samchain/econo-pairs-v1 huggingface dataset:
Today we all have our salaries deposited in our bank accounts, directly transferred from the employer’s account. This is, of course, far more efficient. At the sawmill the “chief clerk” went to the bank in Härnösand in order to collect the money and then to count it out at the office before he could walk down to us and distribute the pay packets. It took all day for him. But I cannot deny that there was a different feeling to opening the pay packet than to opening a bank statement. The increased use of bank accounts came to revolutionise payments in Sweden. With the bank accounts as a base, a number of new instruments of payment developed. Cheques were based on bank accounts as were the post and bank giro transfer systems. The same is true of today’s card payments and online payments. So what are the present payment trends? And what do we believe will happen in the future? Are we, as some have claimed and others have advocated, moving towards a cashless society? Just under a year ago the headline on the front page of The Economist was “The  BIS Review 16/2008  1  end of the cash era”. 1 Is this scenario reasonable? I shall begin by looking more closely at what has happened in recent decades in order to reach some kind of answer to these questions, or at least a qualified guess. Cash payments have declined in significance I will begin with cash.

3  “Allmänhetens syn på bankerna” (The Swedish public’s opinion of banks), Temo survey, March 2006, The Swedish Bankers’ Association. 4  Bergman, Guibourg and Segendorf, “The costs of paying – private and social costs of cash and card”, Working Paper Series, (No. 212), Sveriges Riksbank, September 2007. 2  BIS Review 16/2008  Moreover, the increased use of cards is an international trend. For instance, if we look at developments among our Nordic neighbours, we can see that card payments have enjoyed rapid growth in these countries also. As regards the choice between debit cards and credit cards, it is clear that Swedish card users favour debit cards. In 2006, the number of debit card payments accounted for around 80 per cent of all card payments. Charge cards and combined charge cards or credit cards dominate the remaining share of card payments. Cheques have disappeared As I said, card payments have begun to replace cash payments of smaller amounts. They have also replaced a large number of cheque payments in Sweden. In 1990 every seventh transaction was paid for by cheque. Cheque payments accounted for just over one-tenth of the value of non-cash payments. Today cheque payments account for just some tenths of a per cent of both the value of the payments as well as the number of transactions. The death of the cheque in Sweden is of interest, for it was quick and unexpectedly painless. The story is as follows: Over time cheque handling became increasingly unprofitable for the banks.
Euro area banks’ CET1 capital ratios remain at a solid level of about 14%, whereas profitability has stabilised on the back of the strengthening recovery. Some weak banks have been successfully resolved with the impact on the rest of the euro area banking sector being well contained. Notwithstanding these positive developments, important challenges remain, including the still subdued profitability, structural challenges in some parts of the euro area banking sector, such as the presence of excess capacity and cost inefficiencies, as well as – in a few countries – the persistently high stock of non-performing loans (NPLs). On aggregate, however, further progress has been made with respect to resolving NPLs, and a comprehensive action plan to deal with legacy asset quality issues was adopted by the Council of the European Union and is now being followed up by EU and national authorities. The ECB has published guidance to banks on NPLs and a draft addendum, currently subject to public consultation. With respect to financial stability, we observe that at the current stage the euro area’s position in the financial cycle is consistent with the ongoing economic recovery. There are no indications of widespread asset price misalignments and credit developments remain modest. Nevertheless, relatively buoyant real estate dynamics and high household debt levels in some countries warrant careful monitoring. We expect the national macroprudential authorities in the euro area to remain vigilant and ready to use the macroprudential policy instruments at their disposal to counteract the any emerging risks when necessary.

But as the Bank’s Monetary Policy Committee (MPC) has seen wages, employment and productivity evolve, we are increasingly of the view that there has been a material labour supply shock for the reasons that I have discussed. So we have been paying increasingly close attention to developments in the labour market. Our forecasts for the next three years, and hence our interest rate decisions, are based on key judgements that: •  the number of people participating in the labour force will continue to rise, reaching 64% of the population later in the year and continuing its upward trend of the past decade;  •  the unemployment rate that the economy can sustain without generating accelerating inflation will return to where it was before the Great Recession (around 5%), and, at around 5½% now, is currently only a little above that; and  •  there is scope for the average hours people work to increase further, reducing by about half the current gap between actual and reported desired hours. In short, and unlike the US and euro area, the economy is likely to be able to sustain a higher level of employment than in the past. The uncertainty is less the direction of that development and more its magnitude. To assess that magnitude and its implications for inflation, we are tracking a range of indicators, including those of the prospective paths for wages and unit labour costs. Actual wage growth, at just 0.6% since a year ago excluding bonuses, is currently very weak.
The second main stream is full unification of the supervision of banks, securities companies and insurance companies, all in one institution. The trend since some 15 years is that bank supervision in a number of countries has been moved outside the NCB and has been consolidated with the supervision over securities and insurance companies. However, the most common structure is still the traditional one 1 . 1  Martin Čihák and Richard Podpiera: IMF Working Paper WP/06/57 from 2006. BIS Review 49/2007  1  But there are many variations. One is the combination of banking and securities supervision, which is logical due to the close relations between banking and securities activities. Another is the combination of securities and insurance supervision with the aim to create a stronger authority with more resources and expertise. There are also some broader alternatives. The FSA in the UK performs supervision over a wide range of financial institutions, including brokers, pension funds and many more. Its objectives also include financial sector consumer issues and even the promotion of London as a financial market place. All kinds of supervision and other activities related to the financial sector are placed under one roof. The Netherlands, Australia and others have followed an approach based on the purpose of the supervision. In these countries prudential supervision of banks and securities firms is conducted separately from the oversight of the conduct of the financial markets. The underlying rationale is that these activities are different.

The clearest example was the constitution of institutional protection schemes initially, without which it would have been extremely difficult to finally bring about inter-regional mergers. Today some of these problems have already been resolved thanks to these seven laws that have gradually improved the resolution instruments available at the start of the crisis. For instance, with all savings banks having converted de facto into banks, the current situation differs greatly from that at the start of the process, when the regional governments had the  4  BIS central bankers’ speeches  power to veto mergers. And although the perseverance and skill of the Bank’s supervisory arm managed to convince most regional governments of the inevitability of merging with savings banks from other territories, there have been cases in which sounder inter-regional alternatives were turned down for the sake of mergers which, though they were viable in the scenario then foreseen for the Spanish economy and avoided, moreover, more costly interventions for taxpayers, were clearly worse than the mergers suggested by the supervisor. As encouraging examples of Spain’s achievements during these years, I have chosen the progress made in correcting the current-account deficit and in financial restructuring. However, I could have chosen other actions. For instance, the Pension Reform Law has made historically significant changes and, if its sustainability provisions are properly implemented, will enable not only the pensions of our generation, but also of our children’s, to be paid without problem.
We must ensure that when a bank failure does occur, despite all preventive measures and utmost efforts to prevent it, depositors are taken care of fairly, and the bank's  BIS Review 14/2004  1  shareholders accept their due share of burdens. Moreover, we have drafted the Financial Sector Master Plan to foster an efficient, stable, and competitive financial sector, guiding the development of the financial sector over the medium term. All these initiatives were undertaken with the objective of providing the right framework for effective supervision in order to develop a sound and strong banking sector. In this regard, I trust that the discussions in the next two and a half days will be very constructive, providing more insights on these issues, as well as other controversial debates - such as the role of governments and lender of last resort. Allow me to say a few words on the substantial progress made by various international bodies in crisis prevention. The IMF has taken a leading role, revamping its own approach and sharpening its focus on crisis prevention, management, and resolution. Standards and codes of best practices have been introduced - the work coordinated by the IMF, World Bank, BIS, OECD and other international experts, underpinned by the Financial Sector Assessment Program. The Basel Committee has introduced the New Basel Capital Accord, the evolutionary supervisory framework. Supervision is directed away from rule-based guidelines to a more comprehensive risk-based calculation of capital adequacy, methodologies on operational risk, supervisory review process, and market discipline.

Industry and commerce has proved extremely effective in creating new jobs to offset, and more than offset, jobs lost as the business environment has changed. What is particularly notable about this impressive growth in output and employment is that it has been sustained over a period of years and, importantly, there is every prospect that we can continue to sustain it looking ahead. This element of sustainability is, above all, what translates periods of strong output and rising employment into permanent improvements in living standards. Sustainability means having in place a framework to provide a basis of stability on which the economy can continue to grow. Alongside the stable framework the government has put in place for fiscal policy, the Bank of England’s contribution to stability is to deliver price stability - specifically, to meet the low inflation target the government has set of 2½% on the RPIX. Perhaps the most encouraging feature of the strong economic performance I have described is that it has been achieved consistently with low inflation, and it is through maintaining that commitment to low inflation that we can best ensure that the economy continues to grow over time in line with its potential. Against the background of this encouraging overall picture, we face two main areas of uncertainty at present. The first is the impact of the strong exchange rate for sterling. The strength of sterling in recent years has impacted on virtually all areas of the economy - agriculture and some service industries as much as manufacturing.
Bigger and broader banking does not obviously appear to have been better, at least in a risk sense. In banking, as on many things, Merton may have had it right. (b)  Robustness  The Merton result holds in a world in which investors form judgements based on knowledge of the distribution of risk. But in complex dynamic systems, the distribution of risk may be lumpy and non-linear, subject to tipping points and discontinuities. 21 Faced with this, the distribution of outcomes for the financial system as a whole may well be incalculable. The financial system may operate in an environment of uncertainty, in the Knightian sense, as distinct from risk. There is a literature on how best to regulate systems in the face of such Knightian uncertainty. 22 It suggests some guideposts for regulation of financial systems. First, keep it simple. Complex control of a complex system is a recipe for confusion at best, catastrophe at  18  Beale et al (2009). 19  A Herfindahl-Hirschman index of revenue concentration is constructed to measure diversification, with a measure of zero meaning that the HHI = 1, i.e. revenue is concentrated solely on one activity. Revenue concentration is calculated across three buckets for the last pre crisis year (2006) – Retail and commercial banking; Corporate and investment banking; Asset and wealth management. 20  De Nicolo (2000). 21  Haldane (2009b). 22  See, for example, Aikman et al (2010). 8  BIS Review 40/2010  worst.

Example: SGX’s Marketnode seeks to enhance the efficiency of fund raising through international debt capital markets, shifting from a largely analogue process today, to a digital, automated environment supported by distributed ledgers and smart contracts. We anticipate that in the near future, the ability of real-time validation through a distributed ledger will shorten settlement cycles, which in turn allows for more cost-effective margin requirements. Third, a growing bond market that serves the needs of global and regional issuers. The size of Singapore’s bond market has expanded by 50% over the last 5 years, reaching almost half a trillion Singapore dollars as at the end of 2020. SGX is the largest bond listing exchange in Asia with over 3000 bonds from 45 countries in 19 currencies. More than two-thirds of the bonds issued in Singapore are in foreign currencies including the G-3 and Asian currencies. Over 60 international and regional banks have debt origination teams and capabilities here to support international bond issuance out of Singapore. More than half of the bonds issued in Singapore come from foreign issuers. Example: China’s Three Gorges issued a dual-tranche jumbo issue of $ billion in 2/4  BIS central bankers' speeches  2020, and the Philippines’ Jollibee issued two tranches totalling $ billion. Singapore also has a vibrant green and sustainable bond market to support the region’s transition to a low carbon future. The green bond market started only in 2017 but issuances are expected to cross $ billion by the end of this year.
Growth in the domestic facing sectors is likely to taper, as consumer demand slows in the face of higher interest rates and more moderate wage increases. Singapore's GDP growth for 2023 is expected to slow to a below-trend pace within MTI's current forecast range. Consequently, the output gap is estimated to turn mildly negative, to around -0.5%, from the positive 0.6% recorded last year. Inflation in Singapore has clearly peaked and has discernibly moderated. In assessing inflation trends, it is instructive to focus on month-on-month momentum and price trends going forward rather than year-ago averages. Core inflation on a month-on-month seasonally adjusted annualised basis has come down sharply, to 3.6% in May 2023 from a peak of 9.1% in June 2022. The disinflation has been broad-based across most components in the core CPI basket. Notably, imported inflation has turned negative, reflecting the decline in global energy and food prices and the effects of a stronger Singapore Dollar. Even excluding oil, whose prices have fallen most sharply, imported inflation was minus 1.2% in May this year. The fall in inflation momentum is gradually translating to lower year-on-year inflation. Core inflation on a year-on-year basis moderated to 4.8% in Apr-May from 5.4% in Q1. Headline inflation slowed to 5.4% from 6.1% over the same period. Singapore should see further reductions in inflation by the end of the year. One, imported inflation should remain negative over the rest of the year.

This inevitably led to a very grim situation in the banking sector, where many of the newly established banks collapsed under the burden of bad debts. The state-owned banks had to have their capital replenished by the government. Balance sheet cleaning was also one of the preconditions for banks’ successful privatization in the late 90’s. BS Profitability 1  5  0,8  4  0,6  3  0,4  2  0,2  1  0  0  -0,2  -1  -0,4  Gross profit/ assets in % Net interest margin in %  -2 1995  1996  1997  1998  1999  2000  2001  2002  12  Nowadays, the existing banks are well capitalized, the level of bad loans is relatively low and adequate provisions and reserves are made. Despite the decreasing net interest margin, the profitability has improved, especially thanks to an increasing portion of banks’ income coming from fees and commissions. Improved Indicators of Financial Health Health 40 35 30  %  25  Capital Adequacy Classified Credit (weighted) Quick Assets/Total A. 20 15 10 5 0 1995  1996  1997  1998  1999  2000  2001  2002  1H 2003  11  6  BIS Review 53/2003  Profitability Return on Equity 40 30 20 10 0 -10  Banks- ROE Insurance Comp.
The single economic entity resulting from the IPS – the aggregate – must be profitable and efficient, well-managed and display dynamism befitting the financial sector so as to provide the services demanded by the real economy with quality and at competitive prices. Evidently, in a setting of clear risk-aversion, the road to attain these goals and to convince savingsbank creditors of them, so that they renew the funding they have provided, is not an easy one. This task requires three basic conditions. First condition: resolve in adopting the measures needed using exclusively corporate criteria, in full knowledge that some of them may not be agreeable owing to the personal sacrifice entailed. To achieve this, it is essential that all the interest groups behind the governance of the merged savings banks should identify with the goals of the single project. Second condition: flexibility and speed in adopting these measures. As the saying goes, time is precious. The need to access wholesale funding markets as from the first fortnight in January in 2011 and the greater capital requirements imposed by the regulations in the pipeline and by the widespread increase in the perception of risk should be a spur to all, and they impose a clear-cut reduction in all the timeframes envisaged for the conclusion of the projects. In practice, the timetables for the concentration plans suggested some six months back must be significantly shortened. Implementation of the various steps must be brought forward, with every extra effort and sacrifice needed being made.

Household debt has increased sharply since the mid-1990s. At the same time, house prices have shown a marked increase. Debt developments in the 1990s can probably be viewed to some extent as a delayed adaptation to the deregulation of the housing and credit markets in the 1980s, after many households burned their fingers immediately after deregulation. In recent years, household income growth has been solid, household confidence regarding the future has been strong and households probably perceive higher income levels as permanent. This may have resulted in a further rise in house prices and debt. In addition, low real interest rates are now making a contribution. In countries that have had liberalised credit markets for a long time, Denmark for example, where credit markets were liberalised over a hundred years ago, the household debt-to-income ratio is higher than in other countries. Norwegian households have a high level of debt, but there are examples of countries where household debt is even higher when we compare Norway with some of our trading partners. Developments in growth in credit to households in Norway nevertheless give cause for concern. We have examples showing that the subsequent effects of a period of unusually high house prices can persist for a very long time. At the end of the 1800s, house prices rose sharply in Christiania (now Oslo). The effects of the very high level of housing construction that resulted from the rise in prices are still perceptible in parts of Oslo. At that time, the housing market collapsed.
And we emerged from all this with the most robust banking system in the region. Indeed, the HKAB and HKMA partnership is a very important one, as we continue, in accordance with the requirement laid down in the Basic Law, to develop Hong Kong as an international financial centre. And there are many more challenges ahead for us that require an even stronger partnership to handle. We are all well aware of the forces of globalisation and technological advance, and the opportunities and risks associated with them. The Asian financial turmoil has also put us on clear notice that those forces, made more potent by the activities of the highly leveraged institutions, can be brutal and do not tolerate excesses or mistakes. It takes great effort, particularly in a small and entirely open international financial centre, for both the regulated and the regulator to harness these forces, and derive and maximise the benefits that undoubtedly flow from them. This process is likely to involve changes to both the structure of the banking sector and to the supervisory framework, perhaps to the extent of affecting special interest groups. But the fact of the matter is that changes are inevitable. And in coping with them, we have a choice between either dealing with the relevant issues ahead of time, making full use of our strong partnership, or leaving them to the brute forces of the market.

This has not been helped by erroneous suggestions in some prominent newspapers that the replacement of the Liquidity Adjustment Facility with a Discount Window, as one of the seven technical measures introduced last September, has effectively ended the HKMA’s role as lender of last resort. The issue has been further clouded by the equally erroneous academic argument that the role as lender of last resort should not be mixed with the HKMA’s role as operator of a Currency Board system. The Consultants offer a number of other reasons why there should continue to be such uncertainty: the strongest, perhaps, is the fact that, since our establishment in 1993, the HKMA has never had to exercise its function as lender of last resort. I think we would all hope that this will long continue to be the case. And so, in the absence of an actual demonstration of the lender of last resort policy in action, we have to continue to rely on explanations of the principles behind the policy. With this in mind, I shall shortly be sending copies of a detailed policy statement on the HKMA’s role as lender of last resort to the chief executives of all authorised institutions in Hong Kong, and we shall be giving extensive publicity to the policy statement. I shall give here both a summary of, and an elaboration on, that policy statement.