samchain/econo-pairs-v1 huggingface dataset:
Therefore, it was opted to establish this conditionality and to promote an integration process designed to bring about sizes that would enable the institutions to be more efficient and to more readily obtain funding from the markets; to implement capacity-reduction plans; to introduce management changes; to write down balance sheets with a charge to private funds; to convert savings banks into banks, and to raise capital on the markets. True, a plan of this scale and complexity does not enable difficulties to be overcome overnight. Yet it is not an overstatement to say that, once the process has been concluded, it will have brought about a reform that should be valid for many years. Let’s now look at our economy’s biggest problem: the difficulties our legal and institutional framework poses for job creation and which mean that, even in good times, Spain is one of the countries with the highest unemployment rates in the world. Earlier I referred to the importance of identifying and acknowledging problems. It suffices to look at the figures available and, in particular, at our very high unemployment rate – at 21.3% – to see that we have a serious home-grown problem, stemming from the shortcomings of our legal and institutional framework. Pick up a copy of The Economist and go to the final pages, where there is a table with the economic data for the 40 biggest economies in the world.

Perhaps, the greatest challenge is to achieve a lasting peace. Economic growth and peace are interlinked. Therefore, the process to accelerate economic growth and the peace process need to move in tandem. Further, structural reforms have to be continued. In this connection it is necessary to convince all stakeholders of the need for reforms to enhance the efficiency in the economy. Macroeconomic management has to be strengthened further to contain macroeconomic imbalances. In this regard, we have had the benefit of considerable assistance from international financial institutions, in particular, the IMF, World Bank and the ADB. Not only have they provided funds at critical times, but they have also been most helpful in providing technical assistance and advice. Sound macroeconomic management requires that the fiscal consolidation process be continued as required in the Fiscal (Responsibility) Management Act, to enhance public investment, attain a sustainable level of public debt, and reduce inflationary pressures. This has to be accompanied by the continuation of a monetary policy that would maintain price stability and avoid the emergence of inflationary pressures that are highly injurious, particularly to the most vulnerable groups in society. The Central Bank will continue to focus on this area. In addition, reforms in the financial sector need to be pursued vigorously to ensure a vibrant and stable financial environment that would be able to take advantage of the links to the international markets and support growth. The high international price of fuel is a major concern.
This is relevant to how banks themselves might estimate risk to their asset portfolios through their internal  16  The definitions of these variables are as follows: capital is the risk-based Tier 1 ratio; asset quality is proxied by loans past due as a per cent of total loans; management is proxied by the cost to income ratio, with lower values pointing to greater efficiency and, in principle, better managerial quality; earnings is measured by the return on assets; and liquidity is defined as US government bonds, cash and deposits with banks as a per cent of total assets. 17  Specifically, from the overall sample of about 8,500 banks, we pick random sub-samples of 100, 250, 500, 1,000 and 4,279 observations. We estimate the models using the smaller sub-samples and use the parameters to predict failure out-of-sample for the remaining 4,279 observations in the dataset. To minimise the risk that our results are distorted by the specific choice of sub-sample, we repeat this exercise 10,000 times. So, for example, we end up looking at the out-of-sample performance of 10,000 estimated models using samples of 100 observations. Throughout, we reject sub-samples if there are no observations of bank failures. 12  BIS central bankers’ speeches  models. It enables us to ask what size of time-series sample is needed before less-is-more effects dissipate. It also enables us to assess the effects of expanding the range of assets on the choice of simple versus complex rules.

Wide-ranging cuts have been announced in the affected countries, and international rescue packages have been put together, first for Greece and latterly also for Ireland, in order to prevent the situation from escalating. The markets will, however, be monitoring the effectiveness of the announced cuts and support measures very closely. The problem of sovereign indebtedness in Europe remains a source of considerable uncertainty. A high level of uncertainty also remains on the foreign exchange markets. The continuing high volatility is coupled with strongly divergent exchange rate developments. Over the last few years, a number of currencies have appreciated substantially against the two major world currencies: the euro and the US dollar (cf. chart 1). These currency shifts do not just negatively affect the export capability of the countries whose currencies have appreciated; they also have a heavy impact in monetary terms. This is because, in order to keep appreciation in check, some countries have intervened in the foreign exchange markets, with some others even resorting to restrictions on the movement of capital flows. The result has been a global rise in foreign exchange reserves. Indeed, they have almost doubled in the past four years (cf. chart 2). The high level of foreign exchange reserves ultimately reflects substantial global economic imbalances. As we know, the Swiss franc also appreciated substantially in the wake of the financial crisis. Looking at how the Swiss franc’s real and trade-weighted external value has changed over the long term (cf.
Capital markets play a comparatively larger role in our financial system. As a consequence, shocks get  2  BIS Review 9/2005  diffused more broadly, and weakness in traditional intermediation channels can be offset by the strength in other channels. Here in the United States, financial innovation has advanced farther and more rapidly than elsewhere. This reflects a regulatory model that is more supportive of competition, of financial innovation, and of market-driven improvements in risk management. The U.S. financial system has embraced opportunities for risk transfer much more rapidly and extensively than other systems. Finally, we have larger and more developed venture capital, private equity, and hedge fund segments within our financial system. These are important sources of liquidity, they add depth and breadth to capital markets, and they play a valuable arbitrage role in reducing or eliminating mispricing in the financial markets. However, no system is invulnerable to stress and crisis. Recent U.S. financial history is not a history of the uninterrupted achievement of ever higher returns. The stock market crash of ’87, the stress that surrounded the Russian default and the collapse of Long Term Capital Management, and the more recent fall in equity prices that came with the collapse of the technology boom all posed significant potential threats to financial stability. In each case, however, with a swift monetary policy response and other actions the process of recovery and repair was reasonably quick. The relative ease with which we managed through these events has reinforced confidence in the stability of the system.

Therefore, alongside with the baseline forecast, we have worked out an alternative scenario  BIS central bankers’ speeches  3  which we consider to be unlikely to develop and which provides for oil price fall to $ per barrel from early 2015 and during the whole three-year period. In this case Russian economy will require more profound adjustment to the new conditions in 2015–2016. In this scenario, the current account surplus will amount to approximately $ billion in 2015. It will further increase due to the slight rise of non-oil and gas exports and decline of imports. Economic growth rates will depend on the pace of import substitution. Slow development of import-substituting production in 2015–2016 may result in “mild” recession. Nevertheless, output and employment decrease will be considerably less than in 2008–2009. In this scenario we expect economic recovery growth to over 5% in 2017. Under this scenario, in 2015, inflation acceleration may be higher than in the baseline scenario due to the lower ruble appreciation during the year which is also expected due to the compensation of the exchange rate overshoot. During the following two years, due to the deeper output gap inflation will decrease even faster than stipulated in the baseline scenario reaching the target of 4% before late 2017. Meanwhile, the monetary policy will be aimed at stabilisation of inflation expectations, prevention of inflation spiral and its gradual decrease due to the prospects of economic growth.
It is a remarkable a story of individual imagination and collective action – the self-same ingredients that first enabled humans to break free from their biological chains. One response to the Great Fire was the introduction of new fire laws and regulations. The first-ever building regulations were after soon put in place, specifying the materials to be used when building houses and the minimum spacing between them. This may not sound transformational now, but at the time marked a significant rewriting of the social contract between government, businesses and households. A second response, this time from the private sector, was to create a market previously missing entirely. In response to the devastation, a market for insuring people’s homes was for the first time created. The first fire insurance company, the “Insurance Office for Houses”, was set up in 1681 at the back of Royal Exchange, close to my office. It was the inspiration of (of all things) an economist, Nicholas Barbon. The idea was simple enough. By pooling risks across a number of households, both the insurer and insured were provided with an extra degree of financial protection against fire risk. A problem shared was a problem halved. The newly-installed rules and regulations around house-building reduced this risk further, by protecting individually-insured households, and collectively-at-risk insurance companies, from correlated conflagrations. This risk-pooling idea caught on. The home insurance industry grew rapidly, first in London, then Edinburgh, then across the UK. In 17th century Britain, home insurance was very much a creative industry.

At this time, we have mostly completed Basel II’s key guidelines with only a few remaining issues. This includes finalizing Pillar 1 – namely, Minimum Capital Adequacy Return Form, and the Recognition of External Credit Assessment Institutions and the Mapping Process Under the Standardized Approach (SA). On the commercial bank’s side, our assessment shows that the preparation for Basel II implementation is on track. In terms of capital impact, based on end of June data for 2006, our quantitative impact study shows that the BIS ratio for the whole industry is expected to decline approximately by 1.5 percentage point. This means Basel II implementation will not have a major impact on the Thai banking industry. At this time, while most of our banks have decided on using the SA for calculating minimum capital, they are fully aware of the need to improve the database to support a more advanced risk management process. Reflecting this, larger banks are in the process of developing advanced internal rating systems to be fully compliant with Basel II advanced approaches in the near future. By the end of this year, banks in Thailand will also begin parallel calculations of the required capital under Basel II. And we, at the BOT, are keeping a close watch on this progress with keen interest. Regarding the implementation of IFRS, I have to say the readiness amongst Thai commercial banks and foreign bank branches do vary a great deal.
Among others, the finance industry is one with many untapped opportunities. Currently, a wide group of people in our countries still needs a better access to finance and there are still lots of demand for financial services to be met – be they savings, loans, insurance products, or payment services for both domestic and crossborder transactions. By applying the airline industry’ experiences for policymakers, let me lay out five key conditions necessary to developing domestic financial systems and nurturing financial connectivity in the CLMVT in the periods ahead. Analogous to the “Open Sky Policy”, the first factor is to promote domestic financial liberalization policy and a well-integrated regional financial system. The financial liberalization policy should aim to lessen the degree of domestic financial repression, thereby strengthening financial institutions’ performance, and broadening their offer of financial  2  BIS central bankers’ speeches  products and services. This can be done along with the policy to enhance financial connectivity by promoting the presence of capable players with regional focus. Under our mandate, the Bank of Thailand aims to promote financial connectivity through more connected banking networks and more integrated payment systems. Under the ASEAN Banking Integration Framework, countries in the CLMVT should gear up efforts to strengthen regional banking networks, which will serve a diverse range of businesses and local people to gain more access to high quality banking services at fair prices.

Much progress has been accomplished, but there remain many more things that we can and should do to further promote more connected financial system. As we have done in the past decade, the Bank of Thailand will stand ready to work with our CLMV partners in various ways from development of human capital and regulatory frameworks to infrastructure building. If we can build strong domestic financial systems and regional financial connectivity, we will be able to reduce costs and create positive spillovers to several other industries. Livelihoods of our people will improve. Workers and investors can more easily and cheaply remit funds across countries. Merchants will find it easier to trade cross-border. The tourism sector will gain even more momentum. SMEs will be able to utilize e-commerce and e-payment in selling their products regionally and globally. Financing of infrastructure projects can also be supported by long-term financial products with proper risk management features. Furthermore, financial inclusion and financial literacy will equip households and small businesses with the needed resilience to go through the increasingly volatile world. Ladies and Gentlemen, Just ten years ago, the low-cost airlines were still at their infancy. The airlines were not household brands, and it would be difficult for most of us to imagine how fast they would grow only in one decade, not to mention the positive impacts they would create to other industries and the wider public.
The solution is not a simple substitution. There are inherent differences between SOFR and LIBOR that will need to be adjusted for in the transition. For one thing, most contracts that reference LIBOR key off of three-month or six-month LIBOR. Mortgages often use one-year LIBOR. But SOFR is an overnight rate—there’s no such thing as three-month or six-month SOFR. One solution to this difference is to use the daily SOFR for each day during the term, either averaged or compounded each day until the end of the period. ISDA has indicated that derivatives will fall back to this kind of average, and the SOFR floating rate notes issued recently use a similar approach. To facilitate this method, the New York Fed is preparing to produce a backward-looking compounded average alongside the daily SOFR. Some market participants may need to use a forward-looking “term SOFR” created by constructing a yield curve off of trading in forward-looking SOFR derivatives, particularly for legacy contracts that already reference a term LIBOR rate. Creating a new rate like that is part of the ARRC’s transition plan, although it’s more concept than reality at this point. But under all of the cash product consultations put out to date, the first preferred fallback is to that kind of term rate, if such a rate were to be created that was up to IOSCO standards and endorsed by the ARRC.

What we don’t know is what the shape or timescale of the recovery will be. It’s going to be some time before we have a clearer view of the effects on other industries, including autos, higher education, manufacturing, and professional services. Our Response Despite this extraordinary uncertainty, at the Federal Reserve we worked quickly to put measures in place to support the economy and set the foundation for a strong recovery. During the first half of March, the Federal Open Market Committee (FOMC) brought the target range for the federal funds rate to near zero.1 The FOMC has indicated that it expects to keep interest rates at this level until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.2 Bringing interest rates down to near zero serves two purposes. First, low interest rates make it easier for households and businesses to meet their borrowing needs. Second, they foster broader financial conditions that will help promote the rebound in spending and investment needed to return the economy to full strength. The New York Fed The New York Fed has important and unique responsibilities in supporting liquid and wellfunctioning financial markets. Working alongside our colleagues in the Federal Reserve and other agencies, we are taking rapid and significant actions to supply liquidity and to stabilize critical parts of our financial system.
Hong Kong may also be able to take advantage of the increased flow of funds for global investment which may be forthcoming from a greatly enlarged European capital market. Furthermore, to the extent that an offshore euro market develops, Hong Kong would be an obvious location for this in Asia. This reflects the existing large presence of European banks in Hong Kong and our role as a bridge between Europe and mainland China. Finally, Hong Kong is one of the world’s largest holders of foreign exchange reserves and the euro will provide interesting opportunities for diversification of our portfolio. Of course, the advent of the single currency also brings with it certain risks. The discipline imposed by the single currency will not always be comfortable, particularly when the business cycles diverge in different member countries. This could set up tensions which could at worst lead to a break-up of monetary union or at least undermine confidence in the euro. The current dispute between politicians and the European Central Bank over interest rate policy might be a foretaste of what is to come. A break-up of monetary union seems highly unlikely, but the potential for internal wrangling is clearly there and that could be disruptive to world financial markets. There must also be at least a possibility that closer integration of the EU could make it more self-contained and inward-looking. Intra-EU trade could increase, while that with the rest of the world and Hong Kong could diminish.

New products and delivery channels that enhance outreach ultimately contribute towards expansion of a larger industry, and pool of customers for all participants in the insurance sector as a whole. In other words, it is not a zero sum game. Everybody will gain. Insurance agents and financial advisers will continue to provide a valuable service as households and businesses move up the income ladder and require more personalised advice on product options. It is important that this evolution is accompanied by a strong focus on raising standards of professional competence. Increasing the proportion of full time agents from the current 40% in the life sector and 30% in the general sector will be a vital component of this agenda. Equally important is ensuring that remuneration structures are aligned with the  BIS central bankers’ speeches  3  interests of consumers. The implementation of the balanced scorecard is an important step in this direction and should not be further delayed or diluted. There is no question that the potential for growth in the insurance and takaful industry is significant, with estimates placing the life and medical insurance protection gap alone in Malaysia at between RM550,000 and RM723,000 per household. Closing this protection gap is ultimately the moral responsibility of the industry. Microinsurance and microtakaful should be further developed to improve access to the underserved segment of society.
2  BIS central bankers’ speeches  Net income for the cooperative sector as a whole in 2015 exceeded € million, entailing an increase of close to 15% on 2014. The return on equity was 4.8%, having increased by somewhat more than 0.5 pp in 2015. This improvement in profitability is due to the almost 60% reduction in asset impairment losses over the past year (practically € million), the result of the reduction in NPLs I mentioned earlier. Net interest income held relatively stable, with both revenue and financial costs having fallen, while the efficiency ratio improved by several percentage points. As regards the sector’s solvency, the highest quality capital ratio, namely CET1, for Spanish cooperatives as a whole was 13.7% in December 2015, almost 70 bp up on the related December 2014 level. This gives a level of CET1 almost 1 pp higher than the aggregate for the Spanish banking sector. In conclusion, the cooperative sector in Spain is holding up with figures and ratios in line with those of the rest of the banking sector, and is currently evidencing solvency levels somewhat higher than those of the rest of the sector. Regulatory agenda: recent developments in the Basel III capital framework I would now like to review the reforms outstanding. But I shall first offer you a brief reminder of the key elements of the new regulatory framework we know as Basel III.

The immense financing needed to build a greener world can only be met through a combination of public and private capital. SINGAPORE’S GREEN FINANCE ACTION PLAN  Last year, the Monetary Authority of Singapore (MAS) launched a Green Finance Action Plan— to support a sustainable Singapore and to facilitate Asia’s transition to a sustainable future. As a champion of sustainable development and as an international financial centre in the heart of Asia, Singapore is well-placed to support Asia’s sustainability journey through Green Finance. Our vision is for Singapore to be the leading centre for Green Finance in Asia. The Green Finance Action Plan comprises four key thrusts— strengthen the financial sector’s resilience to environmental risks; develop green financial solutions and markets for a sustainable economy; harness technology to enable trusted and eﬀicient sustainable finance flows; and build knowledge and capabilities in sustainable finance. Let me elaborate on each of these. STRENGTHENING RESILIENCE TO ENVIRONMENTAL RISKS  First, strengthening the financial sector’s resilience to environmental risks. Climate change poses two key risks to financial institutions. First, physical risks arising from climate change – such as floods and rising sea levels damaging assets and properties, resulting in large insurance claims and reduced collateral values for bank loans. Second, transition risks arising from policy changes, technological advances, or shi s in consumer preferences that reduce demand for fossil fuels, thereby devaluing loans and investments with a fossil fuel exposure. These risks are not trivial and could well threaten the stability of the financial system.