samchain/econo-pairs-v1 huggingface dataset:
There is no rule book that’s good for all seasons, let alone all time. So the new system hardwired in the duty to look up and out and to adapt. The financial crisis had laid bare a failure to do that across advanced economies. Regulation hadn’t kept pace with the risks the system faced, from over-inflated housing and financial markets in the United States to a commercial real estate boom in the UK. Nor had it kept pace with the way the system worked; with securitisation, SIVs and CDS. The result is worth etching in our collective memory. A near collapse of the financial system and a sideswiping of the global economy of epic scale. In the UK alone, a million more people unemployed. And lost income over time equivalent to a bill of £ for every person in Britain. 3  1  The Bank of England’s Financial Policy Committee identifies, monitors and takes action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system. The FPC is not authorised to take action that is “likely to have a significant adverse effect on the capacity of the financial sector to contribute to the growth of the UK economy in the medium or long term”. 2 The FPC has specific powers of Direction over the Prudential Regulation Authority and Financial Conduct Authority and the ability to make Recommendations (including on a ‘comply or explain’ basis) to both authorities.

And when risk taking increases, it must not be at the expense of the resilience of lenders to any future downturn in the economy. They must remain capable of serving in the bad times, as well as the good. Our annual stress test provides the basis for checking that but, in this environment, more regular check-ups are needed too. That’s why (as we said in the Record of our March meeting) we intend to “re-consider the adequacy [of capital levels] in June, with a focus on the evolution of domestic risk appetite.” We’ll keep standards up with the risks that are being taken. Alongside that, we must also keep up with the third macro trend: a fundamental re-shaping of the system. 9  In part due to regulatory efforts to level playing fields, banking is becoming more competitive. Smaller banks are taking market share. In the past 12 months, smaller banks – that account less than a fifth of the outstanding stock of household lending – have delivered half the new lending to UK households (see chart 5). Their newfound importance in the supply of credit means that, even though they are individually small, their collective risk taking has increasing relevance to the whole economy. Collectively at least, smaller banks must – like their bigger cousins – have the resilience to withstand economic bad times. That trend to greater competition should continue as Payment Services reforms and Open Banking come into play.
Are these repeated crises the inevitable result of human nature at work in financial markets, with greed and fear alternating as sentiment swings from irrational optimism to irrational pessimism? Or is it the failure over many years to find the right incentive structure for banking markets? Or is it a mixture of both? I don’t pretend to be able to offer a complete answer to those questions. But I do want to focus on the relationship between the Bank of England and the banks because it helps to explain why crises occur and what we can do about them. Let me start by saying that, although I do think the role of the Bank needs to be enhanced, it would not be right for the Bank to take back banking supervision from the FSA, as some have suggested. We should remember that the period before 1997, when FSA and the “tripartite arrangements” were set up, was not seen at the time as a golden age of official oversight of banks. Before 1997 the relationship between the Treasury and the Bank of England in respect of banking supervision was often fraught. Remember too that the experience which shaped the design of the 1997 settlement was that of idiosyncratic problems in Johnson Matthey, BCCI and Barings, not a system-wide crisis affecting the liquidity of the banking system as a whole. As a result, the tripartite Memorandum of Understanding which underpinned that settlement was not so much faulty as incomplete.

Tukiya Kankasa-Mabula: Modernising Zambia’s payment system Remarks by Dr Tukiya Kankasa-Mabula, Deputy Governor Administration of the Bank of Zambia, at the Ecobank Launch of Financial Products, Lusaka, 16 December 2009. *  *  *  • Members of the Ecobank Zambia Limited Board of Directors present; • The Managing Director of Ecobank Zambia Limited, Mrs Charity Lumpa; • Members of the Diplomatic Corps; • Ecobank Zambia Limited Customers; • Management and Staff of Ecobank Zambia Limited; • Members of the Press; • Distinguished Invited Guests; • Ladies and Gentlemen. It is with great joy and gratitude that I stand to address you at this important launch of the “Ecobank Rapid Transfer” and the “Non-Resident African Account”. I am informed that the two products are designed to transfer money faster and in real time while meeting the needs of customers resident in countries other than those where their accounts are domiciled. I am also pleased that these two products are aimed at promoting the efficient transmission of remittances at an affordable cost. Distinguished Ladies and Gentlemen, allow me to briefly highlight the importance of remittances to our economy. Remittances are increasingly growing to be one of the most important sources of finance in Zambia. Such funds are not simply an expression of fondness by people in the diaspora to assist their families in adverse situations. They also represent an important source of finance that augments capital inflows and investments in the economy.
“Hard” infrastructure refers to the physical equipment, software and networks supporting those markets. See “Open Forum: Building real markets for the good of the people”, http://www.bankofengland.co.uk/ markets/Documents/openforum.pdf. 2  http://www.bankofengland.co.uk/publications/Pages/news/2016/071.aspx. 2  BIS central bankers’ speeches  independent CREST research project later in the day, which has reached very similar conclusions 3. Table 1 Key lessons for success from the crest project  All successful projects need a clear platform for change – and CREST had a burning one! The collapse of TAURUS on 11 March 1993, followed by the resignation of Peter Rawlings, the Chief Executive of the Stock Exchange, was front page news. The huge rancour, reputational damage and cost (estimated by the FT at £ all-in, in mid-1990s money) cast a pall over the UK financial system, already reeling from the failed attempts to defend  3  “From Paper to Automation – Streamlining UK Securities Settlement”, at http://www.globalservices.bt.com/ static/assets/pdf/products/financial_markets_settlenet/CREST-BISS-Industry-Report-final-for-publication.pdf. BIS central bankers’ speeches  3  sterling on “Black Wednesday” and the publication of the BCCI Report in 1992, and facing renewed competition from financial centres in continental Europe and elsewhere. Without TAURUS, the UK was left with what one leading fund manager gloomily described as a “Third World settlement system in a first-rank financial centre”. Equity settlement relied entirely on paper certificates, passing through an average of 25 pairs of hands for each trade, each time running the risk of getting lost, misfiled or stolen. Settlement occurred only once a fortnight, and on a fixed rather than a rolling timetable.

Unsurprisingly, a fifth of all trades failed to settle on time. If the case for change was clear, so too was the common purpose shown by the public authorities. As Pen Kent, the Bank’s Executive Director in charge of CREST said at the time, “TAURUS gave the Bank the legitimacy to step in and get on with the job: it needed a market failure to get everyone pointed in the right direction.” The Bank of England, called upon privately to act by the Chairman of the Stock Exchange, had two main goals: first, to reduce the material risks to financial stability posed by such an extended and uncertain settlement process; and, second, to ensure the UK had an efficient and internationally competitive market infrastructure. There is no doubt that the second of these goals weighed particularly heavily with the Bank’s Governors of the day. Not everyone agreed that the Bank should become closely involved, worrying that it could be a costly and reputationally risky distraction from the post-ERM project of repositioning the Bank as an organisation capable of taking on independent responsibility for setting monetary policy for the country as a whole. But the majority view won out, bolstered by the active support of the UK Government, notably HM Treasury, which took responsibility for ensuring that the complex and extensive legislative changes required were delivered in a timely and effective way.
In addition to long-standing issues that are awaiting resolution such as conflicts in the Middle East, tensions in the Korean Peninsula, and Brexit, new sources of potentially abiding fragility keep adding on to this list. The US-Russia conflict, Iran nuclear sanction, the militarization of the South China Sea, and the increased cyber-attacks by both state- and nonstate-actors, are some of the issues that have emerged over the past few years. While heightening geopolitical risks have not led to a serious market correction or slowdown in global economic activities, persistent geopolitical risks still warrant close monitoring, as these could heighten volatility in the financial market and commodity prices, especially that of oil. The last source of risk that I would like to highlight is on the domestic front. While financial stability remains sound overall, there are some pockets of risk that might pose vulnerabilities to financial stability going forward. The prolonged period of low 2  interest rate environment leads to search-for-yield and underpricing of risks. This is especially challenging in a multi-regulator environment, since increased regulations by one agency is likely to simply push the potentially risky financial activities out of the agency’s regulatory umbrella. The evidence of this is presented by risk areas that span across all regulatory bodies’ responsibilities: delayed deleveraging of household debts; large expansion of foreign investment funds with high concentration in some emerging economies; saving cooperatives’ rapidly growing deposits; maturity mismatch of corporate borrowers; and rapid growth of corporate bonds, especially unrated bonds.

We have already seen some EME countries with idiosyncratic factors such as Argentina and Turkey experiencing these pressures. The second source of risk is headlined almost daily in the news: the escalating trade protectionism and especially trade tension between the US and China. The back-andforth between the two countries and the unpredictability of the outcome have driven much of the macroeconomic as well as financial volatility in the past few months. Up until now, the impact of the announced tariffs between the two countries on global trade has been limited since it takes time for the effect to be fully passed through. Nonetheless, the full impact of the ongoing trade war is expected to come next year, and the series of trade disputes could be far from over. If further tariffs were carried out, supply chain and production networks across the region could be disrupted. While the trade volume would certainly be directly affected, perhaps the more serious casualty is private investment, which—as we have seen in our recent past— decline under uncertainty. To the extent that uncertainty brings about reduced investment, prolonged trade war will reduce the productive capacity for future growth and delay technological upgrading for firms. Along with the growing trade disputes, the escalation of geopolitical risks—the third source of risk that we are facing—is one of the most pronounced trends of the past few years.
BIS central bankers’ speeches  5  In short, the country is prepared to face a somewhat less favorable external scenario next year, which undoubtedly will have effects on the domestic economy. For years we have built solid macroeconomic balances, which yield their fruit when adverse situations hit. We are confident that, in such a scenario, this will be no exception. Our institutions, solid but flexible at the same time, distinguish us in the world. This allows us to look at the country’s future with calm and optimism. We as central bank will continue to contribute our own efforts to the stability of the currency and the normal functioning of the internal and external payment system, the development and welfare of the Chilean population. Thank you. 6  BIS central bankers’ speeches  Figure 1 Nominal exchange rate variation in 2013 (*) (percent) South Africa India Indonesia Australia Brazil Turkey Peru Colombia Malaysia Philippines Russia  Emerging Asia  Chile New Zealand  Latin America  Thailand  Other  South Korea Poland  Emerging Europe  Mexico Hungary Czech Rep. Bulgaria Slovakia China  -5  0  5  10  15  20  25  (*) An increase denotes a depreciation. Sources: Central Bank of Chile and Bloomberg.

The baseline scenario reflects the developments that the Board believes to be the most likely to occur with the information at hand at the statistical closing of the Report. However, there are risk scenarios that, if materialized, might change the macroeconomic outlook and, therefore, the course of monetary policy. On this occasion, after evaluating the alternative scenarios, the Board estimates that the risk balance is downward biased for output and unbiased for inflation. On the global front, a first risk comes from China, namely the fragility of its financial system, among other factors. As I said at the beginning, the banks’ off-balance-sheet financial intermediation has been increasing and credit has accumulated enormous growth in the past few years, with a substantial portion going to local governments. In other economies, episodes of rapid credit growth have resulted a few years down the line in a deterioration of the quality of banking assets and financial intermediaries’ balance sheets, and in a slowdown in domestic demand. Although the Chinese financial system has some features that differentiate it from others, there is no denying that any difficulties in this field could have negative effects on China’s growth for a longer period. If so, it would hurt world growth and commodity prices, particularly for copper. A second risk coming from abroad has to do with the way emerging economies will accommodate the withdrawal of monetary stimulus packages in developed countries.
In a system of flexible exchange rates, gold is no longer required for it to perform this function and the gold initiative is therefore unnecessary. Price stability and the stability of the Swiss franc are not determined by the share of gold in the SNB’s balance sheet, but by its monetary policy. It has achieved these goals more effectively than virtually any other central bank: average inflation has remained below 1% for the last 20 years, and never in the history of the SNB has there been such a sustained period of low and stable inflation. Prescriptions on the share of gold in the balance sheet, coupled with a sales ban, would make it considerably more difficult for the SNB to fulfil its mandate in future. For this reason, the gold initiative is harmful. In order to pursue a stability-oriented monetary policy, the SNB needs to be able to supply the Swiss economy with Swiss franc liquidity quickly in periods of crisis. The SNB’s balance sheet expands when liquidity is increased. In the aftermath of a crisis, it is critical that this newly injected liquidity be reduced again, in order to prevent an undesirable rise in inflation. Scaling back liquidity, on the other hand, reduces the balance sheet total. Given that the initiative is calling for gold to make up at least 20% of the SNB’s assets, a temporary liquidity increase would require gold holdings to be increased, too.

Asia Bond Monitor. Includes bonds issued by governments, regional authorities, supranational organisations and corporations. 3  BIS. 2013. Triennial Central Bank Survey, Foreign Exchange Turnover in April 2013: Preliminary global results. 2  BIS central bankers’ speeches  broadest possible diversification of our investments is extremely important. Consequently, we have increased our exposure in this region over the last few years, in particular to Japan, Australia, Singapore and Korea. Since 2010, the share of Asian currencies in our foreign exchange reserves has almost doubled, from just under 6% to almost 12%. Prior to the financial crisis, the SNB had less than CHF 5 billion invested in Asian assets – and these investments were denominated exclusively in yen. Since 2010, we have been investing in the Australian and Singapore dollars, and since 2012, in the Korean won as well. At the end of 2013, we had over CHF 50 billion invested in Asia, and of this, CHF 15 billion was invested in these three new currencies (left-hand side of slide 4).4 Today, 3.5% of the SNB’s total foreign exchange reserves are allocated to these currencies (right-hand side of slide 4). We see further potential in Asia as we move forward and it will not surprise you to hear that we see China playing an increasingly important role here. Investment quota for Chinese government bonds Why does China interest us?
Norman T L Chan: Can central banks save the world? Keynote address by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at the 19th Annual Hong Kong Business Summit Luncheon, Hong Kong, 25 November 2013. *  *  *  C K (Chow), Stephen (Yiu), distinguished guests, ladies and gentlemen, good afternoon. 1. It has been five years since the onset of the Global Financial Crisis in 2008. The Crisis – followed three years later by the European Sovereign Debt Crisis – exposed the weaknesses of the global financial system and the vulnerabilities of the global economy. Today, peripheral countries in Europe are suffering a sharp contraction in their economies, and major advanced economies are experiencing very weak growth, if any at all. The economic output of several European countries, including the UK and France, is still below the levels prior to the Global Financial Crisis. The US, which seems to be the only bright spot among the advanced economies, still hasn’t recovered in full the 8.7 million jobs it lost following the Crisis. 2. Confronted by this extremely difficult environment, it was not surprising that central banks in the advanced economies began taking unprecedented steps to lower interest rates as far as possible. And, once the rates hit rock bottom, they began introducing different forms of very aggressive quantitative or credit easing.

4  Ladies and gentlemen, before moving on to what lies ahead, let me briefly summarise my key message – excessive leverage is the root cause of the global financial crisis, but surprisingly, not much has changed. Many have still not learnt the lesson, and think the problems can be solved by further leveraging. And policymakers advocating extremely accommodative monetary easing still believe liquidity-driven growth is the answer. Indeed, it’s ironic that low interest rates, mispricing of risk and excessive debt levels, which contributed to the crisis in the first place, are now considered the “solution”. BIS central bankers’ speeches  What lies ahead? 14. So, we have now entered “uncharted waters” or the “world of the unknown”. It has often been argued that the Global Financial Crisis was unprecedented and one which demanded unprecedented policy action. As most of the advanced economies have very little, if any, fiscal headroom to support growth and job creation, the use of zero interest rates and QE, and leveraging on central banks’ seemingly limitless ability to expand their balance sheets, appears to be “The Only Game in Town”. Presumably, this means the situation has become so bad, we may as well try these unconventional policies to see if they work. However, as I outlined earlier, the efficacy or potency of these policies has not been as strong as first thought. In the US, the pace of economic recovery has been rather moderate, if not disappointing, despite the unprecedented fiscal and monetary support packages launched since 2009.
More recently the Fund adopted a set of criteria designed to limit the risk that the Fund would make largescale resources available too frequently and in conditions where they would be unlikely to contribute to a resolution of the crisis. These various reforms gave the Fund a substantially more effective insurance mechanism for emerging market economies than it had before. Building on this progress, I see the key elements of a credible insurance mechanism as including the following: •  Finance must be conditioned on a policy framework strong enough and timely enough to restore confidence. Fund resources can’t compensate for a lack of policy credibility, and lending official resources to fund an inadequate policy effort may make the situation worse. •  The scale of finance provided has to be calibrated to the need, and the needs can be substantial in today’s world. The Fund can only fill part of the gap, but it has to be able to fill a credible share of the gap if it is to play a successful part in catalyzing other resources to flow. •  Flexibility to structure programs appropriate to the circumstances and the borrower’s policy efforts is essential. The Fund needs to be able to substantially front-load financial packages, when this is warranted. Making available small tranches of resources over the life of a program does little to address the realities of open emerging market economies facing liquidity problems.

•  International reserves have increased substantially, providing a larger cushion against adversity. Among the largest borrowers, half now hold reserves greater than 150 percent of maturing short- and long-term debt; less than one-sixth had such coverage heading into 1997. •  There have been improvements in fiscal performance, with some notable cases of governments achieving and sustaining large primary surpluses. BIS Review 37/2004  1  •  External balances have improved, with current accounts in most of the emerging world in surplus or modest deficit. Only 2 of the 20 largest borrowers now are running deficits in excess of 3 percent. •  Exchange rate regimes are more resilient and less fragile, as a substantial majority of the largest borrowing countries have moved to flexible regimes, and away from the fixed-butadjustable pegs that proved so dangerous in the crises of the last decade. •  Important progress has been made in building credibility for new monetary policy regimes, and inflation is generally moderate. •  Governments have made major investments in recapitalizing and restructuring their troubled financial systems. For example, in Asia, where some of the most severe problems were encountered, governments have spent over $ billion carving out problem loans and bolstering capital. •  Growth rates have improved with the restoration of domestic stability and recovery in external demand. Indeed, aggregate growth currently is running at its highest rate since the onset of the crisis in 1997.