samchain/econo-pairs-v1 huggingface dataset:
We’re very grateful to those in the North East, Northern Ireland, Yorkshire & the Humber, London, Scotland, the West Midlands, and the South West who, in recent months, have spent an evening with me or my colleagues. They’ve given us much to chew on about how the economy and the financial system really look from where they sit in different parts of the country and society. They’ve challenged us on the financial crisis, quantitative easing, interest rates, living costs and more. And most importantly, they’ve held us to account, forcing us to explain every aspect of our work. And some. While that’s not easy, it’s essential. Because it’s their economy, their financial system and their lives that we influence. We are simply citizens in their service. 11  All speeches are available online at www.bankofengland.co.uk/speeches  11

In general, credit terms should be calibrated to the quality of the information provided by the hedge fund counterparty. To the extent this is done generally across those funds that are less transparent, have weak risk management disciplines and/or inadequate operational infrastructure, they will be able to take on less leverage, which would limit the potential risk they may pose in a disruptive event. As these points suggest, it is not enough to simply manage the firm’s direct potential future credit exposure to hedge funds within prudently low limits. This has to be complimented with a more exacting approach to the evaluation of a firm’s overall vulnerability to market risk that includes full consideration of the potential impact of a large shock, including one that involves hedge funds. Alongside these enhancements to risk management practices, we believe that market participants should also intensify their efforts to improve the underlying infrastructure of the markets in which hedge funds are important. Weaknesses in close-out procedures for OTC derivatives were among the areas singled out by the CRMPG for collective action in the wake of LTCM, and important progress has been made in this area since. In addition, there are potentially valuable efforts underway to standardize documentation and improve the confirmation and execution process in these markets.
That is something that we may review next year in line with the process of deregulation already referred to. In the meantime, this need not be a barrier to setting up virtual banks, either by converting existing local franchises or, in the case of an overseas bank, by setting up a branch in Hong Kong. As proof of this, we are currently considering two applications to set up virtual banks, and assuming that they can meet our authorisation requirements, I hope that these can be in operation quite soon. One of the main tests that these applicants will have to satisfy is that they have adequate security to prevent unauthorised access to their systems and to protect customer information. Weak internet security puts the financial position and the reputation of the bank at risk, and concerns about security are the major barrier to more widespread customer acceptance of e-banking. It is essential therefore that the banks get this right. We have tried to help by issuing guidelines to the banks on various aspects of security, including the need for senior management to commission periodic independent assessments of the security aspects of their e-banking services. We have recently provided further guidance on how such assessments should be conducted and the areas they should cover. However, we also need to be in a position to conduct meaningful on-site examinations of our own.

As prime examples of Old Economy dinosaurs, they would inevitably succumb to the onslaught from new competitors like virtual banks, technology firms, monoline service providers, portals and the like. The position of the banks is certainly not secure, but it is looking a bit better than it did only a short time ago. The decline of the New Economy has seen the Old Economy strike back, with even bricks and mortar coming back into fashion. The brand names of banks and the credibility which their branch networks provide are not to be underestimated as marketing tools. The ability to marry the branch network to an internet delivery channel is a powerful competitive advantage. But it is also one that could easily be thrown away unless the banks are truly sensitive to the needs of their customers. BIS Review 93/2000  4
The aim is, should the case arise, to provide for the management of situations of bank nonviability while preserving the stability of the financial system, minimising public financial support, safeguarding depositors and ensuring the continuity of the critical economic functions of the banks in question. All of the foregoing might influence the management of bank balance sheets and have a particular bearing on the composition of their liabilities, part of which must be eligible for absorbing losses and for their recapitalisation. The SRM comprises two elements: the Single Resolution Board and the Single Resolution Fund. The latter, by means of contributions from the banking sector, is expected to amount to € billion in 2024. In the national arena, the recently approved legislation on the recovery and resolution of credit institutions and investment services firms distinguishes between pre-emptive resolution functions, which correspond to the Banco de España in the case of credit institutions and to the National Securities Market Commission (CNMV) in that of investment services firms, and enforcement resolution functions, attributable to the Fund for the Orderly Restructuring of the Banking Sector (FROB), which sits moreover on the SRM Board, with the Banco de España having observer status. Performance of credit institutions in 2014 Before concluding, I shall review the recent performance of Spanish credit institutions. The year 2014 saw an improvement in financial conditions and a recovery in activity and employment.

Turning to prices, inflation, which has been in negative territory virtually since the recovery began, has undergone a progressive correction since the start of this year, standing at –0.2% in May further to a rise in the energy component and a gradual pick-up in core inflation. The decline in prices in Spain is proving more marked than in the Monetary Union as a whole, meaning that the inflation differential will continue to help in bringing about an ongoing improvement in our economy’s competitiveness. Inflation might be running at a moderately positive rate at the end of 2015 owing to a combination of several factors. Firstly, the progressive petering out of the effect induced by the heavy fall in oil prices in the closing stretch of 2014 is expected to bring about an automatic rise in the energy component of the CPI in the closing months of this year. BIS central bankers’ speeches  1  And further, the depreciation of the euro will impact non-energy goods and services prices. In any event, the persistence of considerable slack in the economy, i.e. of substantial unused capacity, means a mild recovery in the inflation rate over the next two years is to be expected. The factors underpinning growth The favourable growth outlook is underpinned, above all, by the restoring of macroeconomic equilibria. The progress made and the measures underpinning it have allowed the confidence of both external investors and of Spanish households and firms to be restored.
This would hit the regions impacted by the crisis hardest and the number of industrial jobs would decline more rapidly. Another important question concerns the implications of the division of the economy for the Industrial Agreement’s normative role in wage bargaining, a role which has been very important during the most recent agreement periods. The Industrial Agreement has been a restraining force, contributing towards retaining the competitiveness of that part of the Swedish economy exposed to international competition and keeping inflation at a low and stable level at the same time as real wages have risen and growth in the Swedish economy has been strong – until the financial crisis. In the period ahead, a drawn-out recovery, weak labour markets and low price and wage increases are also expected internationally. The sector exposed to international competition is the area of the Swedish economy to be most tangibly and directly affected by these external conditions for wage developments within Sweden. This suggests that this sector should also play a normative role in this year’s collective bargaining. The service sector is not as sensitive to cost increases, but finds it easier to pass these on to prices. If the service sector plays a normative role in this year’s collective bargaining, it is likely that wage increases, and thereby inflation, will be greater than would be the case if the sector exposed to competition were to be normative. Another issue that may play a major role is uncertainty concerning the future.

This will offset the impetus to consumption and investment provided by the near-zero interest rates. 7. Some academics believe that the effectiveness of the quantitative easing policy in the US is also undermined by the fact that the US property market has not yet bottomed out and US households need to continue to de-leverage. Many policy measures introduced in the US recently aim to reduce the pain of households in a falling property market and slow down the process of foreclosures. Even though property prices have already fallen significantly, more than 50% in some places according to anecdotal reports, potential buyers still prefer to wait as they fear that prices may fall further once the huge stock of foreclosed properties are put back to the market or when interest rates return to more normal levels. In other words, while measures to slow the downward adjustment of the property market are well-intentioned and have their political merits, they could prolong the time needed for the market to reach a new equilibrium or find the so-called clearing price. In my view, this may delay a true recovery of the property market and create a negative drag on the repair of US  2  BIS central bankers’ speeches  households’ balance sheets, making the recovery of consumer confidence farther and farther away. 8. Finally I would like to share with you a few policy lessons learnt from the latest crisis:  (a)  Households, companies and governments alike must avoid excessive leverage or borrowing.
More important still, however, is the need for the Banco de España’s autonomy in the area of supervision to continue to be respected and for governments to continue to resist the temptation to interfere in its supervisory decisions, while continuing to design legal instruments and to defend the proper use of public resources. The Banco de España must continue to maintain a dialogue with governments, not only advising them but also listening to them (since nobody has a monopoly on good ideas), although supervisory decisions must continue to be based, as up until now, solely on a professional basis. 6  BIS central bankers’ speeches  I have been emphasising today what has been done during these years of crisis by Spain (that is to say, everyone), because until our country has regained the trust of the rest of the world, the attention of investors will continue to be focused on what all relevant parties have done and are doing to correct the imbalances of the Spanish economy. In particular, they will be monitoring and assessing the extent of cooperative behaviour to overcome the crisis. I’m going to conclude with a few words on Europe, as I believe our membership of the European Union and of the Monetary Union is another good reason for viewing optimistically our possibilities of overcoming the crisis. Some measures need no further explanation, as they clearly show how Europe has helped us and continues to help us during this crisis.

Indeed, all financial sectors are impacted by market developments as the boundaries between financial activities are becoming increasingly blurred. More broadly, all competent financial authorities, central banks, supervisors and ministries of finance should strengthen their coordination mechanisms for managing a crisis impacting cross-border financial institutions. In Europe, an important step has been taken in this direction with the Memorandum of Understanding signed by the financial authorities of all EU Member States in June 2008, which established common principles, procedures and terminology to be used by all parties involved in a cross-border crisis. BIS Review 123/2008  5  Conclusion We are experiencing a very challenging and demanding episode of the market correction which started more than a year ago and was due to a significant underassessment and underpricing of risks in global finance. This fostered extremely high risk–taking behaviour, excessive leverage and a widespread use of toxic, obscure and abnormally sophisticated financial instruments. In this regard, global finance was potentially unstable before the start of the turbulence and this was mentioned publicly, particularly in 2006 and the first part of 2007, by a number of speakers, including myself. The sub-prime mortgage crisis has therefore played the role of a trigger but there was a good deal of explosive around. My experience of previous crises is that it is extremely important to analyse situations very carefully and lucidly and never to underestimate its gravity.
If reintermediation is significant, banks will be taking back on to their balance sheets conduit and investment vehicle paper or just holding onto loans for longer than usual before they can be sold onto the capital markets. 19  Perhaps nothing illustrates this as cleanly as the advent of credit derivatives. Derivatives of any kind unbundle funding (and so liquidity risk) from the underlying risk to which an agent is seeking exposure via a particular contract. So a credit derivative unbundles credit risk from funding. This further complicates interpretation of the bank lending data (M4L). Imagine that, due to their customer networks and screening capability, banks originate all credit, but that they use credit-default swaps to shed a great portion of the credit risk via CDS to non-bank financial institutions. In the limit, this would be a world in which M4L correctly measured (bank) lending and M4 was one useful measure of “liquidity”. But it would also be a world in which shocks to credit conditions from capital and risk appetite worked largely through non-bank lenders, and in which shocks to liquidity worked largely through depositor confidence in the banking system. In the real world, this story underlines the need to look at total credit, and to analyse the monetary data with finesse. 20  See Bank of England Inflation Report, November 2007, Section 1 on “Money and Asset Prices”, pages 16-17.

This is not normal, but today there is no other alternative but to continuously expand controlling powers. Since there is little hope for self-regulation, we believe it right to move towards more systemic efforts in order to limit risks for customers. We would like to, so to say, coordinate the fundamental principles with the market community. The first principle is product governance, that is, product life cycle management. We discussed this topic yesterday at the International Financial Congress. We are now drafting a relevant 5/7  BIS central bankers' speeches  consultation paper and will publish it soon to discuss it with the financial community. The idea of such product governance is that, before offering new products or services in the market, a company should identify the target audience and its needs, inherent risks for customers, and test new products before their launch. The second fundamental principle is the assessment of the customer value of a financial product. In our opinion, a high-quality financial product should conform to consumers’ reasonable expectations. I firmly believe that if market participants focus on the customer value of a product, this will promote effective competition in the market. Unfortunately, not all financial products offered in the market today conform to the customer value principle. As an example, let’s look at recent statistics on housing equity holders’ insurance and insurance in general.
To achieve the primary objective of price stability, as Christine Lagarde simply and clearly put it, “the (effective) transmission of monetary policy is just as important as monetary policy itself”. And this transmission applies towards all economic players, along all financing channels, and in all countries. 3/5  BIS central bankers' speeches  Thus, as early as the critical phase in March, it was already essential (i) regarding interest rates, to support favourable financing conditions and to contain the adverse effects of strains on the financial markets, (ii) regarding volumes, to guarantee sufficient liquidity for business and households through bank channels, and lastly (iii) to limit the risks of financial fragmentation within the euro area. When we need to meet several intermediate objectives at the same time, we need to expand our range of instruments and strengthen their intensity. Here, economists often refer to the “Tinbergen principle”, but it does not necessarily require strict specialisation with one single instrument assigned to each objective. Our choice at the ECB is more pragmatic: since March, we, like the Fed and the Bank of England, have greatly expanded and strengthened our armoury of instruments and in so doing refuted all those – and remember there were a lot of them only a few months ago – who feared that the central banks were “running out of ammunition”. However, some of our instruments deal with the long-lasting, underlying low-inflation environment that preexisted the crisis – and which has not gone away. It is our “baseline game”, if you will.

William C Dudley: The economic and fiscal challenges facing Europe Testimony by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, before the Subcommittee on Domestic Monetary Policy and Technology, Committee on Financial Services, United States House of Representatives, Washington DC, 27 March 2012. *  *  *  Introduction Chairman Paul, Ranking Member Clay, and members of the Subcommittee, my name is Bill Dudley, and I am President of the Federal Reserve Bank of New York. It is an honor to testify today about the economic and fiscal challenges facing Europe, and the Federal Reserve’s efforts to support financial stability in the United States. Financial stability enables U.S. businesses and households to maintain their access to credit and ensures sustained economic growth. This is why promoting financial stability is an important objective of the Federal Reserve, and other central banks around the world. Let me preface these remarks by stating that the views expressed in my written and oral testimony are solely my own and do not represent official views of the Federal Reserve Board, the Federal Open Market Committee (FOMC) or any other part of the Federal Reserve System. Additionally, because I am precluded by law from discussing confidential supervisory information, I will not be able to speak about the financial condition or regulatory treatment or rating of any individual financial institution.
In view of this deficiency, the Central Bank stepped in 1998 to introduce a forward sale contract system to ensure an agreed price for the major agricultural crops produced by the farmer community. The enforcement of the forward contracts was done in terms of the provisions of Sale of Goods Ordinance enacted during the British Period. In terms of this law, people could get into sales contracts and violation of the contract by either party was considered an offence which would permit the aggrieved party to seek redress through courts of law. While the Central Bank provided the guidelines and the mechanism of the system by connecting the farmers to the would-be buyers of products, commercial and development banks functioned as facilitators, financiers and guarantors of the contracts. Initially, the major crops such as paddy, corn, onion, ginger and sesame were brought under the system. The success of the scheme could be gauged from the very negligible incidence of violating the contracts by either the farmers or the buyers during this whole period 27 . The system of forward sale contracts has led to the improvement of the quality of products as well. Since the buyers stipulated the quality specifications in the contract itself, the farmers had to change their production methods to meet the required quality standards. This change has specifically occurred in the case of producing paddy for seed paddy purposes and corn for producing nutritious pre-natal food requirement of pregnant mothers.

The underlying rationale is that a person who does not know how to save does not know how to spend money too. •  Beneficiaries were socially mobilised prior to providing funding so as to create solid customers for banks. This provided a permanent resolve to beneficiaries to go through the hard path of moving out of poverty. •  The group lending system consolidated into Development Societies at the village level and People’s Companies at the district level enabled the project to set up very vital networks in the form effective social capital. It also helped the project to ensure the sustainability of the project when both the foreign funding and Central Bank’s patronage were withdrawn. •  Skills and capacity development of the beneficiaries were conducted continuously in order to make them better entrepreneurs and bankable customers. This helped them to receive a continuous flow of funds for meeting their working capital and investment capital requirements. •  The group savings fund set up under each group helped to provide insurance to the beneficiaries in the event of unforeseen emergencies. In this manner, the beneficiaries were taught the vital lesson of self-reliance and self-accountability. •  The forward sale contract scheme introduced along with the project helped the beneficiaries who borrowed for agricultural purposes to enjoy a stable price system for major crops and be free from disastrous price fluctuations. References APRACA, Self Help Groups as Informal Financial Intermediaries, (1992), APRACA Publications, Bangkok.