samchain/econo-pairs-v1 huggingface dataset:
It appears that the expansion of mortgage claims has not been driven so much by real estate prices, but by the number of loan requests. Consequently, the growing demand for loans is more likely attributable to factors other than the expectation of a speculative boom in real estate prices. The crucial question is the following: Is the higher demand for loans due to excessively harsh competition among banks that has led to cheaper credit not reflecting the actual risks incurred? How has the relatively strong growth in mortgage loans impacted on bank risks? To answer this question, we took a closer look at the banks’ risk behaviour. Several indicators led us to believe that banks have hardly engaged in excessive risk taking. While it is true that interest rate margins, i.e. the spreads between mortgage rates and the banks’ financing costs, had fallen slightly by mid-2005, other bank expenses declined at the same time. In the final analysis, therefore, the profit margin was virtually constant or even slightly higher. The profit margin corresponds to the difference between the interest rate margin and the total operating expenses expressed in percent of the loan volume and – to reflect expected risks – of total value adjustments and provisions. The banks’ profit margin thus also serves to cover unexpected risks. Given that the profit margin has remained constant or moved slightly higher, the banks’ risk-taking capacity has not diminished in spite of pressure on interest rate margins.

2  BIS Review 86/2005  Graph 2: Interest rate risks by bank groups (reduction in net present value as a percentage of equity following an interest rate shock of +100 basis points) Source: SNB  Conclusion: Increased efficiency without higher risks The slight narrowing of interest rate margins supports the assumption of increasingly fierce competition in the mortgage market. From the viewpoint both of consumers and of economic efficiency, this would be a welcome development. However, in the banking business there is always a danger that fiercer competition might encourage excessive risk taking by the banks. A bank can outperform its competitors by offering more favourable conditions while at the same time accepting poorer risk cover. However, as already mentioned, our aggregated analysis suggests that caution has not waned. Banks’ gross margins are declining slightly because their cost savings and improvements in efficiency are being passed on to customers. The capacity to absorb risks is not compromised by granting customers better conditions. Currently, the positive aspects of healthy competition are taking hold without apparently having any negative side effects. The SNB will nevertheless keep a close watch on trends in the real estate market. In particular, we will monitor interest rate risks, which have already reached a high level. With an appropriate normalisation of money market rates, the SNB contributes to limiting the danger of an abrupt rise in interest rates. In the current environment of historically low rates, however, there is no guarantee that the future trend in interest rates will be moderate.
7  All speeches are available online at www.bankofengland.co.uk/speeches  7  Given that the number of unionised workers has been falling over time, the wage premium from unionisation will have had a direct, “batting average”, effect on wage growth as fewer workers benefit from this premium. For example, with a wage premium of 15%, the shift in union membership since 2000 would have subtracted around 1 per cent from wages over the period, or less than 6 basis points from average annual wage growth. This effect is modest but, to my mind, is very likely a lower bound. For example, it takes no account of the broader spill over effects of unionised wages on the wages of other workers. There is evidence self-employment, flexible working and zero-hours contracts also affect wages, after controlling for differences in occupations and locations. For example, self-employment has been found to be associated with a wage discount for workers, perhaps in the region of 15%. 15  The reasons given for this  discount include the fact that workers may be willing to accept a lower wage in return for the increased control and flexibility that comes from self-employment. 16  There may also be problems in recording  accurately income from self-employment. For workers on temporary contracts, there is also evidence of a wage discount, perhaps of around 5-6%. 17  For agency workers, the wage discount is smaller, perhaps around 2 ½%. For zero hours contract workers, it is larger at around 7%.

After peaking at 2.2% in October 2018, euro area inflation could fall to around 1% in some months of this year, before rising again gradually to 1.8% in 2021 according to the latest Eurosystem projections. Beyond these temporary fluctuations, the key trend to watch is core inflation. The improvement in the labour market has already led to a substantial acceleration in wage inflation. Growth in average compensation in the euro area has thus risen from 1.2% in 2016 to 1.6% in 2017 and will probably reach 2.2% in 2018. However, this wage inflation has not yet been passed through to core inflation [slide 5]. Until now, the acceleration in the inflationary pressures linked to unit labour costs since the fourth quarter of 2017 has been offset by the improvement in terms of trade and the decline in corporate profit margins. In our forecasts, these downward factors have a temporary lagging effect: core inflation should gradually increase towards a rate of 1.8% in 2021 (after 1.0% in 2018, 1.4% in 2019 and 1.6% in 2020). However, certain observers have stressed that this lagging effect appears to be durable, and has caused inflation to fall repeatedly short of Eurosystem projections. Inflation excluding energy and 4/6  BIS central bankers' speeches  food remained subdued at 0.9% in November, as well as in December according to the Eurostat flash estimate.
While absolutely nothing can be definitively ruled out, that nightmare now seems unlikely. I shall weigh that in my own policy considerations, as for me the size of the massive monetary stimulus has partly been designed to insure against that catastrophe risk. So a key question over the coming period will be whether or not conditions are developing where some of that insurance could be withdrawn, consistent with leaving policy highly stimulative. 2 But the economy has in actual fact been very weak, with output falling and unemployment rising. The policy debate in the months ahead therefore will turn, as more usually, on the broad outlook for the risks around inflation over the medium term. That will depend on the data and, in particular, whether the data and surveys about real activity and demand come more closely into line, here and overseas. One of the biggest questions is whether, given the policy stimulus, recovery will be anaemic or whether we can attain the above-trend growth needed to absorb the slack in the economy necessary to ameliorate downward pressures on inflation. This will be at the heart of the quarterly forecast round on which the MPC is just embarking. And it could hardly matter more. Anaemic demand growth would lead to inflation undershooting the target for a period. And it would be likely to see firms continuing to shed labour, scrapping capital and delaying new investment, adding to the hardships the crisis has already brought.

Traditionally, in exchange for being allowed to profit from taking risks inherent in providing liquidity, or monetary and credit services to the economy, banks have been subject to: prudential regulation; given access to liquidity insurance at the central bank; and required to finance industrywide insurance schemes. Those have been the key elements of the social contract for banking. This series of speeches explored in more detail how those components of the social contract need to be redesigned. 2  BIS Review 134/2009  On regulation, as Adair Turner has said, it is clear that firms need to hold more capital; and, as the Governor emphasised earlier this week, that that capital needs to be proper, lossabsorbing capital. It is equally clear that banks need to hold a portfolio of high-quality liquidity; that there should be no compromise about what counts as such liquidity; and that any banks thinking a decent treasury policy involves holding the bonds of other banks are way off-beam. That much has pretty well been agreed by international policymakers. The numbers remain to be set. Just as important is the necessity of reviving supervision. By that, I do not mean checking compliance with rules after the fact, punishing breaches; punishing offenders does not bring back to life a bank or the customer businesses that have collapsed with it. I mean forwardlooking judgments about the prudence of a firm’s management and the resilience of its business.
This relationship is not affected by whether or not there is an interest-bearing e-krona, as we would not introduce an e-krona to replace cash. A non-interest-bearing e-krona, on the other hand, would raise the lower bound for the policy rate to zero. This is because the e-krona would then function as cash with regard to alternative investment, but without the costs for storage, for instance, that large amounts of cash incur. Zero would therefore be a sharp boundary for the policy rate if there was unlimited access to a non-interest-bearing ekrona. But it is of course possible to implement other measures that counteract such a sharp boundary, such as limits as to how many e-krona one can hold or who is allowed to hold them. The potential impact of the e-krona on financial stability is a more complex question. A couple of years ago, it was fairly common to hear concern expressed over the risk that bank runs would increase when there was stress on the market and an attractive, risk-free alternative such as a digital central bank currency was available. However, there is research that shows why this need not be the case. 19 In general, I would say that within the central bank world this is no longer seen as a particularly large risk. On the other hand, there is still potential cause for concern if the e-krona were to become so large that in normal times it takes over large shares of the banks’ deposits from the general public.

The monetary policy tools need to be fit-for-purpose and flexible Over a long period of time now, we have seen many different types of change in the financial systems, both in Sweden and abroad. The financial markets have grown very rapidly and at the same time they have become more integrated with one another. New instruments and new actors have emerged, which has made the markets more efficient, but also meant the risks are larger. To enable the Riksbank to manage its tasks and deal with the challenges offered by the changes in the financial system, the monetary policy tools need to be fitfor-purpose and flexible. The Riksbank's actions during the coronavirus pandemic are one example of why this is important. 35 When the pandemic broke out in the middle of March last year, no one knew what economic effects it might have. We could not rely on the economic relationships that had applied previously still applying. Nor could we make forecasts in the normal way, but were forced to outline different scenarios. Moreover, it was difficult to determine what effects the different monetary policy measures would have in this new situation, at the same time as it was necessary to act quickly, clearly and powerfully. We therefore implemented extensive measures of various types in a very short space of time. If we had chosen to implement one measure at a time and then wait and evaluate the effects, well then we would probably not have created sufficient stability.
We have the foundations to take our financial sector to a new level of development that will focus on new areas that will further strengthen the competitiveness and efficiency of the financial sector and its potential role in facilitating Malaysia’s ongoing economic transformation and in strengthening our linkages in the region. As Malaysia evolves and the new financial landscape emerges, one prominent area of focus is the development of deep, liquid and efficient financial markets in particular, the development of our domestic bond market. Malaysia’s bond market has already grown to MYR867 billion or 105 percent of GDP in 2011, and has become one of the largest debt securities market in South East Asia which has now been liberalized to allow issuance by foreign corporation and in multiple currency. Our Islamic capital markets have also thrived, with a growing presence of international issuers and investors operating in both the ringgit and foreign currency sukuk markets in Malaysia. We have seen new innovative structures for sukuk issuances including a world’s first issuance in Renminbi from Malaysia’s own sovereign wealth fund, Khazanah Holdings. The money and foreign exchange markets also continue to grow in depth and liquidity. The volumes transacted in the domestic money market and the foreign exchange market have now reached RM23.5 trillion and RM9.21 trillion trades respectively. Participation in these markets have also broadened significantly with the growing presence of new issuers, banks, institutions and investors in general, including a growing presence of regional players.

There are already many ongoing initiatives, for instance, promoting the usage of local currency in the region, the ASEAN Banking Integration Framework, the Asian Payment Network, and the Asian bond and capital market initiatives. Despite progress made thus far, financial institutions and policymakers in the region could step up our joint efforts in various ways. Let me now turn to immunity, which is equally important under the increasingly volatile, uncertain, complex, and ambiguous world in order to keep the financial system resilient throughout and thus be able to continue to support their clients and the real economy. 4  As the financial system is the blood vessel of the economy, immunity needs to start from safeguarding against blood infection. We will need to ensure that banks have adequate capital and provisioning cushion to be able to withstand swings of economic cycle and financial volatility. The Bank of Thailand welcomed the post GFC’s regulatory reform addressing concerns on systemic risks including the conservation buffer, the countercyclical buffer, G-SIBs and D-SIBs, as well as the recovery and resolution plan to further strengthen financial safety net. To complement these rules, and build a better immune system that is strong and resilient through any cyclical or structural shocks, I believe we need to target the underlying factor contributing to immunity, namely, the culture and behaviour of banks. Fundamentally, an organisation is predominantly defined by its behaviour and culture.
Zdenĕk Tůma: Euro adoption, acceding countries and financial stability Speech by Mr Zdenĕk Tůma, Governor of the Czech National Bank, at the IMF Conference, Prague, 3 February 2004. *  *  *  Ladies and gentlemen, dear colleagues, It is my pleasure and honour to address you during this high-level conference which we co-host at the Czech National Bank. Today we had an excellent opportunity to exchange views on the preconditions and implications of adopting the euro in the acceding countries. These debates will provide us with a springboard for our discussions on euro adoption strategies, which are scheduled for tomorrow. Even though the actual enlargement of the euro area still lies in the relatively distant future, the acceding countries have to be prepared well in advance. That is why last year was marked in most acceding countries by co-operation between central banks and governments to define their joint positions on the euro. Many of the acceding countries subsequently published euro area entry strategies. In these documents they discussed the potential benefits and challenges of adopting the euro and outlined a roadmap for their entry. According to the traditional cost-benefit framework, one can expect that the acceding countries, which are mostly small open economies, will derive numerous benefits from adopting the euro. These benefits involve, among other things, a reduction of foreign exchange risk, and the elimination of the danger of exchange rate turbulence and crises. Euro area entry provides an attractive solution to the “fear of floating” dilemma for these countries.

On the supervisory front, we need to address the cross-border as well as growing cross-sector integration in our financial systems. Finally, sound fiscal policies also play a significant role in maintaining financial stability. I am glad that this conference provides a good opportunity to discuss these policy challenges and their implications in more depth. Thank you for your attention. BIS Review 8/2004  3
We have no foreign exchange controls and do not impose tax on offshore income, capital gains, dividends, estate or sales. There is free movement of capital, talent and goods. It is a combination of many factors including political stability, a  2  Sources: Islamic Financial Services Board; IFSL Research. 3  Source: Chatham House report on “The Gulf as a Global Financial Centre”. 2  BIS Review 146/2008  strong legal and regulatory regime, and a pro-business market environment which makes Hong Kong a popular city for international business in Asia. Given these core values, there are no barriers to entry and no obstacles to mobility for financial and human capital from local and overseas financial institutions planning to engage in Islamic or conventional finance in Hong Kong. The second aspect is the unique role Hong Kong plays in the economic development of China. In the past three decades when the Mainland was achieving economic liberalisation, Hong Kong has capitalised on its strong cultural and geographic links to become the gateway connecting the Mainland market to the world. Our close and increasing economic cooperation with the Mainland undoubtedly makes Hong Kong the natural choice for anyone wishing to tap into China’s high savings rate and huge growth potential. Hong Kong is the premier capital formation centre for the Mainland and hence a global investment platform for enterprises from around the world wishing to gain exposure to China’s growth.

From our engagement sessions, it was not uncommon for us to hear about stories of anger, resentment and frustration from the migrant workers about the difficulties they had to go through in remitting money to their families. The workers whom we approached in Sapong estate for example, told us that they only had two options to access the remittance service: the closest is in the town of Tenom which is located 8 kilometers away from their estate; or if that is not available, the next option is to go to Keningau which is about 50 kilometers away! We also knew of instances where the workers were robbed on their way to remit money. Some told us that the money that they sent through hawaladars did not reach their families. These aptly sum up why it is crucial for us to promote a remittance service that is safe, affordable and convenient. This is also the primary reason why we decided that Project Greenback 2.0 Kota Kinabalu should be focusing on accelerating usage of digital remittance services.
In the period from 1974 to 1993, for example, productivity growth averaged less than 1.5% a year, while since 1994 the average rate has been almost 2%. This is what lies behind the common, though not yet entirely certain, estimate that the potential rate of GDP growth is now between 2 and 2.5%. At the same time it should be noted that there are still no clear signs of an accelerating rate of productivity growth such as we have seen in the United States. I say this even though I believe that one cause of the difference between the United States and Europe in this respect has to do with how the statistics are obtained. Such a process could conceivably come about in the Swedish economy, too, but I suggest we wait until that happens before incorporating it in our expectations and policy decisions. Our economy is developing favourably enough as it is. Given certain assumptions, there are, in principle, two ways in which labour productivity can be increased. Firstly, the growth rate of total factor productivity can rise. Total factor productivity seems to have been on an upward trend since 1993, which implies a successive improvement in production technology. That in turn may mean that information technology, for example, has been gradually increasing its contribution to output. Secondly, labour productivity can be affected by changes in capital intensity. A rising input of capital equipment per employee, for instance, means that each person can produce more.

Indeed, the global financial crisis witnessed unprecedented levels of global cooperation as the world came together to pursue a common interest of restoring stability and building more sustainable financial systems. In the same manner today, the future of finance demands strong leadership and cooperation in fostering collective will towards achieving the necessary positive transformation. The Responsible Finance Institute, as a think tank connecting various responsible finance practices and expertise around the world, is in a unique position to contribute towards realising this aspiration. But for responsible finance to gain real traction, this cannot be an undertaking of a single institution. Finance, with its potential to serve society, is capable of so much more. As responsible global financial participants, the opportunity to come together again to rebuild trust and provide the foundations of a more stable and sustainable long-term economic growth can be achieved through our commitments to responsible finance. The call is for greater global cooperation and leadership to unlock the future of finance and expand its positive impact in the global economy. With that, I wish you an engaging and impactful summit. BIS central bankers’ speeches  3