samchain/econo-pairs-v1 huggingface dataset:
As a result, the new tools allow exposures to that sector to be deterred. The application of a global buffer, on the other hand, does not alter the relative incentives across the different lending segments, which may have unintended consequences. Also, other tools are made available to the regulator that do not impact lending institutions’ capital requirements, but rather the characteristics of borrowers and even of loans. Unlike  13/15  capital tools, which are designed to increase institutions’ capacity to absorb shocks, these new tools seek to reduce the vulnerability of borrowers or to limit the appearance of bubbles. Finally, to be able to cover the financial system as a whole, the legislation gives other sectoral supervisors similar tools. In the design of macroprudential instruments that go beyond banks, Spain has taken the lead in European regulation, although clearly the coordinated application of these tools will be one of the tests that the new macroprudential authority has to pass. Of course, these tools can never be applied automatically. Their use must be measured and fine-tuned responsibly by the supervisor. In any event, activation of these measures in cyclical upswings is likely to meet with criticism from public opinion, consumers and the institutions themselves. We must not forget that the aim is to restrict credit, with the focus on a particular sector. When applied to the property sector, the measures will curb credit and make it more expensive, hampering access to owner-occupied housing, even if only temporarily.

12/15  Second, last December saw the publication of RDL 22/2018, which assigned additional powers to the Banco de España, in the form of new tools, such as the sectoral countercyclical capital buffer and limits on credit conditions and sectoral concentration of credit exposure. What is the difference between these tools and the ones approved in 2014? The first fundamental difference is that instead of a global buffer, we can now make use of much more focused tools. In this respect, we need to be aware that, although the application of a global capital buffer affects lending, it does so indiscriminately, and in certain circumstances its application may have unintended consequences. Allow me to give an example. Imagine that the supervisor observes excessive growth in consumer credit and decides to activate the global buffer to limit this growth. It is very likely that institutions will react to this tightening of capital requirements by increasing credit, precisely in those sectors that offer the highest returns, in order to compensate for the increase in their capital costs. Therefore, the activation of this global buffer may mean that consumer credit growth, instead of moderating, increases, largely at the expense of financing to other sectors, in which the supervisor had not observed any problem. The new legislation, by giving the Banco de España the power to limit the assumption of risk at sectoral level, allows the measures to be restricted to exposures to the specific sector in which the risks are concentrated.
Implicit in these ratings was the assumption that a large, national decline in home prices was extraordinarily unlikely. The rise in home prices led to a surge in construction activity, which helped to sustain the housing boom for a time. This effect was particularly powerful in states such as Arizona, California, Florida, and Nevada. Rising home prices also bolstered the economy by supporting consumption, as households monetized these gains by cash-out refinancings and home equity lines of credit. The housing boom was also supported by an accompanying financial boom. The financing activity associated with the surge in mortgage originations and securitizations pushed up the earnings of the major banking and securities firms. These strong earnings created incentives to ease underwriting standards further. But, as housing supply responded to the increase in home prices—housing starts rose from a 1.5 million annual rate in mid-2000 to a 2.3 million annual rate in early 2006—the positive feedback loop began to run in reverse. Home prices began to soften, subprime borrowers found it more difficult to refinance, and mortgage loan defaults and delinquencies rose. As the bust got underway in earnest, residential investment declined and consumer spending was undercut as home equity levels fell. The housing boom and bust underscores several important lessons. First, the financial sector is not only a very complex system, but also one that can be inherently unstable—subject to excess, then sharp reversal.

However, the estimated scale seems to be much exaggerated. One problematic issue is related to the  BIS Review 6/2007  1  fact that before the eurozone, we did not have examples of currency unions between developed countries. So the Rose study was based on data on currency unions involving poor and/ or small countries. As noted by Micco, Stein and Ordonez (2003), “one does not need to be a eurosceptic to wonder whether such findings are directly applicable to Europe’s single currency”. Follow-up studies (e.g. Rose and Wincoop (2001), Kenen (2002), Persson (2001)) attempted to correct the Rose estimates but arrived, rather inconclusively, at anything between a 50% and 150% growth of bilateral trade. Recently, the first studies based on euro area data emerged. These show that the trade creation effect of the euro was substantial, although (until now) by an order of magnitude smaller that the original Rose estimate (e.g. Micco, Stein and Ordonez (2003)). Our knowledge about trade creation effects of the euro is still far from complete and we will probably have to wait another 10+ years to have enough data to draw firm conclusions about its magnitude in the eurozone. Now let me move to the cost side. As already noted in contrast to the benefits, some costs have a contingent character. They are tail-events – rather unlikely but with a possibly high impact if they happen. Let me concentrate on two issues: -  asymmetric shocks,  -  arising micro- and macroeconomic imbalances.
In addition, the ECB has the following high-priority requirements concerning the euro area statistics compiled by Eurostat and the NSIs: 1.  more comprehensive and timely statistics on services, labour markets and housing markets;  2.  better use of available data through the compilation of regular euro area supply and use tables and the integration of labour accounts into the national accounts, which  10  See “Recent developments in consumers’ inflation perceptions and expectations in the euro area” in the November 2007 issue of the ECB’s Monthly Bulletin. 4  BIS Review 50/2008  are needed both for productivity and growth analysis and for updating the EUKLEMS data; and 3.  closer coordination of national statistics with regard to seasonal and working day adjustments, revision policies and release calendars. As regards the process innovations, the Governing Council of the ECB last year endorsed a long term vision for statistics produced by the Eurosystem: •  concerning input, the same data should be collected only once;  •  concerning data processing, the Eurosystem’s statistical function should operate as an efficient production network; and  •  concerning output, the fitness for use of Eurosystem statistics and statistical communications should be further enhanced.

8 In addition, in the performance of their statistical tasks, both the ECB and the NCBs adhere to the statistical principles and ethical and quality standards set out in their “Public commitment with respect to the ESCB’s statistical function”. 9 The independence granted to the ESCB by the Treaty means that there is no political interference in the  6  See “The introduction of harmonised competitiveness indicators for euro area countries” in the February 2007 issue of the ECB’s Monthly Bulletin, and http://www.ecb.europa.eu/stats/exchange/hci/html/hci_200801.en.html. 7  See “Review of statistics on payments and securities trading, clearing and settlement” in the January 2008 issue of the ECB’s Monthly Bulletin. 8  See http://www.ecb.europa.eu/pub/pdf/other/ecbstatisticsqualityframework200804en.pdf. 9  See http://www.ecb.europa.eu/stats/html/pcstats.en.html. Both this commitment and the framework governing the quality of ECB statistics take due account of the European Statistics Code of Practice for the national and Community statistical authorities, while also reflecting the specific governance structure of the ESCB. BIS Review 50/2008  3  compilation and dissemination of statistical information. Similarly, the Treaty states that compilers of statistics in the NSIs and Eurostat should also act in full scientific independence. In addition to these essential preconditions, statistics also need to be adequately explained. This applies, in particular, to one of the most important statistics for the ECB’s monetary policy making, namely the Harmonised Index of Consumer Prices (HICP).
Second, they can buy assets – which, in this hypothetical economy, means cars – increasing demand for them and hence their price. These actions lower the cost of borrowing and raise the price of assets in the two-car economy. Both support the production of cars by firms and the consumption of cars by households. In this way, aggregate activity in the economy is boosted, at least in the short run. By lowering interest rates and purchasing assets, a central bank can help meet its mandate of supporting the economy as a whole. If the aggregate impact of looser monetary policy on the economy is positive, what about its distributional impact across regions? In this simple setting, lower interest rates boost the incomes of net borrowers in Red Car region, while reducing the income of net savers in Blue Car region. As the income of Red Car consumers is lower than Blue Car consumers, this shrinks the distribution of incomes across the economy. The effect of asset purchases is to boost the wealth of all car owners, with the bigger boost felt by those whose car wealth is largest. So although both regions are better off in net wealth terms, Blue Car region benefits more than Red Car region. Put differently, the distribution of wealth across regions may widen as a result of asset purchases. Or that at least is what this simple, stylised economy would imply. 3  The Real Economy Now let’s return to planet earth, from the hypothetical to the real world.

This will result in an extra 0.1% of GDP in infrastructure spending in 2017/18, rising to 0.3% of GDP by 2021-22. Over five years, the incremental spending amounts to an extra £ billion. This fund will be focussed on transport, housing, telecoms and research and development. 22  Just yesterday, the CBI published a report on differences in regional productivity performance and outlined a sequence of measures to help boost productivity and narrow regional differences. These measures included developing regional scorecards to enable productivity hotspots (and coldspots) to be identified; increased investment in skill-building through improved school and vocational education; increased infrastructure, in particular transport, spending; and improvements in managerial practices. The work of the “Productivity Commission”, chaired by Sir Charlie Mayfield, has identified a long tail of companies across all sectors in the UK whose productivity performance is falling short. 23  The Commission  are developing, among other things, a tool which would enable firms to benchmark themselves relative to others in their sector along several key business dimensions. This could then serve as a prompt for action, enabling firms to boost their productivity performance through targeted action. I think this micro-level assessment of productivity is a useful way to formulate plans which support productivity, and narrow productivity differences, regionally and sectorally. For example, recent work by the OECD has looked at the changing distribution of productivity across firms over time.
The crisis has clearly shown that in Europe a receding tide lowers all the boats, not just the ones which are in trouble. 1  B. Sørensen and O. Yosha (1996), “Channels of interstate risk sharing: United States (1963–1990)”, The Quarterly Journal of Economics, November, pp. 1081–1111. 2  Y. Demyanyk, C. Ostergaard and B. Sørensen (2008), “Risk sharing and portfolio allocation in EMU”, DG Ecfin Economic Papers 334. 4  BIS central bankers’ speeches  My second remark is that the banking union – whilst critical for the ins – is also desirable for the outs. The so-called financial trilemma.3 – in other words the impossible trinity of financial integration, financial stability, and national responsibility for crisis prevention and management – holds for the entire region, and not just for the euro area. For example, the Swedish and Danish banking system are not only large in proportion to your GDP, but they are also very closely integrated with the rest of Europe. Let me focus on the case of the Danish banking sector. Danish banks’ consolidated assets are almost four times Denmark’s GDP. The biggest banks have considerable cross-border activities. For these reasons, it would make perfect sense for Denmark to join a Banking Union that is composed not only of a single supervision mechanism, but also a single resolution mechanism with a resolution fund that can serve as an insurance scheme in relation to systemic banks. Whilst participating in the banking union therefore appears desirable, the terms of that participation should also be right.

2/3  BIS central bankers' speeches  To conclude, Islamic financial institutions have developed into matured institutions that are now offering a wide range of financial solutions to meet the varied needs of customers. Therefore, halal businesses should seize these opportunities to better position themselves and embrace sustainability, as well as digitalisation that aim to provide stronger platforms to rebound as the economy recovers. In closing, I would like to share with you an inspiring verse from the Quran, that serves as the foundation to the key points I have intended to raise earlier. In Surah Al-Baqarah verse 195, Allah s.w.t mentioned, “And do good, indeed Allah loves the doers of good”. So, let us embrace this message together and put more effort in propagating good, particularly in the way we conduct businesses, by not just being halal, but also beneficial to the environment and society at large in line with the commandment of Allah s.w.t. Let us begin this today, here at the World Halal Business Conference 2021. Thank you and I wish everyone a pleasant and productive conference. 1 Source: Dinar Standard, The State of Global Islamic Economy 2020/2021 2 Halal food, Islamic finance, Muslim-friendly travel, pharma and cosmetics 3 Source: HDC HIMP 2030 4 BNM internal survey 5 Source: HDC Vibes issue 06/2021  3/3  BIS central bankers' speeches
0.5% of annual GDP, to achieve a structural public balance in equilibrium. 9  In this regard, if the ratio between the total tax take and GDP is taken as reference, it stood at approximately 35% last year, around 6 pp lower than that recorded in the euro area as a whole (decreasing to around 3 pp when the arithmetic mean of the various countries is considered). Spain is particularly notable for its low level of consumption taxation, in international comparisons, and for a low revenueraising capacity in respect of environmental taxes. 10  Specifically, the simulation presented on the slide assumes that potential economic growth will stand at slightly above 1%, the GDP deflator will converge towards 2% from the mid-2020s, and average interest rates on debt will rise only moderately from their present levels. 36  Moreover, it should be emphasised that debt reductions would be greater under alternative scenarios in which the potential economic growth rate rises, highlighting the importance of pursuing policies in this respect, which I will now go on to discuss.11 (ii) Policies to foster long-term growth In the strategies to reduce public debt in the medium and long term, the role played by policies to promote sustained growth in activity and employment must be at least as important as that of the multi-year budget plans.

On the contrary, we should reinforce the multilateral economic policy coordination mechanisms already in place internationally. This need is particularly evident as regards the euro area members, since they share the same currency. For each and every member, joint action - beyond the common monetary policy response - is the most effective means to ensure that the economic effects of the pandemic are vanquished in a shorter time and at a lower cost. This coordinated action is also needed to shore up the solidarity of the European project: although the shock has been a common one, the effects across countries have not been even, and the starting position of each country in facing its effects also differed. The elements needed for an appropriate European response to this crisis largely coincide with those already deemed vital before COVID-19 to complete the institutional architecture of the euro area: the creation of a powerful, pooled budgetary resources mechanism that, in the context of the current crisis, smooths the financing of government spending that has arisen as a result of the pandemic and of those other needs that may arise during the 2  recovery; the completion of the banking union, with the launch of a European deposit guarantee scheme; and the full roll-out of the project to achieve a genuine European market for capital. In this specific field of joint European action there is clearly room to boost the response so far to the crisis.
In addition, the Payment System Act confers on Norges Bank the responsibility for licensing and supervision of systems for clearing and settlement of interbank money transfers. BIS central bankers’ speeches  5  transactions are crucial to financial stability. A robust financial system is not only dependent on solid banks. The infrastructure must also be able to withstand shocks. Large amounts are settled in the payment system every business day. If the system fails, payment flows can be interrupted, with serious consequences for banks, private individuals, the business sector and public administration. Pension and wage payments may be delayed, and businesses may not be paid for goods sold. Problems can spread from one bank to another if one of the banks cannot meet its payment obligations. Today, payments are largely made by cashless means using deposit money. This places even greater demands on the payment system to function as intended. Chart: Net settlements at Norges Bank Norges Bank’s system for net settlement of interbank payments is the core of the Norwegian payment system. There are 22 banks that participate directly in net settlements (first-tier banks), while 110 banks participate indirectly (second-tier banks), through a private settlement bank. The two most important private settlement banks in Norway are DNB and Sparebank 1 Midt-Norge. Second-tier banks, normally small banks, have risk exposure towards their settlement banks. The risk to the payment system as a whole increases when many banks use the same settlement bank.

As deposits are readily available to depositors and many deposits are covered by a deposit guarantee, depositors accept a relatively low interest rate. The insurance premium banks pay for the deposit guarantee bears little relation to the risk the bank takes. In addition, since investors can expect that the authorities will come to the aid of banks in distress, they  BIS central bankers’ speeches  1  may be satisfied with a lower return. The result is an underpricing of risk, potentially leading to excessive risk-taking. Low equity ratios reduce loss-absorbing capacity and, at the same time, strengthen the incentive to take risks. While owners cannot lose more than their equity stake, there is a potential for high returns on the equity they have invested. To avoid a situation where banks hold inadequate equity capital, banks are subject to capital requirements. Each bank should hold capital in proportion to its risk exposure. This is the basis of microprudential bank regulation. But even if banks appear to be solid individually, the banking system as a whole may be vulnerable. Banks are exposed to one another and can inflict losses on one another directly. Banks can also suffer substantial losses indirectly if they have shared exposures outside of the banking system. This was clearly evident during the financial crisis. When a bank is forced to sell off assets, they fall in value. This weakens the balance sheets of other banks holding the same type of assets.
36 The inflation target was finally formalised in a new regulation on monetary policy in 2001, a good eleven years after New Zealand, nine years after the United Kingdom and eight years after Sweden. The mandate for Norges Bank states that monetary policy shall, in addition to securing price stability, contribute to stabilising output and employment. It is possible to give weight to cyclical fluctuations in interest rate setting, and to new information, as long as there is confidence that inflation remains near the target. The central bank’s announced interest rate strategy ahead will be adjusted as new information emerges. This stands in contrast to the parity system, which was more rigid. The authorities cannot systematically allow policy to be more expansionary than announced to bring down unemployment. As Kydland and Prescott demonstrated, this would lead to  33  Another difference is that under parity policy the authorities stabilised the price of gold and not the price of a basket of representative goods – the consumer price index. Today, stabilisation of the consumer price index would be described as price level targeting. Inflation targeting, on the other hand, implies stabilisation of changes in the consumer price index. There is also a difference in that there is no longer any redemption obligation. Confidence is not based on gold reserves, but more generally on responsible economic policy as a basis for achieving the inflation target through the active use of the interest rate.

Thomas Jordan: Mortgage financing and the risks of a credit crunch in Switzerland and abroad Summary of a speech by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the Schweizer Ökonomentag, University of Zurich, 10 September 2008. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The international financial crisis has raised the question of the risks of a credit crunch on domestic and foreign property markets. A credit crunch can occur if banks’ ability to lend is constrained, or if their lending practices become more risk averse. From a macroeconomic perspective, a credit crunch is relevant because it can reinforce an economic slowdown. The risks of a property market credit crunch differ from country to country. Mortgage markets in the US and UK are showing clear signs of a credit crunch. Both countries have typically seen a sharp slowdown in credit growth, falling house prices and weaker bank balance sheets. Mortgage lending in these countries over the past few years has increasingly been financed through securitisation. The current loss of investor confidence in securitisation has thus hampered banks’ ability to refinance mortgage contracts and, as a result, banks in both countries are finding it harder to grant new mortgage loans. At the same time, falling prices have dampened their risk appetite as regards lending. This decline in the supply of credit is now weighing on economic developments in these countries.