samchain/econo-pairs-v1 huggingface dataset:
It is therefore important that the Riksbank’s equity is of an adequate size to retain the confidence of the financial sector. Does the Riksbank have to make a profit? Well, a profit only becomes important when it affects the balance sheet and thereby the Riksbank’s ability to carry out its tasks. The Riksbank does not need to make a profit every year, but in the long run it is important that the Riksbank does make a profit. We need to be able to build up buffers to cover our costs so that we can carry out our task regardless of the government and the Riksdag, the Swedish parliament. It is therefore important that the Riksbank is not financially dependent on them. Moreover, EU legislation requires that a central bank should have adequate financial resources to carry out its tasks independently. The main reason why I have chosen to talk about the Riksbank’s possibilities to make a profit is that it is not self-evident that the Riksbank will always report large profits year after year. The coming five-year period actually looks rather gloomy from this perspective. The low interest rates and expectations of rising interest rates further ahead mean that we share this situation with many other central banks. It is linked to the way the Riksbank has prepared itself to be able to manage its tasks in the future.

6  BIS central bankers’ speeches  system is so large and important to the Swedish economy, this cost can be considered small in relation to the costs that might arise if the banking system ceased functioning. The reinforcement of the foreign currency reserve thus reduces the Riksbank’s profits by around SEK 400 million a year. This is one of the reasons why it is has been discussed in various contexts whether the banks should contribute to the costs of the reinforcement. The Riksbank has previously argued that it would be reasonable if the banks stood for the cost of the part of the foreign currency reserve needed to manage emergency liquidity assistance5, and we will probably have reason to return to this question in the future. How can the Riksbank obtain funding in the future? By going through the balance sheet in this way, we can clearly see that the Riksbank has little opportunity to influence how it obtains funding. We have already observed that the banknotes and coins item is declining and that there is nothing the Riksbank can do about this – it is part of the technological developments taking place. With regard to foreign currency loans, I mentioned that the interest expenditure for them exceeds the income on the assets the loans fund. The Riksbank’s equity exceeds SEK 100 billion. This means that the Riksbank has a good capacity to manage potential losses. And it is important for our credibility.
A certain increase in lending is normal in an economic upswing, when companies need to borrow in order to invest, while households borrow, for example, in order to meet rising house prices. In an economic boom, loan losses are also generally low, while they tend to be higher during a recession. The increased level of indebtedness has also come under discussion. The question has been raised of whether households and companies today borrow to such an extent that this could lead to problems in the banking sector when the economic cycle turns downward. History shows us that the factor which has triggered banking crises in modern times has often been extensive loan losses caused by changes in the macroeconomic environment. This was also the case during the Swedish banking crisis at the beginning of the 1990s. Is the growth in credit worrying? So what is the situation at present? Figures for April show that total lending to the general public is up 7.3% compared with April 1999. The main growth is in household lending, which has risen by 8.8%, while corporate lending has increased by 4.1%.1 A perspective on these figures can be obtained if we consider them in relation to GDP. This gives a measure of whether lending is growing at a faster rate than the economy as a whole, which provides us with an indication of whether imbalances are being built up.

Corporate lending in relation to GDP has remained relatively constant over the last four years, and is currently far below the levels which prevailed at the end of the 1980s. The financial statements presented by companies are also currently strong, which suggests good solvency. In this context, I would also like to point out that those companies within the “new economy” that are currently very much in the news and which show weak profitability finance themselves primarily via the risk capital market and not via bank loans. This means that a possible downturn in this part of the corporate sector should only have limited direct effects on the banks. In terms of household lending, the situation is rather different. Lending to households has risen relatively strongly over the last two years and currently amounts to over 40% of GDP. It is therefore approaching the levels we saw at the end of the 1980s. However, it should be stressed that households’ interest expenses are currently lower due to the low interest rates. This rise in lending is also reflected in the household debt ratio, i.e. debts in relation to disposable income, which has risen and which now amounts to 104%. Households are borrowing to an increasing extent, at the same time as their economic situation has improved as a result of rising disposable incomes and falling unemployment.
One detailed factor that has complicated monetary policy recently is the effects on measured retail price inflation of regulated and administered prices such as above-inflation rises in utility bills, university tuition fees, rail fares etc. Individually these may be perfectly sensible public policy choices and I do not want to be interpreted as criticising their motivation. But the effect on CPI inflation is important. These prices – which are about 16% of the CPI basket – will contribute around one percentage point to the CPI inflation rate in the next couple of years, largely regardless of what happens to domestic demand. Pushing inflation down to 2% would require very low price rises in the other 84%. The risk of overall deflation is much less likely as a result. At our February meeting we faced, as so often in the recent past, a difficult choice. Should we offer more monetary stimulus, or should we not? My own choice, on a balanced assessment of the risks, was that we could and should do more now to support a nascent recovery with a further monetary injection. I do not believe the assertions of those who claim that that QE is noticeably less powerful than previously – although I have noted that there are limits to what monetary policy can be expected to achieve on real growth and it is impossible to measure the impact of monetary policy with any degree of precision. As with changing interest rates, the precise effects will always depend on the state of the economy.

The impact is also more obvious on mortgage than on corporate lending. Three quarters of total lending is to households rather than to firms, and it is easier for banks to launch new offers in that sector. In the corporate sector, we have seen banks take different approaches to SME lending: one bank offers a cash back scheme; another has scrapped arrangement fees; a third is offering guaranteed discounted borrowing costs. The true impact for corporate customers is not easily measured in “standard” interest rate data, but the potential economic benefit is there. Overall, we think there is more action to come in lower lending rates. The final stage is the impact of lower lending rates on the quantity of credit. That will take some time to work through from applications to approvals to actual lending and is the most uncertain leg. The FLS has clearly shifted the supply of credit: loans are generally available at lower cost than previously. That in itself is a monetary boost as new borrowers will be better off than they were before because they are paying lower interest rates. But whether there is more borrowing in total will depend on the demand for credit and the creditworthiness of borrowers. If firms or households, for whatever reason, are reluctant to borrow, a change in the marginal interest rate may not make much difference.
Within that limitation, the Exter Report has highlighted that “the greatest significance of the introduction of a Central Bank lies in the power of the bank consciously to influence the supply, availability and cost of money in Ceylon”. While this conscious action constitutes monetary policy, it differs from what a currency board does and even from a central bank’s creation of money through similar action by foreign exchange operations. Foreign exchange operations are compulsory and a central bank has no choice in that. When commercial banks offer foreign exchange to the central bank, it has to buy that exchange and issue local currency. But, a central bank’s credit creation through domestic operations is discretionary and voluntary. So, a central bank is in a position to regulate such money creation depending on the situation and the credit requirements of the economy. Hence, Exter did not expect the new central bank to have an open policy of creating money to finance the domestic operations. He wanted such operations to be conducted at the sole discretion of the bank. Exter also empowered the central bank to examine and supervise commercial banks in order to strengthen the banking system. Such powers would prevent banks from engaging in unsound practices, protect the depositors against bank failures and, with “lender of last resort” facility, provide liquidity in times of crises. Up to the establishment of the central bank, there was no any attempt at regulating commercial banks in Sri Lanka.

Since Singapore’s economy was small and open, “financing budget deficits through Central Bank credit creation appeared to us as an invitation to disaster” (Prudence at the Helm, p 33). About 25 years before Singapore used this wisdom, Exter argued that, given the underlying domestic production capacity, deficit financing would be an efficacious policy in developed countries that were largely dependent on foreign trade. But, it would not be the case with a developing economy. Hence, the Exter Report highlighted that, “this should serve as a warning to those who might hope that some of the policies growing out of Keynesian economics can be uncritically adapted to Ceylon”. As a safeguard, a provision was included in the Monetary Law Act prohibiting the Central Bank to engage in trade or otherwise have a direct investment in any commercial, industrial or other undertaking. In Exter’s opinion, such interests would lead to money creation, generate conflicts of interest and prevent making investment decisions based on hard-core economic principles. As such, the Central Bank’s involvement in economic activities was considered sub-optimal. It would be useful to examine whether Exter indeed proposed the necessary legal provisions in the draft bill to facilitate the new central bank to carry on business as per the advice given  4  BIS Review 92/2007  above.
BIS Review 126/2010  11  Figure 11 Actual and expected MPR (percent) 9  9  8  8  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  07  08  09  Forward, June 2010 Report FOS 2Q August 2010 MPR  10  11  0  12  Forward, September 2010 Report EES August 2010  Source: Central Bank of Chile. 12  BIS Review 126/2010

The facility for a reverse-enquiry Singapore dollar sukuk was completed in January. We have issued the first tranche to the Islamic Bank of Asia, and are reviewing applications from other banks. We have also ensured equal tax, regulatory and liquidity treatment of the sukuk with Singapore Government Securities, effective immediately. Members of the IFSB Board and the industry have been very active in developing talent. Several credible Islamic finance training providers are offering courses here. The Singapore Management University offers an undergraduate module on Islamic Law, Banking and Commerce and the Wealth Management Institute has incorporated an Islamic Finance module in its Masters of Science in Wealth Management programme. The National University of Singapore recently organized an Islamic Finance conference. These initiatives help to raise understanding of Islamic Finance among students and industry practitioners. To support professionals who wish to deepen their expertise, I am pleased to announce that beginning from this year we will sponsor students for the eligible Islamic Finance Masters programmes. MAS will continue to work towards a regulatory approach that is clear, relevant and consistent, across the range of Islamic financial activities. We are committed to working with fellow regulators, and to developing the infrastructure and talent to support the growth of Islamic Finance in Singapore. Conclusion In conclusion, we face challenging times. But the dynamism of Asia, including the Middle East, will return and the structural economic changes are likely to accelerate.
Source: TURKSTAT, CBT  The rise in inflation rates stands out to be an ongoing global trend. Elevated commodity prices have continued to exert inflationary pressures all over the world. As depicted in the slide, almost all emerging economies under inflation targeting have faced significant breaches in their inflation targets (Figure 6). 4  BIS Review 100/2008  Figure 6: Inflation and Target Bands in Emerging Economies (as of May 2008) 16 14  Inflation  Target Band  12 10 8 6 4 2  Guatemala  Costa Rica  Iceland  South Africa  Philippines  Turkey  Chile  Romania  Colombia  Czech Republic  Hungary  Brazil  Korea  Peru  Israel  Mexico  Slovak Republic  Poland  0  Source: Web sites of central banks, IFS, TURKSTAT, CBT  2. Reaction of monetary policy  Distinguished Guests and Members of the Press, After making brief remarks on the inflation developments in the previous period, in this part of my speech, I would like to touch on the policies carried out by the Central Bank during this process. In the April Inflation Report and the open letter dated April 2008, we indicated that uncertainties in the global economy, hikes in energy prices, and the risks to price setting behavior compelled the monetary policy to be more responsive to the incoming information. In this framework, they revealed a clear tightening bias against increased risk related to the second round effects of the supply side shocks.

Recent readings on domestic sales, production and confidence indicators suggest a similar outlook. At this point, I would like to remind you that the indicators regarding the course of domestic demand are presented in detail in the July Inflation Report. BIS Review 100/2008  7  Figure 8: Private Consumption (Seasonally Adjusted, Billions, YTL) 19 18 17 16 15 14 13 08Q1  07Q3  07Q1  06Q3  06Q1  05Q3  05Q1  04Q3  04Q1  03Q3  03Q1  12  Source: TURKSTAT, CBT. Data on consumer credits suggest that monetary conditions continue to be restrictive. Consumer loans have been growing at a moderate pace compared to the periods of vigorous domestic demand (Figure 9). The decline in risk appetite and the tightening in global credit conditions are likely to restrain credit expansion in the period ahead. Figure 9: Consumer Loan Growth Rate (Q-on-Q, in real terms) 80 Housing Automobile  60  Other 40 20 0  06.08  03.08  12.07  09.07  06.07  03.07  12.06  09.06  06.06  03.06  12.05  09.05  06.05  03.05  -20  Source: TURKSTAT, CBT. Overall, domestic demand conditions continue to support disinflation (Figure 10). Therefore, the underlying inflation is expected to decelerate in the medium term.
In Sweden we are now assuming that GDP will fall almost as much as during the crisis in the 1990s. At that time the crisis was domestically-generated with financial imbalances, high nominal interest rates and an overvalued currency. On this occasion much of the disruption comes from outside. Public finances are in a good condition to begin with, interest rates are low and we will probably continue to have a current account surplus. At the same time, exports are declining rapidly, which has negative repercussions on investment. Household consumption is subdued by the deterioration in the labour market and an increase in precautionary saving. The outcomes and confidence indicators in recent months emphasise the weak developments. The recession is assessed to be unusually deep, which affects the supply of credit. Although corporate borrowing is still increasing, loan terms for companies have been tightened. There are also signs that there has been some substitution from market borrowing to bank borrowing. It is the larger companies that are experiencing the biggest problems with funding in the market and taking up a rising share of bank loans, which contributes to smaller companies seeing themselves at a disadvantage. There are now clear risks that increased credit losses will subdue the banks’ lending to companies. There is also a risk that small and medium-sized companies will be pushed aside. Funding difficulties and weak international demand have led to companies revising down their investment plans. All in all, this points to the Swedish economy being weaker than was expected in February.

The programme will be rolled out next month as planned. All in all, with the support of the banking industry and the stakeholders, the CFI implementation is on track and on time. 5. Second, the HKMA has commissioned ASTRI to carry out a comprehensive study on distributed ledger technology (DLT). The very fact that DLT allows information or records to be transferred and updated by network participants in a trustworthy, secure and efficient way, carries enormous potential in its application. However, while the value proposition of DLT is gradually crystallising, the use of DLT in financial services may bring about new risks and challenges in its application. As a regulatory authority, the HKMA needs to have a better understanding of these issues before DLT can be adopted for wide application in the banking sector. 1/2  BIS central bankers' speeches  6. In this connection, I am pleased to announce that the first stage of this research project is completed and a white paper is published by ASTRI today. While the white paper affirms the good potential of DLT for application in financial services, it also highlights a number of possible issues which need to be carefully dealt with if DLT is adopted by the banking sector. For example, the decentralised model may pose some challenges for constructing an effective governance structure and oversight mechanism.
This lesson is that a single financial market with a single currency needs a single system of supervision – and alongside this, a Single European Resolution Mechanism (SRM). The SRM is an essential component of banking union. It helps break the bank-sovereign nexus by allowing banks to be resolved at the European level with minimum use of taxpayer funds. And it adds credibility to the European supervisor by providing reassurance that banks can be resolved in an orderly and efficient manner without creating financial instability – especially large cross-border banks. With the development of banking union, we are creating the conditions for a more stable financial sector in the future and a better functioning monetary union. But we also need a banking sector that takes responsibility. As supervisors, we expect the banks to be better capitalised and less leveraged, more stable and efficient, to perform their indispensable role in financing the economy and supporting the on-going, fragile economic recovery. Because the crisis of the European economy is not over. It is true that modest growth has returned in the last six months and that countries under stress have gone through a painful but successful adjustment, reducing their deficits, correcting their initial loss of competitiveness in terms of unit labour costs and even achieving external accounts surpluses. At the same time, the recession has been deep and has left unprecedented and unacceptably high unemployment.

Vítor Constâncio: Banking Union and the European crisis Opening remarks by Mr Vítor Constâncio, Vice-President of the European Central Bank, at the 6th Santander International Banking Conference, Madrid, 5 November 2013. *  *  *  Ladies and gentlemen, Thank you for inviting me to speak today at the Santander International Banking Conference that has become over the years a very relevant event. A window of opportunity is currently open for the banking sector in Europe. We have the possibility to change how the banking sector serves the economy; to implement adequate regulation and ensure its stability and efficiency; and with banking union, to reform how banks are supervised and resolved. If we make the most of this opportunity, we can put the banking sector on a sounder footing for a generation. We therefore face a profound responsibility as policymakers to get these changes right. Today’s conference includes many expert speakers who will go into detail on the on-going reforms of the banking sector. I would therefore like to use my remarks today to recall why the Single Supervisory Mechanism (SSM) was the necessary response to the crisis and how the design of the SSM is addressing some of the weaknesses in the initial architecture of EMU. The point I will emphasise is that one of the main drivers of the crisis was private imbalances financed by banks in both core and peripheral countries.