managed to consume its way to prosperity. Both economic theory and the history of economic development point to the lesson that high-level of consumption does not guarantee higher rate of economic growth for a sustained period. 4  BIS Review 158/2009  Investment, on the other hand, is a prerequisite for a dynamic economy that is moving towards a higher level of income and development.

In particular, with an ever globalised world, competition is no longer local – the private sector cannot just compete locally when the flows of goods, capital and talent are global. Furthermore, in a global stage, long-term relevance can only be sustained through genuine competition-driven competitiveness rather than through public sector support. To develop both an appropriate incentive structure and a market-driven environment, it is crucial that market and price distortions are removed and greater competition is introduced, such as through deregulation, liberalisation and greater transparency of rules and regulations. While the government moves towards this, the private sector must be ready to operate in this more open and competitive environment. An example of an industry within Malaysia in which a private sector-led competitive environment is being developed is the  BIS Review 158/2009  5  financial sector. Over the last several years, the domestic financial sector has been gradually liberalised and subjected to greater global competition, with the dual aims of enhancing the role of the financial sector as a source of growth and as a key enabler and catalyst of economic growth. Growth of the financial sector also strengthens Malaysia’s economic interlinkages with other economies. Liberalisation is done after ensuring that the financial institutions are in a state of readiness to compete in a more competitive and challenging environment.
My idea, which I have already mentioned, is basically this: Each economic policy framework is designed to function well in a given economic reality. When the reality changes, the framework may also need to be adapted, reformed or supplemented. However, it is also important to be able to identify the changes and understand their implications. The frameworks should aim to be robust for events that cannot be predicted. They should also be symmetrical – be able to handle shocks that lead to both higher and lower outcomes than expected. For example, the current system was created to deal with a high government debt, high inflation and high nominal wage increases. An updated framework should have scope for dealing with risks on both the upside and the downside. The frameworks that we have built up are worth defending, but we must not be too complacent and believe that there is no potential for improvement. We know that the world is different today than it was thirty years ago and that we have built up vulnerabilities in the Swedish economy. Difficult task but better conditions The Riksbank, like many other central banks, faces a challenge that we have not met for decades; inflation has risen to levels that we have not seen since the early 1990s. As I have mentioned, this was initially about a number of global supply shocks that pushed up commodity prices, in particular. But, it has gradually become increasingly clear that the price increases have begun to spread widely in the economy.

But it was now nevertheless clear that it was a total renovation that was needed. 4 [16]  In the Swedish paper Dagens Nyheter on 20 November – the day after the defence of the fixed exchange rate was abandoned – it was announced that an expert group had been appointed with Professor Assar Lindbeck as chairman. The aim was to tackle the long-term economic problems and, in Assar's words, to try to answer the question: “What is it about the Swedish economy that makes it run out of control like this?”6 The group, which came to be called the Lindbeck Commission, was to present proposals for how to tackle problems, which Assar described as “the low growth rate, the exploding public expenditure, the budget deficits, the constant trends towards cost inflation and the slow productivity growth”. Necessary changes in the framework… Unfortunately, it often seems that a crisis is needed to bring about real and profound changes. The major changes in the economic policy frameworks that we made as a result of the crisis in the early 1990s are well known so I will only mention them briefly here. The inflation target Instead of defending a fixed exchange rate, the task of monetary policy from now on would be to keep inflation low and stable. In January 1993, the Riksbank announced that an inflation target of 2 per cent would enter into force with effect from 1 January 1995. Gradually, changes in the monetary policy framework confirmed the new order.