samchain/econo-pairs-v1 huggingface dataset:
On the basis of that guidance, we scrutinise the banks’ strategies and provide feedback. So we are keeping a close eye on how banks are addressing the problem. And today, we have published an addendum to our guidance. This addendum will help to ensure that NPLs remain a problem of the past once they have been dealt with. To that end, it lays out how we expect banks to provision for new NPLs. More specifically, it refers to exposures that are newly classified as non-performing as of 1 April 2018. The addendum is not a binding document, but it specifies our expectations and will thus serve as a starting point for our dialogue with each bank. Conclusion Ladies and gentlemen, Rest assured that I have not exhausted the topic of my speech. But I may well have exhausted you. So I will conclude quickly and painlessly. First, banks are important for the economy, particularly here in Europe. That said, it might be good to add a bit more capital market to the mix; but that is a topic for another day. Second, banks must be able to fail. If they are not, the economy will suffer in the long run. But if banks fail, they must do so in an orderly manner. If not, financial stability will suffer in the short run. The new European resolution framework helps to make orderly failure possible. Third, failure is the least desirable outcome, of course. We need banks which are profitable and resilient in the first place.

But, funding is only one aspect of a micro-business. Prior to as well as subsequent to funding, there are a large number of other requirements that have to be satisfied. First and foremost, anyone desirous of starting a micro-business should have a good knowledge of the market in which he would sell his products. A feature of the market is that it is driven by the consumer who is considered the sovereign. If the consumer does not need a product, no one could force him to buy it, even when it is supplied free of charge. Hence, the goods and services that are produced by micro-businesses should always meet the requirements of the consumers. How can a micro-entrepreneur identify the market requirements? What proxies can he use for that, if he does not have direct information on the same? A problem which he would face in this respect is that he has to produce for the future. Hence, any information relating to the past may be a poor guide for that. This is not a problem unique only to micro-businesses. It is equally relevant to big producers as well. But the advantage for such big business firms is that they have the benefit of the results of consumer preference surveys conducted by various institutions. Such survey results are expensive and beyond the financial capacity of micro-businesses. Yet, without the benefit of such results, it would be a pure gambling for a micro-business to get into the production of these goods and services.
Ardo Hansson: Experience with and preparations for the euro Speech by Mr Ardo Hansson, Governor of the Bank of Estonia (Eesti Pank), at the opening of the conference on “Experience with and preparations for the euro”, Riga, 22 February 2013. *  *  *  Honourable Mr. President, Honourable Madame Speaker, Honourable Mr. Prime Minister, Excellencies, Ladies and Gentlemen, It is a great honor to be here today in Riga at this important conference and to be able to express my support for Latvia’s euro area aspirations. Looking to the future, and remembering all of the good help which we also got from other countries in the past, we would also like to give that same support other European countries joining the euro area. Let me begin by stressing that Latvia’s long track record of fiscal prudence and your recent very difficult but ultimately successful crisis management are recognized, welcomed and greatly respected in the euro area. In fact, Estonia and Latvia are good examples of the benefits of implementing decisive reforms, demonstrating that the beneficial effects of frontloaded fiscal consolidation, deep structural reforms and economic flexibility outweigh the initial higher costs, especially by quickly restoring the confidence that is so crucial for ending a crisis and getting a country on a path towards recovery and growth. One of the lessons we learned from this crisis is the importance of the issue of confidence. It is intangible, it is hard to measure, but it is so crucial.

Philipp Hildebrand: The virtues of flexible financial markets - a central banking perspective Summary of a speech by Mr Philipp Hildebrand, Member of the Governing Board of the Swiss National Bank, at the CFA Institute Annual Conference, Zurich, 22 May 2006. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch)  *  *  *  Summary Rapid technological change and market liberalization have been the driving forces behind the remarkable evolution of global financial markets over the past three decades. The consequences of this development include a geographic rearrangement of global capital markets, a fast pace of product innovation and changes in the nature and composition of financial market participants. The benefits associated with today’s flexible financial markets are manifold. Financial markets have become much more efficient in allocating capital. New products enable a better distribution of risks and the liquefaction of previously illiquid assets. They have also increased market transparency. As a result, modern financial markets facilitated innovation and likely enhanced economic growth. Moreover, they have contributed to make economies more resilient to shocks. These extensive benefits notwithstanding, modern financial market also entails new risks. These risks tend to elicit calls for increasingly far-reaching regulation. While some regulation may indeed be required to guarantee the integrity of financial markets, the threshold for such regulation should be set high.
BIS Review 133/2010  7  A bad equilibrium path for the financial sector – or in more everyday language a vicious cycle – is much more likely to exist in a world where financial firms that hold large amounts of risky assets, such as banks, have small equity cushions. The smaller bank capital is the greater will be the concern over bank solvency from a given fall in the value of bank assets. That can trigger a drying up in funding for banks causing a sale of some bank assets that drives their values lower, exacerbating the concerns about the ability of banks to survive. There need be nothing irrational about this process. Indeed, there are many examples of bad, but rational, equilibrium paths that markets – and whole economies – can follow. The idea that this is news to economists who use formal models expressed in maths is completely wrong-headed. Yet there is a current view that economists who use mathematical models to analyse outcomes where people behave rationally are always led to the Panglossian conclusion that things will work out just fine. It would come as a surprise to those who hold this view that two of the most famous economic articles in the last forty years which are routinely taught to economics undergraduates – by George Akerlof (1970) and by Diamond and Dybvig (1983) – draw entirely non-Panglossian conclusions from formal (mathematically expressed) models of collective rational behaviour.

A natural way to gauge the cost of higher capital requirements on banks is to estimate how much lower economic activity – GDP – might be as a result. I want to illustrate the cost of higher capital for banks using a very similar method to that used in the studies mentioned above. The calculation proceeds in steps. First, estimate how much the average interest rate charged by banks would have to increase to recoup any cost of an increase in their equity financing relative to use of debt. Then estimate how much a rise in the cost of borrowing from banks might change the required rate of return (or cost of capital) of investors. Finally use a production function to estimate the impact of such an increase in the cost of capital on desired capital and output. We can then express the cost of having banks hold more equity capital in terms of the present value of all future falls in output. This is the methodology used in the calculations reported in the Bank of England’s 2010 Financial Stability Review (FSR). Those calculations were based on conservative assumptions – understandably so, for fear of under-estimating the cost to the wider economy of imposing substantially higher capital requirements on banks. I will start from that FSR baseline estimate of the present value of output lost as a result of a 1pp increase in the capital ratio, which is 4.25% of current annual GDP.
The higher performance exhibited by the Turkish economy compared to many other emerging economies during the global crisis and the recent upgrades to our credit rating are mainly attributable to the stability ensured in our financial system. Unlike its peers, Turkey did not require any cash stimulus packages for its banking system against the global financial crisis. The absence of toxic assets in banking balance sheets, strong capital adequacy ratios and considerably low levels of foreign exchange short positions have been the essentials underlying the increased strength of our financial system against the global crisis. Net Foreign Exchange Position of the Banking Sector (B illio n US Do llar)  1.1  0.6  0.1  -0.4  -0.9  -1.4  Source: BRSA. Distinguished Guests, 16. 6  With the problems driven by global turbulence, the domestic and foreign credit conditions in Turkey tightened and Gross Domestic Product (GDP) growth rates have slowed down significantly since the second quarter of 2008 as a result of narrowing domestic demand. Economic activity has experienced hard landings from the last quarter of 2008 to the second quarter of 2009. As the monetary and fiscal measures started to sway, the GDP, after bottoming out, started to recover rapidly as of the second quarter and contracted by 4.7 percent for the overall year. While private investment and consumption expenditures had a negative effect, government spending on consumption goods had a boosting effect on GDP growth in 2009.

In order to support foreign exchange liquidity and ensure smooth operation of FX markets, in February 2009, the Central Bank extended the maturity of foreign exchange deposits denominated in US dollar or Euro for banks in the FX Deposit Markets, and lending rate was reduced for transactions where the Central Bank is counterpart. Moreover, upon observing unhealthy pricing in the foreign exchange markets as a result of vanishing depth, 18 foreign exchange selling auctions were held between 10 March-2 April 2009 and 900 million USD was sold in total. 45. With the aim of supporting the corporate sector and widening the use of export discount credits, arrangements were introduced in March and April, larger number of firms was granted access to export discount credits and credit limits were raised. Distinguished Guests, 46. Recently, one of the most debated issues with respect to monetary policy is the “exit strategies”, which entail withdrawal of measures taken during the global crisis and provide normalization of operations for monetary policies. Many central banks have been working on exit strategies for quite a long time as the adverse effects of the crisis diminish and signals of economic recovery grow stronger with the ultimate goal to prepare markets for the normalization process. Obviously, each central bank will form its own exit strategy according to country-specific conditions such as improvements in financial markets, degree of economic recovery and the severity of inflationary pressure.
Stefan Ingves: Managing structural risks in the Swedish banking sector Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision, at Affärsvärlden’s “Bank & Finans Outlook”, Stockholm, 20 March 2013. *  *  *  Today I intend to speak about the Riksbank’s view of the structural risks in the Swedish banking sector and how they can be managed. As so often in recent years, I will take the crisis of 2007–2009, and the risk reassessments that banks, investors, researchers and decision-makers all over the world were forced to make as a result of the crisis, as my starting point. I will begin by saying a few words about the international work on regulations that arose as a consequence of the crisis. Then I will go into a little more detail about the structure and special characteristics of the Swedish banks. On the basis of this, I will present my view of the possible implications of the implementation and follow-up of the Basel III regulations for the Swedish banks. The risks associated with banking operations need to be limited First, however, I would like to give you a small example of the risks we are talking about. The US mortgage crisis became acute in 2007 and marked the start of the global financial crisis. At that time, the capital adequacy ratio, that is the amount of capital in relation to riskweighted assets, in the major Swedish banks averaged around 7 per cent.

This calls for continuously upgrading our regulatory regime. Accordingly, we in Kuwait, like our colleagues in the region, have not only refined our existing regulations to reflect the best global practices, but have also introduced a host of new measures. This journey brought its own set of challenges, and I would like to point out one in particular, to benefit from the presence of our esteemed colleagues from the BIS. Similar to other jurisdictions with dual banking system, we have a sizeable presence of Islamic banks in Kuwait. Yet we found limited relevant guidance for the application of Basel III on Islamic financial institutions, if at all. For the most challenging aspects of Basel III reforms, it has been left to the discretion of individual regulators to figure out how best to apply the proposed rules to Islamic banks. However, the use of discretion, though well intended, is bound to create differences across countries, and more so in the case of Islamic finance where the lack of consistency in Sharī`ah interpretations makes the task even harder. Consequently, we may witness diverging approaches to regulation of Islamic banks across jurisdictions, with the risk of regulatory arbitrage. Going forward, we also need to recognize that ensuring stability, of a constantly adapting banking system, cannot be left to regulation alone. Therefore, we need to strengthen our supervisory capacity, to suitably complement our revamped regulatory regimes. Only through effective supervision can we ensure that banks are truly compliant with our regulations.
In the second half of my speech, I will address two ideas, which are the subject of current public debate and which would have a direct impact on the SNB were they to become reality: namely the creation of a sovereign wealth fund using the SNB’s foreign exchange reserves, and the sovereign money initiative. Economic developments Discontinuation of minimum exchange rate Let’s start then by casting our minds back to last year. On 15 January 2015, the SNB discontinued the minimum exchange rate of CHF 1.20 per euro. This had been introduced as a temporary measure in September 2011 in exceptional circumstances. The Swiss franc’s safe-haven status had caused it to appreciate rapidly and sharply against virtually all currencies. The consequent massive overvaluation of the Swiss franc had posed a threat to the Swiss economy and carried the risk of deflation. The minimum exchange rate put a stop to these developments. In the subsequent almost three and a half years until January 2015, the situation changed fundamentally. Global uncertainty eased and the Swiss economy gained ground once again. By contrast, recovery in the euro area continued to be sluggish. The euro had already steadily weakened against major currencies in the second half of 2014. Furthermore, at the start of 2015, there were signs of further easing of monetary policy in the euro area. Against this backdrop, the euro was expected to weaken further.

The resulting effect on inflation is thus only temporary. Over recent months, inflation has been observed to be edging back up towards the zero mark. Mandate The SNB’s statutory mandate is to ensure price stability while taking due account of economic developments. We equate price stability with a situation in which the inflation rate is below 2%, but still positive. Unlike other central banks, we do not have a percentage inflation target. There are good reasons for this. A small open economy like Switzerland is continuously exposed to powerful outside influences. Monetary policy cannot always entirely offset these influences. It therefore makes sense for us to stabilise inflation within a range over the medium term. In the case of very large or recurrent unfavourable influences from abroad, inflation may temporarily turn negative. Often, this is also part of the process of real economic adjustment. The global economy has been exposed to a series of powerful shocks over the past ten years or so. Central banks worldwide have reacted with interest rate reductions and unconventional measures. We too have resorted to unconventional methods and, as in the past, we will not shy away from using these methods if it is in the interests of the country as a whole. However, any action we take will always be based on careful consideration of the costs and benefits in the short and long term. 2  BIS central bankers’ speeches  Outlook Let me conclude the first part of my speech with a brief look into the future.
In some countries, such as Slovenia, Serbia, Montenegro and Croatia, the shift was markedly above the average, with debt levels reaching between 70%-83% of GDP. After 2015, the debt level started to adjust, with a cumulative contraction of around 6 p.p. of GDP, visible in almost all countries in the region. The adjustment was supported through the cyclical recovery of the economies in the region, as well as fiscal discretionary measures, which allowed for fiscal consolidation and precluded further debt accumulation. Though public debt sustainability and vulnerability is a much more complex issue rather than  3  a simple comparison with a benchmark criterion, still even the latter can provide certain guideline on the issues. Chart 2 General Government Debt as % of GDP 90.00 80.00  25.0  70.00 60.00 50.00  20.0  60.5  55.8  52.5  52.4  49.1  46.3  15.0  50.3  10.0 36.1 37.9  40.00 30.00  General Government Debt, change in p.p 30.0  79.3  29.7  28.3  27.7  20.00  14.5  10.00  9.3  5.0 25.4  0.0 -5.0  Region  CEE  SEE  Baltics  -10.0 -15.0  0.00 Region  CEE 2000  SEE 2007  2015  Baltics  -20.0  2019  2015/2007  2019/2015  2024/2019  *Region refers to all the countries in the sample from CEE, SEE and the Baltics. Source: World Economic Outlook, October 2019.

These measures included tightening of debt service to income ratio (the Czech Republic, Hungary, Romania, Slovakia, Slovenia) and/or loan to value ratio rule for housing loans (the Czech Republic, Poland, Romania, Slovenia), limits to the maximum maturity of consumer loans (Romania, Slovakia, Slovenia) and more stringent risk weights on households loans (Poland, Slovenia, North Macedonia). Chart 9. Share of households with a DSTI above 40% (% of all indebted households and 90% confidence interval)  Source: Aleksandra Riedi “Household debt in CESEE economies: a joint look at macro- and micro-level data”, Focus on European Economic Integration, 2019, issue Q1/19  Recent OeNB study3 focusing on household debt in CESEE economies suggests that risks associated to households’ leverage have moderated post-crisis, but need monitoring in order to timely address potential vulnerabilities. The inference is based not purely on the level and dynamics, but some structural features as well, such as the currency and interest rate structure. Yet, estimated debt service to income ratio (DSTI) 4 for all households in all CESEE countries is below 40%, as commonly used threshold in the literature for potential vulnerabilities related to household debt burden. Debt service burden is lowest in Hungary and the Czech Republic, while Romania and Albania stand out as  3  Aleksandra Riedi “Household debt in CESEE economies: a joint look at macro- and micro-level data”, Focus on European Economic \Integration, 2019, issue Q1/19. The analysis uses macro-level data and data from the OeNB Euro Survey conducted in fall 2017.
It draws attention to emerging imbalances and the existence of risks which, in our view, could jeopardise the stability of the banking industry as a whole in the medium term. In addition, last year a new instrument was created – the countercyclical capital buffer – based on the lessons drawn from the financial crisis. At the beginning of the year, the SNB proposed that this buffer be activated, and the Federal Council decided in favour of an activation in February. The countercyclical capital buffer will come into effect from the end of September 2013 and will strengthen the resilience of the banking industry. Moreover, it will help to counter a further build-up of imbalances on the mortgage and real estate markets. My colleague, Jean-Pierre Danthine, will now give you our assessment of the risks in the financial sector. BIS central bankers’ speeches  3

6  BIS Review 17/2005  Table 1: MPC members’ voting statistics from January 1998 (current members in red)1  % of months voted for a rate change  % of changes voted for that were in IR months  Number of meetings attended since Jan 1998  Time of membership  Willem Buiter  79  36  29  1997-2000  Sir Alan Budd  65  30  17  1997-1999  John Vickers  61  29  28  1998-2000  Charles Goodhart  52  36  29  1997-2000  Sushil Wadhwani  51  37  37  1999-2002  Christopher Allsopp  49  44  37  2000-2003  DeAnne Julius  46  47  41  1997-2001  Stephen Nickell  41  50  58  2000-date  Mervyn King  39  41  87  1997-date  David Clementi  37  43  57  1997-2002  Ian Plenderleith  33  44  54  1997-2002  Sir Andrew Large  34  40  29  2002-date  Kate Barker  33  53  46  2001-date  Sir Edward George  30  45  67  1997-2003  Richard Lambert  29  67  21  2003-date  Marian Bell  28  56  32  2002-date  Charles Bean  28  60  54  2000-date  Rachel Lomax  25  80  20  2003-date  Paul Tucker  24  63  33  2002-date  1  Up to and including the February 2005 MPC meeting.