samchain/econo-pairs-v1 huggingface dataset:
I believe that the odds of widespread financial disruption on this count are fairly slim, although, clearly, some borrowers are vulnerable. First, the shift to these new instruments appears relatively modest overall. Second, the equity cushions available to both borrowers and lenders still seem, on average, to be pretty substantial. This is evident in looking at loan-to-value ratios, which have fallen, on average, as home valuations have risen faster than mortgage debt. In addition, most financial institutions enjoy comfortable capital positions, so they’re better able to weather any problems with their mortgage portfolios. Finally, some of the risk associated with mortgages has been transferred from banks to investors, as banks have sold off securitized bundles of mortgage debt. These investors may be in a better position to handle the associated risk. So, while there undoubtedly would be some fallout from a substantial drop in house prices, the financial system and consumers appear to be in reasonably good shape to handle the situation. Monetary policy I’d like to close my remarks by taking a step back from the home price story and putting it in the broader context of the economy’s overall performance—which, after all, is the chief concern of monetary policymakers. As I’ve emphasized, economic activity has been burdened by some major drags over the past several years. As a result, the Fed has had to keep interest rates exceptionally low for a long time just to get respectable economic growth.

In addition, inflation expectations, which may affect wage and price setting, appear to be edging lower: We see this both in survey results and in the financial markets— through noticeable declines in “inflation compensation”, measured by the difference between the yields on Treasury bonds with and without inflation protection. A third factor is productivity growth. BIS Review 52/2005  1  There have been concerns that a structural productivity slowdown was in the offing, which could put upward pressure on inflation; the good news is that structural productivity growth apparently still remains above the levels reached during the second half of the 1990s, although it may have edged down just a bit over the last few years. A final factor impacting the inflation outlook is the degree of slack in the labor market. Right now, the unemployment rate is relatively low: at 5 percent it’s near most estimates of the so-called natural rate. But other measures—such as the employment-population ratio, a survey of job market perceptions, and industrial capacity utilization—suggest that some slack still remains. Risks to economic growth and employment Now let me turn to the real side of the economy—growth and employment—and highlight some of the risks that affect my optimistic baseline projection. Even though overall growth has been respectable, economic activity has been burdened by some major drags over the past year or so. Three major ones result from the oil price shock, the deterioration of the trade balance, and a still relatively low level of business investment spending.
Recognising that, the US authorities have recently revised their circuit-breaking rules with all trading in a specified set of securities and futures now halted, irrespective of where trading is taking place. 33 Although the pattern of trading fragmentation in Europe is similar to the US, current MiFID proposals do not envisage an automatic cross-market trading halt. But in a world of locationfree, tightly arbitraged trading, cross-market circuit-breakers might become increasingly important. Indeed, these rules may potentially need to cross continents, as well as countries and platforms, if price dislocations are not to be redirected. 31  European Commission (2010)  32  MacKenzie and Demos (2011). 33  CFTC-SEC (2010). BIS central bankers’ speeches  13  (iii) Resting rules: Circuit-breakers are an ex-post, state-contingent intervention rule, specifying a minimum T for a temporary period. A more ambitious proposal still would be to impose a minimum T, or resting period for trades, at all times. Minimum resting periods are an ex-ante, non-state contingent intervention rule. They tackle the arms race at source by imposing a speed limit on trading. Though mooted in both the US and Europe, they have not been implemented in either trading jurisdiction. In some respects, it is easy to see why. From equation (1), imposing a minimum T will tend to result in a higher average bid-ask spread in all states. By increasing the per period transaction cost, the imposition of a minimum resting period would tend to widen bid-ask spreads and damage market liquidity in peacetime.

In mid-2007, serious problems with structured products backed by sub-prime mortgages put an abrupt stop to the boom in securitisation. False incentives, inadequate control mechanisms, shortcomings in the rating system and insufficient personal responsibility on the part of investors were the main criticisms aimed at securitisation practices. What is important now, is to correct these deficiencies, so that the trust of market participants in these products can be restored. It would be wrong to ban the securitisation of mortgages, since these refinancing instruments generate substantial economic benefit and are an indispensable part of our modern financial system. The mortgage securitisation weaknesses revealed in the financial market crisis do not apply in the case of the Swiss mortgage bond. Consequently, it should definitely have the potential to play an even greater role in maturity-matched refinancing of mortgages in Switzerland in the future. In addition, banks can improve their liquidity by holding portfolios of Swiss mortgage bonds themselves. Mortgage bonds could be converted into liquidity quickly and simply, as required, by means of repo transactions – either in the Swiss franc interbank market or at the SNB. BIS Review 60/2008  1
BIS central bankers’ speeches  7  Figure 4 Theoretical sketch, adjustment to new equilibrium unemployment Per cent 10  10 Equilibrium unemployment Actual unemployment Adjustment path 3  8  8  Adjustment path 2 Adjustment path 1  6  6  4  4  2  2  0  0 0  2  4  6  8  10  12  14  16  18  20  22  24  Source: The Riksbank  Figure 4 illustrates three different adjustment paths to a new level of equilibrium unemployment (broken red, yellow and grey curves) and the variation of actual unemployment around the equilibrium (blue curve). In this example, the economy is assumed to be exposed to a structural change in year seven which decreases equilibrium unemployment from six to four per cent and, five years later, the economy has adjusted to the new equilibrium. Due to various frictions in the economy, such as matching frictions and changeover costs on the labour market, the adjustment to the new equilibrium takes time. Cyclical unemployment is measured by the unemployment gap, which is the vertical gap between actual unemployment and the adjustment path. The figure is thus a schematic illustration of how unemployment adjusts to a new calculated equilibrium. However, in reality, we have no knowledge of how the adjustment to a new equilibrium takes place and how long it takes. The lack of knowledge about adjustment is represented by the three different adjustment paths.

Examples of structural factors are the design of the taxation and social insurance systems,  6  See, for example, the article “The effects of the financial crisis on the labour market – a comparison of Sweden, the euro area and the United States”, Monetary Policy Report, February 2011, and “The relationship between the business cycle and the labour market in Sweden”, Economic Commentaries no. 2, 2010, Sveriges Riksbank. 7  Okun’s law shows the short-term relationship between the level of unemployment and GDP. 4  BIS central bankers’ speeches  competitive pressures in the economy, labour market legislation, the negotiating strength of employers and employees and so on.8 These are the factors that determine equilibrium unemployment. So affecting these would require broad-based economic policy measures. Although it is obvious, it is still important to bear in mind that monetary policy cannot affect these fundamental conditions for long-term growth and employment. Breaking down unemployment – a complicated story On the other hand, however, monetary policy is able to influence the cyclical part of unemployment via effects on the aggregate demand in the economy. In theory, this is a matter of using monetary policy to keep actual unemployment as close to the equilibrium level as possible. In practice, this is difficult, as equilibrium unemployment is not observable but must be calculated indirectly. These calculations are highly uncertain, something which is true of all gap calculations in which various actually-measured quantities are related to an estimated, unobserved quantity.
It was an important causal element of the financial crisis that part of the financial sector had escaped this safety net. This applied in particular to cross-border banking. Let me take two examples to illustrate this. 1  Thornton and Bagehot are the classical references: Henry Thornton (1802). “An Enquiry into the Nature and Effects of the Paper Credit of Great Britain”. London: George Allen & Unwin . Bagehot, Walter. 1866. “What a Panic Is and How It Might be Mitigated”. Republished in Collins, Michael. 1993. Central Banking in History. Vol. 7. Aldershot, England. Edward Elgar, Walter Bagehot (1873). “Lombard Street: A Description of the Money Market”. 2  Goodhart and Dimitrios give a recently published summary of the historical development of the financial stability role of central banks: Charles Goodhart and Dimitrios P. Tsomocos (2012). Analysis of financial stability. In “The Challenge of Financial Stability: A new model and its applications”, eds. Charles Goodhart and Dimitrios P. Tsomocos. Edward Elgar. Cheltenham, UK. BIS central bankers’ speeches  1  First, the euro area as a whole had a more or less balanced current account position during the build-up to the financial crisis. A fact that drew less attention at the time, however, was that European banks had built up huge USD-denominated balance sheets that had mismatches, especially in terms of maturity.

Again, the biggest strides have been taken in the realm of supervision, but a greatly improved resolution framework is also in the process of being introduced. A common deposit insurance system is not yet on the agenda, however. That might be an impediment to further banking integration and potentially a source of vulnerability. EU members outside the euro area can opt into banking union. This introduces the possibility of deep banking integration without a LOLR, which is a risky combination, as we have seen. That risk could of course be mitigated through uncapped central bank swaps and mutual acceptance of collateral, but as far as I can see, there is as yet no formal framework for this. In this connection, I note with interest the plans in this region to progress with regional banking integration by, for instance, the ASEAN. The benefits will be substantial, but we need to be mindful of the risks and learn from the European experience. As I see it, banking integration without a monetary union or alternative arrangements for FX liquidity provision is potentially very risky. That said, recent events have shown that a monetary union without a banking union is also risky. At the global level, there has been some progress on the framework for supervision, crossborder crisis management, and resolution of cross-border banks through the work of the Financial Stability Board (FSB).
This seems also to have constrained to some extent the economic performance and the development of these sectors in the euro area as illustrated by their disappointing labour productivity growth performance. 9  See the ECB Occasional Paper Series No 44 “Competition, productivity and prices in the euro area services sector”, by the Task Force of the Monetary Policy Committee of the ESCB, April 2006. 10  Although the data available refer mostly to the 15 earliest members of the European Union, the EU15, they are still illustrative of the situation in the euro area. In 2000 only 0.1% of the total EU15 population (or around 225,000 people) moved their official residence between two Member States. Furthermore, only a small proportion of individuals – 0.4% of the EU15 population – were known to commute across borders to work, and half of this amount was to a non EU15 country. In the United States, geographical labour mobility appears to be far higher. Evidence suggests that around 5.9% of the total US population moved their residence between US states in 1999. See F. F. Heinz and M. Ward-Warmedinger, “Cross-border labour mobility within an enlarged EU”, ECB Occasional Paper No 52, 2006. See also “Action plan for skills and mobility”, European Commission, 2002. 11  See EIB “Financial integration in Europe” (2007).

Domestic demand should be further supported by our monetary policy measures and their favourable impact on financial conditions, as well as by the earlier progress made with fiscal consolidation and structural reforms. Moreover, the renewed fall in oil prices should provide additional support for households’ real disposable income and corporate profitability and, therefore, for private consumption and investment. In addition, the fiscal stance in the euro area is becoming slightly expansionary, reflecting in particular measures in support of refugees. However, the economic recovery in the euro area continues to be dampened by subdued growth prospects in emerging markets, volatile financial markets, the necessary balance sheet adjustments in a number of sectors and the sluggish pace of implementation of structural reforms. The risks to the euro area growth outlook remain on the downside and relate in particular to the heightened uncertainties regarding developments in the global economy, as well as to  BIS central bankers’ speeches  1  broader geopolitical risks. These risks have the potential to weigh on global growth and foreign demand for euro area exports and on confidence more widely. Euro area annual HICP inflation was 0.2% in December 2015, compared with 0.1% in November. The December outcome was lower than expected, mainly reflecting the renewed sharp decline in oil prices, as well as lower food price and services price inflation.
5  King M A (2006), Speech at a dinner for Kent Business Contacts in Conjunction with the Kent Messenger Group/Kent Business, Ashford, Kent, 16 January, 2006. 6  My colleague David Miles discussed this in “The Future Financial Landscape”, a speech given at Bloomberg, 16 December, 2009. 7  An earlier estimate of world broad money growth can found in Tucker P M W (2007), “Macro, asset price, and financial system uncertainties”, Bank of England Quarterly Bulletin, 2007 Q1, pp. 122–130. This version takes into account resident foreign currency deposits and non-resident deposits with banks. 6  BIS Review 21/2010  market intelligence began to report a revival in financial market “animal spirits” after the telco debt problems of 2002. 8 Obviously these wider measures of money collapsed – and, again, by more than the standard M4 measure – after the Lehman crisis. Broader measures can tell us about domestic as well as global conditions, and this may be especially important for the UK. The contraction in lending to our businesses and, to a lesser extent, to our households owes a lot to withdrawal by foreign-headquartered banks (Chart 15). Cross-border lending into the UK, particularly via syndicated lending, has shrunk. And so has lending by branches and by many (but by no means all) subsidiaries of overseas banks here. The same broad pattern seems to be true in other economies, but may be rather less significant. There is an unusually large presence of non-UK banks here, due to our hosting an international financial centre.

With kuna banknotes bearing my signature and the stability of the kuna having been the focus of most of my professional career, I probably have the most reason to regret its passing into history. However, we have introduced the euro for the benefit of Croatia and I have never had any doubt about this being the right way. Not only did Croatia become the twentieth member of the euro area with the  1/2  BIS - Central bankers' speeches  introduction of the euro, but it also entered into partnership with the countries using the second major currency in the world. Looking forward, the introduction of the euro has opened a new chapter of our monetary history for us at the central bank. On 1 January 2023, the Croatian National Bank became part of the Eurosystem and thus an active participant in defining a common monetary policy. Furthermore, our voice in the ECB's Governing Council has a greater weight relative to the size of our country, and for the first time in history we are in a position to influence the financing conditions in the euro area and, consequently, in Croatia. Those opposing the euro might claim that Croatia loses its monetary independence by joining the monetary union, but the truth is in fact the opposite: Croatia has gained more power.
Covered bonds are well suited for pension portfolios and other assets with a long time horizon. Further ahead, there should therefore be good possibilities for Norwegian banks to procure long-term funding. Since residential mortgages usually feature a long maturity, bonds should also have a long maturity. Before the financial crisis, mortgage-backed covered bonds were normally issued with a maturity of five to ten years in European countries. 13 But this source of funding also has its limitations. The larger the share of borrowing that has first claim on banks’ assets is, the higher the risk becomes for other lenders and for depositors with savings above the guaranteed amount. The risk for the Norwegian Banks’ Guarantee Fund may increase if covered bonds become too dominant. The Basel rules require capital for banks’ assets, but do not stipulate how the assets are to be financed or their liquidity. It is now being considered whether common requirements should be introduced as to the amount of liquid assets a bank must hold to survive a stress situation over a period of for example 30 days without drawing on loans in the central bank. In addition, there will be funding stability requirements. 14 The Basel Committee is expected to make concrete proposals in the course of the year. One of the first countries that introduced stricter requirements is the UK, where banks are required to apply a stress situation with a duration of three months.

A tightening of monetary policy in Norway specifically aimed at curbing property prices and credit growth can result in a rising krone exchange rate, a weaker labour market and excessively low inflation. Should we seek to avert bubbles in the housing market even when medium-term inflation prospects are moderate? On this point, it is our judgement that a distinction must be made between giving greater weight to credit growth and house price inflation in the reaction function and defining house price inflation as an independent monetary policy objective. Socalled “leaning against the wind” would not require adjustments to Norges Bank’s approach, bearing in mind that our reaction function already gives weight to asset price movements and credit growth. 16 Should central banks also set explicit targets for asset prices? In our judgment the answer is no, but we should probably apply a fairly long horizon for achieving the target so that we seek to take account of any imbalances that might disturb activity and inflation further ahead. 16  See for example White,W.R. (2009): “Should Monetary Policy “Lean or Clean”?”, Working paper no.34, Federal Reserve Bank of Dallas. 16  BIS Review 131/2009  Household behaviour in the housing market is a considerable economy policy challenge. This is primarily because demand for housing and housing loans is heavily subsidised by the tax system and loan supply is marked by the near-absence of an equity capital requirement for providing housing loans.
The MSB industry in Malaysia is also highly competitive, with among the lowest remittance costs in comparison with other markets. I know that this has been an issue of some concern among some players in the industry as margins have continued to narrow. As in any other industry, an environment of healthy competition that delivers more choice, provides better service and encourages innovation, generally benefits society. Tonight’s awards are a good example of MSB companies that have stepped up to deliver an outstanding customer experience in order to attract and retain customers. Many strategic partnerships between companies in the industry have also been formed over the 1/3  BIS central bankers' speeches  years in response to greater competition. This has unlocked value for the companies by opening up new business opportunities and increasing cost efficiencies. Throughout history, whether in an organisation, an industry or a nation, progress and development have always been achieved through a process of creative destruction, adjustment and evolution. The industry will continue to transform and evolve, and in the process, it become more efficient and advanced in delivering superior products and services to the public. Bank Negara Malaysia remains committed to ensuring that the market for money services continues to function efficiently and sustainably in the best interests of consumers, and a competitive market is an important part of this process. The industry’s remarkable development has not gone unnoticed. More than a few countries have been interested to study and learn from Malaysia’s experience.

But they entail several risks, and they could lead to significant concentration effects among a few dominant private networks: these would in practice “re-intermediate”, but without the trust and regulation associated with the architecture of the monetary and financial edifice that we – public and private players – have built together over a period of decades. In the face of this major challenge, we need to both innovate and regulate. For some, the conjunction between the two should be an “or”, considering them mutually exclusive: innovation in the form of a central bank digital currency would be an alternative, indeed the only alternative, to the unchecked development of decentralised finance. For me, the conjunction is “and”: the two pillars clearly work together to foster sustainable innovation; this is why the EU should at once (i) adopt the MiCA regulation on crypto assets in the first half of this year, (ii) prepare for a Central Bank Digital Currency, a e-euro, by 2026. But the worst conjunction would be “neither, nor”: revolutions always happen quickly, and we are at risk of neither innovating nor regulating in time. In that case we would have failed in our historical mission and jeopardised centuries of work building up confidence in our money. Page 8 sur 9 2/ Let me now turn to the second major transformation underway, the ecological transition, which is an absolute necessity at the global level even if Europe here lies ahead. Climate change is accelerating.