samchain/econo-pairs-v1 huggingface dataset:
Indicators for credit risk and asset quality percent  percent  100  30  250  100  25  90  200  80  20  80  60  15  70  10  60  5  50  0  40  150 100  289 239  234 223  217  129  50  40 20  0  0 OSII group  Non-OSII group  Total Romanian banking sector  LCR – total LCR – EUR component cumulative market share (rhs) OSIIs – other systematically important institutions Note: Ratio of liquidity reserves to net cash outflows. The minimum required level is 80 percent. Source: NBR  Sep.14 Nov.14 Jan.15 Mar.15 May.15 Jul.15 Sep.15 Nov.15 Jan.16 Mar.16 May.16 Jul.16 Sep.16 Nov.16 Jan.17 Mar.17 May.17 Jul.17 Sep.17  120  300  NPL ratio restructured loans ratio ratio of non-performing exposures NPL coverage by provisions (rhs) Texas ratio (rhs) Source: NBR 9  Figure 13. Non-performing loan ratio The adjustment pace of the NPL ratio in the EU (September 2014 – June 2017) percent  25  percent 21.5  10  NPL ratio in Romania  8 6  20  4 2 15  0 -2 -4  7.96  10  -6 -8 -10  5  -12 -14 RO CY IE HU BG IT LT AT HR ES LV CZ SK GB DE DK BE FR PL NL FI SE LU PT GR Note: No data are available for SI, MT, EE.

In 1978, Helmut Schmidt said that “the citizens of Europe just want solutions to concrete issues".2 Nonetheless, we need a political ambition if we are to act – call it a “vision", if you wish. We need this because we have to make progress – it’s now or never: thanks to the economic recovery, and thanks to President Macron’s initial proposals at the Sorbonne, and the European chapter of the German coalition agreement – it is obviously not my place to comment on the rest of the agreement – we are enjoying historically favourable conditions. If we don’t act in 2018 – first the French and Germans, and then all 19 member countries of the euro area – we will never make headway. 2. How to strengthen the euro area: three new ideas I will now turn to my three new ideas to strengthen the euro area. In order to make genuine progress in Europe, we must first start with the real needs for corporate investment, and the resources at our disposal. In terms of needs, the key to growth in the euro area today is, without doubt, innovation. Chancellor Merkel spoke about it in Davos three weeks ago, while companies in Bavaria are well placed to recognise its importance: over the past 50 years, Bavaria has radically transformed its economy by rising to the challenge of innovation.
Such “tilt” investment strategies, which overweight high ESG stocks, and “momentum” investment strategies, which focus on companies that have improved their ESG ratings, have outperformed global benchmarks for close to a decade. More widespread adoption of such strategies is essential. At present, one of the biggest hurdles to doing so is the huge variation in the measurement of ESG.18 Common taxonomies to identify environmental outperformance, such as the EU’s Green Taxonomy and the Green Bond Standard can help but they tend to be binary (either dark green or all brown). Mainstreaming sustainable investing will require a richer taxonomy – 50 shades of green. One promising option highlighted by the UN’s Climate Financial Leaders is the development of transition indices composed of corporations in high-carbon sectors that have adopted low carbon strategies. Consideration should also be given to the new assessments by leading asset owners of how well their portfolios are positioned for a two degree target. Once again, Japan is leading the way. GPIF, the world’s largest pension fund, calculates that its portfolio is aligned to a 3.5 degree world. Allianz assesses that it is on 3.7 degree path and has committed to get to 1.5 degrees by 2050.

AXA estimates that its assets are currently consistent with a 3.7 degree path, and it has developed an innovative climate VaR model to measure the opportunities as well as risks from the climaterelated exposures of its investments.19 With our citizens—led by the young—demanding climate action, it is becoming essential for asset owners to disclose the extent to which their clients’ money is being invested in line with their values. Conclusion The TCFD provides the necessary foundation for the financial sector’s role in the transition to net zero that our planet needs and our citizens demand. 18  With the growth of different ESG measurement approaches, scores have been shown to vary greatly between providers. Barclays found positive but low correlations across all three ESG dimensions (14% for governance and 13% for environment) when comparing MSCI and Sustainalytics. Similarly, State Street Global Advisors found a correlation of 0.53 for constituents of the MSCI World Index. 19 See Axa 2019 Climate Report, available on: https://www-axa-com.cdn.axa-contento-118412.eu/www-axa-com%2F308285a0-f2094b04-9a3e-41d8df848445_axa2019_ra_en_climate_report_19_07_2019_pdf_mel.pdf. 11  All speeches are available online at www.bankofengland.co.uk/news/speeches  11  So whether the TCFD is used to manage the growing physical and transition risks from climate change or to finance the enormous opportunities to develop more resilient and sustainable economies, your work to develop the TCFD and spread its adoption is literally vital. 12  All speeches are available online at www.bankofengland.co.uk/news/speeches  12
RPI inflation has risen to 4.4%, the highest rate since December 1991. And RPIX inflation – the target which governed our decisions until December 2003 – has risen to 3.8%, which would have triggered a letter under the old target. In 1997, I suggested that “Given past experience of inflation volatility, it is likely, even allowing for the change in policy regime, that the MPC will have many opportunities to restore the lost art of letter writing to British life”. It is really very surprising that no opportunity has yet arisen. As I stressed back then, it is important to understand – and many commentators seem to misunderstand – that the inflation target is not a range of 1-3%, but a target of 2% at which the Monetary Policy Committee continually aims. So an inflation rate of 3.1% is simply a trigger for a public explanation of why inflation has risen above target and what the Committee proposes to do about it. Letter writing is a key part of the accountability provisions of the monetary policy framework created in 1997, and I would welcome the chance to demonstrate how the process is meant to work. The opportunity to write to the Chancellor did not arise last week. But since we are so close to the level that would trigger a letter, let me instead write a letter to you. Over the past year CPI inflation has risen by a percentage point, from around 2% to 3%.

In this way, they will contribute not only to the stable functioning of the institutions for which they are responsible, but also to that of the financial system as a whole. The inclusion as from last year of a chapter dealing with management aspects of the Banco de España allows me to be brief and to point out that in 2004 the branch restructuring plans, the staff renewal and redimensioning plan and the early retirement plan were completed and the negotiation of the 2002-04 collective bargaining agreement was finalised. All these reforms, which enable us to undertake appropriately our important mission and functions in the euro area, have been made possible by the effort and dedication of all the Bank’s staff, whom I thank for their attitude and their work. Finally, I express my gratitude to all the members of this Council for their inestimable support and collaboration. I would like to conclude by remembering two people whose untimely loss we suffered last year: Ángel Pardillos, who was one of the victims of the 11 March attacks, and Eugenio Domingo, who shared, at this table, many sessions of this Council, both before and after his term of office at the European Central Bank. Thank you. BIS Review 45/2005  13
Following the finalisation of the Basel III reform in December 2017, the main focus for financial regulation is no longer bank solvency, but non-bank liquidity. We nonetheless need to avoid making two mistakes. The first would be to favour one sector over another, be it banks or shadow banking: the existence of opportunities for regulatory arbitrage could to lead to the transfer of capital-intensive activities to less regulated, or even unregulated entities, which would be counterproductive. The other mistake would be to impose banking regulation on shadow banking, as the risks are not the same; in particular, the same 2/3  BIS central bankers' speeches  capital requirements cannot be applied. At the global level, the non-bank sector needs to be provided with microprudential and macroprudential regulations that are tailored to its particular business model and risks. With regard to macroprudential regulation, France is a pioneer in this field with its decision to introduce, as of 1 July this year, a measure regarding large enterprises that also takes into account their market debt. We shall publish details on how it will work this week. But we need to be honest with ourselves and admit that our experience of using macroprudential tools outside the bank sector is still very limited. One of our priorities in terms of regulation should also be to develop liquidity management tools for investment funds, and to refine the measurement of their leverage, two issues that, fortunately, the FSB has already identified.

We should stress here that, of the larger euro area countries, France has the highest proportion of market-based financing, at 40%. Non-bank financing in France totals EUR 1.748 trillion, and the leading asset manager in Europe is a French firm, Amundi. France also has an internationally recognised regulator, in the form of the AMF, while Paris is home to the European Securities and Markets Authority, ESMA. After Brexit, I also have every reason to believe that a significant share of the market activities of the largest global banks will be based in Paris. First of all, I want to put an end to the non-debate over whether market-based financeis better than bank-based finance and vice versa, and the misconception that the US system should be 1/3  BIS central bankers' speeches  replicated in Europe: working towards a balanced development of non-bank finance simply means giving companies the option of diversifying their debt financing. Fun damentally, the real debate lies elsewhere: it is about switching from debt to equity.This is crucial in advanced economies, where growth is dependent on innovation. Equity financing is better suited to the uncertainty and often long-term returns associated with innovative projects. The euro area is seriously lagging behind in this respect: equity only accounts for 74% of GDP, compared with 125% in the United States. Moreover, it only makes up half of the total external financing of euro area corporations (equity + debt), compared with three quarters in the United States.
The rational discount uses an average risk free rate from our cross sectional data sample (1.085). This is illustrated even more clearly if we consider payback periods. Under rational discounting, payback occurs in 9 years (Chart 7). Under upper bound myopic discounting, the investor today would erroneously assume that payback would never be made. These differences have the potential to alter radically project choice. The net present value of this  12  BIS central bankers’ speeches  project evaluated over 50 years falls from $ under rational discounting to a loss of $ under extreme myopia. In other words, a NPV-positive project would be resoundingly rejected. To put the point more starkly, Table 7 asks at what point in the future the residual value of a future cash-flow hits a level of 10%, 1% and 0.1% of its face value, under rational and myopic discounting. Under rational discounting, cash-flows even 50 years ahead retain more than 1% of their face value. Under strong myopic discounting, this residual threshold is reached after 25 years. Virtually zero weight – less than 1000th of the face value of the cashflow – is placed on projects with income streams much beyond 35 years. The long is dramatically shortened. This is a market failure. It would tend to result in investment being too low and in longduration projects suffering disproportionately. This might include projects with high build or sunk costs, including infrastructure and high-tech investments.

In particular, the Financial Stability Board has claimed that the problems of misconduct in some financial institutions have the potential to create systemic risks, considering the scale of the associated fines and sanctions which could run into the millions and also the negative impact on confidence. This is a serious threat that must be properly addressed. The banking business is about trust; if confidence in the financial institutions and markets is lost, the potential for finance to serve the real economy and foster growth will be undermined. In response to this threat, a new area of FSB-coordinated work has been set up. An action plan has been launched which, among other measures, explores the pivotal role played by compensation structures and, more generally, corporate governance frameworks in preventing and mitigating bad practice. The FSB is examining whether the reforms already in place, mainly as a result of principles and standards issued by the OECD, the Basel Committee and the FSB itself, have proven effective or if, on the contrary, more preventive measures are required. 5. Closing remarks  Let me conclude. Back in 2009 the FSB and other standard-setting bodies (such as the Basel Committee) received a mandate from the G20 to restore the resilience of the financial markets and make future financial crises less frequent and costly. Most of the agreed postcrisis measures are now in place and have already begun to deliver benefits in terms of bank resilience and financial stability. The Basel Committee intends to finalise the Basel III framework in 2016.
But I will also assert that, when major disruptions occur, central banks cannot always keep inflation and growth stable within a targeted range. This, in turn, is not a new insight per se, in that it adheres to the central banking consensus that monetary policy should be geared to the medium term, and that, depending on the environment, certain short-term fluctuations in output and inflation are unavoidable. Allow me to begin by providing a definition of what is meant by an independent monetary policy. A country with free movement of capital has two means of achieving monetary policy goals like price stability. First, it can peg the exchange rate of its currency to a foreign currency, thereby adopting the other country’s monetary policy. If the two economies move in parallel and the monetary policy of the other country is sufficiently stability-oriented, price stability can be imported by this means. Or, second, a central bank can pursue a monetary policy that is BIS central bankers’ speeches  1  explicitly tailored to suit the specific needs of that country. The monetary policy trilemma is that, given free capital movement, such a tailored, independent monetary policy is only possible with a floating exchange rate. Of course, as a small open economy pursuing an independent monetary policy, Switzerland is also exposed to global influences, and particularly to those from within Europe. First, trade relations are of central importance; fluctuations in consumer demand within the euro area are reflected in the exports of neighbouring countries, and influence their economies.

The most serious is the inability of these models often to fit the macro-economic facts at business cycle frequencies, particularly at times of economic stress. 24 RANK models fared poorly in capturing the dynamics of the economy either side of the global financial crisis. At the very time it was most interesting and important, these models were found wanting as a guide to the fortunes of the economy and economic policy. One response has been to develop models that relax the representative agent assumption. So-called  Heterogeneous Agent New Keynesian (HANK) models comprise distinct agents with distinct behaviours. As importantly, these models capture interactions among agents. 25 While it is heterogeneity that is often emphasized, it is interactions between agents that is most important for replicating real-world dynamics. Consider the dynamics of two very simple systems: a single and double pendulum. The single pendulum is a representative agent model. Once disturbed, its motion is regular and its distribution normal  (Figure 1, LHS). The double pendulum involves two identical representative agents which interact. Its dynamics are complex and highly non-linear and it is Power Law distributed (Figure 1, RHS). Even simple interactions among representative agents generate complex system dynamics. 22  For example, Galí (2015). For example, Kydland and Prescott (1982). Haldane (2016), Haldane and Turrell (2018). 25 For example, Kaplan, Moll and Violante (2018).
Speech by the BNB Governor, Mr. Dimitar Radev at the forum of the Association of Banks in Bulgaria on the occasion of the 30th anniversary of its foundation, 13 June 2022 Dear Ms Chairperson, Dear Mr Deputy Prime Minister, Dear Members of Parliament, Dear colleagues and guests, Thank you for the invitation. Please accept most sincere congratulations by the BNB Governing Council on the 30th anniversary of the Association of Banks in Bulgaria. I would also like to take this opportunity to thank you for your many years of support and partnership. They were demonstrated not only in our operational work, but also in solving strategic tasks for the sector and the country's economy. The ABB was founded at the beginning of a period of dramatic political, economic and social change in the country. Since then, the banks in Bulgaria and the sector as a whole have gone through various phases and periods, some of which particularly turbulent. Unlike in the beginning, the sector and the Association are now much more consolidated. People like me, contemporaries of the events of 1992, remember that there were over 70 banks in Bulgaria at the time, 47 of which became founders of the association. Today, there are 24 ABB member banks (full and associate), with a total of 25 banks and bank branches in Bulgaria. We do not need to go so far back to assess the huge changes in the sector. It is enough to take the period of the last 5 years.

Although banks have real appetite to lend, households don’t have the appetite to borrow. Credit conditions in the mortgage market are easy and mortgage pricing competitive. The share of new mortgage lending at loan-to-value ratios above 90% is approaching pre-crisis highs as the price of such lending falls relative to that on lower LTV mortgage lending (Chart 5). And yet, mortgage debt is growing no faster than the economy as a whole (Chart 6). Of course, the level of household debt is high (Chart 7). But the share of households with very high debt burdens is in fact very low. In a low mortgage interest rate environment, only around 1% of households face debt servicing costs of more than 40% of their pre-tax income. It would take a large and sudden rise in interest rates – of up to 300bp – to take that fraction of households to around it historic average (Chart 8).
Major changes have occurred in the past year, for instance in the repo rate. Time is needed to assess their effects. This also motivates a cautious line in monetary policy. 2. Employment and what monetary policy can do The low inflation in the past few years has been accompanied by respectable growth. Since 1994 economic growth has averaged 2.7 per cent a year, which is higher than the normal rate in recent decades. Given the low capacity utilisation initially, the high growth as such is not remarkable. What is more surprising - and alarming - is that a recovery of employment seems to be considerably more sluggish than the upswing in total production. The problem of generating new jobs is by no means peculiar to Sweden but something we have in common with much of Europe. The situation in this respect contrasts markedly with the United States. There are also exceptions in Europe, one being the Netherlands in the past decade. This suggests that cures for the high unemployment exist, though naturally the solutions in other countries may not apply as a whole to Swedish conditions. The high unemployment in Sweden is now a subject of intensive discussion. Today I shall try to describe in principle what monetary policy is capable of doing and what it is not in a position to achieve. Restricted potential in the longer run In an analysis of monetary policy’s potential for influencing employment it is natural to make a distinction between the short and the longer run.

Mr Chairman, learning from others, some of the obstacles facing the leasing companies, include inability to attract funding and lack of adequate leasing expertise, can be overcome through formation of synergies and partnership with other industry players. I understand in the USA, for example, over 70% of leases are actually written through lease intermediary companies or brokers, who use their specialised skills to structure lease transactions in the best way possible for the benefit of both the lessee and the lease underwriter. Lease syndications and funding partnerships with bigger players should also be encouraged as these help to spread risk and reduce pressures on balance sheets of individual leasing companies. Ladies and Gentlemen, you will agree with me that there is vast untapped potential of leasing activities in this country. There is need to develop this line of business further. A developed leasing sector is characterized by a diverse range of financial services that include factoring and trade finance, term lending, corporate finance and investment advisory services, and corporate restructuring, treasury management as well as traditional leasing activities. But this is not the case in Zambia at  2  BIS Review 17/2007  present. Currently, the leasing sector is restricted primarily to the traditional leasing activities. This seminar has thus come at the right time, as the lessons learnt are vital to complement the Government’s efforts not only to develop the leasing sector, but the financial sector as a whole.