samchain/econo-pairs-v1 huggingface dataset:
This may mean, for instance, the willingness to take progressively tougher measures where the situation warrants. This in essence is what the MAS and other agencies in Singapore have done recently on the property cooling measures. Let me add that these measures are not a substitute for banks’ own risk assessment processes. Banks should continue to maintain prudent lending practices. This includes taking into account potentially higher interest rates in their credit assessments, and not assuming that current low interest rates will last indefinitely. MAS will continue to monitor banks’ activities and practices closely. Understanding Asia 12. Asia’s growth prospects have attracted global interest and a surge of capital inflows. Asia is now the second highest contributor to global trade, and is expected to overtake Europe in a few years. China, India and Indonesia are growing rapidly, registering GDP growths more than four times that of US and Europe. The prospect of greater Asian currency appreciation has drawn greater fund flows into the region. In 2010, inflows into Asian local bond markets reached record levels. 13. However, investing in Asia is not without risks. The huge capital inflows, if left unchecked, have the potential to increase inflationary pressures and fuel asset-price bubbles. In an informal survey by MAS of 30 major fund managers, almost half cited the possibility of a hard landing of major emerging economies in Asia as a key risk. While inflows have been swift, we must be prepared for a rapid outflow as well.

Several years ago, most major investors were investing in Asia but based thousands of miles away. Today, many investors are realising that a ground presence in this time zone is necessary. The rapid structural changes of economies in Asia, the differences in the stages of economic development, in political systems, regulatory regimes and corporate governance standards mean that investors must not only understand the differences within Asia, but they have to be able to respond to swift changes in outlook, and to take into account ongoing structural changes in their assessments. In short, the ability to distinguish noise from trend is essential. Having the right risk mindset 14. Apart from responding to policy reforms and initiatives, investors and financial institutions will do well to continuously rethink and challenge the fundamental tenets of their investment and risk management tools and methodologies. To do so, it is imperative for investors to have the right risk mindset. 15. We should put once-neglected risks, such as counterparty credit risk, model risk, liquidity risk and technology risks, at the forefront of risk considerations. We have to be  BIS central bankers’ speeches  3  mindful that falling back on historical experience may not necessarily provide the guidance especially when developments are unprecedented. In this regard, boards of financial institutions play a vital role in driving the level of risk consciousness in their institutions and exercising effective risk management oversight.
23.06.17  “The challenges facing the Spanish banking industry” Closing address to the seminar “La Cuarta revolución. ¿Cómo afecta la agenda digital a la economía y a la industria?” (“The fourth revolution. How does the digital agenda affect the economy and industry?”, UIMP – APIE (Santander) Javier Alonso Deputy Governor  Good morning. It is a pleasure to be here in Santander today, at the Universidad Internacional Menéndez Pelayo, continuing the tradition for the Deputy Governor of the Banco de España to participate in the closing session of this seminar. Thank you to the University, to its Rector, to the APIE (Association of Economics Journalists) and, in particular, to Miguel Ángel Noceda, for organising this event and for his kind invitation. This year, the focus of the seminar is technological developments and, in particular, the socalled “digital agenda”. This gives me the opportunity to speak about one of the main challenges facing the banking industry (new technologies and the entry into the banking market of what are known as “fintech” companies). However, I do not wish to overlook other important challenges for the industry, such as its profitability, compliance with the new regulatory requirements (in particular on resolution) and the need to maintain customer confidence: the most important and fragile of bank assets and the fundamental basis of banking activity. 1 The Spanish banking industry In order to clarify the background, before addressing the challenges, allow me to briefly describe some of the main features of developments in the Spanish banking industry as a whole.

For instance if, in the event of resolution, and after absorption of possible losses, it is expected that the institution in question would continue to perform its critical functions, the recapitalisation component would be equivalent to the new capital requirements estimated for the institution following the resolution process. In any event, the European regulations are currently under review, and will continue to be at least into next year, so it is still too early to know the precise details of the final requirements and, therefore, to accurately estimate the issuance volumes that institutions would need in order to comply with those requirements. Also, in order to allow the markets to absorb the foreseeably high issuance volume that would be needed to meet those requirements, there is a common understanding that an appropriate transition period is essential for implementation of the MREL requirements. That said, it is clear that although their introduction will be greatly beneficial for financial stability, they may pose a significant challenge for the banks themselves, especially for small and medium-sized banks that, owing to their business model, have less experience than 5/8  their larger peers in raising funds on the debt markets. It is to be hoped that the MREL requirements will not act as a further drag on these banks’ profitability, nor place excess constraints on their business models.
It will be consisted of Governor, Vice Governors, one member to be elected from among the Board members and one member to be designated by Council of Ministers upon the proposal of the Governor. This Committee will play an important role in setting the targets and regulations, upon which the Central Bank will act jointly with the Government. However, the Central Bank will support the governments’ policies on economic growth and employment, on condition that they do not conflict with the aim of achieving price stability. The Draft-Law is removing a number of constraints of the present Law on the monetary policy actions and is bringing new facilities. The concepts of Transparency and Accountability are underlined in the Draft-Law. For example, the Governor of the Central Bank will report to the Council of Ministers and will brief the Planning and Budget Commission in Parliament twice a year on the Bank’s activities. Moreover, the Bank will disclose its monetary policy implementation to the public by means of reports and announcements. In addition to this, if by any chance inflation targets are missed or should there be a probability of failing to hit the targets, then the Bank will explain the reasons thereof to the Government and to the public. The balance sheet, profit and loss account of the Bank will be audited by independent agencies, which is another element increasing the Bank’s transparency.

I would therefore like to extend my sincere thanks to the organisers of the Sibos event for this excellent opportunity to share ideas. As home to many international organisations, Geneva is an ideal location for this dialogue. We are certain to find fertile ground here. I wish you all a successful conference with many enlightening discussions. 11  Cf. FINMA press release ‘FINMA reduces obstacles to FinTech’, 17 March 2016. Page 6/6
But I judged that removing some of the monetary stimulus was warranted. I would like to tell you that this judgement was driven by “nice” reasons. That I was confident that the recovery would continue apace. That the very low level of Bank rate reached at the depth of the recession was no longer needed. That we were in a position in which monetary policy could begin a gradual process of normalisation. But I’m afraid these nice reasons were not the factors driving my decision. In particular, I’m not at all confident about the strength of the recovery. My central view – similar to that in the February Inflation Report – is that growth is likely to be close to its average historical rate over the next few years. But that is a pretty disappointing outlook given the depth of the  Mumtaz (2007)) while others have argued this was due to better monetary policy (Batini and Nelson (2005), Nelson and Nikolov (2004)). BIS central bankers’ speeches  7  recession from which we are recovering. And there is considerable scope for growth to surprise to the downside, particularly if households retrench further. Rather, my vote to raise rates was driven by a concern that – despite a relatively weak outlook for growth – the risks to the inflation target in the medium-term were to the upside.

Andrew G Haldane: Stuck Speech by Mr Andrew G Haldane, Executive Director and Chief Economist of the Bank of England, to the Open University, London, 30 June 2015. *  *  *  Accompanying charts can be found on the Bank England’s website. The views are not necessarily those of the Bank of England or the Monetary Policy Committee. I would like to thank Will Abel, Charlotte Adams, Gareth Anderson, Daniel Beale, Will Dison, Ronnie Driver, David Elliot, Jeremy Franklin, Rich Harrison, Robert Hills, Chris Jackson, Phil King, David Latto, Clare Macallan, Holly-Ann Mansford, Jack McKeown, Rebecca Maule, Francesca Monti, Ben Nelson, Tom Pattie, Lukasz Rachel, Gareth Ramsay, Jon Relleen, Martin Seneca, Minouche Shafik, Scott Simmons, Thomas Smith, Matt Waldron, Dan Wales for their comments and contributions. Oliver Jeffers is an author and illustrator of children’s books. In Stuck, he tells the story of a boy whose kite becomes lodged in a tree. The boy makes vigorous attempts to dislodge the kite by throwing up objects, including a cat, a gorilla and an ocean-liner. (The story is fictional.) Yet the kite remains stuck. Central banks today can sympathise with the boy’s dilemma. Official interest rates in the major economies remain stuck at unprecedentedly low levels. Central banks have made vigorous attempts to dislodge them, including through special liquidity schemes, asset purchases and forward guidance. (This story is factual.) Yet interest rates remain stuck. This stickiness in interest rates has surprised both policymakers and financial markets.
5  All speeches are available online at www.bankofengland.co.uk/speeches  5  And its performance against that remit can be assessed month in month out with published inflation numbers. It can be held to account easily for delivering Parliament’s good intentions. If only it were quite so simple in financial stability. The creation of the Financial Policy Committee required two major challenges to be overcome to ensure we remained citizens in service. But overcome them we have. Let me describe how. Challenge 1: the difficulty of specifying a clear mandate  At the heart of this difficulty is a trade-off between stability and growth. A stable financial system is resilient to a range of bad shocks. It doesn’t respond to them by causing further material economic harm. But beyond a point at least, raising that resilience hampers the ability of finance to take risks and drive investment and growth in the good times. It’s possible to over-insure. So there is a balance to be struck. And it is right that Parliament should decide where it should be struck. However, a target like: “make sure the system can withstand a repeat of the 2008 recession and no more” wouldn’t work. Such a target wouldn’t be fit for purpose all the time or for all of the financial system. For some parts of the system, whose failure might not cause much economic damage, such a target might be too severe. At some times, such as after a credit boom, such a target might be too loose.

It is therefore my intention that, following a thorough and consistent review of firms’ applications, we make final decisions on all models for firms for which we are the home supervisor in early December, and communicate those decisions to firms simultaneously at that point. Firms that do not have an internal model will, of course, enter the regime on the standard formula. In conclusion, we will faithfully implement Solvency II here in the UK. We will be proportionate, and we will be robust in the pursuit of our objectives. And in doing this: •  we will not use Solvency II to increase capital requirements across the insurance sector;  •  we will not keep the ICAS regime alive; and  •  we will give firms plenty of time to adapt to the new regime. Thank you. 4  BIS central bankers’ speeches
This has encouraged both individuals and companies to take greater risks to enhance financial returns. Besides, companies have an incentive to rely more on debt than equity because many countries permit the deduction of interest expenses from tax liabilities. These are all causes of the problem of over-leveraging. 4. But there is another cause of this over-leveraging problem that I would like to draw to your attention – it is market failure. By this I mean the market had been sending out wrong signals to the borrowers, be they households, companies or governments, that increased indebtedness was nothing to worry about. A prime example is the experience of Greece. In the 1990s, the Greek Government had to pay on average 1,550 basis points above German bunds for 10-year funding from the capital market. However, after Greece joined the Eurozone, the market supplied funds to Greece at interest rates very close to the triple-A rated Germany. In 2005, 10-year Greek sovereign bonds were traded at only about 20 basis points above German bunds. Because of this extended period of serious market failure, Greek nationals and their government were under the wrong impression that they would be  BIS central bankers’ speeches  1  able to roll over their debts perpetually. Of course, we now know that such an illusion could lead to catastrophic consequences. 5. The ever increasing leverage in the US and Europe eventually came to an end following the burst of the US housing and credit bubbles in 2007, triggering the Global Financial Crisis.

This will offset the impetus to consumption and investment provided by the near-zero interest rates. 7. Some academics believe that the effectiveness of the quantitative easing policy in the US is also undermined by the fact that the US property market has not yet bottomed out and US households need to continue to de-leverage. Many policy measures introduced in the US recently aim to reduce the pain of households in a falling property market and slow down the process of foreclosures. Even though property prices have already fallen significantly, more than 50% in some places according to anecdotal reports, potential buyers still prefer to wait as they fear that prices may fall further once the huge stock of foreclosed properties are put back to the market or when interest rates return to more normal levels. In other words, while measures to slow the downward adjustment of the property market are well-intentioned and have their political merits, they could prolong the time needed for the market to reach a new equilibrium or find the so-called clearing price. In my view, this may delay a true recovery of the property market and create a negative drag on the repair of US  2  BIS central bankers’ speeches  households’ balance sheets, making the recovery of consumer confidence farther and farther away. 8. Finally I would like to share with you a few policy lessons learnt from the latest crisis:  (a)  Households, companies and governments alike must avoid excessive leverage or borrowing.
For the moment, the signs of output deceleration in the emerging world are moderate and consistent with September’s forecasts. Manufacturing production is down in some economies, and distrust has increased. Worth noting is the slowdown in Brazil and, to a lesser extent, in China (figure 2). Considering forecasts of slower global growth and its effects on the inflationary outlook, a number of central banks at both developed and emerging economies have begun to increase the monetary impulse. 2  BIS central bankers’ speeches  In Chile, these events have had limited effects. The financial market is showing somewhat tighter conditions echoing the situation in the global markets, which can be seen also in other emerging economies (figure 3). In recent months, Chile’s sovereign and corporate long-term debt premiums increased 50 and 70 basis points, respectively, mainly from August and coinciding with a reduction in investments in local bonds by international investors. After being stable for a long period, the cost of short-term bank credit rose to spreads around 110 basis points lately – 45 basis points more than in September. It is worth noting, however, that the local banking system has a diversified credit base. It recently reduced its funding from European banks, but compensated with increased funds from the United States, Canada and Asia. The higher volatility has also affected stock, fixed-income and currency markets, a phenomenon that is also present elsewhere (figure 4).

Figure 6 Inflation indicators  Incidences on monthly inflation (*)  (annual change, percent)  (percentage points)  12  12  0.8  0.8  10  10  8  8  0.6  0.6  6  6  0.4  0.4  4  4  0.2  0.2  2  2  0.0  0.0  0  0  -0.2  -0.2  -2  -2  -0.4  -0.4  -4  -4 06 07 CPI  08  09  10  11  CPI minus foodstuffs and energy  11  Apr. Jul. Oct.  Fresh fruits & vegetables (2.90%) Fuels (5.70%) Foodstuffs X1 (17.77%)  CPI  Meats (3.55%)  (*) In parentheses, shares in CPI basket. Sources: Central Bank of Chile and National Statistics Institute (INE).
Such manipulation has not come to light in Sweden, but the need to reform the reference rates has nevertheless become increasingly clear. Strengthening the interbank rate frameworks is not enough After the global financial crisis and the LIBOR scandal, extensive international work began, initially aiming to strengthen the framework around interbank rates. As a result of this work, both STIBOR and other interbank rates have changed and further changes are underway. However, as activity in the interbank market has continued to decline, it has become increasingly clear that this process of change will not be enough. The banks' judgements will still form much of the basis for the calculation. As we all know, the financial market is a confidence-based industry. As very significant sums are directly linked to the reference rates, a lack of confidence in these rates could affect large parts of the financial market and, ultimately, have negative consequences for the whole economy. Global initiatives for new reference rates There you have a brief background to me standing here today and talking about SWESTR. And it was against this background that authorities throughout the world, headed by central banks, took an active role in developing an alternative to interbank rates. The solution that soon seemed most appropriate was to move away from the system of reference rates based primarily on banks' judgements and instead calculate and publish new, fully transaction-based, reference rates.

The fact that the bond in this case is linked to STIBOR 3 months is probably due to it being the same frequency as the coupon payments. It would, of course, be impractical to have settlement and coupon payments every day. In this context, backward-looking average rates have roughly the same practical and administrative advantages as forward-looking interbank rates. As the Riksbank is now starting to publish average interest rates and indices for SWESTR, market participants can therefore start using SWESTR instead of STIBOR also at longer maturities. This is, of course, an adjustment for both lenders and borrowers, but the obstacles are hardly insurmountable. In other countries, for example, various adjustments have been introduced which mean that interest payment is delayed for a couple of days. In this way, market participants can see what the final interest was and make the payment a few days later. Market participants need to work together for an orderly transition It is thus clear that there are issues that need to be addressed before a transition to SWESTR can be completed. Since reference rates are used by many participants and in a large number of contracts, it is important that this is done in an orderly manner. It will be a development project running over several years. The Riksbank would like to call on all those concerned to start the transition now. Sweden should not be left behind in the global effort to start using transactionbased reference rates.
However, I believe Sri Lanka now faces one of its best chances since independence, to correct this situation. In particular, the country does not have a drag in terms of an internal conflict or regressive policies. Today, Sri Lanka is poised for a fresh leap of development. In that context, it is the responsibility of the Central Bank to provide a stable foundation to leverage the country’s excellent geographical location and favourable international relations to attract investment to foster more robust and sustainable growth and employment generation. Sri Lanka is twenty miles from the fastest growing large economy, India; in the middle of China’s Maritime Silk Route; and fortunate to have  At this juncture, I would like to share  excellent relations with a number of  some of my thoughts on the Sri Lankan  capital surplus countries in the world. economy in a broader perspective. Central Bank of Sri Lanka – ROAD MAP 2017  4  As I have repeatedly emphasised,  We have to establish a solid foundation  sustained growth requires  for the nation to meet the imperatives of  strengthening macroeconomic  a new economic growth model, built on  fundamentals, implementing structural  the core tenets of high value-added  reforms that increase the  entrepreneurship, creativity and  competitiveness of the economy, and  innovation to generate benefits for all  improving the business environment. Sri Lankans.

A weakness in the current criticism is that it takes the advantages I have just outlined too lightly, or in other words underestimates the benefit of maintaining confidence in an already formulated inflation target. I also think that the criticism overestimates the possibility of managing the debt and housing problem by using the repo rate. I will explain what I mean in more detail shortly. The criticism: Lower the target or accept long term low inflation It is easier to discuss the criticism if we divide it up based on the conclusions drawn from it. Different commentators have put forward roughly the same arguments in favour of the Riksbank reconsidering its policy, but they have drawn slightly different conclusions about what the consequences should be for the inflation target. Some have claimed that the inflation target is outdated or that it should be lowered. 2 Others have not gone as far, but instead said that the Riksbank should keep the 2 per cent target but accept that inflation will continue to remain below the target for a long time to come. 3, 4 My perception is that the criticism has gradually aligned itself with the latter view, but I still want to say something about the argument that the inflation target should be lowered, as that discussion is important in principle.