samchain/econo-pairs-v1 huggingface dataset:
To a degree, the authorities have responded to this risk: last year the Financial Supervisory Authority imposed a ceiling on residential loan-to-value ratios, following analysis and discussion within the Systemic Risk Committee, which works for the Financial Stability Council, and upon receiving an opinion from the Council. Developments in the real estate market will continue to be monitored closely in this respect, and the possibility of applying additional macroprudential tools will be considered. Another risk factor that the Financial Stability Council has identified is uncertainty about future developments in the tourism sector and the potential impact that a setback in the industry would have on the position of the banking system. At the end of 2017, lending to the tourism sector accounted for 9% of the large commercial banks’ total lending, but because growth in tourism has eased recently, this ratio has held broadly steady. The Central Bank of Iceland conducts an annual stress test in consultation with the Financial Supervisory Authority, in which it examines the impact of macroeconomic scenarios on the commercial banks’ resilience. The results are published in the autumn issue of the Bank’s Financial Stability report. The last stress test assumed that there would be a recession in trading partner countries, plus a drop in major export prices and a steep decline in the number of tourists visiting Iceland. In this scenario, the banks’ capital ratios would fall by an average of 3½ percentage points, to a level close to the minimum capital ratios currently required by the Financial Supervisory Authority.

With large and, to some extent, varying budget revenues, the basis for determining central government expenditure and taxes from one year to the next may easily be impaired. If budget spending is allowed to vary in step with oil prices, the Norwegian economy may experience abrupt shifts and instability. Changes in oil prices may then quickly influence wage and price expectations, the exchange rate and long-term rates. In addition, short-term rates would have to be changed frequently and sharply. BIS Review 19/2001  9  In recent years, central government real underlying spending growth has accelerated somewhat. In 2000 and 2001, spending growth has been higher than 2 per cent, which is higher than normal growth in the mainland economy. At the same time, direct and indirect taxes have increased. Fiscal policy has thus had a virtually neutral effect on domestic demand for two years while wage growth has been substantially higher than in other countries. A possible interpretation of this development is that it is more demanding to use the government budget to dampen cyclical fluctuations during an upturn than during a downturn. The willingness and ability to pursue a counter-cyclical policy may in itself be cyclical. Another interpretation is that a neutral fiscal stance this year, with a strong increase in government financial wealth, is a balanced approach to using the budget to stabilise the economy while phasing in an increase in financial income in the economy. Conclusion The Norwegian economy is fragile and vulnerable.
Higher demand for companies’ goods provides scope for increasing prices. Experience shows that inflation is directly influenced by the level of capacity utilisation in the Norwegian economy. Some of the rise in prices for domestically produced goods and services can be attributed to higher margins in the business sector. If there is confidence in monetary policy, economic agents will expect inflation to be close to target over time. This will provide a basis for company budgets. This will then contribute to stabilising inflation. Many companies change their prices only once or twice a year. When they change prices, they probably take into account the expected rise in other prices. It has been important to prevent inflation expectations from falling and becoming entrenched at a low level. Surveys of inflation expectations nevertheless indicate that expectations are well anchored around the inflation target in the long term. 4  BIS Review 10/2005  The interest rate is a powerful instrument. The effects come through growth in private consumption, higher house prices, increased residential construction, higher investment in various business sectors, business start-ups, improved corporate profitability, higher employment and wage growth, higher profit margins and higher imported inflation. The effects of the interest rate decline on demand, output and employment have been pronounced. It has taken time for inflation to pick up. This partly reflects low external interest rates and high oil prices, which have moderated the impact on the krone exchange rate.

Christian Noyer: The euro area perspectives Keynote speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the Paris Europlace International Financial Forum, Paris, 10 July 2013. *  *  *  Ladies and Gentlemen, I am very pleased to have this opportunity to speak to such a distinguished audience and I thank Paris Europlace for the invitation. As Arnaud de Bresson just mentioned it, I take this opportunity to express, again, my strong support to the ongoing development of financial activities in off shore RMB out of Paris. In that regard, let me also commend the work undertaken by Paris Europlace to federate and coordinate the variety of initiatives that we have seen develop over the recent months. We are lucky, here in Paris, to benefit from the presence and the dynamism of the major Chinese banks, which are among the main international banks. This is an asset for Paris. Similarly, the main French banks are active on the Chinese markets, out of Hong Kong and out of mainland China. This is another major asset for Paris as a financial center. Both will benefit Chinese corporates in France, and French corporates in the Chinese markets. Both these assets will guarantee that liquidity in RMB does and will flow smoothly from China to Paris. Furthermore, Paris ambitions to serve as a hub for the development of yuan denominated business throughout the euro area.
At that point, Iceland was already on its way into a recession after an unsustainable boom and serious overheating during 2005–2007 and a currency crisis in the first half of 2008. The banking collapse and the associated wealth loss and further currency depreciation only made the recession worse. Over the course of that autumn, two separate but interrelated sub-stories of the recent Icelandic saga were converging in a tragic grand finale. These are: 1. Iceland’s boom-bust cycle and problems with macroeconomic management in small, open, and financially integrated economies. 2. The rise and fall of three cross-border banks operating on the basis of EU legislation (the European “passport”). Let us look a little bit closer at the second story. In just five years’ time, the Icelandic banking system expanded from a combined balance sheet of under 2 times GDP at the end of 2003 to almost 10 times GDP in mid-2008. Most of this expansion was cross-border, and a great deal of it had very little to do with Iceland, as both financing and investment took place abroad. There were indeed important domestic factors behind this expansion. One was the privatisation of the Icelandic banking system in the early 2000s, which was carried out in a manner that placed the country’s largest banks into the hands of risk-loving investment bankers and the ill-founded promotion of “financial centre Iceland”.

But the policy measures were successful in turning the situation around: the exchange rate stabilised in 2009, fiscal consolidation progressed from 2010 onwards, growth resumed in the second half of 2010, the sovereign regained foreign capital market access in summer 2011, and the new banks were profitable and well capitalised. On the other hand, private sector debt restructuring has proven more time-consuming than originally hoped, and lifting the capital controls is a challenging task. According to the latest figures, Iceland’s growth rate is 4.5% and the unemployment rate has fallen to the 5½–6% range. What lessons can be drawn from this story? 1. Excessive and volatile capital flows played an important role in Iceland’s crisis, and the capital controls and the underlying balance of payments problem are a legacy of that. 2. To a significant degree, the euro area crisis is also a capital flow – balance of payments problem. 3. The framework for cross-border banking in the EU is deeply flawed. Either there will be a regression of financial globalisation at the EU level, or the freedoms must be matched by public frameworks and policies. 4. In the absence of international or EU-wide reforms, small, open economies like Iceland might have to take action to protect themselves, such as restricting the international activities of home banks and placing much more stringent prudential limits on foreign currency maturity mismatches and foreign currency lending. 5. An independent flexible currency is a double-edged sword.
So many banks were bidding for money that, collectively speaking, did not exist in the interbank market. As a result, the interest rate for overnight money shot up to almost 300%18. Contrary to press reports and comments from analysts, the high interbank interest rates were the making of the banks themselves and not the result of the HKMA squeezing towards the end of 1996, requiring all licensed banks to maintain a clearing account with the HKMA for the account of the Exchange Fund. In operating the Accounting Arrangements (1988 - November 1996) and the settlement accounts (since December 1996), the Monetary Affairs Branch and subsequently the HKMA have ensured that the whole of the monetary base is subject to the discipline of the currency board arrangement. 17 On 17 October 1997, Taiwan’s central bank vice governor Liang Cheng-chin said there was “no need for the central bank  to intervene” and it was “the right time” to let market forces determine the Taiwan dollar rate.” As a result, the Taiwan dollar closed 3.3% lower at $ per US dollar on that day. 18 This was only for about an hour on 23 October 1997. When speculative shorting of the Hong Kong dollar was quickly  reversed, the overnight interbank interest rate came down quickly and closed at 100%-150% on 23 October and further to 7% on 24 October. BIS Review 19/1998  -7the money market.

The slowdown is also considered healthy, given a degree of irrational exuberance seen in asset markets in the past couple of years. Indeed, inflation this year will slow down further to 5% from 5.8% in 1997, with the unemployment rate staying low and the current account remaining broadly in balance. Thus the Hong Kong economy will not be too much affected by the devaluation of the exchange rates of our competitors. This is understandable for a highly service-oriented economy which Hong Kong now is 8. One Country, Two Currencies 11. Perhaps I should digress a little here and address a related issue which has been the subject of some attention, with considerable apprehension amongst observers. This concerns whether the currency of the Mainland of China, the RMB, would be forced into devaluation by the Asian financial turmoil and if so what would be the implications for the Hong Kong dollar’s link to the US dollar. The Chinese 7 As an illustration, residential mortgage loans, which account for roughly 25% of total domestic loans extended by the  banking sector, have been of very high quality, helped by the prudent lending policy of the banks, including for example a maximum loan to valuation ratio of 70%. As at the end of September 1997, the actual average of this ratio was only 52%. The delinquency ratio, measured by loans overdue for more than 90 days as a percentage of total outstanding loans, stood at only 0.1% as at end-September 1997.
Swiss economic outlook  I now turn to the economic outlook for Switzerland. GDP stagnated in the fourth quarter. For 2022 as a whole, GDP grew by 2.1%. The labour market remained robust, and overall production capacity has been well utilised. Page 3/6  Zurich, 23 March 2023 Thomas Jordan, Martin Schlegel and Andréa M. Maechler  News conference  Despite the slight upturn in economic activity in recent months, growth is likely to remain modest for the rest of the year. Subdued demand from abroad and the loss of purchasing power due to inflation are having a dampening effect. Overall, Swiss GDP is likely to increase by around 1% this year. The forecast for Switzerland, as for the global economy, is subject to high uncertainty. In the short term, the main risks are an economic downturn abroad and adverse effects of the turmoil in the global financial sector. Monetary policy outlook  Ladies and gentlemen, allow me to return to our monetary policy. Inflation is currently higher than we had expected in December, and inflationary pressure has risen again also due to second-round effects. The renewed increase in our policy rate is therefore necessary to ensure that inflation returns to the range consistent with price stability over the medium term. It cannot be ruled out that a further tightening of monetary policy will be necessary to ensure price stability.

Banks can now draw US dollar liquidity from their central banks with increased frequency if needed. To this end, since 20 March we have been conducting our US dollar repo auctions on a daily rather than a weekly basis, and will continue to do so until at least the end of April 2023. Through their cooperation, the participating central banks ensure that US dollar liquidity is distributed throughout the system, thereby jointly helping to secure global financial stability. Let me now turn to the implementation of our monetary policy on the money market. Banks’ sight deposits and the liquidity on the Swiss franc money market are increasing due to our liquidity assistance. To ensure that secured short-term money market interest rates remain close to the SNB policy rate and do not decline, we are absorbing sufficient sight deposits through the weekly issuance of SNB Bills as well as with daily repo auctions. In addition, we are selectively conducting overnight repo transactions. Our flexible set of monetary policy instruments allows us to keep secured short-term money market rates close to the SNB policy rate also in the current situation. I would now like to hand back to Thomas Jordan. Conclusion  Ladies and gentlemen, allow me to conclude. Within the framework of its mandate, the SNB will use all of the resources at its disposal to ensure price stability in Switzerland and to contribute to financial stability. Thank you for your attention. We are ready to answer your questions.
But the effect can be to prolong the economic pain for everyone by reducing spending, and therefore amplifying the effect on incomes and output in the economy. The evidence, across countries, recessions (and US states) is compelling: build-up of household debt means an economy is exposed to more severe recessions (Chart 1). Chart 1 Household debt growth in the boom and the economic severity of the subsequent bust: across US states, countries and time for GDP and unemployment  Source: David Aikman, Jonathan Bridges, Anil Kashyap and Caspar Siegert, ‘Would macroprudential regulation have prevented the last crisis?’, Bank of England Staff Working Paper No. 747, August 2018. Notes: State level household debt statistics (left hand panel) from Federal Reserve Bank of New York; GDP data from Bureau of Economic Analysis (BEA); unemployment data from Bureau of Labour Statistics. Change in household debt to GDP ratio from 2004 to 2007 on x-axis, economic performance from 2007 to 2010 on y-axis. International data (middle and right panels) uses Bridges et al. (2017) dataset: household debt data from Bank of International Settlements “Long series on total credit and domestic bank credit to the private non-financial sector”; real GDP and unemployment data from the OECD, the Global Financial Database and national statistics websites. Middle panel shows experience across 27 advanced economies in the Global Financial Crisis, using same dates as U.S. state panel. Right hand panel is for recession episodes in G10 countries from 1960 to 2004 (i.e. Great Recession not included).

Financial resilience and economic earthquakes Speech given by Alex Brazier, Executive Director for Financial Stability Strategy and Risk, Bank of England Member of the Financial Policy Committee  University of Warwick 13 June 2019  I am grateful to Kiman Bassi, Jon Bridges, Jeremy Franklin, Andrew Gimber, Shahzad Gitay, Nick Jackson, Ben King, Philip King, Miriam Kurtosiova, Cian O’Neill, Rupal Patel, Simon Pittaway, Matt Roberts-Sklar, Jamie Semark, Sagar Shah, Nick Vause and Danny Walker for their assistance in preparing these remarks. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches  In the aftermath of the financial crisis, a new buzz phrase emerged in economic policymaking: macroprudential policy. It tells you something about economic policymakers that this phrase qualified as buzz. But after a fragile financial system had sideswiped the economy, turning what could have been an economic downturn into a disaster, it was difficult to disagree with the aim: to promote a financial system that could serve households and businesses in bad times, as well as good. That means a financial system that is resilient to the bad times, but not so resilient as to be inefficient the rest of the time. In many respects, the idea of macroprudential policy was vintage wine in a new bottle.
After the adoption, last December, of a sustainable taxonomy, sustainable reporting is actually the next critical step ahead of us to mainstream green finance. I am looking forward to the report the EFRAG is currently preparing to address this issue [report to be published on 31 January 2021]. We should indeed strive to design our own framework for non-financial data, which meets our own needs (which means, for instance, integrating the ambitious concept of double materiality). It is a European responsibility, and a public one: we cannot just leave it to private bodies, at the global level. We should be committed to make our common framework operational and easy to transpose. We Europeans would then be in a position to inspire potential international initiatives aiming to produce a global sustainable reporting framework, and then make sure that the EU standards are widely recognised. Such a necessary endeavour for the EU also has domestic grounds: we will have to implement the new article 29 of the “Loi énergie et climat”, which will replace article 173. I dearly hope that, the ACPR and the French Treasury together, we can use the decree scheduled for early next year to strengthen harmonisation along the lines of the European standard that is to come. If not – but that would be a second best – we should at least ensure a French comparability. *** I have insisted on what we can do, must do, and will do: regarding supervision, monetary policy, and the harmonisation of financial disclosures.

Not just because that is how one safeguards the purchasing power of our fellow citizens, in particular of the most vulnerable amongst them, who have the least protection against price increases. But also because price stability allows us to create the conditions for sustainable growth and dynamic job creation, and to combat unemployment effectively. In today’s world, however, financial stability, for which price stability is a prerequisite, is of great value. We must unremittingly endeavour to create conditions for the international economy that minimise misalignments in asset prices, excessive volatility, purely speculative phenomena and dangerous herd behaviour. This is the underlying message in central banks’ repeated calls for prudence and caution. Nothing is more conducive to economic euphoria than ample monetary liquidity, but the after-effects can be very painful, with the formation of speculative bubbles, sharp swings in asset prices, and the herd behaviour of huge capital flows. A monetary policy based on stability is the indispensable complement to the remarkable efforts undertaken these past years to improve the international financial architecture. *  *  3  *  BIS Review 115/2000  The economy of the euro area has the favourable monetary, financial and competitive conditions necessary to contribute to the pursuit of growth that is sustainable because non-inflationary. But as the Monetary Policy Council has indicated these past years, monetary policy needs to be relayed by the other main components of economic policy. Four conditions would appear necessary to preserve and reinforce the complete success of the single currency.
However, first and foremost I would like to point out that monetary policy aimed at stabilising the inflation rate should basically reduce the risk of over-valued asset prices leading to an exaggerated real demand. Fluctuations in the level of resource utilisation and in the output gap are traditionally assumed to be reflected in the inflation rate. If inflated asset prices stimulate demand in the economy, without a corresponding increase in the potential growth rate, inflation will rise. If the central bank anticipates this, monetary policy will normally be tightened to ensure that demand is compatible with long-term sustainable growth. And as long as demand in the economy increases at a rate compatible with long-term growth, there is less risk of exaggerated indebtedness. Inflation targeting should thus, at least in theory, reduce the risk of extensive financial imbalances accumulating. However, even with an otherwise successful inflation target policy, real and financial imbalances created by exaggerated asset prices can build up. If there are exaggerated expectations regarding growth in productivity and profits in a particular country, this can lead to a strong inflow of capital and strengthening of the currency. The increase in real demand, which is caused by exaggerated increases in asset prices, can thus be partly met by increased imports, while the currency strengthens and domestic inflationary pressure is reduced.

Lastly, the implementation of the IMF arrangement not only guarantees the stability of the public debt, but also provides us with the possibility for additional funds to withstand any unexpected and unwanted development. The arrangement is an insurance policy, which should assure all the economic actors for the country’s financial soundness. Dear media representatives, Concluding, I would like to re-emphasize Bank of Albania’s commitment to safeguarding the country’s economic and monetary stability. In our judgment, the adopted policy framework provides a sound and coordinated development platform. Pursuant to our legal requirements and the development programme, the Bank of Albania will continue to work on: •  Maintaining price stability and sustaining the country’s development. Under the current scenarios, the monetary policy stance will remain accommodative for several quarters ahead. We are, however, willing to take any additional measures necessary to maintain price stability and the purchasing power of Albanian households. •  Safeguarding the country’s financial stability, in cooperation with all the stakeholders. We are in on-going contact with our international partners and other public agencies. Our analyses show that the banking system is stable. However, even under shocks, we have detailed measure plans available to avoid financial constraints. •  Developing the financial system further through the implementation of measures agreed upon under the FSAP arrangement and provided for in cooperation with the continued IMF assistance. •  Continuous improvement of the Bank of Albania, with a view to enhancing its professionalism, reputation and independence.