samchain/econo-pairs-v1 huggingface dataset:
The global financial crisis significantly undermined confidence in the financial system, and the discovery of ethical lapses that continue to be reported today has further eroded public trust in financial institutions. There is an urgent need to restore faith in the utility of financial services, firstly through the demonstration of fair and responsible practices and reinforced with the provision of valueadding products and services that are meeting the real needs of consumers and businesses. Financial institutions with their extensive reach and customer relationships are in a unique position to have a more significant role in advancing the financial education agenda. In Malaysia, this has included providing technical support and materials for teachers to improve their knowledge and increase confidence in teaching financial matters in schools. Financial institutions have also adopted more than 10,000 schools across the country under the School Adoption Programme with wide ranging activities in money management for the children. The financial institutions also work closely with the Credit and Debt Management Agency in the implementation of financial education programmes for adults. Today, the focus on financial capability has become a global agenda. This has provided opportunities for policymakers to learn from their peers across countries and leverage on the international network of expertise in addressing common issues and challenges. This Symposium is a great example of realising such opportunities. The possibilities for meaningful cooperation at the regional and global levels are tremendous. This has already included research, technical assistance and guidance for policymakers.

Chris Salmon: The UK payments landscape Remarks by Mr Chris Salmon, Executive Director for Banking Services and Chief Cashier of the Bank of England, at the C D Howe Institute Special Policy Conference “Canadian Payment Systems”, Toronto, 4 November 2013. *  *  *  I would like to thank Nicholas Constantine, Andrew Dent, Rosey Jeffery, Simon Rickenbach and Peter Williams for their comments and contributions. Introduction Today’s conference provides an opportunity to review how the Canadian payments landscape could evolve. On the basis that there will be some relevant crossovers, perhaps the most helpful contribution I can make is to summarise some of the challenges we face in the United Kingdom. In line with this session’s focus, I will cover the core sterling payments infrastructure, defined as the key wholesale and retail payment schemes that the Bank oversees, and focus on integrity, which is at the heart of a central bank’s interest in payments. As a precursor it may be helpful to give a brief overview of the current set-up of the UK’s payments landscape. The Bank of England operates the UK’s real time gross settlement infrastructure, RTGS. CHAPS, our high value payment system, has settled on a real time gross basis since 1996, and CREST, our securities settlement system, since 2001. They settle in central bank money across accounts their members hold in RTGS.
Therefore, in our eyes, and in the eyes of many other leading central banks, transaction-based interest rates appear to be the way forward to create more reliable reference rates. SWESTR – the Riksbank's response to the shortcomings in STIBOR It is in this context that the Riksbank has undertaken to calculate and publish a fully transaction-based reference rate, SWESTR (Swedish krona Short-Term Rate). The test period for SWESTR ended at the beginning of September, and SWESTR can now be used in financial contracts. The Riksbank calculates SWESTR based on transactions in Swedish kronor that are made in the money market from the current business day to the next business day (overnight, O/N). The transactions reported to the Riksbank come from nine of the Riksbank's monetary policy counterparties, all of which are banks. These are the largest and most active banks in the money market in Swedish kronor.3 The banks report money market transactions of different types and at different maturities, but only those transactions where the counterparty deposits money overnight with the bank, without obtaining collateral, form the basis for the calculation of SWESTR. The banks shall report their transactions with a wide group of counterparties. Transactions with other banks, financial companies, non-financial  4 [8]  companies and the Swedish National Debt Office are used for the calculation of SWESTR. SWESTR shall thus reflect the prevailing level of interest rates in the overnight market in Swedish kronor. There are several differences between SWESTR and STIBOR.

When the interbank rates are to be determined, the panel banks report submissions. If there are no actual transactions in the interbank market, the submissions are instead based on the banks' judgements of what the interest rate for an interbank loan would be. 2 [8]  Over time, the number of transactions on which to base the bids has declined, as interbank loans are not currently the banks’ primary source of funding. During the period January-August, there was not a single unsecured transaction at the maturity tomorrow-next in Swedish kronor between STIBOR panel banks!1 So during that period no such transactions were carried out which the daily values of STIBOR’s shortest maturity are to reflect. The submissions are therefore now based almost exclusively on the banks' judgements. And this means that the reference rate is becoming increasingly vulnerable. Interbank markets have also become less important in other countries following the global financial crisis, and therefore international interbank rates are also based to a lesser and lesser extent on actual transactions. As a result, global confidence in these interest rates has decreased rapidly. One event that further weakened confidence in interbank rates is the so-called LIBOR scandal in 2012, when it was discovered that several panel banks had manipulated submissions for their own gain, not least during the global financial crisis in 2007-2008. It was simply a question of reporting false submissions for the calculation of LIBOR with a view to benefiting their own business transactions.
This was the case after the emergence of the railway at the end of the 19th century and the crash of 1929 followed on from the breakthrough of electricity and the internal combustion engine at the beginning of the 20th century. I do not intend to make an in-depth analysis of the causes here, but to point out that even very promising developments in the growth of productivity can live up to the profit expectations created during speculative bubbles. Monetary policy implications It is evident that large, IT-driven and IT-supported structural changes are underway and that these affect productivity and price levels in a way that needs to be taken into account when assessing inflationary pressure in the economy. We do not know how long the technological changes will have an effect, but I have every reason to believe that IT will affect developments in Sweden for the next few years, which basically comprises the monetary policy target horizon. On the other hand, there is in my opinion nothing to indicate that the “new economy” has invalidated any fundamental economic connections. At the same time, rapid changes such as those we are now experiencing involve greater uncertainty. No one can say with any great precision how productivity will develop over the next few years and how large a role IT will play in its development. This uncertainty is enhanced by the difficulty in measuring the IT sector’s significance as a result of shortcomings in Swedish statistics.

This is particularly true for sovereign credits where there is BIS Review 50/2000  2  widespread support for finding an alternative to the current OECD/non-OECD distinction. In other words, OECD membership would no longer be relied on for setting regulatory capital for sovereign or bank claims. Notwithstanding this support, many commentators have offered modifications to the Committee’s proposed standardized framework, which several observers have suggested does not go far enough toward risk differentiation. The Committee has taken this concern to heart, and is actively evaluating whether it would be feasible to incorporate additional risk weights into the standardized approach, and, if so, how this should be done. As we work toward greater risk differentiation among claims that are rated, we will continue to give extensive thought to the treatment of unrated claims, given that the penetration of external ratings remains low in most countries. It is difficult to avoid creating incentives to remain unrated while at the same time retaining continuity with the existing Accord’s treatment for these credits. Further work would be needed to develop a standard for unrated claims that would be more risk-reflective but, unfortunately, few commentators offered significant suggestions in this regard. Procyclicality The Committee has considered what some observers have noted is the potential for introducing greater cyclicality in a more risk-sensitive capital framework. That is, the capital requirements for loans to troubled borrowers will tend to increase at just the point when such trouble is becoming apparent.
When I went to the UK for my post-graduate studies in mid 1970s, it was only in the case of subjects he had covered that I did not have the so called knowledge gap. Professor Tilakaratna was not only an academic, but also a policy advisor, manager and administrator. In early 1970s, he functioned as an advisor to the Ministry of Plantations Industry and was appointed as Chairman of the newly established Coconut Marketing Board. Unlike other academics who thought that they knew all, he had the modesty and humility to learn from industry. A big magnate in coconut industry recently related to me how he once visited a coconut factory and insisted on learning a to z of everything there. My frequent visits to him either at the Coconut Marketing Board or at his residence were intellectual and academic journeys through all aspects of and issues relating to the coconut industry. We always returned home being much wiser than before. The university authorities too recognized his academic excellence and erudition fairly early. He was elevated, by double promotion, to the post of Professor of Economics and Head of Department at such a young age as 34. Immediately after that, he re-organized the Department of Economics, introduced a Post Graduate Diploma in Applied Social Statistics and strengthened the Department with new staff. I was one of the students who completed this Diploma in its first batch.

The few examples that I have just described show how research on macro modeling and forecasting is important for our work. We are well aware that there will always be ample room for improvement in our toolbox, and we are fortunate to have such prominent speakers with us here today. This workshop is a great opportunity for us to become familiar with recent advances in Bayesian econometrics. In addition to the pleasure of the scholarly discourse, I also hope you will have the opportunity to enjoy Oslo. BIS central bankers’ speeches  1
Moreover, these economic agents tend to put the blame on the falling inflation for the worsening of their situation. These economic agents that fail to harmonize with this new process are the ones who resist the most to the fight against inflation. This adaptation problem also prevents these economic agents from seeing the advantages offered by price stability. In this context, the most important development in fight against inflation is that credibility of current policies have improved, whereas the inflation target has increasingly become a more credible nominal anchor for a majority of the economic agents in Turkey. In other words, the inflation target was taken as a reference more extensively. Further developments will facilitate the adaptation of economy to changing dynamics and support maintenance of the price stability as well. Distinguished guests, Before discussing the effects of the falling inflation on economy, let me elaborate the importance of price stability for economies. As we all know, the primary objective of economic policies is to provide sustainable growth and to increase employment throughout the country. The role of monetary policies has been misunderstood for a long time. This wrong assumption is that the increase in inflation and growth are parallel to each other and growth rates can be accelerated by loosening the monetary policy. Frankly speaking, in the framework of early economics literature, this assumption can only be verified in the short term, in countries where inflation rates are low and there is no credibility gap in monetary policies.

BIS Review 63/2004  3  At present, producers are in a position to differentiate, to a large extent, whether the increase in prices is attributable to inflation or to an increase in demand, and can take their decisions with regard to increasing production, making investments, etc., within this framework. They now give importance to cost control and productivity increase while determining the profit margins in their pricing policies. Similarly, consumers have also begun to actively participate in the pricing process, using the advantage of a more competitive environment. At this point, I wish to emphasize two issues I deem significant. The first one of these has to do with inflation falling at a slower pace compared to other sectors, also due to pricing behavior directed to increasing the profit margins, at those sectors where demand is relatively rigid and competitive structure relatively weak. This situation, also expressed as rigidity in inflation, by way of causing differentiation in relative prices, forms an obstacle to prices to carry on their task of conveying information properly. The rigidity in inflation recently observed in Turkey, in sectors such as education, rental services and hospital services, with prices falling at a slower pace for the services group compared to the commodities group, is an example of this. It is crucial that measures to increase competitiveness in these sectors are taken promptly in order to eliminate this distorted structure and also in terms of the risk it constitutes to the inflation target in future.
Figure 1: Financial Services Value Chain  At present, the most significant changes are taking place at the front-end, where innovative payment service providers (PSPs) are providing new user interfaces for domestic retail and cross-border payment services through digital wallets or pre-funded eMoney. 8  Other aspects of the customer relationships are being opened up. For example, aggregators are providing customers with ready access to price comparison and switching services. This will increase further when aggregators gain access to banks’ Application Programme Interfaces (APIs). 9  These new entrants are capturing potentially invaluable customer data which can be used to target non-bank products and services. 10  8  For example, more than 80% of incumbent financial institutions thought their customers were already using FinTech companies to make payments whilst nearly 70% thought they were doing the same for fund transfer and around 60% for personal finance. Only 50% thought their customers were doing so for traditional deposits and savings. See PWC “Global FinTech Report” (2017). 9 The second Payment Services Directive (PSD2) will allow, conditional FCA authorisation and customer authority, non-banks to access customers’ bank account data. In the UK, the Competition and Markets Authority has required that the UK’s nine largest banks adopt an open banking standard for APIs by early 2018.

6  All speeches are available online at www.bankofengland.co.uk/speeches  6  The Right Hard Infrastructure A second, related example is how the Bank is working to develop the financial system’s hard infrastructure to allow innovation to thrive while keeping the system safe. Specifically, the Bank is widening access to some of its systems to include PSPs in order to boost both competition and system resilience. The UK has led the world in innovation in the wider payments ecosystem. And we are committed to keeping pace with customer demands for payments that are seamless, reliable, cheap, and ubiquitous. Our challenge is how to satisfy these expectations while maintaining a resilient payment systems infrastructure. That’s important because the Bank operates the UK’s high-value payment system ’RTGS’ which each day processes £ trillion of payments on behalf of everyone from homeowners to global banks. Understandably, we have an extremely low tolerance for any threat to the integrity of the system’s “plumbing”. Currently, only 52 institutions have settlement accounts in RTGS. Indirect users of the system typically access settlement via one of four agent banks. These indirect users include 1000 non-bank PSPs at the front-end of the financial services value chain. As they grow, some PSPs want to reduce their reliance on the systems, service levels, risk appetite and frankly goodwill of the very banks with whom they are competing. The Bank has decided to widen access to RTGS to include non-bank PSPs in order to help them compete on a level playing field with banks.
In fact, at times, when short-term rates have been pinned at the zero lower bound, the Federal Reserve has taken actions that eased financial conditions without changing shortterm interest rates. Such actions have included forward guidance that the FOMC was likely to keep short-term rates low for a long time and large-scale asset purchases that led to lower bond term premia. Now, as I said at the start, just because I don’t want to follow a rule mechanically does not mean that I favor the polar opposite – that is, a fully discretionary monetary policy in which market participants, households and businesses cannot anticipate how monetary policy is likely to evolve as economic and financial market conditions and the economic outlook change. If households and businesses do not have a good notion of how the Federal Reserve will respond to changing economic and financial market conditions, then this would loosen the linkage between short-term rates and financial conditions. This would also likely lead to greater uncertainty about the outlook and higher risk premia, and it would make it more difficult for policymakers to attain their objectives. Instead, what I favor is a careful elucidation of those factors that influence the economic outlook and how monetary policy is likely to respond to changes in the outlook. This includes fiscal policy, productivity growth, the international outlook and financial conditions, as well as how much employment and inflation deviate from the Fed’s objectives.

3 Sometimes it can be much higher than 2 percent. Presumably, this was the case during the late 1990s as rapid technological change lifted productivity growth. Sometimes it can be well below 2 percent. For example, when credit availability dried up during the financial crisis in late 2008, this drove down the equilibrium real rate far below 2 percent. More recently, the slow growth rate of the economy and the low rate of inflation are evidence that the equilibrium real short-term rate today is well below the 2 percent rate assumed in the Taylor Rule. If 2 percent really was consistent with a neutral monetary policy, then the very low real rates of recent years – buttressed by our large-scale asset purchases – should have been extraordinarily accommodative. As a result, we should have grown much faster than the 2½ percent pace evident over the past couple of years and seen an inflation rate much higher than what we experienced. This conclusion is supported by a number of more formal models. For example, the Laubach-Williams model currently estimates that the equilibrium real short-term rate is around zero percent. 4 Third, the Taylor Rule – and more broadly, any prescriptive rule for the systematic quantitative adjustment of the policy rate to changes in intermediate policy inputs such as real GDP or inflation – is incomplete because it does not fully account for factors that are crucial to how monetary policy impulses are transmitted to the real economy.
Moreover, the mark-to-market completed by mark to model of a wide range of assets and liabilities has also contributed to this widespread focus on immediate financial performances. This focus on short-term performance can translate into additional volatility in the price discovery process: indeed, the shorter the investment horizon of market participants, the larger the impact on prices of any new information. Mimetic behaviour is by no means a new phenomenon on financial markets. However, technological developments on markets may have gradually reinforced this type of behaviour. The spread of benchmarking, which allows fund managers and clients to measure performance against that of other funds, together with the growing competition within the sector, appears to have favoured such “herd behaviour”. Some operators have come to the conclusion that it is better to be wrong along with everybody else, rather than take the risk of being right alone. A striking example of rational mimetic behaviour is the influence that hedge funds enjoyed, a few years ago, as "opinion leaders" and trend makers. The second set of factors relates to new market techniques or financial engineering devices. Here are a few examples of some of these mechanisms: •  The inclusion of contingent or trigger clauses in loan and bond contracts. These clauses provide creditors with a form of insurance since the level of interest rate paid by debtors increases when specific trigger events occurs (typically the downgrading of the debtor by rating agencies). These clauses were designed to help borrowers access financing at lower rates.

Dimitar Radev: The Bulgarian banking sector and the challenges in 2020 Publication by Mr Dimitar Radev, Governor of the Bulgarian National Bank, in the Quarterly Bulletin of the Association of Banks in Bulgaria, issue 60, January 2020. * * * The banking sector in Bulgaria ended 2019 with very good overall indicators and positive trends – high capital adequacy and liquidity, credit activity, improving asset quality and the historically highest annual profit of the sector. The asset quality review and the stress test conducted by the European Central Bank confirmed the resilience of the sector overall. The banking sector in Bulgaria will be strategically impacted by the developments in the process of accession to ERM II and the Banking Union, part of which was the assessment of six Bulgarian banks undertaken by the ECB. The final stage of this process is to unfold in the coming months. The fulfillment of the commitments assumed by Bulgaria, including strengthening the capital of two Bulgarian banks, will be followed by relevant external assessment. Following the set path, Bulgaria is drawing near to achieving a fundamentally new level of EU integration – membership in euro area institutions. This will bring about significant change in terms of banking supervision and bank resolution activities. The very onset of the process of establishing close cooperation of the Bulgarian National Bank with the ECB has already expanded the scope and enhanced the intensity of the two institutions’ joint work.