samchain/econo-pairs-v1 huggingface dataset:
On the other hand, financial regulators cannot afford to focus exclusively on the health of individual banks and dealers as though they were isolated atoms. The financial sector is a system that hangs or falls together. Moreover, it is swings of exuberance and caution that drive excessive fluctuations in the supply of credit to firms and households. The FPC is about filling the space between monetary policy and microregulation – in an admittedly inelegant phrase, “macroprudential” policy: policy that is focused on the resilience of the system as a whole. BIS central bankers’ speeches  3  The FPC will not be a talking shop. It will have powers. At times, this will affect you directly. We have advised the government that, alongside controls over banks’ leverage and risk-weighted capital requirements, the FPC should have the power to make the banking sector (and other financial intermediaries) hold more capital temporarily against exposures to sectors going through a dangerous boom. Sometimes that will be within the financial sector, as the run up to the latest crisis illustrates. On other occasions, it could be part of the real economy. History points to commercial real estate as an obvious example. Property-related borrowing booms have often driven financial stress. In those circumstances, simply increasing the headline capital requirement might prompt banks to cut lending to sectors of the economy that were not overly exuberant while maintaining lending into the booming sector that seemed to offer wonderful returns. That would be perverse.

If we allow this culture of cynical greed to take root, it will undermine the public trust that is so critical to not just the growth but the viability of financial institutions. The leadership of financial institutions – Boards and senior management – owe a special duty of care to ensure that finance is trustworthy, socially redeeming, and economically purposeful. They must send a clear, unadulterated message, down to the last person in their organisation: “If it is not right, don’t do it. If it is not true, don’t say it.” 26. This is an area that MAS intends to engage the Boards and senior management of financial institutions on. Conclusion 27. We are making good progress in our corporate governance journey. We are now entering a new phase, and must go beyond rule reforms to create the conditions for good governance to flourish – developing a conducive ecosystem for market discipline, building up the competencies of our Board directors, and instilling a culture of ethical conduct and values. 28. I wish you all success in this important new phase of our corporate governance journey. 1  Joseph Barr, “From the Boardroom: The Role of the Professional Director”, Harvard Business Review, May-June 1976. 5. 4  BIS central bankers’ speeches
Vítor Constâncio: Presentation of the European Central Bank Annual Report 2015 to the Committee on Economic and Monetary Affairs of the European Parliament Introductory remarks by Mr Vítor Constâncio, Vice-President of the European Central Bank, to the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, 7 April 2016. *  *  *  Mr Chairman, Honourable Members of the Committee on Economic and Monetary Affairs, Ladies and gentlemen, I am honoured to once again present the ECB’s 2015 Annual Report to your Committee. Please allow me to take this opportunity to express my heartfelt thoughts, and those of the ECB’s Executive Board and ECB staff, for the victims of the recent attacks in Brussels, in the heart of Europe. Our thoughts are also with their families and friends. Events like this remind us that Europe must stand together. And our institutions have a role to play in this respect. The presentation of our Annual Report to those representing the European Union’s citizens is a key element of our accountability, which is a necessary counterpart to our independence. That is also why we have decided to publish our feedback to the input you provided in the Resolution on the 2014 Annual Report, together with this report. This is the first time we have done so. This decision reflects the importance of having a fruitful dialogue between our institutions, for the benefit of European citizens.

This morning, I would like to talk about some of the changes we are seeing in the practice of risk management and reflect on important priorities for risk management as observed from our work at Bank Negara Malaysia with the financial industry. I will then offer some brief perspectives on business continuity management and close with some final thoughts on the prospects for the insurance industry in Malaysia to contribute towards the advancement of risk management capabilities across Malaysian businesses. Changing practices in risk management Since the financial crisis, risk management practices have come under intense scrutiny. The spectacular failures in risk management in the lead up to the crisis prompted deep reflections on what had gone wrong with risk management systems and practices – not least of all among companies that had invested heavily in sophisticated risk measurement and management systems only to have them ultimately fail to detect or control risk exposures. Closer to home, businesses in Malaysia are currently facing a set of challenging business conditions and some are likely to find themselves ill-prepared to respond to the challenges, with important implications for their future prospects. So what can we learn about the changing practice of risk management from these experiences? A first observation to my mind concerns the importance of building a strong risk culture supported by governance arrangements that are explicitly aligned to a firm’s risk appetite.
François Villeroy de Galhau: Ultra-low interest rates and challenges for central banks Welcome address by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Farewell Symposium for Honorary Governor Christian Noyer, held by the Bank of France and the Bank for International Settlements, Paris, 12 January 2016. *  *  *  Bienvenue à Paris and to the Banque de France (BDF) … I’ve switched to English so as to welcome you all to this new Conference Center created by you, dear Christian. What better way to wish you farewell after 12 years as Governor of the BDF and six years as President of the Bank for International Settlements (BIS)? And what better way for me to welcome for the first time this unique community of actors, academics and observers who are together genuinely contributing to a better understanding of monetary policy and financial stability? To quote a few numbers, some 200 VIPs are gathered here, representing more than 80 central banks (CBs), governments and international organizations, as well as about 50 universities, think tanks and financial institutions. It’s no surprise, as Christian enjoyed meeting all of you at international gatherings and research conferences. The Symposium title, chosen jointly by the BDF and the BIS, relates to the prevalence of very low interest rates for the past 7 years in advanced economies and, by contagion, around the world.

Spreads and volatility have also been lower for longer, although there is some market discrimination between agents and between emerging market economies (EMEs), as well as periodic spikes in volatility, especially recently. Next, why are inflation or interest rates so low and how does this impact policy? First puzzle: inflation remains low in countries where unemployment is close to the NAIRU, like the USA, or where the output gap has been sharply reduced, like Germany; this may imply that the Phillips curve has a lower slope too. Yet, various studies by the IMF or the BDF show that, even if slopes have tended to flatten since the early 1990s, there has been no clear-cut change over the last years. BIS central bankers’ speeches  1  There are two possible explanations. The benign one is that transitory disinflationary shocks, e.g. due to commodity prices, temporarily shift the Phillips curve downwards. The worrying one would be a disanchoring of long-term inflation expectations, threatening the objective of price stability; such a disanchoring is suggested by the surprising correlation between spot oil prices and market expectations derived from inflation-linked swaps up to 5 years in 5 years. People can reasonably differ in their interpretation; hence the scope for healthy policy debates. As regards low policy or market rates, these are mainly seen as reflecting lower equilibrium, or neutral, interest rates. This leads us to the second puzzle: does the lower neutral interest rate result from cyclical or structural factors?
In particular, due to the growing presence of new participants in credit markets with greater risk tolerances, it seems that firms with lower creditworthiness (credit ratings) may have found it easier to refinance and restructure their debt. This refinancing activity has included the greater use of weaker loan covenants than in the past. Thus, to a certain extent, firms may only be deferring their financial difficulties into the future. When the credit cycle finally turns, the consequences could be more abrupt and severe than past experience might suggest. In this context, the recent episode of re-appraisal of credit risk pricing in the US sub-prime mortgage market may provide some guidance on how the credit market could behave in a broader downturn. Since mid-2005, the combined effect of resets of initial borrowing terms to higher interest rates and reduced abilities of borrowers to avoid such resets through house sales or to carry out cash-out refinancing, has been associated with rising delinquency rates on securitised sub-prime mortgage loans. The impact of sub-prime mortgage delinquencies on the lower-quality-end of the credit risk transfer (CRT) market has been substantial. Early this year, the concern of market participants about deteriorating sub-prime credit quality led to a significant and, so far, persistent increase in the cost of credit protection associated with sub-prime non-agency residential mortgage-backed securities (RMBS), as shown in the chart on the right of slide 5. Box 2 of the Review contains a more detailed assessment of the potential risks of the sub-prime episode.

It concludes that there is some concern that the deteriorating performance of sub-prime RMBS could affect the broader market for structured credit instruments, due to the fact that the concentration of sub-prime mortgage loans as collateral for collateralised debt obligations (CDOs) is very high. It cannot be ruled out that further poor performance of this type of collateral could trigger rating downgrades of CDO tranches themselves and lead to a reassessment of risk in other segments of structured credit markets. Financial market liquidity An overarching theme, pertaining to several sources of risk and vulnerability in the financial markets, is the abundant liquidity characterising global markets. Indeed, there appears to be a consensus among market participants that market liquidity has reached unprecedented levels. Financial market liquidity is a measure of the ability of market participants to undertake securities transactions without triggering large changes in their prices. The concept of financial market liquidity is distinct from the concept of monetary liquidity, but there can be links between the two. Although the measurement of market liquidity is rather complex, symptoms of the abundance of liquidity include high leverage, low yields, low market volatility, narrow credit spreads, and high market turnover. Overall, abundant liquidity seems to be intertwined with the “search for yield” which has been discussed in past issues of the FSR and it appears to be dependent on confidence remaining in the smooth functioning of the market.
To do otherwise may in the long-term be inconsistent with the objective of creating shareholder value. What this means in practice is that in imposing new charges, banks need to be sensitive to the impact on their customers and particularly on the more vulnerable members of the community. It is important to offer customers options for how they can access banking services and at what cost, and to provide them with information about these options and the associated charges. I am pleased to say that the banks that have so far announced new charging policies have borne these considerations in mind. We  2  BIS Review 29/2001  intend to give this further underpinning through revisions to the Code of Banking Practice that will lay particular stress on the need for transparency in the setting of charges. There have been calls from some quarters in Hong Kong that the HKMA should regulate banks’ fees and charges. This is not something that we want to get into. The only role for the HKMA would be if it appeared that the banks were engaging in collusive, anti-competitive practices in their charging policies. There is no evidence of this as yet, and given the way in which banks compete in other business areas, the risk of collusion seems quite low. Indeed, a number of banks have already said that they will not impose new charges, for the time being at least. Nonetheless, this is something that we will keep an eye on.

We are in fact already in the process of reviewing the question of whether the HKMA should play a bigger role in consumer issues, and if so what powers and resources we would need for this purpose. It is too soon to say where this will lead, but I stress again that we have no desire to get involved in the regulation of fees and charges. Deposit insurance Let me now turn to the other major plank of our reform package, which is equally, if not more, controversial. I am referring to the proposal to introduce a deposit insurance scheme (“DIS”) in Hong Kong. In a sense, this can be seen as the other side of the coin to deregulation. Increased competition in a deregulated environment may give rise to increased risk and therefore it seems right that we should look again at the arrangements for dealing with banking failure, should it occur. Let me hasten to add that we have no reason to believe that such a failure will occur. The banking system in Hong Kong remains profitable and robust, despite the challenges that it faces. Our system of banking supervision is also generally reckoned to be effective. But banks can still get into difficulties because of risks that supervision may not be able eliminate. There is always the possibility of external shocks or unfounded rumours that may damage confidence in a bank.
In the near future, Turkey will unquestionably attain an economic and social level it deserves by reaching a social consensus and by taking appropriate policy actions today. Thank you all for listening to me. 4  BIS Review 35/2001

The core principles of the science’s consensus remain valid today. Page 3 sur 8 In particular the two first principles—central bank independence and the primacy of price stability—remain essential for the credibility of the central bank. We are benefiting from it today through the—so far—relatively firm anchoring of longterm inflation expectations despite the surge in current inflation. This being said, we should acknowledge that new questions have arisen with the unexpected return of high inflation. Let me highlight three. A first question is the slope of the Phillips curve. To the enduring debate of whether it had flattened since the 1970s we must now add the question of whether it could be steepening again in the current inflationary environment. The question is central to assess how to quell inflation without engineering a harder than necessary landing of economic activity. Second, we still have to understand better how inflation expectations influence actual inflation. In recent years, we have made considerable progress –including at the Banque de France—in measuring the expectations of firms and households, which are the ones that matter for price-setting and spending decisions. iv But there is still relatively little empirical work on how their inflation expectations map into their actual pricing and spending decisions. v What the extent of pass-through from inflation expectations to inflation is, or whether past inflation plays a role beyond inflation expectations remain open questions. vi  Page 4 sur 8 Third, what about forward guidance? It was a decisive input of science, thanks to Eggertsson and Woodford.
The economic consequences of adjustment  A comprehensive process of restructuring and reform such as we are seeing in the euro area naturally has economic consequences. Let me turn to those consequences in the second part of my remarks. As the public sector is consolidating, and the private sector is deleveraging and rebalancing towards exports, the external sector has to go into surplus for a period of time. The euro area current account surplus is expected to rise above 2% this year. There have been some claims recently that this constitutes a “beggar-thy-neighbour” approach as Europe is importing global demand. I find this quite contradictory. Observers cannot call on the one hand for Europe to avoid the mistakes of Japan, and then on the other hand criticise Europe for the inevitable consequences of doing so. It is also a very short-term view. Europe’s contribution to global demand in the years before the crisis came largely through governments, firms and households taking on too much debt. This had to change. The ongoing process of reform and restructuring will allow Europe to support global demand in the future – but in a sustainable and stable way. I would add that ensuring balanced growth between major economies would be greatly helped by efforts to accelerate regional free trade agreements, in particular the Transatlantic Trade and Investment Partnership (TTIP) between Europe and the US.

Jörg Asmussen: Europe 2014 – an outlook from the ECB Speech by Mr Jörg Asmussen, Member of the Executive Board of the European Central Bank, at the Council on Foreign Relations, New York, 21 November 2013. *  *  *  The latest economic data suggest that the euro area is gradually advancing on the road to recovery – but doubts remain about where that road is leading. Some commentators think that the road will be so long and difficult that Europe will face a “lost decade”, like Japan experienced in the 1990s. Yet this is not my view. I would like to us my remarks today to argue that the changes taking place in the euro area today will allow us to take a different path from Japan – although we need to persevere to ensure that a “lost decade” is definitively avoided. At the same time, observers should understand that the process of restructuring and reform this entails has certain economic consequences – namely a period of current account surpluses. I see this as part of a healthy adjustment that will help the euro area to play a constructive role in global demand in the future. 1. Learning the lessons of Japan  Let me start by illustrating how the euro area is learning the lessons of Japan. The term a “lost decade” came to be applied to Japan not just because economic outcomes were poor, but also because little was done to address its structural challenges.
That hard-headed economist I mentioned earlier would at this stage spring to their feet. Brandishing revealed preference theory, they would say this is obvious – that it is these very benefits that explain why the volunteer army exists in the first place. And, once again, they would largely be wrong. For research has shown that people tend systematically to under-estimate the positive effect for them of giving to others. In a nice experiment, people were randomly assigned $ to spend, either on themselves or others. Those who were told to spend it on others subsequently reported significantly higher subjective well-being ex-post, contrary to their expectations ex-ante. 23 This means that volunteer army would possibly be larger still if individuals had greater selfawareness of the private benefits of volunteering. When it comes to volunteering, preferences may be as much concealed as revealed. 24 Social value of volunteering Finally, let’s consider the social welfare benefits of volunteering. Why might these differ from the economic and private benefits? And by how much? Let’s take a simple example. Consider a volunteer who helps out a charity providing support services for the homeless. Is the value of this activity captured by the hours spent volunteering? By the amount it would have cost to hire that person to provide that help? By the amount that person themselves benefit from volunteering? Well, all of the above are important and large, as I have shown. But they would still potentially significantly under-estimate the value society should place on this activity.

The collapse of the stock market would have enabled them to reap a handsome profit from the futures contracts they had taken out. A few figures will help give some idea of the scale of this attack and the vulnerability of Hong Kong’s markets at the time. We estimate that the hedge funds involved had amassed in excess of $ billion in currency borrowings, at an interest cost of around $ million a day. They also held an estimated 80,000 short contracts, which translated into the following calculation: for every fall of 1,000 points in the Hang Seng index they stood to make a profit of $ billion. If they could have engineered that fall within 1,000 days they would have broken even. If they could have achieved it within 100 days they would have netted $ billion. All they had to do was to wait for the best moment to dump their Hong Kong dollars, to drive up interest rates and send a shock wave through the stock market. August was an opportune time: turnover in the stock market had shrunk to about a third of its normal level; there was bad news as the government announced that first-quarter GDP growth had been negative; and rumours were flying around predicting the devaluation of the Renminbi and the severing of the link between the Hong Kong dollar and the US dollar.