samchain/econo-pairs-v1 huggingface dataset:
How much risk a company should take in its core business and in the provision of pensions is obviously a matter for its board. A famous paper in corporate finance 5 finds that, subject to some (admittedly fairly strong) assumptions about tax etc, the market value of a company (measured as the sum of the value of all its financial liabilities, equity and debt) should not depend on its capital structure. Rather, its capital structure affects the risk to equity holders, and so the headline return they should rationally require to compensate for risk. Within this framework, defined-benefit pension schemes can be viewed as deferred compensation and so as entailing a form of indebtedness (in many cases, de facto indexed-linked borrowing) for their sponsors, to be ‘serviced’ alongside their more conventional external indebtedness. Perhaps that has become most obvious when a fund is calculated as being in deficit. It would seem that in recent years there has been a keener awareness of this way of thinking analytically about pension obligations. If there has been an ‘awakening’, maybe it was triggered by a combination of the volatility of the value of equities held by funds, especially when they fell sharply a few years ago; the volatility of the discounted value of their liabilities as long-maturity real rates fell; regulatory requirements governing the closure of deficits; and fluctuations in the net value of funds having for the first time to be reflected in firms’ capital in their financial accounts.

Paul Tucker: Uncertainty, the implementation of monetary policy, and the management of risk Speech by Mr Paul Tucker, Executive Director and Member of the Monetary Policy Committee of the Bank of England, at the Association of Corporate Treasurers, Newport, 19 May 2006. *  *  *  Many of us would probably say that we do not much like uncertainty, whether at work or home. But we cannot escape it, and it provides opportunities. Rather, we want to be compensated for the risk, or to mitigate it, or both. What I think we actively dislike is avoidable uncertainty. And from the point of view of society, we should dislike uncertainties that are both avoidable and especially costly to mitigate for those who bear the consequent risks. I am going to discuss some sources of avoidable uncertainty – or volatility – that have affected you as corporate treasurers. And I will discuss some unavoidable sources of uncertainty, and what they might mean for risk management, at the level of firms and of the financial system as a whole. Avoidable uncertainties: the monetary regime, and the implementation of monetary policy For too many years in the UK, we lived with a large but avoidable element of macroeconomic uncertainty. It was unclear what rate of inflation households and businesses should expect to prevail over the medium-to-long run. In other words, it was unclear what policymakers were trying to achieve; whether their goals shifted about; and whether policy makers would succeed in delivering those goals.
A second war of independence with Britain was looming. A trade embargo with Britain was imposed and led to a steady drop in import tax revenues over the coming years. At the same time, Gallatin needed additional revenues for war preparations. This left him with next to nothing to sustain his debt reduction strategy. By 1809, the first deficit emerged since Gallatin had taken office. In addition, and against Gallatin’s advice, Congress opted not to renew the charter of the Bank of the United States in 1811, just one year before war broke out. Congress thereby removed the main tool for arranging war financing that Gallatin would have relied on. Foreseeing financial disaster and unable to prevent it in his capacity as Secretary of the Treasury, Gallatin resigned from the Treasury in 1814. 1814-1849: Diplomacy This brings me to the fourth distinct period of Gallatin’s life, covering his post-treasury years. In 1814, Gallatin went to Russia to represent the United States and help settle hostilities at the peace conference with England and France. The conference ended successfully the same year with the signing of the Treaty of Ghent. Much of this success has been credited to Gallatin. 25 Before returning home, Gallatin made his first visit to Geneva since he had left his birthplace 35 years earlier. Geneva received him with great honors. According to his son, who accompanied him at the time, the visit was very emotional. Gallatin remained deeply attached to his native city throughout his life. 26 Albert Gallatin never returned to Treasury.

Philipp M Hildebrand: Albert Gallatin, one of the financial founding fathers – what can we learn from him today? Speech by Mr Philipp M Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the Swiss-American Chamber of Commerce, Geneva, 10 September 2008. I would like to thank Signe Krogstrup for her valuable support in drafting this speech. I also thank Rita Kobel and Urs Birchler for their very helpful comments and discussions. * 1. *  *  Introduction  As always, it is a great pleasure to be in Geneva. I want to thank the Swiss-American Chamber of Commerce for its kind invitation. My remarks today are unusual in the sense that I will not structure them around monetary policy, the ongoing financial turmoil, or any other current monetary topic. Instead, I have the privilege to step aside temporarily from my day-to-day preoccupations and indulge in a little bit of history about a remarkable man whose origins are firmly rooted in Geneva’s beautiful “vielle ville”. Ladies and Gentlemen, it is an honor for me to pay homage to Albert Gallatin – the Geneva-born fourth – and to this day longest – serving United States Secretary of the Treasury. 1 Those of you who enjoy economic history will be familiar with the extraordinary accomplishments of Alexander Hamilton, the first Secretary of the Treasury, appointed by President George Washington in 1789. Hamilton built the foundation of the U.S. federal financial system in the late 18th century.
That is why I am convinced that our British friends are true allies when it comes to overcoming the current euro area problems, and that we can count on their help and cooperation – albeit from a different position than ours – for our initial steps regarding the Banking Union, including the steps towards single supervisory arrangements and the functions of the European Banking Authority. The United Kingdom has one of the world’s most sophisticated financial industries, and a wealth of regulatory and supervisory intelligence and experience. Quite frankly, we wish to avail ourselves of their help and advice. The current economic situation is not an easy one in either the United Kingdom or Spain. There are serious imbalances in our public finances and problems in our banking systems, but unemployment is much more severe in Spain than in the United Kingdom and, moreover, we are suffering from a bout of distrust regarding the future of the euro area, which affects our external financing, but naturally not the United Kingdom’s. What is more, the restrictions on the European Central Bank differ from those to which the Bank of England is subject. Finally, we should note that the latest news on economic activity in the United Kingdom appears to be positive, and that in Spain we are implementing a very harsh adjustment that is already yielding appreciable results in terms of fiscal consolidation, competitiveness and correction of the current account deficit.

What is more, the world economy is still characterised by profound imbalances, such as the deficit in US external accounts and the lack of flexibility in the Chinese monetary system. Turning now to monetary policy, there were often considerable disparities in 2005, for instance, the progressive hikes in the rate of interest in the United States at a time when monetary policy in Europe was characterised by a waiting-game approach. Despite these potentially destabilising factors, financial markets remained relatively calm. In currency markets, the dollar picked up in the wake of tighter US monetary policy, while the yen moved only slightly against the Swiss franc. The exchange rate of the euro against the Swiss franc fluctuated within a narrow range, thereby reflecting the strong convergence of fundamentals in Switzerland and the euro area. Over the past few months, the Swiss franc has even trended downward – a decline that is hard to explain given the low rate of Swiss inflation as compared to the rest of Europe. If this trend  2  BIS Review 34/2006  were to accelerate and give rise to an excessive relaxation in monetary conditions with respect to economic developments, a normalisation of interest rates would become even more essential. Generally speaking, the capacity of financial markets to absorb shocks and to cope with imbalances is one result of globalisation and the progress in financial intermediation. In addition to stimulating goods markets, globalisation has also enlarged and deepened financial markets, and is doing so to a growing extent.
These data are collected by the U.S. Bureau of Labor Statistics as part of its monthly Current Population Survey. 2  Aaronson and Sullivan (2001). 2  BIS central bankers’ speeches  since then. 3 Among the many robustness analyses they performed, their models produce nearly the same trend for labor force participation as they have since 2001. 4 Depending on the details of the specification, Chicago Fed economists estimate that at the end of the second quarter of 2014, the labor force participation rate was between 1/2 and 1–1/4 percentage points below trend. Furthermore, the participation rate was as much as 3/4 of a percentage point below predictions based on its historical relationship with the unemployment rate. This disparity suggests that there likely is an extra margin of slack in labor markets beyond that indicated by the unemployment rate alone. It is interesting to dig further into these “labor force participation gaps.” Virtually all the gap during this cycle has been due to withdrawal from the labor market of workers without a college degree. By contrast, a participation gap never materialized for college graduates, even during the depths of the recession. There is no simple explanation for this striking contrast. It could be yet another symptom of long-running but difficult-to-model trends in the economy, such as job polarization and changes in social programs, which particularly impact the lower-skill work force. 5 Regardless, the divergent work behavior across education groups strikes me as an important fact and deserving of much further research attention.

Due to favourable developments in prices for goods produced in Norway compared with prices for imported goods, our terms of trade have improved. The impact of the rise in oil and  2  BIS Review 107/2007  gas prices is particularly strong, but the terms-of-trade gains for the mainland economy have also been high. The labour market and the orientation of monetary policy Developments in recent years have paved the way for strong growth in employment, and the same applies today now that the cyclical upturn is in a mature phase. The labour market is tight. There have never before been so many vacancies in relation to the number of unemployed. Unemployment has fallen sharply in the past few quarters. The rate of decline and level of unemployment are reminiscent of two previous cyclical peaks, the one in the mid-1980s and the other that started in the late-1990s and continued into this decade. Both expansions culminated in a sharp rise in wage and cost inflation. While unemployment is now very low, the current upturn with high productivity growth and low growth in real wages has, from a corporate perspective, resulted in a reduction in employees’ share of corporate earnings. Historically, however, unemployment has been high when the wage share was low. What are the factors that can explain the current situation of both low unemployment and a low wage share? Developments in unemployment and the wage share have probably been influenced by a number of positive supply-side conditions.
It is from this perspective that an incentive package is being considered by the Bank to subsidize the costs related to minimum professional qualifications for FAs. We hope that it will entice more agents to consider upgrading themselves to become successful FAs. Growing demand for independent financial advisory services As our economy continues its track towards high income nation status, and as our society becomes more affluent and discerning, we envisage an increasing demand and preference for high-quality, independent and personalized advisory services among financially-savvy consumers. Apart from rising levels of disposable income and financial sophistication, Malaysians are expected to live longer now than ever before. It is projected that by 2040, 17% of the Malaysian population will live beyond the age of 60 years old compared to about only 8% of the total population in 2010. This creates the need for more effective long-term financial planning on the part of consumers to ensure they have sufficient funds to see them through their golden years. In this respect, as part of the Government’s initiative to encourage savings among Malaysians to better prepare for their retirement, the Government had announced a tax relief of RM3,000 for individuals who have bought an annuity plan for the next 10 years commencing in 2012. 2  BIS central bankers’ speeches  An increased competition within the financial sector and evolving demographic structures has also led to the introduction of new and more complex financial products offered by financial service providers.

Muhammad bin Ibrahim: Charting new frontiers – financial advisers the future Keynote address by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia, at the Inaugural Conference of the Association of Financial Advisers “Charting new frontiers – financial advisers the future”, Kuala Lumpur, 31 October 2012. *  *  *  I would like to congratulate the Association and its members for your commitment, which has resulted in the successful formation of the AFA to champion and promote the interests of all licensed financial advisers in Malaysia. The formation of AFA is most timely, and marks a significant milestone in the progressive maturing of the financial advisory industry. Since the introduction of FAs in 2005, we have seen commendable growth within the industry, with the number of licensed FAs rising from 2 to 17, and the number of licensed FA representatives increasing from 17 to 229 today. The formation of the AFA is timely as it provides a platform to encourage greater collaboration among FAs to instill greater professionalism among its members and I expect the AFA to play an important role in coming up with clear strategies to propel the financial advisory sector towards greater progress and growth. Developments in the insurance and takaful sectors There are some broad developments within the economy and the financial sector that will expand the opportunity for growth in the provision of independent financial advisory services.
The second line of defence, then, is prudential rules and macroprudential tools aimed at hindering excessive indebtedness, enhancing financial system resilience, and mitigating procyclicality. Capital flow management tools are the third line of defence and are intended to support other aspects of economic policy if the need arises. In formulating a new economic and prudential policy framework in the near future, we must try to make the interactions between the various components most conducive to achieving the desired results. This applies to fiscal policy, monetary policy, decisions made in the labour market, and decisions designed to safeguard financial stability. In this context, it should be borne in mind that monetary policy is unique in that it can have a very rapid response time, as its instruments can be applied at short notice. This means that monetary policy can have the last move and can consider the decisions made in other policy areas. Furthermore, experience shows that monetary policy is most effective in the long run if central banks are independent in applying monetary policy instruments but have clear objectives decided by elected representatives and are then accountable for their decisions after the fact. The framework for the interactions among the various components of economic policy must not limit this independence. This does not change the fact that, for these interactions to have maximum effectiveness, there must be a clear understanding of which factors will determine the decisions of each party.

The end of the minimum exchange rate has major repercussions for the Swiss economy, and it was by no means an easy decision for the SNB. Yet this is not the first time that the Swiss economy has had to react to shocks and changes in the international environment, and the experience was often painful. The example of the watch industry shows that even a severe crisis can be overcome. Unfortunately, this example is not readily transferable to other export industries. Many companies currently find themselves compelled to seek cost reductions and efficiency gains. The economic outlook depends to a great extent on global economic developments. In its latest monetary policy assessment, the SNB is projecting that momentum in the global economy will pick up again. This should cushion the impact of the exchange rate shock somewhat, and allow Switzerland to return to positive growth in the second half of the year. While inflation has dropped well into negative territory, as things currently stand, a sustained price decline - or, indeed, a deflationary spiral - is not to be expected. Overall, the Swiss franc is currently significantly overvalued. Monetary policy is geared towards this challenging set of circumstances, and is guided by the SNB's willingness to take an active role in the foreign exchange market and apply negative interest rates. This twopronged approach is designed to ease the upward pressure on the Swiss franc. However, in the current climate there is, regrettably, no easy solution that would absorb all external disruptions.
The banks managed to solve this problem for card payments, but just consider how long it took to achieve the volumes that we see today. Consider also the fact that the banks did not manage to solve this problem for an e-money product called Cash Card that was finally phased out a number of years ago. A natural consequence of network effects is that those who are already connected to a welldeveloped network, for example for card payments, will think carefully about whether it is worth connecting to a new network that is currently much smaller but might in the future be as large or larger than the existing network. There is a risk of not being able to reach as many payers and payees in the new network. It may thus be better for consumers or merchants to wait and perhaps join the network later when a critical mass of users has been achieved. Launching a service that is not based on an established network is therefore much more difficult and more costly than adding new services to an established network. Third, it is easier and less costly for established payment mediators to launch new products as they have the advantage of having already attracted a circle of customers that buy their services. These customers can easily be reached through the relationship that is already in place. The customers also already have an account with the mediator, usually a bank, which can be used as the basis for new payment services.

However, it is worth mentioning once more that the banking system should not slacken risk management principles by simply relying on the more flexible and effective New Turkish Lira liquidity management and the foreign exchange liquidity facility of the Central Bank. On the contrary, the banking system should use risk management principles effectively. Annex: calendar for 2008 MPC Meeting Dates 17 January, Thursday  Inflation Report  Financial Stability Report  31 January, Thursday  14 February, Thursday 19 March, Wednesday 17 April, Thursday  30 April, Wednesday  15 May, Thursday  30 May, Friday  16 June, Monday 17 July, Thursday  28 July, Monday  14 August, Thursday 18 September, Thursday 22 October, Wednesday 19 November, Wednesday  31 October, Friday 28 November, Friday  18 December, Thursday  10  BIS Review 4/2008
More encouraging is the principle of better late than never, and the important thing is that Spain initiated the process of bank restructuring, now nearing completion, in 2009, that significant measures to reduce the budget deficit began to be adopted in May 2010 and that an ambitious labour-market reform was introduced in February this year. Spain has proven itself capable of making adjustments and reforms and this is essential to restore long-lasting upswings and sustainable growth. But this reassurance must not lead to complacency. What we have done so far, despite its huge importance, is not sufficient. And some of us have the thankless task of pointing this out. For example, when each financial reform has been approved it has always been argued that the result will be more credit, but although bank restructuring is certainly an absolutely necessary condition, we have always seen that it is not sufficient by itself to make credit flow again. We have to restructure the financial system so that, as in any process of industrial adjustment, the resulting banks can generate a healthy profit and be sufficiently solid to meet demand when the adjustment process is complete. However, credit will not improve until solvent demand increases. Hence the importance of other economic reforms to boost consumer and investor confidence, such as reducing the budget deficit and reforms, such as the labour-market one, to increase the economy’s growth potential.

To begin with, the Capital Account Liberalization Master Plan aims to make our financial markets serve residents and non-residents more flexibly with diverse products and services. This would facilitate regional financial transactions. Companies with regional operations are encouraged to set up a Treasury Center (TC) with the flexibility of foreign exchange regulations as well as tax incentives. To date, 16 companies, most of which are Multinational Corporations (MNCs) with intention to use Thailand as a springboard to gain access to CLMV, have already received a TC License, with several more to participate. The Bank of Thailand is also continuously promoting the use of local currency in regional trade settlement. In March this year, cross-currency dealers were appointed to act as clearing agents for the Baht and the Malaysian Ringgit. In the near future, we will allow securities companies to buy and sell foreign currencies within the scope of their brokerage business. Foreign corporations will also be permitted to borrow directly in Thai baht from domestic financial institutions to invest in the Greater Mekong Subregion (GMS). Also in March of this year, we have signed Letter of Intent with Malaysia and Indonesia, and negotiations are currently under way, to establish the Qualified ASEAN Banks. Looking forward, this initiative should help enhance financial connectivity, and improve operational flexibility of businesses in the region. Ladies and gentlemen, as I outlined above, the Bank of Thailand is committed to establishing financial infrastructure which will facilitate efficient and inclusive growth.