samchain/econo-pairs-v1 huggingface dataset:
7 And, more recently, 9% of the UK banks’ pre-crisis stock of CRE lending was written off between 2008 and 2014 compared to 0.4% for mortgage lending. Over the past two years, commercial property prices have risen strongly by 18%. Up to the second half of last year, the market seemed to be “simmering” if not “bubbling”. Unlike in previous cycles, however, a much greater proportion of CRE activity has been financed by equity investors, in large part overseas investors, rather than by UK bank lending. The share of equity finance in UK CRE transactions in 2015 is estimated at around 55%, compared to around 30% in 2007 and a peak of around 80% in 2010. So the direct risks to major UK banks from this sector are not as high as one might assume. The fact that there is less UK leverage in the sector does not mean however that a sharp correction in CRE prices poses no financial stability risks. Property is an important source of collateral for UK corporates, SMEs in particular. A sharp drop in CRE values could constrain their access to credit. Recent research by Bank staff found that a one pound rise in the value of a company’s property is associated with around a five to ten pence rise in investment. 8 More broadly, Bank staff estimate that around a quarter of business investment is related to commercial property.

As a global messaging standard with richer data content, ISO 20022 has the potential to drive greater payments efficiency, facilitate risk management and compliance with regulations as well as facilitate cross-border connectivity. This move towards a common global standard will address issues relating to diverging regulatory and technical standards which have increased friction in making payments and made the cross-border payments landscape more complex. Embracing financial innovation to enhance cross-border payments efficiency Aside from the global pandemic, the other key disruption to our established view of cross-border payments is financial innovation. There has been growing awareness that the underlying technology for digital assets such as distributed ledger technology (DLT) may have the potential to improve payments efficiency, particularly from the cross-border payments perspective. Some central banks have made significant strides in exploring the potential of this technology, including testing the use of blockchain and DLT for clearing and settlement of payments and securities. The rapid shift from cash towards other payment platforms, has also intensified calls for central banks to issue Central Bank Digital Currency (CBDC) to protect the country’s monetary sovereignty. Many central banks, including BNM, are exploring the merits and feasibility of issuing CBDC. Preliminary findings highlighted that this may offer some solution to the challenges associated with cross-border payments (e.g. synchronised cross-border transaction between different currencies across different platforms, reduced number of intermediaries and improved transparency of payment status).
Instead, I will turn to the SCE, which asks about consumers’ uncertainty of By continuing to use our site, you agree to our Terms of Use and Privacy Statement. You can learn more about how we use cookies by reviewing our Privacy Statement. inflation expectations, as well as options on future interest rates, which provide some indirect insights into markets’ uncertainty of future inflation. Over the past year and a half, two aspects of increased inflation uncertainty are evident in the SCE: an increase in disagreement in mean expectations across respondents and an increase in the width of respondents’ reported inflation distributions. Although disagreement does not directly correspond to uncertainty, research has identified it as a useful indirect indicator.10 Figure 2 and Figure 3 illustrate the increase in disagreement across SCE respondents over the past several years. Figure 2 shows the share of respondents who have deflation expectations—that is, they expect inflation to be at or below zero percent—either one, three, or five years in the future.11 As discussed in research with my colleagues at the New York Fed,12 there has been a striking increase over the past year in the share of respondents who expect deflation three and five years in the future.13 At the same time, as shown in Figure 3, the share expecting inflation above 4 percent grew, but part of the increase has since reversed.

Similarly, “breakeven inflation” measures derived from inflation-indexed Treasury securities are based on the CPI and include time-varying risk and term premiums in addition to expectations of inflation.8 To address the lack of direct comparability of different measures of inflation expectations, I compare readings over the past two years to the levels observed during 2014-2020, after the FOMC’s announcement of a 2 percent long-run goal and before the onset of rising inflation in the spring of 2021. The level of longer-run expectations in the SPF has consistently stayed very close to the FOMC’s 2 percent goal. The other measures have generally stayed within pre-pandemic ranges, with most recent readings only slightly higher than corresponding average levels from 2014-2020. The upper portion of Table 1 provides statistics on these comparisons. Interestingly, during the period of sustained low inflation before the pandemic, the market-based and Michigan measures declined, and their current levels are similar to those seen prior to that decline. Assessment of the uncertainty criterion for well-anchored inflation expectations is more challenging given data limitations. In theory, prices on inflation options contracts could be used to infer investors’ distributions of beliefs about future inflation.9 However, there have been virtually no trades recorded in the U.S. market for inflation caps and floors since 2015. Over that time, the “prices” reported for these options were based on models—not transaction prices—and cannot be used to measure investors’ inflation uncertainty during the current episode.
Challenges associated with climate change and the digitalisation of finance To conclude these remarks, I would like to say a few words about the role we can play as supervisors and central bankers to help banks on the path towards a sustainable economy and the digitalisation of finance. On the first point, the recent publication of the latest contribution to the IPCC’s1 6th Assessment Report reminds us of the urgent need for a transition to carbon neutrality. Supervisors have already started to assess the exposure of financial institutions to the resulting transition risks, in order to encourage them to identify, assess and manage these risks in the  1  Contribution of Working Group III of the IPCC published on 4 April 2022  4  same way as traditional risks - and the ACPR has played a pioneering role with the first stress test on climate risks. Climate risks will be gradually integrated into the prudential framework, starting with requirements under Pillars 2 and 3. Banks need to prepare for these future regulatory requirements, including those relating to climate risk stress tests and to transition plans. The latter are part of the CRD6 proposal, which is currently under negotiation. As regards Pillar 1, the integration of climate risks continues to be the subject of intense debate and I hope that the publication of an EBA consultation paper will enable us to move forward. However, the many methodological and data limitations will need to be addressed before new requirements are implemented.

From this point of view, I would like to highlight the strategic importance of the European Payments Initiative (EPI) project, which currently represents the only project for a joint solution rather than an interoperability of heterogeneous domestic solutions. We, at the Banque de France, therefore hope that the launch of the first EPI solutions, scheduled for 2023, will convince other banks to join this initiative which offers Europe a great opportunity to build an independent European payments market for the future. To conclude, in the face of the many short and medium-term risks and challenges, I would like to share with you, the members of the OCBF and more broadly with the stakeholders in our banking system, a message of confidence but also of great vigilance. The reforms conducted by the regulators and the efforts made by the banks over the past decade have borne fruit and the European banking system has demonstrated its great resilience during the health crisis and then in the face of the war in Ukraine. The banking sector has also managed to support government efforts to deal with the crisis and kick start recovery. But these developments should encourage us collectively to remain very vigilant in an environment marked by a rise in shocks and strong uncertainty and to pursue our efforts to bolster this resilience in order to successfully meet current and future challenges. 6
The benefits the world economy has reaped from having pursued that path are now only too clear. Global integration and co-operation has boosted dramatically flows of goods, services, people and monies. Each is at levels never previously seen. This, in turn, has helped deliver higher living standards and lower levels of 1  poverty in pretty much every country on the planet. Finch would have wholeheartedly approved. Looking to the future, however, this wind is at risk of changing direction. The global financial crisis has left lasting scars. That has created pressure to place speedbumps, or in some cases roadblocks, on flows of goods, services, people and monies. One of the key policy challenges ahead will be to prevent the hard-won gains from global integration and co-operation being lost. The stakes could scarcely be higher. Tonight, I want to discuss a different policy challenge facing policymakers, specifically central banks. It too has risen in prominence since the global financial crisis. It too has posed big questions about the existing policy order. And it too needs, I believe, to be tackled transparently and comprehensively if stability and trust in the international monetary system is to be preserved. Just before the 2016 referendum on EU membership, Professor Anand Menon of King’s College London was explaining to an audience in Newcastle that, in the view of most economists, leaving the EU would be bad for their economic health. GDP was likely to fall.

We now have the same policy commitment to price stability as the rest of the world. That leaves around 40 per cent of the depreciation to account for. Our work at the Riksbank suggests that in the 1970s and ’80s, the major part of the real exchange rate’s weakening can be attributed to deteriorating terms of trade, low GDP and productivity growth compared with the rest of the world and growing external debt. One of the models we have used indicates that about three-quarters of the depreciation stemmed from relatively poorer growth in Sweden and about a quarter to worsening terms of trade. The picture in the 1990s looks different. As far as we can tell at present, in the past decade neither productivity nor GDP growth has been poorer than in the rest of the world (Fig. 1). So in this respect, too, there seems to have been a change for the better. It is partly against this background that the krona’s persistently weak average path in the latter part of the 1990s is surprising. BIS Review 75/2001  3  Fig 1.
William C Dudley: The 2015 economic outlook and the implications for monetary policy Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at Bernard M. Baruch College, New York City, 1 December 2014. *  *  *  It is a pleasure to have the opportunity to speak here today. In my remarks, I will focus on the 2015 economic outlook and the implications for monetary policy. In general, I will paint a reasonably positive picture – an economy that is likely to make further progress towards the Federal Open Market Committee’s (FOMC) objectives of maximum sustainable employment in the context of price stability. In fact, if my own forecast is realized, I would expect to favor raising the FOMC’s federal funds rate target sometime in 2015. This would be a welcome development, because it would signify that the economy has healed sufficiently to warrant a somewhat less accommodative monetary policy. As always, what I have to say today reflects my own views and not necessarily those of the FOMC or the Federal Reserve System. The growth outlook is improving Since the official end of the Great Recession more than five years ago, the U.S. economy has grown at a disappointing 2.3 percent annualized rate. Several times over that period, it appeared that growth was breaking out on the upside, but each time such hopes were disappointed. We are again at a similar junction.

This will cause major oil exporters to run either smaller budget surpluses or bigger budget deficits. In the aggregate, the swing from oil producers to consumers is quite large. For example, a $ per barrel decline in global oil prices results in an income transfer of about $ billion per year from producers to consumers.2 This understates the total effect because it does not include any knock-on reductions in other energy prices – such as for natural gas – that, outside the U.S., often are linked to oil prices. Obviously, if the oil price declines were to both intensify and persist, this would have negative implications for oil and gas investment in the U.S. At a minimum, as cash flows fall, some producers will cut back on their drilling activity rather than plug the shortfall with outside financing. Nevertheless, there are several reasons why I don’t think this risk should be overstated, especially if oil prices stabilize around current levels. First, even after the large gains in recent years, oil and gas investment remains a small fraction of GDP. Second, domestic natural gas investment should be relatively unaffected because U.S. natural gas prices are largely insensitive to global energy price developments. This reflects the high costs associated with exporting natural gas and the fact that most of our oil production is used for transportation purposes. Thus, the ability to substitute lower cost natural gas for oil is limited. Third, extraction costs vary appreciably across the different major oil fields.
As fundamental parts of infrastructure development, we adopt international best practices on the security and prudential standards to ensure confidence as the country moves from a cashbased economy towards a digital economy. The third area of financial sector development policy is the Capital Account Liberalization Master Plan, Phase II. The plan aims to deepen Thailand’s financial markets by allowing greater flexibility and diversification in products and services offered to residents and non-residents, and to support the growth and development of the Thai economy. So far, a number of regulations on foreign-exchange management have been relaxed for greater flexibility and lower transaction costs. This year, the Bank of Thailand plans to further relax foreign-exchange regulations by allowing qualified investors to invest in securities abroad directly within a certain limit without the need to go through local intermediaries. We also plan to allow securities companies to buy and sell foreign currencies with their clients within the scope of their brokerage business. Lastly, foreign corporations located in neighboring countries are to be permitted to borrow direct loans in Thai baht from domestic financial institutions to invest in Greater Mekong Subregion (GMS). We have also started to see the results of the increased flexibility, which helps MultiNational Companies to establish Treasury Centers (TC) and International Headquarters (IHQ) in Thailand. As of now, there are 13 companies holding Treasury Center licenses, of which 4 have been granted in the past 3 months, with one more awaiting approval from the Ministry of Finance.

As a result, the increase in nominal GDP would be around 4%. At end-2015 the overall general government deficit target (4.2% of GDP) is expected to be met. For 2016, a deficit of 2.8% of GDP is targeted, which would involve attaining – for the first time since 2007 – a figure close to the 3% ceiling established in the Stability and Growth Pact. In turn, the public debt/GDP ratio would stand at 98.2% in 2016, having posted a figure of 98.7% at end-2015, which would mean a decline in this ratio for the first time since 2007. The macroeconomic scenario used to devise the Draft Budget is, as I earlier stated, and with slight upward differences, similar in terms of rates and composition to that I described when referring to the Banco de España forecasts and, more generally, to the consensus of analysts. It is reasonable to expect the improved cyclical position and the reduction in public debt yields to have a positive direct effect on public finances. In this respect, the upward revision of the Spanish economy’s growth prospects means that the budgetary drive required to further the fiscal consolidation process, measured by the change in the primary structural balance, will be very limited, in line with the latest Updated Stability Programme, which anticipated that the fiscal policy stance would be essentially neutral in the 2015–2018 period. Naturally, any slippage in growth or rise in financing costs would hamper fiscal consolidation, making the process more demanding.
Half of the losses worldwide are estimated to be borne by US banks, a quarter by euro area banks, and another quarter by banks located in Switzerland and the UK. •  If we want to re-establish economic and financial stability, we need to develop the lessons from the crisis. To this end it is important to recall what triggered the crisis. Low inflation rates and robust growth in the context of global imbalances, as well as abundant liquidity, were the main drivers at the macroeconomic level. At the level of the financial system it was regulatory arbitrage, deterioration in credit standards and increased reliance of banks to fund their assets in short-term markets. BIS Review 102/2009  1  •  Thus, the crisis is a consequence of a combination of failures both in financial markets and on the part of regulatory authorities. Despite market failure having been one factor, we must not forget that market participants have simply behaved in line with the incentives provided by regulatory authorities. In this respect, improved regulation and oversight of financial markets will be crucial to ensure economic and financial stability. In particular, sound balance sheets, solid risk management and transparent and robust business models are key in strengthening the financial soundness of banks and their resilience to shocks. The first line of defence of financial stability is with market participants. To provide for the right incentives, market participants must be liable for their actions. This is an essential condition for sustainable economic growth and financial stability.

On this note, I must stress that under-investment in human capacity and system of mid- and back-offices, as opposed to fronts, could prove costly. Building the capacity of mid- and back-offices may require in-house investment, as recruitment from market may not be as easy as front-office, but possibly more important, a change in management culture, which can only come from leadership of top management. Ladies and gentlemen, For those more conservative banks or financial markets, not affected in this first round hit, I also say that they cannot afford to be complacent. As in risk rating framework, it is neither the risk exposure nor risk management ability that determines bank’s riskiness, but the danger lies in the gap between the two. Therefore, banks, though engaged in less complex products would still be at risk if their ability to manage such risk is lagging behind their products. Indeed, the gap between risk exposure and management capacity becomes more important in a very volatile macroeconomic and financial environment. This is since such a gap may possibly emerge or expand undetected, given the dynamics of market events. Even with plain vanilla products, the exposure can become complex due to the number of positions used for different hedges and at different strikes. This is not to mention the complex layers of counterparty, with counterparty risk and concentration risk. At such time as this, caution is vital, because even conservative banks could be exposed to market risk from domestic assets as well as currency risk.
Full and consistent implementation of the Stability and Growth Pact is key for confidence in our fiscal framework. In view of the necessity to step up structural reform efforts in a number of countries, it is also important that the macroeconomic imbalance procedure is implemented effectively in order to address the excessive imbalances as identified in individual Member States. We are now at your disposal for questions. BIS central bankers’ speeches  3

The last paragraph specifies what Norges Bank is required to do. The first sentence in the mandate refers to the value of the krone. Stability in the internal value of the krone implies that inflation must be low and stable. Low and stable inflation fosters economic growth and stability in financial and property markets. The regulation also states that monetary policy shall be aimed at stability in the Norwegian krone’s external value, contributing to stable expectations concerning exchange rate developments. With open trade with other countries and free capital movements, we do not have the instruments to fine-tune the krone exchange rate. The krone has appreciated when economic activity has been high and there have been expectations of a wide interest rate differential between Norway and other countries. The krone has depreciated when activity has declined and the interest rate differential has narrowed. There is also a strong tendency for the krone to revert to a level that stabilises the price level in Norway relative to our trading partners, measured in a common currency.1 The task of monetary policy is to provide a nominal anchor. The inflation target is such an anchor. The conduct of monetary policy Norges Bank’s operational conduct of monetary policy shall be oriented towards low and stable inflation. Norges Bank operates a flexible inflation targeting regime, so that weight is given to variability in inflation as well as variability in output and employment. Inflation shall be 2½ per cent over time.