samchain/econo-pairs-v1 huggingface dataset:
Distinguished delegates, part of the reason for the resilience of Zambia’s financial sector were the comprehensive financial sector reforms that have been systematically undertaken after the banking sector collapse in the second half of the 1990s. These reforms were promulgated under a Financial Sector Development Plan (FSDP) that was implemented to address weaknesses in the financial sector, identified in a Financial Sector Assessment Programme (FSAP) conducted by the International Monetary Fund (IMF) and the World Bank in 2002. Zambia’s reforms included the following: the increase in capital requirements for banks; consolidation of the supervision of bank and non-bank financial institutions under the Bank of  BIS Review 63/2010  1  Zambia; legislative reform that gave the Bank of Zambia powers to deal with failing institutions; and the promulgation of corporate governance guidelines including the conduct of outreach programmes on good corporate governance practices for the financial sector and the introduction of credit reference services. The Bank of Zambia is continuing with its work to improve the financial sector and enhance the role of the financial sector in the development of the country through the implementation of the second phase of the Financial sector Development Plan, FSDP II. The FSDP II will focus more narrowly on issues of competition within the financial sector and extending financial inclusion.

But countries are staring down the barrel of increasing expenditures and decreasing revenues… Countries will experience a deep recession that will have an impact on their public finances. This will entail greater funding needs, of between € trillion and € trillion, an amount the likes of which we’ve probably never seen before. They will also issue public debt to finance themselves, which is precisely why the ECB’s intervention in the bond markets aims to avoid fragmentation at an extremely difficult time. The ECB balance sheet is overflowing with debt from euro area countries. Where will this end? Is it possible that in the future this debt could be forgiven or written-off? Debt levels in the euro area are sustainable and when this crisis is over, economic conditions will get back to normal. We are not looking at any scenarios where this debt is a problem. It’s not a scenario I’m considering. Nevertheless, EU institutions are going through a severe crisis as they finance the cost of the pandemic. At the most recent EU summit and last Eurogroup meeting, we saw unprecedented clashes involving EU founding members, such as Italy. Europe currently has three main instruments at its disposal. First, the EIB guarantee fund that I mentioned previously, with € billion made available to provide support of up to € billion.
BIS Review 10/2004  1  The authorities responsible for the institutions and for financial stability, mainly Finansinspektionen (the Swedish Financial Supervisory Authority) and the Riksbank, had not built up sufficient competence regarding the financial risks. Nor did the legislation suffice as a basis for the authorities to limit imprudent credit-granting. The oversight of the banks and other credit-granting bodies therefore became formalistic and fragmentary. We were not always looking in the right places. In defence of the banks’ management and the authorities it can be pointed out that risk assessment was made difficult for many different reasons. Several important factors counteracted a sound financial development, such as the high inflation rate, misleading tax incentives and central government subsidies. In addition, there was a lock-in effect in that currency regulation, which was in force until 1989, had kept our capital inside Sweden and contributed to a form of hothouse effect. The banks did not take these factors into account in their risk assessment, or not to a sufficient degree. They then suffered the consequences when the government made some decisions that were desirable in themselves, but which altered conditions drastically. Inflation was pushed down, the tax system was reformed and subsidies were erased. Developments in the property market were a central component in the banking crisis, as the banks’ credit-granting meant they were highly exposed to the property sector. Property prices rose at an unreasonable rate, regardless of how one measures them. They left the basis for normal pricing, i.e.

It is possible to view the development in itself as a risk in that it has created new, potent instruments and possibilities for speculation. If used incorrectly or carelessly, these instruments could destabilise the financial system or in other ways lead to inconvenience. It is therefore important that both the financial agents themselves and the authorities responsible in this field closely follow developments in both theoretical and practical work and are prepared to take action if they identify risks to stability. Of course, it is another matter in this context - as in others - that the costs of new methods of control must be weighed against the risks to be managed. Regardless of the fact that there are now outstanding issues to be resolved to improve risk management, my overall conclusion is positive. The development underway with regard to identifying, measuring and managing risks provides possibilities to improve stability in the banks and other parts of the financial sector. We still have some way to go, but the work is proceeding and is presently in an intensive phase in both the financial institutions and the authorities concerned. The Riksbank intends to continue to play an active role in this work. Thank you. 4  BIS Review 10/2004
Jean-Claude Trichet: Overview of recent euro area developments and the effects of globalisation on prices and real estate Speech by Mr Jean-Claude Trichet, President of the European Central Bank, at the meeting of the Management Board of the CDU, Wiesbaden, 5 January 2008. *  *  *  It is a great pleasure for me to be invited as a guest speaker here today. Let me briefly sketch out the main topics I want to address. First, I will present to you our views on the current economic situation in the euro area. Then, I will explain the ECB’s liquidity operations following the tensions in the money markets since August last year as well as our views on the stability of the euro area financial system. To conclude, I will say a word upon the effects of globalisation on price developments and on developments in the real estate sector. Economic and monetary developments Let me first say that we are presently in the purdah period, namely within a week before the next decision meeting of the Governing Council. Nothing in what I will say should be interpreted in terms of our future decision next Thursday. I will stick to explaining what has been our diagnosis and judgment on the occasion of our last meeting.

In this sense, a strategy which on top of our economic analysis regularly assesses money and credit developments has an important benefit on the monitoring side in that it can contribute to identifying and limiting the emergence of unsustainable developments in asset prices. In terms of recent developments in the euro area real estate sector, the latest available data on house prices appears to support the notion of a cooling in euro area housing market developments after a prolonged period of unusually high growth rates in many euro area countries. That said house price growth generally remains relatively elevated in the euro area on average when seen in historical perspective – notwithstanding considerable heterogeneity in underlying country developments. The outlook for the euro area as a whole – I insist, for the euro area as a whole – remains that of a relatively soft landing. Within this context, a continued moderation of residential investment would also be likely. I thank you for your attention. BIS Review 3/2008  5
Ben Broadbent: The economics of deflation Speech by Mr Ben Broadbent, Deputy Governor for Monetary Policy of the Bank of England, at Imperial College Business School, London, 27 March 2015. *  *  *  The CPI in February this year was no higher than in February 2014. This is the first time the UK has failed to record positive annual inflation for over 50 years. Inflation was briefly negative in late 1959 and early 1960. Before then, you have to go back to the early 1930s, and the agonies of the Great Depression, to find a period when UK consumer prices fell over a sustained period (Chart 1 plots three-year rolling averages of inflation). Because of the depth of the economic downturn at that time, and the more recent stagnation of Japan, the weakness of price inflation today has raised fears in some quarters about the risks of sustained deflation in this country. The MPC’s objective is not simply to prevent prices from falling: it is to ensure they rise at the target rate of 2% a year. Because of the attention it’s been getting, however, I’m going to focus today on negative inflation specifically. I’ll divide the substance of my remarks in two. One part will discuss the basic economics – how and why it matters if prices decline over a protracted period – the other, the frequency and implications of deflation in the historical data. Chart 1 Deflation last seen in 1930s  Source: ONS and Hills,Thomas, Dimsdale (2010).

5  If deflations per se were costly you’d expect to see Charts 3 and 4 become shallower south of the origin. 4  BIS central bankers’ speeches  Chart 3 Those deflations no more costly than other disinflations…  Chart 4 …same was true for wage growth  Source: ONS and Hills,Thomas, Dimsdale (2010). Source: ONS and Hills,Thomas, Dimsdale (2010). Chart 5 Interest rate unconstrained by zero bound  But what must also have been important, it seems to me, is that the appropriate level of real interest rates was sufficiently high through the period that monetary policy never had to contend with the zero lower bound on the nominal rate 6. Chart 5 adds to Chart 2 the series for Bank Rate, in green. The real short-term interest rate – which we know, after the event, can’t have deviated that much from the level necessary to sustain stable growth and prices (since that’s what generally occurred) – averaged 4% between 1850 and 1914. If the neutral real rate is anything like that high, only a very severe deflation would drag the appropriate nominal rate close to zero. As it was, Bank Rate was unconstrained from responding to lower nominal growth 7, when that occurred, and never fell below 2%. Source: ONS and Hills,Thomas, Dimsdale (2010). 6  By “zero” I mean the effective lower bound on nominal interest rates; this may not be precisely zero.
Of course, this is always a difficult task, since the increase in the precautionary demand for liquidity altered the behaviour of banks and rendered less efficient, at least temporarily, the forecasting models we use to calculate the benchmark need for liquidity. However, since the Eurosystem acted as a price taker during these liquidity injections, it is obvious that the interest rates at which these fine-tuning and longer-term operations were settled had no information content for the monetary policy stance. In a period of increasing inflationary risks stemming notably from excess demand for commodities and energy worldwide, it is crucial that our liquidity management is not misinterpreted and does not contribute to a deterioration of inflation expectations. Conclusion To conclude briefly, I shall invite you not to expect too much of monetary policy. Not only, to quote the Economist 2 , are we, central bankers, “only human”, but also, to put in more classical words, monetary policy alone cannot do everything with one single tool, the policy rate. A lesson that the subprime crisis has taught us is that a lot has still to be done in order to improve the regulatory framework in which the financial innovation process takes place. I have no time to develop this further, but I am confident that in particular the implementation of Basel II will bring significant improvements in the measure and management of risks, providing a sounder basis for the next wave of financial innovation. 2  Cf.

Implicitly, this also raises the question of whether and to what extent the current state of the innovation cycle challenges our understanding of what has changed over the last decade. -  and secondly, how financial innovation challenges the role of monetary analysis in monetary policymaking. I shall then conclude by a few words on the difficult task of communicating about monetary policy in times of financial stress. This is a concern that does not feature formally in our programme today but lurks in the background and I am sure many of us will have it in mind throughout the day. Challenges for our understanding of the MP transmission process An appropriate knowledge of the mechanisms through which monetary policy affects the economy is of crucial importance for central banks. Financial innovation affects these mechanisms both by altering the channels through which monetary policy operates and by changing the overall impact of monetary policy decisions. But the magnitude of the changes and the exact impact of financial innovation at a time when other factors such as globalisation are at work are not well known. Financial innovation certainly contributes to enhancing wealth effects and thus probably also to strengthening the interest rate channel. First, financial innovation fosters faster dissemination of information and its more rapid incorporation into financial market prices. This is of course particularly true for monetary policy decisions and can therefore increase the effectiveness of monetary policy via the interest rate channel.
When banks would have identical response functions, economic cyclicality would increase, potentially creating additional instability. At the same time, excessive variation in risk measurement is clearly undesirable. Finding the right balance is the key. The preliminary work suggests we may not have the balance right in the current set-up. But as with all of our work on implementation, it is necessary to identify problems before we can set about correcting them. The on-going analysis has generated a wealth of information about risk modelling by banks. This is useful for international policymakers. The Committee has not yet decided what actions it might take in response to the analysis, but some of the possible policy options could comprise improvements in public disclosure practices, limitations in the modelling choices for banks, and further harmonisation of supervisory practices. These ideas will also feed into the current fundamental review of the trading book. In addition, our international study provides national supervisors with a much clearer understanding of how the risk models of their banks compare to those of international peers. This means that national supervisors are much better equipped to discuss the results with their banks and take action where needed. The Committee will be doing further work on the trading book, in addition to the banking book work, to explore the outcomes in more depth. I am confident that it will generate additional insights in the modelling of risk-weighted assets and to explain better why modelling results differ across banks.

Recent years have seen growing interest in vocational training among students in compulsory and higher secondary education.11 The new Vocational Training Law seeks precisely to ensure that the training on offer better caters to this increased demand and to ease the transition into the world of work, to this end focusing on practical training (over and above academic learning) and promoting lifelong learning. 2 Spain is notable for having a low proportion of STEM (science, technology, engineering and maths) graduates,12 probably due to the poor mathematical skills of our secondary  8  Schivardi and Schmitz (2020). 9  On Eurostat data, 35.2% of the self-employed, 32.9% of employers and 28.5% of employees had a low educational attainment level in Spain in 2022. These figures are well above those observed in the euro area (20.7%, 18.9% and 18.2%, respectively). 10  The percentage of the population aged 18-24 that had not completed upper secondary education and were no longer in education or training stood at 13.9% in Spain in 2022 (up 0.6 pp on a year earlier), as compared with the euro area average of 9.7% (in 2021, the latest available year). 11  In particular, the number of students aged 17 in intermediate vocational training (as a percentage of the total students who have chosen either vocational training or higher secondary education) has risen from 10% to over 15% in the last five years.
Appendix When the financial markets are large, it is important to try to assess their vulnerability and systemic risk, that is, the risk of a disturbance in the financial system that can lead to large socio-economic costs. The Riksbank has developed a measure of this, the so-called systemic risk indicator.10 In brief, this means that one aggregates five separate indicators for the various sub-markets that reflect developments in the banking sector, household sector, corporate sector, property market 10 See Dominika Krygier and Peter van Santen, “A new indicator of risks and vulnerabilities in the Swedish finan-  cial system”, Staff memo, May 2020, Sveriges Riksbank and Dominika Krygier and Tamás Vasi, “Quantification of systemic risks with Growth-at-Risk”, Staff memo, May 2022, Sveriges Riksbank. 15 [16]  and in a group of variables referred to as external factors. Like all indicators, it does of course have its shortcomings, but it gives an indication of developments over time. From immediately after the 1990s crisis to the global financial crisis, the indicator remained at a low level, but it has remained relatively high after the financial crisis. Diagram 10. The Riksbank’s indicator for risks and vulnerabilities in the financial system Deviation from mean value 2  1  0  -1  -2  90  95  00  05  10  15  20  Systemic riskindicator  Non-financial corporate sector  Banking sector  Property market  Husehold sector  External environment  Note. A higher value means greater risks and vulnerabilities.

Real GDP growth has decelerated in 2018 compared with the growth we have seen since the second half of 2014. This slowdown mainly reflects weakness in net trade. Looking forward, global protectionism and weakening conditions in emerging markets represent further downside risks to growth. Internally, the present low savings rate of Spanish households and the need to restore savings in the near term, points to moderation in consumption going forward. Let me point to the three main challenges that the Spanish economy is facing at present, in my view. The first relates to the process of fiscal consolidation. While well advanced, it is still incomplete. The government deficit ratio is still the highest in the EU and it needs to be further reduced to bring the government debt ratio on to a downward path. In fact, adequate buffers need to be rebuilt now, in times of solid growth and favourable financing conditions. This would enable fiscal policy to support the economy in the event of any future shock. Secondly, unemployment remains very high, as does the share of temporary employment. Spain’s unemployment rate remains well above pre-crisis levels and is roughly the double of the euro area rate. This situation calls for further reforms to address the duality of the labour market and more effective active labour market policies to re-integrate young people and the long-term unemployed. Finally, productivity remains low and needs to be raised to maintain economic growth and enable sustainable wage growth.
If a large bank should experience difficulties, the contagion to other banks and the rest of the economy can be very serious. This is called systemic risk. Banks’ activities have considerable externalities. 7 Few bank failures illustrate this point better than the bankruptcy of Lehman Brothers on 15 September 2008. In the course of the week following the closure of the bank, interbank lending rates soared. Banks distrusted one another. Short-term funding markets, money markets, dried up worldwide. US money market funds experienced payment problems. The spillovers spread throughout the financial system. One of the world’s largest insurance companies, AIG, teetered on the edge of bankruptcy. To prevent the Lehman bankruptcy from ending in the complete collapse of the financial system, the authorities in a large number of countries took measures on an unprecedented scale. Central banks in many countries injected large quantities of liquidity into the banking system to keep the wheels turning. The aim of these measures was to keep the banking system operating so that the rest of the economy would not be impacted. That is why banks are bailed out. The costs associated with closing a bank are largely borne by parties other than the bank itself. We bail out banks to prevent systemic crises. We bail out banks to limit the substantial damage a deep banking crisis can inflict on the economy. Why should banks not be bailed out? But it is not that simple. There are also compelling arguments against bank bailouts.

Looking ahead, the level of RMB deposits may rise or fall from time to time. This is only natural as RMB financing and investment activities take place, and as RMB funds flow in and out of the system. It is what one would expect from the growing interaction between the onshore and offshore market. Similarly, the pricing of RMB funds, indicated by the offshore RMB interest rates, will also adjust in response to the fund flows, thereby restoring the balance in the supply and demand of RMB funds. So, is the RMB liquidity pool in Hong Kong big enough? I would respond that since the scope of RMB business has already expanded from merely deposit-taking to a much wider range of banking and financial activities, the amount of RMB customer deposit is only a partial measure of RMB liquidity or the overall state of play of RMB business in Hong Kong. What is more important is how efficient the pool of RMB is moving around the system. That is, whether we are seeing the channelling of RMB savings to investments, through bank lending, bond issuance and other activities. After all, financial business is about the circulation of money, rather than everyone holding a stagnant pool of money. The second question that I am often asked is whether the wider use of RMB and the development of offshore RMB business are still on a rising trajectory.