samchain/econo-pairs-v1 huggingface dataset:
Here it is the commercial banks and other private sector stakeholders that choose the best technologies and solutions. The division of roles between central banks and commercial banks results in a good balance between safety and efficiency. At the first level, the central banks facilitate the settlement of interbank transactions on secure systems and in electronic central bank money. In so doing, they minimise the risks in the systemically important segment of payment transactions, beyond which the risks can be borne by the market. At this second level, settlement can take place via alternative channels, without necessarily having to be based on central bank money. This division of roles between central banks and commercial banks epitomises our current two-tier financial system. In the first tier, the central bank acts as the banker to the banks. In the second tier, the commercial banks act as the interface to the end customers. And it is the competing commercial banks that decide which services they want to provide for companies and private individuals. This system is efficient and proven. There is much more to fintech than just DLT In connection with fintech, I have so far focused mainly on DLT. However, there is of course much more to fintech than just DLT. In addition to DLT, a whole array of promising innovations could potentially be applied to traditional financial services. We need only think of mobile payments, robo advisers, crowd lending or big data.

Looking back, it seems inevitable that the increasing breadth of financial activities undertaken by single firms would create an impetus for increased consolidation in the oversight of such activities. Of course this was the view in the late 1990s. At other points in time, indeed just over a decade after the FSA was created, it was decided that the most appropriate way to structure supervision was along separate prudential and conduct lines – the so-called “twin peaks” model. Moreover, some supervisory authorities like the PRA sit within the central bank given (in the case of the UK) the Bank’s longstanding interest in overseeing the banks that settle in its money – the clearing banks – out of which was born a system of supervision over banking and payment systems. 37  Gower, L.C.B. ’Review of Investor Protection’, Presented to Parliament by the Secretary of State for Trade and Indutstry, January 1984, p.13 38 Ibid, p.25 39 Hansard: http://hansard.millbanksystems.com/commons/1997/may/20/bank-of-england-and-financial-regulation 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  Beyond the UK, we can observe many different types of institutional arrangements. In the United States, the organisation of supervisory agencies reflects the federal system of government with supervisors at both central government and local state level. Another difference lies in the fact that many US state commissioners are publicly elected, unlike other countries where supervisors are unelected. Indeed, undertaking a stint as an insurance supervisor at the DTI during the 1980s was just another rotation for those enrolled on the government-wide civil service scheme.
Credit for house purchase posted a year-on-year fall of 2.7%, declining almost 1 pp more than in February. The yearon-year growth rate of consumer credit, which stood at 15% in February, fell as low as 2.5% in May. In June it grew by 2.3%, owing especially to drawdowns of credit facilities, since new lending continued to move on a downward path. However, in the coming months we will inevitably witness a deterioration in the credit quality of banks’ balance sheets, as a result of the sharp contraction in the income of non-financial corporations and households over recent months. Indeed, this deterioration is expected to intensify when the moratoria end or the grace period on guaranteed loans expires. The volume of NPLs in the private non-financial sector continued to fall at a year-on-year rate of 11% in June, although this was 8 pp less than the decline in February. The NPLs in banks’ business in Spain increased by 2% between March and June this year, with no major differences between firms and households. Although the increase in NPLs traditionally lags behind the onset of recessions, this increase is very contained considering the scale of the fall in GDP. Undoubtedly, the measures implemented, particularly guarantee schemes for firms and payment holidays for individuals, are significantly reducing the immediate rise in newly classified NPLs. Reclassifications of NPLs which in recent years significantly reduced the NPL ratio, have also fallen, owing to less activity in the impaired assets market.

Higher provisioning and, especially, the non-recurring adjustment to goodwill, both as a result of the expected downturn in economic conditions on account of the pandemic, were the main causes of lower profits. The losses were concentrated at the two banks with the largest international presence but profits decreased by two thirds at the other banks. In any event, banks’ recurring business has only been affected modestly to date and this is being offset partly by an adjustment to operating expenses and, consequently, they continue to gain in efficiency. 11  Therefore, the price-to-book (P/B) ratio — which compares listed banks’ market capitalisation and their book value — contracted notably in Spain, as in other European countries, by declining to levels of around 0.4, although it subsequently recovered somewhat. 12  One way of illustrating the risks to financial stability posed by the current episode is through simulation exercises which assess prospectively banks’ resilience to adverse macroeconomic scenarios. Accordingly, the ECB conducted a so-called “vulnerability” analysis – to underline their limitations compared with the usual stress tests – in order to measure European banks’ resilience to the strains triggered by the coronavirus. The results published last July show some of the risks identified.7 Specifically, based on these results, the euro area banking sector overall is positioned to withstand pandemic-induced stress, although the reduction in banks’ solvency under the most adverse macroeconomic scenarios would be significant. Furthermore, the results of this exercise show significant heterogeneity across banks.
However, its limited efficiency must be taken into account in situations where citizens are not ready or reluctant to change their habits. Research shows that even in countries on high positions in the rankings of access of individuals to the ICT, certain restraint is observed in the use of eadministration services offered to the citizens. In Denmark, for instance, it has been discovered that the reason for such restraint lies in the lack of common understanding of personal benefits that a user of e-administration services may enjoy. 7 It points to a need for improvement of related education and information campaigns. Denmark is not an exception in this respect. Promotional campaigns encouraging the use of the electronic media of communication with the public administration are being developed in many countries; some countries have already launched such activities. In Singapore, a website has been launched to enable payments for almost every public office and government agency in the country, and its users participate in weekly and monthly prize draws. 8 In Dubai another interesting solution has been employed, whereby a loyalty programme for users of online public services has been launched. Its first step includes a ten-hour training on the use of online services. The authorities anticipate to have trained 10,000 citizens and civil service employees by the end of 2006. Upon accomplishment of the training, the citizens are provided with a certificate and a loyalty card.

6  BIS Review 23/2006  A clear and publicly known vision is for sure a key element in the development of eadministration, as it demonstrates the will and engagement of the governing bodies, sets the destination and indicates the direction to reach it, and motivates all the citizens, business community and clerks to undertake amicable and creative activities. Consequently, the following questions arise: •  Do we have a vision of Poland in, for instance, 2015? •  Does the public sector ask the citizens or business community whether they are satisfied with the level of services it provides? •  Do we encourage the Poles to assist in making public services more efficient? •  Do we have a system of financial and other incentives to encourage the public servants to assume relevant attitude so that the citizens and the companies are satisfied with the public services provided? •  Do we use properly the joint potential and synergy of the private and public sectors including, in particular, the financial sector, to build an e-economy able to meet the requirements of the XXI century? •  Are we ready to change the way we act and do the things we have never done before? If the response to most of the questions is “no”, it means that we must jointly undertake activities to reduce the distance between the e-economy of Poland and that of other countries. I hope the first Congress of e-Economy will inspire us to undertake such actions.
This would institutionalize its commitment to fiscal discipline, which is essential given the country’s external debt dynamics and exposure to rating agencies and international capital markets. Further, to institutionalise the autonomy of the Central Bank, it is vital to shield monetary policy from fiscal dominance. In this regard, a strong legal and institutional mandate for the Central Bank is expected to ensure a clear separation between monetary and fiscal policy as part of the transition to the FIT. This requires phasing out of monetisation of fiscal deficits by the Central Bank. This will also pave the way to a deeper and liquid financial market which will be a catalyst for effective transmission of monetary policy actions of the Central Bank. 14  We also see the proposed Liability Management Act of the government as a prudent strategy. It allows the government to manage public debt in a more flexible manner. Under this framework, the public debt manager would create a buffer fund to minimise the rollover risk of debt stock eliminating the necessity for the Central Bank to provide financial assistance to the government at the beginning of each year as per the current provisions of the MLA. Even more importantly, it will create the space to go beyond the government’s borrowing requirement in any given year to mobilise financing to address the current bunching of external debt payments from 2019. The government’s decision to earmark the proceeds of divestitures for liability management is also a very favourable development in this regard.

6  All speeches are available online at www.bankofengland.co.uk/speeches  6  Chart 1: G4 non-residential investment weak since the crisis Percentage changes since 2007 15 United Kingdom  United States  Euro area  Japan  10 5 0 -5 -10 -15  2007  2008  2009  2010  2011  2012  2013  2014  2015  -20 2016  Sources: Eurostat, ONS, OECD and Bank of England calculations. Notes: The data for the UK, the US and Japan are for private non-residential investment; the data for the euro area include public nonresidential investment. Chart 2: Weakest UK business investment in half a century Indices, peak in GDP = 100 160 Range of previous recessions  150 140  2008 Average of previous recessions  130 120 110 100 90 80 70 60  -20  -16  -12  -8  -4 0 4 8 12 16 20 24 Quarters relative to date when GDP peaked  28  32  36  Sources: ONS and Bank calculations. Notes: The chart plots real business investment. The range includes the recessions of 1973, 1979 and 1990. 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  Chart 3: UK real business investment to GDP ratio is falling Percent of GDP 12 10 8 6 4 2  1997  1999  2001  2003  2005  2007  2009  2011  2013  2015  0 2017  Source: ONS.
But we also have to ensure the compatibility of our institutions with those in the euro area and this is the essence of institutional convergence, a process where the central bank and its independence are 1/4  BIS central bankers' speeches  particularly important. While structural convergence focuses on adapting the structure of our economy to that of the euro area, real convergence, measured by GDP per capita (at PPS) as a percentage of euro area/EU average, is the best proxy for the development level of a nation. Romania has certainly come a long way in terms of economic convergence, a process whose inception is tied to the prospects of EU membership, witnessing a significant increase in per capita GDP as a share of the euro area average (based on PPS), from 31.3 percent in 2005 to 60.4 percent in 2018. Peer countries recorded a similar trend: Bulgaria went from about 33 percent to 47 percent, while Czechia, Hungary and Poland, which started from a more advanced level, added 11 to 23 percentage points to the same indicator during 2005–2018. However, this process is still far from completion in these non-euro New Member States. Talking about real convergence, practical experience has showed us that the Eurozone is not a “convergence club”, as its members did not necessarily improve their real convergence after joining it. The euro area is not a cosy place for economies with lagging competitiveness or rigid markets.

Our commitment to join the euro area is indisputable, yet this process has to be managed in a very careful manner. 2. FINDING THE RIGHT BALANCE BETWEEN CONSUMPTION AND INVESTMENT During recent years, the contribution of investment to growth was smaller than it should have been, with consumption spending being the main driver of GDP dynamics. Welfare has increased markedly, but the concern for rendering these welfare gains sustainable should prompt a switch to policies aimed at fostering investment, thus boosting the productive potential of the economy. A short-term focus on economic policies and paying no heed to accumulating macroeconomic disequilibria ought to be avoided, as they eventually lead to suboptimal outcomes. The adequate approach is to ensure a rebalancing between consumption and investment, not by discouraging consumption, but by stimulating investment. This is also a way to reduce development gaps between Romania’s regions. Indeed, the EU accession acted as a catalyst for real convergence at country level, yet development imbalances in Romania did not decrease significantly. Romania currently has regions that are similar in terms of living standards and development levels to Western economies, while some other areas are considerably lagging behind: in 2017, the wealthiest region in Romania was almost four times richer than the poorest one (based on regional per capita GDP). Therefore, even though the EU membership has acted as a catalyst for country-level real convergence, the 2/4  BIS central bankers' speeches  development gaps across the regions of Romania have actually increased.
The left-most observation (labelled "Aug. 2016 no stimulus") is a counterfactual version of the August 2016 Inflation Report forecasts with the effect of the MPC's Bank Rate cut, Term Funding Scheme and Asset Purchases removed. See ’Lambda’, speech by Mark Carney at the London School of Economics, 16 January 2017, for further details and discussion. 19  16  All speeches are available online at www.bankofengland.co.uk/news/speeches  16  Initially, the Committee judged that balancing the trade-off between ensuring a sustainable return of inflation to target and supporting jobs and activity would require significant additional monetary support. It therefore implemented a timely, coherent and comprehensive package of easing measures, 20 which was reinforced by actions taken by the Bank’s other policy committees, most notably the FPC’s cut of the CCyB rate. 21 Collectively, these measures helped ensure domestic financial conditions remained supportive even as uncertainty rose – a contrast to usual experience. Despite this support, as well as much stronger-than-anticipated global growth and more supportive fiscal policy, UK growth significantly underperformed the MPC’s projections ahead of the referendum, which were conditioned on a vote to remain.

As a consequence, the MPC began to remove some of the policy stimulus, raising Bank Rate from ¼% to ½% in November 2017 and then to ¾% in August 2018 where it has remained since. 20  This comprised: a 25 basis point reduction in Bank Rate to 0.25%; a Term Funding Scheme to reinforce the pass-through of that cut to the borrowing rates faced by households and companies; £ billion of gilt purchases; and £ billion of corporate bond purchases. 21 The FPC cut the counter-cyclical capital buffer rate to zero, increasing credit availability by up to £ billion; emphasised that banks’ liquidity reserves are usable; and amended the leverage ratio framework for UK banks by excluding central bank reserves. The PRA Board used regulatory flexibilities to smooth insurers’ transition to new regulatory standards in a very low interest rate environment. 22 This estimate is based on the approach to construct a “synthetic” measure of UK GDP described in ‘The Economic Outlook: Fading global tailwinds, intensifying Brexit headwinds’, speech given by Gertjan Vlieghe at the Resolution Foundation, 14 February 2019. 23 Figures are for whole economy average wages excluding bonuses (“regular pay”).
History of investment policy at the SNB At the SNB, the move towards a sustainable investment policy aimed at optimising risk and return began as early as the 1970s. At that time, the management of foreign exchange reserves focused exclusively on the highest possible level of security and liquidity. Imagine a situation whereby, until 1978, a residual term of only three months was a legal requirement. As a result, foreign exchange reserves consisted primarily of short-term US dollar investments, particularly US treasury bills. This led to considerable concentration risk. At the same time, the potential return was extremely low. Despite narrow statutory provisions and market-related limitations, the SNB tried to make use of the existing room for manoeuvre as regards returns. However, it was not until after the partial revision of the NBA in 1997 that strategic importance was attached to the generation of returns. This became possible because of the abolition of the maximum residual term of one year for foreign exchange reserves, which had applied until then. A further important step towards a sustainable investment policy was the entry into force of the fully revised NBA in 2004. Although, at the time, the changes to investment policy did not attract much public attention, they were very important for the SNB’s investment activities. Within the monetary mandate, investment policy was defined as one of the SNB’s core tasks for the first time. Moreover, most statutory restrictions with regard to investment instruments were removed.

The chart is based on the same approach as in the previous slide. It is easy to see that periods of poor stock market performance correspond to an appreciation of the Swiss franc, and vice versa. When equities lose value, this generally occurs in an environment of increased uncertainty in the economy and on the financial markets. In such situations, demand for the Swiss franc is particularly strong due to its character as a safe haven. The value of our equity positions is then subjected to a double loss, first the price loss and second the appreciation of the Swiss franc against the foreign currencies in which the equities are denominated. So the diversification effect of our equity investments is diminished, to some extent, by this currency effect. We cannot safeguard ourselves by hedging an appreciation in the Swiss franc because this would be tantamount to selling foreign exchange reserves against Swiss francs, and an investment decision could thus have a monetary policy effect. This example shows how monetary policy considerations limit investment policy’s room for manoeuvre. A certain diversification effect can also exist between equities and gold. In times when uncertainty is high, the gold price often increases, while equity prices come under pressure. The opposite can occur when uncertainty decreases significantly. This was particularly evident last year, when the gold price underwent a significant correction after climbing for many years. Of course we cannot rely on this kind of diversification effect always holding. However, when it does, it is very welcome.
Third, we need to identify and explain a coherent exit strategy through which all of the unprecedented official policy actions can be unwound and which provides a bridge back to stability. 6  BIS Review 32/2009  A joint commitment to a macroeconomic stimulus – the division between monetary and fiscal measures is a matter for individual countries to determine – is required to ensure a growth of nominal demand sufficient to reverse the extraordinarily steep and simultaneous downturn in output around the world. Much has already been done. But the measures need to add up to a collective determination to support an adequate level of money spending, and will need to include actions to help poorer countries borrow either from the IMF or on world capital markets. Without that collective commitment, countries may neglect the beneficial effects that their policy actions can have on other countries, resulting in an excessively cautious approach. The G20 summit in London in two weeks time offers an opportunity and a challenge. The occasions on which the words and actions of policy-makers really matter are probably fewer than many of us care to admit. But this is one of them. And I was encouraged by an unusual sense of determination at the G20 Ministerial Meeting at the weekend to show a collective commitment to deal with our problems. In the UK we are already taking unprecedented action to boost nominal spending. The Government announced a temporary fiscal stimulus in the Pre-Budget Report in November.

It will wish to take time to reflect carefully on the Report before expressing a view. 4  BIS Review 32/2009  Given what has happened there is now international support for developing a counter-cyclical toolkit for the prudential supervision of banks. But let us be clear what such tools would have entailed had they operated in the past. They would have imposed constraints on the growth and profitability of bank balance sheets. They would have been seen as a tax on the success of the investment banking community and the City of London more generally. And that would have taken place at a time when virtually the entire weight of opinion, not only in this country but also abroad, was in favour of the expansion of financial services. Indeed, just before the financial turmoil broke out in the summer of 2007, there was a debate in New York about the need to follow London’s example of unfettered markets if they were not to lose ground. What are the lessons for central banks? With the passage of the new Banking Act last month, the Bank of England now has two objectives enshrined in statute: monetary stability and financial stability. Events of the past six months show that there are limits to what can be achieved in respect of either objective. No policy framework can, or should be expected to, stabilise output when demand in the rest of the world suddenly and simultaneously “falls off a cliff”, to use the expression heard so often in recent months.