samchain/econo-pairs-v1 huggingface dataset:
Importantly, some PTF firms have been able to make markets at lower marginal cost than other participants, including by closing positions or offsetting risk in correlated instruments in shorter time frames. These competitive pressures have been one factor prompting many banks to warehouse less risk in fast markets, changing their business model to act as agents who sit between end-users and PTFs and the 1  remaining, typically large, bank market-makers. To differing degrees across markets, regulation has also played a role in encouraging such activity. In US equity markets, for example, Regulation National Markets System (2005) required brokers to execute client orders at the best price offered electronically on any venue, leading to fleeting arbitrage opportunities for the fastest moving market participants. In Europe in 2007, MiFID laid the groundwork for more competition, leading to different types of trading venues and more market fragmentation, also contributing to the growth of 2  high-frequency trading. And this regulatory influence will continue, with MiFID II set to introduce a whole host of new rules which bear on fast markets. As Governor Carney has often stressed, central banks care deeply about the operation of financial markets. 3  For the purposes of this speech, I will examine the implications of these developments through two prisms: market efficiency and market resilience. 1  See BIS (2016), ‘Downsized FX markets: Causes and Implications’. The Markets in Financial Instruments Directive (MiFID) was introduced in Europe in November 2007. It increased competition between traditional stock exchanges and alternative trading venues.

Jan. 14  Jul. Jan.  Jul. 15  Sources: Bloomberg and Bank calculations. (a) Average across the 50 largest equity and fixed income ETFs globally by assets. 13  All speeches are available online at www.bankofengland.co.uk/speeches  13
We announced the details of this exercise on Wednesday last week.15 It aims to increase transparency, to identify the necessary corrective actions and to build confidence in the banking system. 13  See Sakakibara, E., 2000, Nihon to Sekai ga Furueta Hi, Chuo Koron Shinsha. 14  “G20 Principles for Cooperation between the IMF and Regional Financing Arrangements as endorsed by G20 Finance Ministers and Central Bank Governors”, 15 October 2011. 15  The comprehensive assessment entails three broad elements. First, a supervisory risk assessment to review key risks including liquidity and funding. Second, a balance sheet assessment to enhance transparency in banks’ balance sheets and their asset quality, collateral valuation and provisions, and so on. And third, a stress test to examine banks’ resilience to adverse scenarios. See European Central Bank (2013). “ECB starts comprehensive assessment in advance of supervisory role”, 23 October. 4  BIS central bankers’ speeches  With such steps, and provided that sources of capital are clearly identified, including public backstops when private sources have been exhausted, I firmly believe we can put the banking system on a sounder footing and enable it to support the economy’s recovery. The second response is to reduce financial fragmentation. Despite having a single market for capital in Europe, liquidity is not fully fungible between and even within cross-border banks. This means that liquidity usage is not optimised – surpluses in some countries are not used to fund deficits in others.

The real effective exchange rate has also oscillated substantially, reacting to shifts in fundamentals such as the terms of trade, risk aversion and underlying capital flows. Compared with a long-term average of 100, the real effective exchange rate (measured in terms of BRL) has moved within 58, on October 2002, when the BRL was particularly weak, to 125 in August 2008, when it was stronger than the mediumterm norm. Regarding the balance of payments, the current account balance has averaged -1.0% of GDP, compared with a long-term average (since 1970) of -2.1%. Net FDI inflows have also performed relatively well, with an average of 3.0% of GDP, compared with 1.5% since 1970. Thanks to the improvement in the balance of payments the Central Bank has been able to accumulate sizeable foreign exchange reserves, which stand at about $ billion currently. The process of reserve accumulation did not impinge on the functioning of the floating exchange rate regime, as the Central Bank strove to buy foreign currency always through publicly announced auctions at the going market price. At inception of the floating exchange rate regime, the foreign sovereign credit rating was B+ (according to S&P) and Brazil had an active stand-by program with the IMF. Brazil is now investment grade, the sovereign credit rating stands at BBB- and the Central Bank has a currency swap agreement, as yet not drawn, with the US Federal Reserve. Of course, a floating exchange rate regime is a pre-condition for inflation targeting.
Another cause for optimism is the attention compliance now receives in law schools and other graduate programs. Two examples are NYU Law School’s Program on Corporate Compliance and Enforcement, and Fordham Law School’s LLM program in Corporate Compliance. These programs engage key leaders in the field in important public discussions, and train students who, in terms of their understanding of corporate governance, are well ahead of where many of us were when we began our careers. These programs will contribute to a bright future for the compliance profession. Compliance, enforcement, and accountability I also want to say a few words about enforcement and accountability. I believe, of course, that past misconduct should be punished. I also believe that we who play a role in bringing wrongdoers to account should also require forward-looking reforms under the mantra of “Never again.” For those forward-looking reforms to be successful, firms and enforcement attorneys need to pay attention to root causes of misconduct. There is a vigorous and important debate in academic and regulatory circles about the prosecution of individuals in cases of corporate misconduct. Virtually everyone agrees that individual prosecutions can have deterrent effect on future misconduct if people believe they will get caught. I follow the debate with great interest. Suffice it to say, I agree that individuals must be held accountable for misconduct. If the misconduct is criminal, criminal prosecution is warranted.

The role of the compliance officer is often divided into two categories—serving as a control function and serving as an advisor. In many respects, this framing works just fine. Compliance sometimes needs to control. And sometimes it needs to advise. Indeed, for in-house counsel, this dual-hatted approach is not unfamiliar. I have discussed in previous remarks the “partnerguardian” model espoused by the former general counsel of General Electric, Ben Heineman. He argues that a lawyer serves as both a partner to the business unit and a guardian of the organization.4 I am a big fan of this model and think it serves in-house lawyers well. But, this binary approach—advisor versus controller—also misses something. I think we would be well served to keep in mind that the mark of a strong compliance function—at least, from my perspective—is that it is influential within the organization. Compliance functions, like in-house counsel, need to adeptly use all the tools in our respective toolkit to influence behavior within an institution. Some of these tools are more advisory; others, are more controlling. Policies and procedures that reinforce clear roles for the first and second lines of defense, along with clearly defined escalation paths, can help compliance exert appropriate influence over business decisions. When a senior manager understands that she has responsibility for control failures that occur on her watch, and sees that her responsibility cannot be deflected or redistributed, then her view of the compliance function shifts.
Emerging markets and Mediterranean economies in the global economy Today we are celebrating the 50th anniversary of Bank Al-Maghrib. This is also an occasion to reflect on the role of the Mediterranean region, and on the role of emerging market economies in general in the global economy. The growing importance of these economies, including those in this area, has profound implications for the euro area and the rest of the world. I would like to share my thoughts with you on this phenomenon. The growing role of emerging market economies The global financial crisis is slowing the growth of the emerging market economies. Only a year ago, some observers were still saying that these economies were likely to decouple from the downturn stemming from the advanced economies. Today it is obvious that this has not happened. Most emerging markets are affected by the crisis through real or financial channels. Many sectors have been severely hit by the global turmoil, for instance, the automotive, textile, building and tourist industries. In addition, remittances which, for many emerging markets, are an important source of revenue, are vulnerable to the downturn in host countries, even though they tend to be a relatively stable source of income. It is too  4  BIS Review 66/2009  early to say when emerging market economies will bottom out of the global financial crisis, but some recent data, particularly for Asia, are somewhat encouraging.

In this context, I would like to underline that since the introduction of the euro in 1999, the ECB’s quantitative definition of price stability – an inflation rate of below, but close to, 2% in the euro area, over the medium term – has proved to be an invaluable asset. It has guarded against undesirably high inflation and against deflation. Long-term inflation expectations in the euro area, whether based on surveys or extracted from financial indicators, have been and continue to be firmly anchored at levels consistent with our definition of price stability. Inflation expectations have been exceptionally resistant to sudden upward short-term price changes, and we have ensured that is also the case with sharply falling inflation. Non-standard measures In addition to reducing interest rates, we have taken exceptional policy actions in response to the crisis – “non-standard” measures related to liquidity management. At the very start of the money market stress in August 2007, the ECB reacted within a few hours and temporarily provided additional liquidity to banks with immediate liquidity needs. We were in fact the first central bank to take non-standard measures. When in mid-September 2008 the crisis intensified and interbank trading came to a virtual halt, the ECB engaged in a new mode of liquidity provision. We started to provide refinancing well above the levels that banks had absorbed to fulfil their reserve requirements in normal times. Our approach comprises three main “building blocks”. •  We significantly adapted our regular refinancing operations.
Jean-Claude Trichet: Macro-prudential oversight and the future European Systemic Risk Board Keynote address by Mr Jean-Claude Trichet, President of the European Central Bank, at the European Banking Congress, Frankfurt am Main, 19 November 2010. *  *  *  Ladies and Gentlemen, It is a pleasure for me to participate in the European Banking Congress. We are meeting at a very important time for Europe’s financial system, of which so many senior representatives are assembled here. This is also a very important time for the European economy and for the governance of the euro area. Looking at the current situation, we have to be very clear as to what the issues are and where the solutions lie. As its name suggests, Economic and Monetary Union has two attributes: one is “Economic” and one is “Monetary.” The “Monetary” attribute refers to the ECB, its mandate and its independence. I will come to this in a moment. The “Economic” attribute comprises the fiscal regime enshrined in the Stability and Growth Pact; the national frameworks of economic policy; and the system of mutual surveillance. The developments we are currently witnessing in Europe’s economy have to do with its “Economic” functions. They have essentially three origins: unsound fiscal policies in a number of member states; inappropriate macroeconomic policies in a number of member states; and overall an inadequate system of surveillance by all member states. This is the triangle that provides the perimeter of the current situation.

It will bring together the governors of the national central banks, the new European Supervisory Agencies (ESAs), the European Commission and the national supervisory authorities of all 27 member states. The establishment of the ESRB was first recommended in February 2009 in the report of a high-level group chaired by Jacques de Larosière. The new institution is backed by a remarkably strong consensus between the European Commission, the European Council and the European Parliament. In the Parliament, the legislation underpinning the establishment of the ESRB was approved with an overwhelmingly large majority of 80%. This gives a strong backing to the ESRB and its mission. The ECB will contribute to establishing the ESRB as a credible and effective body. Concretely, the ECB will host the Secretariat of the ESRB, thereby making it operational and providing analytical, statistical, logistical and administrative support. But whilst the ESRB Secretariat will be located at the ECB, the ESRB will be a separate body, distinct from the ECB. The establishment of the ESRB will not affect the mandate and the functioning of the ECB’s statutory role in monetary policy. The establishment of the ESRB will be a landmark event in how Europe deals preventively with systemic risk. It forms part of wider developments across the globe, including in the US with the newly created Financial Stability Oversight Council (FSOC). Very much like the ESRB, this council is a collaborative body bringing together the relevant US authorities with the aim of identifying systemic risk and responding to threats.
Jean-Pierre Roth: Swiss franc and euro - two sister currencies? Speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the Swiss-Brazilian Chamber of Commerce, Sao Paulo, 19 November 2004. *  *  *  It is a great pleasure for me to talk to you today about the Swiss franc and the euro after six years of monetary integration in Europe. Looking at the map, you might wonder whether Switzerland, a small spot in the middle of Euroland could still follow an autonomous monetary policy. What are the consequences of the introduction of the euro on the Swiss franc and on the effectiveness of Swiss monetary policy? And what are the effects of this new international monetary order on countries outside the dollar-euro block more generally? I will try to provide some insights on these questions today. First, I will present the change in our monetary framework due to the creation of the euro. Then I will enumerate the main fears that we originally had regarding the effects of that transformation, and our experience with the new environment. Finally, I will share some lessons on the influence of the introduction of the euro for the international monetary system and for the autonomy of Switzerland’s monetary policy. 1. A new international framework  January 1, 1999, constituted a true revolution for Europe. Many observers argue that the introduction of the euro represents the major postwar stage in European integration. They are right.

We thus kept our monetary autonomy intact. 4. Conclusion  Let me conclude by first emphasizing the positive global influence that the euro has had since its introduction in 1999. Not only does the common currency contribute to the integration of the European market, but the appearance of a counter-weight to the US dollar has helped stabilize the international monetary order. Exchange rates of third currencies can thus evolve closer to their economic fundamentals, and the impact of exchange rate fluctuations on capital flows and foreign trade are dampened. Developments in the financial markets over the past 5 years have shown us that although highly integrated in international markets and despite the emergence of a bipolar currency environment, the SNB can keep its monetary autonomy and follow an independent monetary policy that is adapted to the needs of the Swiss economy. As a result of our independent and successful policy, together with the global character of the Swiss economy, the Swiss franc has retained its own profile. However, as we know, this particular profile is not without risks. Extreme volatility of exchange rates cannot be excluded, but our experience with the euro/Swiss franc exchange rate has shown that currency markets are not as irrational as some people believe. With a relatively stable exchange market, low inflation and lower interest rates than the rest of Europe, the monetary situation of Switzerland is relatively comfortable. Ladies and Gentlemen, The title of my speech was “Swiss franc and the euro: two sister currencies?” I can now answer the question.
This means that, we will be able to take care of systemically important financial firms outside current regulatory purview if the situation warrants. Ladies and Gentleman, Lastly, let me share with you what I see as major challenges for the maintenance of financial stability in Thailand. While we may have a head start over many countries, we are not in anyway complacent. In particular, three important challenges loom on the horizon. First, the global economy, while doing much better than a year ago, still have many vulnerabilities which could give rise to the next round of global financial instability. Most importantly, the public debt problems in certain European countries constitute a major risk factor. At the other end of the spectrum, the growth and interest rate disparity between Asia and advanced economies amidst the still abundant global liquidity from the unprecedented monetary policy stimulus around the world could attract de-stabilizing capital inflows that will put pressure on exchange rate, encourage a buildup of financial institutions’ short-term debt, and fuel bubbles in various sectors. Second, in light of the possible buildups of financial imbalances, there is a need to further enhance the ability to identify potential threats early on. For example, at least in its early phase, bubbles are almost always associated with favourable economic fundamentals. Effective monitoring of bubbles therefore calls for better data collection, market intelligence, and risk analysis. While timely bubble identification remains very difficult, the good news is that better identification techniques are being developed and will continue to improve.

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We expected that economies re-opening after the Covid restrictions and historically low unemployment would together restore healthy demand, and so it seemed reasonable to start scaling back monetary policy support while still keeping an eye on the lingering uncertainties hanging over from the pandemic. We decided that the pandemic emergency purchase programme (PEPP), through which the central bank provided support to the economy would end in March 2022. We also decided that any additional net purchases of securities by the central bank would be scaled down gradually over the year. These expectations were confounded though as the strict pandemic restrictions that China applied in winter 2021-2022 and Russia's invasion of Ukraine created new turmoil. The economy held up better than was at first feared, but inflation turned out to be much higher and more persistent than we expected. Inflation forecasts have time and again climbed higher, and by June there was no doubt that it was high time to speed up the normalisation of monetary policy. We ended net asset purchases and started to raise interest rates in July. When we started to sketch out the policy normalisation, the financial markets did not expect policy rates in the euro area to rise at all until 2024. Instead, we have now had to raise interest rates in the euro area faster than ever before in the history of the monetary union, by three percentage points in just six months. This may seem dramatic, but we must remember where we started.

The real interest rates in countries with higher inflation might be too low, while the real rates may be too high for countries with lower inflation. The common monetary policy then becomes too lax for some countries and too tight for others. There may also be possible concerns about the price competitiveness of individual countries in a monetary union if they experience persistently higher inflation at the country level. Finally, not every country in a monetary union will have identical economic and financial cycles, and this can then in turn cause differences between national inflation rates. These are wellknown challenges faced by monetary unions and the solution can only lie in the prudent use of other economic policies by the government – that is their structural and fiscal policies. Inflation and consumers When we talk about inflation, we usually mean how prices change for the average consumer. However, the actual impact that inflation has on individual households can vary quite a lot depending on their consumption patterns and the dynamics of the prices of different goods and services. Households that spend a larger proportion of their money on food are more exposed to changes in the price of food, while households that have higher spending on housing feel inflation bite harder when energy prices rise. Studies show that households on lower incomes are generally more exposed to the problems caused by high inflation than those with higher incomes.