samchain/econo-pairs-v1 huggingface dataset:
Because a targeted attack on a hub risks bringing the heart of the system to a standstill, whereas random attacks are most likely to fall on the periphery. This result carries important policy implications. Long periods of apparent robustness, where peripheral nodes are subject to random shocks, should offer little comfort or assurance of network health. It is only when the hub – a large or connected financial institution – is subject to stress that network dynamics will be properly unearthed. When large financial institutions came under stress during this crisis, these adverse system-wide network dynamics revealed themselves. The third result is the well-known “small world” property of connected networks. 11 The origin of this was a chain letter experiment by Stanley Milgram in 1967. This showed that the average path length (number of links) between any two individuals was around six – hence “six degrees of separation”. Although networks tend to exhibit local clustering or neighbourhoods, certain key nodes can introduce short-cuts connecting otherwise detached local communities. This small world property has again been found across a range of physical networks, including the World Wide Web and forest fires. 12 Its implications for network robustness are subtle. In general, however, it will tend to increase the likelihood of local disturbances having global effects – so-called “long hops”. That could occur between different institutions or between different nation states. Either way, a small world is more likely to turn a local problem into a global one.

Headline CPI went from 1.5 percent annually in  BIS central bankers’ speeches  1  October 2013 to 4.7 percent in May 2014 (figure 1). We expected this rise in inflation to some degree, because it came from a low level and the peso depreciation we have been observing since mid-last year also had an impact. A look into inflation rates over the past six months shows that the biggest increase has concentrated in those components of core inflation of goods and services whose prices are connected – directly or indirectly – to the exchange rate (figure 2). We have also seen an acceleration of nominal wages in recent months. Inflation has behaved thus in a context of sharply decelerating output and demand. In the first quarter this year, output grew 2.6 percent annually, confirming the slowdown that began in the third quarter of 2013. Overall, this outcome was in line with forecasts, but composition shifted towards higher growth in those areas more closely linked to the external sector – like some branches of manufacturing and agriculture – and slower growth in those areas tied to domestic demand, especially services. Leaving out inventories, y-o-y growth in domestic demand picked up from end-of 2013, basically due to a milder drop in investment – especially its machinery & equipment component – and increased dynamism of public expenditure. Domestic spending is still weak, however. Investment has posted negative variation rates for three quarters in a row, while private consumption, mainly of durables, is slowing down (figure 3).
That said, given the severity and duration of the recent crisis, this trend does not deviate particularly from the empirical regularities observed for previous economic cycles. Third, the survey on SMEs indicates that, despite having been less successful than large companies as regards their applications for bank loans in the first half of 2009, the majority of SMEs received some or all of the amount applied for. Fourth, it is probable that loans to non-financial corporations will remain modest over the coming months; this would be in line with past evidence, which suggests that the trend of such loans tends to lag developments in GDP by a few quarters. Fifth, the ECB has introduced numerous measures, both ordinary and extraordinary, to support the euro area economy in general and the banking sector in particular. It would be difficult to do more. It is now time for the banking sector to implement the necessary process of recapitalisation in order to restore confidence and support growth. The importance of SMEs in the euro area Let me start by pointing out the importance of SMEs in the euro area. SMEs – which are usually defined as firms with less than 250 employees – play a very important role: over 99% of firms are SMEs and, in the non-financial corporate sector, they produce 60% of total turnover and employ 70% of employees. Their activities are essential to fostering entrepreneurship, competition, innovation and growth.

We expect to start granting licences to virtual banks around the end of this year or early next year. I believe establishment of virtual banks will provide further traction to the growth of the Smart Banking ecosystem in Hong Kong. 7.Fourthly, the Smart Banking ecosystem is not complete without support from the general public and customers. I am glad to see that a large number of bank customers have signed up with the Faster Payment System (FPS) since the launch of customer registration on 17 September for registration. Growing significance of Regtech in the Smart Banking Era 8.As we watch the positive development of the Smart Banking ecosystem, it is also important that we maintain momentum. This year, the conference’s theme, “Banking for a Smart Society”, reminds us not to be complacent. We should continue to work collectively to further develop the ecosystem. 9.While we naturally pay more attention to new or innovative digital financial services that become available to bank customers as a result of the Smart Banking initiatives, let’s not forget that Fintech is not only about the interface between banks and customers. The importance of a key Fintech segment, Regtech – regulatory technology – in supporting and facilitating the interface between banks and the regulators, should not be understated nor overlooked. I would like to therefore provide a supervisor’s perspective on Regtech in the Smart Banking era. 10.When we look at Regtech, some may immediately start to envisage the substitution of us, banking supervisors, with technologies such as artificial intelligence (AI) or “robo-regulators”.
In addition to increasing the resilience of the banking system, higher capital adequacy requirements could also contribute to slowing down household indebtedness as the banks’ funding would become more expensive if they had to have more capital, which could lead to higher lending rates and reduced credit granting. However, further capital requirements of the magnitude now being discussed would have only relatively marginal effects on household indebtedness.10 At the same time, both household debt and housing prices are continuing to increase from already high levels, despite the fact that Finansinspektionen introduced a mortgage cap already in 2010. I therefore feel that further measures are needed to subdue household demand for credit. The Riksbank has proposed, for instance, the introduction of healthy minimum levels for the standard values used by the banks in their discretionary income calculations, which form part of their credit assessment of households. This means that a borrower should be able to manage certain minimum levels with regard to interest rate, amortisation rate on both first and last mortgages, as well as maintenance and general living costs. Examples of further measures that might have an effect on indebtedness are amortisation requirements, limits to loan amounts or interest payments in relation to income or a stricter mortgage cap. The question of measures to increase households’ amortisation of their loans was discussed by the Financial Stability Council in May.

The upper half illustrates the effect of the repo rate on inflation and resource utilisation during the forecast period, and the lower half illustrates the effect of the repo rate on indebtedness and risk in the longer run.6 In the situation we have had in recent years – with inflation undershooting the target – a lower repo rate and repo-rate path has typically meant that inflation will approach the target faster, but also that household indebtedness – and thereby the risks in the longer run – will increase more. Our most recent assessment assumes that household indebtedness, measured as debt in relation to disposable income will increase from an already high level, and moreover increase somewhat faster than in the previous forecast (see Figure 9). At the same time, the percentage of loans at a variable rate is increasing. This is natural in a situation where the Riksbank is signalling that interest rates will be low for a long time. However, the combination of high indebtedness and a large percentage of variable-rate mortgages makes households more sensitive to changes in interest rates. The low inflation is motive for lower interest rates – indebtedness must mainly be managed within other policy areas As on so many previous occasions in recent years, the monetary policy balance in July concerned balancing the low inflation against the high household indebtedness and the risks this entails.
Thus, in the wake of the financial crisis there has been a substantial increase in the intermediation of credit via financial markets rather than long-term on the balance sheets of banks, involving both the supply of new credit to borrowers and the absorption of assets coming out of the banking system, as banks reduce their balance sheets. Over the same period, there has been a fundamental and rapid change in the microstructure of financial markets – the organisation of how they work. Electronic platforms are increasingly used in a number of major financial markets (notably equity and foreign exchange markets). As part of that change, automated trading – which is a subset of electronic trading using algorithms to determine trading decisions – has become common in those markets. And, within automated trading, there has been growth in high frequency trading – which relies on speed of execution to get ahead of other market players. 3 While electronic trading has contributed to increasing market efficiency and probably reducing transaction costs, there are also risks that arise from trading strategies that are flawed, or where in constructing the strategy not all possible outcomes were considered, including the ability to trade large blocks. To recap, the last two decades have seen major changes in the financial system. These have, in turn, shaped the impact of the global financial crisis and its aftermath.

One element of this is the response of regulators to the financial crisis (to which I will return later), while the other is a product of the rapid development of technology and trading strategies. The effects have probably been offset to some degree by beneficial influences from central bank monetary policy actions which have increased market liquidity. Measures of risk that reflect the overall demand for and supply of financial assets, including liquidity risk premia, remain low by historical standards, notwithstanding recent events. In part, this likely reflects the continued intended effects of monetary policy setting and the communication of policy looking forward. This has, as intended, provided an incentive for risk-taking by investors, and thus the market environment has been conducive to the so-called “search for yield”. But, as described, underlying conditions in financial markets suggest that the current situation could be fragile. 5 Shocks that might prompt large-scale asset disposals are of particular concern. The global asset management industry is both large in size in its own right and relative to the size of the commercial banking system. A key issue is the degree to which asset managers (or shadow banks) typically offer shortterm redemptions against potentially illiquid assets. This capacity to realise assets without unwanted disturbance to financial markets is therefore critical and is shaping the work of authorities. The risk is inherently global in nature, thereby suggesting that internationally– coordinated policy action is the preferred outcome where necessary.
We are currently managing through disruption of a significant scale, and the current crisis may exacerbate business model challenges that insurers will need to confront over the medium and long term. This pandemic is likely to raise questions for customers around the value provided by insurance products; we are already seeing significant coverage questions being raised around business interruption and travel policies in particular. There is a critical role for insurers to adapt and ensure they are able to meet customers’ insurance needs whilst managing their commercial operations, particularly during the transition out of the crisis and into the longer term. Firms should take early steps to assess what changing customer behaviours or expectations could mean for their current business models. Although it’s difficult to see beyond the immediate crisis, this pandemic is reinforcing two important things. There are a number of measures contained in Solvency II that have effectively mitigated the pro-cyclical effects caused by the disruption to financial markets. And second, the importance of the fundamental principles of the regime during a systemic event – those that require prudent capital and risk management. These can be expected to endure in any future version of our regulatory regime and will be critical for insurers to successfully navigate the complex landscape of emerging risks.

A key challenge of the Covid-19 crisis for us has been isolating the signal – the increased risk to insurers and their policyholders – from the noise caused by markets finding their way with very sharp but temporary overreactions. 1  https://www.bankofengland.co.uk/-/media/boe/files/speech/2019/insurance-risk-management-in-a-changing-world-speech-by-charlottegerken 2 Category 1 & 2 life and non-life insurers regulated by the PRA 2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  Solvency II contains several measures that were intended to or have otherwise leant against the pitching and rolling of financial markets. These include the Matching Adjustment (MA) and the transitional measure on technical provisions (TMTP); also the Standard Formula Symmetric Adjustment of the Equity Capital Charge (the symmetric adjustment), the Volatility Adjustment (VA), and the Ladder of Intervention. In addition to benefiting financial stability, these measures have helped to filter out the noise in financial markets, supporting the PRA in assessing that insurers are adequately capitalised for fundamental risks in their business and protecting policyholders. The MA is, for UK life insurers, the most material Solvency II long-term guarantees measure, and has been the most significant in the current crisis. The MA is intended to enable insurers to hold assets to maturity and avoid changes in spread from impacting their solvency. When appropriately cash-flow matched, their locked-in funding means that annuity writers are unlikely to have to sell assets prior to maturity, even in a severe stress.
Eva Srejber: Greater budgetary discipline in the EU through transparency and national ownership Speech by Ms Eva Srejber, First Deputy Governor of the Sveriges Riksbank, at a breakfast seminar organised by Ernst & Young, Stockholm, 26 September 2006. *  *  *  Fiscal and monetary policy are interdependent. A government needs transparent and consistent monetary policy to know how to conduct fiscal policy. Similarly, no monetary policy will be sustainable if there is a rapid accumulation of debt. This is what Sweden witnessed in the 1980s and the early 1990s. An unsustainable mix of fixed exchange rates and lax fiscal policy, which led to high inflation and eventually to a crisis that landed us with an even higher mountain of debt. When the regime collapsed, General Council decided that the Riksbank should work towards a direct inflation target. The Riksbank determined that the target would be two per cent. Today this policy is hailed as a success. However, the real breakthrough for the new regime was in the mid-1990s when a forceful implementation of fiscal consolidation, supported by a broad political majority in parliament, made the macroeconomic set-up as a whole credible. It was only then that inflation expectations among the public finally fell to the target of 2 per cent, and interest rate spreads against Germany were reduced substantially. This fiscal tightening could in turn be based on the predictability of the new monetary regime with a clear inflation target. And the tighter fiscal policy would eventually allow less restrictive monetary policy.

This is a strengthening compared to the earlier agreement among the euro area countries, changing the requirement from targeting the cyclically adjusted deficit to targeting an improvement in the structural deficit. When deciding the adjustment path, public investment and structural reforms can be taken into account. If structural reforms are to be taken into account, they should have a large and proven positive effect on the economy and there should be a safety margin to the 3% deficit floor. My view is that there is a possibility to use the newly defined MTOs in a wise manner, more closely adapted to the situation of the individual country. However, the scope for interpretation is so large that there is a high risk of lax and uneven implementation. The experiences of the first year indicate that some member states have more ambitious MTOs than required by the Pact. This is often countries with their own national budgetary rules, such as Sweden, which comprise MTOs. At the same time,  2  BIS Review 88/2006  there are other member states who need to do more to achieve their MTOs. The measures are often postponed too far ahead and are not sufficiently explicit and concrete. Changes in the corrective arm The third part of the changes refers to what happens when a country has an excessive deficit. As before, exemptions can be granted if the country is suffering from a severe economic downturn that it could not foresee, so called exceptional circumstances.
The Riksbank has therefore taken powerful measures in recent weeks, the aim of which has been to enable normal companies to finance their activities. It is clear that companies are having problems doing this at the moment. Companies that obtain funding by issuing corporate bonds or commercial paper have been affected by the turbulence on financial markets and the periodically limited bond trading. From our conversations with business leaders throughout Sweden, it is also clear that the shortage of liquid funds is a major problem and several have also experienced a deterioration in their funding terms. The most vulnerable sectors are finding it most difficult to obtain loans from banks. In other words, there is a major need for loans to both small and large companies so that they can survive a period in which the economy risks freezing over. Although we will not be able to prevent this, it is a question of reducing the risk of viable companies being forced to close and lay off staff due to a lack of money. This could exacerbate the downturn in the economy and depress output and employment in the long term. 2 [5]  Seven measures in the space of two weeks As a first measure, the Riksbank has therefore launched a programme of corporate lending via our monetary policy counterparties. The aim is to support credit supply to Swedish companies.

This leads in turn to a rise in redundancies, something we have unfortunately seen in these last few weeks. Banks then become uncertain as to whether companies can pay back their loans. When uncertainty arises about the financial strength of companies, interest rates go up and it becomes more difficult for the financial system to mediate credit from lender to borrower. Investors, those who normally want to invest money to increase their returns, back away. When they do so, the functioning of other markets increasingly deteriorates. The Riksbank acts as a safeguard so that the system does not run out of money It is now a question of trying to shorten the period of risk aversion and credit shortage as it can exacerbate and prolong the downturn in the economy. As the Riksbank functions as the banks’ bank and supplies them with money which they then pass on to others in society, the Riksbank’s task is to supply money to the financial system. This reduces the risk of money shortages and sharply rising interest rates exacerbating the situation. By guaranteeing ample access to Swedish kronor that keeps down interest rates, the Riksbank helps to ensure that consumption and investment do not fall as much as they otherwise would have done. In this perspective, the Riksbank’s task is key in order to mitigate the effects on jobs and companies. And we take this task extremely seriously because “it is no game”, as one business leader put it in our survey.
As the U.S. economy continues to grow and expand—as I expect it will—your personalized customer service, commitment to relationship banking, and adaptability to technological advances will serve you and your communities well. I will miss many aspects of my role at the New York Fed, particularly the opportunities I’ve had to interact with the community bankers in our district. Please enjoy today’s conference, and thank you for coming. 1 Sumeet Batra, Richard Ciccotelli, and Jacqueline Fenton assisted in preparing these remarks. 2 See William C. Dudley, The Importance of Incentives in Ensuring a Resilient and Robust Financial System,  March 26, 2018. 3 Keeton, William & Kahn, George A. & Schroeder, Linda & Weiner, Stuart E., 2003. “The role of community banks  in the U.S. economy,” Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 15–43. 2/2  BIS central bankers' speeches

Maiava Atalina Ainuu Enari: Educating children about money matters Opening remarks by Ms Maiava Atalina Ainuu Enari, Governor of the Central Bank of Samoa, at the Awards Ceremony of the “Be Money $ Financial Literacy Poster Competition 2014, Apia, 14 March 2014. *  *  *  Greetings and welcome to you all, dear parents, school principals and most importantly the winning students of the 2014 Be Money $ poster competition. As I look across the room to the students, parents and principals/school reps,... without a doubt this is a Happy Friday for you all. It gives me great pleasure to say that, this is also a Happy Friday for us at the Central Bank – we are as much excited to reveal the winning poster entries as you are to be here today to receive your awards!! Talofa! Talofa Lava; I am delighted to be here today, at the conclusion of an important initiative for the Central Bank, to address this gathering and most especially the winners of – our first Be Money Wise Financial Literacy Poster Competition. This competition is one of many programs undertaken by the Central Bank to perform one of its mandates of promoting financial literacy under the “FINANCIAL FITNESS” or “FIT for FINANCE” campaign. The “Be Money $ Poster Competition 2014” was also conducted in collaboration with the Global Money Week which is coordinated by Child & Youth Finance International.