samchain/econo-pairs-v1 huggingface dataset:
As I mentioned, the price of oil has just about doubled over the past two years. Typically, the markets view oil price jumps as temporary. But this time around, far-dated oil futures prices also have increased sharply, suggesting that the high prices may be here to stay. This is a highly unusual development. Most likely, it reflects the perception that there is little excess supply of oil available in the world and that global demand is likely to remain strong. The perception that the oil price shock is more permanent tends to intensify its negative effect on spending. Estimates suggest that the oil price shock has noticeably restrained real GDP growth—by about three quarters of a percentage point in 2005. This impact is certainly nontrivial. However, it is worth emphasizing that the recent price change and spending impacts are far smaller than those of the oil shocks in the 1970s. The U.S. trade deficit, as we all know very well, has been growing rapidly for years. By the end of last year, it topped five and three-quarters percent of GDP, a new record. Two of the major factors contributing to the sizable imbalance between our imports and our exports are the strength of the U.S. economy relative to our major trading partners and the relative strength of the dollar. In 2004, the increase in the trade deficit—by itself—subtracted almost one percentage point from real GDP growth, representing a significant drag on overall activity.

This  means that there’s not a stable long-run average ratio to use as a comparison for today’s ratio, so the analysis we did for the other cities wouldn’t be that meaningful for Portland. What we do know is that the pace of home price appreciation in Portland has been close to the national pace over the past few years, lagging behind somewhat in 2003 as the state struggled to recover from the 2001 recession, but mostly catching up in 2004 and early 2005 as economic growth picked up noticeably in the state. As of early this year, home prices in the Portland area were up 12 percent over a year earlier, only a bit below the national pace of 12½ percent. More recently, I’ve heard reports that upscale homes in the Portland area are increasingly being sold at above-asking price—a phenomenon we’re all too familiar with in the Bay Area! So it’s clear that Portland’s housing market has been hot, but I’m sure that’s no surprise to you. In any event, as I said before, the fact that the ratios for the nation and many areas of the country are higher than normal doesn’t necessarily prove that there’s a bubble. House prices could be high for some good reasons that affect their fundamental value. The most obvious reason is the low level of mortgage rates. This stems both from very stimulative monetary policy and from the conundrum I discussed earlier.
The Board of Directors, thus, needs to act as a check-and-balance against the Management with a view to ensuring the safety and soundness of the enterprise. Meanwhile, shareholders also expect the Board to perform its role as a watchdog or guarantor that the corporation would not incur losses or go into bankruptcy. They also expect the Board to check Management against excessive risk taking. Therefore, it goes without saying that if the roles of Chief of Management and the Chairman of the Board are performed simultaneously by the same individual, then other Board members cannot fully perform their duties of providing the check-and-balance required by good governance. Worse yet, shrewd CEO will tempt other Board Members with stock options so that they would go along with his policy direction. This would especially be the case when the CEO aims for high growth or business expansion, which usually implies a quick rise in the company’s equities. Though, these policies are often prone to higher risks, Board members may become less inquisitive and more optimistic in their judgment as a result of the personal interests in potential profits from stock options. At the end of the day, their own personal interests would overtake their sense of conservatism and responsibilities. BIS Review 24/2006  1  One can think of an even worse scenario when the CEO would like to cover up any wrongdoings or poor performances. Since this CEO is also chairman of the Board, he can easily influence the agenda of the meeting.

M R Pridiyathorn Devakula: Efficiency enhancements and risk management Remarks by Mr M R Pridiyathorn Devakula, Governor of the Bank of Thailand, at the Asian Bankers’ Seminar, Bangkok, 16 March 2006. *  *  *  Distinguished Guests, Fellow bankers, Ladies and Gentlemen, Today’s seminar covers wide-ranging topics of interests to the banking community ranging from efficiency enhancements to risk management needed to achieve sustainable business growth. While these issues are topical and useful to bankers, I believe that one cannot simply reduce risks by relying on risk management process alone. An effective risk management system has to be supported by proper governance of the bank’s Management and its Board of Directors. One of the painful lessons of the 1997 crisis was that improper governance practices at the Board level were amongst the root causes of the downfall of too many financial institutions. Back then, it was not unusual for banks to lend to related parties with close connections to their owners, directors, and management without the proper credit analysis. Board members of banks often neglected their responsibilities to blow the whistle against these imprudent activities. Many Board members also did not have adequate and timely access to the necessary information to detect such misdeeds so that appropriate actions could be taken to prevent the resultant damages. The concept of “governance” as understood in Western society and now introduced into our business organizations, including financial institutions, has served as a good starting point to rectify some of the root causes of the crisis.
Inflation has been above target, not below it – and is expected to remain so for some time. Because of these changes in economic conditions, I have voted for a rise in interest rates at recent MPC meetings – as a start to a gradual movement away from the exceptional level of monetary stimulus put in place to combat very difficult economic conditions last year. And I continue to believe that this the right policy for the situation the UK economy currently faces. In the years ahead, we will see much tighter restraint of public spending as the large deficit which built up over the recession is reined in. That process of deficit reduction is necessary to ensure longer term confidence in the future stability of the economy in financial markets and more generally. In this environment, it is the private sector which will be the engine of growth for the UK economy – just as it was in the 1990s recovery and the previous recoveries we have experienced here in the UK. Confidence that inflation is being kept under control is a key factor in sustaining that private sector engine of growth. My view remains that we should be starting now to make a gradual adjustment of monetary policy.

As investors realised there was a risk they may not receive their original investment in full, or that their holdings in MMFs may be suspended, a run on other funds followed, contributing to the extreme volatility in money markets and broader financial markets observed at the time. Following the financial crisis, considerable work was undertaken to build the resilience of MMFs. In 2012 the International Organization of Securities Commissions (IOSCO) published policy recommendations for the regulation and management of MMFs. Many of the reforms that were subsequently implemented have helped improve the resilience of MMFs, however it is clear they 1/6  BIS central bankers' speeches  did not go far enough in solving the underlying problems. And in some cases they may have had unintended consequences, such as the introduction of a link between the level of illiquid assets held by a fund and the potential use of tools (such as fees or gates) to manage redemptions during periods of stress. While introduced to manage potentially disruptive outflows, these changes have made funds more sensitive to so-called cliff edge effects – thus increasing an incentive to exit before the gate closes. One of the important, broader changes in the financial system post financial crisis has been the shift in the importance of bank and non-bank finance, with the latter growing relative to the former. This is not accidental: the post crisis reforms meant that there were asset classes which were no longer suitable to hold in large scale on the balance sheet of banks.
Article 4 (2) of the revised Act specifically states that it shall be one of the objective of the Bank to “ensure the stability of the financial system.”  2  The core principles recommended by the Committee on Payment and Securities Settlement Systems of the Bank for International Settlements (BIS). 2  BIS Review 50/2004  committee dealing with financial stability, the Banking Supervision Committee, and at the EU level the Bank also participates in the Economic and Finance Committee and in its Financial Stability Table. The importance of two-way cooperation with the MFSA The initiatives I have described have strengthened the Bank’s ability to monitor and analyse developments in the financial system in a wider context. It is nevertheless becoming increasingly clear that to carry out this role effectively, the Bank’s efforts in this area need to be supported by the activities of the overall supervisor in the financial field, that is the MFSA. It is, therefore, reassuring to note that good co-operation already exists between the Bank and the Authority. More specifically, the Authority’s focus on the health of individual service providers complements the Bank’s macroprudential analysis of the financial system as a whole and its oversight of the payment and settlement systems. In undertaking their respective tasks, both these institutions have access to information that may not be readily available to the other.

Thus, for example, through its involvement with payment systems and the daily monitoring of the banks’ foreign exchange exposures, the Central Bank of Malta has daily information on the amount of liquidity and the extent of foreign exchange risk prevalent in the inter-bank market. Similar information, however, only becomes available to the Authority with a delay, through the monthly statistical reports submitted by the individual financial intermediaries. Furthermore, the Bank’s macro perspective assessment of financial developments may identify general risks to the system that may not be apparent when the prudential supervision of individual financial institutions is undertaken. This may occur, for example, if the risk profiles of the institutions in question show a high degree of similarity, making the system especially vulnerable to a particular type of shock. Supervision at the micro level, therefore, has to be complemented with a macro analysis of the interlinkages between different segments of the domestic financial sector and its links with the payment system, the rest of the economy and its counterparts abroad. On the other hand, it is also true that the Bank’s macroprudential analysis may not provide precise information on individual institutions, particularly those that may be on the brink of insolvency. Here, the Authority, through regular inspections of individual service providers will have a more in-depth knowledge of the health of single intermediaries and market segments, including those which play a peripheral role in the monetary policy transmission process and with which the Bank’s relationship is, at least on a one-to-one basis, rather distant.
For example, our collaboration with social enterprises has been focused on supporting the youth segment who are not in Employment, Education, and Training (also coined the "NEET Youth"). 9. COVID-19 has been a defining period for the world in many ways. While it has exacted a huge toll on society, it has also become a point of inflection for the adoption of digital financial services. The World Bank, in its Global Findex 2021 report released in June earlier this year, revealed that 79% of Malaysian adults use digital payments, of which 42% did so for the first time after the pandemic. This trend is evident in the strong adoption of e-payments recently, where e-payment usage in 2021 increased by 30% from 2020, a doubling of the long-term average growth rate prior to the pandemic. 10. To sustain this momentum, we will continue to work with the industry and key stakeholders to further promote e-payment adoption through a coordinated nationwide e-payment initiative under the banner of "e-Duit", with the tagline "Selamat, Senang dan Segera". 11. The evolution of digital financial services opens up enormous opportunities to deepen financial inclusion and expand access to previously excluded and underserved populations. But these opportunities can only be fully realised if our society is equipped to use digital financial services effectively, responsibly and confidently. Low awareness and trust, and limited digital and financial literacy, can become barriers to the adoption and effective use of digital financial products and services. 12.

Thanks to this “coalition of the willing”, gathering today more than 90 central banks and supervisors across the world, high level scenarios were published in July last year, updated a couple of weeks ago by a set of 6 scenarios. This set of global reference scenarios  provide a good basis for financial authorities. Of course, the NGFS should continue to develop and refine those scenarios. However, there will remain the need to tailor those scenarios to the circumstances of each jurisdiction, for instance specifics of their climate policies, or more precise meteorological data at the national level. In addition, ST may legitimately differ along other methodological dimensions. A case in point is the use or not of a dynamic balance sheet assumption. Contrary to the BOE, the ACPR and the ECB have chosen to rely on such assumption, as it allows to take into account the concept of double materiality and to assess how financial institutions would implement their commitments or steer their alignment strategies. The second lesson we learned is that the implementation of scenario analysis can expose data gaps on firms’ exposures. Such data gaps are particularly acute in the case of scenarios, which go beyond the horizons typically considered by firms and their supervisors. This make disclosures of climate-related data and forward looking metrics all the more important to support effective scenario analysis. Progress in this area has already been made, following the COP21, with the creation of the Task Force on Climate-related Financial Disclosures (TCFD).
If hosts cannot influence the process of supervision or crisis management, their trust in and use of the information from the home authority will be very limited. Sharing information and cooperating on regulatory actions may be problematic already in normal times, but is probably much more difficult in a crisis situation when economic risks and costs are clearly visible. So far, cooperation and coordination in crisis situations is dealt with in the EU by various Memoranda of Understanding. Even if these MoUs are not legally binding, they are valuable documents. They provide a basis from which more operational crisis cooperation agreements can be developed by the countries and authorities that see the need to do so. But looking at this increasingly complex patchwork of supervisory colleges, central bank networks and MoUs that we are now creating, one cannot help to wonder if there are not any better alternatives for cross-border cooperation. Future alternatives to the home-host model What are, in the long term, the alternative models to the current home-host set-up? In the EU, we are committed to creating a single market for financial services. If we take off our national central bank and supervisor hats, are we really convinced that the home-host model is the best one in the long run? After all, several serious alternative models have been suggested. The pros and cons of the three main models are reviewed in an interesting paper by Oosterloo and Schoenmaker.3 I will briefly comment on these.

This reflects the heightened state of vigilance in Bank Negara Malaysia as we continue to direct significant effort and resources towards strengthening our surveillance. In addition to macro surveillance, the supervision framework is also more forward looking including increased engagements and dialogue with senior management of financial institution, industry leaders, trade bodies and various chambers of commerce for the early detection of emerging issues and developments. BIS Review 58/2009  1  Facilitating access to credit and easing monetary policy Another area of importance is the continuing availability of credit from the banking sector. We have earlier highlighted the rate of growth in outstanding loans. In addition, the government has introduced specific guarantee schemes while Bank Negara Malaysia also, on its part, maintained a monetary policy easing stance that is conducive to achieve the same goal of facilitating access to credit at reasonable cost. At the same time, to assist the household sector, the Agensi Kaunselling dan Pengurusan kredit (AKPK) is also an avenue for individual borrowers and potential borrowers to seek advice and assistance in managing their finances and debts. Clients of the banking industry may also contact Bank Negara Malaysia hotlines and its LINK and TeleLINK for assistance for info. LINK refers to Laman Informasi Nasihat dan Khidmat. Association of Banks in Malaysia (ABM) has also introduced toll free lines for the benefit of its stakeholders. These combined efforts seek to lower borrowing costs and ease cash flows while at the same time promote financial discipline.
BIS Review 156/2010  3  the Bank on price and wage setting in Malta shows that although just over half of respondents would cut prices if their competitors did so, 36% would not. Unsurprisingly, the most flexible firms were those in the manufacturing and tourism sectors, where foreign competition is strong. This suggests that there is still scope for increasing the degree of domestic market competition. Sometimes, the connection between market liberalisation and exports may be indirect. As the recent experience in the communications sector has shown, liberalisation drove down costs and prices. This opened up new export opportunities outside the communications sector itself, for example, in financial services and remote gaming. The importance of keeping costs under control cannot be overemphasized. Malta’s inflation performance over the last ten years illustrates this point. Whereas the euro area inflation rate averaged 2.1% between 2000 and 2009, domestic inflation averaged 2.5%. The record for inflation excluding energy prices shows a similar unfavourable trend. It is an established fact that in a currency union rates of inflation consistently above the average result in a loss of competitiveness. Apart from more competitive markets, containing domestic inflation implies a need for wage moderation. For many years employee compensation has grown faster than real labour productivity. Whereas the former increased by around 31% since 2000, productivity rose by only 2.5%. The resulting rapid growth in unit labour costs, more than 28%, compares with an average of 20% in the euro area.

The basis for this was the Bank’s task of promoting a safe and efficient payment system – what we in practice define as financial stability.10 In 1997 the Riksbank began publishing its assessment of the stability of the financial system, in the form of the Financial Stability Report, published twice a year. It was one of the first central banks in the world to do this. The special Macroprudential Policy Division at the Riksbank’s Financial Stability Department has as one of its tasks to assess the need for specific macroprudential policy measures. The Riksbank’s Monetary Policy Department has long conducted macroeconomic analysis to provide a good guidance for interest-rate decisions, which are based on macroeconomic analyses and forecasts. The analysis of financial stability, combined with the monetary policy analysis, provides good grounds for understanding the repercussions between the financial and real economy, which is essential for successful macroprudential policy. In recent years the cooperation between the Financial Stability and Monetary Policy Departments at the Riksbank has intensified. There are also clear links between monetary policy and macroprudential policy. Both policy areas ultimately aim for a stable macroeconomic development – macroprudential policy by limiting systemic risk and monetary policy by keeping inflation low and stable and stabilising the real economy. But they also affect the conditions for one another (see Figure 10). 9  Sveriges Riksbank (2012), Financial Stability Report 2012:2.
A further mitigating factor is that household savings rates appear to have risen, involuntarily and significantly, due to social distancing policies. A Bank of England survey in conjunction with Ipsos Mori suggests the aggregate saving ratio is broadly unchanged, although with considerable heterogeneity across income cohorts (Chart 12). But it is possible these survey respondents did not capture the involuntary increase in households’ cash balances when they answered questions about their savings behaviour. 14 15  Haldane (2020). Hicks (1950). 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  For example, sterling deposits held by households and companies in banks have increased sharply over the past few months, by around £ billion (Chart 13). That is consistent with a significant rise in the saving ratio. These higher involuntary savings could be drawn down to finance future spending, at least by some households. In aggregate, they potentially dwarf any voluntary rise in savings for precautionary purposes. Chart 12: Saving rates by income (net balance) Net balance increased savings (%) 25 20 15 10 5 0 -5 -10 -15 Up to £  £  £ - £  £  Sources: Ipsos Mori and Bank calculations. Notes: Research was carried out by Ipsos MORI on behalf of The Bank of England. It surveyed a nationally representative quota sample of 2,243 adults in the United Kingdom aged 16-75 using its online i:omnibus on 29 May to 3 June.

The banks have a key role to play in this effort through financing the transition as well through providing adequate disclosures to the markets. We therefore expect them to adopt both their business models and risk  1/2  BIS - Central bankers' speeches  management frameworks to incorporate climate and environmental risks. The fact that certain banks have started making tangible steps in this regard is a positive development, but there is still some way yet to be travelled. The management of climate risk by banks is on the top of the supervisory agenda. We acknowledge the challenge that this poses especially for smaller banks. However, we do expect them to act more decisively in the said direction. By default, this will ultimately also target the banks' clientele and the submission of detailed climate related information in order to feed the banks' risk management processes. The challenges noted above, require significant up- front investment before reaping the benefits. The banks should proceed without undue delays to the transformation of their business models to address a new challenging business environment. Complacency emanating from short term profits is not a viable option. Sustainability through transformation is the way forward. Thank you. 2/2  BIS - Central bankers' speeches