samchain/econo-pairs-v1 huggingface dataset:
It takes a long view to recognise returns beyond profits where social and environmental gains are also equally valued. This will represent a major paradigm shift in many institutions. For this, strong and visionary leadership that sets the tone from the top, starting from the board and senior management, is certainly crucial. Far-sighted leadership to transform culture, systems and people will be central to this paradigm shift. To facilitate the process, the recently issued Strategy Paper on VBI will be complemented with an implementation guidance that is currently being developed by the Bank in collaboration with the industry. Second, VBI will require greater stakeholder activism through increased transparency on its adoption. This is a new initiative and it is imperative that our efforts go hand in hand with creating greater awareness and understanding of key stakeholders. The public sector and advocacy groups play an important role. But customers and business ventures should also play their roles wisely and use the power of their wallets to make informed choices. To catalyse this change, a value-based scorecard will be introduced to realign behaviours and expectations towards the desire to impact the community and the environment in a positive way. The scorecard will capture important dimensions of qualitative performance that are geared towards creating sustainable outcomes by Islamic financial institutions. The third critical area is adopting a collaborative approach to implementing VBI which will be key to mobilising change.

From LIBOR to SONIA: a bridge to the future  Remarks given by Andrew Hauser, Executive Director, Markets At the ‘Is Your Business Prepared for LIBOR?’ webinar 18 September 2020  I am grateful to Stefania Spiga for her help in writing these remarks, and to Amber Evans, Tom Horn, Al Hughes and Alieda Moore for their input and guidance. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  Thank you Phil. It’s great to be with you, and it’s great to have such a fantastic line up to discuss this vital issue for every company in the UK. We’re here today to talk about what it will take to get your business ready to transition away from LIBOR. But I want to start somewhere different. I want to start with a bridge: Hammersmith Bridge in London, to be precise. It’s been around forever. People love it: it can carry over 20,000 vehicles a day. And to the naked eye, it seems in the prime of health: beautiful to look at, safe as houses? Well no, actually: it’s completely unsafe. Below that shining metalwork, there are big and growing cracks – and sooner or later, if nothing is done, someone driving over it is going to fall headfirst into the Thames. So the local council has closed the bridge – it had no choice. But the disruption has been huge. Journeys that used to take a few minutes can now take hours. There are traffic jams everywhere.
I welcome the current initiatives, including the creation of the Simplification Group chaired by Petra Senkovic from the ECB and Edouard Fernandez-Bollo from the ACPR. Various measures are under development, like the growing use of delegation, the streamlining of SREP or JST functioning. However, an essential challenge will be to make sure that all processes will remain optimised over time and that simplification becomes a full and permanent part of decision-making, from conception to execution. To do so, simplification has to become one of the values that guide the SSM. The second priority is to promote mobility, thanks in particular to staff secondments and more on-site supervisors working on banks outside their home country. Other initiatives could include very short staff exchanges or swaps within JSTs, between the ECB and national authorities, to allow members to better understand the culture and practices of their 2/3  BIS central bankers' speeches  counterparts. The third and final priority is to develop synergies. Just as with the Eurosystem, the Banking Union constitutes a system with a strong center and strong national components, which ultimately have to act as one team. The goal is to make the best use of national resources by fostering their participation in all key tasks of the SSM. National authorities should not hesitate to step up their involvement in the SSM. In return, the ECB should further empower national authorities, especially in the framework of day-to-day supervision and in the field of on-site inspections in branches or subsidiaries of significant institutions.

Even where national authorities had been created, there was uncertainty over the right way to assess risks, which instruments to use and how to calibrate interventions. Moreover, there was a real risk of inaction bias since the costs of macroprudential policy are visible and are felt immediately, but the benefits accrue over time and are difficult to quantify.5 Given this somewhat tentative start for macroprudential policy in Europe, substantial progress 1/4  BIS central bankers' speeches  has been made over the past eight years. Macroprudential authorities now exist in all but one Member State. The gaps in our framework and knowledge have slowly been filled through research and experience. The ESRB has played an integral part in this process.6 The framework has also helped to counter the risk of inaction bias. National macroprudential authorities have mandates and legal tools to act. At the European level, the ESRB also holds a mandate to monitor risks and vulnerabilities and has a number of legal instruments at its disposal. It can, for example, issue warnings if it has identified a significant risk to financial stability, as well as recommendations setting out remedial steps to be taken on an act-or-explain basis. National authorities have certainly demonstrated their willingness to use the tools at their disposal. Most EU countries currently have at least one measure in place to address risks in the residential property sector and half have measures to tackle risks in commercial real estate.
Chart 8 indicates, however, that much of that is attributable to the substantial fall in imports associated with the collapse in domestic demand, rather than a rise in exports (although to the extent that there was excess demand before the crisis – as Chart 4 suggests – part of that decline in imports will be warranted). Moreover, the necessary sectoral reallocation of resources is harder to achieve in a currency union than in a country with its own currency, as the exchange rate is not free to adjust to expedite the necessary adjustments in prices and quantities. Absent a supply-side miracle to  2  As productivity tends to rise faster in manufacturing than services, unit labour costs on average rise faster in non-tradables than tradables. But, as Chart 7 makes clear, the gap was much greater in Spain than Germany. 2  BIS central bankers’ speeches  raise productivity in the periphery, the necessary reversal in the movements in relative unit labour costs needs instead to come about through wage and price adjustment, which may require a sustained period of spare capacity in the periphery together with excess demand in the core. There is, however, an inherent asymmetry, noted long ago by Keynes, that when credit flows dry up, adjustment is compulsory for the debtor but only voluntary for the creditor. Moreover, not only does the creditor lack the urgent need to adjust, they may also feel that the debtor ought to bear more of the burden of adjustment on moral grounds.

Imports and exports of goods have, however, behaved pretty much as expected. For example, the decline in our share of the market for exports of goods appears to have been halted (Chart 2). The real disappointment has instead been in exports of services, where our market share – which had been rising strongly before the crisis – has flattened off, rather than accelerating. A large part of that reflects a decline in the demand for financial services globally as a result of the crisis, but that alone is not sufficient to explain the weakness. Along with the surprising robustness of employment, the disappointing performance of net trade is yet another puzzling aspect of this particular downturn. One possibility is that the lags have  1  See e.g. Bean (2002) and King (2000, 2006). BIS central bankers’ speeches  1  been elongated, perhaps because heightened uncertainty has inhibited the necessary investment to move into new markets. If that is the case, then net exports can be expected to perform better as recovery here and abroad proceeds. But another possibility is that the demand for, and supply of, exports have become less responsive to relative price signals, perhaps reflecting the nature of the goods and services we have a comparative advantage in. That would imply a less optimistic outlook. Let me now venture further afield, to the euro area.
Alan Blinder, former vice chairman of the Federal Reserve and now professor at Princeton University, argues that “a central bank that speaks with a cacophony of voices may, in effect, have no voice at all”. 29 There is also another argument in favour of unanimous decisions. Central banks are important social institutions, which should not be too closely linked to individuals but have a  27  See Alan S. Blinder (2007): “Monetary policy by committee: Why and how?”, in European Journal of Political Economy, 23, no. 1, pp. 106-127 and Alan S. Blinder (2008): “On the design of monetary policy committees”, Norges Bank Working Paper, 2008/6. 28  The Executive Board at Norges Bank consists of seven members, appointed by the King in Council. The Governor and Deputy Governor serve as chairman and deputy chairman, respectively, of the Executive Board. They are appointed to full-time positions for a term of six years. The other five members are appointed for four-year terms and are not employees of Norges Bank. 29  Alan S. Blinder (2007): “Monetary policy by committee: Why and how?”, in European Journal of Political Economy, 23, no. 1, p. 114. BIS Review 140/2009  7  public identity. The institution and its mandate should take precedence over the individuals who occupy positions for limited periods. 30 There is no formula for deciding which system is best. Each system has its strengths and weaknesses. Detailed meeting minutes ensure accountability among committee members. This may give rise to good incentives.

Through the years, the phrase has been simplified into “as safe as the bank”. As banks and central banks store gold and money in their vaults, their edifices have always been solid, protected by thick walls. In a figurative sense, it might be said that a safe and credible national monetary value relied for a long time on thick central bank walls insulating its internal workings from the general public. Until our time, central banks have been closed, both physically and figuratively. Central banks were shrouded in an aura of mystique, which they probably had a hand in perpetuating. Central bank governors worldwide refrained from saying too much, and what they did say often sounded cryptic. 1  The duty of confidentiality for Norges Bank employees is laid down in Section 12 of the Norges Bank Act. Violation of the duty of confidentiality is punishable under the General Civil Penal Code: “Any person who wilfully or through gross negligence violates a duty of secrecy which in accordance with any statutory provision or valid directive is a consequence of his service or work for any state or municipal body shall be liable to fines or imprisonment for a term not exceeding six months” (Section 121, first paragraph of the General Civil Penal Code).
Christian Noyer: No moral hazard – the banks are doing their job Comment by Mr Christian Noyer, Governor of the Bank of France, in the Financial Times, 18 September 2007. *  *  *  In recent weeks, Central Banks in Europe and the US have acted repeatedly to provide liquidity to interbank money markets. These interventions have raised some questions. Concerns were expressed that monetary authorities were bailing out speculators, thus creating the same kind of moral hazard that may have led to excesses in the past. There were also concerns as to whether the integrity of monetary policy would be compromised. These are valid questions. On numerous occasions, in the past, we pointed out the potential dangers that mispricing of credit risk posed for financial stability. We may be now seeing some of the consequences. Excessive risks were taken, and losses will have to be accepted. It is important that monetary and financial authorities take no action that would prevent this process from running its course, let alone be seeing to be condoning past or future excesses. However, the logic behind recent interventions is different. Put very simply, financial turbulence and uncertainty have suddenly triggered an upward shift in the demand for Central Bank money. Faced with such a shift, whose direction is apparent but amplitude uncertain, the choice, for monetary authorities, is clear: either accommodate, and provide temporary liquidity; or not, in which case, interest rates would have to rise to restore balance in the interbank market.

By the same token, such benefits could be gained in the domestic setting from having a lead supervisor under the separate authorities model. Of course, in the case of the integrated model, the notion becomes a lead department in the same agency, rather than an outside lead supervisor. The next question is: who should be the lead supervisor? The obvious answer is it should be the one that supervises the core financial institutions of the country. And following my previous argument that a central bank should supervise the core financial sector, the central bank should be the lead supervisor. The financial landscape, role, and systemic importance of financial institutions evolve overtime, so must the scope of oversight and focus of lead supervisor. The lead supervisor must closely monitor this evolution and ensure no regulatory gap emerges. It can do so by expanding its scope of supervision either directly or indirectly through the relevant agencies and build coordination to ensure it can perform its lead role properly. BIS Review 32/2009  3
A key characteristic of the Swiss Money Market Value Chain is that it provides access to about 150 banks and other financial market participants using a single platform and a common set of rules. Another characteristic is that the SNB has direct access to this platform, through which it also conducts its monetary policy operations. The broad array of participants, the high degree of standardisation, and the fact that interbank trades and SNB monetary policy operations in the money market are conducted on the same platform help foster market liquidity, transparency and trust among participants. The advantages of a common platform are particularly apparent in times of financial distress, when it is vital that liquidity redistribution and monetary policy operations continue to function seamlessly. The Swiss Money Market Value Chain is designed to respond rapidly to technological innovations and to market participants’ needs. Its underlying technology has been adapted and renewed on a rolling basis over the past two decades, mostly in small increments. However, larger components have also been overhauled from time to time. Four years ago, for instance, the trading platform itself was replaced. Since then, the CO:RE platform has been in use. On Page 11/13  the CO:RE platform, participants can both carry out bilateral transactions and either place or ‘hit’ quotes that are visible to all. Trading on a common platform and using standardised contracts increases market liquidity. The prices of completed transactions are visible to all participants, creating a high degree of transparency.

Whereas it is common to assume the mean is being reported – implying that respondents generate forecasts under symmetric square loss – the evidence suggests that some individuals’ forecasts are biased away from the mean, suggesting forecasting using an asymmetric loss function. Heterogeneity in loss aversion would contribute to the cross-sectional heterogeneity of inflation expectations. Moreover, asymmetric loss would generate a mean bias that will vary in size with the uncertainty of individual expectations, and hence is likely nonconstant over time. This evidence points to another potential advantage of density forecasts: their reporting may be less affected by loss aversion than simple point forecasts. BIS central bankers’ speeches  5  While there are several possible explanations for the large dispersion of inflation forecasts among consumers, this heterogeneity is typically higher than that observed in various surveys of professional forecasters. In closing, I would like to speculate on a few potential reasons as to why the dispersion measured among professional forecasters may be too low relative to a “true” dispersion in expectations. First, asymmetric incentives may induce a desire to conform. If professional survey respondents have beliefs that are far from the consensus, they might face an asymmetric payoff: a small positive payoff for being correct, but a decidedly negative payoff for being incorrect. This may cause a tendency to converge on a consensus belief.
With customers’ consent, banks can have direct, efficient access to a substantial body of data. That will enable them to offer the most suitable services to customers, or perform more precise and objective credit assessments. And that, in turn, will help banks address the pain points I mentioned. 27. Let me give you an example of what CDI could deliver. A family-run noodle shop which has problems getting bank credit can now choose to allow its bank to access historical turnover data from its point of sale terminals. With access to this data, and by using AI tools, the bank should be able to make an accurate forecast for the noodle shop’s sales. That means it can make a credit decision without having to first ask the owner for loan collateral. Hopefully, the noodle shop is successful and its sales rise above the projections in the bank’s model. Then its credit limit can automatically be increased by an appropriate amount. 28. Small importers and exporters might also benefit. Through CDI, they could authorise trade servicing platforms to allow their banks to access reliable trading data. This should help banks understand their customers’ trade counterparties, which can reduce money laundering risk. Because of this, the trading companies’ access to financing should improve, and their cost of borrowing should fall. 29. With CDI, our aim is to enable bank customers, particularly SMEs, to take more control of their own digital footprint, so that they can use their data to enhance their access to financial services. 30.

But you can’t have a meal without food — and you can’t have banking without service, trust, and capital. 6. Yes, technology is replacing some traditional banking channels and processes. But that actually enhances those core principles. So, I don’t think technology will replace banks. Rather, I’ll be making the case today that technology will make banks better — whether it is delivered by an established bank or a new market entrant. A new era established 7. In 2017, the HKMA launched seven initiatives to begin a new era of smart banking. Since then, the competitive landscape for banking in Hong Kong has changed quite a lot. We are proud to be one of the first markets in the region to have fully digital banks — or virtual banks. As we speak, our city has one of the highest numbers of virtual banks in Asia. 8. Today, customers can choose from a wider range of banking providers and platforms. They can choose digital or physical, niche or universal. 9. Not surprisingly, competition is bringing down costs and improving customer experience. For example, traditional banks have been phasing out fees for maintaining low account balances. Many are proactively improving their digital platforms to improve the user experience. 10. We owe this progress to the innovators, entrepreneurs, and bankers in today’s audience. It has been driven by your hard work and determination. 11. As a regulator, we help to facilitate this progress. We ensure a level playing field for all types of financial institutions.
Nowadays, even presentations firmly oriented on return-maximising investment decisions dedicate more time to look at the absolute risks of trading strategies and assets, and this is particularly true for credit and liquidity risks. BIS central bankers’ speeches  1  Indeed, during the current crisis we have learned the hard way that those “forgotten” risks, which were perceived as not deserving a single slide in many presentations of the past, matter more than we previously thought. For those holding responsibilities in the design and implementation of public policies, to observe the increasing recognition among market participants of the importance of strengthening risk management practices constitutes one of its very few positive consequences. Causes and dynamics of the crisis Some of the main lessons from the crisis seem obvious in hindsight, but unfortunately were not seen as such before the outburst of the financial turmoil in 2007 and 2008. In particular, there are clear indications that the way we look now at the trade-off between risks and returns has significantly changed over the past thee years and a half. However, the key question is whether the shift in attitude towards risk has changed only as a consequence of the materialisation of some “forgotten” risks or whether there is a deeper and more structural explanation for this shift.

Looking around, I am delighted to see many friends from corporates, banks, fund management firms and other industry professionals sitting here, keen to learn more about sukuk. I am sure that the experts gathered here today will be able to shed light on how sukuk can be a viable fund-raising tool and an attractive investment instrument. Before that, allow me to take this opportunity to say a few words, from a policy perspective, on why developing an Islamic finance platform is important for Hong Kong, and our plans in building this platform. What’s in it for Hong Kong to develop Islamic finance? 4. Islamic finance has become increasingly important in the global financial market, registering exponential growth over the past few years. Compared with a size of only $ billion in 2008, the global Islamic financial industry has expanded remarkably to an estimated $ trillion by the end of 2013, representing an annual average growth rate of 21%.1 According to market estimates, there is huge potential for further growth, with Islamic financial assets expected to reach $ trillion by 2020.2  5. A major growth area for Islamic finance is the sukuk market. Ten years ago, new sukuk issuance was only a modest $ billion. In just ten years’ time, annual sukuk issuance has already surpassed $ billion, amounting to $ billion in 2013 which was more than 20 times higher than the figure in 2003.3  6.