samchain/econo-pairs-v1 huggingface dataset:
Second, when property prices were rising and there was a clear expectation that they would continue to rise, those who were responsible for lending took comfort from the possibility of second mortgages providing borrowers with funding for servicing the first, sub-prime mortgages, in the event that the borrowers encounter difficulties in their mortgage payments. Indeed, when property prices were on a rising trend, the delinquency rate of sub-prime mortgages was quite low and sub-standard financial assets were considered as good quality assets. BIS Review 139/2007  1  Third, through securitisation the lender was able to off-load the sub-standard financial assets to third parties quickly. This eroded the incentive of the lender to carefully assess the ability of the borrower to service the sub-prime mortgage. Instead, the lender was more interested in accelerating the production line in this “originate and distribute” model, earning a fee and providing other customer services. Ironically, therefore, financial innovation in the form of securitisation and credit risk transfer to those in a better position to assume risks, while it should theoretically enhance financial efficiency and promote financial stability, has led to distortions in the incentives of financial intermediaries, eroded credit standards and undermined financial stability. Fourth, the powers of financial innovation continued to work after the sub-standard financial assets got into the hands of the third parties. Slicing, mixing and re-packaging came in and the sub-prime mortgages were buried in very complex financial arrangements to become what are nicely described as Collateralised Debt Obligations (CDO), or generally as structured products.

But in some countries, notably the US and the UK, low inflation has been coupled with an unusually low degree of output volatility; and this may have encouraged an exaggerated notion of the role that central banks can play in achieving exceptionally benign outcomes, in different circumstances. Unrealistic expectations invite disappointment. And disappointment – if it dawns suddenly – is liable to have a disruptive effect on financial markets and potentially on real economies. That is the dark side. But for now, low real interest rates are supporting activity, and the main puzzle is why companies are not taking more advantage of favourable financing conditions to increase their investment – though once they do, past experience suggests that spending could rise could rise quite quickly. Let me sum up. The immediate prospects for the world economy are still robust, despite the sharp rise in oil prices. The outlook for UK weighted activity is less rosy, with relatively subdued growth in the euro area – though even here the latest business surveys are brighter than they have been for some time. The UK is fully exposed to the impact of more adverse world pricing trends, notably higher oil prices. And there are some significant risks, with considerable uncertainty about oil prices. This outlook could provide some support for a rebalancing of the UK economy. But there is no guarantee of that. The MPC may face some hard choices in the coming months.
Given the exceptional nature of the circumstances that would justify a CCoB release we would seek to limit the duration and scope of the distribution restrictions to the minimum required to address the risks faced. This would be dependent on the severity of the shock and the level of  Page 6  uncertainty that the banking system might have to face. [15] Enough said on capital buffers. I expect the debate on this to continue at the Basel Committee and the Financial Stability Board (FSB). Let me now turn to liquidity buffers. Liquidity framework and liquid assets usability The global financial crisis exposed the lack of sufficient liquidity in banks’ balance sheets and led to regulatory reform, including the introduction of the Liquidity Coverage Ratio (LCR), which enhances the resilience of banks to short-term liquidity runs. [16] Alongside the LCR, the net stable funding ratio (NSFR) was also introduced to ensure that banks maintain a stable funding profile over a longer horizon in relation to the composition of their assets and off-balance sheet activities. Following these reforms, we find ourselves in a much better place than before the global financial crisis. Liquidity regulation has helped banks to build strong liquidity buffers that can be used to absorb shocks. A decade after the onset of the financial crisis, liquid assets accounted for 17.2% of major UK banks’ total assets – more than double the level in 2007. Similarly, banks’ reliance on short-term funding reduced substantially – falling by more than three quarters over the same period.

We know that the LCR can be volatile during times of liquidity stress and market volatility, with changes in the ratio not necessarily reflecting a bank’s true liquidity position. Indeed, it is possible for the LCR to fall relatively more sharply than HQLA. For example, under the historical Lookback Approach (HLBA) methodology, when a bank faces an unusual outflows of derivatives variation margin, net outflows can increase while HQLA falls. [30] Another issue is banks’ potential market obligations to notify debt investors in the event of LCR falling below 100%, due to local capital market transparency regulations. In addition, discussions with firms highlight concerns that if banks report a fall in their LCR they may get a credit rating downgrade. This is despite the fact that LCR plays a fairly limited role in the methodologies of most credit rating agencies, which typically consider a much wider set of information. [31] Nonetheless, fears of adverse market reaction appear to induce banks to seek to quickly rebuild their LCR levels, in the event that the levels do fall. Concerns around disclosures may be especially problematic for banks that disclose spot (rather than average) LCR levels, due to the greater volatility and sensitivity of spot LCR rates compared to an averaged metric. Basel III policymakers were aware of this risk. This is why Basel requires disclosure of average LCRs only. However, in some jurisdictions, including the EU and UK, some banks voluntarily disclose their spot LCRs. Fourth, there is uncertainty about the future.
Banks have improved their capital positions and profitability since the euro area crisis, and the stock of non-performing loans continues to decline at a moderate pace. But further improvements are needed in parts of the banking sector if banks are to achieve sustainable rates of return. In particular, overcapacity and cost inefficiencies weigh on many banks’ long-term profitability prospects. The better performance of some banks within the euro area, and in jurisdictions facing similar economic and financial conditions, illustrates the importance of addressing structural issues. The current interest rate environment has various implications for the resilience of the banking sector. Banks have benefited, and will continue to benefit, from the lower credit risk for borrowers, and from the higher asset valuations associated with lower interest rates and 1/2  BIS central bankers' speeches  better macroeconomic outcomes. This has helped support bank profitability across the euro area since the deposit facility rate turned negative in 2014. However, the negative interest rate policy also entails costs for banks, and these could increase the longer negative rates are in place, the lower policy rates are set and the larger the amount of excess liquidity held by banks. These vulnerabilities could crystallize if economic growth is much weaker than expected, or if weak growth persists for longer than expected. We thus welcome the measures taken by the banking sector in recent years to improve resilience, and support efforts to further strengthen resilience while conditions are benign.

Not least, Islamic banking continues to grow  1/4  BIS - Central bankers' speeches  further with more institutions adopting an Islamic-first strategy. With the growth of the assets comes the demand for corresponding Shariah-compliant investing and treasury services. These factors point to another area where we believe to be important in further advancing Malaysia as an international Islamic financial centre. The development of a vibrant Islamic financial market, in particular the ringgit Islamic financial market. Currently, Islamic money market volume already accounts for 38% of the total turnover in the money market while total trading volume has increased steadily over the years to RM5.9 trillion in Islamic money market as at end of 2021 (2020: RM4.91 trillion). Commodity Murabahah has been the predominant instrument in the Islamic money market with a 92.7% composition, followed by Qard Acceptance (5.6%), Negotiable Instrument of Deposits (1.2%) and others3. The overall bond market (including sukuk market) continued to grow with outstanding bond and sukuk growing at 8% in 2021 to RM1.7 trillion4. Turnover of debt securities and sukuk remained robust at RM1.87 trillion as of end-2021, with average daily secondary bond trading volume of RM3.8 billion. To date, Malaysia remains the biggest global sukuk market with a share of 52% of total outstanding sukuk and 42% share of global sukuk issuances as of end-20215. These are very good achievements - a strength that we can further build upon.
This attack led to a rapid spike in food, energy, and commodity prices, and in inflation, jeopardising monetary and financial stability on global and national levels. At the same time, prevailing uncertainty, erosion of purchasing power and tighter financing conditions worsened the world economic outlook. Albania, as a small and open economy, is also experiencing these trends. The external shock was reflected in heightened uncertainty, higher costs of production for enterprises, increased cost of living for households, and an overall rise in interest rates. The external shock had a considerable impact on prices. Average inflation jumped to 6.7% in 2022 from an average of 2.0% in 2021. First, foreign prices fuelled this upsurge, coupled then increasingly by a rise in production costs and inflationary expectations in Albania. Thus, overall inflationary pressures started to appear more broadly and with increasing persistence. These features were reflected in a rapid upsurge in core inflation during 2022. This indicator is the best barometer of more persistent inflationary pressures. In this new economic environment, within our legal mandate of price stability, the Bank of Albania has embarked on the process of normalising our monetary policy stance. The increase in the interest rate to 2.75% as at end of 2022, from 0.5% at the beginning of 2022, led to the realisation of this normalisation.

I would also like to emphasise, that the normalisation speed in Albania has been lower than that implemented by our trading partners, due to the fact that fiscal policy has followed a consolidating trend throughout 2022, while a strengthening of the exchange rate has restrained transmission of imported inflationary pressures to the domestic market. The increase in key interest rates throughout 2022 and going forward, in the absence of these factors, would have been faster and more aggressive. Third, even with the presence of normalisation, the overall stance of monetary policy continued to remain accommodative for boosting both consumption and investments, as it provides better financial conditions for a more balanced performance of aggregate demand and supply in economy. The monetary policy has been transmitted smoothly across financial markets. Its transmission to the interbank market has been immediate and complete. It has been rapid to the government securities market, and it still continues to the deposits and credit market. Nevertheless, despite increasing interest rates, credit flows continue to remain positive and the Albanian banking sector continues to provide necessary funds to the economy for expanding activity and for meeting liquidity needs. The volume of credit to the private sector grew by 12.3%, on average in 2022, while credit portfolio quality remained at good levels, and the non-performing loans ratio stood at the lowest levels in the last decade. The financial sustainability of the banking sector and its positive approach towards lending was conducive to the continued support of the economy with funding.
A number of studies have related interpersonal and institutional trust to lower transaction costs, social cohesion and wellbeing. Second, trust is a livelier concept, which can respond to information and experience acquired by stakeholders, as compared to the more static notion of credibility. Trust is not an abstract concept, but an attitude developed by actual people based on their beliefs, information and actual experiences. Third, by focusing on stakeholders, trust can help institutions to pay closer attention to their environment, changes in social values and standards, thus reinforcing their end beneficiaries rather than structures or procedures. This may be especially important for technocratic and independent organizations, like central banks, that may tend to isolate themselves despite mandates in the general interest. Finally, as we will see below, recent work shows that trust can be deconstructed into a series of components that can be linked to institutional actions. This may provide a stronger lead to how trust can be protected, built, or eroded. In what remains, I will argue that public trust is the cornerstone for safeguarding central bank independence as a stable outcome of the way modern societies decide to allocate powers across institutions.3 A central bank that is not trusted is vulnerable to political pressure to deviate from its mandate, regardless of whether it is formally independent or not. It is therefore crucial for modern central banks to understand better the concept of trust, the mechanisms for fostering and maintaining it, and to think about strategies and tools for the management of public trust.

European Central Bank: Press conference - introductory statement Introductory statement by Mr Jean-Claude Trichet, President of the European Central Bank, and Mr Lucas Papademos, Vice-President of the European Central Bank, at the press conference held in Frankfurt, 1 April 2004. *  *  *  Ladies and gentlemen, welcome again to our press conference. Before I proceed, I would like to remind you that I have conveyed the Governing Council’s sincere condolences to Jaime Caruana, Governor of the Banco de España, following the terrorist attacks in Madrid on 11 March 2004. I assured him of the Governing Council’s total solidarity with the Spanish people and the Banco de España. The Vice-President and I will now report on the outcome of today’s meeting of the Governing Council of the ECB. On the basis of our regular economic and monetary analysis, we have not changed our assessment that the current stance of monetary policy remains in line with the maintenance of price stability over the medium term. Accordingly, the key ECB interest rates have been left unchanged. The low level of interest rates also provides ongoing support to the economic recovery in the euro area. We will continue to monitor carefully all developments that could affect our assessment of risks to price stability over the medium term. Let me now provide a more detailed explanation of our decision, turning first to the economic analysis.
Indeed, this gap in the regulatory framework has been demonstrated in the recent period of financial turbulence, where a number of countries have found it necessary to take extraordinary measures with regard to banks and other financial institutions in order to maintain financial stability. Today, I will try to sketch the broad features of such a resolution framework. In brief, it is a question of finding a system that makes it possible to close banks quickly and efficiently at a low cost to the deposit guarantee system, while making shareholders and uninsured creditors bear the responsibility for their investment decisions. But it must also allow for special measures to be taken in the exceptional situation where the failure of a bank risks destabilising the financial system as a whole. Also in such situations the government needs to have a strong negotiating position against the shareholders. But, first, how did I arrive at this conclusion? Well, from an analysis of the role of the banks in the economy and the safety net which has been built up around the sector. And from some  BIS Review 62/2008  1  experience from dealing with real crises. To get the right perspective, I think it is useful to start at this end. What is so special about bank failures? Bank failures have always been a problematic issue for governments.

To solve the problems, the alternative to winding up the bank and selling the assets is to convert the bank into a public limited company. We saw some examples of this, too, in the Swedish crisis, where some savings banks and other cooperative financial institutions had to be restructured. Accounting issues need to be sorted out When one gets to the point where the government takes control, there are also more practical problems to deal with. This is a stage where the assets must be inventoried and where bad loans may need to be transferred to special asset management companies. One important aspect with regard to the feasibility of a quick and efficient solution is therefore the existence of clear regulations for evaluating assets and liabilities in a situation where the government intervenes. One particular question is how to deal with a situation where the government provides support for existing operations, for instance by injecting capital or providing a guarantee. The purpose of the intervention is to save the functions and not the bank as such. However, this action can have a positive effect on the value of the bank. In principle, it is reasonable that the value should reflect the value of the operations without reference to potential government support measures. Additional legal issues So if all this has been put in place, is one home and dry? At the national level, yes. On condition of course that a number of basic conditions are met.
The external dimension of the economic imperative is further reinforced by domestic considerations. These arise mainly out of the small size of the economy and its lack of natural resources, which translate into a high degree of openness. Malta depends heavily on imports for its consumption and investment needs, and equally critically on exports to generate the foreign exchange required to service its import bill. Imports and exports each account for around 100% of GDP. Such dependence on international trade is clearly a source of vulnerability. Most business activities in Malta are thus inevitably exposed to the full force of international competition. Producers for the domestic market face import competition while export-oriented firms face an ever-tougher competitive environment as new countries enter the global market-place. In the export-oriented sector, there is a predominance of foreign direct investment that often provides the technical and marketing expertise which is a prerequisite for success. A loss of competitiveness would thus be doubly damaging. In the first instance, there would be a drop in domestic output in favour of imports and a contraction in export revenues. In the longer term, as Malta became a less profitable location, there would be a decline in new foreign investment and a consequently negative impact on growth prospects. Apart from these structural factors, the need for competitiveness is accentuated by the current phase of the economic cycle. For most of this year the world economy has been on the brink of a recession.

It is for these reasons that changes in the exchange rate level are only a last resort option for an economy like ours. It should be clear, therefore, that isolationist policies and expansionary fiscal, monetary and exchange rate measures cannot be relied upon to generate sustainable economic growth. There are indeed no easy fixes. The only viable option is to compete successfully in the global market-place. I believe that this objective should be approached by pursuing a virtuous triangle of mutually-reinforcing policies: i)  increasing the amount of resources available in the economy and the efficiency with which they are employed, by cutting costs and raising productivity;  ii)  focusing on the market niches in which we can excel;  iii)  ensuring the best international market access for our products and services. On the last of these points, there is at present a lively debate on the pros and cons of different arrangements with our main trading partner, the EU. While not wishing to enter the debate at this point, I cannot fail to observe that the uncertainty surrounding this issue is causing considerable harm to Malta’s economic prospects. It is in our common interest that the direction the country is to take be clarified as soon as possible. And this within a realisation that with Malta’s main competitors themselves seeking closer trade ties with the EU, we cannot afford to fall behind.
Japan, however, has also become an important market for Norwegian fish, and Japanese tourists spend a considerable amount of money in Norway. The previous large trade deficit with Japan turned into a surplus in 2002, even excluding oil. The current strong growth rates in Asia are boosting demand for commodities. This also influences prices for commodities that we produce. Oil prices have risen sharply since 2000. Prices for other products such as paper and aluminium have shown a flatter trend, but have picked up. Salmon prices, which are more heavily influenced by developments in Europe, have risen sharply since spring 2003 following a marked fall in 2002. The impact of increased competition from low-cost countries on the Norwegian economy Imports from China to Norway increased considerably after 2001, reflecting in part China’s membership of the WTO from December 2001. Imports from China will probably increase in the future. This in itself contributes to lower imported inflation. Moreover, inflation in Norway is restrained because the rise in prices for imports from trading partners other than China is also slowing. High economic growth in China may persist for a longer period, providing the possibility of a large market that will also be open to Norwegian firms. The enlargement of the EEA and the EU on 1 May this year will also open up new markets and sources of income for Norwegian firms, and increase the supply of labour. The transition to more open economies in Central and Eastern Europe has already had an impact on Norwegian firms.

Dear colleagues, •  Before proceeding with the presentations and discussions today, let me share a few words on the experience of the BNB which provides examples, relevant for the topic of today’s conference. •  We have seen that the compatibility of monetary, micro- and macro-prudential policies is possible in reality, and not only in theory. The BNB has successfully implemented such a policy mix for many years, during all stages of the economic cycles, before and during the recent global crisis. •  We have also seen that it may take years and perhaps at least one serious financial or banking crisis, to design and then enforce central banking policies which are optimal for a country. In Bulgaria the policymakers, legislators and the public at large came to the consensus of introducing the currency board regime and the very strict banking supervision and regulations. This happened only after our own deep financial and banking crisis which took place in the mid-1990s. Our experience has convinced us that there are no universally superior or “one-size-fits-all” frameworks. Neither in the areas of monetary policy and banking supervision, nor in the design of regulatory structures or the governance of central banks. Alongside the processes of financial integration and global regulations and practices, which are inevitable, we believe that countries should be allowed to retain sufficient levels of flexibility to apply countryspecific solutions.