samchain/econo-pairs-v1 huggingface dataset:
The policy rule shall not be applied mechanically under all circumstances. This is particularly important given that the economic reality appears to be taking on increasing complexity and becoming more difficult to define. The Inflation Report published in mid-March contained the assessment that economic growth in Sweden and abroad would remain high over the coming years. Our forecast for Sweden was a growth rate of around 3 per cent a year, which is higher than we consider to be sustainable in the long term. The new information received since then has been mixed. The oil price has been unexpectedly high, although recently it has fallen slightly. Moreover, industrial activity appears to have weakened slightly, both in Sweden and abroad. We therefore came to the conclusion in April that growth in Sweden would be somewhat weaker than was anticipated in the March Inflation Report. Since then, we have seen statistics showing that growth in Germany was slightly stronger than expected during Q1, and that the downturn noted in the United States in March appears to have been temporary. We had anticipated lower growth in Sweden’s net exports, but exports of goods appear to be increasing even less than was forecast. However, good growth in real incomes and low interest rates will contribute to favourable growth in household consumption. The labour market remains relatively weak, and our forecast is based on employment strengthening during 2005.

Slow growth, lack of economic mobility and erosion of trust in public and private institutions are among the factors that are likely to have contributed to this. Like undercurrents before a storm, these trends have far reaching implications for political, economic and social systems. Last but not least, the fifth shift is the advancement of technology. This has and will continue to 1/5  BIS central bankers' speeches  dramatically alter the way we behave, interact and transact. Much has been said about the benefits, but an increasing reliance on technology presents risks that we cannot ignore. This includes issues of data privacy, discrimination or biases and also displacement of certain segments within society. In the digital age, higher order risks of cyber-attacks and operational disruptions are magnified in ways that we have yet to fully comprehend. Calling for a financial system that is relevant, safe and socially responsible These five megatrends and finance are deeply intertwined. While undoubtedly finance has helped to power the economic rise of ASEAN, its role in contributing to an increase in climate risk and inequality cannot be denied. Therefore, as we consider the future of finance, we need to contemplate not only how these megatrends may impact finance, but how finance itself can respond to and shape these trends in more positive ways moving forward. In my mind, this calls for a financial system that is relevant, safe and socially responsible. Finance must be relevant to the needs of the economy.
The real-estate sector is adjusting after being very dynamic in 2015. New house sales in Santiago fell sharply in the first quarter of 2016, largely due to advanced purchases last year (figure 13). A substantial part of the sales of last year were accounted for by promised purchases of unfinished units, scheduled for delivery mainly this and next year. In this sense, one risk for real-estate companies stems from such promises not being honored if the economic outlook worsens. Finally, the vacancy rate in the office-space sector is around 10 percent, while rental prices showed a slight reduction at the end of 2015. In this context, the new house price index for Santiago as estimated by the Chilean Chamber of Construction rose 6.8 percent in real annual terms in the first quarter of 2016, slightly less than the 7.2 percent it showed in the third quarter of 2015. Meanwhile, in the third quarter of last year, the house price index for both new and used units calculated at the Bank rose by 9.4 and 9.7 percent in real terms nationwide and in the Santiago Metropolitan Region, respectively (figure 14). About households, aggregate borrowing – the debt to income ratio, RDI – continues to rise, in a context of weaker output and employment. The RDI reached 63 percent at the close of 2015, largely explained by an increased share of mortgage debt, which continues to expand at a real annual rate of nearly 10 percent.

12  BIS central bankers’ speeches  Figure 8 MPR and expectations (percent)  6  6  5  5 MPR  EES  Financial asset prices in March 2016 Report (*)  4  FBS  4  3  Financial asset prices in June 2016 3 Report (*)  2  2 11  12  13  14  15  16  17  18  (*) Built using interest rates on swap contracts up to 10 years. Source: Central Bank of Chile. Figure 9 Two-year-ahead inflation's deviation from target (*)  Nominal MPR (percent)  (percentage points)  8  8  6  6  4  4  2  2 13  14 Peru  15  16 Colombia  1,2  1,2  1,0  1,0  0,8  0,8  0,6  0,6  0,4  0,4  0,2  0,2  0,0  0,0  -0,2  -0,2 15  Apr. Mexico  Jul. Oct.  16  Apr. Chile  (*) Difference between target inflation and inflation expected for 2017 (Peru), December 2017 (Mexico) and two years out (Chile and Colombia). Sources: Central banks of Chile and respective countries.
But I believe there are tools better suited to make the financial system more robust and I want to consider one of them – capital requirements – and how they might in future interact with monetary policy. More immediately, problems and fragilities in the banking sector remain and pose risks that the recovery in demand and activity we have seen across Europe – including in the UK – falters. But in the UK we have also seen CPI inflation rise to a level that is significantly above the inflation target. In recent months CPI inflation has begun to fall, but remains well above the 2% target level and that makes setting monetary policy difficult. We continue to face the problem of balancing risks: risks that inflation of 1.0pp–1.5pp above target lasts long enough to become ingrained in expectations and affect behaviour so that it is hard to bring down, versus risks that the recovery in output becomes weaker and then disappears, leaving inflation pressures lower than is consistent with the target further ahead. Since the financial crisis towards the end of 2008 economic policy has been unusually hard to manage. Both monetary and fiscal policy have been exceptionally expansionary. There has been an extremely large fiscal deficit. Fiscal policy is now being tightened. I look forward to the day when it will be appropriate to tighten monetary policy since a return to more normal levels of interest rates would be a welcome sign that economic conditions were also more normal.

Prior to 1970 published accounts understated the true level of banks’ capital because they did not include hidden reserves. The solid line adjusts for this. 2009 observation is from H1. (c) Change in UK accounting standards. (d) International Financial Reporting Standards (IFRS) were adopted for the end-2005 accounts. The end-2004 accounts were also restated on an IFRS basis. The switch from UK GAAP to IFRS reduced the capital ratio of the UK banks in the sample by approximately 1 percentage point in 2004. Sources: Bank of England, Financial Stability Report June 2009 and “The British Economy, Key Statistics 1900–1970”, published for the London & Cambridge Economic Service. From 1968 the liquidity ratio is: Cash + Bank of England balances + money at call + eligible bills + UK gilts as a percentage of banks’ total asset holdings. Prior to 1968 the ratio is calculated as the liquid assets of the London Clearing Banks as a percentage of gross deposits, as defined in “The British Economy, Key Statistics 1900–1970”. Furthermore, in recent years the quality of banks’ capital deteriorated as banks exploited the availability of new hybrid capital instruments which often had the tax advantages of debt. In practice hybrid capital did not absorb banks’ losses despite being treated for regulatory purposes as if it was like equity.
The collapse of the stock market would have enabled them to reap a handsome profit from the futures contracts they had taken out. A few figures will help give some idea of the scale of this attack and the vulnerability of Hong Kong’s markets at the time. We estimate that the hedge funds involved had amassed in excess of $ billion in currency borrowings, at an interest cost of around $ million a day. They also held an estimated 80,000 short contracts, which translated into the following calculation: for every fall of 1,000 points in the Hang Seng index they stood to make a profit of $ billion. If they could have engineered that fall within 1,000 days they would have broken even. If they could have achieved it within 100 days they would have netted $ billion. All they had to do was to wait for the best moment to dump their Hong Kong dollars, to drive up interest rates and send a shock wave through the stock market. August was an opportune time: turnover in the stock market had shrunk to about a third of its normal level; there was bad news as the government announced that first-quarter GDP growth had been negative; and rumours were flying around predicting the devaluation of the Renminbi and the severing of the link between the Hong Kong dollar and the US dollar.

If dishonesty is unacceptable, then it is unacceptable regardless of whether we are dealing with a neighbour or with a counterparty. The global financial crisis has been a sobering reminder of why we must not divorce ethics from finance. Second – we must all face up to the difficult but necessary decisions of keeping out bad apples from the financial industry. Recruitment and promotion plays a key role here. Organisations should pay careful attention to the individuals they hire and promote. Recruitment assessments should be done with utmost vigilance, and financial firms must be more candid in dealing with cases of misconduct. Complaints and suspicions should be investigated properly, with an opportunity for the individual in question to make representations. If their name is cleared, then this should be recorded, to protect them against unfounded accusations in the future. If they are found to be in the wrong, then proportionate disciplinary action should be taken and recorded. Often, bad apples are allowed – and even requested – to leave quietly before investigations are opened. This leaves them with a clean record to go on and stir wrongdoing in another organisation, and the next, and so on. This practice should stop. We are collectively responsible for upholding the integrity of our entire industry, not just our respective institutions. What is important is transparency, to allow the job market to make informed decisions. In this regard, the Bank is currently pursuing an initiative that will mandate the sharing of employment references with future employers.
Unfortunately, one can see that the authorities in many countries have insufficient resources, independence and competence to match the often financially strong and rich in expertise financial institutions, whose owners can moreover all too easily gain the support of politicians against the supervisory authority’s demands for measures. This is of course a more serious weakness in a problem situation where a lack of measures, insufficient measures or delayed measures can aggravate the crisis. Another problem, although fortunately one we do not have in the Nordic countries, is harassment of the management and personnel within the public authorities for the purpose of reducing their ability and willingness to take supervisory measures against wrongdoing banks. In addition, it is important to establish clear roles and areas of responsibility between public authorities within the same country, between authorities in different countries and also between the authorities and the financial institutions. I have seen that in some countries it is unclear which authority makes the decisions, or which authority has the power to decide on a particular issue, because the law is unclear or because it is not followed in practice. This lack of clarity is accentuated in a crisis situation and hampers crisis management. This can be expressed in different ways, such as poor coordination between the authorities with regard to public statements and decisions or territorial conflicts arising and special interests being favoured over general solutions.

Let me now turn to seven more awkward questions for us. First, how do we square the principle of proportionality with the steeper slope of regulatory requirements this inevitably causes for growing firms? This arises in many ways, where we take a softer approach for smaller firms but this has to be withdrawn as they grow. One example is the steps in our Systemic Risk Buffer regime, which we’ve debated with Sir John in the past – it’s true these could be smoothed to some extent by greater granularity and/or an ‘income tax’ approach, but the basic problem of gradient remains. This issue also arises on the resolution side, which is of course outside the scope of the competition objective – it must be right that we exempt small firms from bail-in debt, but this inevitably leads to a moment when successful firms stop being small and need to start issuing. Second, and related to the first, although we have in my view been pretty successful in encouraging new entrants, it is so far notable that no small bank has successfully become a large bank. Perhaps this will change through time, and it may have much more to do with behavioural stickiness of current accounts than regulation, but it would be complacent to be relaxed about it. As an aside, there may be lessons to be learned here from the general insurance market: it is notable that some of today’s largest GI firms started as small challengers within the last 20-30 years.
The Code of Banking Practice, which is a non-statutory code issued jointly by HKAB and the DTC Association with our endorsement, is the main tool for achieving this end, and, as  2  BIS Review 55/2001  you all know, the Code is currently being subjected to extensive revision and strengthening. This process is almost at an end and we believe that it will make the Code an even more effective tool. In addition to transparency, we hope that the banks, in making their decisions on fees and charges, will show some sensitivity to the needs of the more vulnerable members of society. We believe that, so far, banks are displaying such sensitivity. We also wish to ensure that there continues to be choice for customers. Again, we believe that there is choice, and that deregulation, new technology, new products are indeed combining with competition to provide a greater choice than ever before. We shall continue to monitor. This is a reasonably healthy picture. But it is time also, I think, to look at the current arrangements for consumer protection in the banking industry, to see whether improvements are needed, and if so, what they should be. The HKMA already plays an informal role in addressing consumer complaints, though we have no powers to settle disputes. Should we – or should someone else – be given such powers? Should there be sanctions for banks that fail to comply with codes of practice? How does Hong Kong compare with other jurisdictions in this area?

But we also have to ensure the compatibility of our institutions with those in the euro area and this is the essence of institutional convergence, a process where the central bank and its independence are 1/4  BIS central bankers' speeches  particularly important. While structural convergence focuses on adapting the structure of our economy to that of the euro area, real convergence, measured by GDP per capita (at PPS) as a percentage of euro area/EU average, is the best proxy for the development level of a nation. Romania has certainly come a long way in terms of economic convergence, a process whose inception is tied to the prospects of EU membership, witnessing a significant increase in per capita GDP as a share of the euro area average (based on PPS), from 31.3 percent in 2005 to 60.4 percent in 2018. Peer countries recorded a similar trend: Bulgaria went from about 33 percent to 47 percent, while Czechia, Hungary and Poland, which started from a more advanced level, added 11 to 23 percentage points to the same indicator during 2005–2018. However, this process is still far from completion in these non-euro New Member States. Talking about real convergence, practical experience has showed us that the Eurozone is not a “convergence club”, as its members did not necessarily improve their real convergence after joining it. The euro area is not a cosy place for economies with lagging competitiveness or rigid markets.
We will continue to work closely with Bank Negara Malaysia and Euroclear Bank to promote the platform to other central banks and securities settlement systems in the region and to implement additional services to the platform to meet evolving market needs. Thank you. 2  BIS central bankers’ speeches

When the hinterland is in difficulty, the financial centre will be adversely affected, but it still plays an important role in facilitating the process of recovery. As confidence recovers and investor interest returns, the financial centre will be an important conduit for the funds required for rehabilitation and growth. Thus as Asian economies make progress in putting themselves in order, they will need access to global capital for corporate restructuring and new investments. Singapore's financial centre will be ready to play that role, whether the capital is to be raised through loan syndication, debt securitisation, private equity, or bond issuance. Financial centres in Asia Looking ahead, the trend towards concentration of financial institutions and activities in fewer major centres is likely to persist. However, it is not easy to predict which specific cities will emerge as leading centres. This will depend not only on the static comparative advantage of the different cities, but also on the dynamic competitive advantages created by their policies and strategies. Incumbents will always have an advantage, but no lead is totally unassailable, as London found to its dismay in 1998 when within a few months Frankfurt snatched away the trading of German bund futures. London and New York will continue to be key global players. In Asia, while Tokyo will always be big and significant, the role of the other centres is still unclear. Hong Kong, Singapore, Sydney, and in the longer term Shanghai are in play.
But I’ll point out a couple of things about the November 2017 measures here. First, they occurred despite the fact that the stock of unsecured lending (conventionally defined) is significantly lower than in the mid-2000s, relative to income. What mattered more were incipient signs of faster growth. Second, what also mattered were signs that the supply of credit, and the associated under-writing standards were loosening. Mortgage debt costs likely to remain below average The consequences of default for households are much greater in the case of mortgage debt. Rates of default are much lower, partly for this reason.5 On the other hand the stock of mortgages is much bigger. And unlike conventional unsecured debt – the blue bit of Chart 5 – mortgage gearing is also significantly higher than it was a generation ago, in the mid-1990s (Chart 6). However, that doesn’t mean it’s unaffordable. You would have to see a marked rise in ratios of mortgage debt to income, and/or in the level of interest rates, even for interest payments on those mortgages to return to their pre-crisis average. The second is not what the bond market predicts. I want to explain here why the first is unlikely and, in doing so, to describe briefly the links between these things.6 The main point to understand is that aggregate mortgage debt is largely a consequence, not a cause, of the level of house prices. That’s certainly true in the data: statistically, mortgage growth follows rather than precedes changes in house prices.

It bridges time. The money we spend today could have been earned from past accomplishments or could be borrowed from future ones. Money is also Memory for a country and its people. Money, after all, can be a piece of art in everyone’s pocket. Far from being “barren”, our banknotes are a celebration of the UK’s heritage, a salute to its culture, a testament to the great achievements of its most notable individuals. In short, money has not just economic value; it has cultural value. By depicting characters on our banknotes, we celebrate those who have advanced British thought, spurred innovation, shown exceptional leadership, shaped this diverse society and forged our common values. The great statesman Sir Winston Churchill will feature on the next £ note, unveiled on 2nd June, and issued in September, replacing the prison reformer Elizabeth Fry. The renowned author Jane Austen will feature on the £ note, which will be issued in 2017, replacing the ground-breaking scientist Darwin. 1  Hicks, J R (1967), Critical Essays in Monetary Theory. 2  “I am what I am” or “Stupid is as Stupid Does”. 3  A moniker used by Kocherlakota. See Kocherlakota, N (1998), “Money is Memory”, Journal of Economic Theory, 81 (2). 4  Book I, Chapter 4 “On the Origin and Use of Money” of Smith, A (1776), An Inquiry into the Nature and Causes of the Wealth of Nations. 5  Kocherlakota (Ibid.)