samchain/econo-pairs-v1 huggingface dataset:
Figure 6 Loans by type of credit (1)  Lending interest rates (3)  (annual change, percent)  (percent)  30  30  50  50  20  20  40  40  10  10  30  30  0  0  20  20  -10  -10  10  10  -20  -20  0  0  98 00 02 04 06 08 10 Consumer Corporate (2)  Housing  02  04  06  08  Consumer, from 181 days to 1 year  10  Consumer, over 3 years (4)  Commercial, 30-89 days (4)  Commercial, from 181 days to 1 year (4) Housing, over 3 years (5)  (1) Data for May 2010 are provisional. (2) Sum of commercial and foreign trade loans. (3) Weighted averaged rates of all operations performed in the month. (4) Nominal rates. (5) UF-indexed rates. Sources: Central Bank of Chile and Superintendence of Banks & Financial Institutions.

Internationally, the baseline scenario assumes that the world economic recovery will be more gradual than suggested by average consensus estimates. There are risks, such as a significant deceleration in the economic activity of the U.S. or China or, as is usual, persistent global imbalances. However, the greatest source of risks at this moment comes from financial stress, given the remaining by markets regarding whether the fiscal adjustment and financial support measures announced in Europe will be feasible and large enough. The magnitude and reach of the effects of a scenario in which the weak fiscal and/or financial  4  BIS Review 99/2010  situation in Europe intensifies or spreads to other regions materializes, are highly uncertain, but potentially substantial. Stress tests reported in the IEF show that current levels of capitalization of the banking industry allow it to absorb the probable consequences of this scenario of increased global financial instability. Meanwhile, banks have high levels of liquidity. Despite these strengths, banks must pay special attention to the management of their liquidity positions in foreign currencies and take any necessary actions to ensure smooth access to foreign markets. This consideration is especially important due to the fact that the European commercial banks account for a major fraction of Chilean banks’ external financing. In addition, in the risk scenario, other forms of contagion cannot be ruled out, considering the presence of foreign banks in Chile.
That minimum requirement must however be well-parametrised to take into account the special nature of the different institutions while preserving a level playing field both nationally and internationally. 3  The European case  Let me now expand a bit more on the European resolution framework which has played a key role in the policy response to the financial and institutional crisis in the EU and is subject to relevant specific challenges. The involvement of national governments in the resolution of the financial crisis established a perverse destabilising link between sovereign and financial risks which was at the root of the severe turmoil in public debt markets that started in 2010. That turmoil challenged the very existence of the single currency as it caused the reemergence of a country risk component in all relevant asset prices and impaired the correct functioning of the monetary union. The reaction by the authorities was to adopt an ambitious common framework not only for the prevention of banking crises – through the creation of the Single Supervisory Mechanism (SSM) – but also for the resolution of those crisis through the newly founded Single Resolution Mechanism (SRM). The SRM ensures not only that the resolution framework will be harmonised in the euro area – as provided by the BRRD – but also that resolution policy, at least for SSM countries, will be managed centrally by a Single Resolution Board (SRB), which will enjoy a high degree of 2  BIS central bankers’ speeches  autonomy.

Naturally, it is easy to agree on the need to minimise possible competitive distortions associated with any form of public intervention in the European banking market. Moreover, in no way, could we complain about the rigour and professionalism of EC officials involved, which generally followed technically sound yet sufficiently pragmatic criteria. Still, it could be argued, from a conceptual point of view, that purely competition-based considerations should not necessarily always prevail over other major policy considerations such as those concerning financial stability or public finances. Naturally, the BRRD and the SRM legislation would provide a more consistent and homogeneous resolution framework in which financial stability considerations and the preservation of taxpayers’ interests would be fully considered when approving resolution decisions within the European Union. Yet, as these legislative reforms involve no change with respect to State-aid rules, a good understanding will have to be reached on how different policy angles and responsibilities will be effectively combined when addressing the suitability of resolution plans involving State aid. The second relevant lesson from the Spanish experience relates to the need to ensure an appropriate investor base for bail-inable instruments. It is already commonly accepted that for the bail-in tool to be effective in helping to resolve banks without affecting financial stability, arrangements have to be put in place to limit the exposure to these instruments of other institutions with the potential for generating systemic distress.
As indicated on several occasions, the overall aim of the comprehensive assessment of banks is two-pronged: on one hand, the exercise seeks to offer a high degree of transparency concerning the situation of banks whose supervision will be conducted by the single supervisory mechanism as from November; on the other, it intends to promote the recapitalisation of those viable institutions that show insufficient levels of solvency. Both  2  BIS central bankers’ speeches  avenues will help reinforce the credibility of European banks ahead of the transfer of the supervisory function to the new authority. I should emphasise that it would be mistaken to quantify the value of the stress test in terms of the capital requirements it brings to light; and even more mistaken to measure its success on the basis of the proximity of the final result to the relatively sizeable estimates in the analyses published so far which, often, have been lacking in information and rigour. Experience shows that, beyond the size of the capital shortfall identified, these analyses are only credible if they manage to provide rigorous and consistent information on banks’ real situation and their ability to withstand adverse scenarios. Accordingly, the strategy to pursue can be none other than to ensure the methodological soundness and consistency of the exercise, and to provide the market with sufficiently accurate information on the results obtained and the process followed. In this respect, what should reasonably be expected from the comprehensive assessment under way?

Faced with these foreseeable changes in the regulatory and supervisory framework, and irrespective of whether the ongoing assessment exercise is likely to be generally satisfactory, Spanish banks must evidently seize every opportunity to strengthen their capital position as the improvement observed in financial conditions progressively firms, be this through gains in efficiency, retained profits or new securities issues. 5. Conclusions  To conclude, I believe the major structural changes sweeping the banking industry will have been reiterated in this conference. We should assume that in the future the banking sector will be better capitalised and safer. As a counterpoint, however, it will likely be smaller and, probably, less profitable. All these changes will have appreciable consequences for banks’ business models and competitive strategies. The concurrence of this global process and the start-up of the banking union in Europe poses, in the short term, additional and considerable logistic and strategic challenges. Yet far from being a disadvantage, the banking union will over the medium term improve the European banking sector’s competitive capacity. Banks will benefit not only from a genuinely unified market but also, more directly, from the added strength this project brings to the monetary union. And the soundness of banks and the stability of the financial system as a whole will hinge crucially on the proper functioning of this union. Thank you. BIS central bankers’ speeches  5
Allow me to illustrate this in a figure showing what we know and what we don’t know about the effects of climate change, see Figure 1. First, there is scientific consensus on the fundamental connection between rising greenhouse gas emissions and rising temperatures. But there is considerable uncertainty surrounding the extent of the effects on temperature, precipitation and sea levels. The IPCC – Intergovernmental Panel of Climate Change4 – has calculated how concentrations of greenhouse gases in the atmosphere will increase in two scenarios; one in which emissions continue at their present rate, and one in which emissions decrease, see the red and yellow lines respectively in Figure 1. Figure 1 also shows the estimated effects of the two scenarios on the temperature, precipitation and sea level in Sweden. If emissions continue at their current 3  See Bolton et al. (2020), NGFS (2019) and World Economic Forum (2019). All the scenarios use year 2000 as base year and they were updated in 2005. A detailed description of the scenarios can be found at https://tntcat.iiasa.ac.at:8743/RcpDb/dsd?Action=htmlpage&page=welcome#citation. 4  2 [18]  rate (red figures), we can expect the temperature to rise by between 4 and 7.9 degrees, precipitation by between 17 and 41.4 per cent and the sea level by between 21.4 and 66.4 centimetres. If, on the other hand, we manage to reduce emissions in the second scenario (yellow figures), the effects will be less, but far from negligible.

Direct greenhouse gas emissions, excluding uptake and emission of greenhouse gases from land use, GHG (kt CO2e)/GDP (USD million). Sources: UNFCCC, OEDCD and Climate Watch. Chart 4. Greenhouse gas emissions Blue bars show the Riksbank’s bond holdings and red bars show bonds sold in 2019, in Canada and Australia respectively. Emissions as a share of GDP 1,4  1,4  1,4  1,4  1,2  1,2  1,2  1,2  1,0  1  1,0  1  0,8  0,8  0,8  0,8  0,6  0,6  0,6  0,6  0,4  0,4  0,2  0,2  0,0  0  0,4  0,4  0,2  0,2  0,0  0  Note. Direct greenhouse gas emissions, excluding uptake and emission of greenhouse gases from land use, GHG (kt CO2e)/GDP (USD million). Sources: Australian Bureau of Statistics, Bloomberg, Government of Australia, Government of Canada, UNFCCC and Statistics Canada  Bond purchases for monetary policy purposes Like many other central banks, the Riksbank has bought bonds for monetary policy purposes. The Riksbank has limited purchases to nominal and inflation-indexed government bonds. As I have already mentioned, the Riksbank can broaden its purchases to other types of bonds, such as corporate bonds, municipal bonds and housing bonds. There is an international debate33 on to what extent central banks should consider sustainability aspects in these types of bond purchases: should they give extra  33  See, for instance, Cœuré (2018), Honohan (2019) and Mersch (2018).
But since the beginning of the 1990s, the average house has become more expensive also relative to income. Or to put it another way, an average wage can buy less than half as many square metres today than it could in 1991. Chart 7: Higher debt – lower interest burden Since our living conditions are generally not more cramped than before, you might think that we have to spend more of our income on financing our homes. But this is not the case. Although we hold record-high levels of debt, our interest burden is not heavier now than it was 30 years ago. Interest rates have fallen. Since income has risen markedly at the same time, principal payments on large loans have also been manageable. Norwegian households have responded by taking out increasingly larger mortgages to finance increasingly more expensive housing. This would not have been possible without access to cheap credit. Low interest rates have made it possible to maintain housing quality, even though house prices have crept steadily upwards. Moreover, lower interest rates, longer repayment periods and the introduction of interest-only periods have made it possible to borrow more without squeezing liquidity. This has also enabled prospective homebuyers to submit a bid higher than they normally would have done, with increasingly higher prices as a result. Globally, debt is matched by assets. What some people borrow, others save. Some wish to bring forward consumption and investment, others to save for old age.

Thank you for your attention. Les notes du Conseil d’analyse économique, Pour une refonte du cadre budgétaire européen, Avril 2021 Abiad A., Furceri D., Topalova P., The Macroeconomic Effects of Public Investment: Evidence from Advanced Economies, IMF Working Paper, May 2015. iii The American Crisis (circa 1776) i  ii
The operation of automatic stabilisers will provide a relatively large and powerful fiscal impulse to the weakening economy, in addition to already announced expansionary fiscal policy measures and the government support for the banking sector. Taken together, the additional measures decided so far put a considerable burden on public finances in a large number of euro area countries. If not reversed in due time, this will negatively affect in particular the younger and future generations. It is therefore essential to return to a credible commitment to medium-term budgetary objectives as soon as possible. The significant fiscal loosening and the implied increase in government debt should in any case not risk undermining public confidence in the sustainability of public finances, thereby detracting from the effectiveness of a fiscal stimulus. Turning to structural policies, the ongoing period of weak economic activity and high uncertainty about the economic outlook imply the need to strengthen the resilience and flexibility of the euro area economy. Product market reforms should foster competition and speed up effective restructuring. Labour market reforms should help to facilitate appropriate wage-setting, as well as labour mobility across sectors and regions. The current situation should therefore be seen as a catalyst to foster the implementation of necessary domestic reforms in line with the principle of an open market economy with free competition. We are now at your disposal for questions. BIS Review 5/2009  3

For sure, if there is a lesson to be had from the crisis, it is that there is always a risk of another crisis; we cannot easily repeat the famous “this time is different” approach. But we are now better prepared. As a general approach, the main challenge is to fully implement the reforms and to closely monitor their impact on the financial sector, and if necessary, fine-tune them.  The interrelation between monetary and macroprudential policies. Under general circumstances, monetary policy and macroprudential policy complement each other. But, as shown by the run-up to the global financial crisis, there might be periods in which achieving monetary policy goals does not necessarily guarantee achieving macroprudential goals and vice versa; low interest rates had an influence on financial imbalances and excessive risk-taking while inflation was contained and the real economy did not show overheating pressures. This is a tradeoff which central banks will have to deal with. It would help to design an institutional set-up that ensures synergies and consistency among monetary, micro and macroprudential policies, but also separates ex-ante analysis, probably through Chinese wall-type structures. 5/6  3. The fintech challenge   “Fintech” is gradually entering into the financial sector. Information technologies can have important implications in terms of increasing competition and redefining the relationship between consumers and suppliers of financial services, fostering efficiency gains, better financial inclusion and improvements in quality through tailored services.
In fact, the originate-to-distribute model has stymied one of the essential functions of banking: the extraction of valuable information to allow proper discrimination between borrowers. This business model has been highly fashionable in certain countries, but not in all. The Spanish banking system has not adopted it, and the model here has continued to be a traditional banking one with closeness to bank customers, detailed knowledge of them and the forging of links over time being some of its defining characteristics. 2  BIS Review 62/2008  True, Spanish banks have made considerable use of asset securitisation, but to a totally different end than those banks which developed the originate-to-distribute model. As conceived by Spanish banks, asset securitisation was not a business in itself but a mechanism to obtain additional funding. In this way, risks were not transferred to the financial markets but were retained on the balance sheets of the banks granting financing, and the perverse incentives under the originate-to-distribute model were thus avoided. Second lesson: on the use of complex products that are difficult to assess and lacking in transparency The process of asset securitisation has also differed across banking systems as concerns the complexity of the products developed. The second key aspect of the turbulence is that some international banks, particularly when securitising US subprime mortgage loans, used highly complex structured products that are difficult to assess and lacking in transparency.

An autonomous rise in the supply of finance, for example, would tend to depress real interest rates and the expected returns on all assets, quite independently of monetary policy. More optimism about the future, increasing the demand for investment funding, would push up real interest rates. An increase in the perceived degree of risk, increasing the wedge between the required return on risky assets and the risk-free rate, can push up the first but depress the second (using a simple model of asset prices I’ll present below some stylised simulations that make these points). So the notion that real interest rates only vary because the output gap moves around, or because central banks are making mistakes, doesn’t square with theory. Nor does it make much sense empirically, particularly over the past twenty years: First, as I said in the introduction, inflation has been relatively stable. Anyone who believed in the mid-1990s that the neutral policy rate was fixed at 6% (in nominal terms) would have viewed with some alarm the sharp decline since then. Bank Rate has now been over 5% points below the estimates of the neutral rate that prevailed in the 1990s, for well over five years – a period far longer than the lags supposed to exist between policy changes and their effects. Taking into account any additional impact of quantitative easing (QE) the predicted result would presumably have been a cyclical boom in output and ever-rising inflation, throughout the developed world. That’s not what’s occurred.
The effects of the currency collapse and the associated outburst of inflation, which rose from below 4% in late 2007 to 18% in early 2009, were magnified, as it hit one of the most indebted private sectors among advanced economies, with a high share of foreigndenominated or exchange rate-linked debt (20% for households, 70% for businesses, and 40% for municipalities). In addition, households’ CPI-indexed debt amounted to 75% of their total debt and the pass-through of exchange rate depreciation to inflation was speedy due to the magnitude of the depreciation and the lack of credibility of monetary policy at the time. Having set the scene, I shall now turn to the policy responses. The framework for these was set by the two-year Stand-By Arrangement agreed with the IMF in November 2008. The total financing associated with the programme amounts to around USD 5 bn, with just over USD 2 bn coming from IMF resources and USD 3 bn provided by bilateral loans from the Nordic countries, Poland, and others. The original Stand-By Arrangement provided for quarterly reviews; however, the first review was delayed, partly because of the deposit insurance dispute between Iceland and the Netherlands and UK, relating to online foreign overseas branches of the failed Landsbanki. The first review was completed in October 2009, the second in April 2010, and the third on 29 September 2010.

Financial institutions in Asia also had limited exposure to highly leveraged activities, such as complex derivatives and structured credit instruments. Consistent with the more traditional banking models in Asia, there are now calls for a return to basic banking and its clear separation from higher risk-taking activities. The growth of Islamic finance, with its emphasis on the close link between financial transactions and real economic activity and which embraces universal values such as transparency and fairness, further supports this trend. The emphasis on productive financial innovation has also been reinforced by a long standing focus in Asia on promoting effective consumer protection arrangements. In the recent period, this has received renewed attention by authorities given the experience of the recent crisis which has underscored how market conduct failures that led to widespread mis-selling and predatory lending, was not only detrimental to consumers, but also a source of systemic risk. An emphasis on product transparency and disclosure, responsible sales and marketing practices as well as investment in financial education have served to better align the interests of financial institutions and consumers, thus reducing the potential for harmful practices. Asian economies have also taken steps to strengthen the financial safety net including deposit insurance, while putting in place institutional arrangements for debt counselling and restructuring. These measures can contribute towards pre-empting widespread defaults particularly during periods of stress. Second is the continued commitment and sustained progress in the development of strong regulatory and supervisory systems for the financial sector.