samchain/econo-pairs-v1 huggingface dataset:
Nout Wellink, President of the Basel Committee on Banking Supervision and Governor of the Central Bank of the Netherlands, quotes Charles Kindleberger, saying in his famous book "Manias, Panics and Crashes", that the "financial crises are typically a result of extended accumulation of imbalances preceded by certain exogenous shock, or structural changes in the financial system. The examples are in the changes in the political environment, new regulations and financial innovations. These changes create new possibilities, but also, uncertainties and lack of awareness of potential risks from the so-called unknown-unknowns". In such environment, says Wellink, "the traditional checks and balances can become inappropriate and can easily result in excessive risk". Really, we have faced:  2. 4  •  Fiscal and balance of payments deficits, which failed to be treated because there was no enough good will for that in the globalized world, and accordingly to discuss about the foreign exchange rates. •  Huge imbalances in the financial sector, the dimensions of which grew to explosion. While the savings rates were decreasing with a limited rise in the households' deposits being registered, the banks were filling in the gap between the retail deposits and the credit growth by using sources from the wholesale markets. For example, in England, the gap between the lending to clients and the deposits climbed from zero, in the beginning of the century, to over British Pounds 700 billion in the first half of 2008, says Sir John Gieve, Deputy Governor of the Bank of England.

This will lead to increasing the confidence in the financial system. The Basel Committee on Banking Supervision and the Board for International Accounting Standards have already undertaken certain activities. •  The regulation on determining and measuring banks' solvency deserves special attention. The appropriate level of capital is the main anchor for a stable banking system. When this issue is discussed internationally, primarily a reference is made to the New Capital Accord, the so-called BASEL II. It is being criticized even before its full implementation and therefore it is inappropriate to refer to it as one of the reasons for the current crisis. However, it is important to mention that draft amendments have already been prepared as a response to the new developments. Those are, inter alia, the following: -  Improvement of the manner of covering the risks arising from the use of structural financial products. -  Changes in determining the capital necessary for covering the risks from banks' trading portfolio, especially of those instruments characterized with lower liquidity on the market. -  Measures for reducing the effects from the economic cycles on the level of the capital requirement. The purpose is: to allocate more reserves in periods of expansion in order to provide sufficient capital for covering the losses in times of crisis. This is Spanish experience, known as "dynamic provisioning". -  Expanding of the type of data which the banks will be obliged to disclose.
The krone exchange rate is the price of our currency measured in a foreign currency. Developments in other countries are just as important for the krone as developments in the Norwegian economy. Capital flows freely and flows can change rapidly. This can spill over to exchange rates and interest rates as well as output and employment. There is a cost involved for businesses in hedging against fluctuations in the krone. A krone that is stable - but too strong - also entails social costs in the form of low activity. Likewise, a krone that is stable - but too weak - is a source of high inflation. Norway is running a current account surplus as a result of sizeable oil and gas exports. Owing to high oil prices, the current account surplus is rising this year. An increase in the current account surplus will normally result in higher net demand for the domestic currency. In Norway, however, the additional foreign exchange revenues that accrue to the Norwegian state as a result of high oil prices will be invested in foreign securities through the Government Petroleum Fund. As a result, they will not have a direct impact on the balance in the Norwegian foreign exchange market. Oil companies hold a large share of their financial capital in foreign currency, and higher revenues in these companies therefore results in an increase in capital outflows.

At its monetary policy meeting on 3 November, the Executive Board decided to leave the sight deposit rate unchanged at 1.75 per cent. At this meeting, the Executive Board did not see any clear alternatives to leaving the interest rate unchanged. In reaching its decision, the Executive Board has weighed the objective of bringing inflation back to target against the risk that output growth may eventually be too high. 6  BIS Review 67/2004
Muhammad bin Ibrahim: Malaysia’s “My Ringgit” mobile app and the use of ink staining technology for ATMs Keynote address by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Launching of “My Ringgit” Mobile Application and Ink-Stain Technology, Kuala Lumpur, 11 May 2015. *  *  *  I wish to welcome you to this event, first to launch a mobile app My Ringgit which aims to provide members of public with a tool to obtain information on the security features of our currency; and second to launch an ink staining technology as an innovative solution or approach against any attacks on our ATMs. Malaysia has one the lowest counterfeit rates in the world. Indeed, if compared to developed economies. Malaysia’s counterfeit rate is 2 per million pieces compared to development economies which range between 48 to 100 pieces to a million. Our counterfeit rate is only a fraction of the rate experienced by these countries. Most counterfeits found in circulation in Malaysia were of low quality produced using colour printers without any security features. Empirically no counterfeit notes have ever passed through the sophisticated cash processing machines used by Bank Negara or financial institutions. This is because there is a spectrum of advanced security features embedded in our currency. Nevertheless, from time to time we keep hearing cases that the general public inadvertently receive counterfeit notes in the course of doing business.

There are numerous security features but fortunately, we need to know only a few major ones to enable us to tell the difference between genuine and counterfeit notes. It would be in our interest to download and use this application so that we are able to differentiate a genuine and a counterfeit note. In the process, we will get to know and appreciate better our unique characteristics of the design and security features of our currencies. The My Ringgit application also contains useful information on the locations of the coin deposit machines of participating institutions throughout Malaysia. Users of this app will also receive a “Push Notification” message from time to time on news relevant to our currency like issuance of a new commemorative coin. Protecting our currency against being forged is critical but protecting it against being stolen is also as important. In the last few years, our ATMs have been the frequent target of criminals that has impacted the general public perception on the security of the banking industry’s ATMs. Many defective and preventive measures have been taken by financial institutions to protect the safety of ATMs such as relocating the ATMs to a safer location, strengthening the ATM security panel, installing bollards or even replacing obsolete ATMs. We are appreciative of the police who have played a significant role in improving the ATMs’ security. Bank Negara and financial institutions will always stand ready to assist the police in ensuring the security of our ATMs.
Surveys from the National Institute of Economic Research indicate that households expect rising interest rates in line with the Riksbank’s repo rate forecast. This is probably one reason why saving among households is at a historically high level. That said, however, there are a number of uncertainty factors to consider. … but major differences among different groups The aggregated figures conceal vary large differences among different households, a fact substantiated by the Riksbank’s analysis of data on individual households’ debt. 13 We can categorise households based on their indebtedness. Figure 8 shows how much an interest rate hike of 1 percentage point will subdue disposable income expressed as a percentage for all borrower households and for the most indebted. 14 For borrower households as a whole, disposable income will slow by just under 2 per cent. For the 10 per cent most indebted households, disposable income will slow by more than 6 per cent. The repo rate will be raised by about 1.5 percentage points during the three-year forecast period. See K. Blom and P. van Santen, “The indebtedness of Swedish households –-Update for 2017”, Economic Commentaries No. 6, 2017, Sveriges Riksbank. 14 The calculations only capture the dampening effect of rising interest expenses on disposable household income, as the data material does not contain details on households’ interest-bearing assets. See P. Gustafsson, M. Hesselman, and B. Lagerwall (2017), “How household cashflows and consumption are affected by higher interest rates?”, Staff Memo, Sveriges Riksbank. 12 13  10 [13]  Figure 8.

Inflation in many countries is the highest seen in decades, and central banks in many trading partner countries have responded by raising their policy rates substantially over a short time. In Norway, inflation is markedly above our 2 percent target. Twelve-month consumer price inflation was 6.5 percent in August, far higher than we expected before summer. Prices for electricity and other energy products have risen to historically high levels. But prices for a range of other goods and services are also rising faster than normal. The consumer price index adjusted for tax changes and excluding energy products - the CPI-ATE - was 4.7 percent  higher in August this year than one year earlier. Prices for both imported goods and domestically produced goods and services are rising at a fast pace. We project that inflation will remain higher for longer than envisaged in June. The tight labour market has contributed to pushing up wage growth. There are signs of higher electricity prices ahead than anticipated earlier, and we expect firms to pass on some of the cost increase to selling prices. We also believe it will take a little longer for imported goods inflation to come down to a more normal level. The Committee assesses that there is a need for a higher policy rate to bring inflation down towards the target. A higher policy rate will pull down demand for both labour and goods and services, which will have a dampening effect on price and wage inflation.
Unlike the traditional financial supervision – microprudential policy – which focuses on the risks in individual institutions, the focus of macroprudential policy is on risks in the financial system as a whole. The European Systemic Risk Board, ESRB, began its operations in 2011, with the task of identifying threats to the financial stability of the EU. However, the ESRB has no binding instruments at its disposal; it can instead issue warnings and recommendations. For instance, in January 2012 the ESRB published a recommendation to EU countries regarding national mandates for macroprudential policy. This stated that responsibility for macroprudential policy should rest with an institution or council and that this body should have control over appropriate tools to attain its objectives. The way the framework for macroprudential policy has been set up differs somewhat from country to country. As you know, we have had such a framework in Sweden now for a year, with Finansinspektionen (the Swedish Financial Supervisory Authority) having the main responsibility for the macroprudential policy tools. The new framework also entailed establishing a forum for representatives of the Government, Finansinspektionen, the Swedish National Debt Office and the Riksbank to meet and discuss questions of financial stability, what is known as the Financial Stability Council. To some extent, macroprudential policy involves taking a backward step towards a greater element of regulation in the credit market. As we see here, history has a tendency to repeat itself.

The Riksbank’s objectives and means have been influenced by developments in society Figure 1 illustrates inflation in Sweden over the past 140 years and the exchange rate regimes we have had during this period. Something that becomes clear is that even if we have now become used to a flexible exchange rate, over a long period of time a fixed exchange rate has been much more common. However, from time to time socioeconomic developments in general have led to the prevailing monetary policy regime being reconsidered. 1 As you know, Sweden has not introduced the euro as currency, but on the other hand we were part of a Scandinavian currency union between 1873 and 1924. 2 This began a period with different varieties of fixed exchange rate, which – with the exception of the First World War and a brief period in the 1930s – came to last until 1992. During 1931–1937 the Riksbank worked with a price stability target, for some years this was also combined with a fixed exchange rate. It would take another 50 years until we introduced a price stability target again. 1  This also applies to the central bank’s mandate in a broader sense. See Georgsson, M, Vredin, A. and Åsberg-Sommar, P., “The modern central bank’s mandate and the discussion following the financial crisis” Economic Review 2015:1, Sveriges Riksbank. 2  This cooperation largely came to a halt in connection with the outbreak of the First World War ten years earlier.
Some countries therefore ran persistent deficits in good times or maintained high levels of debt. But the greater imbalances in fact emerged in the private sector. Looking at the data for EMU’s first decade, imbalances in the private sector far exceeded those in the public sector. 5  Tobias Adrian, Paolo Colla and H. Song Shin (2012), “Which financial frictions? Parsing the evidence from the Financial Crisis of 2007–2009”, Federal Reserve of New York Staff Reports. 6  Schoenmaker, D. (2011): “The Financial Trilemma”, in Economics Letters, 111 pages 57–59. BIS central bankers’ speeches  3  Between 1999 and 2007, the ratio of public debt to GDP in EMU declined on average by 5.6 percentage points. But in the same period, the ratio of private sector debt to GDP increased by 26.8 percentage points. For the same period, in the stressed countries, the cumulative increase in the private debt ratio to GDP versus the public debt one, amounted respectively, to 49 and 24 per cent for Portugal, 75 and minus 35 per cent for Spain, 101 and minus 10 per cent for Ireland, 217 and 4 per cent for Greece. Private debt levels were able to increase so significantly because the integration of national markets allowed for higher borrowing from abroad and increased leverage. For instance, from 2001 to 2006 MFI holdings of cross-border securities issued by non-MFIs increased by almost 44%. And as we now know, these flows were not perfectly optimised by rational private agents.

As market participants and investors came to realize that the system was overexposed, they began to withdraw funding. Credit lines were reduced, lending terms shortened and demand shifted towards high-quality collateral. Major funding markets came under tremendous strain and experienced run-like threats, including the triparty repo market, interbank lending markets, money market mutual funds and the commercial paper market. Facing significant redemptions, money market mutual funds withdrew from wholesale funding markets, including from both secured and unsecured commercial paper programs, which further exacerbated those dynamics. The withdrawal of funding raised the possibility of fire sales of assets, which, in a vicious circle, further heightened concerns about financial exposures and accelerated investors’ flight to safe and liquid assets. Asset-backed securities markets virtually shut down as distressed asset sales by SIVs and other entities prompted sharp spikes in secondary market spreads. The fact that the regulatory structure had allowed the shadow banking system to operate with less capital and liquidity than the regulated banking system added to the stress of the situation. However, banks and other traditional financial institutions were caught up in the same dynamics. In part, their involvement reflected the connection between the banking system and the shadow banking system noted earlier. As the shadow banking system came under pressure, regulated banks had to provide funding by extending lines of credit or by absorbing assets onto their balance sheets. As such, the shadow banking system effectively collapsed onto the regulated banking system.
By early 2016 mortgage debt to income ratio had dropped to 97%. It remained around that level until Covid, due in large part to house prices growing more in line with earnings. I should make clear here that London – and to a lesser extent the South and East – was very much an outlier during this period (Chart 1). For example, in London, house prices increased by 35% and the house price-toearnings ratio rose by 200 percentage points. The market in London was probably driven by the sheer weight of demand given employment patterns. But investor flows – including from abroad – and migration may have also played a role. Nationally, however, the picture over this period is of a less active market more in line with economic growth and with households staying longer between house moves. A simple thought experiment illustrates the unusual and quiet nature of the market for the UK as a whole over this period. In Chart 2, the blue line shows the flow of new mortgage borrowing since 2000. After rising through the first half of the decade, new lending drops of dramatically during the financial crisis. The red line shows what the flow of borrowing would have looked like, if, taking house prices at their outturn levels, mortgage transactions had levelled off at their financial crisis peak rather than falling back.

That is one element of uncertainty in climate change within the gift of governments to solve, and many are working hard to do so. I will be speaking later this week at the Green Swan Conference where I will set out in more detail the work the Bank has done on climate change and where we go from here. As we look ahead to a decade that climate science tells us must deliver real climate action, I can promise you this, the Bank of England will continue to play its part. I am grateful to Zane Jamal, Ryan Barrett, Sarah Breeden, Theresa Löber, Matthew Trott, and Karen Jude for their assistance in helping me prepare these remarks.​ 1 The share of manufacturing output in GDP has fallen from around 17% in 1990 to around 9% more recently,  while the share of services has increased from around 70% to around 81% over the same period. Further details here: GDP output approach – low-level aggregatesOpens in a new window 2 See payment volume trends by type in UK Payments Market Report 2020Opens in a new window, UK Finance 3 FSB Global Monitoring Report on Non-Bank Financial Intermediation 2020Opens in a new window 4 Climate Change Act 2008 (Order 2019) 5 See Chapter 6 of The Sixth Carbon Budget: The UK’s path to Net-ZeroOpens in a new window, the Committee  on Climate Change 6 As an example of damage exacerbated by climate change – a recent study from Strauss, B.H., Orton, P.M.,  Bittermann, K. et al.
Thus, for example, compared with the figures budgeted in 2019, real investment by the State is expected to rise by 47% in 2021 (equivalent to 0.2 pp of GDP), expenditure on civil research, development and innovation by 70% (0.4 pp of GDP) and expenditure on infrastructures by 52% (0.3 pp of GDP), while expenditure on education would increase by 80% (0.2 pp of GDP) and health expenditure by 71% (0.3 pp of GDP). As I have indicated, given the magnitude of these increases and the possible delays in the process, there is a risk that they may not materialise in full. In any event, independently of the volume of the European funds mobilised in 2021, I wish to insist on the importance of the quality of management of these funds. As I have said, it is essential they be assigned to new public investment projects with a high multiplier effect on economic growth potential. In addition, considering the temporary nature of these European funds, they should not be used to defray permanent increases in expenditure, as this would simply drive up our already high structural deficit. 19  These will clearly be the key aspects to be assessed in the coming quarters, as more details of the specific projects to benefit from the NGEU programme become known. My second comments refer to the forecasts contained in the Draft Budget for certain expenditure items that have been severely hit by the management of the pandemic in 2020.

Nevertheless, even though these rules are not currently binding, any deviations that are not caused by a poor economic performance should be avoided, to minimise the possible negative repercussions for budget outturn credibility. Regarding the unemployment rate, the macroeconomic forecast contained in the Draft Budget expects it to reach 17.1% of the labour force in 2020 overall. This forecast, which is at the lower limit of the range defined in the Banco de España’s two scenarios published in September – between 17.1% and 18.6% – would, in my view, be subject to certain upside risks. Nevertheless, the most significant difference between the two sets of projections relates to the unemployment rate in 2021. Thus, while the macroeconomic forecast contained in the Draft Budget expects the unemployment rate to fall by 0.8 pp to 16.3%, under both the Banco de España’s projection scenarios it is expected to increase, by 2.3 pp under scenario 1 and 3.5 pp under scenario 2. It is important to note that these quite considerable differences cannot be explained solely by the fact that the Banco de España’s scenarios do not include the effects of the NGEU programme, because taking the Government’s estimates as reference, the implementation of that programme would entail a drop in the unemployment rate of 0.6 pp between 2020 and 2021. I will return to this question later.