samchain/econo-pairs-v1 huggingface dataset:
Availing myself of my recent council member status, I would say that the guiding principle should be to avoid becoming complacent and, on the contrary, to harness the economic expansion so as to adopt the measures that may provide for sustainable growth, a greater degree of stability and more extensive room for manoeuvre in the face of potential future crises. This advice stems from a diagnosis that is worth emphasising: the Spanish economy still has significant factors of vulnerability. These include most notably high external debt, a level of public debt close to its historical high, an unemployment rate double that of our European partners and a financial system facing considerable challenges; and this in a scenario where the economy must face the impact of the phenomenon of population ageing and the structural problem of low productivity. It is further worth recalling that, although the recovery has rested on a diverse set of measures, in Spain and in Europe alike, it has also been underpinned by the support afforded by the European Central Bank’s extraordinarily expansionary monetary policy. Additionally, this expansion has been accompanied by a significant fiscal impulse in recent years. However, the effect of these monetary and fiscal impulses will tend gradually to fade in the coming years. Against this background it is necessary, firstly, to deepen the fiscal consolidation process.

The high level of public debt is harmful to the economy’s financing conditions, it restricts the countercyclical leeway of budgetary policy and it means a high volume of resources must be set aside to pay the interest burden. There is room, moreover, for the fiscal consolidation process to be compatible with a revision of the structure of public revenue and spending, making it more efficient and  3/5  enhancing its contribution to growth. And, at the same time, a greater degree of fiscal coresponsibility should be promoted across the different tiers of general government. It is likewise a priority to pursue further reductions in unemployment and its persistence among specific groups, especially the lesser-skilled. The high level of joblessness is also closely related to the notable increase in inequality that came about during the crisis. Achieving this will require not only labour market measures but also, more broadly, actions targeting employee skills and training, to encourage their greater adaptability to a new environment marked by technological progress, the automation of productive processes and the knowledge economy. In parallel, despite the significant progress in recent years, the financial sector continues to face deep-seated challenges. These include the need to tackle the effects of the farreaching changes in regulation, technology and competition, to improve low profitability levels and to complete the ongoing reduction of problem assets. Looking ahead to the medium and long term, population ageing is probably the main challenge the developed societies face.
At the same time, both the European Central Bank and the Bank of England have stated clearer forward guidance in order to increase transparency and reduce uncertainty. One reason for the need to increase transparency is that these central banks have come down to very low policy rates. This means there is a greater need for central banks to clearly communicate their views on future monetary policy. The Riksbank has long emphasised the importance of a central bank being transparent and giving clear guidance, which is why we started publishing a repo-rate path and forecasts for inflation and unemployment, for instance, in connection with our monetary policy decisions back in 2007. The uncertainty on the global financial markets has declined during the summer and the increased volatility which we noticed prior to the meeting in July in the stock markets as well as the bond and foreign exchange markets has also decreased somewhat. Government bond yields in the United States and Europe have continued to increase while stock markets around the world have risen, even if the latter fell somewhat during the last week. The Swedish financial markets have followed the international developments and market rates and the stock market have risen in Sweden during the summer. The Swedish krona has fluctuated considerably but all in all the change is small compared to the level at the beginning of July. The Swedish krona has strengthened somewhat in trade-weighted terms, which is mainly due to a strengthening against the US dollar.

In the past, as we have seen here in Asia, serious reversals have triggered debt defaults, banking distress, and currency crises. Although capital flows are nothing new for Asia, what is new and makes the issue more demanding this time is the global context that the flows are taking place, which has important implications for the effectiveness of the policy response. First, compared to previous episodes, capital inflows this time are not country-specific that relate to the financing of payment deficits. Instead, capital inflows this time are a global phenomenon propelled by near zero policy rates and liquidity expansion in the advanced economies, as well as the return of risk appetite, and the recognition that risk-adjusted investment returns in the advanced economies are likely to be very low for an extended period. This means we are living in a world where the forces that shape the resurgence of capital inflows lie outside the control of policy by emerging markets, making it a totally different challenge. Second, given that financial markets have become more integrated and more interconnected than ever before, the risk to economic and financial stability associated with capital inflows this time is also much greater. This is because large capital inflows relative to the absorptive capacity of any economy are more likely to be sustained for a longer period. As a result, the effects of abrupt reversals of capital inflows are likely to be more severe as well.
Efforts were directed to promote a robust domestic bond market to provide a competitive source of long-term debt funding and viable investment alternatives for investors. The trading and information infrastructure was enhanced with the introduction of the Fully Automated System for Tendering, Bond Information and Dissemination System and real-time gross settlement system. The regular issuance of MGS with various maturities along the active benchmark yield curve has facilitated the evolution of a benchmark yield curve. The introduction of new instruments such as asset-backed securities and MGS futures were facilitated, and liquidity in the market was improved by enlarging the size of MGS issues and widening the institutional investor base. The introduction of the Principal Dealer (PD) system promoted an active market-making mechanism for both Government and selected securities in the bond market. In terms of magnitude, the bond market (including both public and private sector bonds), tripled in size from 44.7% of GDP in 1996 to 80.6% of GDP as at end-June 2003. The private debt securities market accounted for 54% of bonds outstanding and 43.6% of GDP as at end-June 2003 compared to 13.5% of GDP in 1996. Funds raised by the private sector through the bond market increased to 16% of the total private sector debt financing (as at end-June 2003) from 9.3% in 1996. 4  BIS Review 40/2003  Another development in our financial landscape is the growing significance of Islamic banking and finance in the financial system.

Closely related to this is the need to strengthen the framework for consumer protection to provide an avenue for redress in cases where consumers are placed in a disadvantaged or unfair position resulting from financial transactions taken due to lack of transparency and understanding. The move towards the adoption of the supervised market approach requires continuous efforts to enhance product disclosures and to elevate the level of financial literacy of consumers. Dealing with consumer awareness and education require considerable time and commitment. While recognising the potential benefits of liberalisation to the domestic financial system, the need to ensure the proper sequencing, and to manage the liberalisation process must be accorded importance. Financial systems in emerging economies have and are expected to continue to play a significant role in the economy. As such, the process of international integration of the domestic financial system has to be paced with developments in the domestic system so as to ensure that the system is adequately prepared to cope with the challenges arising from the liberalisation process without destabilising effects on the domestic economy. The liberalisation process must be managed with respect to identifying the potential sources of risks to the system.
BIS Review 94/2006  1  fundamental to an understanding of recent movements in inflation and the response to them of the Monetary Policy Committee. Let’s take a closer look at the NICE decade. Two factors were particularly important in delivering stability. First, companies and employees responded flexibly to sharp movements – both up and down – in input costs. That new-found flexibility, unlike in the 1970s, meant that firms absorbed cost pressures partly in profit margins, partly through efficiency improvements, and partly by resisting increases in the prices of other inputs. With a clear commitment by the Bank to meet the inflation target, raising prices (so losing market share) was a less attractive strategy for meeting the challenge of higher input costs than searching for ways of reducing other costs. And employees recognised that the consequences of higher world prices, such as for energy, on living standards could not be avoided by higher money wages. So wages rose more slowly when employers faced higher National Insurance contributions and energy prices than when the costs of imported inputs were falling. Second, monetary policy supported a broadly steady path for total money spending – during the decade 1995-2004, the growth rate of nominal domestic demand fell within a narrow range of between 5¼% and 6¼% in all but one year – so that the new flexibility meant that price rises in some parts of the economy were balanced by price falls elsewhere, leaving inflation overall close to the target.

At the same time, sharp rises in the prices of oil and other commodities reduced the income households had available to spend on more discretionary items and put downward pressure on those prices. Not surprisingly, that loss of spending power was one of the contributory factors to the standstill in consumer spending in the second quarter of last year. But since then consumer spending and output growth in the economy have picked up, and in the first half of this year were growing at around their long-run average rates. After a prolonged period during which consumer price inflation was below its 2% target, inflation has been above target for nine out of the past thirteen months. So what are the challenges facing the Monetary Policy Committee as it tries to bring inflation back to the 2% target? Since their peak in early August, oil prices have fallen by around a quarter. In due course, that will ease the pressure on petrol prices and fuel bills, including gas and electricity. The direct impact was seen in the producer price data published yesterday, and will be seen in CPI inflation over the coming months – making it less likely that I will have to write an explanatory letter to the Chancellor than was the case two months ago – although the anticipated fall in inflation for September may not persist for long. Over the past year, profit margins, especially in manufacturing, have been squeezed and outside the oil sector the share of profits in GDP has fallen.
But in some cases the best judgment that it may be possible to make is that the supervisory authority is actively working to establish the necessary capability - which is essentially the view that we have taken in relation to the People’s Bank of China in licensing banks from the Mainland; second, it is important to realize that, in undertaking consolidated supervision, the primary responsibility of the home supervisor will be to safeguard the interests of the parent bank. While this should hopefully help to promote the safety and soundness of the banking group as a whole, including overseas banking subsidiaries, the interests of home and host supervisor may not necessarily coincide. Despite this, the various regulators should, of course, try to cooperate to the maximum extent possible; third, and related to the previous point, cooperation will only be possible if there is an adequate two-way flow of information. However, the main focus of consolidated supervision sometimes appears to be for the home supervisor to obtain information from the host supervisor. There is less emphasis on reciprocal flows. For example, in the recent paper prepared jointly by the Basle Committee and the Offshore Group of Banking Supervisors on Supervision of Cross-Border Banking, only four paragraphs out of BIS Review 55/1997  -5-  forty-three are devoted to information flows from home supervisor to host supervisor. In our experience, home supervisors can be reluctant to share information with us, either at the time of authorization or, more particularly, if serious problems arise in the parent bank.

One year on, we have seen a significant number of market participants from all over the 1/5  BIS central bankers' speeches  world using the Statement as a means to demonstrate adherence to the Code. To lead by example, many central banks, including MAS, have also issued Statements and published these on our websites. Central banks have also requested that our FX counterparties issue the Statement. Many FXCs have linked membership of the FXC with Code adherence. These efforts have resulted in a “bumper crop” of Statements being issued at the one-year anniversary of the Code. We have also seen about 12 public registers being established in response to market demand. These are repositories where market participants can publish their Statements, to publicly demonstrate adherence to the Code. In addition, the GFXC launched a Global Index of Public Registers (or the Global Index) in May this year, which links these public registers. The Global Index has a search function which enables the quick identification of market participants that have published Statements on the participating public registers. As at mid-August, the Global Index had about 420 Statements, from 9 participating public registers. The GFXC is continuing with efforts to include more public registers, and this will be an important and highly visible way to track adherence progress to the Code. The GFXC has also been expanding its membership to include more jurisdictions. From the original 8 FXCs, we have seen a number of new FXCs being established in the last year.
4  BIS central bankers’ speeches  An important function of financial firms is to provide liquidity to the market. However, this exposes financial firms to run risk. Liquidity runs can be an accelerant to asset fire sales that can lead to downward price spirals where firms must sell assets to raise funds, with these sales putting more downward pressure on asset prices, leading to a renewed round of asset sales. For solvent financial firms, protection against liquidity runs requires liquidity buffers and/or access to appropriately collateralized central bank liquidity support. Financial firms on their own would likely choose to hold liquidity buffers that are smaller than socially optimal since these firms do not internalize the positive market externality that these liquidity buffers provide. As a consequence, liquidity regulation is necessary to achieve the desired level of firms’ liquidity buffers. Liquidity buffer requirements are also needed to reduce the dependence of these firms on central bank lender-of-last-resort (LOLR) support. There are several reasons this is desirable. First, access to central bank liquidity can lead to moral hazard with respect to the behavior of financial firms. This can be mitigated by requiring that firms with access to LOLR support hold sufficient liquidity buffers that must be used ahead of any central bank liquidity – the equivalent of liquidity “skin-in-the game.” Second, the line between illiquidity and insolvency often can become blurred, especially when markets are under stress.

Firms’ compliance with PPP and supervisory review or firm-by-firm regulatory intervention under Pillar 2 of the Solvency II framework are all important to manage concentration risk. But we should not have to rely on the PPP to compensate for perverse incentives that the quantitative capital rules under Pillar 1 might create. A robust and coherent Pillar 1 needs to play the primary role in incentivising prudent risk management practices in the first instance and to work in concert with Pillar 2 measures. The ongoing work on Solvency II reform plays a part in this. In order to enhance our understanding of the risks and the most appropriate ways to address them, the PRA will engage with insurers and other stakeholders, including international regulatory colleagues. Our own work on concentration risk will examine the need to tighten controls on recognition of reinsurance structures and volumes to mitigate systemic risks to policyholders. Page 9  Undertaken within a robust framework for the management of counterparty concentration and recapture risk, reinsurance can continue to deliver the global diversification that is at the heart of insurance, and which allows the insurance industry to play its part in helping individuals and businesses to navigate a world of uncertainty. Thank you. I am grateful to Wendy Fu, Alwin Luchmaya, Dean Minot, Charles Adam, Hannah Rashid, Alan Sheppard and Miranda Hewkin Smith for their assistance in helping me prepare this speech. 1.
The result of this is that we will see less difference in the banks’ capital requirements for assets with similar risk profiles. Let me make myself clear: The idea is not that we shall return to Basel I. The banks will be able to continue using internal models in their risk management. What the Committee's current work concerns is instead bringing order to the risk-based system to increase the credibility of the capital requirements the banks have and to make it easier to compare them. Without this work, there is a risk of further erosion of confidence in the regulations. Another important part of the Committee's work involves modernising and developing standard methods so that they become more risk sensitive and thereby better adapted to banks with international operations. For many types of exposure, such as lending with property as collateral, the current standard measures often give the same risk weight regardless of the loan-to-value ratio. This will probably be changed so that the capital requirement varies according to the loan-to-value ratio. This work also covers trying to reduce the mechanical dependence on external credit ratings, which is in line with the objectives stated by G20. Supplementary requirements will increase the banks’ resilience On the basis of the revised standard methods, the Basel Committee is also working on new floors to limit how low the banks’ risk weights can fall. In this way, one also limits how low their capital requirements can be.

What are the repercussions that banks are exposed to? The weak economy results in a deterioration in the quality of loan portfolios, and the collapse of stock prices has an adverse effect on profits. Banks not only suffer losses on their own securities portfolios. The stock market slump also has an impact on earnings from commissions and services. Lucrative services in investment banking, such as those in connection with IPOs or mergers, are less and less in demand, and the reluctance on the part of many investors – with the resultant lower turnover – cuts into the income from commission business. In the wake of falling stock prices, profits in asset management are declining as well. This is because a part of the fees and commissions levied on the assets under management is value- or performance-based. This year, the big banks recorded profit setbacks in most areas compared with year-earlier quarters, in some cases even considerable losses. This was especially due to the poorer results from trading for own account and to a decrease in investment banking business (new issues, mergers and acquisitions). Particularly insurance business accounted for these losses. In traditional banking business, notably in retail banking, the big banks recorded satisfactory results, however. The BIS equity ratios disclosed by the big banks clearly exceed the required minimum.
Eva Srejber: Is there reason for confidence in the future of the economy? Speech by Ms Eva Srejber, First Deputy Governor of the Sveriges Riksbank, at the KEPA day1, Stockholm, 21 October 2004. *  *  *  Thank you for the invitation to take part in the KEPA day and share my thoughts regarding confidence in the future of the economy. I will speak about economic growth and internationalisation, draw a parallel between current events and historical events and then look ahead to the challenges and opportunities that an increasingly interlaced world economy will bring. Since the Second World War, international growth has been higher than during previous centuries, while it has spread to a larger number of countries - never before have so many had it so good. During the industrial revolution in the 19th century, the growth rate in leading countries like Britain amounted to an average of 1.5 per cent a year. Since the middle of the 20th century, many countries have managed to achieve growth rates of between 5 and 8 per cent a year. These unparalleled successes of course have several explanations, some of the most important being extensive liberalisation of trade and capital flows, major technological advances and changes in economic policy. Assuming that the trend towards increased global integration continues, there is every reason to expect continuing substantial increases in economic wealth.

Although many people have experienced considerable improvement in their living conditions in recent decades, there are still far too many who have not yet been given the opportunity to benefit from the increase in wealth. In addition, there are still substantial environmental problems in many areas. However, the good results we have achieved since the Second World War show that we are on the right track - we need more and better globalisation, not less! I therefore consider that there is good reason for confidence in our economic future, but also that it is important for us to safeguard what we have already achieved, to make use of future opportunities that arise and to tackle the challenges that come in the wake of globalisation. As I see it, a strong multilateral framework is necessary to enable us to manage these challenges effectively. The driving forces behind the increased wealth in the world After the end of the Second World War, the architects behind the new multilateral economic system were determined to avoid a repeat of the fiascos during the 1930s, when countries introduced tariff barriers, made competitive devaluations and set up obstacles for payments. These measures halved world trade and led to falling GDP figures and declining real wages, mass unemployment and political chaos in large parts of Europe.