samchain/econo-pairs-v1 huggingface dataset:
BIS central bankers’ speeches  1  *** Lie I: “This time is different” The first lie is the four most expensive words in the English language: “This Time Is Different.” 2 This misconception is usually the product of an initial success, with early progress gradually building into blind faith in a new era of effortless prosperity. It took a revolution in macroeconomic policy to help win the battles against the high and unstable inflation, rising unemployment and volatile growth of the 1970s and ‘80s. In no small part due to my predecessors, particularly Lord King, the stagflationary threats in the UK were tamed by a new regime for monetary stability that was both democratically accountable and highly effective. Clear remits. Parliamentary accountability. Sound governance. Independent, transparent and effective policy-making. These were the great successes of the time and their value endures today. But these innovations didn’t deliver lasting macroeconomic stability. Far from it. Price stability was no guarantee of financial stability. An initially healthy focus became a dangerous distraction. Against the serene backdrop of the so-called Great Moderation, a storm was brewing. Debt was building rapidly, with total non-financial debt in the G7 doubling to 300 per cent of GDP between Prime Ministers Thatcher and Brown. In the US and UK, this was led by massive increases in household debt, the likes of which were last seen during the Great Depression. Several factors drove this debt super-cycle including demographics and the stagnation of middle-class real wages (itself the product of technology and globalisation).

Conclusions  After I prepared this presentation, I started even more to support the old truth in slightly modified wording – maintaining financial stability is more the art than the science. Maintaining the financial stability is the mission impossible for one institution to carry out in isolation, be it the central bank or any other authority. What is needed is shared data, shared analysis that brings together macro and micro prudential aspects of financial stability, common set of principles to fall back in case of systemic crisis, and perhaps most essentially, there is a need for common mindset. 4  BIS Review 63/2001  I would like to highlight one essential aspect of financial stability. The pan-European consolidation of banking industry has resulted in rapid increase of cross-border ownership. The question of co-operation between central banks and supervisors is the key to maintain sound financial systems. That applies both to crisis prevention as well as to crisis resolution. How to pass on early warning signals, how to provide emergency liquidity support, how to restructure or wind up big financial conglomerates – these questions are highly relevant for us as well as for the whole common market. I believe this a good time to stop and pass the word over to our moderator who will elaborate more thoroughly on the other mission impossible: how to find a right institutional structure for financial sector supervision. Thank you for your attention. BIS Review 63/2001  5
The lending margin on fully secured mortgages could then be 0.5 percentage point. In conclusion, we should be able to say that the decline in lending margins has probably come to an end. It will come as no surprise if lending margins rise somewhat ahead. It is now likely that a number of banks are not achieving a satisfactory return on new loans. Banks may have compensated for this by having low deposit rates. However, as mentioned above, there has been a marked rise in borrowing costs. Even if some of the increase should be reversed, competition for ordinary deposits will have to intensify ahead – also in view of the greater uncertainty experienced by many banks with regard to funding in the money market. A number of features of household behaviour make households more vulnerable to economic disturbances. Household debt has grown more than income since 1999. Both the  14  BIS Review 115/2007  debt burden and the interest burden have increased markedly and are expected to continue to rise somewhat in the years ahead. Most household loans are adjustable-rate loans. This is perhaps not so surprising. In the post-war period up to the late 1980s, the Norwegian State Housing Bank played a key role in mortgage financing, and banks’ lending rates were regulated. The interest rate for house purchases was politically determined, and – for a period that was perhaps surprisingly long – borrowers were confident that their best interests were being safeguarded.

BIS Review 115/2007  15  Norway has a substantial current account surplus. If oil prices remain high, this might also be the situation in the years ahead. Most of the current account surplus is matched by capital outflows from the state to the Government Pension Fund – Global. Adjusted for these outflows, the surplus has been between NOK 0 and 70 billion in recent years. It is also likely that oil companies invest substantial foreign exchange earnings abroad. In the chart, the term basic balance has been used to mean the current account adjusted for the estimated capital outflows from the state and oil companies. The basic balance has been negative in the past few years and is estimated to fall close to minus NOK 150 billion this year and next. 16  BIS Review 115/2007  The large basic balance deficit reflects a substantial saving deficit among mainland industries and households combined. Developments in banks’ balance sheets and sources of liquidity are influenced by these flows. The saving deficit is to a great extent financed by raising capital abroad, often through banks. Access to and pricing of this funding is influenced by the recent turbulence in international money markets. The situation has similarities with the situation in the mid-1980s. Then, as now, there was a large saving deficit in the private sector of the mainland economy, while high petroleum revenues laid the basis for a current account surplus.
We should recall here the weakness of the euro area’s cross-country risk-sharing mechanisms based on the capital markets and banking system, especially in comparison with other currency areas of a similar size, such as the United States. 7/14  Especially since the emergence of the sovereign debt crisis, in the first part of the current decade, these shortcomings have prompted significant progress in reform of the European institutional architecture, including the strengthening of the mechanisms for surveillance of the fiscal and macroeconomic imbalances and the creation of the European Stability Mechanism, the Single Supervisory Mechanism and the Single Resolution Mechanism. Despite these reforms, significant limitations persist that require further EMU deepening. First, the second pillar of the banking union needs to be completed by means of the creation of a common backstop for the Single Resolution Fund to guarantee its financial sufficiency. Moreover, it is essential to launch a European deposit insurance scheme to ensure the same level of protection for all depositors throughout the euro area, reducing the risk of bank runs in situations of financial stress and to weaken the “doom loop” between sovereign risk and bank risk. In relation to resolution, in line with international initiatives, the European resolution directive stipulates a minimum requirement for own funds and eligible liabilities in the event of resolution. The application of this directive poses a number of challenges, in particular in terms of the transition towards compliance with these new requirements by banks, which I shall refer to later when discussing Spanish banks.

I then turned to monetary and fiscal policy, which are the main tools for managing the economic cycle, arguing that, at present, and for different reasons, they both have less freedom of action than in the recent past. Therefore, in my opinion, the fundamental conclusion is that it is necessary to take advantage of the current cyclical position in Spain, while conditions remain favourable, to build up budgetary leeway for future recessions and to introduce structural reforms to take over from recent years’ expansionary demand-side policies in order to prolong the current economic growth phase and boost the economy’s growth potential. In short, economic policy provides us with a national, European and global toolkit that, if we wish to avoid repeating the errors of the past, we should use properly to prepare ourselves for the next economic crisis, which will surely arrive. The anniversary of the collapse of Lehman Brothers ten years ago, and the economic and financial crisis we have suffered, particularly in Spain, should spur us to press ahead with the reform drive so that, paraphrasing the recent winner of the King Juan Carlos Prize in Economics, Carmen Reinhart, next time is different. 14/14
Although a weaker exchange rate contributes to boosting exports, the effects are limited if international demand is low. At the same time, a weak krona provides higher imported inflation. We are expecting the exchange rate to strengthen in the slightly longer term, but to remain weak until the most acute stage of the crisis is over. To summarise in brief, we are assuming that the financial crisis will in various ways make the wheels of the economy turn much more slowly. Growth is expected to slow down both in Sweden and abroad. Our forecast is that the increase in GDP in Sweden, Europe and the United States will remain around zero next year, but recover in 2010 and 2011. The labour market, resource utilisation and inflation In that the financial crisis aggravates the ongoing economic downturn, we are assuming that the labour market will show weaker development and that inflation will be lower than we forecast at the beginning of September. Resource utilisation in the economy is still at a  6  BIS Review 138/2008  slightly higher level than normal. However, we are assuming that it will fall rapidly and be somewhat lower than normal over the coming years. Inflation is still high at the beginning of the forecast period. But during next year we are expecting it to fall rapidly. Opinion polls also indicate that inflation is expected to be lower in the future. Our assessment is that inflation will be below two per cent in 2009.

A study by Catherine Mann at the Institute for International Economics shows that trade and global production accounted for 10-30 per cent of the price fall on hardware products in the United States during the 1990s. This led to growth being approximately 0.3 percentage points higher each year between 1995 and 2002 than it would otherwise have been. Today, expenditure on software is increasing at twice the rate as on hardware, and this process has scarcely begun in large areas of the economy. If prices for software also begin to fall, thanks to globalisation, the second wave of productivity gains can be even greater than the first, particularly within the services sector, which has the greatest potential. We have seen that globalisation of trade and production patterns has led to more operators, who also have lower costs, participating in the world economy. This has led to international competition becoming stiffer and prices being pushed down. Similarly, the increasing trend towards deregulation and privatisation over the past two decades has contributed to making production more efficient and raising productivity, which in turn has had a subduing effect on price trends. The question of how globalisation and structural changes may affect the future path of inflation will probably attract increasing attention in central bank circles. If, on the one hand globalisation and new  BIS Review 21/2004  3  technology have led to economies having a lower inflation propensity, it may be possible to achieve a higher level of resource utilisation without inflation accelerating.
While this might appear to be a constraint for the Federal Reserve, purchases of non-sovereign debt by other central banks have been small—both in size and as a percentage of GDP— compared with the Federal Reserve’s purchases of agency MBS, which are guaranteed by federal agencies and can affect private borrowing rates.8 In expanding their balance sheets through asset purchases, central banks must consider how their choice of assets—for example, sovereign debt, corporate bonds, or federal agency debt— will affect the policy transmission mechanism. Central banks must also take into account any implementation challenges related to executing in a given market. There are many broad transmission channels through which an LSAP program can provide additional monetary accommodation: Increasing the monetary base and central bank liabilities—the QE channel Reinforcing that interest rates will remain low—the signaling channel9 Changing the quantity and mix of financial assets held by the private sector—the portfolio balance channel Taking interest rate risk out of the private sector—the duration channel Taking credit risk out of the private sector—the credit channel Taking prepayment risk out of the private sector—the prepayment channel Improving market function—the market function channel The purchases of different assets will have different degrees of impact across these channels. For example, sovereign assets will generally work primarily through the first four channels, while corporate bonds would also work through the credit channel and MBS would also work through the prepayment channel.

In addition, the BoE launched an 18-month, £ billion corporate bond purchase program in September 2016. The monetary policy framework of the Bank of Japan (BoJ) now targets both the levels of interest rates across the yield curve as well as the pace of expansion of Japan’s monetary base. Its current interest rate targets include a negative deposit facility rate at –10 basis points for the short-end and a 0 percent yield target for the 10-year yield. Of note, the BoJ’s three-tier deposit system exempts the majority of its system reserves from the negative rate. As for the quantity target, the BoJ pledges to maintain an expansion of “around” ¥ trillion per year until realized inflation exceeds a 2 percent target in a sustainable manner by purchasing primarily Japanese government securities. 5 During the Bank of Japan’s Quantitative Easing Program, which lasted from 2001–06, the BoJ targeted the  liability side of its balance sheet by explicitly targeting the level of bank reserves. This was accomplished via repurchase agreements and purchases of Japanese government bonds with a remaining maturity of less than 5 years. 6 In a speech on January 13, 2009, then-Federal Reserve Chairman Ben Bernanke discussed the differences  between “Quantitative Easing” and “Credit Easing". 7 A prominent exception is the central bank of Chile. See Section 27 of theBasic Constitutional Act of the Central  Bank of Chile.
Annual growth rates of consumer credit products and household income  Ratio 6 5 4 3  2 1 0 1973  1978  1983  1988  1993  1998  2003  2008  2013  Sources: Department for Communities and Local Government, Halifax, Nationwide, ONS and Bank calculations. (a) The ratio is calculated as average UK house price divided by the four-quarter moving sum of gross disposable income of the UK household and non-profit sector per household. Aggregate household disposable income is adjusted for financial intermediation services indirectly measured (FISIM) and changes in pension entitlements. (b) House price is an average of the Halifax and Nationwide indices. Sources: Bank of England, ONS and Bank calculations. (a) Identified dealership car finance lending by UK monetary financial institutions (MFIs) and other lenders. (b) Sterling net lending by UK MFIs and other lenders to UK individuals (excluding student loans). Non seasonally adjusted. (c) Percentage change on a year earlier of quarterly nominal disposable household income. Seasonally adjusted. (d) Other is estimated as total consumer credit lending minus dealership car finance and credit card lending. Chart 9. Interest-free periods of credit card (a) balance transfer offers  Chart 10. Interest rates on personal loans £ (quoted rate) £ (quoted rate) 1-5yr fixed-rate (effective rate)  Per cent 16 14 12 10 8  6 4 2 0 03  Sources: Moneyfacts and Bank calculations. (a) Whole market end-month data, excluding values of zero and nil returns. (b) The maximum 0% balance transfer term available across all lenders.

So far, 24 European central securities depositories, accounting for practically all euro area markets, have committed themselves to taking part. 2  BIS central bankers’ speeches  The second European initiative I would like to mention is SEPA, the Single Euro Payments Area. The goal of the SEPA Project is to make electronic payments as easy, convenient and straightforward for the residents of any euro area member country to carry out as are their cash payments in other countries in the union. The initial aim is to eliminate the differences between making a national payment and a cross-border one, although the benefits extend also to payments made in the national arena. What is involved is a further step in the ongoing integration of financial services in Europe. To achieve this, we must adapt to a new set of rules and uniform standards in Europe. But we have very little time remaining: Community legislation envisages SEPA being in place as from 1 February next year. It is a far-reaching project, necessitating changes in the relationship between paymentservices users and providers. That involves efforts and investment on the part of financial institutions, but also affects users, irrespective of their size. It is important that banks should strive to make the transition by their customers easier. In this connection, communications and advice to customers must be stepped up, informing them of the new circumstances ahead and offering them the necessary support in their migration to the new payments scenario.
The breakdown of the monetary base into banknotes in circulation on the one hand and sight deposits held by banks at the SNB on the other is determined by public demand for banknotes. If you, ladies and gentlemen, withdraw more money than usual before Christmas to do your Christmas shopping, the volume of banknotes in circulation increases, only to decrease again after Christmas when the money taken in by the shops flows back to the SNB via the commercial banks. Banks can, through the SNB, exchange banknotes against sight deposits and vice versa. They thus have access to both banknotes and a sight deposit account  2 3 4  In Switzerland, central bank money as defined by the SNB comprises banknotes in circulation and the sight deposits held by domestic banks at the SNB. The Federal Act on Currency and Payment Instruments (CPIA) requires unrestricted acceptance of Swiss banknotes as payment, and unrestricted acceptance of sight deposits with the SNB as payment by anyone holding an SNB sight deposit account (art. 3 CPIA). Residual risks are currency reform, settlement disruption in the payment system, and the possibility of banknotes being lost or stolen. Page 3/12  at the SNB, while the public has access to banknotes only, since private individuals cannot hold an account with the SNB. Sight deposits are used by banks for cashless interbank payment transactions.

10  For purposes of distinguishing between different types of digital central bank money, a discussion of its characteristics and a comparison with existing payment options, cf. M. Bech and R. Garratt (2017), Central bank cryptocurrencies, BIS Quarterly Review, September. Page 10/12  Ladies and Gentlemen, as with the sovereign money scenario, any moves to grant broader access to digital central bank money for the public would call into question the traditional division of tasks between the central bank and commercial banks, whereby the central bank acts as the bankers’ bank, while commercial banks supply households and companies with credit and liquidity. The central banks would assume a bigger role in financial intermediation. In other words, the SNB would have to take on new financial risks and tasks which were previously borne or carried out by the private sector. Moreover, there are financial stability risks associated with households and companies potentially being able to move their deposits back and forth between their accounts with the central bank and the commercial banks. In order to be economically desirable and sensible, sovereign money and broader access to digital central bank money would have to outperform the current monetary system; in our view, neither of these two proposals meets this requirement. This is why the SNB firmly opposes the sovereign money initiative and is also critical of the idea of making digital central bank money available to everyone in the form of accounts with the SNB. The technologies underlying digital currencies are evolving rapidly, however.
Of course, it may be the case that the principal understands the difficulty in making these trade-offs concrete and considers it desirable that the central bank nevertheless takes the risks into account in a way that reduces the degree of target attainment a couple of years ahead. But in this case, it is desirable that the principal should make clear that the mandate is worded too narrowly and therefore needs to be broadened. And one question that also arises is to what extent such a broader mandate fits into the degree of independence granted to many central banks. There is some tension between the breadth of the mandate and the degree of independence. A high degree of independence assumes that it is fairly simple to assess whether the mandate is fulfilled, which could be difficult if the mandate is worded so broadly that it encompasses most potential outcomes. “Let the cobbler stick to his last!” Let me conclude by summarising my message today and perhaps unexpectedly I shall begin in ancient Greece. It was said that the famous artist Apelles from Kos one day heard a shoemaker pointing out a mistake the painter had made in his depiction of a sandal. Apelles corrected the mistake, which encouraged the shoemaker, who then continued his criticism of the way the leg of the person in the picture had been drawn.

The upcoming debut sovereign issuances from established financial centres and emerging markets and the increasing diversity of the composition of sukuk investors across continents, in addition to the growing trend for multi-currency sukuk issuances, cumulatively contribute towards strengthening the dynamism of the sukuk as a global product for fund raising and investment activities in the international financial markets. Malaysia, has witnessed an increasing trend of issuances of foreign currency denominated sukuk in our domestic sukuk market, reinforced by an increasingly wider investor base as reflected by the increased and more diversified foreign investor participation in such issuances. In parallel with this rapid growth of cross-border financial flows has been the increased attention to the development of the international financial architecture relating to financial stability in the Islamic financial system. With the important two international institutions already well established, that is, the accounting standards setting organisation, AAOIFI, and the prudential standard setting body, the IFSB, concerted global efforts have been directed towards the progressive implementation of the recommendations in the eight building blocks identified in the Islamic Finance and Global Financial Stability Report 2010. In particular, the efforts have been focused on the adoption and operationalisation of the prudential standards and the development of the potential for effective liquidity management as part of the efforts to safeguard financial stability. It is encouraging that there has been a higher adoption of the prudential standards issued by the IFSB, with implementation by 13 regulatory and supervisory authorities worldwide with indications that there are more in the pipeline.