samchain/econo-pairs-v1 huggingface dataset:
Our policy-making has been in a “nonstandard mode” for a considerable period of time. In October last year, we adopted a fixed rate tender procedure with full allotment for all main refinancing operations and longer-term refinancing operations with maturities of up to six months. In addition, the ECB expanded its list of assets eligible for use as collateral in Eurosystem credit operations. As a result, the size of the Eurosystem balance sheet has increased substantially during the financial turmoil, by around € billion between June 2007 and March 2009, mainly reflecting the expansion of liquidity provision to the banking system since last autumn. This is of particular significance for the euro area because the banking system plays a more important role in the financing of the private sector than in other major economies. At the same time, owing to the ECB’s liquidity management, overnight money market rates have fallen even more steeply than the key ECB interest rates since last October. Money market rates in the euro area are now very low, also in an international comparison. Overall, the provision and management of liquidity by the ECB have played a crucial role in the implementation of the ECB’s monetary policy. They have ensured that banks have adequate access to central bank funding so as to continue financing the economy and that liquidity constraints and perceived risks have not triggered a systemic crisis.

There was a spirited public debate whether such rate increases would invite more capital inflows. But we viewed that other factors, such as the strength of the domestic economy and high risk appetite of international investors, played a larger role in inducing capital inflows than a gradual increase in the policy rate. Our concern for medium-term financial stability was also a key element of policy deliberations at the time. Subsequently, things became more challenging as the Thai economy suffered domestic setbacks. As the boost from the government’s temporary stimulus measures dissipated at the start of this year, domestic demand slowed down markedly. At the same time, domestic credit growth was still quite high, stock prices continued to advance, and activity in the housing market remained brisk. Moreover, portfolio capital inflows continued and the baht was appreciating. This presented a dilemma and was an example of the difficulties posed by policy spillovers. Against the backdrop of weak global demand, we cut the policy interest rate. We contemplated the use of certain prudential measures, including those on capital flows, in order to complement domestic monetary policy as well as offset some of the impact of capital inflows on domestic financial conditions. But since the QE tapering talk began in earnest in May, the global financial environment changed dramatically, and with it the nature of the policy trade-offs. The communication by the Federal Reserve about possible tapering of its bond purchases was a key turning point for global financial markets. Financial conditions suddenly tightened in response.
But it was not until two hedge funds from Bear Stearns with active exposure in the sub-prime market had almost lost all their capital by June 2007 and when some rating agencies in early July announced that they would downgrade many asset-backed securities (ABSs) and collateralised debt obligations (CDOs) that a significant reassessment of the expected returns of structured finance products took place and AA and AAA-rated assetbacked securities (or ABS) also started falling in value. The following general re-pricing of risk [see Chart 15] and tensions in credit markets (e.g. also the corporate bond market) now affected several countries other than the US (e.g. the corporate bond markets in the US and Europe). Financial market liquidity for most structured credit products started evaporating [Chart 16]. Equity markets have also been affected by the increase in risk aversion and a general flight to quality. 19 As a consequence of inadequate risk management, and in particular liquidity risk management, the interbank money market came under pressure. Due to the complexity of pricing structured credit products and the lack of transparency of banks’ exposures to investment vehicles heavily in need of refinancing their ABS investments (which, at that time, were more or less fully illiquid), an adverse selection problem in the interbank market led to concerns about systemic risk. Banks were reluctant to lend to each other because of concerns about the counterparty’s exposure to sub-prime related assets and also uncertainty about their own liquidity needs.

The really hard question for us is could we - or should we - attempt to protect those businesses most affected by the strong exchange rate even if that meant putting the economy as a whole at significant risk of rising inflation. The reality is that, were we to do so - notwithstanding our specific mandate from the Government - we would not succeed in protecting even the suffering sectors except possibly in the very short term; and in the medium to long term our overall economic performance - in terms of growth and employment would - on all past experience - almost certainly be worse. As it is, Mr President, the recovery in the world economy, and the extraordinary efforts of UK businesses themselves to cope with the hostile international environment, are already resulting in a stronger net external trade performance. That in turn is contributing to the recovery in our own economy, particularly in manufacturing output growth, and to the more encouraging news in recent surveys. To the extent that this improvement in external demand persists, it will help to ease the exceptional pressures on the most internationally-exposed sectors, and contribute to a better balance within the UK economy. But it needs, of course, to be accompanied by corresponding moderation of the growth of domestic demand - after the offsetting stimulus of a year ago - if we are to maintain overall stability. That essentially is why interest rates have had to rise since last autumn.
Broader explanation of the reasons for passing this decision is the following: 1)  Negative effects of the world crisis over the world economy continue to grow. The latest IMF projections point out that the world growth will switch towards the negative zone thus in 2009 world’s GDP will drop between -0.5 and -1.0 percent. This will represent the first negative GDP growth rate within last 60 years. The reduction of the world’s GDP below the potential, together with the downward trends of food and energy prices, by themselves not only eliminate the inflationary pressures, but also create deflationary risks, especially in the developed economies. Unfortunately, continuous revisions of the projections of the world‘s growth are further towards deeper recession. In the less developed economies, including ours, the external sector risks appear as most essential, where the large reduction of the external demand as well as the lower inflows and/or larger net foreign capital outflows create serious pressures over the value of national currencies. 2)  Macedonian economy, as we stated, is under a strong influence by the global macroeconomic developments. As almost everywhere in the world in our case as well the inflationary pressures fade and the economic growth decelerates because of the reduced external demand, contracted and more expensive financing sources and increased negative expectations of economic agents. The external sector imposes itself as a main problem of our macroeconomic policy.

starting at end-2007 and during the whole of 2008, being concerned first of all because of the growing inflation but also of the growing deficit of our economy to the rest of the world, we undertook a number of measures for tightening the monetary policy. However, in the meantime, the world crisis has deepened. In the fourth quarter of 2008 it started delivering to us high „paying invoices”. The demand as well as the prices for our main export products dropped dramatically . This continues even stronger in the first quarter of the this year. At the same time domestic aggregate demand (stimulated by the wage and pension growth, higher budget consumption and the high credit growth) was not appropriately and timely accommodated in accordance with the foundations of the economy. The trade as well as the current account deficit were growing, without being followed by the appropriate inflows in both, the capital and the financial account in the balance of payment. Practically, imbalances and pressures on the foreign exchange market were growing and so continue to grow thus being increased by the not that seldom carelessness or by, I even don’t exactly know what, other reasons, in creating numerous well founded negative expectations related to the foreign exchange rate stability.
Its demand, trade and cross-border investment activities will reinforce this potential. The recent trend for the use of the renminbi for settlement of trade and cross-border investment activities will facilitate this potential. It is my pleasure to welcome you to this Seminar on “Renminbi Trade Settlement and Investment”. I would like to take this opportunity to extend a warm welcome to our guest speakers from the People’s Bank of China and the Ministry of Commerce (Mofcom) of the People’s Republic of China. I also wish to welcome our panellists from the financial industry and the corporate sector that are here today to share their experiences in operating in the current challenging economic and financial environment. The economic relationship between Malaysia and China is longstanding and grounded on strong foundations. Today, China is Malaysia’s largest trading partner accounting for 14% of our country’s total trade. Malaysia also ranks as China’s most significant trading partner in the Asean region. Our trade with China has continued to expand, increasing by 20% annually, in this recent two decades. Our bilateral trade with China is now seven times higher than the level in the early 1990’s. Our economic relations have also evolved and expanded beyond the area of trade – into the services sector, particularly the financial sector, tourism and education. China is among the top five tourism markets for Malaysia and Chinese nationals represent the largest foreign student population in Malaysia’s private universities and colleges.

This serves to provide a safe and efficient clearing and settlement platform that supports trade and investment flows in renminbi. A nationwide awareness program by the banking institutions and the business chambers is also creating greater awareness on renminbi for trade settlement and investment. The Bank has also participated in the Chinese interbank bond market. In 2011 alone, the size of renminbi trade settlement in Malaysia expanded by four times from the level a year ago, reflecting a growing interest in renminbi as a settlement currency. The expansion in renminbi usage has also been underpinned by a diffusion of corporate players, both in size and across the sectors. Not only has the number of corporate players increased, but there has been a shift in relative significance in the use of renminbi as a trade settlement currency from the smaller to the larger corporations. There has also been more widespread corporate participation from a larger cross-segment of economic activities, namely the commodity based industries, manufacturing and services sectors that also includes tourism and education. There has also been an increase in the number of financial institutions participating in renminbi trade settlements. There are now 19 financial institutions that facilitated such trade settlements, double the number in 2009. More recently, there has been an increase in the use of the renminbi as an investment and funding currency. In the first seven months of this year, renminbi deposits in the banking system had tripled.
The market for these securities had dried up because the traditional investors in these securities – SIVs, bank-related conduits and securities lenders – have either disappeared or are balance sheet constrained. This has reduced the availability of credit for consumers and led to higher borrowing costs. The first subscriptions for financing under TALF Version 1.0 will occur on March 17. The first batch of new securitizations will be funded on March 25. TALF Version 2.0 will follow. This will broaden the TALF into new asset classes such as Commercial Mortgage Backed Securities. Development of this phase is still in its early days. But it anticipated that the size and scope of TALF will expand sharply in the months ahead. So how will the TALF restart securitization activity and provide balance sheet capacity to the private sector? By providing leverage and 3-year term, non-recourse financing to investors, the TALF should increase the demand for AAA-rated securitizations. Yields of LIBOR + 400  4  BIS Review 28/2009  basis points may not be sufficiently attractive on an unleveraged basis, but at 10 times leverage the returns become very attractive. The non-recourse nature of the loans is also important. If the price of the security falls considerably, the investor just loses an amount equal to size of the haircut.

Let me conclude with a reflection on monetary policy. The economy is bouncing back rapidly, which is good news. With that has come a rise in inflation, and we expect that rise to continue in the near term as we go through the rest of this year, such that CPI inflation is expected to pick up further above the target, owing primarily to developments in energy and other commodity prices. I have set out the reasons why we expect this rise in inflation to be a temporary feature of the bounce-back. The reasons for taking this view are well-founded, it is not a vain hope or a matter of whistling in the wind. It is important not to over-react to temporarily strong growth and inflation, to ensure that the recovery is not undermined by a premature tightening in monetary conditions. But it is also important that we watch the outlook for inflation very carefully, which of course we do at all times, particularly for signs of more persistent pressure and for a move of medium term inflation expectations to a higher level. And if we see those signs, we are prepared to respond with the tools of monetary policy. Over the last sixteen months we have used monetary policy decisively to respond to an unprecedented crisis which was disinflationary. We were able to act in this way because the framework of monetary policy and the record of its use are robust. This credibility gave us the scope to act in a crisis.
Source: Norges Bank  If necessary, Norges Bank can supply liquidity to the payment system. Norges Bank is the bankers’ bank. 13  In addition, Norges Bank has a special responsibility for the payment system. The Bank oversees and supervises various components of the payment system and should drive new and efficient solutions. NORGES BANK ECONOMIC PERSPECTIVES 14 FEBRUARY 2019  Today, nearly all payments from customers’ bank accounts are made using deposit money.7 This is money created by banks. When people borrow money from a bank, the bank credits the same amount to an account. The money deposited was created at the instant the loan was made. Deposit money circulates through the banking system, in and out of people’s accounts and is only to a limited extent converted to cash. As long as we have confidence in both the value of the Norwegian krone and in the banking system, we will also have confidence in deposit money. The cash provided by Norges Bank has important attributes. While deposit money is a claim on a private bank, cash is a claim on the central bank. Cash is a safe alternative if private payment solutions are not functioning or do not meet the expectations of the public in terms of security and efficiency. Even though the use of cash has declined, cash is still in use and has important contingency functions. But new digital alternatives are emerging.

The primary responsibility of understanding the risks run by the bank and ensuring that such risks are appropriately controlled and are within the risk parameters of the Bank, i.e. its risk appetite, is vested with the Board of Directors. It is now a widely accepted principle of good corporate governance that bank management understands new banking products and businesses of the Bank. Without proper understanding of the risks associated with such new products the management should not give their assent to the introduction of such products. It is the responsibility, therefore, of the Board of Directors to set the parameters for risk taking beyond which banking business should not be permitted. What then are the essential pre-requisites for good and effective risk management? Timely and reliable information is the foundation upon which good risk management is built. Lots of questions come to my mind here - do those responsible for credit decisions have a knowledge of the industry they are lending to? Why do banks depend so much on collateral when we all know it is the last resort? This is where information plays an important part. If you do not have knowledge of the industry or sector to which you are lending, your credit decision is seriously flawed and sooner or later will translate itself into NPA. Why do we have high levels of NPA? Is the information necessary for evaluation of creditworthiness of a borrower available to the banks?
Structural reforms were also needed to correct earlier structural mistakes and restore our economic vitality. Whether the measures that have been taken up to the present are sufficient is a debatable issue; but the point I want to make is that a change of direction and some political action had already been initiated in the 1980s. The work has continued since then and been undertaken by governments of diverse political hues and personalities. In other words, something happened to Swedish economic policy in a wide sense in the late 1980s. When the immediate crisis had been managed in the early 1990s it was clear that the weak government finances would have to be tackled. Moreover, the independent status of our central bank has been formally confirmed, accompanied by a clear mandate. The floating exchange rate regime and the explicit target for price stability have worked well. Several segments of the Swedish economy have been deregulated, though less has been done in this way in the labour market than in markets for goods and services. But the labour market organisations have been working on their own account to improve the system for wage formation. As a result of all this, the Swedish economy is doing better than we have seen for a long time. The economic upswing has now continued for more than six years, during which annual GDP growth has averaged around 3%. And notwithstanding the strong growth of demand, inflation has been lower than one would expect from earlier relationships.

Urban Bäckström: The Swedish economy cyclical upswing or a more fundamental improvement? Speech held by Mr Urban Bäckström, Governor of the Sveriges Riksbank and Chairman of the Board of Directors and President of the Bank for International Settlements, at a meeting with Institut International d’Etudes Bancaires, held in Stockholm, on 19 May 2000. *  *  *  The current economic situation in Sweden differs appreciably from the early-1990s, when our country was on the brink of a serious financial crisis, with a currency and banking crisis, sizeable public sector deficits and rapidly rising unemployment. Today the picture is considerably brighter. The question I want to consider here with you is whether the impressive performance in recent years amounts to a conventional cyclical upswing or has to do with a more fundamental improvement in the workings of the Swedish economy. In the three years from 1991 to 1993, the Swedish GDP fell by a total of 5%, employment dropped more than 10%, unemployment shot up from 3 to 8%, the public sector financial deficit grew to 12% of GDP and government debt accumulated rapidly. Meanwhile, the stock of non-performing loans in the banking sector peaked at 10% of GDP or 8% of the total loan portfolio. The fixed exchange rate was questioned, there were sizeable interventions and for some days in the autumn of 1992 Sweden’s central bank raised its instrumental rate to 500%. Various explanations have been put forward for the depth of Sweden’s economic crisis.
Mojmír Hampl: An uncertain world Speech by Mr Mojmír Hampl, Vice Governor of the Czech National Bank, at the 8th Corporate Research Forum (CRF) International Conference "An Uncertain World: Planning for 2025 and beyond", Prague, 12-14 October 2016. * * * Ladies and gentlemen, Good evening and let me welcome you all here to the premises of the Czech National Bank. I’m really pleased you have chosen our Congress Centre for your cocktail reception. On behalf of the Bank Board of the Czech National Bank I’d like to say that we are delighted to have such a distinguished gathering here today. And I don’t say that just out of courtesy, I really mean it. When we started organising this welcome speech with Richard Hargreaves, he asked me to introduce the Czech Republic in 10 or 15 minutes. I said: “Wow, what a challenge”. Typically I speak about interest rates, inflation or the exchange rate rather than about typical features of this country, but then I thought sometimes even a central banker should try to do something useful. So I put my mind to work. I will not repeat the known facts to this noble audience of educated people. I’m sure most of you will have heard about Czech beer, about our former president Vaclav Havel (or Vaklav Hejvl as many tend to pronounce his name) or about the international success of Czech sports stars in tennis, ice hockey and sometimes even soccer.

Since then, a number of structural forces have probably pulled down the ‘equilibrium’ level of global and domestic real interest rates, making this a conservative calculation. See, for example, Vlieghe (2016) ‘Debt, Demographics and the Distribution of Income’ http://www.bankofengland.co.uk/publications/Pages/speeches/2016/872.aspx 8 This point was made back in 2012 by my colleague Ben Broadbent. See Broadbent, B. (2012) ‘Deleveraging’, remarks given at Market News International, London, on 15 March 2012. http://www.bankofengland.co.uk/archive/Documents/historicpubs/speeches/2012/speech553.pdf  9  All speeches are available online at www.bankofengland.co.uk/speeches  9  Lenders’ own assessments of how risky these loans are, which they use to calculate how much capital they need to withstand losses, have fallen. Over the past two years, these ‘risk weights’ on credit card loans have fallen by 7% and those on other consumer loans by 15% (Chart 11). This improved performance doesn’t reflect a tightening up of lending standards. Credit scores of new borrowers are actually a little lower than they were 2 years ago (Chart 12). Instead, the improved performance of borrowers reflects the environment of continued employment growth and easier credit terms. Lenders have been the lucky beneficiaries of the benign way the economy has evolved. In expanding the supply of credit, they may be placing undue weight on the recent performance of credit cards and loans in benign conditions. Car finance  Car finance has drawn particular attention, with growth of 15% in the past year and more than 100% in the past 4 years. The way we buy cars has been transformed.