samchain/econo-pairs-v1 huggingface dataset:
This has increased at the same time as we have witnessed a relatively substantial decline in the value of household net wealth. In recent years, household indebtedness has risen sharply and is now approaching the levels seen shortly before the banking crisis at the beginning of the 1990s. The interest ratio, i.e. post-tax interest expenses in relation to disposable income, is however at a relatively low level historically. So far the Riksbank has not judged these developments to be a problem for financial stability, at least not as long as any future rise in interest rates is accompanied by an increase in growth and income. But it is clear that households' scope for consumption in the near future will be limited by their levels of debt and that this could subdue the recovery. As capacity utilisation in the economy today is relatively low, stronger growth is not expected to constitute a more acute problem with regard to inflation. But when growth exceeds its potential, this normally leads to a gradual intensification of inflationary pressures. Since our last assessment of the situation, some new data has shown, for example, that inflation in August was higher than we previously thought, owing mainly to electricity prices remaining higher than expected. Nonetheless, it is likely that inflation will continue to fall rather sharply over the coming six months. Monetary policy is focused on inflation a couple of years ahead, however.

As opposed to the situation in the two most recent  BIS Review 6/2004  3  wage bargaining rounds, unemployment has risen recently. There is neither any shortage of labour other than within very limited areas. It is also positive that the rate of wage increases last year was decelerating and that this was also the case for expected inflation. With the currently low rate of inflation, even limited nominal wage increases would imply higher real wages. The demands that have been put forward are also lower than what has been the case in recent years. At the same time, there is always the risk of disturbances from the negotiation process itself. Neither is it inconceivable that some of the productivity gains will be taken to justify a higher wage-payment capacity. In December, the Riksbank revised down its forecast of unit labour costs somewhat. Behind this was both a marginally more positive view of productivity growth and a small decline in the rate of wage increases. The data that has been received since December reinforces this picture. As I see it, there is probably reason now to further revise down the forecast of unit labour costs somewhat and thereby also the forecast for domestic inflationary pressure. Inflation and monetary policy That brings me to the inflation assessment. In 2003 average inflation was somewhat above target. However, the situation changed considerably over the year.
These gross intra-system claims have grown rapidly over the past decade, fuelled by off balance sheet activity. CDS growth has outpaced Moore’s Law – the more than doubling of microchip capacity every two or so years. In the CDS market, what were 1000piece watches in 2000 would by 2007 have become more than 64,000 piece. Intra-system claims on this scale increase network fragility. When one node collapses, the ripple across the system risks developing into a tsunami – as Lehman’s experience attests. Herbert Simon recognised just this problem. Hierarchical networks are, in his words, decomposable with intra-system interactions constrained. The financial system has recently evolved in the opposite direction, with intra-system interactions growing and decomposability of the system thereby reduced. Policy initiatives may be able to help. For example, infrastructure could be developed to “net off” gross claims within the financial system. Attempts have already been made to do this in the CDS market, by tearing-up redundant claims among participants. This has reduced outstanding CDS claims by as much as 30%. The same netting principle could potentially be applied to a wider range of contracts and counterparties, to improve the decomposability and hence robustness of the system. 39 Third, financial innovation in the form of structured credit also had the consequence of creating a network structure which was non-hierarchical. Financial engineers created products in which elements of a loan portfolio were reassigned to a higher-order subassembly. In this way, an automatic dependence was created among almost every substructure.

And in my view, it takes us further than purely national supervision. But I would like to clarify one thing that is often misunderstood. The best supervisors in the world cannot guarantee the success of each and every bank. Banks compete in a market. Some will do well and thrive; others will do less well and fail. They will make way for better business models, for stronger banks. What I want to say is this: sometimes banks just have to fail. And when that happens, the European resolution mechanism kicks in, the second pillar of the banking union. It ensures that banks can fail in an orderly manner. And here too, the European approach has many benefits. Let me mention just two of them. First, over time, the European resolution mechanism will gain much more experience than national mechanisms. Why is that? Well, for the simple reason that it covers a much larger pool of banks and so, statistically speaking, will have to deal with a larger number of banks exiting the market. Second, there is the Single Resolution Fund, which can step in under certain conditions to carry some of the costs of bank failures in order to support financial stability. Since it is a European fund, it has much more firepower than any national fund. And that firepower would be even greater if a common backstop for the Single Resolution Fund were to be set up. In my view, that should be done as soon as possible.
In 2006, a single digit inflation level was attained. Although inflation rose to double digit levels at the end of 2008 owing to the effects of the global economic crisis, we have since seen it return to single digit levels;  iii. The financial sector has also recorded tremendous growth since the commencement of liberal economic and financial policies in the early 1990s; and  iv. Equally, positive developments have been registered in the payment systems. I must caution, though. that sustaining macroeconomic stability remains a key challenge in the face of limited resources, infrastructure and financial inclusion. Ladies and gentlemen, as you participate in this workshop, allow me to underscore the importance, we in Senior Management attach to capacity building programmes for all Bank employees. I am reliably informed that during the workshop you will cover a number of important topics including the following: i.  Self awareness;  ii. Time management;  iii. Action or goals required to achieve a vision;  iv. Emotional intelligence and values;  v.  Power to take action; and  vi. Ability to manage direction successfully. BIS Review 107/2010  1  I am fully aware that some of the topics that you will be dealing with may not be entirely new to you, but I firmly believe that they may be necessary for purposes of reinforcing what you already know. You are all therefore implored to take keen interest in all the topics if you are to realise the full benefit of the workshop.

The use of credit guarantees, cross guarantees, or credit enhancements – to mention a few ways – can only act as a temporary measure to catalyze interest in Asian issues, and at a cost. Such guarantees increase the issuer’s cost of funding, and usually cannot be sustained indefinitely. The coverage of credit guarantees, for example, would have to be reduced from a full guarantee to a partial guarantee as markets develop. In the meanwhile, countries must tackle their fundamental problems that are hindering the rating of their issues, whether it is infrastructure, legal, or regulatory problems. 4  BIS Review 24/2003
This will promote consistency in the implementation of standards, a level playing field, and the reduction of unnecessary regulatory burdens. It will also diminish banks’ incentives to engage in regulatory arbitrage across different jurisdictions. Work is underway on a variety of fronts to promote such co-operation. First and foremost, the Basel Committee’s Accord Implementation Group, or AIG, is working to foster information-sharing among supervisors to promote consistency of Basel II implementation. The AIG is encouraging home and host supervisors, including those from non-G10 countries, to use actual banks’ implementation plans as the basis for heightened co-ordination and communication. The Committee welcomes the work being done in a number of non-member countries and believes that continued outreach is essential. Dialogue with countries outside the Basel Committee played a critical role in the development of the revised framework, and I am personally committed to continuing such dialogue in the future as the new capital framework moves into the implementation phase. Adoption of Basel II: who and when? I would like to share some thoughts on when and how the new framework should be adopted in different countries. I am not referring specifically to Turkey with these comments, as it is not for me to talk about your plans in this respect, but I would like to make some comments about how we see the process in general terms. Let me begin by emphasising that I cannot answer the question of when or how any country should adopt Basel II.

Shock absorbers adequate and risk sensitive. Third, I have already mentioned that no bank can maintain public trust for long if it lacks sufficient capital. One of the fundamental tenets of risk management is that banks need to create provisions to absorb expected losses and to have sufficient capital to absorb unexpected losses. Accordingly, capital and provisions are an essential part of any supervisory framework. I believe Basel II reinforces the need to implement sound policies in both areas. I will just add in this point that given the unique positions of banks at the crossroads of businesses and consumers in every economy – and their special role as intermediaries of credit to both – nothing threatens financial stability more than the presence of poorly managed and poorly capitalised and provisioned banking institutions. Appropriate time horizon and counter-cyclical elements. Stress testing Fourth, the solid and stable functioning of banks requires an additional consideration, a macro perspective. Namely, risk management decisions, capital and provisioning policies should be set with an appropriate time horizon that allows at least a full business cycle to be considered and avoids excessive emphasis on the short term when assessing risks. The aim is not to promote the uniformity of time horizons, but to encourage managers to consider how risk determinants alter over the cycle and in conditions of stress. The need for capital in a full range of economic scenarios has resulted in a requirement that banks consider stress scenarios when assessing capital adequacy.
Concluding remarks  The all region is going under a political, economical and social consolidating process. Now a day politicians, decision makers, analysts, almost everyone is stating the EU accession as the main priority, the top challenge for the next coming years. How far are we? That’s a difficult question. Many times I looked behind my shoulders to see how far we have come. It is indeed a long way, full of ups and downs. Along this way we have scored positive developments as well as few setbacks. Yet it has been a road toward progress. However the modern attitude of central banking requires a forward looking approach. It is for this reason that in my public appearances have always stressed the vital importance of the integration process and related issues. The success of this process will depend first and foremost by our attempts and dedication. There is only one way to get closer to the finish line. That requires waking up every morning with a European mentality, and try with all our efforts to make this dream come true. We all agree with the idea of not decorating our home with Fendi furniture whilst our roof is not yet fully covered. BIS Review 119/2007  9  I personally believe our societies are becoming mindful on their efforts towards European standards.

For most of this period, we have integrated in our policy important monetary policy elements that define essential characteristics of the inflation targeting regime. Various internationally recognized experts of monetary policy have compared the current setup of monetary policy to a fully fledged inflation targeting framework. During these recent years Bank of Albania has publicly announced a numeric objective of 3 percent with a tolerance zone of plus minus 1 percent for inflation in the 12 coming months. In addition, weekly repurchase argument rate, the key policy rate, has become the most  BIS Review 119/2007  3  important instrument of monetary policy and signaling tool. Yet, we are still in the process of empirical investigation and quantification of the monetary transition channels, with particular focus on the efficiency of the inter-bank markets. Modestly but surely I have to admit that the efficiency of our monetary policy has increased. In general we are satisfied with the reaction of the interest rate behavior, which model the developments of the bank of Albania key rate with the appropriate lag structure. Moreover increased and more efficient communication with the public are reflected in contained inflation expectations which are anchored to Bank of Albania announced numeric objective. We are happy to observe that results of consumer and business confidence as well as financial market expectations surveys indicate these trends. It is widely accepted that such results are outcome of our continuous attention toward ever lasting improvement of institutional and regulatory framework on which Bank of Albania operates.
BIS central bankers’ speeches  5  That explains the interest in deploying additional policy instruments that are better suited to restraining the build-up of dangerous financial imbalances and contributing to the maintenance of financial stability – so-called macroprudential tools. With two targets – price and financial stability – one really wants another instrument, or set of instruments, to complement monetary policy. In the new arrangements established following the crisis, the deployment of such instruments falls to the Bank’s Financial Policy Committee. There are several potential macroprudential tools to deal with such cyclical risks, but they are of broadly two types: those that increase the resilience of the system; and those that work pre-emptively against a build-up of leverage. In addition, measures may be targeted or more general in impact. To give some examples, first consider the Basel III counter-cyclical capital buffer, implemented in the European Union under the Capital Requirements Directive. By forcing banks to hold extra high-quality loss-absorbing capacity during a credit boom that can be released during a subsequent downturn, this primarily improves resilience. But because it raises the marginal cost of bank funds, the counter-cyclical capital buffer should also inhibit the build-up of leverage in the first place. There are several reasons why debt finance is cheaper than equity finance, including the implicit subsidy from being Too Big To Fail, and the advantageous tax treatment of debt.

In order to illustrate this point, I will look at the incentives with regard to risk-taking by the various stakeholders of a bank and try to gauge the likelihood that these incentives lead to decisions that would be optimal from society’s viewpoint. In my second section I will focus on the “too big to fail” (TBTF) problem. My goal here will be to discuss the variety of solutions that can be envisaged in order to restore proper incentives and in particular assure that the capital necessary for maintaining the vital functions of financial institutions will in the future come from sources other than taxpayers. I will argue that higher capital requirements, in part in the form of contingent convertible bonds (Cocos), together with appropriate organisational measures, can fulfil the objective of a “partial” bankruptcy and lead to improved incentives for key bank stakeholders. In this speech I will adopt a relatively academic point of view, appropriate for today’s circumstances, which will lead me to the conclusion that sound theoretical principles underlie the TBTF package currently submitted to the Swiss Parliament.1 Finally, I would like to address the question of the likely impact of current regulatory efforts on the cost of capital for banks and their expected return on equity. 1  The importance of this issue for the Swiss National Bank (SNB) is reflected in the number of times it has been addressed by members of the SNB Governing Board.
The OECD estimates that potential GDP in the OECD area will decline by around 4 per cent as a result of the crisis. All in all, this means that public finances in the OECD area require a structural strengthening of around 5–6 per cent of GDP over the coming years. At the same time, several factors indicate that interest rates will rise, which will lead to increased interest expenditure and thus put even greater pressure on public finances. Monetary policy is expected to become less expansionary in the years immediately ahead, which means that short-term interest rates will rise. The large general government deficits and thus rising borrowing requirements will probably lead to higher government bond rates. In addition, there is the premium that the market participants require as compensation for the risk that the debt may become unsustainable. Meanwhile, stricter financial regulations will probably also lead to higher interest rates. In the past, there have been periods when the debts of the public sector as a percentage of GDP have been reduced as a result of high inflation. But as experiences of the harmful effects of inflation have led to more or less explicit inflation targets for central bank activities  2  2  See Reinhart and Rogoff (2009). BIS Review 56/2010  and as interest rates tend to adapt very quickly to inflation expectations, it is not probable that higher inflation will reduce public-sector debt as a percentage of GDP.

(Slide: General government net lending in the United States and the euro area). There are also major differences between the countries in the euro area. In some of the euro countries the deterioration in public finances has been dramatic. I will come back to this later. 1  These figures are taken from the OECD’s latest Economic Outlook, November 2009. BIS Review 56/2010  1  There are several reasons for the deterioration in public finances There are a number of causes behind the substantial deficits in public finances. Firstly, many countries were in a weak initial position even before the crisis began, as their public finances were already in deficit. Many countries failed to save money for a rainy day when times were good. This is illustrated by the fact that in the decade prior to the crisis average general government net lending was –2 per cent of GDP in the OECD area, the USA and the euro area. In the case of the euro area this is remarkable given that the so-called growth and stability pact stipulates that the aim should be to achieve a balance or a surplus in public finances in the medium term. (Slide: Average general government net lending). Secondly, a downturn automatically leads to a weakening of public finances. Tax revenues fall and cyclical expenditure, for example on labour-market policy, increases. The OECD estimates that this effect has accounted for just under half of the total deterioration in public finances since 2007.
François Villeroy de Galhau: 75 years later – thinking about the next 75 Welcome address by Mr François Villeroy de Galhau, Governor of the Bank of France, at the G7 high-level conference, Paris, 16 July 2019. * * * Ladies and Gentlemen, It is a great pleasure to welcome you to this G7 high-level conference dedicated to the next 75 years of the Bretton Woods system… which is a sign of confidence. 75 years ago, John M. Keynes for Britain, Harry Dexter White for the US, Pierre Mendès-France for France inaugurated what we now see as the “golden age” of multilateralism and cooperation. Quite remarkably, the Bretton Woods Conference preceded peace: economic cooperation was seen as a prerequisite for peace. Today, we are unfortunately far away from this spirit: multilateralism is facing a major crisis. Yet the Bretton Woods institutions (BWI) are remarkably resilient, thanks to the commitment of their successive leaders – many of them are here – and to the strength of their history. They are priceless assets – we are probably all convinced of this. But we also know that the current situation is not stable. So, where do we go from here? The worst-case scenario would be an implosion of the system, implying a real step backward, with a rise of protectionism and bilateralism. A more promising scenario – and this is what we should fight for – would be to come out of this crisis stronger by re-building common solutions.

Chart 2 Cash use has continued to fall Norges Bank conducted a new payments survey three weeks ago. Only 4 percent of payments are now made using cash. This share is approximately the same as in spring, and considerably lower than before the pandemic. To our knowledge, the share of cash payments is lower in Norway than in any other country. Contactless and PIN-less payments are increasing sharply. Three out of every four card payments are now contactless payments. An increasing number of smartphone apps can be used to make payments in shops. Online shopping is growing, and payment is increasingly made via smartphone apps and other digital wallets. New payment methods are contributing to the efficiency of the payment system. Payment processes are being simplified. Payments are faster. These are positive developments. At the same time, the payments market is characterised by scale and network advantages. We must therefore be vigilant to developments whereby some operators – domestic or global – gain market power that weakens competition. Chart 3 Increased globalisation 1/6  BIS central bankers' speeches  Global technology companies are involved in many parts of the payment system. Some companies such as Amazon, Apple and Facebook also control shopping and social network platforms, often offering services on the platform in competition with other operators. This allows these technology companies to regulate and restrict competition – including in the payments arena. There is a risk that users will be locked in and that the range of payment options will be reduced over time.