samchain/econo-pairs-v1 huggingface dataset:
In every crisis, depositors would typically ask for foreign currency cash, inducing exchange rate pressures and prompting monetary policy tightening in order to counter those pressures. Euro adoption was the only way to get rid of currency mismatches and endow the central bank with the ability to provide euro liquidity in the case of emergency. This eventually took place at the beginning of this year, after a process that was internally started in 2017 and followed a new, more complicated procedure (due to the changed euro area architecture after the crisis). EDP, MIP, BU... The process was successfully completed in the shortest possible time, five years. Before the introduction, however, we also had to deal with public fear of unwarranted price increases, in particular due to the euro introduction taking place during a period of high inflation. Nevertheless, the immediate impact of the changeover on the aggregate price level was in line with the experiences of other Member States, around 0.4 p.p. What were the immediate effects? Credit rating agencies responded promptly to the elimination of currency and liquidity requirements, increasing the sovereign rating by two notches immediately following the formal decision on euro adoption. Also, market participants repriced government bonds, reducing the yields by around 80 bps, with some additional price in effect taking place even before the decision. At the time of the entry, reducing high mandatory reserve requirement from 9% to 1%, and foreign currency liquidity requirement from 17% to 0, substantially increased excess liquidity.

Not all of them disappeared though, for example, Charlemagne capital bought four regional banks and consolidated them into a single bank. Cleaning up the market, by removing inefficient banks, laid foundations for a healthier banking system, resistant to macroeconomic disturbances and improved risk management. Moreover, these two crises made us attentive to emerging risks, such as rapid credit growth or lax risk management practices and generated political support required to provide us with the toolkit needed to prevent future disruptions in the financial sector with large spillovers to the real economy and potentially huge costs to the budget. Since then, we continued cleaning up the system with no threat to either the financial stability or the budget. Navigating the Boom and the Bust The resumption of growth and resolution of weak banks eventually stabilized the banking system, setting the stage for the period of rapid international integration and financial deepening of the 2000's. After the first clean-up at the turn of the century, the number of banks has fallen to slightly above 40, and consolidated institutions started to compete strongly. In their pursuit of higher market shares, banks turned to foreign sources of financing, facilitated by extremely favourable financing conditions and high liquidity at the global level. At the surface, the financial sector supported the story of economic growth and convergence. However, experiences from the 1990s provided an optics needed to spot risks emerging underneath.
In particular, network graphics can be used to visualise “node size” – as a measure of the capital-absorptive capacity of emerging markets – the Small Pond; and “link scale” – as a measure of the capital distribution of advanced economies – the Big Fish. As a first cut, we use a dataset developed at the Bank of England on stocks of cross-border capital, spanning 18 advanced and emerging economies (Kubelec and Sa (2010)).1 This enables us to track the growth in, and financial linkages between, countries over time. Chart 4 plots this international network map at five-year intervals from 1980 to 2005. The node size for each country is measured as the absolute sum of its external assets and liabilities, while the width of the links between nodes measures bilateral gross external assets. Both are in (log) dollar terms. Taken over the past quarter-century as a whole, there is significant evidence of both capital market deepening (increased node size) and integration (increased link size). On average, total stocks of external assets have increased seventeen-fold over this period, rising from around $ trillion in 1980 to $ trillion by 2005. Relative to these countries’ GDP, they have risen from 18% in 1980 to over 70% by 2005. This is consistent with a period of intense financial globalisation. Yet, despite this, the balance of global financial power has not altered markedly.

But, unconstrained, such a simulation would imply a potentially unbounded relationship between market capitalisation and a country’s GDP. Because market capitalisation is the discounted value of future profit streams from companies, that seems implausible. Charts 10 plots equity financial depth for the US and UK since 1929 and 1965 respectively. Between 1929 and 1990, the financial depth ratio in the US was roughly flat, at around 50%. As the US liberalised this ratio shifted upwards, averaging around 100%; it has remained roughly at these levels since. The UK has followed a similar pattern. To reflect these findings, in the simulations an (arbitrary) cap of 100% is placed on countries’ market capitalisation to GDP ratio, once they have reached current levels of US GDP per capita. 6  BIS central bankers’ speeches  Using the relationship in Chart 9 and the GDP projections, equity financial depth in the G20 countries can be projected forward. Many of the advanced countries have only a short distance to travel to reach 100%, given their starting point. Among the emerging G20, the average financial depth ratio rises from around 50% in 2010 to around 100% by 2050 (Chart 11). In other words, the pace of financial deepening in the emerging G20 countries is rather gradual. If anything, this may understate the likely pace of change. Nonetheless, these trends imply a rather striking shift in the composition of the global market portfolio.
2  BIS Review 13/2005

The most prominent challenges are the high cost of capital as a result of high interest rates compared to large enterprises (LEs), the difficulty of obtaining proper finance due to shortage of guarantees and modest credit record, inability to compete and affect the market’s powers and making advantage of economies of scale as is the case with LEs, weak capacity to face and facilitate governmental procedures to expand their work, and low spending on development research works. Dear audience, Business enterprises in the Kingdom of Saudi Arabia have witnessed notable growth over the last years. The enterprises subscribing to the Social Insurance system have increased from 121.5 thousand in 1426AH to 218.4 thousand in 1430AH, with an average annual growth of 16 percent. Individual enterprises represent 93.1 percent, limited partnership enterprises 4.7 percent, and joint enterprises 0.6 percent of the total number. These enterprises’ economic activity is concentrated in three areas, namely, commerce with 34.3 percent, construction and building with 32.3 percent, and manufacturing industries with 14.6 percent. Small enterprises employing less than five persons have accounted for the bulk share, representing 45.5 percent of total enterprises at the end of 1430AH, enterprises with  2  BIS Review 171/2010  5–59 employees constitute 42 percent, while the remaining 3.8 percent has been accounted for by enterprises with more than 60 employees. These data show that most enterprises in Saudi Arabia are small ones, based on the number of employees. The SME’s contribution to total GDP is low.
Offshoring may impair the national capacity for systems operations, development and follow-up. It may also become difficult for the Norwegian authorities to coordinate contingency planning, if large parts of operations are managed from another country. Norges Bank sets conditions for interbank systems when tasks are moved abroad. Among these conditions are that hardware must be physically located in Norway. There must also be contingency arrangements in Norway that in a crisis can quickly take over tasks that are performed abroad. Norges Bank is of the opinion that critical providers of services to the payment system need to be more closely monitored. Norges Bank will, in consultation with Finanstilsynet (Financial Supervisory Authority of Norway), examine the contingency arrangements and security of the payment system’s critical ICT service providers and data centres. This will not entail a change in FMI owners’ responsibilities for outsourced operations. The banking and payment system in Norway is dependent on a very small number of ICT providers and data centres that are also vital to other critical infrastructure. This systemic risk needs to be followed up by the authorities. ICT service providers are not subject to direct supervision in the same way as entities in the banking and payment system. In its official report from last year, the ICT Security Commission found that the supervision of subcontractors may present a challenge for a number of systemically critical institutions.

Falling cash usage and the possibility of more profound structural changes in the monetary and payment system mean that we need to consider whether it would be wise also to issue a central bank digital currency. A working group at Norges Bank has looked more closely at the purpose and relevant forms of a central bank digital currency. The group finds that a central bank digital currency could function as a back-up solution in the event of a disruption in banks’ payment systems. This contingency aspect may gain importance if banks’ systems become more international. Moreover, a central bank digital currency may help to maintain competition in the payments market and offer the characteristics of legal tender. Looking ahead, Norges Bank will assess further how well the solutions being considered are able to offer the necessary and desirable characteristics. Then we will decide whether to proceed with testing. This is a long-term undertaking, and it is still too early to draw any conclusions. This work also interfaces with other measures to ensure a sound payment system and confidence in the monetary system. We must consider the combination of measures, by both public and private entities, that can best enable us to perform our social mission. The payment system is changing. New structural features like vertical integration, internationalisation, new market entrants and increased concentration of providers suggest that Norges Bank must assess how it will perform its role. Our ambition must be to maintain a payment system that is at least on par with comparable countries.
This is particularly important for the common assumption that a mortgage must be arranged at the time of purchase, which means entering into a very longterm payment commitment with a credit institution. Something which, as the crisis brought painfully to light, may entail problems in the case of economic or labour market instability. Comparatively speaking, mortgage risk performed well during the previous financial crisis, despite the fact this is not always perceived as such. Defaults on house purchase mortgage loans at no point exceeded 6%. However, financing for real estate development and construction reached non-performance levels of over 36%. This demonstrates that individuals treat their monthly mortgage payments as something that is a priority, whereas the financing of these same houses before their completion and sale evidences much riskier characteristics. Yet despite this relatively good performance, the crisis showed that the mortgage market had certain shortcomings that needed correcting. Apart from the evident social and economic drama, in the final years of the crisis we experienced a bout of litigiousness and unprecedented legal uncertainty. Notably, much of this litigiousness was concentrated in the mortgage market. One paradigmatic instance of this conflict were the so-called floor clauses. According to end-August figures, more than 1.2 million complaints were lodged in this connection, with a cost for banks of almost € billion. 1  The economic and, no less importantly, reputational harm that cases such as the floor clauses have caused to the sector is evident.

In the first ten years of membership of the euro area, Spain enjoyed a long phase of growth in an environment in which monetary policy, with relatively low interest rates, was highly expansionary. This period saw rapid increases in the standard of living and in economic welfare, as reflected by the rapid rise in GDP per capita, which in 2007 edged above the average of that of the countries then comprising the euro area. This achievement largely reflected very labour-intensive growth. The insufficient adaptation to the euro gave rise to significant imbalances However, the expansion in those years was based on a pattern of household and corporate spending which, driven by the property sector boom and by cheap and easy credit, systematically exceeded the economy’s productive capacity. This imbalance has been at the root of the difficulties of the Spanish economy since the international financial crisis began. First, demand-side pressure led to significant pressure on costs, margins and prices, which tended to grow systematically faster than those of our European partners, with a notable worsening of our external competitiveness. This was not at all consistent with the decision to forgo the exchange rate as an economic policy instrument. Second, the lack of sufficient domestic output to meet domestic demand had to be increasingly covered by imports. This caused a sizeable imbalance in our foreign trade, as reflected by the balance of payments, which in 2007–2008 ran a deficit of around 10% of GDP.
Muhammad bin Ibrahim: De-risking Asia - the growing role of selfinsurance Keynote address by Mr Muhammad bin Ibrahim, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Asian Captive Conference 2017 "De-Risking Asia: The Growing Role of Self-Insurance" Kuala Lumpur, 16 August 2017. * * * It is probably fair to say that captives have had, at best, an uneasy relationship with regulators. Captive insurance did not get off on the right foot with regulators. In the early days of the modern captive, efforts to regulate captives were mostly ill-suited to the nature of the captive business. Prudential and market conduct regulations intended for the protection of the general public were applied equally to traditional and captive insurers. This reduces the cost savings that captives were set up to achieve. In response, captives relocated and domiciled in jurisdictions with less onerous regulations, which on hindsight is an onerous consequence. Fast-forward half a century, captives are have an entrenched reputation for being tax evasion vehicles of large corporations. Offshore centers that are hosts to many captives have come under greater scrutiny, with stronger tax and regulatory regimes back on the cards to haunt the industry. We seem to have come full circle, and possibly still without a clear grasp of how captives, as well as the economics in which they operate, have fundamentally changed over time. This raises a risk that the captive and regulatory community may yet find itself caught wrong-footed (again! ), with potentially higher stakes at hand.

This often results in structural defects in the financial systems that are not conducive to the maintenance of monetary and financial stability; for example, regulatory gaps, low transparency and market concentration. These defects also breed unethical behaviour. Indeed, free and open emerging markets are considered by some as markets that can be rather freely manipulated. They also call them ATMs. But I still believe that financial openness outweighs the risks of financial instability, and that the risks I mentioned just need to be, and can be, managed, simply by being sensible in the development of the financial system, reminding ourselves always that the primary purpose of the financial system is financial intermediation that supports the economy. Although it provides employment for quite a number of people, including us, and profits for a lot of capital, the financial system does not and should not have a life of its own. Gradualism is perhaps a prudent attitude, even if this means taking a little more time or appearing for a time to be not as welcoming as the top players in international finance would like. "Because others have it" is definitely a risky attitude to take in financial development. And as developed markets are going back to basics, a no-frills approach to financial development may not be a bad idea. Financial openness does not mean getting all the top brand names to set up shop in your backyard and importing innovative financial instruments and practices. Indeed, some of those innovative financial instruments may be toxic.
Of course a fall in house prices benefits buyers just as it hurts sellers so there is no necessary link to wider consumption. But the belief that in housing you could have your cake and eat it – that is your house would not just provide a place to live but would also provide an assured capital gain – has become widespread and the shock to expectations appears to be having a wider impact on confidence. There are also signs in some of the more timely survey indicators of consumer spending that weakness is spreading there too. If nothing else were going on, the MPC would expect this prospective weakness in overall demand to put downward pressure on inflation in the medium term and that would be pointing to further rate cuts. The commodity price cycle However, there is something else going on! Because if the US still drives the financial cycle, it has become less dominant in the world economy. According to the IMF, emerging and developing countries together generated around 70% of world growth in 2007, with China alone generating around 25%. And the world economy has been and still is growing strongly. That is what has been driving the rise in oil and commodity prices. For example, since the start of 2005, China has accounted for almost all of the increase in world demand for key metals such as aluminium, copper and zinc. And since 2000, around one-third of the increase in world demand for oil has emanated from China.

This led to a wider loss of confidence in banks, the hoarding of cash and illiquidity in many financial markets which is still not over. As financial institutions all around the world have struggled to shrink their balance sheets in the face of this storm, there has been a pronounced tightening in the supply of credit. The number of loan approvals for house purchases fell to a new low in April to – on some indicators – its lowest level in over thirty years (Chart 3). In the past, the swings in the UK economy have been home grown. Credit squeezes have typically resulted from rising domestic arrears and defaults, driven by economic downturns at home. This time the sequence has been reversed. The broadest measures of economic activity have continued to grow: quarterly GDP growth in the latest data for 2008Q1 was 0.4% and employment has continued to rise. The level of defaults on corporate and personal loans has been low. So the squeeze on new lending has preceded rather than followed the slowdown in the UK. The judgement we have to make is how far that tightening will restrain the domestic economy in future. There is no doubt it is having a material effect already (Chart 4). This is most obvious in the housing market, where prices have fallen by around 7% since their peak, and have further to fall. The drop in transactions and turnover is rippling through the housebuilding industry,  BIS Review 80/2008  3  estate agencies and mortgage brokers.
This process has continued during the 1990s and 2000s and in 2018 more than 50 per cent of all private sector employees in Sweden were working in service industries. At the same time, GDP per capita has shown rapid trend growth from 1850 until now. Productivity growth means we have time and money over to invest in other things than work and output. Ultimately, it increases our welfare, makes our workplaces better and improves our health. A somewhat hackneyed but nevertheless descriptive quote from Nobel Prize winner Paul Krugman is “Productivity isn’t everything, but, in the long run, it is almost everything”.12  ...but also creates distinct challenges Despite changes and productivity improvements in the long run lying behind almost all of the growth in welfare, there are of course important challenges in the short run. Behind every statistic there are people and families. Owning horsedrawn coaches when the internal combustion engine was commercialised or being a seamstress when Spinning-Jenny came into operation was probably quite tough. Similarly, there can be major upheavals in our lives if driverless trucks push  9 Sveriges Riksbank (2018a). 10 Skingsley (2018). 11  The concept of creative destruction was coined by Joseph Schumpeter in 1942. 12 Krugman (1997). 4 [12]  out lorry drivers or software and algorithms take over administrative tasks.

I base this on some, few, companies having seen their market power increase in recent years.7 These companies are often known as “superstars” and have high profit margins and have experienced high return on invested capital. They are often multinational corporations that sell products and services all over the world. At the same time, it appears as though smaller companies have fared less well. The difference in productivity between superstars and ordinary companies has also increased.8 When we talk to companies in our Business Survey, they largely confirm this picture. The companies that have long been subjected to international competition on global markets have a greater tendency to regard digitalisation as an opportunity than the consumer-related companies with most of their operations in Sweden. Change is a necessary condition for a prosperous society... Regardless of what stage of technological development we are at, it is clear that technological advances revolutionise lives and entire societies. The internal combustion engine transformed transportation in society. Electricity gave us light,  4 Cowen (2011). 5 Brynjolfsson and McAfee (2011). 6 https://voxeu.org/article/technological-progress-thing-past 7  See, for instance, De Loecker and Eekhout (2017, 2018). 8 OECD (2015). 3 [12]  heat and energy. Digitalisation, and above all the internet, has given us almost direct access to enormous amounts of information. Each new innovation replaces other products or changes their areas of use. Our behaviour changes and we make new demands of companies and decision-makers. In some branches the changes have been particularly marked over the past decade. One example is traditional media.