samchain/econo-pairs-v1 huggingface dataset:
Second, actions need to be taken to get academia more involved in policymaking, to bring the discipline of theory-based analyses to the policy debates. That implies a better access to governmental data for academic researchers, to enable them to conduct independent and  BIS central bankers’ speeches  1  rigorous research and expose their results to policymakers and the general public, who should listen to them in return. Well, I hope this is no wishful thinking and I will now leave the floor to our distinguished speakers. Thank you. ***** Closing speech To close today’s conference, I would like to come back to the Foundation and its role. I will focus on a brief historical overview of the Foundation for Monetary, banking and financial economic research. A lot has been achieved since 1995, as you know. What was our goal? To promote excellence in academic research in the field of monetary policy and finance. And did we achieve it so far? Well, over three hundred conferences and seminars have been sponsored. The research grant program has also awarded 81 grants for about 2.4 million euros in total. While it is difficult to identify the potential outcome of projects at an early stage, the program has been rewarded by excellent outcomes. Most papers were published in the best international research journals. Yet not just academic successes were achieved. Some papers were also financed by the Foundation and later became hot policy topics, sometimes with very good insight.

For instance, the Economist magazine estimated that about USD 500 billion to USD 1.5 trillion is laundered through banks each year. Further, the Financial Action Task Force (FATF) - an intergovernmental organization under the auspices of the Organisation for Economic Co-operation and Development (OECD) also estimates money laundering to be in the ranges of USD 590 billion to US1.5 trillion. As a percentage of world economic output, money laundering accounts for about 2% to 5%. Obviously, given the secrecy and the illegal nature of this business, it is difficult to tell exactly the extent of money laundering. Nevertheless, these figures give us an indication of the magnitude of the problem. In this regard, financial institutions, in particular, banks provide a conduit through which money (including laundered money) flows. Because of this, the financial system is the focal point of antimoney laundering initiatives because dirty money is most visible when it is first introduced into the financial system. Ladies and Gentlemen, before I proceed in discussing the various aspects of money laundering including stages in money laundering, its effects on the economy, the global and local initiatives to fight money laundering and the role that banks can play in combating money laundering, allow me to define what money laundering is. For the purposes of my presentation today, I shall define money laundering as the method of hiding, mixing and disguising the proceeds of criminal activities through legally operating institutions for the purpose of destroying the origins of the proceeds.
Many of the mortgages are also interest-only loans. This means that there is a risk that housing prices and indebtedness will now be driven up to unsustainable levels. For those of us making the monetary-policy decisions, the key issue is what measures will be taken to slow down the build-up of debt and, not least, what effects these might have on household consumption and ultimately on inflationary pressures in the Swedish economy while our monetary policy is taking effect. This is an important source of the uncertainty we have to deal with. Unfortunately, there is so far little experience to learn from with regard to the effects of socalled macroprudential policy measures. This makes it difficult for those making decisions and for those of us assessing what the decisions will be and what effects they may have. 1  “Results from a survey on company pricing”, Economic Commentary No. 4, 2014. 2  The Riksbank’s Business Survey, September 2014. BIS central bankers’ speeches  3  One trade-off concerns “dosage”. What one wants to achieve is that the growth in debt and housing prices slows down, but at the same time one wants to avoid a heavy fall in housing prices. This is a delicate task. Another question concerns the fact that macroprudential policy involves getting banks and borrowers to behave in ways that they would not otherwise, for instance, amortising their loans quicker than they do now.

Second, when trying to enforce new supervisory guidelines and rules on our local banks, one of the first questions they will ask is what is being done elsewhere. It is thus very helpful to be able to point to the relevant international standard in order to confer legitimacy on what we are trying to achieve. Of course, this presupposes that international standards are relevant to individual countries and territories. The Basle Committee on Banking Supervision has played a major role in setting standards which do have such relevance. In particular, the Basle capital adequacy ratio, which is still called the “Cooke ratio” in parts of Asia in deference to our chairman here today, has become the de facto capital standard in most supervisory systems around the world despite the fact that it was originally intended to apply only to internationally active banks. Despite this enormous achievement, however, it can be argued that the subsequent work of the Committee did become somewhat too narrowly focused on issues which are of principal interest to supervisors from G-10 countries. This is only natural since these are the people who comprise the Basle Committee but it perhaps left something of a vacuum in the setting and promulgation of standards with more global relevance. In particular, much of the work of the Basle Committee has been dominated in recent years by the formulation of its recommendations to extend the capital adequacy regime to cover the market risk arising from trading in derivatives and other financial instruments.
Andrew Bailey: Governance and the role of Boards Speech by Mr Andrew Bailey, Deputy Governor of Prudential Regulation and Chief Executive Officer of the Prudential Regulation Authority at the Bank of England, at the Westminster Business Forum, London, 3 November 2015. *  *  *  It is a pleasure to be speaking at the Westminster Business Forum again. I am going to use my time this morning to set out some thoughts on how at the PRA we are thinking about the role of governance and Boards in the prudential supervision of deposit takers, insurers and major investment firms. We work very closely with Boards, more so than in past approaches to prudential regulation, and I find it a very important, constructive and informative engagement. There is a lot of focus at present on the Senior Managers and Certification Regime which will be implemented by next March, and on the proposal before Parliament to change one element of the test, namely the Presumption of Responsibility. This morning I am going to focus on the substance that underpins the regime. Also, I am not for the most part going to comment on the issue of diversity in Board membership, but not because I think it is unimportant, far from it.

One thing is clear in our work, it is time to take stock on this issue. Thank you. 4  BIS central bankers’ speeches
In contrast to earlier periods of sharply rising oil prices, the main reason behind the current rise in oil prices is a surge in demand and limited excess production capacity. Growth in oil demand has been particularly strong in regions where production is relatively energy-intensive, such as China and other non-OECD countries. China alone accounts for about 1/3 of global growth in oil demand this year. Moreover, there has been a marked reduction in excess production capacity in OPEC countries. Small production problems have therefore affected prices more than would otherwise have been the case. In the short term, oil prices constitute the greatest risk to the outlook for the global economy. High oil prices may contribute to a sharper-than-expected slowdown in global economic growth. This could in turn result in lower demand and lower commodity prices. High oil prices have mixed effects on the Norwegian economy. Lower demand abroad will have a negative impact on parts of the Norwegian economy. At the same time, domestic demand is normally stimulated by higher petroleum investment. The balance in the Norwegian foreign exchange market will not be affected to any appreciable extent. So far, the effects of high oil prices on developments in the real economy have been relatively limited. Credit developments in the past year have given ambiguous signals to our interest-rate setting. Growth in household debt is high. Enterprises have been reducing their debt for some time, but developments over the past months may suggest that this trend has been reversed.

7/9  BIS central bankers' speeches  An Open API Architecture And saving the best for the end: creating an API economy. APIs, or Application Programming Interfaces, are likely to be one of the most important building blocks for innovation in the future economy. APIs are basically a set of protocols that define how one system or application interacts with another, usually from the perspective of information exchange. They allow systems to interact with one another without the need for human intervention. Publishing these APIs allows FIs to collaborate with external users to: – seamlessly merge multiple data sets from different sources into an integrated rich data set; and – deliver more functional and customised solutions faster and cheaper. MAS aims to establish Singapore as a centre of excellence for APIs on financial services. We are actively pushing FIs to develop and adopt APIs, and to offer as many of them as possible to the broader community. APIs are the essential ‘plumbing’ – the pipes – that enable the connections and collaborations that foster innovation. The financial industry has come together, in partnership with MAS and the Association of Banks in Singapore, to develop guidance on APIs. I am pleased to announce that we will publish today what we call the “Finance-as-a-Service API Playbook”. The API Playbook provides guidance on common and useful APIs that FIs could make available. For instance: Many of us struggle today to track and use our rewards points on our credit cards issued by various banks before they expire.
2  2  All speeches are available online at www.bankofengland.co.uk/speeches  2  To explore these issues, we start by discussing briefly recent empirical evidence on market power and its potential macro-economic explanations and implications. We then explore its effects on monetary policy, using counter-factual policy simulations and adaptations of a simple New Keynesian model. Taken together, this evidence suggests that an increase in market power and mark-ups could have potentially important consequences for the economy and policy. These are summarised, in stylised terms, in Figure 1. To the extent a secular rise in mark-ups reflects a set of trade-off inducing shocks, that would shift outwards the output/inflation variability (policy possibility) frontier (from A to B). It may steepen the Phillips curve, causing the policy possibility frontier to rotate clockwise (B to C). And it may also potentially alter the optimal weights placed on output and inflation stabilisation by the policymaker, shifting the point of tangency between the policy possibility frontier and policymakers’ loss function (C to D). Taken together, the net effect of increased market power could be a potentially significant rise in inflation (but less so output) variability, relative to the counterfactual case of stable and static mark-ups (A to D). As for monetary policy, the fact that these are trade-off inducing shock places limits on its stabilisation capacity. The (level and variability) of the optimal interest rate path is, as a result, less affected by increased market power, despite significant shifts in policy possibility frontiers and policymaker preferences.

This is a significant change in the parameterisation of a key macro-economic relationship for the setting of monetary policy. One way of explaining the intuition behind this steepening of the Phillips Curve is that market power reduces the degree of strategic complementarity in price-setting. In a product market closer to perfect competition, firms will be reluctant to raise prices fearful that, with other prices in the economy sticky, demand would fallaway sharply. By reducing the elasticity of demand, market power reduces this risk and thus gives rise to greater flexibility in prices – and hence a lower sacrifice ratio (for example, Ball and Romer (1990)). Let us now put this model into a stochastic setting, by assuming desired mark-ups fluctuate around a trend level according to some stationary stochastic process, log 𝜇𝑡 . These would now appear as cost-push disturbances in the Phillips curve:  𝑢𝑡 =  (1 − 𝜃)(1 − 𝛽𝜃) 1 − 𝛼 log 𝜇𝑡 𝜃 1 − 𝛼 + 𝛼𝜖  (7)  This tells us that, when mark-up shocks strike, a greater degree of market power will mean that a larger fraction of the shock will fall on prices than activity. A rise in market power, through its effect on the slope of the Phillips curve, will cause the Taylor output/inflation variability (policy possibility) frontier to rotate clockwise, with more of the burden following a shock felt by inflation than by output variability. 23  De Loecker and Eeckhout (2018).
These preparations, both in the financial and the real economies, are the preparations which prospective ‘ins’ need to make, in particular. But there are of course preparations in financial markets which apply to everyone. We are in no doubt that the introduction of the euro in 1999, if the current timetable is maintained, will have profound consequences for financial markets, initially for wholesale markets, and later for the retail financial sector too. It is incumbent on all central banks to seek to ensure that the financial markets in which they sit are as well prepared as they can be for this momentous change. We must also ensure that the central banks themselves are well prepared. At the Bank of England we now have a steering group, which I chair, focused on preparing the Bank itself. We have made a clear decision that the Bank will be ready for UK membership of EMU in January 1999, if a future government decides that that is the right course for the country. But our more important work in the short term is focused on preparing the City of London and on preparing the financial infrastructure which the City will need to maintain its position as the most innovative and dynamic financial market in Europe. I should emphasise that we see the City as a financial market for the whole of Europe, not just for the United Kingdom.

We understand that to build one European wholesale financial market will require a staple diet of solid Bundesbank fare, seasoned with a soupçon of Banque de France, a ración of Banco de España, and so on, as well as a couple of pints of Bank of England pragmatism. There is one important area, I think, in which it has not so far been possible to reach an agreed solution, and one on which I might just conclude with one or two observations. That is the question of TARGET, the inter-linking of real time gross settlement systems across Europe. There are two issues of interest, here. First, pricing policy. We have argued that the pricing of the national element of cross-border payments should relate to national costs, rather than being set uniformly. So far we have not prevailed on that point and, as long as the competition authorities approve, it is likely that there will be a common price within the TARGET system for cross-border transactions. Unfortunately, some of our colleagues do not believe this is an area in which competition should intrude. The second important question relates to the terms on which ‘out’ central banks might link to TARGET in the future. We can see no reason why out central banks should not be able to link to TARGET on the same terms as those which apply to the ins. We accept, of course, the need in both in and out countries for rigorous policing to prevent unintended spillover of intra-day credit into the overnight market.
The financial system is also exposed to such external effects, which we could perhaps call pollution. The external effects can be classified by the resulting symptom; excessive risk or excessive credit. Moral hazard arises when a bank’s owners take a big gamble with creditors’ money. While the owners might earn a huge profit by investing depositors’ savings, depositors will never earn more than the interest on their deposits. As long as the owner takes the upside and the depositor is left with the downside, the bank has an incentive to take greater risk than socially desirable. The distortion is amplified by deposit guarantees or public guarantees. When many banks or big banks play moral hazard, risk in the financial system becomes excessive. 4  Thomas Kuhn uses in his book The Structure of Scientific Revolutions (1962) this statement from Max Plancks Scientific Autobiography and Other Papers (1949). 5  Jorda, Oscar, Moritz Schularick, and Alan M. Taylor, “When Credit Bites Back”, Journal of Money, Credit and Banking, 2013, 45, pp 3–28. BIS central bankers’ speeches  3  Contagion effects between banks can also lead to a vulnerable financial system. Banks lend each other money in interbank markets and can become more closely intertwined than is socially desirable. Losses at one bank can spread through the system, creating a domino effect. The contagion effect can also be indirect. When a bank has to sell assets to redeem debt, the value of equivalent assets of other banks decline, as many experienced during the financial crisis.

This means that across a broad range of scenarios, our large-scale asset purchase program is likely to result in a lower federal debt-to-GDP ratio. To sum up, the better choice is for the Fed to pursue the policy that best achieves its mandated objectives and puts the U.S. government in a better fiscal position. This dominates a policy of fewer purchases simply so we can avoid potentially having to explain why our remittances may have fallen to zero for a short period. Issues associated with the normalization of monetary policy Finally, I’d like to talk about some of the other issues associated with the normalization of monetary policy. In general, I think it is premature to spend much time focusing on exit when we have not yet secured a sustainable economic recovery. That’s putting the cart before the horse in my opinion. That said, we nevertheless do need to understand the issues surrounding exit so that we can design the best monetary policy regime to achieve our objectives. On this topic, let me ease three concerns I hear frequently expressed. The first is that the large amount of excess reserves in the banking system will be “dry tinder” and fuel a rise in inflation. As I have mentioned repeatedly, the ability of the Federal Reserve to pay interest on excess reserves ensures that we can control the credit creation process and prevent an upsurge in inflation.
So there are a number of lessons for today’s exchanges, to do with the need to respond to market needs, the need to make full use of available technology, and so on. Role of clearing houses It will be very little surprise to many of you that, as the central bank, the aspect of these developments which interests us most is the management of risk. BIS Review 50/2000  2  Clearing houses have traditionally played a central role in the derivatives markets and continue to do so as those markets expand. They are also increasingly active in the underlying cash markets. It’s clear to see why the markets value their service and it is fortunate that, in the London Clearing House, London has a first class central counterparty. But clearing houses concentrate risk at a single point. And, by serving multiple markets, they provide a route for disturbance to be transmitted between markets. So the way they manage their risk, particularly as they expand their activities, is important to you, I hope, as much as to us. Diversifying across products can provide benefits, particularly if this simultaneously diversifies a clearing house’s exposures across existing clearing members. And expansion into new markets where existing members are already active provides clearing houses - and potentially regulators - with more information on members’ overall trading books which they can use to manage their risk more effectively. Diversifying across markets does not, of course, help when, for some reason, the markets all move together.

In a world where a German trader can trade on an exchange in London with a counterparty in the US who uses a French technology provider and a Belgian settlement agent, the question of how to ensure that all parts of the process are regulated effectively is a tough one. Some argue there should be some kind of pan-national “super-regulator”. Perhaps that is where we will eventually get to although one worries about its potential for the worst sort of bureaucracy: and in the meantime we think that an approach based on close cooperation and the exchange of regulatory information, is a pragmatic way forward and more likely to balance the need to protect investors and the need to encourage innovative, responsive markets. But let me turn my attention back to the opportunities that technology offers. The scope for new contracts on B2B and e-commerce networks is enormous. Contracts that would have taken some time to establish themselves in a pit can be quickly listed on screen at relatively little cost. Trading is now possible in such diverse commodities as electricity, telecoms bandwidth and even the weather. The organisers of this event may, in future, be able to hedge their exposure to fluctuating wine prices using exchange-traded futures based on the finest premier cru, I suspect this is one contract where traders would be happy to go to physical delivery. We central bankers will have to stick to our usual vin ordinaire.