samchain/econo-pairs-v1 huggingface dataset:
(i)  Distortions to cash balances  Money - notes and coin - may no longer, as Sally Bowles claimed, make the world go round, but, even in a world of plastic, it oils the wheels of transactions. Cash still accounts for a large number of transactions, albeit a smaller fraction of the value of all transactions. The opportunity cost of holding cash is the interest rate on deposits. Inflation raises nominal interest rates and hence this cost. So agents economise on their real money balances, and incur additional costs in the form of more frequent trips to the cash dispenser - the so-called ‘shoe-leather costs’ of inflation. The traditional view was that these costs could be measured by the area under the money demand curve. Such estimates were typically small, and left researchers wondering if the costs of inflation were really all that important. But high inflation rates can affect more than just money demand. If agents economise on money balances, transactions costs may rise in markets for goods, labour and assets. As argued by Hahn (1965) and more recently articulated by Wallace (2001), many monetary models contain hidden inconsistencies in the sense that they ignore the credit or trade frictions - in particular, imperfect  BIS Review 68/2002  11  monitoring and enforceability - that give to money an essential role in the first place. To assess the welfare implications of inflation we need a theoretical framework that takes seriously the role of money in all these transactions.

In fact, this strategy is known as the Greenspan put, in reference to interest rate reductions in the aftermaths of severe financial turmoil, such as the stock exchange downfall of 1987, the collapse of LTCM in 1998, or the technological stocks in the early 2000s. 7 In fact, from the standpoint of liquidity provision and potential downward pressures on inflation, a reduction in interest rates is generally recommended. The problem is that this response provides an incentive to adopting more risk-prone behavior, since investors perceive that they will have the put option available later. Therefore, it is advisable to not only provide the liquidity, but also carefully monitor the market’s operation to prevent overexposure to these risks in the future. Indeed it can be argued that bubbles are difficult to identify. For example, Gürkaynak (2005) finds that, for every work identifying a bubble, there is another one finding the opposite. At the same time, it is not so clear how much of a given bubble can be affected by raising the interest rate and the necessary magnitude of the adjustment in order to make any difference, because, by definition, a bubble is determined by “non-fundamental” price movements. Thus, although after seeing the critical situation that developed financial markets have been enduring, a more proactive monetary policy strategy might have been advisable, but it is hard to believe that such a strategy could have averted this crisis by itself.
With a diverse population and a growing middle class, Malaysia is an ideal test bed for developing and commercialising fintech solutions. The emergence of fintech has opened up new opportunities which can greatly benefit the financial industry. At its core, fintech has led to the creation of various business models that help improve and simplify financial transactions, which 10 or 20 years ago seemed impossible. Here, I would like to highlight three key areas that Islamic finance stand to gain from fintech. Entrepreneurs too stand to gain from fintech. First, fintech provides the technological underpinnings to realise the goal of Islamic finance in creating a risk sharing economy. This will in turn benefit entrepreneurs who will gain wider access to bank-intermediated credit. An example is the Investment Account Platform (IAP). IAP is Malaysia’s first multi-bank online 1/3  BIS central bankers' speeches  platform that combines the credit evaluation expertise of Islamic banks and the power of technology to channel funds from investors to economic ventures. This virtual “multisided” platform facilitates a collection of interesting investment ventures and projects, with transparent risk-return rewards for investors. Second, fintech has opened up new sources of funding to entrepreneurs, in what is increasingly being referred to as the alternative financing space. Crowdfunding and peer-to-peer (P2P) funding platforms have emerged as highly efficient “matchmakers” between entrepreneurs and investors. From the USD10 million raised globally in 2009 through nine major platforms, crowdfunding platforms mobilised over USD767 million in 2016 with backers from over 200 countries.

Deposit insurance, like other forms of insurance, is there to deal with low probability events that have a major impact if they occur. To make an obvious analogy, you still take out fire insurance even if you do not expect your house to burn down. Hong Kong stands out as one of the few developed banking centres which does not have a DIS. There is of course no reason why we should follow the rest of the world just for the sake of it. But we should at least keep our safety net arrangements under regular review to ensure that they are still appropriate to changing market circumstances. This is what we did last year when we engaged an external consultant to consider whether the existing deposit protection arrangements in Hong Kong were sufficient, and if not how they should be changed. The conclusion was that an explicit and limited form of deposit insurance should be introduced. We subsequently undertook a public consultation on this proposition and on the detailed design features of the proposed scheme. This consultation generated a heated, albeit civilised, debate. Not surprisingly, some of the large banks vehemently opposed the scheme. Opinion in the community as a whole was however generally supportive.
It is, moreover, a model for regulation based on the introduction of the incentives needed to stimulate prudent and responsible action by the institutions. These incentives will promote the establishment of appropriate risk measurement and management systems, such that the better they are, the lower the capital requirements applied to the institutions in recognition of this superiority. The desire to offer alternatives and incentives is clear in the design of the Accord. For example, it proposes that institutions should have various alternatives for calculating their regulatory capital, ranging from the simplest possibilities based on the use of external rating systems, to other more complex ones based on internal rating systems designed by the institutions themselves. The requirements to gain access to the most advanced methodologies are, undoubtedly, considerably more demanding. That said, it is up to the institutions themselves to decide, on the basis of their specific operations and of their needs in general, which methodology they wish to apply. In fact, it is not clear that small and medium-sized institutions should opt, at least initially, to use the most advanced approaches. In particular, the Banco de España foresees that, both on account of the type of operations carried out by Spanish institutions and owing to the minimum requirements for access to the different methodologies, the number of those adopting the most sophisticated methods (i.e. the advanced IRS approach) will be limited and will be the result of a gradual process over time.

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Christian Noyer: A review of the financial crisis Speech by Mr Christian Noyer, Governor of the Bank of France, at the Hearing before the Finance Commission of the Assemblée nationale, Paris, 7 October 2008 (updated 15 October 2008). * 1. *  *  A number of comments on the developments of the past month  The bankruptcy of the investment bank Lehman Brothers on 15 September 2008 marked a crucial turning point in the crisis. The direct consequences of this failure, involving over USD 600 billion in assets, appear to have been correctly contained and managed up to now. Nevertheless, it exacerbated the crisis of confidence, with the following major repercussions: •  first, interbank markets increasingly seized up, because banks perceived there to be a rise in counterparty risk. Overnight dollar interbank rates rose to particularly high levels of close to 7%;  •  second, significant pressure on other money market segments, in particular the US commercial paper market, where yields on 30-day paper have been climbing since mid-September to reach levels close to those observed at the end of last year;  •  lastly, the deterioration in the financial position of AIG, the largest US insurer, followed by its exceptional bailout. A two-pronged rescue plan was implemented: on the one hand, the Fed made an USD 85 billion loan at a penalty rate of three-month Libor plus 850 basis points and, on the other, the US government took a 79.9% stake in the company.

So the Bank won’t hesitate to withhold approval of inadequate or opaque models”. There are many things I could say about Solvency II, but I want to concentrate on what it means for the future. One particular aspect is that it sensibly allows for a smooth transition, over a period of 16 years in some cases. It is recognised that for insurers (particularly life insurers), Solvency II with the introduction of a “going concern” regime, is a considerable shift. In particular, firms will have to hold a risk margin to ensure that the insurance liabilities reflect the value for which they could be transferred to a third party. To allow for the gradual introduction of the risk margin, firms will be able to make a transitional deduction from their  BIS central bankers’ speeches  5  technical provisions. Together, the various transitional measures within Solvency II should ensure a smooth progression, avoiding the market dislocation, volatility and increased costs that could result should a number of firms have to augment their capital base at the same time. They rightly recognise that the underlying risks have not changed overnight, even if the regime has. Firms making use of transitional measures will be afforded time to reach the level of financial resources required by the full Solvency II regime. In the meantime we can be sure that the transitional deduction from technical provisions will not result in a firm’s resources falling below those required under the existing UK regime.
The Committee also indicated that an overnight reverse repurchase agreement (ON RRP) facility and other supplementary tools will be used, as needed, to help control the level of the federal funds rate. An ON RRP facility will supplement the primary role of IOER in controlling the federal funds rate by providing an alternative safe, overnight asset for money market investors. I will describe the role of the ON RRP facility in more detail in a moment. 11 The Committee expects to gradually return the balance sheet to a more normal size and composition, primarily by ceasing to reinvest repayments of principal. A halt or reduction in reinvestments is expected to occur after the FOMC begins increasing the target range for the federal funds rate. The FOMC does not plan to use asset sales as part of the normalization process, but suggests that limited sales might be warranted in the longer run to reduce or eliminate residual agency MBS holdings. The Federal Reserve will continue to test some of these tools to gather additional information about their efficacy and to enhance their operational readiness prior to liftoff. For the past year, the Desk has been conducting an exercise of ON RRP operations.

At last week’s meeting, the FOMC also reaffirmed its view that it likely will be appropriate to maintain the current zero to ¼ percent target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longerterm inflation expectations remain well anchored. Meanwhile, as a matter of prudent planning, the Committee has been deliberating how it should proceed to remove policy accommodation (often called “normalization”), when it believes the appropriate time to do so comes. Although the specific timing of this is not yet known, it’s certain that the level of reserve balances in the banking system will be very high. Assuming no other liabilities are issued, there would be about $ trillion in reserves – mostly in excess reserves – if the Committee ends asset purchases next month and continues reinvestments. In itself, an elevated level of reserve balances need not impede the FOMC’s ability to effectively raise the level of short-term interest rates because of the ability to pay interest on excess reserves. BIS central bankers’ speeches  5  Following last week’s FOMC meeting, the Committee released a revised set of normalization principles and plans (taking into account changes in the SOMA portfolio and enhancements in available tools since it originally issued such principles in June 2011) that it intends to implement when it becomes appropriate to begin normalizing the stance of monetary policy.
There are at least 80 positions in so ware engineering alone. It is a far cry from the 300 so ware engineers the industry needs each year. But it is a good start. Conclusion Let me conclude. Our financial sector has shown that technology creates far more jobs than it displaces. During the last 5 years, the financial sector created 21,000 net jobs. We estimate that about 1 out of 4 of these net jobs were in technology. While Singaporeans took up 75% of the total net jobs, they accounted for only 35% of the tech jobs. There are simply not enough Singaporeans applying for tech roles. The problem is not jobs; it is skills. The financial sector is on track to create many good jobs in technology over the next few years. They present a great opportunity for Singaporeans – provided we acquire the skills necessary to take on these jobs. The answer does not lie in restricting the inflow of foreign tech expertise. On the contrary, it is by attracting the best tech talents from around the world that we can anchor new tech capabilities and functions that expand job opportunities for Singaporeans. The answer lies in individuals, financial institutions, and MAS working together to build strong skills in technology. We have been doing that, but we need to do much more. MAS looks forward to ideas and initiatives on what else we can do collectively to build up tech skills.

Many of the tech skills required to do the jobs I have described earlier are in short supply locally. We are fortunate that global and local financial institutions have invested heavily to build up strong technology teams in Singapore. Technology talents from abroad have brought with them valuable experience and expertise that we do not have enough of in Singapore. The surge in demand for technology jobs has benefitted Singaporean workers. The share of Singaporeans in tech jobs has remained stable at about 35% over the years. But with the rapid expansion of the technology workforce, it meant 2,200 more tech jobs for Singaporeans. This is a more than 30% increase in 5 years, from 6,700 jobs in 2014 to 8,900 jobs in 2019. Let us take a deeper dive into the various kinds of technology jobs. The proportion of Singaporeans taking on technology jobs is uneven across diﬀerent roles. Singaporeans account for 70% of the net job growth for cybersecurity engineers and UX/UI designers; and 50% of the net job growth for data analysts and data scientists. This is encouraging, given that these are in-demand roles. But these are also niche roles where hiring numbers are relatively small. The strongest demand - and biggest shortage in local skills - is for so ware engineers. In 2019, net job growth in so ware engineers was 200, 10 times more than that for UX/UI designers. Less than 20% of these 200 so ware engineer jobs went to Singaporeans.
To summarise, probably all of these factors have had some significance in stabilising the world economy. However, one must remember that 20 years is a short period when analysing economic cycles. Perhaps the current downturn will give us reason to reconsider the conclusion that the fluctuations have declined? In this context one usually mentions the importance of the extended period of high growth in some emerging economies. First and foremost China, but also India, has had an increasing significance for the world economy over the past decade. If domestic demand can be sustained in these countries, despite declining economic activity in the United States, Japan and Europe, it may lessen the downturn for the world as a whole. However, their growth opportunities should slow down as the economies enter a more mature phase. In the long term, they cannot support world growth. 2. Sweden  As each economic cycle is to some extent unique, one can never say exactly what will happen in any phase of a cycle. There is quite simply no such thing as a typical economic cycle. But it may nevertheless be interesting to look at how different variables can vary in the economic cycle in Sweden. As Sweden is a small, open economy with a large export sector, we are very much affected by what happens abroad. It is therefore often claimed that Swedish economic cycles are "imported”.

However, this could be at the cost of an even larger adjustment further ahead to bring down inflation expectations again. This was what happened in Sweden in the 1970s and 1980s. Although economic downturns cannot be avoided, fiscal and monetary policy can be conducted in such a way that the consequences for the economy are as small as possible. The impact of monetary policy is long-term and it is therefore important that confidence in the Riksbank's ability to stabilise inflation is maintained. This does not prevent us from taking into account developments in the real economy when we make our decisions on the repo rate. The Riksbank conducts what is known as “flexible” inflation targeting. Our aim is that inflation, when it deviates from the target, will normally return to the target level within a couple of years. If the shocks affecting the economy entail large deviations, it may take longer before the target is achieved in order to attain a smoother sequence of events for production and employment. When we were to make a decision on the interest rate in September, we faced a situation where the declining economic activity in Sweden and abroad needed to be placed in a context where many factors could conceivably affect inflation. The slowdown in economic activity has probably had a subduing effect on inflation. However, we have seen that economic cycles are not sufficiently regular to enable us to forecast how profound or prolonged a downturn will be.
It would not be proper for me to say anything about the ongoing investigations beyond the joint statement issued last week. It would also not be proper for me to comment on any specific institution beyond MAS’ statement last week because the supervisory examinations are still ongoing and we have to be fair to the institutions. The two statements last week are unprecedented. We have already said a lot more publicly than we usually do when investigations and reviews have not been completed yet. Instead, I want to focus today on what the findings imply for our financial sector. There is no doubt that the recent findings have made a dent in our reputation as a clean and trusted financial centre. MAS is disappointed with the lapses in AML/CFT controls and breaches of AML/CFT regulations that we have picked up in our FIs. I am told that money laundering is growing more sophisticated in nature and is carefully designed to avoid detection; that these incidents happen in every financial centre and the large and rising frequency in which fines are imposed in other jurisdictions show we are not alone in facing this challenge; and that the rules and practices here are already very strict and on par with global standards. BIS central bankers’ speeches  5  This may all be true but they cannot be an excuse for what has taken place. What happened is simply unacceptable. We may not be any worse than other jurisdictions. But that is no consolation.

We have not met the high standards we have set for ourselves. AML/CFT is like cyber security. Those who seek to abuse our financial system are getting smarter and more sophisticated. That cannot be a reason for failing to detect and deter them. As the threat grows, so must the effectiveness of our risk management. MAS is determined to fix the problem, working together with the industry. We need to draw lessons from the failings we have observed in the FIs and see how we can further bolster our AML/CFT regime. We will work hard with the industry to ensure that Singapore offers neither safe haven nor safe passage for tainted money from anywhere. Let me share our preliminary thoughts. Our AML/CFT regime comprises four key prongs: •  one a robust legal and regulatory framework that sets the rules;  •  two, active supervision of FIs to check for compliance with the rules and adequacy of controls;  •  three, strict enforcement to punish non-compliance; and  •  four, good cross-border cooperation. First, regulation. AML/CFT rules in the financial sector are strict. It is mandatory for all FIs to perform proper due diligence to know their customers. FIs are required to assess the risks and perform enhanced due diligence where the risks are higher. FIs are also required to monitor transactions on an on-going basis so as to identify and report any suspicious activities.