samchain/econo-pairs-v1 huggingface dataset:
The need to reduce the levels of indebtedness of all sectors and the prevailing conditions of access to external financing will continue to curb the possibilities for any expansion in domestic spending. Exports might be the only component of output to increase in 2012. Admittedly, the international situation is subject to a high degree of uncertainty and, in particular, the activity of the euro area as a whole is expected to flatline or fall slightly. But it is also true that the behaviour of exports has been very favourable over the last two years and Spanish firms have been increasingly diversifying their exports towards third markets with more dynamic demand. Unfortunately, the stimulus provided by external demand will not suffice to offset the effect of the other contractionary forces on employment, which can be expected to fall further. If the labour reform were to begin to produce its effects soon, wages might grow somewhat slower than in 2011. And along with productivity gains, that would lead to further declines in unit labour costs, thus enabling competitiveness gains to be made. Prices will continue on the moderating path on which they embarked in the second half of last year, although the risk of rising energy prices has not disappeared. To sum up: the scenario described indicates that domestic demand will continue to adjust in step with the ongoing financial deleveraging and fiscal consolidation.

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To build a fuller picture of how credit is affecting the level of risk in the financial system, it is necessary to drill down into the sectoral components of credit and their counterparts in the economy. Household credit The largest component of bank credit in the UK economy is of course lending to households and within that the great bulk, around 90%, is secured on dwellings. Mortgage lending is the single largest asset class on lenders’ balance sheets and stock of lending secured on dwellings is around 70% of GDP. Net secured lending to households is rising at nearly 3% – the highest rate since the end of 2009. Mortgage rates in the UK are now at very low levels – average quoted rates on two-year (75% LTV) fixed-rate mortgages are below 2%. Some of this of course is because the Bank of England’s official Bank Rate has been close to zero since 2009. But over the past three years, as banks’ funding costs have reduced and as competition in the mortgage market has intensified, on average mortgage interest rates have fallen by 2 percentage points. Unsecured lending to households is a much smaller proportion of credit; it accounts for only 12% of lending to households and around 10% of GDP. And the stock of consumer credit remains £ billion below its peak in 2008. But it is growing at around 8% a year, much faster than secured lending.

This is becoming a more pertinent issue in the UK as we move into a more normal phase of the credit cycle; credit is beginning to grow again albeit at rates below the pre-crisis peaks. And within the aggregate numbers some sectors are growing relatively quickly. Time-varying macroprudential policy is hard and there is much new ground to be broken. But there is a benefit in ensuring that the financial system maintains resilience as the distribution of systemic risks moves through the cycle and where necessary trying to ensure that such risks do not build up unchecked. I am conscious that I have spent the last half hour talking about the role of policy through time. Einstein, of course, taught us that time was in the end indistinguishable from the dimensions of space: “for us physicists believe the separation between past, present and future is only an illusion, although a convincing one”. There is I am afraid only so much brilliant simplicity an economic policy maker can take. So I fear that for the immediate future at least we will need to maintain that convincing and indeed convenient illusion and set policy accordingly. BIS central bankers’ speeches  7
34  Senior Supervisors Group (2010). 35  Jenner and Block (2011). BIS central bankers’ speeches  11  common tongue. That is one of the key messages of the 2010 Senior Supervisors Group report. The experience of global supply chains and the web tell us there is no technological constraint on real-time measurement and management of financial inventories by even the largest firms. Where Wal-Mart has led, Wall Street could follow. Common data standards could similarly transform consolidated risk management. There is no technological reason why slicing and dicing of the aggregate balance sheet could not be done with the same simplicity as searching the web. Determining aggregate exposures to a given counterparty or a risk factor is a single cut of the financial web. It ought to be as straightforward as Googling Aung San Suu Kyi or Britney Spears. (b)  Improving risk management across firms  Measuring and managing risks across firms was perhaps the single most important cause of the seizure of financial markets during the crisis. Counterparty risk reigned supreme. In as densely-connected a web as global finance had become, this was hardly surprising. Network risk, the risk of cascading dominos, was several orders of magnitude larger than at any time in human history. To see that, compare the failure of two financial leviathans only a decade apart. When LTCM collapsed in 1998, it had exposures of $ billion in OTC derivatives with a handful of Wall Street’s finest.

If a product needs to be recalled, the manufacturer updates the common data pool with an instruction, alerting the distributor or dispenser at the next point in the supply chain. If a recalled product has already been sold, the points of sale can be tracked and those affected can be notified. Panic is no longer systemic; it is quickly localised. (c)  Mapping the network  If data are not standardised, mapping complex networks is a high-dimension jigsaw puzzle. Understanding the underlying picture is taxing and time-consuming. Capturing the same data in a standardised way means that plotting the network becomes a much simpler game of join-the-dots. Experience with both product supply chains and the World Wide Web demonstrate the benefits of doing just that. In global product space, the recent work of Ricardo Hausmann and colleagues gives us some tantalising glimpses of the possibilities. They have recently constructed an “Atlas of Economic Complexity”.17 This is a visual representation of the product categories that contribute significantly to a country’s exports. Those product categories can in turn be mapped to measures of complexity. For example, iPhones are the fruits of a more complex manufacturing process than ice-cubes. This product network mapping provides new insights into trading opportunities and risks. For example, it allows country-specific measures of economic complexity to be constructed. These can explain almost three-quarters of the variation in income across countries.
Thomas J Jordan: Approaching the finishing line – the too big to fail project in Switzerland Speech by Mr Thomas J Jordan, Vice Chairman of the Governing Board of the Swiss National Bank, at the International Center for Monetary and Banking Studies, Geneva, 17 May 2011. *  *  *  I would like to thank Dr. Claudia Strub and Till Ebner for their valuable support in drafting this speech. Introduction Eighteen months ago, we here in Switzerland tackled a major challenge: the search for a solution to what is known as the “too big to fail” problem in the current financial system. “Too big to fail” means that the state has no choice but to rescue a company because its demise would seriously affect the entire economy. In good Swiss tradition, a broad-based committee of experts1 presented the Federal Council with a proposal supported by all involved parties and the implementation of which would significantly alleviate the “too big to fail” problem. This proposal was, in essence, approved by the Federal Council and has been put before Parliament in the form of a draft law. At this point, I should like to deliver an important message. The package of TBTF – too big to fail – measures is not intended to hurt the big banks or the banking sector in Switzerland.

Rather, it aims to protect state and taxpayer from incurring an unwanted and unacceptable risk, while also creating the necessary framework conditions for the banking sector to be able to develop sustainably and successfully over the long term. The decision is now up to the politicians. In the coming weeks and months, Parliament will decide whether the proposed measures will actually be implemented. The final, decisive phase of the project is thus underway – we are approaching the finish line! In the Swiss system of direct democracy, the electorate essentially also has the final word in the legislative process. It is therefore important to ensure that the public clearly understands such a complex topic as the regulation of systemically important financial institutions. The SNB has the statutory mandate to contribute to the stability of the financial system. It thus played a significant role in drafting the solution put before the Federal Council. Allow me to explain the considerations behind the proposed legislation. The cost of financial crises The latest crisis highlighted the fact that big, globally interconnected financial institutions present a particularly large risk to an economy. If they fail, systemically important functions vital to the smooth running of the economy – such as the lending business or executing payment systems – can no longer be carried out. It is for this reason that an economy cannot afford to allow such an institution to fail. In a crisis, the state – in other words the taxpayer – has no choice but to rescue the bank.
Zeti Akhtar Aziz: Islamic finance – a global growth opportunity amidst a challenging environment Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the State Street Islamic Finance Congress 2008 "Islamic Finance: A Global Growth Opportunity Amidst a Challenging Environment", Boston, 6 October 2008. *  *  *  This decade has witnessed the rapid evolution of Islamic finance. This has resulted in the dramatic transformation of the industry, from being focused on retail financing to providing an extensive spectrum of financial products and services, from being focused on the Muslim community to having an extended reach that serves the non-Muslim community, from being governed by conventional regulatory and accounting standards to having promulgated its own standards and finally from being domestic centric to becoming increasingly internationalised. The Islamic financial services industry has during this decade transitioned into a dynamic, fast growing and competitive form of financial intermediation servicing the global community. It is my honour and great pleasure to be here in Boston to participate in this inaugural State Street Islamic Finance Congress. With the recent evolution and expansion in Islamic finance, it has now emerged as a viable new asset class for investors and a competitive form of financing for businesses.

This growth is spurred in part by the growing funding requirements in emerging market economies, in particular, in Asia and the Middle East. This is reinforced by the continued confidence of investors in the Islamic financial instruments. Malaysia's Islamic finance journey Let me now turn to Malaysia's journey in the development in Islamic finance. Islamic finance in Malaysia first started as a strategy for greater financial inclusion, so as to have a greater outreach to the underserved segment of society to basic banking and insurance products that are compatible with Shariah principles. After three decades, the Islamic financial industry in Malaysia has evolved as an integral and competitive component of the overall financial system that operates in parallel with the conventional financial system. The Malaysian Islamic financial system is founded on three major strategies. Firstly, the Islamic financial system has been evolved as a comprehensive financial system that is diversified in terms of its institutions, markets and players. The Islamic financial system comprises the Islamic banking institutions, the takaful industry, the non-banking institutions and the Islamic money and capital markets. The supporting financial infrastructure includes the robust regulatory and supervisory framework that is reinforced by the legal and Shariah framework, the payment and settlement systems and the mechanism for the liquidity operations by the Central Bank. The assets of the Islamic banking system now comprise 16% of the market, while the takaful sector has garnered 7% market share.
As Bulgarian is not a member of the euro area and the ECB’s decisions have no legal force in the country, the BNB will issue individual administrative acts regarding the significant institutions upon a request by the ECB and in full compliance with it. For the purposes of direct supervision over the banks determined as significant, the BNB has appointed sub-coordinators, and representatives of Joint Supervisory 1/4  BIS central bankers' speeches  Teams who are to take part in all stages of the supervisory process. The Joint Supervisory Teams are responsible for the overall assessment of the risk, stability and vulnerability of each of the significant credit institutions. They also determine the relevant supervisory measures, as needed, including additional capital requirements under Pillar 2 of Basel II. The Joint Supervisory Teams assess the adequacy of the internal ratings of capital and liquidity, and the risks to them, the recovery plans, and the adequacy of the business model and corporate governance of each bank. With regard to prudential supervision related policy issues, the BNB’s representatives participate in other committees and structures assisting the ECB’s work in relation to the tasks conferred to it under Regulation (EU) № 1024/2013. The ECB is responsible for monitoring of less significant institutions and for the general procedures applicable to all credit institutions. Direct supervision over institutions classified as less significant is exercised by the BNB, but with full harmonization of the supervisory process with that of the ECB.

With regard to institutions and groups, which have not been classified as significant and do not operate cross border, the national resolution authorities exercise fully their powers for resolution planning, assessing resolvability and the possibility to address the impediments to a resolution, as well as the resolution actions. At the same time, in order to ensure the effective and consistent implementation of the resolution framework, the SRB issues guidance and general instructions to the national resolution authorities regarding the performance of the tasks and adoption of resolution decisions. Within the SRB, the national resolution financing mechanisms are replaced by the Single Resolution Fund (SRF), where the credit institutions from the participating Member States make ex-ante, and if needed, ex-post contributions. The decisions about determining the amount of banks’ contributions to the SRF and about the SRF funds management are taken by the SRB. It is the national resolution authorities that are responsible for informing the banks about their calculated individual contributions and for raising and transferring the contributions to the SRF. Using the funds to finance the resolution of failing credit institutions within the Banking Union is an exceptional power conferred to the SRB. The SRB will perform this function with regard to both the banks in Bulgaria which are directly supervised by the ECB and the banks for which the BNB continues to be, even within the SRM, the resolution authority with direct powers.
Likewise, further headway would be needed in reducing sovereign-banking links, which contributed notably, as is known, to heightening the severity of the crisis in the euro area. In this connection, the banking union requires supranational support that would increase the financial capacity of the Single Resolution Fund in the event of a systemic crisis and which would afford it greater power during the transition process established for its full constitution. The European Commission’s proposal that the European Stability Mechanism should provide this support might be an appropriate solution. It is also necessary to create a common deposit guarantee scheme whereby depositors’ confidence in banks is irrespective of the health of their Public Treasuries. Progress on the set of initiatives encompassing the Capital Markets Union would also contribute to achieving greater financial integration, diversifying sources of financing and empowering to a greater extent private mechanisms geared to sharing the risks that originate through these markets. Conclusions In any event, it should be stressed that, although the recovery is providing for the correction of some imbalances, some fallout from the crisis remains at large. The high levels of unemployment and of public and private debt, low productivity growth and the weakness of the capitalisation process pose challenges that require greater reformminded ambition.

Along with the initiatives being developed to modernise and harmonise insolvency procedures and to tackle the vulnerability arising from the scale of the nonperforming loans still on bank balance sheets, the euro area economies must reinstate a reform agenda geared to enhancing productivity and to improving both the flexibility of product and factor markets and the business environment. Over recent years the monetary union and the European integration project have overcome the difficulties that called into question its existence. At present, there is some consensus on how to proceed in order to strengthen the project and to enable the ensuing benefits to be clearly perceived by all European citizens. European governments and institutions have a clear responsibility to heed the lessons learnt and to provide the appropriate economic policy responses. Thank you for your attention. 7/7
By 1914, while the U.S. was already the world’s largest economy and trading nation, its banking system remained curiously parochial and the dollar was not a major international currency. 8 In fact, American firms continued to finance their trade almost entirely with credits from foreign banks, a source of resentment, with Paul Warburg, the first Federal Reserve vice chairman, referring to the annual acceptance fees paid to London banks as a form of “tribute.”9 With the passage of the Federal Reserve Act in 1913, some of the constraints on the emergence of a robust dollar trade financing market were removed and the newly established U.S. central bank could take a more active role in nurturing and backstopping a nascent dollar acceptance market, which it did. These efforts included buying dollar acceptances for foreign central bank accounts at competitive discount rates and providing guarantees, for a small fee, on payments at maturity of acceptances bought for these accounts.10 These actions helped to spur the dollar’s emergence as an important international currency, with dollar acceptances viewed as an attractive reserve asset by the 1920s. The early accounts also represented tangible links of cooperation among major central banks, with much of this cooperation centered on efforts to maintain or restore the international gold standard in the aftermath of the First World War. 11 The reciprocal relationships enabled central banks to buy and sell foreign exchange to influence credit conditions in each other’s markets with the aim of regulating cross-border gold movements.

There are a number of industry initiatives across the world to explore further public-private partnerships to provide ultimate backstop for systemic losses. Clearly there is a limit to the size of losses that private insurance capital can cover, and it is worth exploring whether an explicit public-private backstop along similar lines to Pool and Flood Re in the UK is one way of mitigating the risk of a shock to supply of insurance. But we should be mindful of the risk of moral hazard and of crowding out private capital. To return to the example of cyber risk, the industry is now able to provide explicit cyber cover for those aspects of the risk that are insurable such as recoverability, physical damage and the cost of notification of lost records. And we know there is appetite in the market to keep the insurance business model relevant and seek out alternative sources of profit by underwriting new risks. As investors in longer-term, illiquid assets, insurance companies are well suited to support the UK’s economic recovery As this audience will be well aware, the industry’s contribution to the economy goes further than transfer and pooling of physical and financial risk.
Conclusion We are well advanced in the programme of regulatory reforms to manage systemic risk in the banking system. We are only now beginning to think about macroprudential risks from marketbased financing. This should not be surprising. With the exception of some types of market based financing activity, such as money market mutual funds, which have been addressed, asset managers and investment funds were not a source of instability in the financial crisis. But the past is not always a guide to the future. It is important to try to understand risks from market based financing and how they could materialise in a world in which market liquidity might be lower than before the crisis. And to return to where I started, it is important that we complete the implementation of the programme of reform of the banking system. Oscar Wilde also once said ‘When bankers get together for dinner, they discuss Art. When artists get together for dinner, they discuss Money’. I suspect over the last few years the dinner topic for members of the banking industry has been much more about regulation and the future of your industry and much less about art. I think it will be a long time before art is the only topic of conversation over dinner. There is a great amount of implementation work to be done. Risks have not gone away and we will need to consider them carefully as the financial cycle moves through a more normal phase.

The drivers of the deceleration back then appeared, to some extent, to be idiosyncratic and short-lived, relating to the effect of emissions standards on the euro area car industry and a normalisation of world trade from its very strong growth rates in 2017.1 Yet it was clear that the loss of growth momentum could become more broad-based and persistent if two risks were to materialise: first, if external demand were to remain weak; and second, if this were to spill over into domestic demand. In the meantime, the first risk has by and large been realised. The weakness in world trade has continued, which has significantly affected the manufacturing sector. Global goods import growth2 in January reached its lowest level since the Great Recession, on the back of rising uncertainty about trade disputes and a slowdown in emerging market economies, especially China. As a result, growth in extra-euro area goods exports was negative at the end of last year for the first time since January 2016, and industrial production fell by 4.2% year on year in December – its largest decline since 2013 – before recovering somewhat in January. Indicators such as new export orders, which have historically been closely associated with industrial production3, remain in negative territory. So we are now seeing a more persistent deterioration of external demand. But a “soft patch” does not necessarily foreshadow a serious slump.