samchain/econo-pairs-v1 huggingface dataset:
But for any firm with less than average systematic risk and less than average leverage, the cost of equity would be lower; and at zero leverage, much lower, perhaps as low as say 6 percent. At that rate, even an all-equity bank with an expected return on assets of only 8 percent would not only be viable, but would presumably sell for a 1.3 premium over book value..... An essential message of the M & M Propositions as applied to banking, in sum is that you cannot hope to lever up a sow's ear into a silk purse. You may think you can during the good times; but you'll give it all back and more when the bad times roll around...... I can't  BIS Review 133/2010  11  who says “equity capital is very expensive to a bank” appears not to understand this. It might be fine for most people not to understand this – just as it is fine that most people do not understand what tensile strength materials need to have to be suitable to build a bridge with. But it is not fine if those that run banks, or regulate them, don’t understand it, any more than if engineers who design bridges don’t know about the strengths of building materials. In retrospect I believe a huge mistake was made in letting banks come to hold much less equity capital – relative to un-weighted assets – than was normal in earlier times.

Entering the EU, for the NBRM would automatically mean participation in the European System of Central Banks (ESCB). In this manner, we are getting much closer to Europe in the field of central banking. The staff of the central bank becomes part of many committees, subcommittees and working groups of the ESCB, which is crucial ingredient for strengthening the institutional capacity for policy making. And this is vital for the future steps, as the EU membership, for small and open economy, with high level of euroization and fixed exchange rates would inevitable imply need for very serious preparations for the Euro adoption. It requires passing the so-called test period, staying in the ERM 2 mechanism for at least two years and delivering stable currency, inflation and long term interest rates comparable with those in the EU, and disciplined and prudent public finance. All of these are Euro convergence criteria that at the end boil down to having safe and sound economy and disciplined monetary and fiscal policy, as a precondition for smooth monetary integration. Hence, entering the EU not only will facilitate trade and finance, and make movement of people much easier, but it will also open the doors to gradually move towards a single currency. The benefits of adopting the Euro are well known, in particular for a country that already has the exchange rate as a target, which means smoother transition. The single currency eliminates the currency risk and transaction costs, and thus facilities trade of good and services.
Not only because of the obligation arising from the Treaty of the European Union. Rather because euro area membership provides ultimate monetary and economic security for our nation that is already used to the “de facto membership”. Competitiveness in today’s world Ladies and Gentlemen let me now turn to the topic of today’s conference: competitiveness in today’s world. I would like to look at it from the perspective of a really small country. As we all know, globalization has changed the understanding of success factors for countries. Oldstyle economic policies and market protection are of no use any more, since today whole factories and industries are moved within a short time. How can a small country survive in this world at all? It is often said that real wages should be kept artificially low to attract investment and provide high returns on capital. I do not think this is the right way for a small country. We could never compete with major economies when it comes to mass production. Instead, we should make use of the fact that globalization creates also a huge spectrum of niche markets. Mass production cannot meet countless individual needs, as people all over the world demand more and more personalised products and services. This is the key to success for smaller economies. BIS Review 63/2007  1  The point of departure for a society to remain competitive is to get over the fear of globalization. The new world is after all an opportunity, not a cause for sorrow.

It has facilitated stronger financial and economic ties between Asia and Middle East. The sukuk market in particular, has become an important avenue for international fund raising and investment activities that generate significant crossborder flows. The sukuk market has experienced tremendous growth in the recent few years from an outstanding amount of USD33 billion in 2006 to USD180 billion as at end 2011. Malaysia is now evolving to become a major multi-currency bond and sukuk market. Important in this development are the initiatives that have been taken to strengthen the institutional and international infrastructure of Islamic finance. Most important is the emphasis being given to the development of the international financial infrastructure relating to financial stability. The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) was established in 1990 and in 2002, the Islamic Financial Services Board (IFSB) was established as the international prudential standard setting body for the Islamic finance industry in the areas of risk management, capital adequacy, governance, conduct of business and supervisory process. From ten members at its inception, the IFSB is now a 189 strong member institution comprising mainly regulatory and supervisory authorities. A more recent initiative is the establishment of the Islamic Financial Stability Forum (IFSF) as a platform for greater engagement between the regulatory authorities in the Islamic financial system and promoting more effective cross-border cooperation. Efforts now is focused on putting in place arrangements for enhancing liquidity management in the Islamic financial system.
But it would be difficult to counter the public’s assumption that this would be a surreptitious mutualisation of sovereign debt. The political desire to introduce ESBies in the near future is likely to be very limited. I therefore don’t see this proposal as being part of the operational agenda but rather as a subject for long-term study. Outlook Let me conclude. Weakening global growth and a generally lower natural interest rate are demanding very low, sometimes negative, market rates so that investment and consumption become more attractive. In the medium term we are thereby aiming to get inflation back to a level in line with our mandate to ensure price stability of below, but close to, 2%. Without our measures, the euro area economy would probably have slipped back into recession, with the risk of fully fledged deflation. We had to act and have prevented things from getting worse. Our measures have proved effective. Our mandate is clear. It says that in the medium term we have to achieve an inflation rate of below, but close to, 2%. This is the only goal that our unconventional measures are also bound by. And price stability is an exclusively internal objective – the ECB does not pursue an exchange rate policy. Nevertheless, the longer it takes to achieve this goal, the greater the risk that the side effects of our measures become stronger, especially of the negative rates.

Yves Mersch: Behaving responsibly in a low interest rate environment - a central banker's perspective Speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the Stiftung Marktwirtschaft: Expertentagung "5th Kadener Gespräch", Alveslohe, 10 February 2017. * * * The policy of the European Central Bank (ECB) is often said to be at the root of the current problems in the banking and financial sector. Particularly in Germany, there’s the added accusation of monetary policy “expropriating” savers. A closer look quickly reveals that such hasty judgements fail to appreciate the complexity of the matter. Today, therefore, I shall examine carefully the underlying reasons for our monetary policy action. By focusing on the reasons for our actions we can understand more easily how to get back to a normalisation of monetary policy. Low natural interest rates Why are interest rates so low? The growth trend has been declining in many mature economies not just since the crisis, but for several decades. This slowdown in growth has led to lower long-term interest rates. The structural causes of this trend of slowing growth is a subject of controversy among specialists. Demographic and technological developments are mentioned, as are the effects of the financial cycle, which may be out of sync with the business cycles. I do not want to pre-empt this ongoing discussion.
And they must do so in a manner that avoids engaging in a race to the bottom, but rather, puts us back on the path to ever higher achievement of prosperity. The sooner they get on it, the better. Uncertainty is corrosive; it is hurting job creation and capital expansion when we need it most. As Margaret Thatcher would say: “Don’t dawdle. And don’t go wobbly on us, Congress.” Monetary policy cannot substitute for what you must get on with doing. Get on with your job. The ugly truth I think I have made it pretty clear today that I believe what is restraining our economy is not monetary policy but fiscal misfeasance in Washington. We elect our national leaders to safeguard our country. An integral part of that consists of safeguarding the nation’s fiscal probity. Pointing fingers at the Fed only diminishes credibility – the ugly truth is that the problem lies not with monetary policy but in the need to construct a modern, appropriate set of fiscal and regulatory levers and pulleys to better incentivize the private sector to channel money into productive use in expanding our economy and enriching our people. Only Congress, working together with the president, has the power to write the rules and provide the incentives to correct the course of the great ship we know and love as America. I hope you, as the voters who put them in office, will demand no less of them. Thank you.

John C Williams: Banking culture - the path ahead Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the conference "Building Cultural Capital in the Financial Services Industry: Emerging Practices, Risks and Opportunities", Federal Reserve Bank of New York, New York City, 4 June 2019. * * * As prepared for delivery Good morning, everyone. I’d like to begin by welcoming you to the Federal Reserve Bank of New York and to the fifth conference on culture in financial services that we’ve hosted. Before I launch into my remarks, it’s time I remind everyone that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee or others in the Federal Reserve System. When I took on the role as President of the New York Fed last year it so happened that my first day coincided with this conference. In my remarks that day, I emphasized that culture is a longterm project, a constantly evolving one, which is never done. The trouble with long-term projects with no distinct finish line is that they can lack a sense of urgency. The pressure to make real progress is often missing, especially when there are so many other priorities competing for our time. Headlines in the financial news illustrate the lack of progress. In the year since our last conference, stories of money laundering and fraud have been an all-too-frequent feature.
8  projects mean that the main mechanism for financing the public deficit continues to be traditional access to markets. An aspect I would like to underscore regarding the economic policy response to date is the high degree of complementarity of the measures adopted by the different authorities. If the ECB's response and the decisions of the European Council have enabled governments to expand the scope for fiscal action, it is the action taken by the latter and the ECB itself that has been vital for guaranteeing liquidity and reducing risk for non-financial corporations. This, along with the decisions taken by micro and macroprudential authorities and the ECB, has helped sustain the flow of credit to economic agents. It is very important that this degree of complementarity is maintained in the future. Outstanding European architecture reforms This crisis has also shown that, despite the progress of recent years, further improvements are needed in euro area governance. In particular, beyond the importance of having access to a recovery fund with the characteristics described above, we must continue to stress the major limitation for the proper functioning of the euro area of not having a permanent macroeconomic stabilisation mechanism that allows for greater risk-sharing in response to economic shocks.

In my opinion, this work is going in the right direction. For example, we have a general agreement that not all SIFIs are the same or pose the same degree of risk to the system, and that the framework should recognize this. Along the same lines, the idea is to have a system which builds in a sufficient degree of supervisory judgement to reflect aspects that cannot be quantified, but balanced with “constrained discretion” and a peer review process to ensure that there is a level playing field. And I think, and others think, that the resolvability of an institution should be taken into account in determining the systemic risk of a Global SIFI. For instance, a proper “living will” is a mechanism to reduce the impact of a bank failure and, therefore, to reduce the systemic risk these institutions pose. Finally, the FSB places strong emphasis on the importance of intensive supervision. The aspect of the FSB approach to SIFIs which has attracted most attention is the setting of higher capital requirements (or “loss absorbing capacity”) for SIFIs. We would be extremely naïve to think that extra capital is the answer to systemic risk. Holding extra capital does not resolve the problems of poor management or ill-advised risk taking. And we will never be able to require SIFIs to hold a level of capital sufficient to absorb the huge costs related to their potential bankruptcy.
These surveys provide significant transparency into the finances of those entities, which is invaluable for policymakers and citizens wishing to understand, monitor and exert control and discipline over the fiscal policies of their governments. They may also serve the purpose of increasing investor understanding of how the Commonwealth’s finances compare to other governments. New York City’s experience in the 1970s shows the value of better financial reporting. Prior to the City’s fiscal crisis in 1975 through 1977, New York had relatively poor financial reporting practices. As part of its recovery from that crisis, and a condition of accessing credit, the City’s reporting improved dramatically and has since won several awards. Along with those improvements, the City’s access to credit markets steadily improved. Economic research indicates that more transparent budgets are associated with lower public sector funding costs. A fourth step would be to look for ways to strengthen the performance of public corporations. A major difference between Puerto Rico’s balance sheet and those of the states is the presence of large, heavily indebted, corporate-like entities that continue to lose money and increase borrowing. For any financial reform agenda to be successful, it must confront this issue head on. Key elements of a successful reform strategy might include strengthening the public corporations’ financial standing and controlling the future flow of liabilities. BIS central bankers’ speeches  5  Puerto Rico could also seek out the opportunity to benefit from outside management expertise, including the wide experiences of U.S. mainland states.

Employment in the private sector has been increasing modestly, with some notable pockets of relatively brisk job creation in leisure and hospitality, professional and business services and private education and health services – employment in each of these sectors now far exceeds its prerecession levels. Cutbacks in government employment, however, have largely offset the private-sector gains realized over the past few years. 2  BIS central bankers’ speeches  Low labor force participation rates and high unemployment rates remain perhaps the biggest challenges to the Puerto Rico economy. Our earlier report cited low labor force participation among younger and less educated workers as one important factor limiting the Island’s competitiveness. Since that report, overall labor force participation has continued to decline. The unemployment rate on the Island has consistently exceeded the rate on the mainland by several percentage points. Although the rate has fallen by more than a full percentage point year to date, the gap with the mainland remains wide. Moreover, poor labor market opportunities for many workers have contributed to a significant increase in the rate of outmigration of Puerto Rico’s residents, accelerating the Island’s population decline. The prolonged period of weak economic growth has compounded Puerto Rico’s fiscal problems: Puerto Rico’s public sector debt has been on an upward trend for a decade. The stagnation of the economy and persistent fiscal deficits underlie this debt buildup.
There is great uncertainty as to the development of the health crisis, the economic crisis related to it, and to how the political situation will evolve. Therefore, as you may have seen from the data we recently published, the Bulgarian National Bank remains conservative in its economic growth forecasts, and with a rather broad range of assumptions, at that. We are presently working on a new, updated assessment of this year’s situation and of our expectations for the next one. We will publish this assessment in October. We also carefully monitor the economic developments in the euro area, which will be of crucial significance, mainly regarding, but not limited to, external demand, for the way and the pace of recovery of our economy. We share the assessment of the European Central Bank, communicated just a few days ago. In short, this is as follows: there are clear signs of economic recovery; however, the uncertainty with regard to the pandemic and the way it will be curbed is still great. Depending on the developments, both in the country and in the euro area, we in the Bulgarian National Bank are ready to launch additional measures, if needed. Out of the context of specific additional crisis-related measures, in the current year we also achieved development of enormous strategic importance, which will be ever more highly valued in the future. What I have in mind is the simultaneous accession of the Bulgarian Lev to the EU exchange rate mechanism and the country to the European Banking Union.

Up to now payments for over 14 thousand businesses and over 93 thousand households, totalling more than BGN 9 billion, have been suspended , which really and considerably eases the financial conditions during the hardest time of the crisis. The crisis has moved the external financing conditions issue to the top of the agenda. You know that the crisis triggered the accumulation of deficits which must be financed and the required financial buffers must be maintained. Therefore, we had to give an additional signal to markets and investors that Bulgaria stays stable in the crisis in terms of its financial position and its 1/2  BIS central bankers' speeches  monetary regime. This signal was given with the EUR 2 billion swap line set up between the European Central Bank and the Bulgarian National Bank, and it has been read unequivocally as a positive one by markets, rating agencies, and investors alike. I want to point out one very important thing – the conclusion about Bulgaria’s strong financial position remains valid now, despite the developments in the last months. A drastic change of this direction would be a mistake with serious repercussions. All measures so far pursued in relation to the banking sector, which I believe were successful and timely, do not, in any way, diminish our concern of what is happening and is going to happen in the coming months.
When these sorts of widespread assumptions – these financial myths – turn out to be wrong, most financial-market participants find themselves poorly positioned for the resulting shocks. The result is insolvency of groups of firms and substantial uncertainty – uncertainty about the exposure of many firms to direct losses, or to indirect losses created by their counterparty exposure to other firms that suffer direct losses. These so-called financial myths are not unique to this time period, or to this country. I would like to briefly mention two among the numerous examples from recent history – examples where financial myths were important in helping to create a potential crisis. The first example involves the assumption of many in Japan that real estate prices could not fall in the late 1980s. The second involves the assumption, in the late 1990s, that the Internet had completely changed how we should think about company valuation. I will then briefly mention four financial myths that played critical roles in the recent financial crisis.

These are just two of many potential scenarios that are worth exploring. However, I would add that the recent financial crisis highlighted that unlikely events can happen, and when they do, the outcomes can be quite costly for everyone. So the need for better risk management is clear. Fortunately, the opportunity is there as well. Thank you. 6  BIS central bankers’ speeches  BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches