samchain/econo-pairs-v1 huggingface dataset:
Simon M Potter: The role of best practices in supporting market integrity and effectiveness Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, at the 2016 Primary Dealers Meeting, Federal Reserve Bank of New York, New York City, 7 September 2016. *  *  *  I would like to thank Radhika Mithal and Michelle Ezer for their excellent assistance in the preparation of these remarks, as well as colleagues in the Federal Reserve System and central bank community for their insightful comments and suggestions. Welcome to this year’s primary dealer meeting, and thank you for joining us today. Primary dealers play several important roles as trading counterparties of the New York Fed in its implementation of monetary policy, as participants in Treasury auctions, and as providers of information on market conditions to support the Desk’s monitoring of financial markets. 1 These annual meetings provide us an opportunity to strengthen this relationship and communicate our expectations for you. The official sector and market participants have a shared interest in ensuring that markets function efficiently, effectively, and fairly in the provision of financial services to all stakeholders, particularly firms and households. To help achieve these goals, the official sector employs a variety of channels, including legal, regulatory, and supervisory. In addition, officials work with market participants to create best practice guidance that complements official-sector initiatives.

In this context, global growth lost momentum somewhat in the third quarter. This was largely attributable to special factors, such as production losses in the German automotive industry and extreme weather events in Japan. Economic expansion in the US and China remained robust. Employment figures in the advanced economies rose again and unemployment continued to decline. The growth in international trade in goods also continued. In our baseline scenario for global economic developments, we anticipate solid growth in the coming quarters. In the short term, the world economy is set to continue to expand somewhat above potential, benefiting from the clear improvement in the labour market situation and the ongoing expansionary monetary policy in the advanced economies. However, a gradual slowdown is likely in the medium term. Nevertheless, we also see significant risks to this baseline scenario, primarily in connection with political uncertainties and protectionist tendencies. These risks have considerable potential for damage. The resulting uncertainty alone can curb growth and weaken the resilience of the global economy. For instance, surveys indicate that trade tensions have prompted companies to reassess their investment plans and value chains. As far as Brexit is concerned, uncertainty remains high following the postponement of the vote in the UK parliament. The tension surrounding Italy’s fiscal policy also persists. All these risks could lead to turbulence in the financial markets, jeopardise global economic growth, and also influence monetary policy.
Cross-border capital flows can “run”– just as deposits can “run” for banks. And the majority of a sovereign’s assets – claims on future taxpayers, are both hard to value and inherently illiquid – so, like banks, they are susceptible to runs by international investors, which even if not based on fundamentals, could threaten their solvency by raising borrowing costs. Sovereigns are particularly exposed to run risk or a sudden “stop” if they have borrowed in foreign currency – the so called “original sin” – as large depreciations raise the domestic burden of repaying the debt, particularly if there is a shortage of foreign exchange reserves. In the Euro-area, countries have become painfully aware of the risks of borrowing in a domestic currency that individual sovereign states have no right to issue. But of course, sovereigns are also very different from banks. By definition, their finances are not regulated by any authority, and there is no legal framework for dealing with bankruptcy or resolution, giving them more discretion to default. Instead, we have IMF surveillance (which is weaker than bank supervision) and a complex and often messy process whereby markets and the official sector deal with sovereign debt restructurings. While there are important differences between sovereigns and banks, I think there are enough parallels to draw some insights. 4.

Commodity price changes with relatively more of a permanent nature may distort the general pricing behavior and initiate a wage-price cycle. This may entail prolonged upward movement in inflation in general and, accordingly, the high costs associated with this. Therefore, to be able to contain the potential second-round effects due rises in commodity prices, it is important for central bankers to pay close attention to core inflation indicators and inflation expectations, and shape their communication policy in this direction. BIS central bankers’ speeches  1  We, as the Central Bank of the Republic of Turkey (CBRT), are also in the position to carry out the abovementioned analyses. As a matter of fact, in our Inflation reports as well as the Summary of the Monetary Policy Committee (MPC) meetings, we share with the public, our assessment of the nature of commodity price changes. In the Inflation Report published in January 2012, we made the following assessment on oil prices: “Another risk factor in the forthcoming period is the uncertainty regarding oil prices. Although the weak course of the global economy dampens commodity prices, recent manifesting problems regarding oil supply pose upside risk to energy prices.
This perversion of competition could lead to the failure of insurers to pay out claims and reputational damage to the wider UK insurance market. The collapse of a large insurer would also lead to higher prices for new consumers. This is because the Financial Services Compensation Scheme would need to be replenished by the surviving firms, who would in turn pass on these costs to their customers. Robust prudential standards underpin the sustainability of the fund and reduce the potential need for taxpayer funds to compensate policyholders following a failure, as we have seen in the past. I am not therefore persuaded of the case for giving a primary competition objective to the PRA. This would likely require the PRA to pursue competition as an objective in its own right and enable it to use its powers for that purpose alone. It's difficult to say what specific activities this would entail for the PRA. Potentially, the PRA would be given the same competition powers that sit with the FCA, allowing the PRA to undertake market studies with a view to introducing new rules with the specific aim of promoting competition. Given the potential for overlap with the FCA and the CMA, which both have specific objectives to promote competition, I would be wary of taking this route. Our secondary competition objective refers to competition, not competitiveness. This is an important distinction. Competitiveness is usually taken to mean a firm’s ability to compete on cost or quality grounds.

Second, we need to maintain high standards of safety and soundness for UK insurers – not primarily for financial stability reasons, but in order to ensure an appropriate degree of protection for policyholders. 9  All speeches are available online at www.bankofengland.co.uk/speeches  9
Ravi Menon: The rise of Asian banking Speech by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Symposium on Asian Banking and Finance, jointly organised by the Federal Reserve Bank of San Francisco and the Monetary Authority of Singapore, Singapore, 29 May 2017. * * * Dr John Williams, President and CEO, Federal Reserve Bank of San Francisco, Distinguished guests, colleagues, ladies and gentlemen, good morning. Welcome to Singapore once again for this year’s Symposium on Asian Banking and Finance, jointly organised by the Federal Reserve Bank of San Francisco and the Monetary Authority of Singapore. Let me say what a delight it has been for us at the MAS working with John and his colleagues at the San Francisco Fed, putting together this event. 2017 marks the tenth anniversary of the Symposium. It is also the third year that MAS is partnering the San Francisco Fed to host the event. This Symposium has been providing a high-quality platform for policy-makers, industry captains, and academics to exchange views on global finance. It stands out from other conferences for its focus on bringing Asian voices to the discussions. We at the MAS have a soft spot for this event, as it represents a milestone in our long-standing relationship with the San Francisco Fed – a relationship that dates back to the time current Fed Chair Janet Yellen was at the helm, before she handed over to John.

This forces the Riksbank systematically to consider whether there are any transitory factors that ought to be disregarded when deciding the repo rate. It also facilitates a correct evaluation of monetary policy. One risk with this arrangement is perhaps that the discussion may sometimes become rather technical and focused on details. Should or should not the index we use include a given tax change that alters inflation by one tenth of a percentage point? Continuous minor revisions of our target variable are also liable to make us less intelligible, which may ultimately render monetary policy more difficult to scrutinise. So we evidently face a difficult choice. Since the clarification, we have chosen so far to start from UND1X, which unlike the CPI excludes house mortgage interest expenditure and price effects of indirect taxes and subsidies. In addition, we present a more detailed picture of how we view certain price movements that could be regarded as transitory, for instance the recent oil price rise. There are those who argue that the Riksbank ought to disregard downward price effects from structural factors. Examples are effects on the price level from various deregulations and the increasingly strong international competition. Reasons for doing so are difficult to find. What matters is not whether a price movement is “structural” but whether it affects the path of inflation more fundamentally, that is, as a part of the inflation process. If it does, it ought to be taken into account when policy is formulated, regardless of whether its effect is downwards or upwards.
Inflation is expected to stabilize around 5 percent in the medium term (Figure 24). Hence, assuming that a limited monetary tightening will bring credit growth rate down to 20–25 percent in 2011, our revised forecasts indicate that inflation would be close to the target by the end of 2011. I would like to highlight that the envisaged monetary tightening in 2011 may be through various combinations of different policy tools. The monetary tightening could be implemented by either required reserve ratios or policy rates, or a combination of both. Moreover, during the tightening process, both instruments could move in either the same or the opposite direction. Yet, it should be emphasized that the baseline scenario envisages the net impact of the policy mix on credits and domestic demand to be on the tightening side. We believe that evaluating our forecasts in comparison with those presented in the previous Report would serve to provide a better understanding of the changes in forecasts. As I have mentioned earlier, the rapid decline in unprocessed Food Prices pulled short-term inflation forecasts down, while the upward revision of oil and other commodity price assumptions drove end-2011 inflation forecasts higher (Figure 25). The output gap has been revised slightly upward for the last quarter of 2010 (Figure 26). Moreover, taking into account the lagged effects of monetary tightening, the output gap is assumed to close slower than what was suggested in the previous report.

I would like to elaborate on these factors to enable a better understanding of the forecasts. The October Inflation Report envisaged food inflation to be 10.5 percent at end-2010, to fall gradually to 7 percent at end-2011 and to remain at these levels throughout the forecast horizon. As I stated at the beginning of my speech, the sharp decline in unprocessed food inflation during the fourth quarter resulted in lower-than-expected food inflation. However, the potential impact of the recent upsurge in agricultural commodity prices on processed food prices led to an upward revision in the assumption for food inflation from 7 percent to 7.5 percent, which had around basis points upside impact on 2011 inflation forecasts (Table 2). BIS central bankers’ speeches  11  In the October Inflation Report, oil prices were assumed to be USD 85 per barrel for 2011 and USD 90 per barrel for 2012 and beyond. Moreover, import prices were assumed to rise gradually over the forecast horizon, increasing by an average percent year-on-year in 2011. Commodity prices have accelerated further since the release of the October Inflation Report due to the ongoing quantitative easing in advanced economies and the strong growth in emerging economies. In this context, in view of the commodity futures prices for the first half of January, we raised our oil price assumption to USD 95 per barrel for 2011 and thereafter (Table 2). Furthermore, again considering the commodity futures prices, we assume that import prices will increase by about 10.9 percent in 2011 (Figure 23).
The launching of these indices marks yet another milestone in the development of the Malaysian capital market. As you are well aware, credible and transparent indices are very significant market infrastructure to raise the awareness and interest of investors. This will bode well for our aspiration to broaden and deepen the bond market in Malaysia. Ladies and gentlemen, I would like to remind you that both the Day One and Day Two programs promise to be eventful. I know the very conducive environment for shopping at the Kuala Lumpur City Center or KLCC can be very tempting for some of us. But please resist that temptation for a while and wait until the conference is over. Then please, by all means savour the sights and sounds of Malaysia. On this note, I wish you all a rewarding and productive conference. Thank you. 2  BIS Review 49/2005

6  BIS Review 69/2007  BIS Review 69/2007  7  8  BIS Review 69/2007  BIS Review 69/2007  9  10  BIS Review 69/2007  BIS Review 69/2007  11  12  BIS Review 69/2007
One of these, Terra USD, which had a market capitalisation of around $ has collapsed completely. An algorithmic stablecoin, its mechanism for maintaining its value to the dollar was maintained by algorithmic buying and selling of another crypto-asset, Luna and supplemented by a reserve of Bitcoin. When the price of Luna (and Bitcoin) fell sharply, confidence in Terra’s ability to maintain the peg eroded, leading to a run on the stablecoin and its complete collapse. At this point, another familiar amplifier of financial market stress – contagion – entered the picture. The collapse of Terra put a spotlight on the adequacy of the backing of other stablecoins,  Page 4  particularly the adequacy of the real economy reserve assets backing the largest stablecoin, Tether, which suffered significant outflows and, on several crypto exchanges, broke its peg to the dollar – meaning many coinholders were not able to redeem at par. A further example is the inherent risk that comes with leverage – a familiar one given its role in many financial crises. Leverage is a powerful tool in financial markets, but leveraged positions can greatly amplify losses when asset prices move against investors, driving fire sales of assets and self-reinforcing downward price spirals. In recent years, we have seen the small but growing development of exchanges and other mechanisms in the crypto world, like DeFi platforms, which have given investors – retail and wholesale – the ability to take very highly leveraged positions.

Using as a starting point the observed heterogeneity and by analysing the experiences of several countries, we can draw certain broad conclusions on the effectiveness of the macroprudential toolbox. The design of Borrower and Capital Based Measures is a decision of authorities. For example, based on information from the ESRB, Belgium introduced a Loan-to-Value on both owner-occupied and buy-to-let properties. Cyprus, in order to deal with a specific sectoral exposure, further to the Loan-to-Value cap, recently introduced an even stricter Loan-to-Value for luxurious properties. However, by observing the real estate cycles registered in a number of countries, it is evident that even the idiosyncratic design of these measures does not always stop real estate cycles from materialising. The Netherlands and Slovenia are examples of countries that have recorded vulnerabilities despite the implementation of such measures. Analysis performed at the Central Bank of Cyprus verifies this observation. Using an econometric model, we explain the growth rates of housing loans and house prices considering the implementation of macroprudential measures2. 1/3  BIS - Central bankers' speeches  The analysis indicates that the Loan-to-Value ratio seems to be effective in containing housing loans, for 10 out of 12 countries in our sample and effective in containing house prices in only in 3 out of the 12 cases. Income based measures (such as DebtService-to-Income) and Capital Based Measures were found to be effective in around half of the countries that use them. We can therefore conclude, that there is no "one-size-fits-all" type of macroprudential tool.
Muhammad bin Ibrahim: Developments in Malaysia’s banking sector Keynote address by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Official Launch of the Asian Banking School, Kuala Lumpur, 17 August 2015. *  *  *  Thank you for inviting me to deliver my remarks at this official launch of the Asian Banking School (ABS). It is my great pleasure to be a part of this momentous occasion. Today is the culmination of the vision to take professional development and continuous learning in the Malaysian banking sector to new heights. It also marks the beginning of another important and exciting journey in our overall effort to enhance the standards, quality, productivity and competitiveness of the workforce of the financial services industry. It’s an important first step in professionalising the industry. The banking sector in Malaysia has come a long way to grow both in strength and stature, steadily advancing and maturing as it seeks to become more effective and efficient in performing its intermediation function. In the last decade alone, the industry has undergone some fundamental changes following a period of transformation facilitated by the Financial Sector Masterplan (FSMP). Today, our banking system is placed on a solid footing on the back of strong capitalisation, strengthened by improved risk management and governance practices. We are also seeing increased sophistication and a wide spectrum of products and services being offered by diverse players in the marketplace.

To illustrate that, Chart 10 plots the distribution of levels of productivity across countries over a set of sample periods, where productivity is measured relative to a frontier country (the United States) indexed to one. Comparing the distributions in the 1950s and 1970s, there is a clear rightward shift. Cross-country productivity convergence or catch-up was underway, as the Classical growth model would suggest. In recent decades, however, that pattern has changed. Comparing the 1970s with the 1990s, there is a small leftward shift in the probability mass. And in the period since the global financial crisis, there has been a further leftward shift in the distribution and a widening of its range. Today, non-frontier countries are about as far from the technological frontier as they were in the 1950s. Another way of illustrating the same point is by looking at differences in productivity between frontier and periphery countries over time (Chart 11). In the decades immediately following the Second World War, the Classical growth model was operating effectively, with catch-up in productivity underway and at faster rates among emerging market countries with furthest to travel to the frontier. 37 38  Gordon (2014). Barro and Sala-i-Martin (1992) and Rodrik (2011). 9  All speeches are available online at www.bankofengland.co.uk/speeches  9  Since the 1980s, however, that convergence process appears to have stalled, perhaps even to have gone into reverse, in both advanced and emerging economies. The gap to the frontier has failed to close and, in particular for emerging market countries, has widened.
Building upon these initial studies, the Committee has started extending its analysis to establish a comprehensive picture: for the trading book, the initial analysis has been extended to more complex portfolios, with results expected in the next few months. In parallel, the work on the banking book will extend to the other remaining core asset classes, especially retail portfolios, SMEs and so-called “partial use” exposures (ie exposures that  4  BIS central bankers’ speeches  have not been migrated to the internal models). The Committee also foresees extending its work to operational risk, the third core risk type. And once the Committee has done an initial round of assessment, we will need to repeat the exercise periodically to see whether the policy measures that I will discuss shortly are having the desired impact. Further analysis to establish a comprehensive picture will take us into 2015, but this does not, of course, prevent us from taking action in the meantime. It is clear that a problem exists and the Committee is considering a range of supervisory and policy responses – without, I must add, settling on anything definitive just yet. Given the multi-faceted nature of the problem, it is also clear that we will need a multi-faceted response. As there is no silver bullet, we will likely end up with a series of incremental policy and supervisory changes, drawing from the following list:   Most immediately, we will see supervisory action.

Stefan Ingves: Strengthening bank capital – Basel III and beyond Keynote address by Mr Stefan Ingves, Governor of the Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision, at the Ninth High Level Meeting for the Middle East & North Africa Region, jointly organised by the Basel Committee on Banking Supervision, the Financial Stability Institute and the Arab Monetary Fund (AMF), Abu Dhabi, United Arab Emirates, 18 November 2013. *  *  *  As prepared for delivery Good morning everyone, and thank you for the opportunity to speak about what – among the myriad of recent regulatory initiatives – has probably been the most important: strengthening bank capital. Strengthening bank capital is not simply about asking banks to hold more capital. Rather, it is a broader objective that involves ensuring the functioning of the entire capital regime. The Basel Committee’s approach has therefore been to work extensively on the consistent implementation of the regulatory capital framework. The ultimate goal is to implement Basel III so that it strengthens the quantity, quality, consistency and reliability of bank capital ratios around the world. Quantity and quality of capital As you know, a set of requirements designed to raise the quantity and quality of bank capital lies at the heart of the Basel III reforms. Not only were minimum capital requirements raised, but the increases in capital requirements were focused on where they were needed most: in going-concern loss-absorbing capital, or Common Equity Tier 1.