samchain/econo-pairs-v1 huggingface dataset:
I want to briefly mention two possible factors that may be affecting investors’ perceptions of risks and hence of the returns necessary to compensate for them. First, there may be a collective action problem on the part of asset managers. Around half to two-thirds of the shares of the largest UK banks are owned by institutional  BIS central bankers’ speeches  7  investors and managed in-house or by asset managers. 14 These tend to operate to common benchmarks and are subject to rigorous peer comparison. Asset managers, particularly those managing assets on behalf of institutional investors that have fixed liabilities, are currently under great pressure to find returns in a low return environment. Before the crisis, banks made high double-digit returns on equity boosted by very high leverage. There may well be a reluctance among managers of institutional money and investment funds to be the first to drop required returns. This could account for some of the stickiness that we have seen in banks’ return on equity targets. The behaviour of institutional investors may also explain the so-called “low risk” anomaly. In theory, lower risk ought to be matched by lower returns. But some research suggests that this may not be a simple relationship. The “low risk anomaly”, under which lower risk stocks generate no lower – and in some cases higher – returns than higher risk stocks has been identified for banks.

Most importantly, we will not accept empty shell companies. All entities in the euro area must have adequate local risk management, sufficient local staff and operational independence. All that should be self-evident. Banks which seek to permanently book all exposures back-to-back with another entity in London should change their plans. And so should banks that plan to book all exposures with a euro area entity while having their risk management somewhere else. We are aware that it is a burden for UK banks to apply for a new licence in the EU. With a view to internal models, we would aim to be accommodating regarding the timing. There will be a transitional period in which new euro area entities might use internal models that have not yet been approved by the ECB. But of course, there are conditions attached. First, the relevant models must have been approved by the UK’s Prudential Regulation Authority. We would also reflect on any comments on the quality of the models from our UK colleagues. Second, the banks must have applied for internal model approval in the euro area. The transitional period will cease as soon as we have approved or rejected the bank’s model application. Ladies and gentlemen, sound banks are at the heart of a strong economy. Banks therefore should note Walter Bagehot’s words and remain cautious. It is our job as supervisors to help them do so and steer clear of risky adventures. Thank you for your attention. 2/2  BIS central bankers' speeches
Likewise various aspects of the internal audit function may well be centralised. So for global groups, the control of the activities in the various legal entities scattered across the planet will hinge on the adequacy of controls located not in those particular countries but centrally. In a way it is simply an extension of the vulnerability of banking entities to problems arising elsewhere in the group. But in this case solvency of the individual entities will depend on the adequacy of systems and controls located in another part of the group. Massive intra-group transactions to move risk between entities will also affect the position of the various subsidiaries. One obvious question is why firms do not dispense with such a plethora of legal entities and operate a simpler branch structure. The answer seems to be that differences in tax structures and even regulatory requirements in some countries still encourage the use of legal entities in different jurisdictions. In that case should regulators try to lean against this BIS Review 21/1997  - 12 -  centralisation? Here I think the answer must be that the regulators should not try to discourage greater central control of risk. Where a firm is running one type of risk in different locations it must make sense for the total risk to be controlled centrally. But this does create a problem for supervisors because supervision has to be structured along legal entity lines (given that it is legal entities which fail). Responsibility for legal entities cannot be transferred between supervisors.

The value-at-risk approach is an attempt in that direction. It recognises that there is a crucial role for judgement in supervision, and that one size really will not fit all. It does not prescribe the key qualitative factors in legalistic detail. But it does set out the parameters so as to ensure that there is a framework in place which will deliver broad consistency and also some degree of prudence. Some have argued that regulators should go further than the value-at-risk approach: rather than defining the key parameters and endorsing particular model types, why not leave it to the banks, and give them an incentive to improve their internal models as much as possible? Under this pre-commitment approach a bank would specify the maximum portfolio loss on its trading activities and this would become the institution’s market risk capital requirement. Banks exceeding their pre-committed maximum loss (that is breaching their capital commitment) would be penalised in one way or another. Such penalties could be financial, or could entail corrective supervisory action. In some ways pre-commitment can be seen as an extension of the model-approval approach we already adopt. The aim, which we endorse, is to ensure that supervisors work with the grain of the business, and monitor ratios which are seen as meaningful by those who run banks themselves. To that extent, we support it. But there are potential drawbacks.
I think it has the following four features: •  First, its aims to limit the distress to entire financial systems rather than distress to individual institutions. •  Second, its chief aim is to avoid large and burdensome costs to the economy – such as expensive bank bailouts – rather than aiming to protect more narrowly the depositors of an individual bank. •  Third, it is based largely on the assumption that at least some of the risks faced by the banking system collectively differ from those faced by individual banks. In other words, the risk to the system is not simply the sum of risks to individual banks. •  And, fourth, it aims to examine risks that arise from the interaction of banks as part of a financial system rather than on a bank-by-bank basis. While having sound and sturdy building blocks of the system is essential, it is also essential to understand how they all fit together in a framework and this is where the macro prudential perspective becomes critical. In short, the difference between the two pillars of micro and macro prudential surveillance is between a system-wide health check and ensuring that individual banks are inoculated  BIS Review 106/2006  7  properly from disease. The macro prudential pillar takes account of those risks that may affect all, part, or most banks in the system - and not just individual banks.

Thus risk-based supervision and proper risk assessment by banks are essential measures to bring about financial stability. In this regard Basel II will no doubt help strengthen our collective financial systems by encouraging banks to adopt stronger risk management mechanisms. Pillar 2 of Basel II will add to the stability of the financial system by providing a deeper and richer mechanism to evaluate a broader range of risks - including risks that will impact on the system more broadly - such as credit concentration risk. Encouraging greater transparency by banks under Pillar 3 also contributes to making financial systems more resilient by providing a consistent framework across national boundaries for analysts to do their job in identifying weak or risky banks. Ensuring the soundness of individual banks – what some people now call the "micro prudential" perspective – is, however, only part of ensuring a sound financial system. Bank supervisors these days now talk about "pillars" and in addition to the three pillars of Basel II I believe that there are also two pillars of financial stability. One of these is the micro prudential perspective. The other one is the macro prudential perspective. They are mutually reinforcing and both are essential for ensuring financial stability. An important movement in the last decade has been a much more explicit emphasis being given to the macro prudential aspects of banking supervision by central banks as well as academics and other market observers. What do we mean by macro prudential aspects?
For the insurance industry, more needs to be done to provide products that cater for the OKUs’ needs and to address the issue of high loading of insurance premium imposed by the insurers. Another area for consideration – employment opportunities for OKUs On another aspect, the Government has issued a service circular to implement a 1% policy on employment opportunities for OKUs in the public sector as well as provided incentive by giving double tax relief for employers of OKU. It is encouraging to note that several financial institutions have provided opportunities for the OKUs to be employed in the financial industry and recognized that they have the necessary capabilities to contribute to the financial industry. Nevertheless, more needs to be done and I hope financial institutions will provide the opportunity for more OKUs to be employed in the financial industry. Global trend-benchmarking with financial sector in other countries showed that they are more advanced On the global front, looking at the trends and initiatives by other countries, especially the developed countries, we observe that the industry associations are very proactive and undertake a leading role in ensuring the OKUs’ rights are met. For example, the Australian Bankers’ Association issued Guiding Principles for Accessible Authentication to provide guidance to financial institutions to adopt stronger authentication technologies to facilitate the access of people with disabilities.

They contain Braille markings as well as tactile symbols to denote each denomination. In 2000, Bank Negara Malaysia presented 13,000 units of Ringgit cash test cards to the visually impaired which measured third series banknotes of all denominations. This year, the Bank will distribute 20,000 units of Ringgit cash test cards to the visually impaired. The Bank has made several improvements to the new cash test card design including to measure the fourth series banknotes and a coin channel to measure third series coins after obtaining feedback from the National Council for the Blind, the Malaysian Association for the Blind and Kementerian Pembangunan Wanita, Keluarga dan Masyarakat. In conjunction with this program, I would like to take this opportunity to launch the new cash test card. BIS central bankers’ speeches  5
Inflation then falls back to the targeted rate. For clarity’s sake I should perhaps add that this reasoning presupposes that inflation expectations are not affected. The exchange rate’s reactions to monetary policy measures are not entirely given. Text books say that the exchange rate weakens in a scenario with monetary stimuli and appreciates when the instrumental rate is increased. That should normally be the case as long as nothing else happens. But the fact  2  BIS Review 30/2001  remains that there have been many instances all over the world of exchange rates appreciating even though instrumental rates have been cut and vice versa. In such situations market players have often attached greater weight to the prospects of faster or slower economic growth — provided the rate of inflation is expected to remain low. So it is not entirely clear how the exchange rate will ultimately be affected when the intrumental rate is raised or lowered. Were it the case that regulatory changes always refer to a particular group of goods or services, one might consider excluding this group from the price index that monetary policy aims to stabilise. A disadvantage of this might be that monetary policy would be guided by an indicator of inflation that is not the most relevant one for consumers. On the other hand, it could confer the advantage of making monetary policy simpler and more predictable. In practice, however, adjusting the consumer price index for shocks of this type is virtually impossible.

In particular,   Financial implications are often not yet disclosed    Disclosures are often in multiple reports making comparisons harder    Disclosure varies by industry and region, with higher percentages of European firms, as well as higher shares of those on the climate frontline – such as the energy sector – disclosing information aligned with the recommendations; and    Disclosure is weakest with respect to strategic resilience which is the topic of greatest interest to most capital providers. As they look to enhance their disclosures, TCFD members are supported by various TCFD Preparers’ Forums, which have been established to help firms prepare disclosures, for example the Oil and Gas industry group convened by the World Business Council on Sustainable Development and the Institute of International Finance for banks. A4S’ implementation workshops are exactly the sort of collaborative processes which will help ensure that the TCFD recommendations are implemented in a consistent manner. This is particularly important for more complex parts of the TCFD framework like scenario analysis and its interpretation. As A4S has identified, managing climate-related risks will require firms to assess the resilience of their business strategies: where they are now, where they are going and how they will get there. 10  See TCFD (2018), ‘2018 Status Report’, September 2018.
For example, the CRISIS (Complexity Research Initiative for Systemic Instabilities) project is a consortium of EU universities, private firms and policymaking institutions which is building large-scale calibrated models to capture sectoral behaviour, including between the economy and the financial system. 12 At national level, promising progress has also been made in developing ABM models of the housing market. For example, Geanakoplos et al (2012) develop a regional model of the US housing market, which does a much better job than aggregate macro-economic models in matching housing market patterns, both in in the run-up to, and following, the financial crisis. As part of its new research agenda, the Bank of England is working currently with the Institute for New Economic Thinking (INET) at Oxford to try and develop an ABM model of the UK housing market. 13 As with Geanakoplos et al (2012), the aim is to provide a calibrated, granular model which better captures the dynamics of the housing market. It could also, potentially, be used to help evaluate the efficacy of macro-prudential interventions in that market – for example, policies which alter mortgage loan-to-income or loan-to-value limits. A third promising area of research concerns the interaction the macro-prudential and macroeconomic layers of the system – that is, the interplay between macro-prudential and monetary policy tools. This is another priority area for the Bank’s new research agenda. Although these policies have distinct primary objectives, their transmission channels are likely to be closely interwoven, with both affecting risk-taking and economic activity.

It also demands greater agility, astuteness and foresight on our part to go beyond and able to ride on the next wave of growth – either at the higher end of the spectrum of financial services that focus on sophisticated and high value added activities or the lower end that cater for the traditionally underserved, as well as opportunity to fully realise the benefits from the greater regional and international integration. At the same time, a myriad of challenges including global regulatory reform, transformational technology and changing generational expectations will continue to drive change in the years to come. This would also mean that financial institutions will need to meet higher standards of how they manage risks and govern their operations. Against this background, the professionalism, productivity and capability of our talents become more important now than ever before. Future success will hinge on our ability to constantly remould the workforce in the banking industry for a new marketplace, with emphasis on a corresponding increase in the levels of knowledge, skills, competencies and  BIS central bankers’ speeches  1  overall quality of our talents. We clearly have an urgent and important task ahead of us. The critical questions therefore need to be asked here – Have we done enough to sustain the competitiveness of our workforce to meet the current and future industry needs and what more can be done to propel the industry to new heights?
I believe that the truth is more complicated than that, and that these views disregard the progress that has been made in making finance more “ethical” in recent years. Regardless, I believe that it is timely to recalibrate our moral compass – and to explore innovative ways and solutions that finance can offer to build a more sustainable future. If I may say, to discover humanity within the world of finance. As we embark on this quest, we can consider the role that Islamic finance can play in contributing towards sustainable development. With positive values and ethical considerations ingrained within Islamic finance, it provides a ready and workable blueprint for finance that best works for the people and the planet. In supporting economic growth that is both inclusive and environmentally sound, Islamic finance can potentially realise the promise of sustainable development – that is to not leave anyone behind. Ultimately, it can help to build shared prosperity for not only the generation of today, but also the generations to come. There is already large acceptance of Islamic finance in the global economy, with global assets amounting to USD1.9 trillion in 2016. But the success of Islamic finance cannot, and must not be measured solely on headline numbers such as this. In our move towards a sustainable future, the way forward for Islamic finance, in my view, lies in four imperatives. First, Islamic finance must prove its capacity to innovate.

The State Budget for 2013, which will begin to be drafted in the coming weeks, must uphold this commitment and give expression in specific  4  BIS central bankers’ speeches  measures to some of the announcements made in the context of the latest Stability Programme. It is no overstatement to say that much of Spain’s future is at stake in complying with these fiscal targets, and that failure in this process of consolidation would set back considerably the possibility of an economic recovery in our country. BIS central bankers’ speeches  5
Any separate group-service companies need to maintain sufficient capital and liquidity to continue to support the principal operating companies before they are wound down or sold to third parties. And it would probably be useful to have governance arrangements that give some form of control rights to the operating companies over the service companies during that transition. In broad summary, it will be apparent that, even once the statutory resolution regime is in place in all key jurisdictions, many financial groups are going to need to restructure themselves in order to achieve resolvability – financially, legally, organisationally. Indeed, a group’s choice of financial and operational structure will influence which of a SPE or MPE resolution strategy is preferred by the home and key host authorities. These will be bespoke restructurings – and will be on top of the plans for systematic structural reforms of banking around the world (Vickers, Volcker, Liikanen, and so on). Cross-border co-operation The final precondition for success I want to highlight is, of course, effective cross-border co-operation. For a SPE strategy, successful implementation will depend on the home authority providing assurances to the key host authorities so that they refrain from taking independent action. Instead the host authorities would rely on the home authority to give effect to a group-wide resolution and, where necessary under the law, would take local action to help the home authority. Host authorities are going to need to be clear about the assurances they need – ahead of time and during the execution of the groupwide resolution.

During discussions with university leaders, I heard about their exciting new partnership with NBC Universal. By working together, a new Media/Broadcast minor was created to provide the necessary coursework to prepare students for employment at NBC Universal and similar companies. To better understand the extent to which local workforce development programs are addressing skills gaps throughout Upstate New York, the New York Fed has engaged with community leaders from across the region. Our first meeting took place here in Rochester in March 2014. An important issue raised by many participants was the lack of information about available well-paying middle-skills career opportunities. To help address this concern, the New York Fed partnered with the Rochester Community Foundation, MCC, Finger Lakes Community College and Genesee Community College to launch a pilot video contest. The purpose of the contest was to increase awareness about specific middle-skill occupations identified as in demand by analysis conducted by the Finger Lakes Economic Regional Council. The contest challenged college students to create a 30-second video that identifies the skills required, expected wages and job demands for an occupational group within a targeted set of industries. At an awards ceremony held in The Little Theatre here in downtown Rochester a panel of judges selected the winning video “Not Just a Geek,” submitted by students from Finger Lakes Community College. The video focuses on the field of computer science.