samchain/econo-pairs-v1 huggingface dataset:
The increase in leverage has appeared everywhere: in the expansion of banks’ balance sheets; in the proliferation of off-balance sheet vehicles that for the most part operate without own funds, i.e. with infinite leverage; lastly, as I have said, in the use of the limited capital of monoline insurers to guarantee a large volume of structured products. One well-known feature of leverage is that it amplifies both gains and losses. For many years, the US property boom provided substantial returns on investment. But with the turnaround in the market, very considerable depreciations have been recorded on structured products, which, for many banks, have exceeded their level of capital. Their inability to recapitalise has led to the failure of some of them. How, in this environment, can we assess the state and performance of our banks? They are, of course, not immune to the crisis. They have direct or indirect exposures (notably via US monolines) to structured products. They have had to make write-downs, sometimes substantial ones. They are also suffering the impact of the drying up of liquidity, the seizing up of some markets and, more generally, the rise in their refinancing costs. That said, our banks are sound and profitable. It is worth recalling four facts that, in the current turmoil, are sometimes overlooked: First, the solvency ratios of French banks are high, well above the minimum requirements set by prudential regulation and the levels of their European competitors; Second, overall our banks remain profitable: over EUR 7 billion in the first half of 2008.

Article 9 of the new NBL defines a wider scope of possible transactions. This allows the National Bank to further optimise the structure of its investments with a view to specific central bank needs. As part of this process, we are also evaluating the possibility of enlarging the investment universe. However, such an extension would raise a number of fundamental questions that will first need to be examined. Before the new law enters into force, we will establish and publish investment policy directives setting out how the Governing Board plans to make use of the extended investment policy scope. While our assets have already been managed largely in conformity with the principles of modern asset management, improvements were nevertheless called for. It was essential to bring our internal investment and risk control processes into line with the new legal framework. The opportunities for diversification brought about by additional investment instruments would, in principle, reduce the market risk of the investments. At the same time, though, the SNB would incur new risks, e.g. additional credit risks. In addition, corporate governance is to be enhanced. The primary goal is to segregate powers as far as possible: firstly between monetary policy and investment policy operations, secondly between investment strategy and its implementation through asset management, and thirdly between risk taking and risk controlling. There are limits to the principle of segregation of powers insofar as the Governing Board is responsible both for monetary policy and investment policy.
Profitability is an important component here - if the banks’ profitability is poor, it may drive them to invest in more risky projects in an attempt to regain profitability. What loan losses might the banks suffer in the future? By looking at the quality of the banks’ assets, we link the analysis of the banks to the analysis of the borrowers. Might the banks suffer liquidity problems? We study the banks’ financing capacity to obtain an impression of this. The final chapter contains an analysis of the financial infrastructure. This must function so efficiently that any problems arising within an individual financial institution or sub-market will not spread to other participants or markets. Nor should there be any problems in the infrastructure resulting from shocks to the systems themselves. Analysis of the infrastructure is made difficult by the fact that it also requires fairly detailed insight into how different computer systems are constructed - technological issues thus become more important here than in other areas. Each report concludes with one or more articles. These articles give us an opportunity for more in-depth analysis of various fields or for presenting the results of various studies. This is all done with the aim of increasing our knowledge and making us even better at analysing and overseeing the financial system. Although the standard layout of the report provides some form of framework for our analysis work, we are constantly developing our analyses. Conditions change, with new operators, risks and technological developments.

Since the start of the crisis in 2008, Malaysia has experienced three episodes of large foreign capital outflows. Thankfully, our policy framework, a healthy level of foreign exchange reserves, and the robustness of our financial system, have enabled us to withstand such flows without significant disruption of domestic economic and financial activity. The third form of risk is through interest differentials. Very low interest rate in the AEs do not just attract yield-searching foreign funds to the higher yields in the emerging markets (EMs), they also create a very strong temptation for residents in EMs to borrow from abroad. We saw this type of vulnerability in this region in the period before the Asian financial crisis and more recently, in the Eastern European economies. The build-up of unhedged foreign currency debt by residents can be a significant source of vulnerability during times of economic and financial upheaval. Then there are global liquidity spillovers into domestic liquidity that put downward pressure on domestic interest rates. We see this most evidently with the negative interest rates of the ECB, which has resulted in capital flows to the neighbouring countries and pressure on their exchange rates. As a consequence, interest rates in neighbouring Denmark, Sweden and Switzerland have all also become negative. Such contagious fall in interest rates can lead to excessive borrowing, a decline in savings, increases in asset prices, and increases in leverage, which in turn increase the risks of financial imbalances developing and undermining financial stability.
The rate for New York State, which has been improving since the first quarter, is noticeably lower at 8.3 percent. Puerto Rico, which has had much higher unemployment than the mainland for the past several decades, saw a modest decline in its jobless rate, but at 15.6 percent is still showing little evidence of a recovery. Regional housing trends in New York and New Jersey We focus on housing at today’s briefing because it represents the most important asset that many households own, provides a substantial number of high-wage jobs and is often a key driver of regional as well as national business cycles. I’ll start with a key observation: During this recession, the housing sector contributed less volatility to the regional economy than it did in much of the nation. We have, of course, seen painful losses of homes, construction jobs and housing equity in New York and northern New Jersey. This pattern can be seen quite directly in the construction sector, where many jobs were created during the housing boom, but then were lost as the housing market deteriorated. However, our housing markets tend to be less influential in our economy because we are a relatively mature region. That is, we are not adding population as rapidly as some other parts of the country, so housing construction – which tends to be very cyclical – and associated purchases account for a smaller share of aggregate activity here than it does in faster growing regions.

We urge you to discuss the many issues confronting our respective countries and attempt to learn from each other as well as from the broader experiences from international experts and develop our skills and expertise. We also look forward to your report at the conclusion of your deliberations. Let us also offer all of you our continued co-operation in your collective endeavors to combat money laundering and terrorist financing activities. Finally, we wish you a successful learning experience and hope that your efforts will effectively contribute to the prevention and suppression of money laundering and financing of terrorism. BIS Review 9/2007  3
For as long as the scheme’s in place this will temper any further rise in headline inflation, and with it any related increase in “second-round” effects over the medium term. However, by relieving some of the immediate pressure on household finances, the policy would also add significantly to domestic spending over the next year (relative to our last forecast). At the margin, the task of reducing overall demand growth, in order to bring inflation back to target, would therefore tilt more towards monetary policy. And as I argued earlier, there’s less reason to respond to this news in a “gradual” or “smoothed” manner. Whether or not that response needs to be as large as the shift in market interest rates, since our last set of forecasts, remains to be seen. For one thing, there is now some uncertainty about the prospective scale and nature of the government’s energy subsidies. On Monday the Chancellor said the Energy Price Guarantee would be maintained only for six months, rather than the two-year period originally planned. He suggested support was likely to continue, beyond six months, albeit in a more targeted fashion. But we are unlikely to know for a while precisely the form that will take. Second, the rise in market interest rates has been very dramatic. At the time of the Monetary Policy Report in August, prices in financial markets were consistent with Bank Rate rising to a peak of 3% next spring and then falling back a little over the following year.

The UK is a big net importer of (non-energy) goods. And although the North Sea is still providing quite a bit of oil and gas, here too the UK runs a significant deficit. Besides, only a very small minority of UK residents actually receive any disposable income from that source. Notionally “British” companies operating in the North Sea have significant foreign ownership. What domestic shareholdings do exist are likely to be held mostly in pension funds and other long-term (i.e. inaccessible) investment vehicles. This means that, for given GDP, rises in the relative prices of goods and energy make us collectively worse off. And that’s exactly what’s happened over the past couple of years, thanks first to the pandemic and then Russia’s cut in gas exports. Over that period the price of the UK’s imports has risen by 20% more than the average price of its output. You can see this in the last bar in Chart 2. Chart 2: Bucking the long-term trend, import prices have risen much faster than output prices over the past couple of years  12 10 8 6 4 2 0 -2 -4  Change in import prices relative to GDP deflator, annual average, % points 12 10 8 6 4 2 0 -2 -4 60s 70s 80s 90s 00s 10s Last two years  Source: ONS and Bank calculations.
These jobs account for a good part of the 22,000 net jobs the financial sector has created during 2016–2019. Our FinTech start-up community has grown exponentially – Five years ago, we had about 50 FinTech firms; we now have more than 1,000. Last year, FinTech firms attracted a record $ billion of investment. For the first half of this year, despite COVID-19, the FinTech sector continued to attract equity funding and M&A amounting to $ million. The FinTech sector has been a powerful creator of jobs. We estimate there are nearly 10,000 people employed by FinTech firms, many of which are also classified as part of the financial services sector. We have seen many examples of innovative solutions that use technology to meet the daily needs of consumers of financial services. The Proof of Concept (or POC) Grant, under FSTI, provided funding support for experimentation, development, and dissemination of such solutions. One example of successful commercialisation is SoCash, who partnered with Standard Chartered Bank to pioneer micro cash distribution in Singapore, by turning any retail shop into an ATM alternative and allowing users to withdraw cash at the checkout. SoCash subsequently raised $ in Series B funding to expand its distribution network into overseas markets such as Indonesia, Malaysia and Hong Kong. The financial industry has begun to make progress in frontier technologies like AI. The AI and Data Analytics (or AIDA) Grant, under FSTI, has helped to promote the adoption and integration of AI and data analytics in financial institutions.

They review such issues as whether the model is based on reasonable assumptions, whether the firm is making appropriate use of backtesting, and how the model performs under normal and stressed market conditions. In addition, they are spending significant time on key controls related to the overall use of models, including the model validation process and the new product approval process. Likewise, as banks rely increasingly on their own assessments of credit and operational risk when determining their capital needs, our examiners will have to become well-versed in the changing technical aspects of those models. Some of the conventional, static metrics that we now use - for example, on the credit risk side, those to judge asset quality and to assess the adequacy of credit loss reserves - are likely to be supplanted by more sophisticated quantitative measures. As is the case with credit risk, we are in the process of developing a more integrated framework for assessing the adequacy of banks’ operational risk management and measurement approaches. We are focusing heavily on how banks are managing operational risk from a corporate-wide perspective. We begin by developing a feeling for the "tone at the top" - that is, the board of directors’ and senior management’s commitment to effectively manage its operational risk. Then we assess whether that commitment translates into an effective operational risk management and control structure - including the quality of management reporting, and the degree of integration of operational risk into a bank’s overall risk management approach.
Developments in the technological infrastructure have increasingly been at the forefront of economic discussions in the second half of the 1990s. One of the most striking economic events of the last years has been the pace and depth of change in information and communications technologies (ICT), and the discussion about a so-called “new economy” in the euro area. There has been no undisputed definition of what should be understood by the term “new economy”, but generally it included the following characteristics. A “new economy” seemed to manifest itself mainly in a permanently higher rate of potential output growth, with gains in productivity driven by technological innovation being the main force behind the upsurge. 1  D. Coyle, “The Weightless World: Strategies for Managing the Digital Economy”, MIT Press, 1998, p.VII. BIS Review 23/2003  1  The problem with the “new economy”, however, was that the evidence available for the existence of it was fairly mixed, both for the United States and - even more so - for the euro area. On the one hand, some studies, undertaken at the aggregate level, tended to conclude that the data did not warrant an affirmation of a “new economy”. On the other hand, several microeconomic studies found evidence of significant effects of information technology on firm-level productivity. From the beginning, there was, however, only limited, if any, evidence of a “new economy” in the euro area.

It will also enhance public confidence in the efficiency and performance of the financial system to contribute to the overall development of the economy. This approach is also a move towards a differentiated regulatory and supervisory approach whereby companies that demonstrate strong corporate governance standards and risk management practices will be accorded 'lighter regulatory touch', which implies that they will be given greater regulatory flexibility. This underscores the importance of capacity building by the financial institutions in research and development and re-engineering of business processes in search of operational excellence and enhanced customer service delivery. A strong culture of excellence is therefore vital: one that is embedded in all levels of the organisation; one that fosters and rewards innovation and service quality. A customer-centric focus is, and will continue to be, the winning formula for a successful financial services provider. In particular, insurers must ensure suitability of products sold or advice given; play an active role in enhancing financial capability of consumers; and ensure policyholders are treated fairly. This regulatory approach will basically benefit those companies that are efficiently-run and wellcapitalised. In this regard, Axa Affin will benefit from this new regulatory approach if it puts in place a risk management system that could be used to capitalize incentives accorded by the new framework. The synergies derived from the strengths of the bank and the experience of foreign insurance partner should be harnessed to benefit from this new environment, particularly in the bancasurance line of business.
We take all of our responsibilities very seriously, as of course we should. Across the board, there have been developments over the last year that give me a sense of cautious satisfaction – by the way, that is at the happier end of the spectrum of emotions for a central banker Seriously, I am afraid that we must not get carried away here. We are in many ways in the second phase of the financial crisis. The first phase was a prudential one, while the second phase has revealed past misconduct. Fixing the financial system requires more than just fixing capital and liquidity standards. Standards of governance, conduct and the right incentives structures are all extremely important. After commenting on two material development this year I want to use the rest of my time to set out four areas where we are either taking action, or watching very carefully to determine whether action may be required. Let me start by describing two developments which point to some cautious satisfaction. First, the capital position of UK banks has strengthened. Market conditions have supported actions to raise capital and reduce non-core assets, and banks have taken advantage of those conditions. The targets that were set as a consequence of the FPC and PRA exercise of nearly two years ago have been met ahead of schedule. The banking system is now more able to support lending and the growth of the economy.

Toward the end of the year, we will publish the results of our first round of simultaneous across major UK banks stress tests, which will follow the publication by the European Banking Authority of its stress tests in just over a week from now. Our stress tests are a real step in the direction towards the full use of such tests as one of the three pillars of the capital framework. This is a major development compared to the cumbersome and slow process of stress testing one bank after another that we developed during and after the height of the crisis. We will be using these tests to assess whether firms have capital positions and capital plans looking forwards which will provide re-assurance that they will be safe and sound under stressed conditions, as the name suggests. If they don’t – and you should take no inference on the results from what I say here – we will ask them to look again at their plans. Stress tests should not be a dramatic event, they should be part of the health check and they should prompt measured responses where necessary, and reflecting the fact that at different speeds banks are heading out of the crisis. Last on capital is the issue of loss absorbency in going and gone concern states. For the major banks this is the too big to fail problem.
The Board of the Central Bank is firmly determined to adopt any measures needed to mitigate the adverse effects of a worsened external scenario, but it also must be careful not to allow medium-term inflationary risks to end up triggering an unwanted increase in inflation. In the baseline scenario that we believe to be the most likely, the world economy will remain weak and will give us less impulse than we expected a few months ago. Although the Chilean economy will be affected, it will continue to perform well. Inflation will stay around 3 percent. But the external risks facing said baseline scenario are significant. Let me now look into this setting in more detail, examining the risks we have identified in our Monetary Policy Report and our Financial Stability Report. 2  BIS central bankers’ speeches  Macroeconomic scenario As I just said, the external impulse on the Chilean economy in the next two years will be weaker than forecast in March. The poor performance of the developed world – for several quarters already – is being compounded with early signs of weakness in emerging economies, thus exacerbating the risks coming from abroad. I want to begin by the developed world. In the Eurozone, the new financial tensions have tightened credit constraints, while ongoing fiscal measures will not contribute to boost growth in the near term. The recession foreseen for the region this year will be deeper than previously estimated. The other developed economies will grow slowly.

Bwalya K E Ng’andu: Improving the investment climate in Zambia Opening remarks by Dr Bwalya K E Ng’andu, Deputy Governor (Operations) of the Bank of Zambia, at the Foreign Private Investment & Investor Perception Survey 2011 Dissemination Workshop, Lusaka, 22 December 2011. *  *  *  Permanent Secretaries; Chief Executive Officers; Distinguished Participants; Ladies and Gentlemen. I would like to welcome you all, on behalf of the Bank of Zambia, the Zambia Development Agency and the Central Statistical Office, to this Foreign Private Investment and Investor Perceptions 2011 Survey Dissemination Workshop. I want also to take this opportunity to thank the companies that participated in the Survey which was conducted by the three institutions in the third quarter of 2011. The insights and the various valuable revelations on the investment climate in Zambia contained in the survey report were only made possible by their co-operation and support to the process. We want to thank them most sincerely. This dissemination workshop is built around two objectives. The first one is to give representatives of respondent companies the chance to comment on the contents of the report. In this sense, this can be considered as a validation workshop from which inputs into the final version of the report will be received. The second objective is to give the three institutions that commissioned the survey the opportunity to receive feedback on what the community of investors considers to be the main issues in investment.