samchain/econo-pairs-v1 huggingface dataset:
3 In other words the massive increase in the stock of lending – an increase of £ trillion in absolute terms – did not lead to very much of an increase in productive investment at all. Of course there are benefits in enabling people to buy their homes. And much of the financing of financial markets almost certainly came back to productive investment in the form of market investments in business. But as we discovered in the crisis much of the lending appears to have financed the increase in house prices and a large part of the market investment was simply misallocated and lost. 4 Nor did this increase in lending drive a commensurate increase in economic growth in this particular credit cycle. Over the period 2000–2007 GDP growth averaged little more than its long-run average of around 2.8%. In fact, business investment over the period averaged just 1.3% a year and it appears that most of this was related to commercial real estate. Conclusion The financial system can be a powerful engine for growth and prosperity. But its ability to generate systemic crises means it can also be a powerful destroyer of those as well. This has been true throughout history but never more so than for today’s highly complex, globalised and digitalised financial system. We should not therefore see economic growth, or productivity as somehow opposed to effective financial regulation.

Systemic financial crises, as this episode shows, are not new. The invention of credit and the development of banking and financial systems have been key to the improvement of human living standards throughout history. But they bring with them the boom and bust extremes of the credit cycle, driven by greed and fear, and the risk of systemic crises which can badly damage the real economy. As financial systems have developed and spread, public authorities, from Tiberius’ administration to the Financial Policy Committee (FPC) of the modern Bank of England today, have had to adapt both to deal with financial crises when they occur and to try to prevent them occurring in the first place. It has often been an unequal struggle. I want today to review a little of that history from the Bank of England’s perspective. I will draw out the development of what – following the great financial crisis of 2008–9 – has become known as “macroprudential” policy. Put simply, this is the regulation and supervision of the financial system as a whole rather than just the “micro” regulation and supervision of the firms and the markets that go to make up the system. In doing so, I want to review the progress of macroprudential policy and the FPC of the Bank, which is the UK macroprudential authority. Have we built a more resilient financial system and one that can provide the financial stability that is essential for sustainable economic growth?
Besides, credit deceleration, as long as it takes place in an orderly manner, is justified, after the recent rise in private debt ratios (households and non-financial corporations). In this respect, I would like to point out that France's debt ratio is the highest of the major European countries at 147% of GDP in Q3 2022, compared to 119% on average in the euro area. This leaves the third major economic agent: general government as a whole. France's public debt ratio is not only 20 percentage points higher than that of the euro area as a whole (113% of GDP compared with 93% in Q3 2022),1 but it is not decreasing, unlike that of the other major countries of the euro area. Since energy prices are declining, we must now begin to rapidly reduce support measures, while targeting them at those who need them most. Tariff shields may have been useful in the short term to cushion the energy shock, but they cannot alleviate it altogether. Indeed, a lasting victory against inflation cannot be achieved by fiscal measures, but by monetary policy and by strengthening our productive supply. More broadly, the response to this crisis, to this new world, lies above all in a major effort to adapt.

The lingering economic uncertainty and the burgeoning fiscal deficit drove the US dollar weaker across all currencies. Therefore, benefitting from the broad based dollar weakness and relatively high levels of US dollar liquidity in the market, the Kwacha posted a 5.0% gain against the American currency. A sustained rise in the copper prices at the London Metal Exchange to an average of $ per tonne in the third quarter from $ tonne gave further support to the domestic currency, with the interbank rate ending the period at an average of K4,869.21 per US dollar. Balance of payments Preliminary data show that Zambia’s overall balance of payments (BoP) recorded a surplus of US $ million during the third quarter of 2010 compared to a deficit of US $ million in the previous quarter. This was driven by the improvement in the performance of both the current account and the capital and financial account balances. The current account surplus increased to US $ million from a surplus of US $ million recorded the previous quarter, reflecting an increase in the merchandise trade surplus coupled with the narrowing of the services and income accounts deficits. Supporting the current account was the merchandise trade surplus which rose by 74.8% to US $ million in the quarter under review following an increase in exports as well as a decline in imports. Merchandise export earnings edged upward by 18.7% to US $ million, on account of increases in both metal and non-traditional export earnings.
Stefan Ingves: The evolution of the Basel Committee Welcome and keynote address by Mr Stefan Ingves, Governor of the Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision, at a symposium to mark 25 years of the Basel Capital Accord “25 years of international financial regulation: Challenges and opportunities”, Basel, 26 September 2013. *  *  *  Good morning everyone. On behalf of the Basel Committee, I would like to welcome you to today’s symposium, which the Committee is hosting to mark 25 years since the first Basel Accord on bank capital was established. And let me at the same time also acknowledge Jaime Caruana and the BIS, not only for hosting this event, but also for their unwavering support of the Committee over the past almost 40 years. As many of you know, the Basel Committee started out in 1974 as the Basel Committee on Banking Regulations and Supervisory Practices. In the aftermath of the Herstatt collapse, the G10 Governors of the day were seeking ways to preserve and promote the stability of the international financial system. It is worth reflecting during the morning, as we discuss the Committee’s achievements to date, that the basic problems we encounter today – poorly run institutions, interconnectedness and financial instability – are the same as those faced by the Committee when it was founded. This is not to imply that nothing has been achieved: on the contrary, a great deal has been done and the world has benefited greatly.

Despite her impressive academic track record, Carmen has had at least one foot in the world of policymaking throughout her career. Given her influence among both academics and policymakers, Carmen is an ideal person to hold the Karl Brunner Distinguished Lecture. Karl Brunner himself maintained close contacts with decision-makers around the world, always emphasising the importance of a continuous dialogue between academia and practice. Carmen’s biography reads like a screenplay for an American success story. She was born in Havana, Cuba. A few years after the regime of Fidel Castro came to power, Carmen’s parents emigrated to the United States, leaving almost all their belongings behind. Carmen arrived in the United States at the age of 10, barely speaking any English. The family settled in Florida, where Carmen attended college. After finishing college, Carmen moved to New York to pursue graduate studies in economics at Columbia University. She then embarked on a successful career on Wall Street, where she rose to the position of Chief Economist at the investment bank Bear Stearns in the 1980s. After a few years in the financial industry, Carmen decided to return to Columbia to finish her dissertation. This was followed by an eight-year spell at the International Monetary Fund, before Carmen was appointed professor at the University of Maryland in 1996. In 2012, Carmen moved to Harvard University, and since June of last year, she has been Chief Economist at the World Bank.
In most of our macro models, long-term variables, such as potential growth or the “natural rate of interest” or the non-accelerating inflation rate of unemployment (NAIRU), play a very important role. They determine, for instance, the output gap, domestic inflationary pressures, and as a consequence the structural indicators that are used to assess fiscal policy and the degree of monetary accommodation. These variables are estimated in large advanced economies like the US as if the latter were a closed economy. They are considered as independent variables for the rest of the world. 1  IMF Performance in the Run-Up to the Financial and Economic Crisis: IMF Surveillance in 2004–07, 10 January 2011. See http://www.ieo-imf.org/eval/complete/pdf/01102011/Crisis_Report_English.pdf  BIS central bankers’ speeches  1  To use some model terminology, most of our models are built on the assumption that Ῡ – which represents the long-term growth rate of the economy – is influenced mainly by domestic factors such as productivity and population growth. Similarly, r* – which represents the world interest rate for most small open economies – is assumed to be determined by long-term equilibrium conditions in the US. Given the importance of these variables for our models, a bias in their measurement would have a direct impact on the assessment of economic conditions, on the forecasts and on the policy prescription. It would seriously undermine surveillance.

For instance, if the long-term trend growth of the economy is overestimated, the output gap (in absolute terms) would as a consequence be overestimated too and so would the deflationary risks. Monetary and fiscal policies would then be considered, ceteris paribus, as excessively tight and there would be a bias towards excessive expansion, with a view to achieving an optimistic rate of growth. The borrowing capacity of countries, households and companies would also be overestimated if their potential growth were overestimated. Ex post, the miscalculation of growth potential would result in an excessive accumulation of debt, both public and private, a misalignment between the interest rate and its long-term “neutral” level, and insufficient savings. As shown by Kydland and Prescott in their work on time inconsistency of optimal policy, which was later applied to monetary policy by Barro and Gordon, policy-makers who aim at excessively “optimistic” growth will conduct an inconsistent policy which will generate instability. The solution to this problem, at least for monetary policy, is to set a rule or establish an independent central bank which is aware of such an inconsistency and has a sufficiently long horizon to avoid it. This assumes however that the independent policy-maker knows what the right, “not over-optimistic” long-term growth of the economy is. He or she also has to know what the right model of the world economy is. This brings me back to the question I raised at the start, i.e. the impact of globalisation on the long-term growth of advanced economies.
Deregulation since then has meant that there are currently greater similarities with the late 19th century/early 20th century than with the intervening period of regulation. I have used the word deregulation here. On a general level this is an appropriate description, but one can also describe developments in terms of changes in regulation. This is because, at the same time as considerable deregulation has occurred, there are other regulations remaining and new ones have been introduced. One important difference, however, is that today’s regulations are aimed at allowing the price mechanism to function, i.e. they are market-conforming. These regulations are usually aimed at protecting savers and investors against risks and abuse. In this sense it is a case of re-regulation. The financial sector thus fulfils a central role as a lubricant for the economy. An efficient financial sector increases a country’s potential growth rate. Today approximately 80,000 people are employed in the financial sector, although the number of bank employees in Sweden is in relative terms lower than in any other OECD country. This and other indicators show that we have a relatively efficient financial sector. BIS Review 37/2003  3  Growth based on productivity and labour I have emphasised, in this roughly sketched outline, the important role of growth in the development of our standard of living. However it also plays a central role in monetary policy discussions, as demand in the economy in relation to production capacity is decisive for whether inflationary bottlenecks will arise or whether we will underutilise the production potential.

The importance of the sector is evident in the balance of payments data where it ranks third in terms of its contribution to the total value of exports of services at 19% for 2021, after the financial services and ICT sectors, with contributions of 32% and 23%, respectively. Concluding remarks Let me conclude by underlining the challenges for policy makers: The global inflation dynamics are currently being addressed by central banks, but the fight is far from over. Monetary policy is being utilised at a different pace in different regions, due to the differences in economic fundamentals. However, we should not forget that other policies also play a role. For instance, state support should avoid horizontal measures and instead use targeted fiscal measures,  3/4  BIS - Central bankers' speeches  which focus on the economically vulnerable, in order to support social cohesion but avoid undermining monetary policy measures against inflation. Finally, regarding the shipping sector, it is and will continue to be the backbone of the global economy. In fact, when talking about the importance of shipping, I cannot avoid the temptation of referring to the British writer Arthur C. Clarke, who said and I quote: "How inappropriate to call this planet, Earth when it is quite clearly Ocean". Cyprus, a tiny spot on the planet, continues to strengthen its role in the shipping sector. As a hub for ship management, ship owning and vessel chartering services, it aims to maintain and enhance further the competitiveness and prospects of the sector.
New market segments can be created if the risk-return trade-off is appropriate. The new issues (Credit Suisse and Rabobank), have so far been very well received and we are aware of plans for funds being created to invest in these instruments. We see every reason to believe that new vehicles for owning contingent capital instruments can be created and existing mandates modified to allow them, as long as the market sees these securities as an asset class that will stay and reach critical scale, and subject to the normal market discipline of risk and return. This plays into a second lesson from the crisis. It is obviously crucial from a financial stability standpoint that contingent capital securities do not end up largely in the hands of other highly leveraged financial institutions, where losses could cause further spill-overs and thus generate financial instability. We believe that regulators could play a constructive role in allowing a broad range of “real money” investors to own sensible amounts of this systemic risk. Conclusion In this paper, we have given a number of examples taken from the financial crisis, where financial contracts undertaken for hedging purposes, or with optional features designed to protect the issuer or the investor, have not had the value expected at precisely the time when they needed to. These now look like classic time inconsistency problems coupled with partial equilibrium analysis. To avoid these pitfalls, a more extensive use of extreme and holistic stress tests could be used to assess individual counterparties as well as systemic risks.

This is in line with EBRD Strategy of Graduation and the graduation of EU 8 countries from EBRD operations can be envisaged. The Czech Government has already given approval that discussions with the Bank's management on the graduation of the Czech Republic from EBRD operations can begin. We believe that October 2007 - which would be the date of the regular consideration of EBRD Strategy for the Czech Republic could be considered an appropriate for this debate. This time-frame should be sufficient for the Bank, the Czech authorities and investors to make the necessary arrangements. We understand that the Bank's management will make their decisions regarding the supervision of its portfolio in the Czech Republic, including decisions concerning the future of the Bank‘s representative office in Prague. The mandate of the EBRD in the Czech Republic is thus approaching its conclusion, and I would like to express our gratitude and appreciation to the Bank for its support during the ups-and-downs of the transition process in my country. Our sincere thanks go to the Management and all those numerous members of staff who for years and sometime in difficult circumstances brought many successful projects to the Czech Republic. We wish the Bank much good fortune for fulfilling its mandate. Thank you for your attention. BIS Review 44/2006  1
Norman T L Chan: How to get rid of banking supervisors Keynote speech by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at the Lion Rock Institute Freedom Dinner, Hong Kong, 22 November 2017. * * * Nick (Sallnow-Smith), founders, directors and members of the Lion Rock Institute, Daniel (Hannan), ladies and gentlemen, 1. It gives me great pleasure in joining you today. 2. After accepting the Institute’s invitation conveyed by Peter Wong, I thought hard about what to talk about in front of such a learned and distinguished audience that support and cherish economic freedom. I was also mindful that I should come up with an inviting title that helps sell the tables. I hope I have achieved this, at least by attracting a few more senior bankers to help foot the dinner bill. 3. Nowadays a common theme that bankers often talk about when they meet each other is how their lives have become so much tougher, thanks to ever more stringent standards demanded by regulators and supervisors. Not only are banks required to hold a lot more capital as well as liquidity to meet unexpected contingencies, there is constantly increasing demand by the supervisors to deal with conduct risks. Everyone is familiar with the escalating compliance burden and pressure on banks in tackling anti-money laundering, counter-terrorist financing, international sanctions, mis-selling, etc., not to mention the hefty financial penalties slapped on banks for violations or breaches.

As for the short-termism of the shareholders and the financial reporting cycle, banks are at the receiving end and there is not much they can do. 12. While I agree that it is probably unrealistic to go back to the “good old days” of banking, I am not fully convinced that there is little banks can do to restore a stronger alignment of interest with their customers. But that doesn’t really matter because, without these changes, the slow track solution to get rid of supervisors also does not seem to work! So I am bringing you the bad news! The bad news is that the public will need an agency entrusted with the mandate and powers to protect the safety of their deposits, to guard against banks taking excessive risk in pursuit of profits, to ensure that customers are treated fairly, to deal with 3/5  BIS central bankers' speeches  bank failure, as and when it happens, in an orderly manner to avoid disrupting the financial system and reduce the risk of having to use public funds again to bail out failing banks. What happened during the GFC is a very powerful reminder that excessive risk taking in pursuit of short term profits in modern day banking and finance can and did pose a serious threat to the economic well-being and stability of society as a whole, even in the most advanced economies.
Finalising design When I look at the remaining agenda of post-crisis reforms to be agreed, it is striking that they are not about capital levels in the same way that we saw immediately post-crisis. True, there is work in Basel but that is much more about refining the framework than a step change in capital requirements. As part of this there is work to agree and implement the leverage ratio internationally, and to improve the use of models to estimate capital requirements so that they are used only for asset classes that lend themselves to modelling of this sort and we have an acceptable degree of consistency across banks. There are two important points I want to draw out which are by no means uncontroversial. First, it is sometimes said that the banking system still needs markedly more capital, and that a focus on other issues is a distraction from tackling a system that is still over-leveraged. The second, closely-related, point is that we should focus much more exclusively on non-risk based measures of capital requirements. I don’t agree with either of these positions, and nor would I say do most supervisors I know. I have been and remain a strong supporter of the reforms to date and the higher levels of capital put in place, and I am a strong supporter of having the leverage ratio in our toolkit and that for some assets it is the “biting” approach and therefore it is not just a backstop.

And, if we only used a non-risk based system, we would incentivise firms to disregard the amount of risk per unit of assets on their balance sheet. The leverage ratio is firmly in the camp of necessary but not sufficient, as is the risk-based approach. The third reason why I disagree with the much more capital school of thought is because there are more important things for us to do, which revolve around getting the incentives for behaviour right in firms. This is why as supervisors, both prudential and conduct, we spend so much time on governance in firms and on getting the incentives aligned for individuals through our approach to remuneration and to the responsibility of individuals. 2  BIS central bankers’ speeches  We have achieved much progress towards strengthening the resilience of the global banking system, with stronger capital ratios, and this has demonstrated in my view the important principle that appropriately strong capital positions support rather than deter lending by banks. Jobs still to finish: three topical issues The Senior Managers Regime The Senior Managers and Certification regime for banks is a product of the Parliamentary Commission on Banking Standards chaired by Andrew Tyrie, put into legislation and to be implemented by the PRA and FCA by next March, so not long to go now. The current approved persons regime has not delivered effective incentives and thus behaviour.