samchain/econo-pairs-v1 huggingface dataset:
Calculations show that for the most indebted Swedish hedge fund this measure is 320 per cent, compared with a median of 80 per cent. An international study from 2003 shows that the debt/equity ratio was less than 200 per cent in more than 80 per cent of the funds examined. These are modest levels in comparison with financial institutions. For example, the major Swedish banks have a debt/equity ratio of 2,300 per cent on average. Thirdly, hedge funds are often accused of engaging in herd behaviour, that is, of imitating one another's behaviour and taking similar positions. This type of strategy risks reinforcing market fluctuations and having a destabilising effect. This applies in particular to macro funds, which take positions and investment decisions on the basis of an expectation of macroeconomic developments. For example, it is often claimed that hedge funds were involved in and reinforced the effects of the ERM crises. The evidence is not clear-cut. I believe that it is difficult to claim that hedge funds follow the prevailing trend to a greater extent than other investors. Traditional investors often have limits that force them to sell when there is a sharp fall in the price of an asset. This could in turn lead to a selfreinforcing spiral. The absolute, rather than relative, required rate of return on hedge funds should reduce the incentives for herd behaviour.

LTCM – which was gigantic – had at most a capital of around SEK 70 billion. This can be compared, for instance, with the state pension funds in Sweden, which each manage capital amounting to around SEK 150 million. The hedge fund market has also developed rapidly in Sweden. Brummer & Partners were first in Sweden, with their hedge fund Zenit, in summer 1996.Nektar, which operates in the fixed income and foreign exchange market, and originally followed Jones’ ideas completely, came soon after. Since then around 60 more funds have been established and the capital managed has gradually increased. Today, hedge funds account for a good six per cent of the total capital managed in Swedish-registered funds. This percentage has more than doubled over the past ten years and now corresponds to just 2 over SEK 85 billion. The size of the Swedish hedge funds varies substantially. The largest Swedish hedge fund had at the end of June 2005 a market value of a good SEK 26 billion, which is a considerable sum even in an international perspective. The smallest fund at the same time had a negative market value of SEK 5 million. The median fund had a market value of around SEK 225 million. [Figure 1] The hedge funds’ earnings over the past ten years may not appear that fantastic at first glance. One of the largest hedge fund indices, Credit Suisse/Tremont has over the past twelve years had an average increase in value of around 8 per cent, similar to the S&P 500.
In the event domestic consumption growth has continued to hold up pretty well; but it has done so inevitably - on the back of a rapid build-up in household indebtedness, including mortgage debt, which in turn was associated with a sharp acceleration in the rate of increase in house prices - to some 25% on average across the UK over the past year. And that is something that, as we've been pointing out for some time, clearly can't be sustained for ever. So that's the background against which I turn once again to the question of whether we can continue to maintain reasonably steady growth of output, with high levels of employment and continuing low inflation over the next two years or so. Now there is no denying that we are - as we always are - faced with significant uncertainties and potential risks in the period ahead, even without the possibility of imminent war with Iraq. The global economy may not pick up gradually - as we certainly hope that it will - and some real gloomsters still talk of the possibility of a double dip back into recession. Domestically the gloomsters talk of the risk of a sudden sharp fall in the rate of growth in consumer spending - often related to a "crash" in house prices generally. That's to say not just a sharp moderation in the rate of increase in house prices but a fall in their actual level generally.

I am therefore delighted that we were able to organise this colloquium with such a set of distinguished speakers, all of which have their exceptional professional standing deeply associated with the financial crisis, either as policy-makers, crisis managers, academics or proponents of regulatory initiatives. My introductory remarks this afternoon are organised around the title of this colloquium. My aim is to review policies in the last few years and draw some policy conclusions. I will first touch upon some of the lessons for financial stability, where Lucas’s contribution was especially important, as responsible for the financial stability function, and then turn to the experience with monetary policy. Lessons for financial stability The financial crisis erupted in August 2007, when off-balance sheet vehicles that had been set up by banks to manage portfolios of complex structured credit securities ran into funding liquidity problems. Although initially a liquidity squeeze, concerns about counterparty credit risks quickly spread as uncertainties intensified about the nature and extent of exposures of banks to what we now call “toxic assets”. And, as we know, these escalating tensions culminated in the bankruptcy of Lehman Brothers in September 2008, an event which triggered an unprecedented surge of volatility across mature-economy financial markets and a broad-based decline of asset prices. With this, an adverse feedback between the condition of the financial system and real economic performance was unleashed, contributing to a sharp economic slowdown across the developed economies.
In the west, technological developments and a desire to reduce systemic risks have been drawing central banks like ourselves into greater involvement in payment and settlement services, especially in the provision of real-time gross settlement. No doubt the central banks in the transition economies will feel the same pressures before long. (v) Branch networks On the last of my five metrics of central bank functions - the size of the branch network (which I use as a convenient proxy for the extent of their involvement in straight banking activities and in note distribution) - the transition central banks occupy an intermediate position. The extensive branch networks of the monobanks went largely to the savings banks, and in some case they have been turned into commercial banks. The result has been surprisingly consistent across central and eastern Europe, with one branch remaining for every ½ - 1 million people (except for the Bank of Estonia which has no branches, a scrupulous qualification). Some of the new central banks are even now questioning, as we have done, whether they need branches - as distinct from regional agencies - at all. Following the setting up of a State Treasury, the Hungarian central bank has closed more than half its branches. Obviously the political structure and geography of the country is material. In the USA and Germany, the maintenance of a branch network reflects the federal structure of the state.

Legislation in 1942 followed the then German model, particularly in making the Bank of Japan subservient to the Ministry of Finance; and after the war, there was American influence. 1 Rosa Maria Lastra, “Central Banking and Banking Regulation”, LSE Financial Markets Group,  1996, page 285. BIS Review 33/1997  -3-  In Figures 1 and 2, I have attempted to capture some of the distinctions between these leading central banks. (Because I am concentrating on distinctions, I have omitted common tasks - such as the issuance of banknotes and acting as banker for government - which are carried out by virtually all central banks.) Figure 1 shows the UK’s “scores” in five areas, while Figure 2 adds in, by way of comparison, the other G5 countries. Mapping the distinctions is not an easy task. For instance, though in Germany a government office is responsible for banking supervision, it is central bank staff who undertake much of the day-to-day work of monitoring individual banks. In France, supervision is the responsibility of the Commission Bancaire, but its secretariat is effectively part of the Banque de France, and the Governor chairs it. And in Japan, the central bank closely monitors the large banks, though the responsibility for supervision formally rests with the finance ministry.
Indeed, the current crisis may be the most severe seen since the 1930s. However, caution is warranted when interpreting these developments. Not only are deviations from average historical regularities observed, but the full impact of the recent severe crisis is still uncertain. Third, it is clear that both supply and demand factors have driven credit developments in the euro area so far, as confirmed by the evidence provided by the bank lending survey. Overall, our assessment is that credit developments have thus far been affected more strongly by factors associated with weak macroeconomic conditions, such as lower credit demand and a decrease in the average level of creditworthiness of potential borrowers. However, supplyside factors have also played a role and should not be underestimated. SMEs’ access to finance I will now turn to some more direct evidence on SMEs’ access to finance in the euro area provided by a recent ECB survey. This survey, which was conducted for the first time in June-July 2009, asks firms across the European Union about their financing conditions over the previous six months, meaning broadly the first half of 2009 in this case. This survey should help over time to fill the gap regarding information on the financing conditions of SMEs in the euro area, since quantitative statistics provide very little evidence on the actual situation.

This behaviour is in sharp contrast to the intense accumulation of financial assets observed previously and reflects the adjustment of banks’ balance sheets in the context of the general deleveraging process. The decline in the annual growth rates of assets has been most visible in short-term loans and deposits as well as in liquid assets, such as equities and mutual fund shares. The sharp contraction in interbank deposits has mainly reflected the freezing of the interbank market following the onset of the financial turmoil, in the context of which euro area monetary financial institutions (MFIs) withdrew their short-term deposits placed at banks. In addition, euro area banks have scaled down their deposits with other counterparts outside the euro area. As well as downsizing their external assets, banks initially scaled down their investment in marketable assets. By contrast, partly related to “relationship banking”, the growth rates of long-term loans have held up. Banks’ investment in long-term debt securities even accelerated in early 2009; indeed, MFIs stepped up their purchases of government debt securities, reflecting the generous liquidity situation in an environment of heightened risk aversion. While the slowdown in the growth rate of assets in principle limits the earning capacity of banks, other factors contributed in the first half of 2009 to a marked improvement in the profitability of large banking groups in the euro area. Net interest income was the main factor behind this improvement, owing to the positive slope of the yield curve and wider operating margins.
But beneath this sense of calmness is a tense undercurrent. There is an underlying anxiety that prevails beyond the realm of economics, for example in relation to issues of international security, environmental change, and the global spread of disease. Despite the tremendous progress that has been achieved in many of these areas through international treaties and institutional efforts globally, anxieties remain. Extreme views are becoming more prevalent in both side of the aisle, and manifests in the form of backlash against conventional wisdom, and the establishments. We ought to be circumspect in expressing our views. As individuals and institutions that have influence to mould public thought and perception, we have the added 4/8  BIS Central Banker's Speeches  responsibility to be balanced. We should not be too eager to discard all wisdom that have been carefully amassed over many years but at the same willing to adapt to new thinking, new circumstances and new possibilities. As policy-makers and economists, these contemporary issues confronting the field of economics are indeed reinvigorating. New rules are being made. Old rules revisited. The contradictory forces that I mentioned earlier, are causing great policy tensions. The policies that have been implemented and experimented in recent years by policy-makers across the world might themselves appear in contradictions. And the fact that the performance so far has been mixed does not invoke confidence in some of the policy prescriptions.

Christian Noyer: Spheres of influence in the international monetary system Speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the Round-table 1 “Fragmentation Risk in Financial Services: A Retreat From Globalization?”, 21st Conference of Montreal, Montreal, 8 June 2015. *  *  *  For many casual observers, there is a close link between money and geopolitics. Historically, money is an attribute of the Sovereign. It can easily be seen as an instrument to project power and influence. There are numerous instances over the last two millennia where monetary power has been used to finance military expansion or, more simply, to assert and exercise government authority. I would not go as far as Michael Bordo and Angela Redish who state, in a recent paper, that “the chronology of monetary history is driven by warfare”; but there is some historical truth in their assertion. Today, however, we live in a regime of fiat money with independent Central Banks in most advanced and emerging economies. Money is not supposed to serve any other purpose than help the economy to function and stabilize through its three main – technical – attributes: as a medium of exchange, a unit of account and a store of value. Yet, the language of geopolitics still permeates the discussion on the international monetary system. Eminent authorities, for instance, casually talk about “currency wars”.
Certainly, the measure which became effective in January where we reduce the reserve requirement for lending to net exporters and producers of electricity is already productive, we have already extended such loans worth approximately Euro 70 million this year, while the measure that should underpin the Denar savings for the account of the Euro savings became effective at the beginning of the year and we expect that the banks will adjust their interest rate policies to this measure in the following months. Did your forecast from the beginning of the year materialize, that the Government is not going to borrow much on the domestic market, at least in the first quarter? Within this period, since the beginning of the year, the Government is not borrowing much on the domestic market, because it has accumulated enough funds on their accounts with the  2  BIS central bankers’ speeches  National Bank. Also, the funds it borrowed from abroad in the beginning of the year are still disposable on their account, because of which there was no need for additional debiting on the domestic market. However, some of the economists fear that exactly the foreign debiting is unfavorable, saying that it was made for unprofitable, unproductive purposes. How do you see this situation, is there a risk? Well, Macedonia has a lack of domestic savings, and as a country, we will need foreign savings for a long time, and that is the situation with most of the developing countries, if I may say.

Dimitar Bogov: “The savings deposits soar also during crisis” – interview in Radio Free Europe Interview with Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, in Radio Free Europe, conducted by Mr Aleksandar Pesev on 29 September 2013. *  *  *  Mr. Bogov, is the ending of the crisis in the Euro area going to have a direct impact on the boost of the economic growth in the Republic of Macedonia? Of course, the Euro area and the European Union are the largest trading partners of the Republic of Macedonia, the largest portion of our export is placed there, and as a result, the demand in the Euro area has large influence on the production in Macedonia. We were encouraged by the data for the second quarter of the year on the Gross Domestic Product, where after six quarters of negative results, positive growth rate has finally been registered. We expect that this will endure also in the following period, we are aware that this growth in the Euro area and the European Union is still very fragile, meaning, there are still risks, but we are optimistic, the indicators that emerge in the Euro area economy every day are mainly positive, so it is expected that it will reflect adequately on the Macedonian economy growth, as well. Can the recent trade war we had with the neighboring Kosovo somehow spoil the perceptions for this positive growth?
Issues like misconduct risk and culture likely fall in these gaps because they involve the attitudes, norms, and behaviors and suggest a critical role for supervisors in addressing these risks. Conclusion To conclude, misconduct risk poses clear threats to both prudential and financial stability objectives. The work supervisors do to address misconduct challenges is critical because there are limits to the regulatory or deterrence and enforcement approach. To understand how a firm manages misconduct risk and to improve resiliency and reduce the potential for unwanted disruptions to financial intermediation, we must increase our focus on firms’ decision-making practices and behaviors as a core aspect of good governance. We can draw from the growing literature about the root causes of misconduct and the underlying factors that drive unhealthy cultures to support this goal. However, as I am sure you already appreciate, addressing culture reform across an entire industry is a complex challenge and there is no one action or approach that will fully address it. We all must be willing to work at this from our various vantage points, as supervisors, as academics, and as industry participants. As you reflect on the conversations you have had today, the points that were raised, and the potential paths forward, I encourage you to consider the important role you each play and the potential impact we, collectively, can have by working together toward the ultimate goal of ensuring a safe and sound financial system that supports economic growth and stability.

The impact of employee misconduct extends beyond the individual and can impact the firm as a whole, as well as the economy and financial markets more broadly. That is, misconduct risk has both prudential and financial stability implications. For a firm, employee misconduct can make it less resilient by diverting management attention, by harming the firm’s reputation in a way that impedes its business, by driving adverse change in the composition of the workforce, or by depleting its capital through losses or fines. Since 2008, 1/5  BIS central bankers' speeches  for example, firms have paid, in aggregate, in excess of $ billion in fines related to misconduct.2 For the broader economy and financial markets, misconduct can inflict harm directly on consumers and employees. In addition, over time, market participants may lose confidence in the financial sector as a whole and adversely impact the sector’s critical role in financial intermediation. In 2016, for example, Gallup found that confidence in the financial sector had fallen by half over the previous decade.3 These incidents of misconduct can introduce frictions and raise the cost of financial intermediation, which in turn, reduces the flow of productive financial services. These sorts of external effects that spill over to other firms, consumers, and businesses are a critical rationale for official sector intervention related to employee misconduct. In the U.S., official sector concern with the damage inflicted by employee misconduct dates back to the Banking Act of 1933.
However, in the 2010 survey, the largest share of volume reported by dealer respondents was for transactions with “other financial institutions” – a category that includes nonreporting banks; 5 other financial institutions such as institutional investors, hedge funds, and proprietary trading firms; and official sector institutions. This shift continued through the 2013 survey, when “other financial institutions” accounted for just over half of reported volume, reinforcing evidence of a broadening in foreign exchange trading, with nondealers playing a greater role in the market. The 2013 survey broke out the “other financial institutions” category for the first time. The data showed that nonreporting banks accounted for about 45 percent of the category’s trading volume while institutional investors and hedge funds/proprietary trading firms each accounted for about 20 percent. In a market where daily trading volume exceeds $ trillion, this represents significant activity and is consistent with a general theme of increased participation by nondealers in the FX market. Execution in the FX market One factor contributing to the expansion in participation by nondealers in the foreign exchange market has been the increased ease of entry into the market, attributable to an expansion in the number of execution platforms and services. In part, this has been supported by technological advancements, which, in some cases, have reduced trading costs, increased the speed with which transactions take place, and improved transparency.

But what is driving the growth of London in particular? One approach to this question is to ask executives in major financial companies, both in the UK and abroad, why they choose to locate business here. A number of these surveys have been conducted recently and they show several common factors. 11 London benefits from English as an international language of commerce, and from its time zone, which means the working day overlaps with Asia in the morning and America in the afternoon. London also has well established financial infrastructure and telecommunication networks. Many of those surveyed point to the regulatory and legal environment. This is partly a matter of the regulatory style – the “risk based and proportionate” approach that the Financial Services Authority has adopted based on general principles where possible. It is partly the simplicity of dealing with a single regulator. 10  Caballero, R. “On the macroeconomics of asset shortages” NBER WP 12753, December 2006. 11  For example, Cook, G. A. S., Pandit, N. R., Beaverstock, J. V., Taylor, P. J. and Pain, K. (forthcoming in 2007). “The role of location in knowledge creation and diffusion: Evidence of centripetal and centrifugal forces in the City of London financial services agglomeration”. Environment and Planning A. 4  BIS Review 29/2007  English law, which is also the basis for financial services law in the United States, prevails here, with the added advantage that practitioners are less likely actually to invoke the legal system.