samchain/econo-pairs-v1 huggingface dataset:
Since the Asian crisis erupted in mid-1997 we experienced a number of speculative attacks aimed at toppling the Hong Kong dollar and breaking its fifteen-year-old link to the US dollar. This link is successfully maintained by a strict and automatic currency board system, backed by more than adequate foreign currency reserves. During the attacks speculators took out large short positions against the Hong Kong dollar with the aim of destabilizing the linked exchange rate. On all these occasions the attacks activated the autopilot mechanisms under the currency board and drove up interbank interest rates to such high levels that the speculators (who had to borrow locally to fund their short positions) were forced to unwind their positions and incur heavy losses. The speculators failed, the currency board worked, and the link survived. But the interest rate volatility, and the consequent additional pain imposed on the community, was extreme: during one attack, on 23 October 1997, the overnight interest rate shot up to nearly 300%. In August we faced a much more complicated situation, in which speculators launched coordinated and well planned attacks across our financial markets. Speculators had discovered that by intensively selling Hong Kong dollars over a short period they could temporarily drive up interest rates under the currency board system, which would exert a downward pressure on stock prices. By pressuring the currency and selling stocks short, they could realize a profit on stock index futures contracts, even if they could not break the exchange rate link.

BIS Review 95/1998  -2-  Clearly, what happens in the EU matters to Hong Kong. What therefore will be the impact of the euro on the participating countries? There should certainly be a number of economic benefits, including in particular: • a huge increase in transparency from the single currency which will make it easier to compare prices across national frontiers. This will boost competition, bring down costs and prices, and improve efficiency; • a reduction in transaction costs, in particular from the elimination of foreign exchange commissions. This will encourage trade and cross-border investment flows; • lower interest rates in individual countries from the elimination from the foreign exchange risk premium. This will reduce financing costs and stimulate investment and output; • the development of larger and more liquid debt and stock markets across the euro zone. This will create a vast new pool of capital for companies, thus giving a further stimulus to investment; • tighter fiscal discipline on the member countries under the Stability and Growth Pact and monetary discipline exercised by the new European Central Bank. Both these should ease inflationary expectations and produce a more stable financial environment for the euro zone. In summary, the single currency should be able to deliver higher economic growth and therefore increased demand for imports by the euro countries. As one of the EU’s major trading partners, this should benefit Hong Kong.
Foreign banks have continued to expand their operations here, and many have made Singapore a regional or even global platform for important banking services. The local banks have strengthened their capabilities and expanded their range of business activities. They have built up their management teams, and made significant infrastructural investments to enhance their operational effectiveness. Fees and commissions have risen as a proportion of operating income. Banks are offering new business services, while continuing to provide affordable banking facilities to the average Singaporean. They have held their own despite the increased competition. For instance, their market share of resident non-bank deposits (both ACU and DBU) has declined only marginally from 62% to 59% over the last five years. The local banks have also improved their business and risk management capabilities. The recent change in MAS’ capital adequacy requirements is in recognition of local banks’ efforts to upgrade their risk management capabilities, and should allow them to manage their capital more flexibly. With greater financial strength from the mergers and increased competition at home, local banks have begun to venture abroad and develop a regional footprint through overseas acquisitions. Banking liberalisation When MAS embarked on the liberalisation measures, we sought to anticipate changes and trends that we were convinced were already underway. Events since then showed that we moved none too soon. Technological advances have continued unabated. The Internet for instance has proven to be an efficient and widely used alternative distribution and marketing channel, and has helped create new business models.

Firstly, banks need to continue to maintain high prudential standards so as to remain sound institutions. Next, they have to develop new strategies to continue growing strong, viable businesses. Sound institutions MAS does not seek to prevent institutions from taking risks. It is the business of financial institutions to take on and intermediate risks. But if risks are not well managed or events turn out unfavourably, institutions can incur substantial losses. No amount of regulation or supervision can completely prevent losses. On the other hand, over-regulation would curb innovation and enterprise. This was a key message in MAS’ Monograph on the Objectives and Principles of Financial Supervision in Singapore. Financial institutions therefore need to build their capacity to identify, monitor, and control the risks that they take. Banks should benchmark their risk management against international best practices. Risk management should be an integral part of their operations, and should keep pace with their business profile and with industry developments. The banking sector as a whole has done well in this respect, and we expect to see this continue. One major change in the way banks manage risks will be triggered by the new Basel Accord. Implementing Basle II will be a complex exercise but will spur banks to enhance their risk management practices. Banks need to develop robust systems and processes to make the new capital adequacy rules work.
In an attempt to maintain growth in the traditional industries, economic policy responded with a series of devaluations. Each devaluation was invariably said to be the final one but the cycle of rising wage  BIS Review 129/1999  2  costs and a devaluation was still repeated again and again. The aim of compensating for the lack of change in Sweden’s corporate sector, which stemmed from the 1960s, simply did not work. If anything, the devaluations meant that the problems persisted and were accentuated. With the lack of investment in new products and the dependence on an increasingly outmoded structure of production, the entire nation’s material standard had to be adjusted. For many years, growth in Sweden was weaker than in the world around us. This example shows how a “new economy” at that time posed problems for the Swedish economy rather than opportunities. The lack of change, because wage formation did not function properly, resulted in an economy that was weaker and more susceptible to inflation. The period clearly illustrates how globalisation, increased competition and new technology can lead to lower growth and higher inflation if changes are not made sufficiently quickly. If the economy is under pressure from strong competition as well as poorly functioning wage formation, economic renewal may lag behind. It is therefore gratifying that the labour market organisations seem to be increasingly in favour of the inflation target policy.

Considering the historic dimensions of the money market crisis, the three-month Libor managed to return remarkably quickly to the target range – just one day after the two interest rate reductions of 6 and 20 November the Libor had already moved into the new range in both cases. The turmoil in the money market prompted the SNB to conduct money market operations to an extent that had never before been witnessed. There were days when up to five auctions were held. The volume of the operations varied considerably. On record days, we carried out operations worth over CHF 100 billion. The reason for these sizeable operations can be found in our interest rate management – we first inject large amounts of liquidity into the market and later absorb it again. Until just a few weeks ago, the liquidity actually remaining in the system was not considerably higher than before the crisis. It was not until the SNB adopted a policy of very low money market rates that the sight deposit balances increased markedly. The low interest rate level means that the opportunity costs for banks to hold  2  BIS Review 157/2008  liquidity are lower, thus prompting them to hold more money in sight deposits. The extent of the money market operations also has a major impact on the size of the SNB’s balance sheet. Before the crisis, approximately CHF 20 billion of the balance sheet went towards monetary policy; today, we are looking at around CHF 80 billion.
This data constraint could also become an issue for some developed markets, given a structural break in data due to the financial crisis and market dislocation. On top of these, there is the issue of level playing-field, as the structure of bank asset and liability in emerging and developed countries may be significantly different. We have found several policies that may have impact on level playing-field, between countries and business models of banks. An example is the application of a simple leverage ratio, which does not take into account inherent risk, because this would tend to penalise banks in developing countries that generally hold less risky assets compared to developed countries. In addition, macro-prudential measures, such as leverage ratio, could likely have a macroeconomic impact, possibly similar to use of liquidity reserve requirement as per classic monetary policy tool, and thus coordination with macroeconomic policy is vital. For central banks with dual role, this is less of a challenge, but for separated regulators, the issue of organisation structure once again comes into play. Turning to the Bank of Thailand’s involvement on these regulatory debates through various international forums – such as the bi-monthly BIS Governor Meetings, the Standard Implementation Group of BCBS, of which we are a member – we have proposed that developing countries be invited to participate in the formulation of new standards right at the beginning, rather than to be included at the later stage of implementation.

This decision was taken on the grounds that the main elements which entered the determination of the reference value, namely the definition of price stability, the estimate of the trend growth of real GDP and the trend decline in the income velocity of M3, had basically remained unchanged. The Governing Council will continue to monitor monetary developments against the reference value on the basis of three-month moving averages of the annual growth rate of M3 as monthly developments might be too volatile. In addition, we also noted that the generous liquidity situation in 1999 will have to be kept in mind when assessing the information content of monetary developments in the future. Considering the second pillar of the monetary policy strategy, namely the broadly based assessment of other indicators containing information about the outlook for price stability, most indicators and forecasts have been pointing to increasing upward pressure on consumer price inflation over the medium term. The strong increase in oil prices in 1999 and early 2000 and the depreciation of the exchange rate of the euro in recent months have contributed to upward pressures on import and producer prices. In addition to the direct effects of these pressures on consumer price inflation, there is 1  BIS Review 25/2000  the risk in the context of the strong cyclical upswing that these developments could, via second-round effects, have lasting effects on consumer price inflation.
Willem F Duisenberg: Presentation of the ECB’s Annual Report 2001 to the European Parliament Introductory statement by Dr Willem F Duisenberg, President of the European Central Bank, to the European Parliament, Strasbourg, 2 July 2002 *  *  *  Six months ago we witnessed a milestone in European history: the launch of “the euro, our money”, in its visible form. European citizens are now able to perceive - and benefit from - the tangible reality of the euro, and the rapid substitution of legacy currencies at the beginning of this year bears witness to the successful launch of the euro banknotes and coins. The year 2001 provided a particularly challenging environment for the monetary policy of the ECB. The worsening economic outlook was accompanied by short-term upward pressures on prices from various sources, which complicated the conduct of monetary policy. This task was made more difficult by the extreme uncertainty which followed the terrorist attacks in the United States on 11 September. As usual, the monetary policy response of the ECB to such a situation had to look beyond short-term developments, focusing on the risks to price stability over the medium term. From this perspective, we could see that medium-term inflationary pressures were in fact receding. The ECB took account of this by reducing interest rates four times in 2001, by a total of 150 basis points.

In addition, the decline in the growth of loans to the private sector has come to a halt and credit demand has recently strengthened. These developments need to be closely monitored, as they may start to point to upward risks to price stability, in particular during a period of economic recovery. BIS Review 40/2002  1  Overall, the outlook for price stability is now less benign than it was in November 2001, when we last adjusted the key ECB interest rates. Inflation has so far declined less steeply and less rapidly than we expected at the turn of the year. This has been partly due to the temporary factors I mentioned before, and to the renewed increase in oil prices in the first quarter of 2002. At the current juncture, even though the appreciation of the exchange rate of the euro will contribute to easing inflationary pressures, we will continue to closely monitor all relevant developments, against the background of the risk that the deviations from price stability, which followed the exceptional clustering of upward shocks on inflation over the past couple of years, may be transmitted into longer-term inflation expectations, thereby potentially affecting wage and price-setting behaviour. In order to maintain price stability, it is crucial that wage moderation prevails in the future. In this respect, we are concerned about recent trends in wages. The importance of wage developments in line with our definition of price stability cannot be overemphasised.
Organisation for Economic Co-operation and Development (OECD), 2008, "Shaping Policy Reform and Peer Review in Southeast Asia: Integrating Economies Amid Diversity". Pangestu, Mari, 2006, "Visions of East Asia: Three Engines for a Way Forward", Chapter 13 in the World Bank publication "East Asian Visions: Perspectives on Economic Development". Rodrik, Dani, 1994, "Getting Interventions Right: How South Korea and Taiwan Grew Rich", NBER Working Paper No. 4964, November. Rodrik, Dani, 2006, "What's So Special about China's Exports? ", China & The World Economy, Vol. 14, No. 5, September-October. Rodrik, Dani, 2009, "Growth after the Crisis", Prepared for the Commission on Growth and Development. World Bank, 2006, "Dancing with Giants. China, India and the Global Economy", By Eds, L., Alan Winters and Shahid Yusuf. In this paper, Asia generally refers to the entire geographical region of Asia, but with specific emphasis on East Asia and South-East Asia. However, when the latter two are referred to in the paper, it is explicitly stated. Refers to Japan (rank: 2), P. R. China (3), India (12), Korea (15) and Indonesia (19) based on 2008 nominal GDP in USD terms. Rodrik, Dani, 2009, "Growth after the Crisis", Prepared for the Commission on Growth and Development. ASEAN-5 refers to Indonesia, Malaysia, Philippines, Thailand and Vietnam. For example, for the newly industrialised Asian economies, private sector-driven growth began in earnest since the 1980s (Rodrik, Dani, 1994, "Getting Interventions Right: How South Korea and Taiwan Grew Rich", NBER Working Paper No. 4964, November).

In addition, international standards on margin requirements for non-centrally cleared derivatives have been adopted.3 By definition, bespoke derivatives cannot be centrally cleared and so do not benefit from the risk reduction and enhanced transparency associated with central clearing. To offset this, these derivatives will be required by regulation to have higher initial margin requirements, as well as variation margin. Despite these efforts, we still may not get the balance right in terms of the requirements applied to non-standard versus standardized, cleared contracts. One worry is that CCPs that are shareholder-owned and operated for profit may compete for market share by offering lower margin requirements on standardized products. This could strike the wrong balance between the private profit motive versus the public benefit of clearing. For this reason, I believe that all CCPs need to have strong governance and regulatory oversight. This must be harmonized on an international basis in order to prevent a potential race to the bottom. It is important to recognize that increased use of CCPs for central clearing also creates potential financial stability issues that must be addressed. While CCPs reduce aggregate risk, they also concentrate the remaining risk. That is, CCPs create potential single points of failure in global derivatives markets. CCPs need adequate capacity to absorb potential losses from the default of one or more of its members, and they need to have access to liquidity so that they can always fully settle their obligations.
2  BIS Review 44/2010  In addition, real interest rates in Norway fell markedly through the 1990s from high levels. This was because the fixed krone exchange rate regime maintained through the period managed to bring down inflation and inflation expectations. Moreover, growth in public spending was rapidly reduced once business sector activity had recovered. Economic shift Over the past decade Norway experienced an economic shift. The cost level began to rise. This was related to the sharp improvement in Norway’s terms of trade at the time and a gradual pickup in growth abroad. Prices for Norwegian exports such as oil, gas, metals, minerals, fish and freight, rose markedly, while prices for imported goods fell. From 2003 to 2008, terms-of-trade gains alone pushed national income up by more than 20 per cent, or a good 4 per cent per year. Institutions and mechanisms had also been put in place to manage the sharp increase in income. Norway’s sovereign wealth fund, the Government Pension Fund Global, and the fiscal guidelines were established with the express purpose of making the mainland economy less susceptible to fluctuations in the oil price. Improved terms of trade, higher revenues and increased government spending contributed to a stronger krone and a shift in real resources towards sheltered sectors. At the same time, the fiscal rule provided a basis for growth in business sectors other than the oil industry and the public sector through the decade.

In the past year we regrettably posted once again the highest unemployment rate in the OECD; and furthermore, the speed at which joblessness in Spain is increasing during the current crisis is the fastest among all the developed countries. In countries facing a contraction in activity similar to that in Spain, the unemployment rate rose only slightly last year (e.g. by 0.2 pp in France), or even fell (Germany). We might argue that these countries show much lower increases in the labour force than Spain and that the expansion in their construction sectors was not comparable. The problem is that when we compare with countries that do have these two characteristics, such as the United States or the United Kingdom, Spain's unemployment increase continues to stand out. Specifically, the US unemployment rate rose by "only" 2.3 pp in 2008, somewhat more than in the United Kingdom, where the increase from January to October 2008 was 1.4 pp. These are very moderate increases when compared with the figure of over 5 pp for Spain in 2008. Evidently, the Spanish economy’s labour adjustment mechanisms are not working properly. Another harmful effect of an inefficient labour market is that it reduces the room for workers' real compensation to improve. In recent years, the Spanish economy has had to compete abroad on the basis of holding down its real labour costs, which was imposed by the economy’s low productivity.
In principle, the National Bank does not invest in Swiss equities and corporate bonds, thus avoiding, from the outset, any potential conflicts of interest which could jeopardise the SNB’s independence. As a shareholder in Swiss companies, the Bank would risk being confronted with structural issues. It could also lead to a conflict between its monetary policy and investment policy goals if an interest rate hike by the SNB were to erode the domestic companies’ profits. Furthermore, such a move could have an adverse effect on prices should the SNB have to liquidate securities of Swiss businesses at short notice. And finally, it is conceivable that the National Bank could gain access to privileged financial market information through its activity in the area of system stability. This would make investing in the Swiss financial sector even more problematic. The influence of equity portfolios and corporate bonds on the National Bank’s risk profile is only moderate. The overall risk attached to assets – as measured by value-at-risk – has not changed greatly since the introduction of these investment options. Gold and exchange rates are still the biggest factors contributing to overall risk. Equities account for less than 5% of the total risk, while corporate bonds contribute only a negligible proportion. The current investment structure and the performance of the SNB’s assets are published online on a quarterly basis in an updated appendix to the Investment Policy Guidelines of the Swiss National Bank. 3.

Risk measurement and management  The return on the SNB’s assets – particularly on currency reserves – fluctuates dramatically from year to year. The absolute loss can be considerable. While it is true that earnings fluctuations have been reduced by the scaling-back of dollar and gold holdings in recent years along with the improved diversification of currencies and investment categories, it is not possible to continue reducing risks ad infinitum. Hence, hedging the currency reserves’ dollar and gold risks to a high degree, for instance, is impracticable, as these reserves would then no longer serve their intended purpose. Professional risk measurement and management is thus crucial for the SNB. The risks attached to the National Bank’s assets are primarily assessed using the value-at-risk (VaR) method. This widely used risk indicator quantifies the level of loss that will most probably not be exceeded within a specific period of time. The SNB calculates the VaR based on a 95% probability and a time horizon of one year. Value-at-risk analyses are undertaken both for individual portfolios and the total assets. The current VaR for the total assets of approximately CHF 100 billion amounts to roughly CHF 4.5 billion. A value-at-risk analysis gives no indication of how much could potentially be lost beyond the specified level of 95%. Furthermore, it is based on current risk and correlation structures that are not necessarily an accurate reflection of future risks. This is particularly the case at the moment – at a time when market volatility is low by historical standards.