samchain/econo-pairs-v1 huggingface dataset:
In any event, the Banco de España has in fact indicated that it will not activate this instrument for a long period of time, at least not until the main effects of the crisis have been absorbed. With this approach it is sought to eliminate banks’ potential uncertainty as to when to build up capital buffers, which might discourage their provision of credit to the private sector. 7  For a detailed summary of country-by-country macroprudential measures, see Box 3.1 of the Spring 2020 Financial Stability Report and the article by Anguren, Gutiérrez de Rozas et al. (2020). 16  We can draw lessons from our experience of the crisis on the usefulness of some of the indicators used for the activation of macroprudential tools. This is the case of the credit-toGDP gap. After the pandemic broke, this indicator increased significantly and has held at values of over 2 percentage points (pp), which is the warning threshold on the basis of which the Basel framework recommends activating the CCyB. However, it should be borne in mind that this increase in the credit-to-GDP gap has been largely due to the very stimulus policies for the economy applied by the authorities and, above all, to the adverse impact on GDP of the COVID-19 shock. Hence, in situations such as the present, the Basel framework itself acknowledges that it is necessary to complement the information provided by the indicators habitually used in upturns with other indicators offering information on the degree of materialisation of systemic tensions.

This apparent resilience, relative to past downturns and relative to the experience of other countries, is the result of a number of factors. Some of these factors stem from developments outside the financial system, like better macroeconomic policy and better microeconomic or supply-side fundamentals. And some stem from changes in the nature of financial intermediation, the structure of the financial system, and the capacity of financial institutions to manage risk. To start with the broader economic context, the strength and length of the expansion of the 1990s helped ensure that U.S. financial institutions entered the latest recession with strong capital positions. The fact that the recession was shallower and shorter than the average of the past helped limit the scale and scope of losses to financial institutions. The forcefulness of the monetary policy response and the large fiscal stimulus provided by the tax cuts and expenditure increases played a significant role in limiting the depth of the downturn and in helping to bring about the recovery. It is significant that the yield curve has been steeper and stayed steep longer in this latest recession than in the previous one. And, finally, the stronger microeconomic fundamentals of the U.S. economy - the shift to just-in-time inventory management, the speed of innovation in the U.S. economy, and other factors that seem to have reduced the amplitude of the business cycle and improved the flexibility and resilience of the U.S. economy in response to shocks - have also contributed to financial stability.
A devaluation of the RMB would risk creating trade friction, particularly with the United States given that the trade surplus of the Mainland of China with the United States has risen to almost $ billion in 1997, very close to Japan’s trade surplus with the United States at $ billion. On the multilateral front, a devaluation may also undermine China’s re-entry to the World Trade Organization because it could be seen as a move to gain undue competitive advantage and increase its trade share. It would also be highly destabilizing for the currencies and financial markets of the Asian region, including those of Hong Kong which the Mainland is very keen to avoid. It could even be destabilizing for financial markets beyond the region, and all this would inevitably in the end impact on the Mainland of China itself. A devaluation would also adversely affect the flow of foreign direct investments into the Mainland and renew inflationary pressures, which would be a pity after winning the tough battle against inflation in the past three years10. 14. Third, there are other less risky and more effective means of maintaining competitiveness. Continuing reform of the state-owned sector, confirmed by the decision of the Party Congress in September 1997, unleashing the powerful forces of the market, will achieve more efficient allocation of resources and enhance productivity of the economy. There is also continued trade reform11, liberalizing import barriers and cutting import tariff rates on more than 4,800 product categories by over 26% effective from 1 October 1997.

Even during the property downturn in the second half of 1994 and 1995, the delinquency ratio remained low, at around 0.2%. 88 The contribution of the services sector to GDP is now about 85%. BIS Review 19/1998  -4leaders have clearly and repeatedly said that the RMB will not be devalued9. The cynics would of course immediately remind us that in the monetary history of the world, devaluations of currencies were frequently preceded by strong denials and that these matters are determined by market forces and not the words of government officials. But I hope the cynics would also spend a little time to look at the facts. 12. First, there are still capital controls in the Mainland of China. That makes the control of the exchange rate much easier. Indeed, the foreign exchange market in the Mainland of China is dominated by one large player sitting on about $ billion of foreign reserves and that is the State Administration of Foreign Exchange (SAFE) of the People’s Bank of China (PBoC). One simply cannot take a short position against the RMB and so technically the RMB is not exposed to speculative attacks. 13. Second, there are political and policy considerations for the Mainland of China to refrain from involving itself in competitive devaluation.
7 In turn, labour utilization can be broken down into the employment rate, the average number of weekly hours worked and the share of the population in the 15-64 age bracket. This decomposition facilitates the identification of appropriate measures for improving growth prospects and, therefore, for narrowing the income gap. It also helps to demonstrate that living standards can only be raised in a sustainable manner though a combination of a greater mobilization of human resources and higher productivity levels. Given the similarities of the EU and euro area averages, I will focus on the income gap relative to the EU. In 2008 this gap was attributable to both lower productivity and labour utilization in Malta. Lower productivity can be the result of either a smaller capital stock, both physical and human, or an inferior level of technology, or some combination of the two. Malta’s labour productivity has been declining over time, dropping from around 90% of the EU average in 2003 to 87% in 2008. On the other hand, labour utilization has improved, increasing from around 88% to 91% of the EU average over the same period. Malta’s lower labour utilization rate is entirely attributable to a low employment rate, as both the average working week and the share of persons of working age in the total population are higher in Malta than in the EU. Since 2003, in fact, Malta’s employment rate declined from around 87% to 84% of the EU average.

On the social level, one indicator that captures the considerable advances made in recent years is the inequality of income distribution ratio, which fell from 4.6 in 2000 to 3.8 in 2007, well below the average of 4.8 in the EU and the euro area. 3  A broad treatment of this subject is contained in Duguay, Pierre, Productivity, terms of trade and economic adjustment, remarks by the Deputy Governor of the Bank of Canada to the Canadian Association for Business Economists, 28 August 2006. 4  Early school leavers are defined as the percentage of the population aged 18 - 24 with at most a lower secondary education and not in further education or training. 5  The education attainment level is defined as the percentage of the population aged 20 - 24 having completed at least upper secondary education. 6  Data obtained from National Commission for Higher Education NCHE Further and Higher Statistics 2008, December 2008. BIS Review 60/2009  3  The challenge ahead Despite this encouraging start to EU membership, much clearly remains to be done. An indication of the challenge ahead is provided by the gap between income levels in Malta and the EU. Measured in terms of real GDP per capita in purchasing power standards (PPS), this gap has not been narrowing of late and in 2008 was still about 21% and 29%, respectively, below the EU and euro area averages. A useful exercise for policy purposes decomposes this income gap in terms of labour productivity and labour utilisation.
Some of this is probably due to the fact that with low interest rates and high employment, impairment charges are at a very low rate by historical standards – impairment charges as a proportion of total loans are now back to pre-crisis levels. Of course, underlying returns only tell you part of the story. When one adds in the cost of misconduct, including for PPI, that banks have paid and are likely to pay on past retail  12  Banks’ current price to book ratio would be associated with CDS spreads of over double their current level if the relationship between banks’ price to book ratios and CDS spreads between 2008 and 2013 still held. 13  Estimates of return on equity on individual business lines should be treated as indicative for a number of reasons, for example, not all banks calculate return on equity by business activity, definitions of business activities can vary across banks and some banks find it difficult to attribute equity to individual divisions or products. 6  BIS central bankers’ speeches  lending activities, and other costs, the overall returns drop markedly. But even adjusted for conduct and other costs, returns on retail lending still seem to be around 10%. Cost of equity is the relevant comparator for return on equity. For large UK and international retail and commercial banks it is estimated to be around 9%. So retail lending does not seem to be the source of the problem. Nor, on the surface, does corporate lending.

The channels of this penetration were similar to those observable today – through Bulgarians studying in Belgium, France and Switzerland, and through trading in goods. These initial contacts had a very strong impact on the subsequent formation of the modern Bulgarian State and its institutions. The Bulgarian National Bank, being the first public institution established after the restoration of the independent Bulgarian State, was strongly influenced by the economic and cultural relations with the Francophonian world already established. On the day of founding of the BNB on January 25, 1879, its capital was subscribed in French Francs. The subsequent reforms of the Central Bank, the Ministry of Finance and the financial system in the country drew on the experience of Belgium and Switzerland, as well as on the knowledge and expertise of a great number of French advisors. The Francophonian movement in the period after the restoration of the Bulgarian State until the beginning of the World War II was further strengthened and expanded by the great number of Bulgarians who studied in Belgium, France and Switzerland. Especially telling of the scale of this process is the number of the senior managing officers in the area of finance and banking who graduated in countries from the Francophonian world. Of the sixteen Governors of the Bulgarian National Bank who managed it during the period from its foundation to the Second World War, eight received their higher education in economics, political science and law in Belgium, France and Switzerland, or specialised there.
Despite the calming in the money markets, the situation in the stock and credit markets continued to worsen as a result of the rapid deterioration in economic conditions. I would like to illustrate the unique nature of the current situation with a comparison of the Dow Jones Industrial Average from five stock market crises (cf. chart 2). 2 Price declines this time round are significantly steeper than those in 2000 and 1973 and not at all comparable with 1987, when the stock markets recovered very quickly. Measured by the extent of the Dow Jones losses, the current crisis can only be compared to that of 1929. Although the financial losses suffered this time have probably already far exceeded those of 1929. The reason for this is the considerably higher market capitalisation of the stock markets, as measured by gross domestic product (GDP). What is more, the losses suffered today are not merely limited to the stock markets, they also affect practically every other type of asset, of which there are significantly more nowadays than back then. Prices have plummeted across the board, from corporate bonds to structured products, from raw materials and emerging market currencies to real estate investments. While US property prices dropped by 2% in 1929 and 4% in 1930, they are currently falling at a rate of 17%. 3 Never before have so many assets been wiped out worldwide in the space of a few months as they were this year.

SNB Bills allow us to be more flexible in steering liquidity. Consequently, we are now in a position to offer more long-term transactions, which help calm the money markets and facilitate the steering of the threemonth Libor. The financial market crisis has also shown us that the liquidity-shortage financing facility can only contribute to calming the situation in the money markets if it is actually used when needed. However, even during the crisis, it was rarely called upon. The reason for this being that the direct costs of drawing on it were relatively high, as were the indirect costs ensuing from the stigma associated with using the facility. The SNB has thus decided to lower the direct and indirect costs of using the facility. To start with, we will reduce the special-rate interest premium from 200 basis points to 50 basis points. This will become effective from 1 January 2009. The SNB will also make some changes to its reporting methods. In order to protect the borrower’s reputation, claims from the liquidity-shortage financing facility will, in future, no longer be reported separately. These two measures should encourage banks to utilise the facility’s limits more frequently and therefore increase their liquidity provisioning. We have also found that, in periods of turbulence, some of the data reported in our weekly publication Important monetary policy data are misinterpreted, which can have a destabilising effect. To remedy this, we have decided to discontinue the real-time announcement of individual transactions and facilities.
In a recently published study, Central Bank of Malta staff analysed in detail the effects of increases in government investment on the Maltese economy under different financing scenarios. Under all financing scenarios considered, an increase in government investment is expansionary throughout. In the short run, the expansionary effects are limited to demand-side effects. However, as government capital stock accumulates, significant supply-side effects begin to kick in. A higher  Page | 2  government capital stock helps reduce marginal costs, boosting factor productivity and helping to crowd-in other private factors of production. The reduction in economy-wide marginal costs in turn should lower overall prices, boosting competitiveness and exports. In line with other analyses, the study also shows that even if not debt-neutral, using fiscal space to finance government investment has the strongest effects on real activity in the short-to-medium run. A debt-financed 1 percentage point increase in the government investment-to-GDP ratio increases real GDP by 1.5 percentage points from its baseline level by the fifth year. Even if the investment ratio returns to its pre-shock level, GDP would still exceed its baseline level by around 1% by the tenth year. Thus, an expansion in public GFCF expenditure can help mitigate the negative impact that weaker external demand might have on Malta’s economy. Further investment in human capital is also necessary. Malta’s positive economic record is also partly reflected by a growing influx of foreign workers. These now account for around a fourth of all employment.

This sector, which directly contributes to a significant 5.3% of gross value added and provides for the livelihood of over 11,600 employees, is in good health. This is attested by the positive assessments from major rating agencies and the IMF as recently as last year. These conclusions are also corroborated by the results of the CBM’s stress tests which regularly feature in our publications. So let us all rise to the occasion, and work towards preserving the sustainability and reputation of our sector. *** Inequalities are of two broad types: legacy inequalities and inequalities that are consequences of present social and economic developments. Gender inequalities have roots deep in the past. Today’s faster economic growth, however, does bring with its own risk of social shocks. The risk of higher inequality is a case in point. As already announced in my previous IFS address, the Bank has begun to develop a social research capability that focuses on studying inequalities of both types. This is a new experience for the Central Bank of Malta and we are striving, within the limits of available resources, to produce high quality empirically based results by the first quarter of next year. We are, however, striving to go beyond producing knowledge. In our efforts to promote inclusiveness and diversity in the Bank itself, we have made modest but significant steps forward.
Turkish inflationary expectations have been following the behavior of the US dollar. Under these circumstances, inflation outcomes have lagged above the targeted level. In addition, due to the preannounced depreciation path of the Turkish lira against the currency basket, the continuous depreciation of the euro against the dollar has resulted in a loss of competitiveness of Turkey vis-à-vis Europe. Due to this chain of events, the total value of Turkey’s imports from the EU countries has risen 29.6% in the first half of the year, while the value of Turkey’s exports to EU countries has grown by only 3.4%. In other words, the depreciation of the euro has contributed to Turkey’s growing trade deficit, which was initially mistaken for a side effect of the disinflation program. In this situation, the correction of the euro’s value against other major currencies will have a beneficial effect on Turkey’s current account balance, in addition to the offsetting of the negative effects of the weak euro provided by the high productivity of our manufacturing sector and the diversified nature of our exports. The weak euro has also led to a portfolio shift in the Turkish economy. At the end of September, total foreign exchange deposits in Turkish commercial banks amounted to $ billion. Of this 27% consisted of euros, which have decreased in value by 38.5% since the end of 1998. The share of US dollars gradually increased during the same period from 58% to 71%.

Zeti Akhtar Aziz: Better supervision and better banking in a post crisis era Welcoming address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Financial Stability Institute (FSI) – Executive Meeting of East Asia Pacific Central Banks (EMEAP) High Level Meeting Dinner, Kuala Lumpur, 16 January 2011. *  *  *  It is my pleasure to welcome you to this Financial Stability Institute (FSI) EMEAP high level meeting for Banking Supervisors. Bank Negara Malaysia is honoured to host this event that brings together senior officials from the regulatory community, as well as, the leadership from the banking industry from the Asian region to discuss Supervision and Banking in this post crisis era. We are now in a period of profound and fundamental change for the industry and for regulators and supervisors. The issuance of the final reform package by the Basel Committee in December 2010 marks the completion of a key milestone in the international financial reform process that began in the aftermath of the global financial crisis. This process has been complex, involving multiple tracks of intense dialogue taking place, both at the international and regional levels. The journey towards building a more resilient international financial system, however, is far from over. For this set of reforms that have been issued by the Basel Committee, the next phase involving the implementation will be equally challenging. There is already great anticipation on how the new standards would be phased in, and its impact on the financial sector landscape.
The studies I have mentioned helped to define a range within which inflation is no longer a factor that distorts economic choices. The ECB pursues, as an objective of monetary stability in the medium term, an inflation rate below, but close to, 2%, which is the upper limit of this range. The macroeconomic model on which the ECB’s monetary policy strategy rests is imbued with contemporary macroeconomics, based on dynamic optimisation and on the centrality of forward-looking expectations.5 At the same time, the model is broader and well structured and corrects the simplifications of the pre-crisis neo-Keynesian paradigm with its prescriptive approach to optimal monetary policy. The weakness of this paradigm was, and is, its inability to recognise the importance of financial frictions and the role of credit and money. This has to do with the fragility of the theoretical foundations that formalise the links between the real economy, financial imbalances and the level of confidence. Ignoring money is tantamount to assuming an absence of risk and uncertainty. Without risk, Keynes would have said, there would be no money. The preference for liquidity is not justified in an economy without uncertainty. But the neo-Keynesian model excludes the possibility of default. In it, risks in the financial sector can be isolated and therefore have no effect on the real economy. The financial crisis has clearly highlighted the weaknesses of this system. Macroeconomic theory has begun to reflect on the neo-Keynesian system and these studies are now one of the liveliest areas of analysis.

Those who accuse the ECB of an indirect violation of the prohibition on financing public debt with central bank money are making the same conceptual mistake as those who accuse the ECB of not having forced the banks to the use the funds acquired via the LTROs to supply credit to the private sector. In the first case, banks would have had to have been forced not to purchase government  BIS central bankers’ speeches  7  securities, and in the second case, to give credit to the private sector. Both groups of accusers forget that the policy of precise allocation of credit was a norm in various countries until the end of the 1970s. In the 1980s the operational system for monetary policy was radically redefined, principally on account of the heavily distorting effects of such an operational framework on economic activity. Moreover, legal arguments relating to the Treaty and to the current contractual form of repos underlying the LTROs, as well as considerations relating to feasibility, would make it difficult to reinstate such a framework. Finally, the behaviour of credit institutions with respect to households and businesses is not uniform across countries: while some countries saw negative credit developments, others saw growth in credit, in some cases even significant growth.