samchain/econo-pairs-v1 huggingface dataset:
There are also particular reasons why, in this case, levels of debt may have been poor indicators of cross-country risk. In the United States, for example, many mortgages were “non-recourse” – it was lenders, not borrowers, who were liable for any negative equity in the event of default. This increased both the borrower’s incentive to walk away from the loan and the  1  British banks certainly lost much less on domestic mortgage lending during the last financial crisis than they had in the early 1990s – when, as it happens, the level of debt was lower than in 2007. Most losses during the financial crisis were on banks’ overseas assets. 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  lender’s subsequent loss. All else equal, this would mean the same level of debt was riskier in the US than in the other two countries. Thanks to the tax regime the opposite was true in the Netherlands. Mortgage interest was fully deductible from taxable income and interest receipts were only lightly taxed. This encouraged so-called “round-tripping”. By ramping up both sides of their financial balance sheet – funding extra deposits with higher mortgage debt – the more highly taxed households could reduce their overall tax bill without adding to financial risk, either individually or collectively. Yet it turns out that the superior predictive power of growth rates of debt, over levels, is a more general phenomenon.

In cross-country data the scale of the economic downturn after the crisis was positively correlated with prior growth rates of debt but uncorrelated with its level (Charts 3 and 4 cover 15 European countries, the US and Japan). In longer-term data, growth rates of debt are better predictors of financial crises. Even across individual households, the rate at which debt had accumulated in the run-up to the crisis seemed to tell you more about a borrower’s subsequent difficulties than the level of gearing. I want to say a little more about this today, using various examples from the UK. Chart 3: Levels of gearing ahead of the crisis unrelated to GDP growth after it  Chart 4: Growth of debt does better  Sources: BIS total credit statistics, Datastream from Refinitiv and Bank calculations. Sample includes 15 European countries, Japan and the US. Sources: BIS total credit statistics, Datastream from Refinitiv and Bank calculations. Sample includes 15 European countries, Japan and the US. I should say at the outset that I’m certainly not claiming that levels of debt are irrelevant. It must surely be the case that, all else equal, more debt means more financial risk. It’s possible there are lots of particular, country-specific factors – things like the non-recourse status of mortgages in the US or the tax regime in the Netherlands – that make a given quantity of debt more risky in some places than in others.
As with other areas of economic policy, research in this field can help drive the action which I want to speak about next. III. And yet, it is still possible to transform public services The key issue with operating expenditure Neither our strategic review of the past few decades nor economic research offers much hope for progress. This leaves one way forward, namely practitioners and their commitment on the ground. I will therefore now focus on government operating expenditure, which is used in particular to produce major public services. It is sometimes argued that the deterioration in the public finances is primarily due to high amounts of social protection expenditure and transfers, which amounted to approximately EUR 900 billion ix in 2022, or 34% of GDP. Operating expenditure is far from being negligible: it accounts for almost a third of public spending (EUR 475 billion, or 18% of GDP) and is therefore a significant potential source for improving public sector efficiency. Central government and national agencies account for EUR 200 billion of this amount, but local authorities with EUR 155 billion account for an increasing proportion. When measured in terms of number of public employees, resources have steadily increased over time. According to the Cour des Comptes, x the number of public sector employees grew by more than one million between 1996 and 2020, i.e. an increase of 23% driven largely by local government (+58%, and  Page 13 of 19 still 47% even after adjusting for skills transfers).

Let me also note that the question of the appropriate longer-run balance sheet size, the point at which the Federal Reserve holds no more securities than necessary to implement monetary policy efficiently and effectively, is a related, but distinct policy judgement upon which the FOMC has made no decision as yet. We will be monitoring that broad range of indicators to search for evidence that we’re approaching the “steep” slope—and I have confidence that our data and analytics will help us to assess this effectively. 29 We have also conducted a new Federal Reserve survey specifically designed to support our efforts to obtain a high-quality estimate of where aggregate reserve scarcity might occur, and the preliminary survey results strongly support my view that reserve scarcity is some way off. 30 Finally, I am confident that the Federal Reserve has the effective tools and is prepared to take measures as appropriate to ensure that short-term rates remain wellcontrolled and efficiently transmit the stance of policy into broader financial markets. For example, another technical adjustment to the IOR rate, as discussed in the May FOMC meeting minutes, could be used to foster trading in the federal funds market at rates well within the FOMC's target range. Concluding Remarks I remain highly confident that the FOMC’s framework for the normalization of the stance of monetary policy—both in the overnight market and the balance sheet—will continue to proceed smoothly, without unnecessary surprise, disruption, or volatility in financial markets.
We are already seeing that technology developed in the petroleum sector serves as a springboard for jobs in the green sector. Turning to my next topic, how are the structural changes in energy markets shaping the outlook for energy prices and inflation? On this, I will be humble and say, that predicting the level of energy prices in the years ahead is difficult. As we have already heard, different aspects of the green transition will affect prices differently, and possibly, with opposite signs. Outcomes will depend on technological developments, the supply of raw materials and minerals and on political decisions related to climate and energy security. In the short to medium term, we should be prepared for a potentially higher frequency of negative, and possibly, more persistent supply-side shocks originating in the energy market. [1] With an increasing share of intermittent renewables in the energy mix and insufficient energy storage systems to act as balancing mechanisms, supply could become more unpredictable. Coupled with low short-run demand elasticities, shortrun fluctuations in supply could potentially trigger large price movements, reinforcing a well-documented characteristic of energy markets. Turning to how movements in energy prices feed into inflation. Although household energy costs make up a fairly small share of the CPI basket, as we all witnessed last year, large movements in energy prices can have a material impact on headline inflation. Energy price changes also have an indirect effect through firms’ input costs.

Furthermore, as my fellow panelist Prof. Baumeister has highlighted, it is important to identify the original source behind the energy price movements in real time. This may become more challenging as the green transition involves a wide range of sectors and products. To help us navigate we might need new analytical tools and new models. Second: Central banks are not unfamiliar with fluctuations in energy prices, but should the frequency and persistence of supply shocks increase ahead we may more often be faced with the challenging short-term trade-off between stabilising inflation and promoting high and stable employment. Deciding on the right timing and dosage of monetary policy will be crucial. The appropriate response of monetary policy to energy prices depends on the source and nature of the disturbances and their expected persistence. It also depends on whether energy price shocks fuel inflation via second-round effects on other prices and wages, for instance through inflation expectations. Failing to respond to secondround effects, we may risk persistent overshoots of our inflation target and ultimately, a deanchoring of inflation expectations. On the other hand, wrongly interpreting temporary movements in energy prices as persistent, we could have larger output losses in the short term and may even increase inflation volatility. Moreover, changes in relative prices, for instance due to higher carbon prices, are effective signals that push the transition in the right direction. An appropriately flexible and forward-looking monetary policy would help those necessary changes in relative prices to feed through.
Banks succeeded in withstanding the first wave of these shocks, remaining at positive territory, in terms of both system level and individual level. Meanwhile, measures are gradually being taken to adequately manage investment portfolio, in line with the established conditions. Capitalisation of the banking system has continued to grow this year as well, to 19.26%, from 18.53%, reflecting also the enhancement in the regulatory requirements on macroprudential reserves and the minimum requirements for own funds and eligible liabilities (MREL). Both elements have strengthened the resilience and security of the banking system. The purchasing and then the merger of the OTP Bank with Alpha Bank drove to the further materialised consolidation of the banking system in 2022. This development introduced another important player in the group of large banks, which share above 70% of market, and it is expected to contribute positively towards a more competitive and expanded market. The segment of payments and the supportive infrastructure have also marked rather positive developments in terms of their processing during 2022, on the back of measures undertaken in the framework of the Albania National Retail Payments Strategy. The AIPS EURO system is already a reality, while your clients, consumers and businesses are experiencing its benefits, together with you. Based on available  2/4  BIS - Central bankers' speeches  statistics, we see that the euro-denominated interbank transactions within Albania have considerably picked up.

Christine Lagarde joined the French government in June 2005 as Minister for Foreign Trade. In June 2007 she became Minister of Economy and Finance, being the first woman to hold the position of Finance Minister of a G-7 country. From July to December 2008, she also chaired the ECOFIN Council. In 2009, Financial Times ranked her as the best Minister of Finance in the Eurozone, considering both her excellent work within the French government and her involvement in the management of the financial crisis. Madame Lagarde acted with diplomacy as Chairman of the G-20 when France took over its presidency for the year 2011. All these achievements in her current position led Forbes Magazine this year to rank her among the most powerful and influential women in the world. Besides her contribution to official matters, Madame Lagarde has broader interests and is involved in various fields of expertise as well as global issues. For example, she has signaled the major risk in not addressing climate change saying with humor: “Our kids will be grilled, fried, toasted and roasted.” She also militates for encouraging women to seek education and enabling them to be more independent and provide for themselves and for their children. Christine Lagarde is Chevalier de la Légion d’honneur since July 2000, and Commander of the Order of Mérite agricole. She has an Honorary doctorate from Katholieke Universiteit Leuven (Belgium). Madame Lagarde will address you today on a thought-provoking topic: Eastern Europe and Romania: The Path to Prosperity.
Before completing this overview of the recent changes in financial stability risks, I would like to refer briefly to the most recent performance of the financial markets and the real estate market. Starting with the financial markets, it is evident that this crisis is also having a major impact on the valuation of many financial assets, and on their volatility. Initially, the stock markets underwent a severe correction and the volatility of equities and debt securities rose sharply. Subsequently, following the global monetary and fiscal policy response, the stock markets began to recover and volatility to decline. Indeed, both in the United States and the euro 8  area, some market valuation indicators, such as earnings per share, have returned to alltime highs. This could suggest a certain disconnect between the rapid and significant recent recovery in financial markets and the more moderate changes observed in the macroeconomic data and the concerns regarding corporate sector weakness. In this respect, despite the slowdown in recent months in the pace of credit rating downgrades, after widening sharply between March and May the spreads on high-yield or speculative grade corporate debt (i.e. with an external rating below BBB), ceased to improve in June in Europe and in the United States. They have thus remained short of their pre-crisis levels, in contrast to the case of investment-grade corporate debt (external rating of BBB or higher). This deterioration in corporate credit quality is a further factor of vulnerability for financial stability.

That said, this increase eased to 7.2% in July. One of the key factors behind the rise in credit over these months was the progressive activation of the Official Credit Institute’s guarantee facility for NFCs and individual entrepreneurs, which proved particularly favourable to SMEs. In fact, of the € billion lent to NFCs from December 2019 to June 2020 via new lending business, € billion (41%) corresponded to guaranteed loans. As a result, the sector’s aggregate debt-to-GDP ratio has risen for the first time since 2010, to 82% in 2020 Q2 (the highest level since 2017), owing both to the increase in debt and to the decline in GDP. True, the intensity of these rises will be corrected to some extent when the GDP data for the coming quarters are incorporated. But the simulations by the Banco de España also suggest a deterioration in the financial position, measured as each firm’s net debt relative to its net assets. This would be greater in the SME segment and in the sectors most affected by the pandemic. As was the case with firms, households’ financial position improved significantly following the previous global financial crisis. At the same time, mortgage-related lending standards have been much more prudent, although consumer credit has been growing at high rates in recent years and certain groups of households have remained in a situation of vulnerability. However, household income has been considerably cut in the current crisis, owing to the reduction in hours worked and the increase in unemployment.
To simplify somewhat, it can be said that the economic programme pursued by the Government with the support of the International Monetary Fund aims to restore trust: trust in the sustainability of public sector finances, trust in the stability of Iceland’s financial system, and trust in the stability of the Icelandic króna. These three elements of trust are so closely intertwined that if one of them fails, the other two are unlikely to remain intact. The past several months have seen a number of positive developments. The króna has appreciated, broad-based fiscal consolidation plan has been implemented, and the reconstruction of the financial system is proceeding apace. We must not sacrifice these improvements for momentary popularity. Consequently, supervisory bodies, governmental authorities, and the legislature must do everything in their power to ensure that these achievements are not squandered. There is good reason to take a closer look at what is at stake. Many of the world’s nations are on the brink of a sovereign debt crisis. Iceland has been among them but is well on the way out of those difficulties. The work this requires is painful but necessary. Substantial additional cost to the Treasury due to a new financial system shock, due to lack of action, would jeopardise the progress that has been made. It would undermine the Treasury’s creditworthiness and delay access to foreign credit markets, both for the Treasury and for Icelandic companies, or – at the very least – would affect the terms offered.

Access to foreign credit is a prerequisite for export-driven growth. Moreover, deterioration in the banks’ position would adversely affect terms in the domestic credit market. Lending rates could rise and deposit rates could decline, impeding investment and delaying economic recovery. As soon as confidence in the Treasury and the financial system erodes, Iceland’s currency will suffer as well. In that instance, we would not be able to lift the capital controls as planned, after the Third Review of the IMF programme. Furthermore, the financial system would be poorly equipped to tolerate possible instability associated with capital account liberalisation. Finally, it is appropriate to bear in mind that financial undertakings’ scope to meet the needs of other individuals and firms would be drastically reduced. All of these factors show how vital it is to the public interest that the Central Bank and the Financial Supervisory Authority set forth general guidelines so as to maintain stability while matters of legal uncertainty are being settled. Other authorities and the legislature must also assess whether further measures must be adopted in order to remove all doubt. Ensuring stability is in our hands – all of our hands. We hope and expect that all parties will work together to achieve that goal. 2  BIS Review 91/2010
With the achievement of relative macroeconomic stability in the recent years as evidenced by a significant reduction in the inflation rate to 8.5 percent as at June 2006, it is the expectation of the Bank of Zambia that all prudent lending institutions would make downward adjustments to their lending interest rates. Some commercial banks have taken the lead by reducing their base lending rates and we expect microfinance institutions will follow suit so that many more people can have access to affordable financial services. Mr Chairperson, Distinguished Guests, let me take this opportunity to inform you that following the coming into force of the Credit Reference Services (Licensing) Guidelines and the Credit Data (Privacy) Code on 30 January 2006, a credit reference bureau has since been issued with an operating licence to provide services to the Zambian market. Although the bureau will initially provide services to the banking sector, it will subsequently extend its services to other credit providers, such as, microfinance institutions. This will help in reducing credit risk through the availability of a widely accessible database on the loan repayment profile of borrowers. This should also provide another incentive for lowering of interest rates. BIS Review 72/2006  1  Ladies and Gentlemen, one way of addressing concerns of limited capital and dependence on donor support to the industry is by promoting linkage banking where microfinance institutions not only maintain accounts with commercial banks but also access funds from their respective commercial banks for on lending.

Ladies and Gentlemen, in recognition of the need to provide a conducive regulatory environment which promotes sustainability, accountability and transparency in the conduct of micro finance business, the Bank of Zambia, in consultation with other key stakeholders in the microfinance sector, introduced the Banking and Financial Services (Microfinance Regulations) of 2006 which came into force on 31 January 2006. While the Regulations may be focusing on deposit taking microfinance institutions and relatively large non-deposit taking microfinance institutions, it is envisaged that several other smaller players in the industry will continue to be regulated under the Cooperative Societies Act and the Money Lenders Act. The Bank of Zambia will be holding a workshop for microfinance institutions and other stakeholders during the second half of 2006 to highlight the salient features of these Regulations and the importance of operating microfinance institutions to properly register their businesses. Ladies and Gentlemen, we are aware that lending of small sums of money to a large number of individuals maybe costly, and this may compel microfinance institutions to charge high lending interest rates than commercial banks and other financial institutions. However, it is also important to note that high lending interest rates can lead to high levels of delinquency. It is in this regard that the Bank of Zambia is concerned about the levels of lending interest rates charged by most financial institutions in Zambia, microfinance institutions included.
2  BIS central bankers’ speeches  2. Resources: On the resource front, we are seeing firms struggle to secure and retain sufficient expertise in some areas, with firms competing for the talent needed to implement the new standards. Firms need to get better at planning in advance, ensuring their recruiting efforts are providing a steady stream of qualified candidates, and looking for opportunities to move people around within the organization, particularly between the front office and control functions, for more well-rounded professions. This is likely to mean more aggressive, creative and targeted searches and a commitment to ongoing training. As the landscape and regulatory requirements change, firms will need to find the right balance between hiring new talent with specific expertise and training current staff to keep them up to speed and capitalize on institutional knowledge. 3. Regional coordination: Cross-functional regional coordination across business areas is necessary, as is coordination across regulatory change programs (EPS, Volcker, Derivatives, RRP, etc.). In addition, FBOs will have to manage several regulatory layers of risk governance including meeting the demands of their home regulator and various host country regulators. 4. Capital Planning, Liquidity and Stress Testing: As firms become more accustomed to – and experienced with – the range of stress testing and capital requirements, there should be greater appreciation for the expectations around governance, quality of modelling, quality and granularity of data, and the level of coordination needed with the head office.

Caleb M Fundanga: Moderating the impact of the global meltdown on the Zambian financial system Speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the official opening of Standard Chartered Bank Zambia Limited Ody’s Excel Centre, Lusaka, 22 April 2009. *  *  *  The Chairman, Standard Chartered Bank Zambia Limited, Mr Michael Mundashi The Managing Director of Standard Chartered Bank Zambia Limited, Mrs Mizinga Melu Distinguished Guests Members of the Press And may I simply say Ladies and Gentlemen I am pleased to be here today at the official opening of the new Excel Centre of Standard Chartered Bank Zambia Limited. This event is taking place at a time when our economy is faced with challenges emanating from the impact of the global financial and economic crisis. Although the Zambian financial system is not fully integrated with the world’s financial markets, the impact of the crisis is already clear. Mr Chairman, the financial turmoil has resulted in a reduction in projected global economic growth and a decline in demand for commodities. As a commodity exporting country, Zambia has experienced a decline in her export receipts due to the decline in commodity prices reflecting a weak demand for these commodities. The declining export earnings and reversals in portfolio investments have been reflected in the depreciation of the local currency and consequent inflationary pressures towards the end of 2008.