samchain/econo-pairs-v1 huggingface dataset:
There were many features of the scheme for which we made different choices because of that over-riding objective – full, quarterly disclosure of usage, bank by bank, being the most obvious. Let me summarise the key features of the FLS for those who have not followed the details. We will reduce the funding costs for banks and building societies by providing them with relatively cheap liquidity. In practice by lending them Treasury Bills for up to four years in exchange for the widest possible range of collateral that the Bank can accept – including pre-positioned portfolios of loans. Those Treasury Bills can be used as liquid assets to support an expansion of lending or turned into cash if necessary. We will charge a fee of just 25 basis points per annum as long as a bank’s stock of lending does not contract over the period to end 2013. The firms will have that 18 months to draw down the bills. This is essentially a swap of highly liquid assets for illiquid ones and part of a wider programme where the Bank has been extending the range of collateral that it can take in such operations. So portfolios of loans are now eligible collateral for the first time in our market-wide facilities. One of the benefits of this expansion is that our operations are now much more accessible to smaller banks and building societies that don’t have large portfolios of tradable securities.

Table 1 FLS data The table below includes all participating groups that had signed up to the scheme and certified their Base Stock of loans by 24/09/2012 FLS Group  Certified lending to UK households and PNFCs Aggregate outstanding FLS £ drawings £ Base Stock of loans as at 30/06/12  Quarterly net lending flow  Cumulative net lending since 30/06/2012  1,211,736  n/a  n/a  n/a  Aldermore  1,567  n/a  n/a  n/a  Barclays  181,020  n/a  n/a  n/a  Hinckley & Rugby Building Society  433  n/a  n/a  n/a  Ipswich Building Society  444  n/a  n/a  n/a  Kleinwort Benson  11  n/a  n/a  n/a  Leeds Building Society  7,567  n/a  n/a  n/a  Lloyds Banking Group  443,255  n/a  n/a  n/a  629  n/a  n/a  n/a  Nationwide Building Society  152,155  n/a  n/a  n/a  Principality Building Society  5,408  n/a  n/a  n/a  RBS Group  214,816  n/a  n/a  n/a  Santander  189,339  n/a  n/a  n/a  Virgin Money  15,093  n/a  n/a  n/a  TOTAL  Monmouthshire Building Society  The FLS measure of lending covers drawn sterling loans to households and private non-financial corporations (PNFCs) by the FLS Group, which includes all UK resident monetary financial institutions and related specialist mortgage lenders within a group.
It is also true that, if the rebound in activity in 2021 projected in the scenarios published both by the Banco de España and by other institutions were to materialise, that would significantly mitigate the strong decline in GDP in 2020. This would provide for an improvement in the credit quality of bank borrowers and for a more favourable path of the prices of the assets that act as collateral to the loans. In turn, that would considerably limit actual losses. In this respect, the results of the stress test performed to date show that, if following a period of slowing economic activity the pace of recovery is swift, there is less likely to be a pronounced deterioration in the aggregate solvency of the banking system. 18  In any event, the uncertainty over the duration of the pandemic and its effects is very high. In this respect, the consequences of adverse economic scenarios that are prolonged over time can indeed worsen aggregate solvency significantly. But even under these scenarios, the loss absorption elements will mean that capital erosion is not immediate. This affords some leeway which, where appropriate, should be used to set in place all the elements allowing a forceful economic policy response with the aim of ensuring financial stability. Second, the foregoing considerations on the aggregate situation of the system mask a high degree of heterogeneity. This is mainly due to the fact that starting positions, in terms of funds and credit quality, are per se divergent.

Moreover, the aforementioned absorption capacity for losses arising through NPLs is strengthened when the positive effect of credit moratoria and of the Government-approved programme of guarantees for firms is taken into consideration. In the case of temporary moratoria set in place both by the authorities and 17  by banks themselves, these should help enable those households most affected by the crisis to face this critical period with greater peace of mind. At the same time, they provide for containment of NPLs in the short run and, foreseeably, also in subsequent phases, provided that a portion of these more vulnerable households can gradually regain their habitual levels of income. Three clarifications are, in any event, called for regarding the general situation of the financial sector and the potential impact of the crisis on it. First, the figures for the 2020 decline in GDP reflected in the macroeconomic scenarios I have outlined would entail the biggest economic contraction in Spain for a single year in recent history. They also exceed the assumptions of any stress test performed on the banking sector in the past. This will give rise to an increase in the NPL ratio, albeit on what is still an uncertain scale. On Banco de España estimates, a 1 pp decline in GDP has, on historical averages, given rise to a 0.7 pp increase in the NPL ratio. That said, the scale of the decline in output projected at present is very high, which might give rise to a proportionately greater effect.
This means that we believe that there are now, and will be in future, less available resources that can be used without price and wage increases accelerating. Inflation above the target level Looking at inflation, it is primarily the underlying rate that has been surprisingly high. The largest rise has been in prices of services. Here, the relatively high resource utilisation in the services sector has contributed to rising labour costs. In addition, prices of input goods, such as electricity and foodstuffs, have risen. Given the developments in prices and wages over the past year, the Riksbank has gradually altered its view of the inflation propensity in the Swedish economy in a broader sense. A higher resource utilisation, together with rapid wage increases and a weak exchange rate, have led to slightly higher inflationary pressure than in previous assessments. It is this gradual shift that has sometimes been referred to as a total U-turn. Recent events Since the most recent Executive Board meeting, new statistics have been received that largely confirm the picture of the Swedish economy painted by the Riksbank. In my opinion, there is no reason, all in all, to alter significantly the assessment of economic prospects made in the latest Inflation Report, with regard to either the international picture or the Swedish picture.

Doing so will dampen the effects on the real economy of the policy measures that are adopted in order to return inflation to the stipulated target. Described in this way, the Riksbank’s strategy is close to the textbook treatment of flexible inflation targeting. However – and here I come to an area where the Riksbank has recently been criticized – we do also allow for taking into consideration developments in asset prices, including house prices. As explained in the policy document “Monetary Policy in Sweden” “the paths of asset prices and indebtedness can at times be either difficult to rationalize or unsustainable in the long term. This means that there are risks of sharp corrections in the future which in turn affect the real economy and inflation. …In practice, taking risks of this kind into consideration can mean that interest rate changes are made somewhat earlier or later, in relation to what would have been the most suitable according to the forecasts for inflation and the real economy.” (p. 15-16) Why is such a statement included in the Riksbank’s monetary policy strategy? Why is it for instance not sufficient to simply follow the prescriptions of the textbook account of flexible inflation targeting? This type of criticism was raised in a recent external evaluation authored by Francesco Giavazzi and Frederic Mishkin. A close adherence to the textbook account of flexible inflation targeting requires a belief that the analytical tools and models currently available have accurately captured the important linkages in the economy.
The loss of revenue means government setting higher tax rates than would normally be the case. •  Sixth, money laundering could lead to risks to privatisation programmes. Money laundering poses a threat to governments’ economic reform efforts, especially privatization of state owned enterprises. Money launderers have the financial power to out-bid legitimate investors. In addition, while privatisation initiatives are often economically beneficial, they can also serve as a vehicle to launder funds. Criminals have been known to purchase privatised banks, resorts, etc to hide their illicit proceeds and farther their criminal activities. Unfortunately, developing countries like Zambia risk being exposed to the threat of money laundering because in the process of attracting investments, they become more vulnerable to accepting laundered money. •  Seven, money laundering could expose any recipient country to reputation risk. In today’s global economy, nations cannot afford to have their reputations eroded by associating  themselves with money laundering activities. Money laundering and other crimes erode confidence in financial markets, and the negative reputation resulting from these activities diminishes legitimate global opportunities available to any country and this could slow sustainable economic growth. Ladies and Gentlemen, what I have just elaborated are the adverse effects of money laundering on any economy in the world. Allow me now to look at the effects of money laundering on the banking sector. As you may be aware, due to banks’ confidentiality principle and their capability to handle huge cashless transactions, and transmit funds efficiently, they are normally the targets of money laundering activities.

5” while the Federal Council, in turn, “is solely responsible for the economic decisions that fall within its area of responsibility.”  8  In 2010, members of the Governing Board appeared 13 times before parliamentary commissions. 4  BIS central bankers’ speeches  However, central bank independence has its pitfalls. A latent threat to such independence can, in principle, always be said to exist. This threat is particularly great in times of crisis. Consequently it was right and important, during the recent crisis, for central banks around the world to work closely with governments. However, the risk now is that false expectations have been raised amongst politicians. Central banks need to remain firm and concentrate on their monetary policy mandate. While it was necessary to be close to other government authorities at a time of emergency, now that the crisis has been confined, a little more distance is in order. As I outlined at the beginning, the SNB has also taken exceptional measures in order to fulfil its mandate. In doing so, it has shown that it is prepared to make use of the independence it has been granted. What is essential here is that we are always guided solely by our mandate when making our decisions. At the same time, we are continually analysing developments and constantly drawing conclusions with a view to our future actions.
As I will explain in the first part of my remarks, the three pillars of Basel II introduce a coherent system of checks and balances - or perhaps reality checks - into the supervision of capital. Basel II will likewise contribute to the resilience of the banking system on a macro level. In the second part of my remarks, I will discuss some of the factors that suggest that Basel II will more broadly become an effective tool of public policy. Of course, for Basel II to be effective at the micro and macro levels, we will need to undertake considerable work in the months ahead to prepare for its consistent implementation. In the third and final part of my presentation today, I’d like to share an update on what supervisors are doing currently to prepare for the implementation of the new capital framework. I’ll include as well some thoughts on additional things that banks can do to promote a smoother transition to the new framework. 2. Will Basel II promote sound risk management within individual banks? To begin, I would like to discuss why I believe that Basel II will promote reasonable and realistic decision-making on a microeconomic level with regard to each bank’s capital needs. This effect is critical now that qualifying banks choosing an advanced approach to credit or operational risk will be allowed to apply some of their own assessments of risk in the calculations of their minimum capital requirements.

Consequently, our dialogue did not end with the publication of the Basel II text this past June. Indeed, it cannot cease, because, as I mentioned, one of the Committee’s underlying goals is to develop a framework that can adapt to future advances in risk management practices. Supervisors are committed to monitoring and discussing these developments with the industry. The Committee will make adjustments to the framework to reflect the state of risk measurement and management when necessary. I am pleased to say that the Committee is already honouring this promise. One topic that we are studying carefully concerns the treatment of “double default.” Some representatives of the industry believe that Basel II takes an overly conservative approach to the risk of loss associated with exposures covered by guarantees: they suggest that the risk of both a borrower and a guarantor both defaulting on the same exposure is lower than the risk of just one party defaulting. The Committee believes that the new framework should recognise double default effects, and a working group is currently considering all of the implications, including those associated with measuring the effects, before we agree on a solution. We remain dedicated to finding a sound treatment of double default prior to the implementation of the new framework. Other groups are discussing potential improvements to Basel II’s treatment of certain trading-related exposures.
The FLS offers banks cheap funding for up to 4 years – with the price linked to how much lending a bank makes to UK firms and households. It is carefully designed to provide incentives to all banks to lend more than they would have done in its absence. The actual mechanism is a liquidity upgrade as we lend 9-month Treasury bills against illiquid loan collateral.11 The Treasury bills can easily and cheaply be converted into cash, thus reducing the banks’ reliance on more expensive market funding. How successful has it been? The impact comes in three phases. First of all the FLS tackles the problem at source by cutting the funding costs of banks. That phase has been remarkably successful. Market-based measures of UK bank funding costs have fallen across all sources: secured and unsecured term debt; inter-bank borrowing; deposit rates and so on. It has no doubt helped that coincidental developments in Europe have brought down bank funding costs there. But in the UK they fell quickly once the FLS was first announced, and generally by more for UK banks than for their European peer group. The next stage is for banks to pass on lower funding costs to their customers. This is happening, albeit a bit more slowly. Of course it is only the banks’ marginal funding costs which are reduced. Their pre-existing stock of funding will reflect historical borrowing costs. So the largest falls in loan costs are directed at new lending, rather than the stock.

and Manzano, C., “Trade disclosure and price dispersion”, Journal of Financial Markets, Vol. 8, No 2. pp. 183–216. 8  See Goldstein, M., Hotchkiss, E. and Sirri, E., “Transparency and Liquidity: A Controlled Experiment on Corporate Bonds”, The Review of Financial Studies, Vol. 20, No 2, pp. 235-273, and Edwards A., Harris, L. and Piwowar, M., “Corporate Bond Market Transaction Costs and Transparency”, The Journal of Finance, Vol. 62, No 3, pp. 1421–1451. 9  See Naik, N., Neuberger, A. and Viswanathan, S., “Trade Disclosure Regulation in Markets with Negotiated Trades”, The Review of Financial Studies, Vol. 12, No 4, pp. 873–900. 4  BIS central bankers’ speeches
Senior management, and, to a significant extent, the board of directors, will have to have a good understanding of various key elements of the organization’s ratings process - the design of the rating system, the methods of assigning and reviewing ratings, the process of developing and using the necessary data, the approach to developing reliable quantitative estimates, and ultimately the consistency of the system with Basel standards. Understanding these various elements will be important in assessing the appropriateness and reliability of the measures of credit risk that are developed - measures that are in turn needed for senior management and the board to make more informed strategic decisions. Operational risk is another area where the Basel Committee has developed a new regulatory capital approach. In this area, as with credit risk, the Committee not only attempts to build on banks’ rapidly developing internal assessment techniques, but seeks to provide incentives for banks to improve those techniques, and more broadly, their management of risk, over time. This is particularly true of the Advanced Measurement Approaches to Operational Risk, or AMA. Under the AMA, banks would be able to use their internal methodologies to assess their exposure to operational risk - subject to a series of qualitative and quantitative supervisory parameters that are intended to ensure that the approach used is comprehensive and that it is implemented with integrity. Moreover, the AMA is intended to be sufficiently flexible so as to accommodate the rapid evolution in operational risk management practices we expect to see over the coming years.

Apart from the need to adopt strategies to strengthen their top quality capital shown by comparison across Europe, Spanish banks also need to: (i) take advantage 8/11  of the current economic growth and recovery in profits to raise levels of solvency and generate operating margin with which to meet the economy’s future credit demand in a stable way; (ii) anticipate the impact of the reforms pending implementation in the framework of Basel III; and (iii) ensure compliance with the resolution requirements without excessive dependence on the market’s appetite to absorb new non-preferred debt instruments (see Chart 7). The new competitive environment However, beyond the difficulties of adapting to post-crisis regulation and restoring banks’ balance-sheet and income statement quality, the biggest challenge being faced by the Spanish banking sector is the new competitive framework in which it operates, and in particular, that deriving from new technologies and the advance of financial disintermediation. In this new competitive environment, both BigTechs and FinTechs are altering some of the traditional paradigms of retail banking, in particular, the traditional role of customer accounts in building loyalty and as the essential pillar on which to offer universal banking services. These new operators can leverage the opportunities offered by technology and the new payments regulation to offer their value-added services using the “basic” deposit-taking and account-management service platform provided by the banking system.
In the long term there are the opportunities that the free movement of goods, capital and not least people provide for economic growth in both the “old” and “new” parts of the EU. Finally, I intend to touch upon how the discussions in the EU have changed now that the 10 new member states have joined the debate. I will deliberately try to avoid using the words “west” and “east”. Partly because it is quite simply geographically misleading; we say “eastern Europe” even though Prague and Ljubljana are situated west of Stockholm, not to mention Vienna or Athens. We forget that Riga and Tallinn are closer to Stockholm than Gothenburg is. But partly also because it is historically misleading since the new member states do not constitute a cultural or political bloc. Besides their fifty years of oppression, Hungary, Latvia and Slovenia have less in common with each other historically than with Austria, Sweden and Italian, respectively, and belong moreover to three completely different language groups. I prefer instead “new” and “old” as a way of referring to the situation that the 10 new member states find themselves in. The short term: the path to EMU In connection with the EU enlargement there has been an intense discussion in recent years, both in the old and new EU countries, about what requirements should be imposed on the new member states’ economic policy.

The flexibility of their wages and prices makes them therefore unusually well-suited to a currency union like EMU. At the same time, these countries have not shied away from reforms that many leading EU countries have not yet been able to bring about. Estonia, Latvia, Lithuania, Hungary and Poland have, for example, carried out comprehensive reforms of their pension systems, which now resemble the Swedish model with savings partly invested in funds. In these areas in particular, it is rather the EU that has something to learn from the candidate countries than the other way around. It is as Pope John Paul II said, that now finally can “Europe breathe with both lungs”. The new member states enrich the EU, not just economically but also intellectually, and of course also culturally and in human terms. The enlargement puts the EU in motion; not just the trade and investment, but also the institutions and the ideas. BIS Review 51/2004  5
The withdrawal of pandemic-related relief measures in major economies and the economic slowdown in China also weakened external demand and, together with the lingering supply chain constraints, contributed to the slowdown in global trade. The recent geopolitical developments have also caused major trade disruptions, tilting policies towards greater self-reliance or “friend-shoring” among the advanced economies (AEs) in order to protect their supply chains. The mediumterm scarring effects of the pandemic on the products and labor markets and productivity, yet to be fully assessed, also weigh on growth. The October 2022 WEO has pared down growth projections for the fourth consecutive time since last year with a clear possibility of further downgrades if the geopolitical risks are not diminished quickly and materially. We are increasingly concerned that the current geopolitical risks will turn into lasting geopolitical fragmentation, posing serious threats to global trade, capital flows, technology transfer and climate policy cooperation. It is still early to declare victory in our fight against the pandemic, a once-in-acentury health crisis that paralyzed the world with untold loss of lives and livelihoods. It is important that we do not lose sight of resurgence risks of new and more virulent COVID-19 variants in the context of a still-low vaccination coverage in the low-income countries (LICs), particularly in Sub-Saharan Africa, and vaccine hesitancy in parts of the AEs. The cooperation that brought us together in the global fight against the pandemic should continue with full force towards equitable and affordable global accessibility of vaccines, tests, and treatments.

As before, we call for a revised quota formula that protects the share of poorest members, and for an increase in the IMF’s quota resources to lessen its dependence on borrowed resources and to reinforce its lending capacity. We remain concerned about the projected sharp decline in the IMF’s lending capacity which, unless reversed, could imperil the IMF’s effectiveness and credibility. 4