samchain/econo-pairs-v1 huggingface dataset:
11  The FSF was established by the G7 finance ministers and central bank governors in 1999 to promote international financial stability through enhanced information exchange and international cooperation in financial market supervision and surveillance. 12  Financial Stability Forum, 2007. 13  The Counterparty Risk Management Policy Group II (CRMPG) is comprised of senior officials from major financial institutions. 4  BIS Review 74/2007  As mentioned above, I do not see HLIs as a direct threat to financial stability. The Achilles heel of the system is the link between HLIs and banks of systemic importance. Thus, the systemic risks originating from HLIs are better addressed through indirect measures aimed at the HLIs' counterparties and creditors, which are mostly large international banks. This has the advantage that best practice guidelines are focussed directly on the transmission channels through which the risk would be propagated and on the institutions which are cornerstones from a financial stability perspective. An example of guidelines for the counterparties and creditors of HLIs is the May 2007 report by the FSF. The FSF published recommendations to address potential financial system risks relating to HLIs. The focus of the report is clearly placed on systemic risks. Investor protection issues associated with institutional or retail investments in HLIs are not addressed. The aim of the two most important FSF recommendations (no. 1 and no. 2) is to mitigate the two transmission channels discussed above: First, core intermediaries – i.e.

It is why the international community responded to the crisis in Asia by promptly offering very large amounts of official assistance - $ billion in the case of Thailand, $ billion for Indonesia and $ billion for South Korea. This kind of official assistance of course is essentially for the international financial institutions and for governments - though central banks are often the channel for bilateral financing, as the Bank of England is, for example, in the case of the UK’s contribution to the bilateral support for Korea. But such official financial help cannot be unlimited and it cannot be provided without strings. It, too, has real dangers. If it were too readily forthcoming it could encourage “moral BIS Review 49/1998  -3-  hazard”, especially by encouraging commercial lenders - particularly foreign currency creditors - in the belief that they will be bailed out if things go wrong. That would be likely to add to the problem of potentially volatile capital inflows next time around. Not surprisingly, too, there is strong political resistance in many countries, including notably the United States, to the idea that public - taxpayers’money should be used to bail out private creditors, especially foreign creditors. External financing need not come solely from the public sector. Private finance would serve the same purpose, and in many situations market price adjustments may be sufficient to stem the capital outflow.
It is therefore, imperative that all institutions provide the price of their loans in terms of the Annual Percentage Rate rather than a monthly percentage. In this way, transparency is enhanced and consumers would have a clear  BIS central bankers’ speeches  1  picture of precisely how much they need to borrow relative to their income levels. This would result in responsible lending and a more competitive and transparent microfinance industry. It is in this regard that the initiative on transparent pricing for the microfinance sector in Zambia could not have come at a more opportune time. I am informed that the Transparent Pricing initiative will offer training on transparent pricing and collect and publish data on the prices of microloans offered in Zambia. This initiative will complement the Bank of Zambia’s effort of enhancing transparency through the quarterly publication of financial charges, fees and commissions for accounts and other general services and transactions applied by financial service providers. In addition, the workshop has come at a time when the Bank of Zambia is conducting a study on “How Microfinance Institutions Determine Lending Interest Rates in Zambia”. The deliberations from this workshop will be of great benefit to the Bank and will provide valuable insights into the factors affecting interest rates in Zambia. Distinguished Ladies and Gentlemen, one of the reasons advanced by microfinance institutions to explain the high interest rates charged for their services in the past has been the high risk of default and lack of credit information on the borrowers.

The reliability of the mark-to-model approach, however, relies heavily on assumptions and on the availability of reliable data. Data on tail events (events that occur rarely, but have major repercussions) would be particularly beneficial for the calibration of models. There is, however, by definition hardly any data on such events. This begs the question as to whether the dangers associated with tail events are being correctly assessed using the available models, or whether model risks pose a problem. Thirdly, it is unclear whether the finance industry’s capital buffer – in the form of equity capital – is adequate to weather particularly bad storms. Like airbags in a car, equity capital is only rarely called into action. Yet, the more serious the accident, the more generously the bags should be filled with air. In the current economic environment, many market participants are highly leveraged, in other words, they have a low ratio of debt to equity capital. Low levels of equity capital can be compared to a thin airbag – they only protect against moderate shocks. It would only take a loss of 2–3% of the balance sheet total, for instance, for Swiss big banks to use up all their equity capital. Of course, a loss of this magnitude is highly unlikely. After all, the Swiss big banks are well-diversified, have sophisticated risk management models in place and have high risk-weighted capital ratios. This notwithstanding, such a loss cannot be ruled out.
Chart 6: Banks’ net interest margins Per cent 6 5 4 3 2 1 0 1996  2000  2004 UK  2008 Euro area  2012 US  Source: Federal Reserve Bank of St. Louis. Notes: Data is sourced from the Federal Reserve Bank of St. Louis as that provides a consistent long-run international comparison of net interest margins. The broad post-financial crisis trend for UK banks in this data is consistent with the series for UK banks’ net interest margins published in the Bank’s Inflation Report in August 2016 (Chart C, Page 10). 27  All speeches are available online at www.bankofengland.co.uk/speeches  27  Chart 7: Contribution of changing sectoral composition to UK-listed firms’ mark-ups Cumulative change in mark-up since 1987 0.4 0.3 0.2 0.1 0.0 -0.1 -0.2 1988  1992  1996  2000  2004  2008  2012  2016  Market share changes (sector)  Mark-up growth (sector)  Net entry (sector)  Total change  Sources: Thomson Reuters Worldscope and Bank calculations. Chart 8: UK-listed firms’ mark-up distribution over time 90th percentile  70th percentile  50th percentile  30th percentile  Mark-up (e.g. 1.2 = 20%) 3  10th percentile  2.5  2  1.5  1  0.5  0 1987  1990  1993  1996  1999  2002  2005  2008  2011  2014  2017  Sources: Thomson Reuters Worldscope and Bank calculations.

This allowed NOKIA to free up capital for the most profitable activities of the company. Today the company has more than 50,000 employees. At the end of last year, the market value of NOKIA was about NOK 1,700 billion, which is four times the market value of all the companies listed on the Oslo Stock Exchange. The economy needs creative destruction to develop. The tendency may have been for the Norwegian authorities to provide various types of support to businesses and industries that have existed for some time. When the government intervenes, the authorities tread a fine line between business development and conservation. It is thus important to tread carefully, so that capital and labour are not tied up in less profitable activity. The required rate of return and the need for restructuring in the business sector often conflict with the need for stability and security for the individual employee. Local communities may suffer. The answer is not to oppose restructuring. The best solution is to develop and take advantage of skills and expertise. This also requires extensive adaptability and labour mobility. The welfare state The restructuring that we are facing in the Norwegian public sector is hardly of less significance than the changes in the business sector. During the last decades the Norwegian welfare state has expanded BIS Review 14/2000  14  rapidly. Household income and consumption have also shown steady and strong growth. We have also witnessed a sharp expansion in the production of services in both the public and private sector.
As a further precaution, reflecting the possibility that heightened uncertainty may last a while longer, today the Bank of England is announcing that it will continue to offer Indexed LongTerm Repo operations on a weekly basis until end-September 2016. This will provide additional flexibility in the Bank’s provision of liquidity insurance over the coming months. These facilities provide an effective way for banks to manage their liquidity, with a competitive auction process, designed to encourage usage, but where at times some bids will go unfilled. We expect institutions to draw on this funding if and when appropriate, just as we expect them to draw on their own resources as needed in order to provide credit, support markets, and generally supply financial services to the real economy. In order to have confidence and plan for the future, financial institutions, like the rest of us, desire certainty. That is why the Bank will continue to be very clear about their regulatory framework. Our liquidity framework is now established and effective. Over the past year, the FPC has finalised the overall capital framework. We are steadily implementing measures to develop ring-fenced banks and to end the scourge of too-big-to-fail. Nothing in financial regulation has changed as a result of last week’s referendum. It will not change until the process of the UK’s withdrawal from the European Union is complete, until the UK is no longer a member of the EU and until EU law ceases to have effect in the UK. The law is the law. Rules are rules.

Chart 7  Chart 8  Earnings yield on equities and 10-year government bonds yields have diverged since 2000  UK equity risk premium is estimated to have grown since 2000, and together with lower growth expectations, explains bulk of equity-bond spread currently  Per cent  Percentage points  18 16  Unexplained component  14  ERP contribution  12  Growth contribution  10  10 8 6  Equity-bond yield spread  8  12  4  6  2 0  1965  1975  1985  1995  2  4  10-year government bond yield Earnings yield 2005  2015  Source: Thomson Reuters Datastream and Bank Calculations. Shows FTSE All-Share equity yield and UK 10-year government bond yield. 0 2000  2005  2010  2015 -2  Source: IMF, Bloomberg, Thomson Reuters Datastream and Bank calculations. The equity-bond yield spread is the difference between the reciprocal of the FTSE AllShare price-earnings ratio and the UK 10-year government bond yield. The growth contribution is calibrated from the IMF 5-year-ahead world growth and inflation forecasts. The ERP contribution is calibrated using the VAR model described in Chin and Polk (2015), “A forecast evaluation of expected equity return measures”, Bank of England Working Paper, No. 520. The serial disappointment in earnings growth is mirrored in global growth since the crisis (Chart 9). In advanced economies, uncertainty appears to be holding back spending, particularly by corporates. Globally, investment remains weak (Charts 10 and 11).
It is a question of monetary policy, as I said earlier, being first and foremost aimed at ensuring there is a credible nominal anchor in the economy. As long as this nominal anchor does not risk coming loose, monetary policy can be aimed at stabilising the real economy. I shall return to this shortly and for now merely emphasise that the key word here is stabilise the real economy and nothing else. It may be interesting to note in this context that the experiences from the period of low, stable inflation have meant that price stability is now increasingly perceived as both an objective in itself and as a means of achieving other macroeconomic objectives. 5 There are many indications that price stability has beneficial effects on efficiency and growth in the economy. The reasons can be those I just mentioned, i.e. that the price system functions better as a signalling mechanism in a low inflation environment and that households and companies can spend more time on productive activities instead of trying to protect themselves against inflation. Essentially it is a question of price stability being a necessary condition for an efficient payment system, as I said earlier. In addition, the period of low and stable inflation has also been characterised in many countries by less fluctuations in growth in the real economy than was previously the case.

During this period one could say that the central banks’ original task of guaranteeing the value of the means of payment was neglected as other tasks, primarily affecting demand in the economy, were perceived as more important and more interesting for monetary policy. The consequence was that the nominal anchor was relinquished and to establish it again proved to require considerable effort. Let me before I discuss the other important component of an efficient payment system – financial stability – say something about the most common approaches to attaining price stability. There are currently two predominant means of trying to ensure that inflation remains at a low and stable level. One is to tie one’s own currency to the currency of a country with a long tradition of low and stable inflation. The fixed exchange rate thus becomes an intermediate target through which one hopes to attain the ultimate target – price stability. The other means is to allow the exchange rate to float and to give the central bank the task of acting more directly to attain low, stable inflation – what is known as inflation targeting. The changeover in monetary policy made by Sweden at the beginning of the 1990s meant that we switched from the first method, fixing the exchange rate, to the second, targeting inflation. The reason was quite simply that the fixed exchange rate had not functioned very well as a means of keeping down inflation and establishing a nominal anchor in the economy.
Furthermore, in order to familiarise the public and to facilitate the giving of change as of 1 January 2002, individuals will be able to obtain, as of mid-December, packs of euro coins known as ‘euro starter kits’; these coins cannot be used for payments before 1st January 2002. As of 1 January 2002, banks will only deliver euros, retailers will give change in euro and ATMs will supply euro banknotes only. A few days after this date, almost all transactions will be carried out in euro. 6  BIS Review 96/2001  Beyond technical aspects, the Eurosystem –and also public authorities- have an important responsibility in informing the general public on the challenges ahead, the deadlines and the practical aspects of the euro cash changeover. The success of the global process depends heavily on the confidence of the general public and cash handlers as well. Preparing people to be well informed and to feel confident in using the euro banknotes and coins is the overall objective of the Euro 2002 Information Campaign conducted by the Eurosystem. This campaign aims to reach the general public through the mass media. It is closely supported by a Europe-wide Partnership Programme with more than 2 600 national and international organisations. It has now entered into an intensive information phase, since the unveiling of the euro banknotes and their security features by our President, W. th Duisenberg, on 30 of August.

–  And lastly, the Stability and Growth Pact disproves the assertion that the euro area has no automatic stabilisers in the event of asymmetric shocks to a Member State. Indeed, by urging governments to aim at a fiscal position "close to balance or in surplus" in the medium term, the Pact enables them to allow budget deficits to increase during periods of specific national difficulties without exceeding the 3% reference value. In short, it enables countries  BIS Review 96/2001  3  to create a fiscal buffer during periods of normal economic conditions. This buffer can be drawn on to counter economic divergences or asymmetric shocks during economic downturns. But of course, the extent to which Governments can let automatic stabilisers play strictly depends on the initial level of the fiscal balance; obviously countries which still have fiscal deficits have less room than countries with budgets close to balance or in surplus. II. The Euro itself is a catalyst for further progress  While many acknowledge that the introduction of the euro on 1 January 1999 was broadly successful, one may ask, at this juncture, what the conditions are for the full and ongoing success of the euro in the medium and long term. What is very encouraging in this respect is the fact that, in a number of areas, the euro in itself appears to be a catalyst for meeting these conditions. 1.
Sandy was a catastrophe for many in our region and significant challenges remain in the years ahead. Recently, the Federal Emergency Management Agency issued preliminary Flood Insurance Rate Maps that show a much larger number of Brooklyn residents and businesses at risk of a future storm. While a once-in-a-hundred-year risk of flooding may not appear worrisome, many within this expanded zone may be required to purchase insurance. The expanded flood zones, coupled with federal government efforts to have insurance premiums accurately reflect the risk, could create a serious affordability problem in the years ahead. The New York Fed has created maps of community-level flood risk in Brooklyn. Now I would like to turn my attention to recent developments in the national economy. National economic conditions From the end of the Great Recession in mid-2009 through mid-2013, real Gross Domestic Product, or the aggregate value, after adjusting for inflation, of all the goods and services produced within the borders of the U.S., grew at a rather tepid 2 1/4; percent annual rate. Then, in the second half of 2013, the pace of growth moved notably higher, reaching an annual rate of 3 1/4 percent. Nonetheless, despite this pickup in the growth pace, the average monthly gains in nonfarm payroll employment were somewhat lower in the second half of the year compared to the first half.

Indeed, employment held up well during the recession, declining by less than 2 percent over a brief period in early 2009, and has averaged a nearly 3 percent annualized growth rate since then. Job growth has been particularly strong at retailers, hotels and restaurants, and also service firms ranging from advertising to engineering. That said, the employment picture does have some difficulties. For example, there is concern over some well-paying health sector jobs given the financial strain at Long Island College Hospital and Interfaith Medical Center and the pressure to close those institutions. Brooklyn’s economic vitality is also reflected in the commercial real estate market, as both office and retail vacancy rates have fallen steadily over the past few years. In fact, office vacancy rates are now lower in Brooklyn than in Manhattan. The strength in the housing market is also evident, with the median home price up by roughly 10 percent in each of the past two years, and the rental market has shown similar strength. 2  BIS central bankers’ speeches  However, these increasing prices also raise two other issues that acutely afflict many in Brooklyn and New York City more broadly: housing affordability and poverty. Despite Brooklyn’s economic renaissance and growing affluence, a large swath of the Borough’s population – one in four residents – still lives in poverty, and many struggle to pay their rent or mortgage. Even with the strong pace of job creation, Brooklyn’s unemployment rate has remained high, averaging more than 9 percent in 2013.
The potential for online payment solutions is great enough to offer scope both for secure card payments and for e-payments based on online banking. The ECB strongly supports the emergence of SEPA-wide online e-payment solutions, such as those that already exist at the national level, for example in Germany, Austria and the Netherlands. In my view, European wide implementation of such innovative ideas is very much needed. Both increased security for “card-not-present” transactions and the introduction, throughout Europe, of e-payments based on online banking will provide more payment options for users. And such developments will also address a problem that greatly concerns central banks: safety. I firmly believe that for “online shopping” the payments industry needs to deliver a solution that permits customers to pay for their purchases in a safe way. This brings me directly to the last of my proposed New Year’s resolutions: New Year’s resolution number five: let’s not forget about security The security of retail payments is key to ensuring that consumers and businesses place their trust and confidence in SEPA. The risk-based approach applied by individual banks may not be sufficient to achieve the level of security that is required at the aggregate industry level. The reason for this is that commercial risk tolerance may differ from social risk tolerance. In the seventh SEPA progress report we dedicated a chapter to the topic of security. By sending a number of ambitious messages we have ensured that the necessary attention will be paid to this topic.

Monetary policy’s effects on unemployment are minor in relation to those due to structural problems. The current situation in the labour market Let me before I finish briefly comment on how I viewed the current situation in the labour market in connection with the monetary policy meeting in May. A large number of central wage agreements are being renegotiated this year. There are several factors governing how high wage costs can be expected to be in future. One important aspect is to what extent the social partners take into account the labour market situation in their wage bargaining rounds. Another is how well the labour market functions with regard to matching the demand for and supply of labour. The wage bargaining rounds have so far resulted in wage increases that appear to be slightly above what we had estimated in the February Monetary Policy Report. We pointed this out at the monetary policy meeting on 3 May. The labour market situation has strengthened and it is therefore reasonable to assume in future that there will be slightly higher wage increases than we have been used to in recent years. The information that we had access to at our monetary policy meeting in May indicated that resource utilisation in the labour capacity was slightly more strained than we anticipated in the February report. There were signs that the labour shortage in the business sector has continued to increase.