samchain/econo-pairs-v1 huggingface dataset:
In most cases, this two-year horizon provides us with the scope to return gradually to the target without having to apply monetary policy with such force as to create unnecessary fluctuations in the real economy. Occasionally in the wake of a major disturbance, there may even be grounds to allow a period of more than two years to return to the target. In such cases, however, we should communicate this clearly. Like most central banks with inflation targets, we apply what is usually referred to as a flexible inflation target policy. When we decided at the most recent monetary policy meeting to increase the repo rate, we once again had to take into account the continuing rapid increase in house prices and household debt. This was not because we have a target for household debt or house prices. However, it is important for us to monitor the trend in the housing market, bearing in mind both financial stability and price stability. As far as financial stability is concerned, there are no indications that house prices or household debt constitute a threat to the banking system. We produce regular analyses and reports on such matters in our six-monthly stability reports. As far as the work with price stability is concerned, we must take into account the effect that house prices have on household saving and consumption decisions through their impact on wealth and thus the level of demand in the economy as a whole.

Unit costs 2001 NOK 15 14 13 12 11  1988 1994 2001  10 9 8 7 6 5 4 3 2 1 0  Unit costs excluding Unit costs including cash withdrawals at cash withdrawals at the counter the counter  As you probably know, we also investigated the costs related to payment transactions in the largest banks and Norway Post in 1988 and 1994. At constant 2001 NOK, the cost per transaction fell from NOK 14.10 in 1988 to NOK 10.70 in 1994. In 2001, the average cost per transaction was NOK 5.30. Since 1988, the cost of an average transaction, at constant prices, has fallen by a good 60 per cent. Banks have steadily increased the scope of direct pricing so that the degree of cost coverage by means of direct pricing has nearly doubled both from 1988 to 1994 and from 1994 to 2001. In 2001, 70 per cent of costs were covered by means of direct pricing. 4  BIS Review 66/2002  6.
In late July, the year-on-year decline in actual registrations had eased, and stood at 9% lower than the figure observed a year earlier. 6  From the standpoint of financial stability, the evidence available4 shows that the variables with the highest information content to explain the probability of default of households are becoming unemployed and a fall in household income. The same evidence shows that, as a result of the shock triggered by the coronavirus, consumer credit defaults can be expected to occur at an earlier stage than mortgage defaults by households, and that a deterioration in income and employment will adversely affect mortgage lending overall, with a slight time lag. Further, there is very notable disparity in the financial situation of the households most affected by the pandemic. According to the Banco de España’s Spanish Survey of Household Finances5, the industries that have borne the brunt of the pandemic employed a higher proportion of young and female workers than other sectors, and also a higher proportion of low-wage workers. The lower wages were partly offset by the fact that the employees concerned lived with other household members who had a higher income. In terms of household wealth, 28% of workers in the social industries lived, in 2017, in households whose financial assets amounted to less than one month's income, and around 8% had bank debts whose repayments amounted to more than 40% of their gross household income.

Looking ahead, the uncertainty about the potential rise in the NPL ratio is notable since this crisis is on an unprecedented scale and is deeper than that envisaged in the adverse macroeconomic scenarios applied in the stress testing of the financial system in recent 10  years. The timing is also very different since in this episode, if current macroeconomic forecasts are confirmed, the adjustment to GDP would be concentrated in the first year of the shock (2020), to be followed by a recovery whose strength is still uncertain. In addition, the impact will hinge on the size and duration of the measures adopted, which will influence their effectiveness. In any event, the increase in NPLs is expected to be higher among smaller firms operating in sectors involving greater social interaction; and, in the case of households, in exposures not secured by mortgages. Accordingly, banks are already recording earlier part of the provisions that they might have to set aside in the future. Furthermore, my previous remarks about the aggregate situation of the system mask considerable diversity. This is mainly because the starting positions of the various institutions, in terms of own funds and credit quality, are already different. Likewise, some segments of households and non-financial corporations are also still in highly fragile financial situations. For example, smaller firms are more vulnerable to a scenario of falling revenues.
Take synthetic credit derivatives, which were supposed to complete a market in default risk and thereby improve the pricing and allocation of capital. Financial alchemy appeared to have distributed risk, parcelling it up and allocating it to those who wanted most to bear it.11 However, the pre-crisis system had only spread risk, contingently and opaquely, in ways that ended up increasing it. Once the crisis began, risk quickly concentrated on the balance sheets of intermediaries that were themselves capital constrained. And with the fates of borrowers and lenders tied together via hyperglobalised banks and markets, problems at the core spread violently to the periphery. A truth of finance is that the riskiness of an asset depends on who owns it. When markets don’t clear, agents may be surprised to find what they own and for how long. When those surprises are – or are thought to be – widespread, panic ensues (Chart 3). 8  Such naïveté is striking given that evidence of disequilibria abounds in markets for goods and labour. In goods markets, there is ‘sluggishness everywhere’. Left to themselves, economies can go for sustained periods operating above or below potential, resulting, ultimately, in excessive or deficient inflation. Yet efficient market forces ‘should’ bring about changes in prices sufficient to equate demand with potential, leaving inflation as a purely monetary phenomenon. In labour markets, there is ‘rigidity everywhere’. Rather than fluidly adjusting to equate the demand for labour with its supply, periods of deficient labour demand can persist, sustaining mass unemployment and joblessness.

39 40  11  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  11  Given the importance of these reforms to both global financial stability and trust in the system, the FSB will undertake a thorough assessment of their effectiveness over the next year and report to G20 leaders. Key considerations will be the adequacy of the resolution plans, or Living Wills, whether G-SIBs will have sufficient liquidity in resolution, and whether it will be feasible – both in practical and political terms – to impose losses on the holders of TLAC in resolution. An anti-fragile system must be as robust to operational failures as to financial ones. While past crises had their roots in financial losses, in our digital era systemic shocks can also come from non-financial sources, including cyber-attacks. To improve firms’ cyber defences, the largest banks and market infrastructure at the core of the UK financial system are subject to penetration tests (known as CBEST) and are required by their supervisors to address any deficiencies uncovered. In parallel, we are literally planning for failure. In the UK, we have begun setting standards for how quickly critical financial institutions must be able to restore vital services following a successful cyber-attack. We will conduct cyber stress tests of firms’ ability to meet our impact tolerances in “severe but plausible” scenarios, and prescribe remedial action plans if they fail.
This stands in contrast to the current situation in the European Monetary Union. Its large member states in particular suffer from endemic growth problems, structural weaknesses and high unemployment. In light of this comparison, it is not surprising that any proposal for the UK to join EMU at this stage is widely regarded as economically disadvantageous, quite apart from deeper cultural-historical misgivings in the UK about further European integration. Moreover, correlations suggest that the US business cycle is no less important for the British economy than the degree of activity in the EU (Chart 1). In many ways, the lessons for Switzerland are more complicated. Unlike the UK, Switzerland has had to endure a protracted period of very low economic growth. Indeed since 1980 and on an accumulated basis, Switzerland has had the poorest growth performance amongst the advanced economies (Chart 3).3 As a result, a widespread and welcome political and media debate about how to boost our country’s growth performance has emerged. At the same time, the absence of a deep economic crisis experience, the mix of proportional representation, direct democracy, strong federalism and the resulting consensus-oriented political process has so far prevented the implementation of a genuine wide-ranging liberalization program. As a result, there is a latent belief embedded in many economic debates in Switzerland that the only way successfully to complete the necessary structural reform program is to join the European Union.

In the latter area we actually have made major innovations since our Monetary Policy Meeting last Thursday. We now upload to our public website the background information based on publicly available data before holding the meetings where we decide on monetary policy. Today’s scenario: uncertainty and risks Monetary policy is one of many factors influencing the cost of borrowing faced by households and firms. Another factor that has gained significant importance is the perception of risk and volatility that has swept over every financial market. This increased with the worsening of the global financial crisis last September. In general, and despite efforts made by economic policy makers in the main economies around the world, we are still dwelling in an extremely uncertain scenario. This has a number of implications that ultimately affect the conditions and costs of credit to firms and households not only in Chile but everywhere. To begin with, external lending standards for domestic banks have become more stringent. We see it in that, although our banks have been able to access foreign credit sources, these have been at shorter maturities and with larger spreads over external reference interest rates. This is a reflection of the difficulties that continue to haunt the main global financial institutions and their reluctance to embark in new businesses.
This must include not only the member’s adjustment plans, but also its institutional and political capacity to deliver this adjustment. This also means that the cooperation between authorities and the Fund must be good and capable of generating constructive team-work. It has been easier to define this framework than to implement it. To some extent, this is not surprising, as one cannot avoid that a strong element of judgment will influence the assessment of the three above-mentioned conditions. And when there is room for judgment, there is always room for political interference. Moreover, if we add the fact that the alternative to large financing very often is the prospect of a full-blown crisis, with unpredictable but certainly high - and possibly systemic costs - it is not difficult to understand why the international community has often condoned sub-optimal decisions. One way to improve the situation and to eliminate this decision bias towards excessive Fund financing would be to find ways to involve more consistently the private sector in the resolution of crises and thereby in burden sharing. Once again, this is easier said than done. Progress in this respect has been disappointingly slow to emerge. Should we conclude that it is too difficult for the IMF to say no? I would definitely not go that far. While recognizing that capital crisis decisions may be too important to leave only to experts, bending the rules too often can also have serious consequences.

One consequence is that the credibility of the institution will eventually suffer, and this will negatively affect its efficiency to the detriment of the membership as a whole. The second is that by granting too many resources under too uncertain conditions the financial soundness of the IMF will be jeopardized. The financial soundness of the Fund may well constitute in itself the topic of another speech. Let me just tell you that, although the IMF financial situation remains strong, recent developments in markets and in Fund lending have increased the risks for the institution. Shareholders of the Fund, through the Executive Board, have the responsibility that the Fund takes sensible decisions. They have an equally important responsibility to safeguard the credibility and soundness of the institution. This can best be done by ensuring that, to the extent possible, the game is played according to the rules. To best pursue its mandates, the Fund must not only be competent and financially sound, it must also be able to preserve its own independent judgment. With this caveat, I would have no problem sharing the very widespread belief that if the Fund did not exist, we would have to invent it. 4  BIS Review 69/2004
(3)  Allan Greenspan in his latest paper “The Crisis” wrote about the reasons for it:  a. “it was the global proliferation of securitized, toxic U.S. subprime mortgages that was the immediate trigger of the current crisis”. But, he says: “the roots of the crisis reach back, as best I can judge, to the aftermath of the Cold War”. Later he explains actually the large increase of the aggregate demand which came from, formerly the third world nations, especially China, which replicated the export-oriented model of the so-called Asian tigers, argumenting it with data that “the savings rate of the developing world soared from 24% of nominal GDP in 1999 to 34% in 2007, far outstripping its investment rate”. b. that “subprime mortgages in the United States for years had been a small appendage to the broader U.S. home mortgage market, comprising only 7% of total originations as recently as 2002”...that “most such loans were fixed-rate mortgages, and only a modest amount had been securitized...” that “..,. starting in late 2003, began to accelerate the pooling and packaging of subprime home mortgages into securities...” that “subprime mortgages securities outstanding in 2007 totaled more than 900 billion USD, a more than sixfold rise since the end of 2001”. c. that “a classic euphoric global bubble took hold”, “that by 2007, yield spreads in the overall debt markets hаd narrowed to a point where there was little room for further under pricing of risk”.

The challenge is to learn how to use these instruments in the best way.” Recently, Petra M. Geraats (Mаy 2010), concluded in the same direction: “Recent financial crises have revealed that a ‘nice’ (non-inflationary, continuously expanding) economy can mask the build up of toxic imbalances that threaten the financial system. So it is vital for policymakers to proactively pursue not only price but also financial stability. Although the pursuit of both objectives could give rise to uncomfortable trade-offs, these can be bypassed by supplementing the main instrument of monetary policy, with tools for prudential policy, in line with the Tinbergen rule.” Accordingly, asking whether the central banks should have double mandate and answering affirmatively, she (Petra M. Geraats) says: “Although the twin goals sometimes give rise to dueling demands, with an appropriate policy framework central banks can accomplish both and achieve a dual mandate of price and financial stability”. Definitely, the consensus for this point of view is mounting, since larger number of authors are basically on the same line. Тhis highlights the importance of ongoing efforts to strengthen the macro-prudential supervision role of central banks (de Larosiere, 2009). Macro-prudential policies could aim to contain the build up of financial imbalances and ensure that the financial system is sufficiently resistant to withstand a disorderly unwinding (Papademos, 2009). Considering the important informational synergies between micro-prudential supervision and systemic risk analysis, bringing micro-supervision under the same roof as other central bank functions seems an attractive proposition.
Countries with stronger macroeconomic fundamentals experience less volatile capital flows and are therefore less disrupted by them. “Fragile five” episode was a case in point for the market to differentiate countries, with high current account deficits and high inflation as the focal point. In most cases, strong macroeconomic fundamentals include both internal and external fronts. Internal front involves improved fiscal discipline, banking system with prudent supervisory and regulatory frameworks, stabilized inflation, wellequipped financial markets, and credible monetary policy framework. External front includes sufficiently flexible exchange rate, adequate foreign reserves, and manageable external debt levels. In addition, well-diversified sources of finance among bank-based, debt and equity markets would be supportive of financial stability. Concluding remarks 4  BIS central bankers’ speeches  Ladies and Gentlemen, I have spoken at length, from the subject of global volatility, onto more policy options issue based on central banks’ perspectives. Let me now wrap up by leaving you with a final remark on these issues. In the world of increased financial integration, volatility of capital flow and exchange rate is unavoidable. A sustainable path forward requires going beyond coping with capital flows to living with them. Therefore, public and private stakeholders must remain vigilant of any impacts they may have on real economy. Thailand’s approach so far has been to allow the exchange rate to act as an automatic stabilizer, while its extreme movements are carefully managed. At the same time, reforms are actively pursued with the economy’s long-term resilience as our ultimate goal.

In this respect, I note that the banking industry has drawn up a communication strategy to raise consumers awareness of its convenience, speed and efficiency and to encourage its use. A smooth functioning payment system is critical to the effective functioning of the economy. As the payment systems continue to evolve, Bank Negara Malaysia, will continue to facilitate and foster the safety and efficiency of the payment systems to safeguard public interest. To enhance the efficiency of the payment systems, Bank Negara Malaysia has recently reviewed the legal and regulatory framework of the payments system. A comprehensive legislation on the payment systems is being put in place to provide the mandate for Bank Negara Malaysia to effectively oversee and facilitate greater development of the payment systems. The legislation would also promote a conducive and liberalised environment for the modernisation of the payment systems in Malaysia. Several policy decisions have also been made. Access to the payments system has been broadened with the relaxation of the policy on the offering of payment gateway services and issuance of credit cards. Banks are allowed to operate their own payment gateways and non-banks are permitted to issue credit cards if they have established line of credit mechanism from the banks, or have set up a joint venture company with the banking institutions.
BIS Review 41/2010  3  As for dealing with consequences of capital inflows, we see the current managed float exchange rate regime as appropriate and beneficial to the Thai economy. We will continue to let the level of exchange rate be determined by market forces, but make sure that it is not too volatile to the extent that it will be too difficult for the private sector to adjust to. And to give the private sector greater flexibility to manage foreign exchange risks, last month we further relaxed restrictions on Thai direct investment abroad and on the unwinding of foreign exchange hedges. These moves, which are parts of our ongoing capital account liberalization plan, will also make our capital flows situation more balanced, by facilitating two-way foreign exchange flows. On the fiscal front, you will agree that fiscal policy is one of the key instruments to support the economy during the difficult times when private sector growth engines have been impaired. However, the stimulus packages that the government announced last year, have been done on the assumption that Thailand will face the most severe global recession in the last 60 years. But as it turned out, the global crisis was not as severe as thought. Given that our economy is on the robust recovery path, the need for stimulus may be less. And the government should also find the way to normalize the fiscal policy stance at an appropriate time.

The latest data for January also shows continuation of a broad-based economic recovery in all sectors. BIS Review 41/2010  1  •  Our manufacturing production index rose at 28.6 percent;  •  Exports grew at 31.4 percent;  •  Private consumption expanded at 4.7 percent;  •  Number of inbound tourists are now exceeding 1.6 million for the second consecutive months; and  •  Farm income has improved noticeably from mid-2009. All of these have been instrumental in reducing the unemployment rate of our economy from the peak of 2.4 percent during the crisis to a near historic low level of 0.9 percent, with some sectors such as electronics and automobile industries now starting to experience labor shortages. These are exactly the picture of the economy that we are hoping and looking for: growth that is based on confidence of consumers and investors that feel secure enough about their jobs and business prospects. So much so that it leads to the renewal of consumption and investment activities, especially the consumption of durable products such as cars, refrigerators, and televisions as well as the purchase of new home and new investment projects. Going forward, the prospect of the Thai economy remains robust. The momentum of the recovery is expected to continue into both 2010 and 2011.