samchain/econo-pairs-v1 huggingface dataset:
In addition, history and culture may play an important role. Perhaps, in view of recent history, German households are more savings-prone than others. Elsewhere in Northern Europe, private debt, and household debt in particular, has risen sharply in recent decades. Our part of the world became the champions of globalisation. We had the winning combination: highly educated labour, open economies with access to a large European market and, in Norway’s case, abundant natural resources. Our group of countries is characterised by solid government finances. Public debt has fallen through the entire period under consideration. At the same time, the countries in Northern Europe have amassed substantial financial assets, either in public or in private hands. Chart 4 Substantial wealth – different composition We often think that Norway really stands out, with its big sovereign wealth fund and substantial external assets. But along many dimensions we are actually fairly similar to our closest neighbours. Sweden, Denmark and the Netherlands also have considerable savings. In these countries, however, saving takes place in private pension funds. Throughout Northern Europe, pension savings entitle us all to a future income flow, whether this saving takes place in a public scheme or through compulsory pension agreements. The security this entails also enables households to bring forward a considerable portion of their consumption by borrowing, and to do so willingly. Together with solid income growth and low interest rates, this has fuelled a systematically faster rise in private debt levels than in income. Households with faith in the future borrow and invest.

The global fall in interest rates reflects the emergence of a considerable savings glut, especially after the countries in Asia joined the world market in earnest after 2000. The decline in interest rates is thus an international phenomenon, driven by falling inflation, lower growth and increased global saving. Interest rates in Norway cannot diverge too far from global rates. An excessively strong krone would then lead to a fall in activity and deflation. The main task of monetary policy is to maintain the value of money by keeping inflation low and 5/7  BIS central bankers' speeches  stable. Inflation targeting is forward-looking and flexible so that it can contribute to high and stable output and employment and to counteracting the build-up of financial imbalances. Monetary policy cannot assume primary responsibility for financial stability. But as we are now in the process of raising the policy rate somewhat, this could also help curb debt growth. Will debt be reduced? It is easy to imagine that house prices will just continue to rise – as they have done for more than 25 years. Rising income and government wealth have gone hand in hand with rising house prices and higher household debt. But Norway’s experience from the years after oil was discovered, and in particular from the years following the banking crisis at the beginning of the 1990s, cannot serve as reliable guidance for what we can expect in the future.
A small banking system like ours is inevitably characterised by a degree of concentration risk and, because of a typical Maltese idiosyncrasy, our banks are heavily exposed to the construction and property sectors. Since our economy is likely to be affected by the oncoming recession and will experience a slowdown next year, it would be advisable for the banks to strengthen their balance sheets further. BIS Review 152/2008  1  Would you say that the worst is over for local banks? Can you envisage a scenario where one of the banks will go down? There is no direct threat from the crisis – they are not directly exposed. If the economy slows down, certain borrowers might be overextended and there might be an increase in nonperforming loans. During a press conference in Frankfurt last week, ECB President Jean-Claude Trichet said he did not exclude further interest rate cuts. Why the need for further cuts and are you optimistic that these cuts are the solution? During the ECB Governing Council of November 6, we concluded that the outlook for price stability had improved further because inflation rates are expected to continue declining. Market expectations about medium-term inflation based on information extracted from the bond markets have fallen to just over two per cent. While the Governing Council does not pre-commit itself, should the data available at our December meeting point to a further alleviation of upside risks to price stability, then the conditions would be ripe for another cut in interest rates.

Joseph Yam: Basel II - back to the future Opening remarks by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, at the HKMA Seventh Distinguished Lecture: “Basel II: Back to the Future”, Hong Kong, 4 February 2005. *  *  *  Let me first extend a warm welcome to all of you to this seventh HKMA Distinguished Lecture. It is a great pleasure for me to introduce our speaker, Governor Jaime Caruana, and our discussant, Mr David Eldon. Basel II, or the New Capital Accord, or whatever we might call it, has been on the minds of bankers and regulators for around five years now. This new framework of capital adequacy standards for banks, issued by the Basel Committee on Banking Supervision, is an important step forward in the field of regulation. By making capital requirements more risk-sensitive, Basel II will bring banking regulation more into line with the way that banks themselves manage risk. It will also give banks the incentive to improve their own risk management. Basel II will help make banks stronger, and it will improve the safety, stability and efficiency of financial systems. The title of Governor Caruana's lecture today, "Back to the Future", might for a moment give the impression that Basel II is the stuff of science fantasy. There is no doubt that it is a highly complex matter, and that it has – literally – required the recruitment of physicists and rocket scientists by the regulators and banks tasked with its implementation.
In contrast, in the context of the absence of observable macroeconomic imbalances that hinder growth, a scenario in which the global outlook improves, combined with the end of the adjustment of mining-related investment, and a rebound in sentiment, may lead to a more dynamic recovery (figure 9). 17. In fact, several fundamentals of the Chilean economy have remained quite solid during this weaker part of the cycle. As you might know, Chile was one of the first few countries to introduce a structural fiscal policy, which has been applied consistently over more than 15 years. As part of this policy, the government has been able to save during good times and currently has two sovereign wealth funds, totaling almost 10% of GDP. Figure 9 Public sector balance (percent of GDP)  4  Latin America: 1995-2015 average (*)  2  1.1  0 -1.5  -2  -0.5  Chile  Peru  Brazil  Colombia  -6  Argentina  -3.4 -3.1  Mexico  -4  -0.9  Chile  4  9  2  6  6  0  3  3  -2 0  0  -4 -3  -3  -6 -6  -6 90  94  98  02  Effective  06  9  10  14 18(f)  Structural  (*) General Government Financial Balance. (f) For 2017 to 2019, forecasts obtained from the 2016 Public Finances Report. Sources: Moody’s and National Budget Department, Ministry of Finance of Chile. 18.

REMARKS ON THE CHILEAN ECONOMY Mario Marcel 1/ Governor, Central Bank of Chile April 2017  1. The last few months have brought mixed signals for the Chilean economy. Recent data suggest the global outlook appears more favorable, particularly for emerging economies. On the one hand, activity data and expectations in advanced economies have been more upbeat, marked by better than expected performance by the manufacturing sector and a more positive outlook following years of stagnation. As a result, deflationary risks have dissipated, as inflation is expected to return to more normal levels. The Federal Reserve (Fed) has continued to normalize monetary policy and monetary authorities in Europe and Japan appear to have set aside the possibility of additional stimulus measures. Markets have incorporated these changes in their expectations avoiding any serious disruptions. Along with better signs in advanced economies, activity in China has remained relatively stable, which contrasts with what had been observed one year ago. 2. In this context, there has been a generalized increase in willingness to take on risk in financial markets, increasing stock market indices, reducing sovereign risk premiums and increasing capital flows to emerging markets. Commodity prices have also benefitted. Copper, our main export product, has been trading at prices near its two year highs and prospects for the next few years have improved, which has had a material impact on the Chilean terms of trade.
However, the sectors that have been affected would be in an even tougher position with a lax monetary stance at present, which would leave us facing a much higher rate of inflation and a strong real exchange rate at the end of this expansionary episode. Tightening the monetary stance under such conditions could also provoke problems and shocks for the financial system, with unforeseeable consequences. 2  BIS Review 22/2005  The real exchange rate is heading for a historical high this year which is unlikely to be sustainable for very long. It is important to engineer as soft a landing as possible. In this context I want to mention the study in the latest Monetary Bulletin which shows that the real exchange rate is no more volatile in Iceland than in other countries, for example other inflation-targeting countries with which we often compare our performance. On the other hand, the importance of foreign trade varies from one economy to the next, so exchange fluctuations have a different impact on households and business in different countries. According to the Central Bank Act, one of the Bank’s roles is to promote an efficient and safe financial system, including payment systems domestically and with foreign countries. I shall not dwell on financial stability issues on this occasion. The reason is that the Central Bank will be publishing a separate financial stability report in April which will include its assessment of the position of the financial system.

It is crucial to take immediate measures to tackle the inflation that we see on the horizon. This is the Central Bank’s mandatory role and the Bank is determined to perform it. The more that other economic agents contribute towards containing expansionary trends, namely the central government, local government and credit institutions, the easier it will be to ensure long-term stability. The successful economic policies of past years must not be swept aside in favour of short-term solutions that would ultimately only backfire. BIS Review 22/2005  5
The reason for the repo rate cuts was to alleviate the effects of the financial crisis on the real economy, while ensuring that inflation stabilised around the target of two per cent. Although monetary policy cannot be used to resolve the financial problems, it can help to dampen the negative effects on the real economy, without jeopardising the inflation target. The Riksbank’s assessment is that the financial crisis aggravates the ongoing economic downturn resulting in weaker growth, a deterioration in the labour market and lower inflation. The repo rate therefore needs to be cut by a relatively large amount during a short period of time. In addition to the cuts already made, the assessment at the most recent meeting was that the repo rate needs to be cut by a further 0.50 percentage points, to 3.25 per cent, over the coming six months. The repo rate is currently less effective than normal as a tool for influencing the economy. The repo rate cuts in October did not lead to an immediate fall in interbank rates. The confidence crisis in the financial system has meant that the normal link between market rates and the repo rate has been broken. Although market rates also declined, there remains an unusually large gap between the repo rate and mortgage rates in particular. The gap between the 3-month lending rate to households and the repo rate has been around 100 basis points in less turbulent periods than that we are experiencing now. At present the gap is around 200 basis points.

It is also evident that the reputations of the credit rating agencies have become tarnished, but how much of this can be remedied through regulation is not so clear. In addition, the trading, clearing and settlement of certain derivatives has been carried out in such a way that insight has been poor and counterparty risks have been substantial. There is thus reason for the authorities to press for the development of the underlying infrastructure of, for instance, OTC-traded derivatives. Many ideas regarding what needs to be done to reduce the risk of future crises will probably be put forward over the coming six months. Let us hope that the wise and well-reasoned proposals will be the ones that are implemented. Crisis management I would also like to touch briefly on some crisis management issues. Good preparedness and good preparations are the be-all and end-all of crisis management. Both in Sweden and other EU countries, and in particular in the United States, it has been necessary on this occasion to improvise measures to a great extent in the management of the financial crisis. This is of course not exactly desirable. Experiences of earlier crises point to improvised measures often coming too late and costing more than ought to have been necessary. It is as yet too early to say what the outcome of the measures taken now will be, but there are nevertheless some bright spots.
Svante Öberg: The current economic situation Speech by Mr Svante Öberg, First Deputy Governor of the Sveriges Riksbank, at a meeting, Jönköping, 5 March 2009. The original speech, which contains graphs, can be found on the Sveriges Riksbank’s website. *  *  *  The minutes of the monetary policy meeting published just over one week ago show how we Executive Board members reasoned when we decided to cut the repo rate to 1 per cent at our monetary policy meeting on 10 February. Today I intend to give my views on economic activity and monetary policy. My speech can be summed up in the following four points: •  The financial turmoil worsened in the autumn and has developed into a global financial crisis  •  International developments will be weak this year and there is a considerable risk that economic activity will also be weak next year. •  GDP growth in Sweden will be negative this year and inflation will fall. •  The Riksbank has cut the repo rate to 1 per cent and may need to cut it further  I have structured my presentation in line with these four points. I shall begin with an account of developments in the financial markets. Then I shall describe international economic developments and what we see before us during the coming years. I shall then go on to discuss the Swedish economy. I shall conclude with some views on current monetary policy.

Firms have made good progress in better understanding the complexity of their own operations, including strengthening the overall management of organizational/legal structures, identifying all legal entities (and this was huge for some firms), and beginning the difficult task of identifying additional impediments to resolving a large internationally active firm. I think there’s also good recognition that the financial system is more than just banks, with processes at both the domestic/U.S. level and globally to identify the set of systemically important financial institutions (non-banks like insurance companies for example) and to ensure that stronger regulation and oversight is exercised over these firms. BIS central bankers’ speeches  1  Locally, within the New York Fed, I noted last year that some of the changes we had made to our supervisory processes were yielding some good results, and I’m pleased to share with you today that progress has continued on a number of fronts. •  We have continued to increase our interactions with senior management and boards of directors of the firms we supervise, including most of the largest foreign firms. We have built important channels of communication with senior management and board members – and we appreciate the enhanced level of dialogue and candor that is resulting from these interactions. And, we know that board members also appreciate the engagement and frank dialogue. •  Of course, we’ve been working closely with home country supervisors to ensure we have good communication and are coordinated in our messaging.
Massive amounts of capital, mostly in the form of external bank borrowings, flew into Emerging Asia during this period. In 1997, total amount of international bank lending to Asia amounted to $ Most of these external finance were denominated in US dollar and with rather short tenor. Of course we now understand this kind of external finance is very risky as it entails currency mismatch and maturity mismatch. But these risks were simply ignored or brushed aside while everybody was enjoying the Asian boom prior to 1997. Then the bubble burst and the crisis-hit Asian economies all learnt very important lessons in a bitter way by paying a heavy price. 4. Since the Asian Financial Crisis the Emerging Asia has implemented many structural reforms and has now re-emerged as stronger and more resilient economies. 5. As a result, Asia, once again, has gained centre stage and, until the last year or so, become the preferred destination of international capital flows. Unlike the 1990s, the structure of finance in Asia has changed because external bank borrowings, although still quite significant, have been overtaken by bond borrowings. Around 80% of bond issuance in the last three years in major Emerging Asian economies was denominated in domestic currency, thereby reducing currency mismatch risk for the borrowers. Moreover, the average tenor of the newly issued bonds has steadily been lengthened to 6.3 years in 2013, which would mitigate the risk of maturity mismatch and short term roll-over risk. 6.

Unfortunately in reality what may seem to be a perfect match does not exist in Asia. A large part of the savings in Asia have been channelled through the banking and other financial market channels to the advanced markets and then part of these savings are channelled back to Asia. This pattern of flows has created several problems. Most importantly, with the implementation of Basel III, banks no longer find it attractive to lend to long term infrastructural projects because of the higher capital charge required to hold these assets on their books. More specifically, many European banks, which were very active in infrastructural financing in Asia in the past decade, have reduced their exposures in this area and will continue to do so in the future. So many infrastructural projects in Asia are now finding it increasingly difficult to secure the necessary finance. At the same time, many bankers and fund managers have said that there is still ample supply of funds looking for investment opportunities, but lending or investments in Asia’s infrastructure has been greatly hampered by the shortage of “bankable” projects. So on the one hand Asia has a huge funding need for infrastructural projects but on the other bankers and investors sitting on huge amounts of savings complain that they cannot find sufficient “bankable” projects. Clearly there is a big gap here. There are many reasons why such gap exists, involving factors relating to legal, governance and political risks for investing in Asia’s infrastructure.
It is sometimes hard to explain where this inflow comes from, but it indicates that in the economy there are sources that generate income, that create savings potential, meaning, the savings, although maybe not sufficient, is still substantial in our country and that deposit growth is just below the one in the good years, but it is positive and continuous, which is encouraging. Does this mean that the banks are more focused on collecting capital, than releasing money in the economy in form of credits? We can state that the deposit growth is higher than the one in the last several years, but the deposit growth is also a reflection of lack of enough alternatives for investments. You know  BIS central bankers’ speeches  1  that the stock exchange is in standstill, we don't have some other developed financial markets where the citizens can place their savings, so every savings is mainly placed in form of banks deposit. Despite the inflation slows down, in the last several months, according to the NBRM estimations, it seems that the banks restrain over landing. Is this an indicator for the unfavorable conditions in the economy, or on the market, or is it a try for further reduction of the inflation? No, the inflation is not an issue, since it is on quite moderate level, 2.8 percentages is the latest data for August and we expect average inflation of about 2.8 percentages for the entire year, there is no probability for inflationary pressures in the following period.

Annual variations in inflation are now substantially smaller than they were in the 1970s and 1980s. Over the past ten years, average inflation has been somewhat lower than, although fairly close to, the target of 2.5 per cent. BIS Review 65/1008  1  Inflation measured by the CPI varies from month to month, primarily as a result of wide fluctuations in electricity prices, but also due to other temporary disturbances. The rise in the CPI-ATE shows inflation adjusted for one-time effects of tax changes and excluding energy products. Inflation, measured this way, has risen since summer 2006. One disadvantage of this indicator is that it does not only exclude the temporary effects on electricity prices of, for example, changes in the weather; it also excludes more persistent developments in energy prices. Energy prices have risen more than other prices for a fairly long period, leading to an average year-on-year rise in the CPI over the past 5-10 years that has been close to ½ per cent higher than the rise in the CPI-ATE. Other available measures of underlying inflation also suggest that inflation has moved up. While the year-on-year rise in the CPI-ATE is now 2.4 per cent, other measures of underlying inflation are above 3 per cent. 2  BIS Review 65/2008  Recently, inflation has been somewhat higher than our projections from last year. Inflation was broadly in line with expectations through 2007. In 2006, inflation was considerably lower than projected at the beginning of the year.