samchain/econo-pairs-v1 huggingface dataset:
Perhaps more relevant, given the theme of this conference is international ramifications of domestic policies, this research suggests that reciprocity of those policies can further reduce the likelihood of a crisis by more than if countries act alone. Of course the countercyclical capital buffer is just one tool, and its application is limited to banks. So I would like to use the second part of this speech to talk about the financial stability implications of the growth in market based finance in recent years. This growth is welcome, not least because it reduces the reliance of both savers and borrowers on the banking system. But it is not without risks, partly because macroprudential policy for market-based finance is less well developed than that for banks. I will argue that those risks can be 1 2  As quoted in Bush (2012); for ’ole read hole, a handy place to hide one’s money (Grote and Marauhn 2006). IMF-FSB-BIS (2016). 2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  reduced by the development of strong institutions and deep domestic capital markets by the recipients of global capital flows, and by measures to reduce the risk of sudden stops such as those recently proposed by the FSB to address structural vulnerabilities from asset management activities. There are two themes that recur throughout these remarks.

The growing interest for attending the Conference confirms once again the significant contribution of the Conference to the enrichment of the knowledge and exchange of experience of the representatives of the central banks in regional and international frames. Nevertheless, the Conference would not be a unique treasure of knowledge and experience, if it did not include the representatives of the domestic financial system and the payment service providers, which by their continuous active participation and involvement in the panel discussion, contribute to the thematic comprehensiveness of the Conference. The Conference will cover the latest developments in payment and securities settlement systems, as well as payment services on global, European and national level. In the global context, Mr Klaus Löber, the esteemed expert from the European Central Bank, will elaborate on the new developments in the area of implementation of the PFMIs, work on retail payments, cyber security, digital innovations and correspondent banking. These are very important issues for central banks given that we also promote the safety and efficiency of payment, clearing and settlement, thereby supporting financial stability and the wider economy. In addition, the developments in the compliance area regarding the prevention of money laundering, financing of terrorism, insider dealing, fraud, corruption and other criminal offences are in the focus of the Conference, as well. In this context, we appreciate the contribution of Mr Oliver Schufmann, the representative of Commerzbank, who will present their experience regarding the compliance activities.
Now, interest rates are believed to have reached their lowest level and are expected to remain at 1 per cent until the end of 2003, with only a gradual rise thereafter. Interest rates were also expected to increase markedly in  2  BIS Review 50/2003  Europe in summer 2002. Instead, interest rates were also reduced here and expectations were revised downwards substantially. The lower projections for growth reflect the effect on the world economy of a number of negative shocks, such as the war in Iraq and the SARS outbreak. It may have taken longer than first expected to correct imbalances generated by overoptimism in sectors such as the IT industry. High oil prices may also have contributed to restraining growth. The combination of low international interest rates and weak cyclical developments contributed to high interest rate differentials against the krone and the strong exchange rate. Activity in the global economy has picked up from the low level prevailing last winter, primarily reflecting high growth in the US and some Asian economies, including Japan. Recent statistics show that the annual rate of GDP growth in the US was 7.2 per cent in the third quarter of 2003. Strong growth in private consumption and a rise in business investment are evidence of a gradual and broadbased upturn. Employment figures are also showing a positive trend and unemployment is falling.

The difference in credit growth between households and non-financial enterprises is a good illustration of Norway’s dual economy. Over the past few years, credit growth has been far higher for households than for enterprises. The level of household credit growth has remained high recently in spite of increased unemployment and a downward revision of the prospects for economic growth. An important reason for this is the sharp rise in house prices in recent years. Low investment demand is reflected in credit to non-financial enterprises, which has declined to a very low level. Developments in prices for commercial property compared to house prices also indicate that the situation is better for households. The current level of vacancy in commercial premises is very high. Although lower interest rates will, in isolation, stimulate investment, a substantial share of the vacant premises will probably have to be filled before renewed growth can be expected. Developments in mainland enterprises have been characterised by low output growth, falling investment and declining profitability in many industries. In order to boost returns on invested capital, enterprises have taken steps to reduce costs, primarily by reducing their workforce or relocating parts of their production abroad. There are some positive impulses, however. Interest rates are low, and equity prices have increased sharply since the trough in February 2003. The krone has depreciated and there are signs of a global upturn. Wage growth has moderated and cost inflation is likely to be lower than in the years from 1998 to 2002.
Financial stability post Brexit: risks from global debt Speech given by Sir Jon Cunliffe, Deputy Governor for Financial Stability, Member of the Monetary Policy Committee, Member of the Financial Policy Committee and Member of the Prudential Regulation Committee  CFO Agenda, London Tuesday 7 May 2019  1  All speeches are available online at www.bankofengland.co.uk/speeches  Thank you for inviting me in January to speak today at your conference on “Financial Stability Post Brexit”. I suspect that when this subject was chosen and the invitation sent, it was assumed that Brexit itself would have happened by the time of the conference. As it is, not only has Brexit not occurred, but the path to it and its eventual outcome are perhaps less clear now than a few months ago. So it is perhaps worth spending a little time today on the financial stability risks that might arise from Brexit. I will then go on to examine the financial stability risk environment more generally. Before going further, a health warning is necessary. It cannot be repeated too often that the Bank’s approach to its financial stability objective is, in one key respect, very different to its approach to its monetary stability objective. For the latter, the Monetary Policy Committee makes the best forecast we can of the path of the economy and the path of inflation – the central case.

The MPC published analysis last August suggesting that the trend real rate in the UK has fallen by more than 2pp since 1990. Slower population growth, increased life expectancy and slower productivity growth have all contributed to this fall.9 Looking forward, many of the structural factors currently weighing on the trend real rate – in particular, changes in demographics – are likely to persist for many years to come, though other factors could push in the opposite direction.10  The trend real rate of interest, however, cannot be observed directly. It can only be estimated and while most estimates suggest it has reduced materially, estimates do vary widely. See August 2018 Inflation Report. See also ‘Secular drivers of the global real interest rate’ by Lukasz Rachel and Thomas D Smith (Bank of England Staff Working Paper No. 571). 10 For example, increasing financial integration of lower-income countries, a pickup in overall global productivity growth and increasing automation. 9  7  All speeches are available online at www.bankofengland.co.uk/speeches  7  As to income growth, to the extent that expected low real rates reflect expected lower productivity and hence expected lower income growth, they would not make debt more sustainable. Over the economic cycle, of course, the short-term real rate of interest will be moved around its longer-term trend by more temporary factors. But the persistence of the fall in the trend real rate means interest rates are likely to need to remain low by historical standards for some time to come.
And retail spending may be slackening, though heavy discounting has clouded the underlying picture. There are clearer signs that the slowdown in the housing market is gathering pace. But the impact of this on consumer spending and ultimately on inflation is highly uncertain. And that is what matters for monetary policy. So growth does now seem to be slowing. But what is less clear is whether the scale of this easing is likely to be broadly what we need to keep inflation on target in the medium term – neither too much nor too little. That’s not just because we don’t know how much slowing is in the pipeline. There are a couple of other important uncertainties too. First, it’s hard to judge the underlying strength of inflationary pressures. When inflation picked up quite sharply last winter, there was a lively debate about how far this reflected strong monetary growth, and how far it was due to the temporary effect of a very big jump in gas and electricity prices. Although inflation has now come down sharply, there is still room for debate about the margin of spare capacity in the economy. Various indicators seem to be telling slightly different stories. On the one hand, overall wage growth seems to have been moderate, by past standards. On the other hand, business surveys of capacity pressures and price expectations remain above average. Second, there is a lot of uncertainty about the risks to inflation, if oil prices do continue at their present levels.

Almost without exception, countries favour criteria for representation that boost their own influence. This is normal when these kind of issues are discussed, but makes progress difficult. In the eyes of many it is Europe that is overrepresented. But it is enough to read the book ‘An Uncertain World', by the former US Secretary of the Treasury Robert Rubin, to realise that it is not Europe that has the real power - it is the United States that essentially calls the shots. This simple example illustrates that there is a big difference between the formal and actual power. Personally, I come to a number of different conclusions from this discussion. The world has changed since the fall of communism and as a consequence of the positive development in a large number of emerging markets. That gives cause to modify countries’ formal influence in the IMF by updating  BIS Review 43/2005  3  quotas to better reflect recent changes in world economy. Such changes should be implemented step by step, and with as broad support as possible. Some argues that the criteria used for determining countries’ influence should be modified. I am not convinced that this is the right way to move forward. There is much symbolism in this issue, which makes it a difficult one. For obvious reasons, it is also difficult to find criteria that balances the need for both borrowing countries and creditors to get reasonable influence, and, at the same time assures that the organisation functions well.
I urge the industry to come together and focus on the long term benefits, and give its full support to initiatives such as ISM’s Fraud Intelligence System, and collaborate on other innovations such as the electronic reporting of motor accidents to bring the cost of insurance closer to its “true cost”. Such collective effort is critical to make insurance and takaful accessible to many, and to promote its sustainability over the long term. Individual insurers should also adopt the longer term view and invest in innovation. Much more can still be done by insurers that are part of global insurance groups to bring new technologies, product designs and process improvements into the Malaysian market. The undue focus on short term profitability driven at the group level have often come at the expense of certain market segments being underserved and customers being denied best value for money. Foreign insurers need to contribute more to justify their presence in the Malaysian market. Thirdly, insurers and takaful operators need to cultivate and continuously affirm society’s trust in the industry. Insurance and takaful products have become more complex with the result that most consumers do not fully understand what they have purchased. A larger number of players chasing the same pool of customers, result in intense competition that gives rise to poor sales practices. Pressure to improve underwriting results by controlling claims costs can also have unintended effects on the consumer experience.

We shall review this policy from time to time, with a view to further liberalise the rules. 3. The Financial Market Committee (FMC), through an industry-driven effort, is in the final stages of rolling out an operational framework for Foreign Exchange Administration (FEA) compliance. This will be an industry standard that sets the minimum due diligence and list of documents required for FEA. Further to this, a standard summary of the relevant FEA rules to facilitate common understanding and consistent interpretation among market participants is being formulated. It is expected, through this important initiative, there would be better clarity and greater efficiency for the financial institutions and their customers, in undertaking FX and hedging transactions. Taken together, these three measures are targeted at residents such as the Small and Medium Enterprises with a view to expand their access to hedge freely and directly with onshore banks. This flexibility will provide the avenue for simplified processes and flexible hedging activities within prudential limits and incentivise residents to use onshore banks for their hedging needs. These are but first steps. We will be looking at further measures, similar to these. The idea behind these measures is to make our onshore financial market more flexible, facilitative and competitive. In other words, we are deepening the onshore markets towards becoming the main actor to conduct the foreign exchange needs of our economy. This journey will be exciting and require some behavioural changes. But we have no doubt that with the full support of the industry, we can achieve these outcomes.
The precise formulation of an amendment would need to be worked out, but the application should be sufficiently broad so that it also covers asset managers, hedge funds and private equity funds. Like the registry, a broad and permanent industry prohibition changes the time horizon for the perceived costs of misconduct – from a one-time fine, or perhaps a few years in prison, to a lifetime prohibition from earning a living in finance, regardless of the type of employer involved. I would welcome the industry’s participation in developing this concept. Conclusion To ensure the behavior that is required for a safe, sound and trusted financial system, we must also be effective in our role as regulators and supervisors. As part of this, we as supervisors must continually work to improve our own cultures to ensure that we can successively carry out our responsibilities. But it also requires good culture at the institutions that we supervise. Supervisors simply do not have sufficient “boots on the ground” to ferret out all forms of bad behavior within a giant, global, financial institution. Moreover, regardless what supervisors want to do, a good culture cannot simply be mandated by regulation or imposed by supervision. In conclusion, if those of you here today as stewards of these large financial institutions do not do your part in pushing forcefully for change across the industry, then bad behavior will undoubtedly persist. If that were to occur, the inevitable conclusion will be reached that your firms are too big and complex to manage effectively.

2 The pattern of bad behavior did not end with the financial crisis, but continued despite the considerable public sector intervention that was necessary to stabilize the financial system. As a consequence, the financial industry has largely lost the public trust. To illustrate, a 2012 Harris poll found that 42 percent of people responded either “somewhat” or “a lot” to the statement that Wall Street “harms the country”; furthermore, 68 percent disagreed with the statement: “In general, people on Wall Street are as honest and moral as other people.” I reject the narrative that the current state of affairs is simply the result of the actions of isolated rogue traders or a few bad actors within these firms. As James O’Toole and Warren Bennis observed in their Harvard Business Review article about corporate culture: “Ethical problems in organizations originate not with ‘a few bad apples’ but with the ‘barrel makers’.” 3 That is, the problems originate from the culture of the firms, and this culture is largely shaped by the firms’ leadership. This means that the solution needs to originate from within the firms, from their leaders. What do I mean by the culture within a firm? Culture relates to the implicit norms that guide behavior in the absence of regulations or compliance rules – and sometimes despite those explicit restraints. Culture exists within every firm whether it is recognized or ignored, whether it is nurtured or neglected, and whether it is embraced or disavowed. Culture reflects the prevailing attitudes and behaviors within a firm.
Finally, central banks have a fundamental role in ensuring monetary and financial stability from a long-term perspective. Morocco knows that it can count on the crucial contribution of Bank Al-Maghrib, whose fiftieth anniversary we are celebrating today. The world economy can count on central banks to continue to act as anchors of stability, which are more needed than ever. The European Central Bank, for its part, will continue to be an anchor of stability and confidence. And I am pleased to note the recent proposals by the European Commission, in line with the recommendations of the de Larosière report, to establish a European Systemic Risk Council under the auspices of the ECB. Thank you for your attention. 6  BIS Review 66/2009

It has been acknowledged that at least part of the deficit may be structural rather than cyclical in nature. Although official projections suggest that the combination of cyclical recovery and disciplined containment of government spending should restore fiscal balance in due course, scepticism is understandable; this is an extraordinarily difficult field for forecasters, since the balance is the difference between two very large numbers, each comprised of many varied components. The air of uncertainty gives rise to rumours – of sweeping expenditure cuts, of asset sales, of new taxes, of higher tax rates or whatever – and to fears that Hong Kong may not be able to preserve its distinctive edge as a place with an uncomplicated tax system and low rates of tax. Concerns which arise under any of the above headings may find expression through the financial markets. Conclusions What can one conclude from all of this? •  First, a number of reasons have been enumerated as to why fiscal deficits may be a worry, both for economies generally and for Hong Kong in particular. There can be no doubt that Hong Kong's fiscal position is a matter for concern, but monetary factors should not necessarily be paramount to that concern. •  Secondly, and in the same broad context, one should beware of simplistic assertions or hypotheses about the monetary implications or, more specifically, the exchange rate implications of fiscal deficits.
Here I will explain how our analysis of market structure shaped the design of the Bank’s corporate bond purchase scheme, and how the scheme may have affected the functioning of the market. In both cases our understanding of these markets, informed by market intelligence, analysis and our own experience in previous operations, has been both tested and improved as the Bank has responded to events. Section 1 – Sterling’s headline days during 2016 The foreign exchange markets are core to the broader financial system, processing enormous volumes of transactions and relied upon by a broad range of economic participants from corporates to individuals. The structure of these markets has evolved markedly in recent years, with electronic trading playing an ever greater role, while the amount of balance sheet devoted to this activity by intermediaries has fallen. Benefits of the broader trend towards greater speed and electronification, common across a range of markets, include a reduced cost of transacting – and hence better value for end-users – but these structural changes as a whole have also led some to question whether markets are now less resilient in periods of stress. 1  2  The value of sterling fell by 17% against the US dollar over 2016 , largely as market participants digested the impact of the EU referendum decision on its long-term sustainable level.

•  In the longer run, ageing and slower innovation may push up saving rates and bring down the return on capital. Therefore, the ultimate response to the risk of secular stagnation is to improve the return on investment, thus pushing the natural interest rate back into positive territory. Again, this is not only a European problem. But we do have difficulties in this regard. Structural reforms are not easy. Many, however, are currently being implemented. Italy is abolishing its provinces, generating savings that will allow for a reduction in taxes and liberalising its labour market. France is on the same track and has reduced taxes on its labour costs as well as improving labour market flexibility. III/- short-term policy challenges and responses The main challenge, of course, is low and declining inflation, with inflation expectations in the euro area drifting downward at short to medium-term horizons. This prevents adjustments in relative prices, – an important mechanism to eliminate gaps in competitiveness – and increases the risk of outright deflation, should a negative shock occur in the future. Strangely, in the euro area, growth and inflation are moving in opposite directions. As growth accelerates, inflation keeps going down. This “disconnect” in the Philips curve is puzzling. We must look, then, at the broader picture. Euro area economies have attracted strong capital inflows over the recent months, with two opposite effects on financial conditions: first, easing through lower long-term interest rates. And, second, an appreciation of the euro exchange rate.