samchain/econo-pairs-v1 huggingface dataset:
But we are interested in having one or more independent checks that the combination of actual capital held by firms and the shape of their balance sheets and business models adds up to a sector that we can be confident is resilient to plausible shocks. We anticipate that the results of stress tests will allow firms and supervisors to better understand whether risk management systems are firing on all cylinders, and if there are any gaps in resilience which need to be plugged, for example by upgrading models5. We intend to consult on any potential changes needed to our approach early next year, alongside the broader Solvency II review consultation. Conclusion Tackling a building project presents a wide range of challenges. But it comes with a unique prize – to create a genuinely bespoke building, one which perfectly meets your needs. The Solvency II review presents a great opportunity. Working with the government, we need to get the foundations right, to make sure policyholders continue to be appropriately protected. And to make sure we get the building we all want, we need detailed, reliable measurements which the QIS will provide for us. With these solid footings, the structure the Solvency II review builds will be one that meets the needs of all stakeholders, and stands tall for years to come. I am grateful to Anthony Brown, Alan Sheppard, Ruth Hendon, Graeme Alexander and Zachary Morris-Dyer for their assistance in preparing these remarks. 1 HMT (2020), Review of Solvency II: Call for EvidenceOpens in a new window.

As with our monetary policy tools, we are closely monitoring the situation and we will review our approach on a regular basis. Independent of the ECB’s actions, banks need to perform proper risk management, acknowledge the recognition of impairments, and book an appropriate level of provisions. I would now like to turn briefly to the subject of central bank digital currencies (CBDCs) and how the pandemic has had an impact on them. The arguments in favour of CBDCs have intensified during the pandemic; one of them is reaffirming the role of central banks as the sole issuers of money. Although these arguments are legitimate, they do not necessarily tip the scales in favour of immediate action in favour of CBDC issuance. This is due to the many legal, operational and policy issues around CBDCs which remain unresolved, standing in the way of a transition from traditional cash to CBDCs. I have touched on those issues in some of my previous speeches. Suffice to say that the issues in question will continue to provide food for thought for the ECB, euro area NCBs and central banks throughout the world as they further explore the costs and benefits of CBDCs. Conclusion Let me conclude. In the blink of an eye, the coronavirus pandemic and the response to it placed the global economy in an induced coma. The ECB has acted forcefully and well within its mandate. Our crisis response shows that our legal framework is flexible, but only up to a certain point.
On the other hand, if a country is to benefit fully from adopting the single currency, then its economic structures must be compatible with those of the countries that are already using that currency. It is for this reason that the EU Treaty sets a series of eligibility tests, known as the Maastricht criteria. These include convergence of inflation and interest rates, sustainable fiscal positions and exchange rate stability. The exchange rate criterion requires participation in ERM II for a minimum period of two years prior to the adoption of the euro. This is an arrangement whereby the European Central Bank (ECB) and participating national central banks would not allow any currency to fluctuate beyond a given margin from its central euro rate. This margin at present can be as wide as 15%, but significantly narrower margins are being contemplated, with an often-cited reference value of 2.25%. Thus, participation in ERM II does not necessarily imply increased currency volatility. Indeed the rationale of this mechanism is to test the stability of a currency. As you know, the Maltese lira is pegged to a weighted average of three currencies, whose individual exchange rates against the lira can vary. In this regard, it is noteworthy that the fluctuations in the Maltese lira/euro rate over the past few years on average have not exceeded 3.5%. As for the inflation and interest rate criteria, Malta is well within the reference values.

Expenditure on welfare, including on health, is already absorbing close to one-fifth of the economy’s annual income, or about Lm300 million, and almost two-fifths of government revenue. Retirement pensions alone account for more than one-fourth of this, and are the cost item which is likely to register the strongest growth in the years ahead. Over the next twenty-five years it is expected that the number of workers supporting one pensioner will drop from the present 4 to just over 2, partly reflecting the fact that the proportion of pensionable age persons in the population will rise from 16.7% today to over 28%. An ageing society will also further aggravate existing national saving and investment trends. The impact on private consumption and savings patterns is a result of the ‘life cycle hypothesis’, which holds that a rise in the proportion of the elderly in the population tends to be accompanied by a decline in national savings. Indeed, the effect of population ageing on public finances is nothing but a reflection of a wider economic problem involving a reduced productive capacity. Reforms to pre-empt this impact must, therefore, be implemented without delay. Here again, Malta need not re-invent the wheel. The World Bank model involving funded pension schemes is being applied successfully in many countries. Equally interesting is the Open Method of Co-ordination of Pension Reform operated by the European Commission with the aim of promoting sustainability of pension systems across the EU without imposing uniformity.
Global investments have suffered from weakening business confidence. In Q1 this year, G3 investment growth moderated to 3.4% on a year-on-year basis, from 3.7% last year. In the ASEAN-4 economies, year-on-year growth in fixed investment spending has pulled back sharply, to 3.1% in Q1 this year. This is half the pace seen in 2018. There are three factors driving the current weakness in manufacturing, trade, and investment. a downturn in the global electronics cycle; the lagged effects of deleveraging in China; and the trade conflict between the US and China. 1 / 11  BIS central bankers' speeches  Of the three factors, the trade conflict poses the biggest risk to global growth outcomes. Cycles in electronics production are a common feature and structural trends in digitalisation and the Internet-of-Things should support a recovery eventually in chip production in the next few years. As for deleveraging in China, there has clearly been an easing of the policy stance in recent months in response to the slowing economy. If the trade impasse between the US and China drags on and further tariff measures are imposed, growth in the second half of 2019 is likely to be weaker than earlier envisaged. MAS’ estimates suggest that the direct impact of the tariffs that have been introduced to-date would already shave off a cumulative 0.3% points from global GDP growth over 2019– 2020. The indirect effects on business and consumer sentiments and financial markets are difficult to estimate.

This is probably the biggest risk to Asia, given the region’s exposure to the corporate investment cycle. 2 / 11  BIS central bankers' speeches  Beyond the tariff war, there is a new and unknown risk on the horizon – the broadening of the trade dispute to the technology front. With global value chains, production is distributed and technology dispersed over several countries, industries, and products. Moves to restrict the supply of critical technologies could potentially lead to significant disruptions in these value chains. Some of these technologies are deeply embedded across multiple products and there may be mutual dependencies across these products. We do not fully understand the dynamics of these value chains and technology dependencies. But it is not difficult to imagine how restrictions on the use of key technologies – like advanced semiconductors – can potentially disrupt activities ranging from data centres to communications between network devices. The disruptions to supply chains and economic activity could potentially be even larger than from tariffs. A prolonged technology conflict could lead to a bifurcation of technology infrastructures globally. While downside risks have clearly increased, we should not over-react. The engines of manufacturing, trade, and investment have stalled, but the global economy is not headed for a crash. Two other engines are providing support: easier monetary policies in the major economies; and resilience in services and consumption. Monetary policy in the US has turned more accommodative against the backdrop of benign inflation.
We have the same monetary policy as all the rest; our income is taxed at the same federal tax rate; and we are equally impacted by Washington’s tax, spending and regulatory policies. But we have better fiscal policy at the state level. We have no state income tax; we are a right-to-work state; we have state and local governments that, under both Democratic and Republican leadership, have for decades assiduously courted job creators – so much so that we have even outperformed the job creation of most every other major industrialized economy worldwide, as shown by the previous slide. Whither monetary policy? Now, back to the hue and cry of financial markets, and the question of further monetary accommodation. Interest rates are at record lows. Trillions of dollars are sitting on the sidelines, not being used for job creation. We know that in areas of the country where fiscal and regulatory policy incents businesses to expand – Texas is the most prominent of those places – easy money is more likely to be put to work than in places where government policy retards job creation. During the next few weeks as I contemplate the future course of monetary policy, I will be asking myself what good would it do to buy more mortgage-backed securities or more Treasuries when we have so much money sitting on the sidelines and yet have no sense of direction for the future of the federal government’s tax and spending policy.

In addition, the introduction of the Payment System Act in 2003 provided Bank Negara Malaysia with a broader scope on the oversight function over payment systems and instruments that are operated or issued by banks or non-banks, given that advances in ICT have increased the participation of nonbanking institutions in the payments system. The Bank has therefore put in place a specific legislative authority to institute more comprehensive and effective mechanisms for achieving effective oversight of the payments system in a networked environment. Bank Negara Malaysia also maintains very close contacts with its counterparts in other jurisdictions to keep abreast of developments in the financial markets. Strengthened surveillance and information sharing on a real-time basis has become key. Cooperation among the Asian central banks is very strong, and there are various avenues for increased interface for collaboration at all levels in the regional central banks. To maintain effective surveillance, importance is also placed on regular engagement with the financial market participants, the industry and the public. An emerging dimension in the changing environment is to strengthen Central Bank communications. The aim is to enhance market understanding and awareness of the benefits as well as the potential risks and the policy initiatives in a network economy. The regular publication of the Bank's Monetary Policy Statement is to appraise markets of the direction of monetary policy. Other measures include outreach programmes on investor and consumer education to enhance financial literacy.
The joke in the American camp at the beginning of the 1980s was that macro is just bad micro, meaning that the models had become dominated by the idea that agents make optimal economic decisions over infinite horizons into the future and that markets therefore tend to be selfequilibrating towards a single steady state. Central banks’ standard models – DGSE [Dynamic General Stochastic Equilibrium] models – have been transformed in many ways, but the 1980s view has still not fully disappeared. This has to change. Economic agents clearly have finite horizons, which impact on their consumption decisions. People do not optimise and plan their lives up to their death. Nor does the financial sector play as important a part in models as it should. The possibility of multiple equilibria has also to be introduced; there are fallacies of composition, there are coordination failures. All these elements have to become part and parcel of macroeconomics; macroeconomics is not just the aggregation of individual decisions by optimising agents, we should not just assume everything moves towards a general equilibrium of competitive markets. The absolute minimum that has to happen is to rid macroeconomics of the imperialism of a certain type of microeconomic foundations; a new core model for macroeconomics has to emerge. If agents act in different ways, we also have to address the question of income distribution. And fortunately there are already models, so-called HANK models, Heterogeneous Agents New Keynesian models, that consider this.

Yet although the decline in residential demand has been very abrupt, lower interest rates and the fall in house prices have placed affordability indicators at more moderate levels, which is helping to stabilise real estate purchases in recent months. In the case of lending to the private sector, we have witnessed increasingly negligible and even negative growth rates, and this pattern will probably prevail over the coming quarters. These developments in lending have a most significant cyclical component, accentuated by  2  BIS Review 151/2009  the tension on international financial markets. After the strong increase in household and corporate debt ratios in the previous upturn, it was inevitable these ratios would fall to improve the financial position of households and firms, and to assist in the resumption of a sustainable path of spending. The strong adjustment in spending is also bringing about a sharp reduction in the external deficit which, after posting a figure close to 10% of GDP in 2007, may be below 5% of GDP in 2009. The adjustment is based, above all, on the decline in imports and on lower commodities prices; accordingly, for this correction to firm when demand picks up, a more substantial contribution by exports will be needed and, in this connection, our export base and the productivity of our companies must continue to be strengthened. In terms of inflation, we are also seeing a significant correction, as there has been a negative inflation differential with the euro area for almost a year.
Howard Davies: Is the global regulatory system fit for purpose in the 21st century? Address by Mr Howard Davies, Chairman of the Financial Services Authority, UK at the Monetary Authority of Singapore Lecture 2003, Singapore, 20 May 2003. *  *  *  I am greatly honoured to have been invited by the Monetary Authority of Singapore to deliver their 2003 Lecture. Over the eight years for which I have had responsibility for banking supervision in the UK I have come greatly to respect the Authority’s skill and dedication, through some difficult times in the region. Your Chairman, Deputy Prime Minister Lee, and your Managing Director Koh Yong Guan, have both been wise advisers to me over the years, and we have shared many useful discussions here and in London. In 1995, when I was still at the Bank of England, we were handling the aftermath of the Baring’s collapse. Since then, we have worked on many issues together in many places, particularly in the informed international group of integrated regulators, which is proving to be a valuable forum for the exchange of ideas and experience. I shall be leaving the FSA at the end of September to move to the London School of Economics. But that will not break my links with Singapore: there are very many LSE alumni in the MAS, and in Singapore more generally, so I will continue to have a sound excuse to visit. You were kind enough to give me the freedom to choose my subject today.

The digital revolution creates many opportunities for financial players, as for consumers: an increasing number of more accessible financial services, more complete customer satisfaction. But it also requires examining ways of adapting business models: diversifying services and adjusting their pricing, on the income side; anticipating changes in employment and skills, in the social dialogue. The Banque de France and the ACPR are mobilised to support innovation: creation of the “FinTech Forum” and a dedicated FinTech unit with the AMF; appointment of a “Chief Digital Officer". The Banque de France is also changing. Pursue efforts to combat money laundering and the financing of terrorism. Further progress will be made in 2017 with the full implementation of the Urvoas Act of June 2016 (including its anti-money laundering and financing of terrorism component) and the transposition of the 4th European Directive. I urge you to pay close attention to their effective implementation. With all these prospects, challenges and promises in mind, I renew to each and every one of you my best wishes for 2017. Thank you for your attention. 3/3  BIS central bankers' speeches
Christian Noyer: The size of Central Bank balance sheet – how relevant (important) is it? 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 GIC (Global Interdependence Center)/Bank of France annual seminar “New Policies for the Post Crisis Era”, Session I “Putting a Context on Monetary Policy – On Both Sides of the Pond”, Paris, 23 March 2015. * 1. *  *  A widespread increase in CB balance sheet  In all major economies, Central Banks’ balance sheets have dramatically increased in size and as a percentage of GDP. That movement was temporarily reversed in the euro area, but our balance sheet is set to increase again following the recently decided -and implemented – asset purchase programs, most notably the Public Sector Purchase Programme (PSPP). Since 2007, the aggregate size of central banks’ balance sheets over the world has tripled, reaching the amount of 22 trillion dollars at the end of 2014. Interestingly, this increase has been almost equally split between advanced and emerging economies. In advanced countries, Central Banks have acquired domestic assets. On average, their balance sheets have grown from 10 to 20% of GDP over the last seven years. In emerging economies, accumulation of foreign exchange reserves accounts for most of the expansion.

It is also important to note that unwanted side effects can be minimized if different public authorities operate in a well-defined and respected framework. We have such a framework in  BIS central bankers’ speeches  3  the Eurozone. It is based on fiscal discipline leading to debt reduction. If those disciplines are not respected or implemented with insufficient vigilance, then monetary policy through public sector debt securities purchases may be perceived as creating strong moral hazard, thereby weakening the necessary consensus and compromising its efficiency. When fiscal transfers take place between countries of the Eurozone, they are implemented through mutually agreed and conditional programs. There are permanent temptations to blur the distinction between those fiscal programs and the monetary and liquidity operations of the Central Bank. Those temptations should be resisted. This is the reason why the Eurosystem has been extremely rigorous in implementing its collateral rules in a transparent and neutral way. Let me conclude. Unconventional monetary policies are necessary but complex. They create more interference with markets than policies conducted in ordinary times. As a consequence, it becomes more difficult to avoid unintended spillovers of stabilization policies on the allocation and distribution of resources. This reality should not prevent Central Banks from acting decisively when there are risks for price stability. But such actions demand rigor and precision in their implementation. For Central Banks, their balance sheet has become the main tool of monetary policy for the foreseeable future. It has proven effective.
As woe became the popular narrative, depressed expectations may have become selffulfilling. In their recent book, Animal Spirits, George Akerlof and Robert Shiller emphasise the role of popular psychology – “stories” – in shaping people’s perceptions and actions. Depression is a psychological state as well as an economic one. Perhaps the best explanation we have about events following the Lehman crisis is that these two states merged. Adroit communications by the authorities, like counselling, might help head-off future bouts of clinical depression in the financial system. This is undoubtedly an ambitious agenda. But experience after the Great Depression suggests grounds for optimism. That crisis brought about a revolution in thinking about macroeconomic theory and macroeconomic policy. In many respects, it marked the birth of modern macroeconomic models – in the form of IS/LM analysis – and modern macroeconomic policy – in the form of activist monetary and fiscal policy. 27  Newman (2002). 28  Haldane (2009). BIS Review 53/2009  13  Though less heralded, it also resulted in a revolution in macroeconomic data. Despite attempts in the 1920s and 1930s, it was from the 1940s onwards that national accounts data emerged for the main developed economies. This was largely a response to the evolution in macroeconomic thinking and policy-making following the Great Depression. Crisis experience led theory which in turn led data. That is the evolutionary path finance now needs to be on.

There are perhaps three key robustness results from this literature which are relevant to the financial system. Perhaps the key one concerns the “robust-yet-fragile” property of connected networks. 6 The intuition behind this result is beguilingly simple, but its implications profound. In a nutshell, interconnected networks exhibit a knife-edge, or tipping point, property. Within a certain range, connections serve as a shock-absorber. The system acts as a mutual insurance device with disturbances dispersed and dissipated. Connectivity engenders robustness. Risk-sharing – diversification – prevails. But beyond a certain range, the system can flip the wrong side of the knife-edge. Interconnections serve as shock-amplifiers, not dampeners, as losses cascade. The system acts not as a mutual insurance device but as a mutual incendiary device. Risk-spreading – fragility – prevails. The extent of the systemic dislocation is often disproportionate to the size of the initial shock. Even a modest piece of news might be sufficient to take the system beyond its tipping point. This same basic logic has latterly been applied to financial systems, using mathematical models and simulated data. 7 These knife-edge dynamics match closely the behaviour of the financial system in the recent past. A lengthy period of seeming robustness (the Golden Decade from 1997 to 2007) was punctuated by an acute period of financial fragility (the period since). The shock causing this tipping point to be reached – the sub-prime crisis – was by global financial standards rather modest. The robust-yet-fragile property of networks helps make sense of these non-linear financial dynamics.