samchain/econo-pairs-v1 huggingface dataset:
In doing so, we have removed a substantial part of our accommodative monetary policy, and are clearly approaching the "normalisation range", which can be estimated to be around 2% in the euro area. We should reach this level in December. 1/4  BIS - Central bankers' speeches  Beyond this, I believe that we will probably continue to raise rates, but we may do so in a more flexible and possibly less rapid manner - "jumbo" rate hikes will not become a new habit. A favourable condition to interrupt rate hikes would be clear signs of a turnaround in the core inflation trend. Faced with persistent inflation, we have therefore demonstrated our resolve to bring it down towards our target level. I will reiterate here our forecast, our commitment and our capacity: together with the Governing Council, alongside Christine Lagarde, we are going to bring inflation down towards 2% within two or three years. II. What we differ on today: fiscal measures and energy prices This is the most difficult issue today, for fundamental reasons, not just questions of timing or of personalities. The first steps towards the necessary European coordination have already been taken: taxation of 'inframarginal' electricity producers; principle of collective gas purchases. The Banque de France is not an energy specialist; I would just like to mention two shared lessons. The first is from France: fiscal measures, taken at the domestic level to help households cope with rising energy prices, may be politically necessary as well as effective in smoothing the inflation shock.

And yet, we have just emerged from a successful experience: let us recall that it was collectively considered that we Europeans were in a very bad position in March 2020 at the onset of the Covid crisis. But together we have managed to weather this crisis very well, thanks for instance to the joint purchase of vaccines and the SURE1 and Next Generation EU programmes, backed primarily by Germany and France. I will therefore venture to outline here, in the field of economics, where we will succeed together, what we differ on today, and - lastly and perhaps most importantly, what both our countries are in danger of forgetting. I. Where we will succeed together: monetary policy This shock further increased inflation, which had already reappeared during the strong post-Covid recovery. Thus, after a decade of too low inflation, and even a risk of deflation during the Covid crisis, inflation now stands at 10.7% in the euro area as a whole (7.1% in France, and 11.6% in Germany). Exogenous factors, especially energy prices (up 42%) and certain food prices, still account for half of total European inflation. Nevertheless, inflation has become more "domestic" and broad-based: core inflation excluding energy and food - has gradually increased and reached 5.0% in October, and this is precisely where monetary policy has a more direct impact. The ECB Governing Council therefore decided at the end of October to raise its key rates by a further 75 basis points, bringing the deposit facility rate to 1.5%.
In this respect, the financial crisis painfully reminded us that the worst business that can be done is to extend a mortgage loan to somebody who has little possibility of meeting the payment obligations. It is bad business for the bank, but also for the customer and for society as a whole. Particular care is unquestionably needed in granting new loans. But we must assume that, inevitably, the application of strict standards, as the Law requires, may restrict home ownership possibilities for some low-income groups. The bubble we have experienced should be a reminder to us that the alternative is much worse in the medium term for everybody. I am sure that we will agree that runaway growth in prices is the main factor that ultimately restricts the affordability of home ownership. In sum, banks perform an essential function in the economy. But to be able to provide the best service to society they must adhere to rigorous management principles, acting responsibly at all times. Conclusions. Let me conclude by once again thanking ADICAE for their invitation. I am certain this conference will be successful, giving the significance and topicality of the subjects on the agenda and the calibre of the speakers. 3  If you will allow me, I would ask that this conference, as well as discussing past conflicts, should also reflect on the banking sector’s role in support of firms and consumers in the difficult setting shaped by the COVID crisis.

This is particularly important for the common assumption that a mortgage must be arranged at the time of purchase, which means entering into a very longterm payment commitment with a credit institution. Something which, as the crisis brought painfully to light, may entail problems in the case of economic or labour market instability. Comparatively speaking, mortgage risk performed well during the previous financial crisis, despite the fact this is not always perceived as such. Defaults on house purchase mortgage loans at no point exceeded 6%. However, financing for real estate development and construction reached non-performance levels of over 36%. This demonstrates that individuals treat their monthly mortgage payments as something that is a priority, whereas the financing of these same houses before their completion and sale evidences much riskier characteristics. Yet despite this relatively good performance, the crisis showed that the mortgage market had certain shortcomings that needed correcting. Apart from the evident social and economic drama, in the final years of the crisis we experienced a bout of litigiousness and unprecedented legal uncertainty. Notably, much of this litigiousness was concentrated in the mortgage market. One paradigmatic instance of this conflict were the so-called floor clauses. According to end-August figures, more than 1.2 million complaints were lodged in this connection, with a cost for banks of almost € billion. 1  The economic and, no less importantly, reputational harm that cases such as the floor clauses have caused to the sector is evident.
It must also be accepted that the public sector cannot continue indefinitely to carry the cost of employees who are effectively redundant. A time limit must be set beyond which this burden will no longer be carried, and training and redeployment schemes should be strengthened in the meantime to facilitate the transition. Another third of government expenditures is absorbed by social security benefits, a category whose growth over time is conditioned by increases in wages and prices, demographic pressures and the need to preserve the social fabric. Along the way, however, the original priorities seem to have been lost sight of. As a result, Malta has a welfare system which is certainly generous, but which is not socially just in the sense that it does not allocate the relatively larger share of resources to those who are most in need. The time has clearly come for a radical welfare reform which reconciles the objectives of social cohesion and intergenerational equity with financial sustainability. Non-essential transfer payments, especially those which are of a universal nature and which do not represent a response to a proven need, should be cut. Means-testing in the provision of social benefits should not be ruled out on the  BIS Review 67/2004  3  grounds of possible abuse - rather, the information technology available today should be used to ensure effective implementation. Consideration should also be given to indexing all benefits to inflation, including those currently linked to wages.

The Central Bank of Malta seeks to achieve these objectives through the operation of an exchange rate peg. The Bank’s ability to maintain the peg in an environment where capital flows freely across borders, however, depends crucially on financial market perceptions regarding the effectiveness and sustainability of macroeconomic policy, particularly fiscal policy. In this context, the present deficit scenario is not helpful and, if not corrected, could oblige the Bank to raise interest rates. The role of governments How and why have fiscal deficits become a problem? In the first decades after the Second World War, governments came to play a key role in promoting economic growth and social development. In today’s free-market economies, moreover, they provide indispensable support to the activities of the private sector and also play an important role in curbing its excesses. Another function of governments concerns economic stabilisation. They can intervene to stimulate aggregate demand in periods of recession and to restrain it at times when the economy is booming. Under appropriate demand and supply conditions, such intervention can contribute to a more favourable investment environment and, in turn, to growth. Perhaps the most important tool Governments use to pursue these objectives is public expenditure. Taxation and borrowing may be viewed as ways of financing such expenditure, but they also constitute important tools in their own right. Effectiveness of government intervention Government intervention in the economy has important implications not only for competitiveness and growth, but also for the promotion of the social dimension of development.
Essentially, it is a question of making households and the financial system less sensitive to shocks. One measure that immediately comes to mind is a change in the amortisation culture. If households amortise their mortgages to a greater extent, the debt ratio will decline. If, moreover, this means that households adjust their savings and use some of what they save now to pay off their loans instead, we hopefully will not need such major changes in consumption. The real economic consequences could be limited, at the same time as indebtedness and the risks linked to it could be held in check. The most natural thing would be for the banks to require that customers amortise their first loans. As a direct effect, the stock of existing mortgages would then decline. This would, moreover, give households stronger incentives to borrow less. This type of requirement would be reasonable and something that is considered self-evident in many parts of the world. International coordination on stability issues So far I have talked about macroprudential policy and monetary policy and the potential effects of the measures taken from the perspective of an individual country. But there is also a world outside that each country needs to relate to. With regard to financial stability issues, there has long been extensive international cooperation. There are a number of forums in the central banking and financial supervision circles in which issues are discussed, and some of them draw up regulations and standards in the financial stability field.

Taking these in turn, data form the core of all AI models and good data management and data governance are essential in controlling issues with, for example, biases that may be embedded in the data. At the model level, we need to think about issues such as ensuring that models continue to perform under a wide range of different conditions and being able to explain the outputs of complex AI systems. Moving to the firm level, some of the key issues will revolve around risk management and governance structures; around accountability and appropriate controls. And finally, for the financial system as a whole, AI may amplify network effects such as unexpected changes in the scale and direction of market moves. In terms of the regulatory challenges, it’s clear that policy thinking in this arena is also evolving rapidly. But the existing regulatory landscape is somewhat fragmented when it comes to AI, with different pieces of regulation applying to different aspects of the AI pipeline, from data through model risk to governance. Policy must strike a balance between high-level principles and a more rules-based approach. We also need to future-proof our policy initiatives in a fast-changing field. With all that in mind, and in order to further our objective of promoting the safe adoption of AI in financial services, the Bank of England, along with the Financial Conduct Authority, is today launching the Artificial Intelligence Public-Private Forum.
However, the purchasing managers’ index has fallen more than expected, which indicates that the slowdown may be greater than estimated (see Figure 10). The labour force survey statistics show that the labour market continued to improve in June. Employment rose by just over 2 per cent, compared with the same month last year, and unemployment fell, when seasonally-adjusted, to 7.5 per cent. This was a marginally smaller  2  See Carmen M. Reinhart and Kenneth S. Rogoff, “This time is different: eight centuries of financial folly”, SNS, 2010. BIS central bankers’ speeches  3  improvement than we were counting on in July (unemployment 0.1 of a percentage point higher). CPI inflation was 3.3 per cent in July. CPIF inflation (1.6 per cent) and CPIF inflation excluding energy (1.1 per cent) were much lower. All of these outcomes were marginally (0.1 of a percentage point) lower than expected. I said at the monetary policy meeting in July that there was still a risk that inflation would increase more than we were expecting, particularly in 2012 and 2013. This was partly because inflation had recently been held back extra hard by the strengthening of the krona. I also pointed to the risk of rising energy and commodity prices in the world market, higher wage increases than expected due to pressure in the labour market, and higher inflation and wage expectations due to the high CPI inflation. But so far, inflation has been marginally lower than expected and energy and commodity prices have fallen.

On the contrary, the US economy will soon have achieved the longest upward phase in the post-war era; the earlier record is due to be broken next month. While monetary policy has not, of course, been solely responsible for this, the achievement does demonstrate that a judicious interest rate increase can definitely contribute to a good economic performance, provided the sustainability of growth is taken into account. Neither should it be forgotten that in the past two years the Riksbank lowered the repo rate from 4.40% to 2.90% in connection with signs that economic activity would be checked by the Asian crisis, the suspension of Russian payments and problems connected with the American hedge fund Long-Term Capital Management. These obstacles are now out of the way. Conclusion On Thursday next week the Executive Board of the Riksbank will be having this year’s first monetary policy meeting. In the light of how we jointly consider that the economy will develop in the coming years, the six members of the Board will decide whether the repo rate is to be increased or held unchanged at 3.25% for somewhat longer. Today I have pointed to some of the factors I believe will be discussed at the Board meeting. BIS Review 6/2000  4  It will be a matter, as always, of basing the monetary policy decision on a comprehensive picture of the various indicators of economic activity and inflationary pressure that the Riksbank follows continuously.
Flow of funds data suggest that the US corporate sector is holding around $ – or 7% of total corporate sector financial assets – in cash. That has led to a reduction in US investment grade net bond issuance and an associated shortage of high-quality corporate assets, at a time when relative demand for those assets is strong. And there has also been a reduction in US T-bill issuance, amid ongoing concerns about the extension of the US government’s debt ceiling. Similarly, serious concerns about the creditworthiness of a number of euro-area sovereign issuers have led to a reduction in the quantum of euro-denominated assets perceived to be “safe”, with some US money funds reducing their exposures to European banking sectors. And a number of other structured and synthetic assets, which had been rated AAA prior to the crisis, have recently been shown to be unworthy of that accolade. 7  As described by Janet Yellen in her recent speech “Assessing potential financial imbalances in an era of accommodative monetary policy”.

Indeed, recent MI has suggested that there has been some direct lending  9  And although the aggregate US corporate sector cash position is strong, it is likely to mask significant heterogeneity in the distribution of firms, with a disproportionate share of the cash held by the largest investment grade businesses. 8  BIS central bankers’ speeches  activity to mid-sized corporates in the UK by non-bank institutions such as dedicated loan, private equity and pension funds (although the absolute amounts are still very small). Chart 13  Chart 14  Issuance of sub-investment grade corporate debt by region(a)(b)  Corporate bond valuation measure(a)(b)  Sources: Dealogic and Bank calculations. (a) Emerging economies includes Africa, Caribbean, Indian subcontinent, Latin America, Middle East, North Asia and South East Asia. “Other” includes Australasia and Japan. Includes issuance in all currencies. (b) 2011 data are to 3 June 2011  Sources: Bank of America Merrill Lynch, Bloomberg, Thomson Reuters Datastream and Bank calculations. (a) Shows the difference between actual and estimated equilibrium spreads as a percentage. Positive numbers represent overvaluation, negative numbers undervaluation. (b) Equilibrium corporate bond spreads are defined as the total estimated credit component plus a five-year rolling average of the illiquidity premia. Full details of the approach used for the decomposition of corporate bond spreads can be found in Churm, R and Panigirtzoglou, N (2005), “Decomposing credit spreads”, Bank of England Working Paper no. 253.
Many may use simple rules of thumb to form views about future inflation, such as “inflation will be equal to the target”.11 Or they may base their expectations on the views they hear expressed by others or they read about in newspapers.12 Importantly, expectations formed in this way may be relatively sticky.13 Rules of thumb are only changed when they perform poorly over a period of time. Expectations based on the views of others may be updated only occasionally. As such, it may be some time before we see the full effects of the extended period of above target inflation fully reflected in inflation expectations. Second, and more fundamentally, I worry that this binary approach to monetary policy credibility – credible or not credible, anchored or de-anchored – misses the key risk to inflation expectations. Despite some of the more lurid newspaper headlines, I don’t believe that many people think that the Monetary Policy Committee has adopted a secret aim to keep inflation above the 2% target indefinitely. Given that, I don’t find it surprising that when asked, many survey respondents have not significantly raised their expectations of inflation in the medium term. More likely, however, is that some companies and some households may look back at the prolonged period of above target inflation and infer that the Committee has perhaps become more tolerant of deviations of inflation from target. As such, inflation may be expected to return to target more gradually.

5  The sum of households’ net financial and gross housing wealth has declined by over 10% since the start of the crisis. In contrast, external estimates of the loss of supply capacity as a result of the recession, to which the fall in human capital is likely to be closely related, are around the 4-5% range. See, for example, HMT (2009) and IMF (2009). 4  BIS Review 114/2009  None of this is to deny that households’ balance sheets have been affected by recent falls in wealth. But the extent of that deterioration and hence the pressure on households to repair their balance sheets might be exaggerated by failing to take a more comprehensive view of their assets and liabilities. Nevertheless, it is clear that, even putting balance sheets to one side, the financial crisis has affected households and families in ways that have caused them to spend less. Most directly, the recession has led to a pronounced weakening of the labour market, with employment falling and incomes squeezed. The recession and the sharp rise in unemployment may also have led households to revise their beliefs about the stability of the economy and with it the predictability of their own incomes. The period from the early 1990s up to the financial crisis has been dubbed by economists as the Great Moderation. The UK economy enjoyed over 60 consecutive quarters of positive economic growth accompanied by low and stable inflation.
BIS Review 139/2007  7  8  BIS Review 139/2007  BIS Review 139/2007  9  10  BIS Review 139/2007  BIS Review 139/2007  11  12  BIS Review 139/2007  BIS Review 139/2007  13  14  BIS Review 139/2007  BIS Review 139/2007  15  16  BIS Review 139/2007  BIS Review 139/2007  17  18  BIS Review 139/2007  BIS Review 139/2007  19  20  BIS Review 139/2007  BIS Review 139/2007  21

Zeti Akhtar Aziz: Raising standards in Malaysia’s financial services industry Remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Centre of Excellence (ACE) Ground Breaking Ceremony, Kuala Lumpur, 22 February 2016. *  *  *  It is my very great pleasure to be here on the occasion of the ground breaking ceremony to the ACE – A Centre of Excellence. ACE is a very much welcomed industry led initiative to raise the level of capability and professionalism for the work force in the Malaysian financial services industry. Our financial services industry continues to be reshaped and transformed by several major forces of change that range from the new demands of consumers and businesses to the rapid advancement in technology, the global regulatory reforms and the continued globalisation of finance. On the domestic front we are also seeing the continued rapid expansion of the domestic financial services industry, and the deepening of regional economic and financial integration. Given the paramount role of the financial system in supporting our real economy we require a financial system that will best serve our economy. It not only needs to be effective and efficient and thus competitive but also robust and resilient. Going forward, operating in this highly dynamic environment will become increasingly more challenging. Today the Malaysian financial industry employs more than 150,000 people, and requires approximately 73,000 new hires over the next 10 years.