samchain/econo-pairs-v1 huggingface dataset:
When the central bank wants to exert downward pressure more directly on long-term interest rates, it can absorb duration risk from the market by purchasing securities of relatively longer maturity. This frees up more risk-bearing capacity for investors, which they can redeploy towards bearing different types of risk, including equity and credit risk. In the aftermath of the financial crisis, restoring risk appetite has been a key condition for stimulating economic activity. And as inflation convergence proceeds only slowly, continued monetary stimulus is still needed today. This begs the question whether the persistent monetary accommodation that is needed for inflation convergence could bring about excessive risk-taking and contribute to financial stability risks down the road. Risks to financial stability can build up when low interest rates interact with distorted incentives in the financial sector, which arise from information frictions in credit markets and externalities that have not been properly addressed by regulation and supervision. Key financial vulnerabilities include excessive dependence on unstable short-term funding, too much leverage, inadequate capital provision for risk exposure and a weak underwriting of loans. Macroprudential policy 2/5  BIS central bankers' speeches  The regulatory and supervisory overhaul that took place in the aftermath of the crisis aims to ensure high-level resilience in the financial system, contain the inherent pro-cyclicality within the financial system and take into account systemic negative externalities and system-wide feedback loops. By design, this should limit excessive risk-taking in the financial sector resulting from periods of accommodative monetary policies.

The share of private sector gross product, which SMEs are part of, is 33 percent, while the share of SMEs in GDP is 57 percent in Japan, 64.3 percent in Spain, 56 percent in France, 44 percent in Austria, 43 percent in Canada, 33 percent in Australia and more than 50 percent in the United States. The SME’s modest contribution to GDP in Saudi Arabia could be ascribed to the immensity of the oil and public sectors, being the main catalyst for economic activity. SMEs coverage in the national income accounts might be low. Dear audience, Small and medium enterprises are facing clear challenges to obtain the necessary funding to meet their expansion needs because of several reasons; one of which is the lack of guarantees for granting credit. To overcome this problem in the Kingdom, the Ministry of Finance, in cooperation with Saudi banks, has established “Kafalah Program” for financing small and medium enterprises. It is a program administered by the Saudi Industrial Development Fund with a capital of Rls 200 million to cover a proportion of the risk of the funding entity in case the guaranteed enterprise fails to repay the finance or part thereof, and to encourage banks to finance viable small and medium enterprises, which cannot provide the necessary guarantees or accounting records that prove their eligibility for funding. The program has been performing well since its inception in 2006 up to the end of 2010.
There is instead an underlying variable explaining why a person both sleeps with their shoes on and wakes up with a headache. We should also be aware that when plotting two variables against each other, it is very rare to expect to find a clear-cut correlation of the type we see in textbook illustrations. The reason is, of course, that the variables are not just linked to each other but are also constantly influenced by a number of other factors. For example, inflation can be affected by changes in energy prices that do not have any significant impact on unemployment. Unemployment can, in turn, be affected by reforms on the labour market, for example, which do not have any significant effect on inflation, at least not immediately. In other words, we cannot expect to see an exact relationship but often have to be content with just barely being able to detect one. On the other hand, the absence of a correlation that is visible to the eye does not mean that there isn’t one. It may still be there and be detectable only if we control for variables other than just the two we are studying. To gain a better understanding of what happens behind the scenes, therefore, we often have to delve deeper into the data, consider more variables and use more sophisticated analytical methods than “eyeball econometrics”. But studying exactly what the data looks like is always a good starting-point. So let’s now look at the figures!

Inflation and unemployment  Inflation  Annual percentage change and as a share of the labour force 4  4  3  3  2018  2  2  2011  2007  1  0  1  5.5  6.0  6.5  7.0 7.5 Unemployment  8.0  8.5  9.0  0  Note. Moving averages over 12 months. Sources: Statistics Sweden and the Riksbank  As we see in Figure 3, there is a reasonably clear negative correlation during the whole period. The following additional observations can be made if we look a little closer: (i) (ii) (iii)  During the period 2015–2017, inflation rose while unemployment fell. Over the last six months, unemployment has fallen while inflation has remained on a level consistent with the inflation target. For a given level of unemployment, inflation has tended to be lower in recent years than it was during the period 2007–2010. As I noted, the original Phillips curve was formulated in terms of wage growth and not inflation. So what does such a curve look like for Sweden over the last decade? Seen over the entire period, the correlation also seems to be negative in Figure 4. But if we look at developments since 2011 in particular, there does not appear to be a correlation – The Phillips correlation seems to be more or less horizontal.
With such heavy trade flows, when the mainland economy does poorly – as during the past year – Puerto Rico’s economy and job growth suffer. Financial regulation also represents an important linkage. Of course, my presence here representing the New York Fed is one example of that particular connection – Puerto Rico is part of the Second District of the Federal Reserve System, along with New York, the U.S. Virgin Islands and parts of New Jersey and Connecticut. I’ll return to the theme of financial regulation shortly. For now, let me just say that we share, along with the rest of the world, a commitment to taking the necessary steps to prevent the type of financial crisis that we just experienced from recurring in the future. The Fed’s role in coping with the crisis and the outlook for the United States The close ties with the mainland means that the broader outlook for the United States is very important for Puerto Rico. The U.S. economy has been through a terrible period, having suffered the worst financial crisis in 70 years. Extensive study of banking crises shows that they tend to be “protracted affairs” with surprisingly similar, if unpleasant, contours. Downturns average four years, during which the unemployment rate rises an average of 7 percentage points. The peak-to-trough decline in output averages 9 percent. Those statistics point out the risks that we faced. Well aware of the threat of a second Great Depression, U.S. policymakers took very aggressive actions to support economic growth in 2008 and 2009.

A healthy banking sector is crucial for economic growth because banks and other parts of the financial system play a key role in determining how savings are allocated among competing projects and users of credit. If households and businesses cannot get credit on reasonable terms, then the economy sputters. To underline this point, the Fed and Treasury did not intervene during the recent crisis to save the financial system (and with it, some big financial firms) for its own sake. We intervened because a collapse of the financial system would have done irreparable harm to Main Street. With the limited tools at hand, we made our choices (often between unattractive options) with the goal of supporting the economy, households and small businesses. A well-functioning financial system is also crucial in fostering economic development. History shows that substantial risks to the economy come from a persistently weak banking sector. Economists have debated whether healthy banks drive real economic growth, or vice-versa, but a wealth of recent evidence suggests that the causality runs at least partly from banks to growth, and not just the other way around. So, from my perspective, getting Puerto Rico’s banking system back onto solid footing is “job one” for supporting growth here. Preparing Puerto Rico to benefit from recovery in the world economy Of course, that isn’t the whole story. Growth may also be impeded by factors that are specific to particular regions or policies.
Do you think your depositors are going to have the same confidence in you, even if it is somebody else that has failed? Do you think they are going to say, “it’s okay. Only one finance company has failed. The company that we have deposited our money in is okay. Therefore, we can go on without any problem”. Do you remember the finance company crisis in the late 1980s and early 1990s? When one finance company failed, what happened? Why is it that Northern Rock had to be supported so strongly by the Bank of England, even though it is not a clearing bank? Isn’t it simply because the Bank of England realized that if one major bank fails, the domino effect, or the contagion effect will take place? So, my dear friends, it must be now clear to you, that as directors, you are not only responsible to your shareholders; you are not only responsible to your own depositors; you are also indirectly responsible to all depositors. Don't forget that if one fails, the resulting effect on the industry and the markets is going to be very very serious. Nobody is going to be spared. That's why we want you all to understand your responsibilities. That's why we take the necessary steps to regulate the industry so diligently. We have a responsibility, to preserve the financial system stability of this country. We take that responsibility seriously.

While the issues would not be exhaustion but I will attempt to give a different dimension on the matters raised. Development of Islamic finance Islamic finance is now the fastest growing segment in the global financial industry. Notwithstanding the global financial crisis, Islamic finance has shown strong growth. The size of assets under management may very well exceeded USD1 trillion. Islamic finance has maintained an average growth rate of 15–20% per annum. New areas of business continue to show encouraging progress. Islamic Mutual Funds is growing at average of 23% per annum. The Takaful industry is growing at 13% per annum. Islamic finance has attracted a lot of attention. It is no more peripheral to the conventional banking system but has grown from being a novelty to be a viable and attractive alternative to the conventional banking system. Giant banking and insurance groups are now very much interested in Islamic finance as a way to growth their business. Five years from now, the data that I am showing you could very well change in terms of numbers and structures. Interest in Islamic finance is no longer limited to Muslim nations and Muslim communities. The world realizes the economic clout of 1.5 billion people is a market that cannot be ignored. The Islamic finance market offers an enormous potential for future growth. Long established financial centers such as London, Hong Kong, Tokyo and Singapore have already begun the first steps to enhance their respective centers into vibrant Islamic financial centers.
He is to be responsible for the execution and administration of policies and measures adopted by the Monetary Board, for the direction, supervision and control of the operations of the Central Bank, and for its internal management and administration. He is to be chief representative of the Bank in its relations with outside persons, ….. Accordingly, the Governor should be a man of recognized and outstanding competence in, and understanding of, the economic and financial problems of Ceylon, and of unquestioned integrity and responsibility...” Exter then states, and I quote further: “It is important that the Governor should have had actual financial experience. In many countries this point has actually been incorporated in legislation, as the following quotation from De Kock’s book on Central Banking shows: ‘… in the case of some central banks it has been laid down by statute that the Governor and Deputy-Governor shall be ‘men of proven financial experience’, as in Canada, or ‘persons possessed of actual banking experience’, as in New Zealand, or ‘persons of recognized banking and financial experience’, as in Argentina, or that the Governor shall be a ‘person of tested banking experience’, as in the Union of South Africa and Mexico.’” Mr. Chairman, you may remember when I was first appointed Governor, there were some who claimed that a person with “financial experience”, was not a suitable choice, to undertake the duties of the Governor.

So, a balance was struck and the decision to increase the petroleum prices was postponed until February 2012, because we knew that, by that time, the inflation figures would be very low, at less than 3%, and that benign situation would then give us a comfortable cushion to make the price adjustment, without harming the inflation numbers or the inflation outlook. This was then, just one, but a representative case study of holding on to a difficult position in the short term, to realize a long term position, so as to benefit by an even more significant outcome. It was, as Exter may have been happy to acknowledge had he been present, a pragmatic decision of the Government working closely with the Central Bank, cooperating on a complex and delicate issue, to deliver stability and growth in the long term. A “shared vision” and “goal congruence” Mr. Chairman, I am often asked by people as to the exact definition of the economic philosophy behind our country’s economic policies. As is usual in any field of learning, academics and scholars like to categorize a series of policies, according to a general character, or to place them in a framework of a pre-determined school of thought. Where then would our current economic policy framework, fit in? Is there a particular model that Sri Lanka follows? To respond to such questions, let us try to understand what exactly our economic planners are doing, and what they are attempting to achieve.
However, owing to the close interdependencies between financial markets, intermediaries and infrastructures, the difficulties affecting institutions and markets have also had a knockon effect on market infrastructures, putting the functioning of payment systems, central counterparties and securities settlement systems under a real-life stress test. Fortunately, as I will illustrate in a moment, EU market infrastructures have proven to be remarkably resilient, thereby limiting the overall systemic risk. In the main this has been due to the successful interaction between industry, regulators and overseers, just like – if I may – in the Italian banking sector, which has also shown itself to be remarkably resilient in the current circumstances. In the second part of my intervention, I would indeed like to look beyond the current turmoil. I will – despite the very positive overall assessment for infrastructures – point to three areas that warrant particular attention for the future of market infrastructures. The first of these is the enhancement of overall crisis management arrangements for market infrastructures. The second involves strengthening market infrastructures for OTC derivatives. And third, given the importance of retail markets to the overall stability and efficiency of the financial system, there is the need to complete the Single Euro Payments Area (SEPA). Performance of EU market infrastructures during the financial turmoil The financial market turmoil has impacted on EU payment systems, central counterparties (CCPs) and securities settlement systems mainly through intensified and more volatile market activity.

Gertrude Tumpel-Gugerell: Beyond the turmoil – rules, supervision and infrastructures Speech by Ms Gertrude Tumpel-Gugerell, Member of the Executive Board of the European Central Bank, at the opening panel at the SPIN 2009 Conference, Rome, 15 June 2009. *  *  *  Ladies and Gentlemen, It is a great pleasure for me to participate in the opening discussion at this conference. The organisers, in choosing the title of the panel, have given us the challenging task to look beyond the current turmoil surrounding rules, supervision and infrastructures. This is certainly not easy as we cannot yet speak of an end to the difficult period facing both the financial and real sectors of the economy. However, looking beyond the turmoil and start implementing the lessons we have learned is exactly what is needed at this point in time. Against the background of the crisis up until now, we have to draw the right conclusions and begin designing the future of the financial architecture, including new rules and improved supervision and oversight. This needs to be done now before the window of opportunity – which will not remain open forever – closes. However, before looking beyond the turmoil let me take the opportunity first to examine the performance of market infrastructures in the current crisis. Developments in the financial markets and the fate of specific institutions have been at the heart of the public debate.
Furthermore, taxpayers should obviously not be liable for any losses incurred by CCPs. Losses should be entirely borne by the CCPs themselves and their participants, in an appropriate and proportional manner, and in line with prudent incentives. In particular, the involvement of indirect participants should be carefully considered: their contribution to the loss allocation process should take into account the fact that they have no contractual agreements with the CCP, and, unlike direct members, have no part in the CCP’s risk governance process (and therefore have no say in the CCP’s risk management). Lastly, the issue of compensating clearing members for losses incurred during a recovery or resolution process remains comparatively unexplored and deserves careful attention.10 Let me now turn to the various tools that authorities could use to address potential shortcomings in CCP risk management and loss-absorption capacities. These options have very different implications, namely in terms of sharing the funding needs between CCPs and participants, and in terms of providing the right incentives to CCPs’ stakeholders. Increasing the level of pre-funded resources held by CCPs to cover default losses beyond the current standards. One possible conclusion from the current review of the international implementation of regulatory requirements, and the analysis and assessments being carried out in parallel, could be that standards regarding margins and stress testing are sufficiently stringent, but are not implemented consistently across CCPs and jurisdictions.

In that case, this option will be available and there should be no technical obstacles to using it. But there can be no commitment from the central bank to provide liquidity, and that’s a basic principle of central banks in general, not only for CCPs but for banks as well.16 In sum, while some of these tools appear more appropriate than others, all of them imply drawbacks, and authorities will need to proceed cautiously if they favour one over another. CPMI-IOSCO is currently reviewing existing CCP recovery mechanisms, including loss allocation tools, and will consider developing more granular standards for CCP recovery planning if that is needed. 15  See Duffie, D., “Resolution of Failing Central Counterparties”, Graduate School of Business, Stanford University, 17 December 2014. 16  The recent agreement between the ECB and the Bank of England is no exception to this rule. We’ll extend the scope of our standing swap line in order to facilitate the provision of multi-currency liquidity support to CCPs established in the UK and euro area, but again, there is no pre-commitment and the provision of liquidity remains at the full discretion of the central bank issuing the respective currency.
These include: a)  creation of a large-value payment system based on real time gross settlement (2004);  2  BIS Review 142/2010  b)  publication of a Financial Stability Report as from 2004;  c)  stress tests for the banking system and disclosure of their results which are published in the Financial Stability Report;  d)  incorporation of non-bank credit card systems into the regulated system, although with looser norms than those applying to banks (2006);  e)  implementation of a household financial survey, carried out countrywide for the first time in 2007 and followed by panel studies for Greater Santiago in 2008 and 2009, gathering information that has served as the basis for numerous research projects;  f)  participation, along with other authorities, in an initiative to modernize the system for clearing and paying financial securities, which will lead to the creation of a clearing house and central counterparty in line with international standards (2009–10). During the recent crisis, the BCCH was decisive in exercising its powers as regards financial stability and these proved effective in maintaining the normal functioning of the system. In April 2008, it announced a program of accumulation of international reserves for $ billion with the aim of strengthening the country’s international liquidity position in a context of great uncertainty about the outlook for the international economy and a significant appreciation of the Chilean peso. This measure was successful in achieving its objectives.

For example, it includes: a)  regulatory incentives for banks to maintain capital in excess of the required minimum so that their effective capital represents more than 10% of their riskweighted assets;  BIS Review 142/2010  3  b)  prudential standards to preserve the quality of capital (hybrid instruments cannot exceed 50% of basic capital);  c)  explicit limit on gross leverage as a complement to capital adequacy rules based on Basel recommendations (basic capital cannot be less than 3% of total non-weighted assets net of required provisions);  d)  special regulatory requirements for larger banks (capital requirement can reach 14%);  e)  robust provisions regime with a forward-looking approach;  f)  quantitative norms on the match of the terms and currencies of banks’ assets and liabilities;  g)  preventive capitalization, regularization and resolution systems for banks in difficulties. Supervision has also played a key role. In recent decades, this evolved from a formal and passive approach to one that is significantly more intrusive and proactive. Supervision now focuses on the governance and, above all, management of institutions. Supervisors seek to be familiar with all the aspects or issues that can be important in an institution’s behavior, rather than merely verifying compliance with regulation or simply reviewing financial indicators from previous years. The ultimate aim is to induce changes or corrections in the management of an institution when weaknesses are detected.