samchain/econo-pairs-v1 huggingface dataset:
This requires banks to have a finger on the pulse of the economy, to closely observe the micro transformations that are taking place, and to keep abreast of future financing opportunities, particularly in new areas of growth. To this end, banks will need to think ahead and begin to invest in developing the organisational capacity to study, distill and generate innovative solutions to effectively and efficiently meet new financing needs. With the development of alternative financing such as crowd funding, P2P, private equity, venture capital, factoring and leasing, it will be imperative for banks to consider how they can complement and support these arrangements more effectively. We are living in interesting times, shaped by forces that bring to the fore contrasts in economic and financial developments. These developments have important implications on how we govern, do business and engage externally. It has never been more important for the banking industry to be more engaged, agile and responsive. I do believe that our banks are well-placed to adapt to changes going forward. It is incumbent on the banking industry to continue to strengthen its foundations and address gaps that may appear through business and economic cycles. Banks cannot be oblivious to the changing tide. Our economic prosperity is very much influenced by the ability of the industry to play its intermediating role effectively.

A current issue that has disproportionately drawn attention to banks is the affordable housing issue. Bank Negara Malaysia recently featured a box article on this subject in 2016 Annual Report. The public debate largely continues to misdiagnose or ignore the root cause of the problem, that is, affordability and accessibility, rooted by low incomes and compounded by the huge mismatch between demand and supply of affordable houses. The popular myth, is that it is all about access to financing. I am perplexed. Actual data is selfevident. It shows the continued strength in bank financing to households for the purchase of affordable homes, with four in five new housing loans extended for houses priced below RM500,000. Yet banks have done little to educate and inform the public on this financing trend. The industry ought to be at the forefront in explaining the real situation and where possible, offering suggestions to help address this issue. Affordable housing is not a problem that is unique to Malaysia. Policymakers around the world, 2/6  BIS central bankers' speeches  including in developed countries, continue to look for creative solutions to this delicate socioeconomic challenge. A common thread across these solutions is their multi-faceted dimensions. The solution for Malaysia has to involve rebalancing the supply of housing towards the affordable segments. We require a bold and pragmatic solution. We estimate a shortage of 960,000 units of affordable housing. This is projected to reach 1 million units by 2020.
And it proves that the concept of Europe is popular as long as it stops being abstract and takes the form of concrete projects. 2/6  BIS central bankers' speeches  However, during the past 20 years, the euro area has essentially forged ahead through crises, with the creation of the European Stability Mechanism – located in Luxembourg – to help Member States following the Greek crisis in 2012 or the Banking Union in 2014 in response to the Spanish or Irish crises. As it appears that a financial crisis is increasingly distant, general European interest has now waned. This is a serious problem: until now, we have not been able to properly take advantage of the more favourable economic climate in order to prevent a new crisis. And this takes me to our challenges for 2019. II. Our challenges in the face of 2019’s uncertainties A - A slowdown rather than a downturn, in a more fragile environment A word first on the economic environment. At both the global and European level, activity is decelerating, but we are still a long way from experiencing a downturn. In 2019, global growth should at best be in line with 2018’s level – 3.7% according to the IMF – subject to a downside risk. In the euro area,5 according to our latest projections, growth should come out at 1.7% compared with 1.9% in 2018. Although revised downwards, our baseline scenario remains relatively favourable. That said, at the start of 2019, we face three challenges: uncertainty, impatience and isolationism.

We should envisage that terrorist financiers will attempt to benefit from anonymous transactions made possible by innovations of new payment products and services such as internet-based payment systems, prepaid cards and virtual currencies. Likewise, fundraising through social media and other online platforms such as “crowdfunding” have increased in prominence, in addition to other more traditional sources of funds such as proceeds of criminal activities, conventional donations, and funding from legitimate purposes. As change is a constant, collation of data points that this environment will continue to persist. Global internet users have increased from 397 million in the year 2000 to nearly 3.9 billion as of June 2017, an impressive growth of almost 1000%. Similarly, global investment activities in the FinTech industry have increased from USD9 billion in 2010 to USD25 billion in 2016. If this trend is anything to go by, the financial industry will be hard pressed to mitigate, identify and prevent cases of abuse in the system. There is no doubt that rapid technological developments have offered immense potential for economic growth. Unfortunately, they have also spawned new ways for terrorist organisations to acquire, move and manage their funds. There are other risks not anticipated before, such as remote radicalisation via the internet that has resulted in an increase in the number of small terrorist cells and “lone wolf actors” that makes detecting and halting terrorism financing even more challenging. In light of this development, the role of financial sector as a bulwark against terrorists financing becomes even more critical.
According to the FSB Key Attributes, a resolution authority should not impose a moratorium on payments, settlement and deliveries related to the core functions or other critical services of the CCP (Key Attributes, Appendix II, II-Annex 1, paragraph 4.17). A short stay could however give the resolution authority time to assess the situation, determine how best to exercise its resolution powers and limit systemic disruption. See Duffie, D., and Skeel, D., “A Dialogue on the Costs and Benefits of Automatic Stays for Derivatives and Repurchase Agreements”, University of Pennsylvania Law School, January 2012. 8  BIS central bankers’ speeches  More generally, in recent months, market participants have expressed concerns that, due to the significant amount of new regulation being discussed and implemented worldwide, it is sometimes hard to get a full picture of the regulatory architecture currently being set up. I therefore believe it is important for authorities to continue to work together, as they have done since the crisis, and to assess the combined effects of global regulation on the market and on incentives to mitigate risks. An example of this type of cooperation is the work carried out by the OTC Derivatives Assessment Team, which brings together representatives of several regulatory committees, and which published a report in 2014 examining the incentives for central clearing in the current regulatory landscape.18 Part of this work will involve looking at how regulations applied to CCPs interact with those applied to other entities in the financial system, namely banks.

The relationship between the incumbents and insurgents has been sometimes competitive but often collaborative – and both have been good for the ecosystem. We adopted a multi-pronged strategy to build what is now regarded by many as one of the most vibrant FinTech ecosystems in the world. First, a conducive regulatory approach that facilitates innovation while managing risks: simplifying rules; selectively easing licensing criteria; providing guidance on new areas like cloud computing, robo-advisers, and digital tokens; adopting activity-based regulation right-sized to the risks posed, as in our Payment 1/5  BIS central bankers' speeches  Services Act; and allowing experimentation through regulatory sandboxes. Second, the digital infrastructure necessary for the adoption and proliferation of new technologies: a 24/7, real-time electronic payment system; a national digital identity and trusted data architecture that allows seamless online authentication and financial transactions; digital platforms to connect businesses, financial institutions, and FinTech firms: matching buyers and sellers through, for example, Business sans Borders; and matching problem statements and solutions through, for example, the API Exchange (or APIX); cross-border data and digital connectivity agreements and frameworks; and Project Ubin - a blockchain based prototype platform for cross-border payment and settlement in different currencies on the same network – faster and cheaper than conventional cross-border payment channels.
But there is more to be done, and it is a long-term project. It is also necessary to drive home the point that bank directors’ role is not only to maximise short-term profits; as the system is currently structured, bank directors are also guardians of public goods as represented by joint financial market infrastructure. The third is financial literacy. A number of studies show that increased financial literacy enhances financial market stability, monetary policy transmission, and understanding of monetary policy actions. This is why the Central Bank has participated in and supported the preparation and implementation of Financial Literacy Week in recent years and intends to continue doing so. It so happens that Financial Literacy Week is underway right now. The fourth topic is discussion of what type of financial system we need and want as we emerge from the aftermath of the financial crisis. That includes the international aspect of the system, the scope of the system, and whether we need to shelter our infrastructure even more from risk-taking than we have already done with recent and planned reforms, including forthcoming legislation on insolvency and winding-up of financial institutions. In this context, there are other options available than the complete separation of commercial banking from investment banking. After important steps concerning capital account liberalisation are complete, which will be soon, there will be opportunities to say more about these topics and others. And now I have come to the conclusion of my speech today.

As central bankers, we are not isolated from the reality surrounding us, and we are committed to play our role in this historical process, particularly with regard to the smooth integration of the central banks of accession countries into the European System of Central Banks and, later , into the Eurosystem. Through ongoing co-operation, the central banks of the accession countries are being given an opportunity to familiarise themselves with the Eurosystem's mode of operation, and the Eurosystem can gain a better understanding of how these central banks operate under their respective regimes. This exchange, and the resulting establishment of a common terminology and understanding of each other's environments, will facilitate the pursuit of a common objective in the future. Thank you for your attention. BIS Review 84/2001  5
The Riksbank has the sole right to issue banknotes and coins in kronor. This comprises the single largest item on the liability side of the balance sheet. The size of this item is governed entirely by the general public’s demand for cash. 1  The currency assets in the foreign exchange reserve are invested in foreign fixed-income securities. Just over 90 per cent of the capital is invested in government bonds and the remainder in US agencies. 2  For further reading on the role of the gold reserve, see Henriksson (2002). 3  With the aim of counteracting a fall in gold prices, 15 European central banks agreed in September 1999 that they would regulate the sale of their gold holdings during a five-year period. This agreement was renewed in 2004. 4  For a detailed survey of the Riksbank’s steering interest rate system, see Otz (2005). 5  This works by means of the Riksbank selling kronor for euro on the spot market and investing the euro on deposit. At the same time, a forward agreement is made to repurchase the kronor up to six months later. Forward agreements are signed to eliminate currency risks. The average duration in the swap portfolio should be three months. BIS Review 33/2006  1  We also need our own capital in order to cover losses that may arise in our activities.

17  The risk of interest rates, and thereby bond prices, developing unfavourably and thereby having a direct impact on the results. This risk increases with the length of the average duration of the investments. 4  BIS Review 33/2006  Summary To summarise, the decisions I and my colleagues make regarding the focus of the Riksbank’s financial asset management ensure that the management complies with the Riksbank's statutory tasks as well as providing good earnings. These tasks require us to hold US and European government bonds to enable us to intervene in the foreign exchange market if necessary. However, we must also limit the financial risk in order to protect the capital allocated to cover potential losses in connection with a financial crisis. We try to limit currency risk, which is the entirely dominant financial risk, by choosing a currency allocation that keeps the fluctuations, as measured in Swedish kronor, low. We endeavour to meet the requirement to generate good earnings by taking credit and interest rate risks and making use of diversification effects in order to reduce any negative impact from these risks. By investing in asset types with credit risk, that is, other fixed-income securities than government bonds, we can increase the risk-adjusted earnings on our investments. This is partly because the actual earnings on assets with credit risk can be higher and partly because the earnings on different types of asset do not usually covary perfectly.
None of it is, of course, either new or original. But understanding the language of unemployment matters. Richard Rogerson, in the Journal of Economic Perspectives last year, posed the question: “Have the language and concepts developed by economists in their study of unemployment served their role of fostering clear communication of findings and allowing issues to be sharply defined?” Professor Rogerson’s conclusion, you will perhaps not be surprised to hear, was a resounding no. Neither the natural rate nor the NAIRU are terms well chosen to win friends and influence people. After all, there is nothing natural about the natural rate. Whatever we call them, it is crucial to recognise that there is considerable uncertainty about the location of both the natural rate of unemployment and the NAIRU. Even in the United States, where there appears to be no obvious trend in the natural rate, estimates of the 95% confidence interval for the NAIRU are typically from 5% to 7.5%. In the UK where both structural reforms and macroeconomic shocks have had a larger impact than in the US, the range of uncertainty is even greater. Perhaps the most honest answer to the question of what is the natural rate was that given by Milton Friedman to the Wall Street Journal in January 1995: “I don’t know what the natural rate is, neither do you, and neither does anyone else.”  The labour market and monetary policy in practice? How do these concepts affect monetary policy in practice?

In its meeting in April, the Monetary Policy Committee noted that “labour market data on quantities were signalling a tighter position than the price [earnings] data”. At that time, the Labour Force Survey and claimant count BIS Review 103/1998  –7–  measures of unemployment had both fallen below their previous troughs recorded in the spring of 1990, and were still declining. This position was evident across all categories of unemployment, as can be seen from chart 2 which shows the various measures of joblessness reported in the EPI’s Employment Audit. In addition, employment and total hours worked were rising quite strongly; recruitment intentions were at their highest level for nine years, with the level of vacancies at Jobcentres, and the average duration of these vacancies, both well above their 1988/89 peaks; and survey measures of recruitment difficulties were also at high levels. The underlying rise of the Average Earnings Index had increased to 42% by the beginning of 1997, but was little changed by the end of the year. If I had been asked to deliver the third Annual EPI lecture, rather than the fourth, the main question you might have expected me to grapple with would have been why earnings growth had not at that point risen by more, given the 1.0 million fall in unemployment and the 1.4 million rise in LFS employment since the end of 1992.
Although their profitability continued to decline in the first half of 2020, this development was driven by a further narrowing of the interest rate margin. There has been hardly any increase in value adjustments and write-downs. Moreover, domestically focused banks are not reporting any significant rise in impaired loans at present. Despite the  Page 2/4  Zurich, 17 December 2020 Fritz Zurbrügg  News conference  economic downturn, mortgage lending volume and residential property prices have also continued to increase over the last six months. However, this does not mean that domestically focused banks will remain unaffected by the economic consequences of the pandemic. Experience shows that there is typically a lag before the impacts of recessions on banks become evident. In the baseline scenario, the profitability of domestically focused banks is likely to come under further pressure. First, the anticipated deterioration in credit quality is expected to lead to increased value adjustments and write-downs on loans to Swiss companies. Second, the interest margin is expected to narrow further due to the persistent low interest rate environment. While domestically focused banks should remain profitable in aggregate, against this background, some of them are expected to incur losses. Uncertainty about the future course of the coronavirus pandemic remains high. In this context, the increased vulnerability of the domestic mortgage and residential real estate markets presents an additional risk factor for the banks.

Should the impact of the pandemic on household and corporate income be much greater than currently assumed, it could trigger a price correction in the real estate market. Equally, such declines in income could lead to a materialisation of the historically high affordability risks. Both of these developments would negatively affect the quality of the banks’ mortgage portfolios. Given these challenges, the available capital buffers of the domestically focused banks are a crucial element for their lending capacity and loss-absorbing capacity. The SNB’s scenario analysis indicates that, in aggregate, domestically focused banks would also be in a position to absorb the losses incurred under significantly more adverse conditions than assumed in the baseline scenario. Use of cash  This brings me to the last section of my speech in which I will talk about the impact the coronavirus pandemic is having on the use of cash. There are currently two main developments. For one, banknote circulation in Switzerland rose sharply during the first wave of the pandemic in spring. This increase was mainly driven by the demand for large denomination banknotes and indicates an increased desire to hold reserves in the form of cash. Second, available data on card payments and cash withdrawals from ATMs suggest that for payment purposes, cashless methods are currently being used more than prior to the pandemic, while cash is being used less. Following the easing of containment measures, the amounts paid with cards have risen above their pre-crisis level.
Using balance sheet policy, the central bank seeks to influence longer-term interest rates and thereby funding costs in a more direct manner. 3 Purchases of government or private sector bonds are intended to depress yields and push up securities prices – the so-called portfolio effect. 4 Studies from the past three or four years indicate that the portfolio effect has been in operation in both US and UK markets – bond prices have increased and long-term yields have fallen as a result of quantitative easing. 5 The aim is to achieve lower long-term yields in order to boost lending and investment. In addition to the portfolio effect, the new use of the balance sheet can have a signal effect: central banks that engage in large-scale purchases of securities to pull down long-term yields are sending a signal that the key rate may be kept low for a long period. In this sense, balance sheet policy also contributes to anchoring expectations and supporting monetary policy communication. It is not easy to say what the situation would have been without these measures. However, it is likely that central bank bond purchases have curbed the decline in output in the UK and the US. Chart: Central bank balance sheets, stylised These measures, by their nature, have an impact on central bank balance sheets – in terms of both size and composition. 2  See the Federal Reserve’s “Monetary Policy Report to the Congress”, February 2012, http:// www.federalreserve.gov/monetarypolicy/mpr_20120229_part1.htm.

The risk of inflation can only arise if growth in the monetary base coincides with an increase in the broader monetary aggregates through higher customer deposits in banks. For the broader monetary aggregates to  6  See for example speech by Federal Reserve Chairman Ben Bernanke: “Monetary Policy since the Onset of the Crisis”, the Federal Reserve Bank of Kansas City Economic symposium, Jackson Hole, Wyoming, 31 August 2012. See also speech by Spencer Dale, Chief Economist at the Bank of England: “Limits of monetary policy”, http://www.bankofengland.co.uk/publications/Pages/speeches/2012/597.aspx  BIS central bankers’ speeches  3  increase, banks must increase lending or purchase securities from enterprises outside the banking sector. Since the crisis in 2008, the monetary base in Europe and the US has grown considerably more rapidly than the broader monetary aggregates. The risk of high inflation in such a situation should be viewed in the context of central bank exit strategies. In the future, central banks will want to reverse the extraordinary measures that have resulted in substantial growth in the monetary base. This will normally be done when the crisis is over and the economy is recovering. Third, the large sums of money involved may also affect exchange rates. Even if central banks do not intervene in exchange markets directly, the measures may in the short term reduce the value of the currency issued by a central bank. This will, in isolation, strengthen exchange rates in countries that were initially less severely hit by the crisis.