samchain/econo-pairs-v1 huggingface dataset:
I do believe that the roadmap that we paved will lift financial skills of the citizens and the level of their inclusion, making them cognizant of all the possibilities, but of the potential threats as well. The importance of financial literacy does have enduring origins, yet it gained prominence after the global financial crisis. Unfortunately, it was a bitter way of learning how low level of financial literacy and risk awareness can contribute to a large-scale financial crisis. Of course, there is no single cause or a single player in conceiving a crisis. So was the case with this one as well. But in this crisis episode, the illiteracy played an important role. In the United States, “the development of a speculative bubble and its burst was also due to the reckless financial behaviours of households, including the most vulnerable ones who contracted mortgages they should not have subscribed considering their financial situation. Actually, individuals were often not aware of the risks they were exposed to”. It collapsed the U.S. financial system, and given the tight financial linkages, it led to a worldwide financial and economic crisis. Another example was the widespread practice in CESSE of borrowing in foreign currency, while repaying in domestic, with adverse implications for households when currencies appreciated. In some countries, individuals undertook investment risk as well, by investing in high-risk, structured products, that they did not understand. Financial illiteracy was even a trigger for irrational exuberance, with deposit withdrawal occurring on the backdrop of ungrounded causes in some countries.

It is one thing for the enhanced architecture of the global financial house to be sound. It is equally important for its participants to be able to understand and adapt to the new requirements. To illustrate, one particular rule requires market participants to obtain LEIs, or Legal Entity Identifiers for purposes of trade reporting. This will improve the usability of trade reporting data and facilitate better data harmonisation across multiple reporting regimes. In fact, when MiFID II commences in January next year, LEIs will be needed for trades with European counterparties. REFORMS AND CULTURE 16. Last but not least, no amount of regulatory reforms, rules and regulations can assure a sound and stable financial system if the conduct and behaviours of firms and individuals are flawed. A culture of strong Integrity and high ethics are crucial lynchpins to the safety and soundness of our financial system. The key to achieve this must lie in the various lines of defence in all financial institutions – where business units follow rules and regulations diligently; and Boards and Management place importance as well as give recognition to the roles of Compliance and Audit, supported by appropriate systems of reward and recognition. It must be made clear that doing right and doing good are aligned with doing well. 17. On this note, let me conclude. I am sure that this forum will provide many useful insights and much food for thought. Thank you for your attention. 3/3  BIS central bankers' speeches
But much of this investment has been in, or backed by property. UK insurance companies only allocate around 2% of their assets to unlisted equity.5 This is a smaller share than many of their European peers. But liability structures are very different between national markets too, which will contribute to differences in asset allocations. The regulator’s concern here is to ensure that any increase in insurers’ asset allocations to long term, productive investments does not endanger policyholder protection, that is to say does not compromise the first , equally important function of life insurance that I set out earlier, namely the provision of security of retirement income.6  Annuities are not a good match for investments with equity-like characteristics. A fundamental principle of the MA is that some of the market risk on the backing assets is neutralized, by virtue of matching. That can never be the case with a long term real asset like common equity, and no amount of clever restructuring will alter that. Much of the new productive investment needed will be financed outside matching portfolios and indeed outside insurance. That said, any reform of the MA that might arise from the Solvency 2 review might nonetheless play a part in unlocking more funding for things like infrastructure. In its current manifestation, the MA was designed and calibrated with simple, fixed, tradable assets in mind.

And we should expect the aggregate impact of individual firms’ decisions in a sector that at the end of 2019 held assets in the region of £ trillion – a figure broadly equivalent to UK GDP in the same year – to be an important influence on speed of recovery and adaptation. But what does the insurance sector do for the economy? If I asked the person on the street about the role of insurance, I’d expect them – once they’d raised the common complaint about insurers putting premiums up every year and telling a story about a particular claim – to speak about the protection it provides to households and businesses against the financial costs resulting  2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  from the occurrence of various risks to their physical property, health, loss of earning power or other unexpected losses. (Though maybe not using quite those words!.) This is a very important function. Efficient transfer and pooling of risk reduces aggregate risk and by freeing individuals from risk allows them to avoid reducing consumption in favour of excess saving. And it allows businesses to put capital to work in their areas of expertise and opportunity, without having to worry about – or reserve for – risks that they are not equipped to manage or diversify, and so will not be adequately rewarded for. It has particularly high value in current circumstances. Excess saving, reduced consumption, and heightened risk aversion would be detrimental to economic recovery.
As noted on previous occasions, this partly reflects intensive growth in employment generation, which has  6  BIS Review 45/2005  been most beneficial for entrenching the expansionary cycle of the economy and making more efficient use of the labour supply available. But weak total factor productivity growth - the relative position of which vis-à-vis the EU has continued to worsen - denotes the presence of other more worrying factors which appear to be checking the incorporation of innovations and technical progress into productive processes. The lack of innovation in the productive system tends to stifle the economy’s overall efficiency and its long-term growth capacity. The indicators available for the stock of technological capital suggest a considerable lag remains in place. Undoubtedly, specific features of the Spanish economy’s pattern of productive specialisation - which is very biased in manufacturing towards the production of intermediate- and low-technology goods, and in services towards tourism activities - may partly explain this phenomenon. But there are also shortcomings that are restricting the business sector’s capacity to incorporate advances in knowledge and to adapt productive processes, human resources management and corporate strategies to an environment of heightened competition. Of particular importance are the persistent mismatches between the skills and training levels of labour and companies’ requirements, and, above all, the rigidities in the workings of factor and product markets, which discourage the adoption of more innovative strategies.

These weaknesses make it necessary to design specific policies to address this objective and to adapt the institutional and regulatory framework so that the smooth functioning of the markets will drive the innovation and development of new activities that will focus the productive structure on sectors in which demand and value added are greater. As a result of the launch of the new Plan to achieve a dynamic economy and to foster productivity, certain measures were adopted to promote competitiveness (of a sectoral nature), which will unquestionably play a part in improving productivity. The Banco de España particularly welcomes those measures addressing the financial system. However, what is most important is that this Plan should clearly steer reform policy priorities in the right direction and maintain the momentum of reform. The commitments announced must be implemented ambitiously and complement other actions aimed at fostering improvements in human and technological capital and in the workings of markets and institutions. This is not the appropriate setting for a detailed and exhaustive review of the range of measures and reforms required by the Spanish economy. I have referred only to some of the most necessary ones, but this list would be incomplete if I did not mention steps to mitigate the potential effects of household indebtedness and of house price rises on the sustainability of growth.
Markets need to form a view on the probabilities of different paths of future interest rates in order to price a wide range of financial instruments. So they are interested in what central banks say. In recent months both the Federal Reserve and the European Central Bank have found it far from straightforward to convey the likely trajectory of future interest rates. And the Fed announced three weeks ago that Chairman Bernanke had established a subcommittee of the FOMC to examine a number of “communication issues”. There is now a lively debate about how, and to what extent, central banks should try to communicate their intentions with respect to future official interest rates to financial markets and the wider public. At the Bank of England, our approach is to keep it as simple as possible. We don’t say where interest rates will go next for the simple reason that we don’t know. And it would be quite misleading to pretend otherwise. The MPC reaches a new judgment each month, made afresh in the light of all the new information about the prospects for inflation. We don’t decide in advance. So trying to give direct hints on the path of interest rates over the next few months risks deceiving financial markets into believing there are definite plans for the next few months when no such plans exist. But in order to form judgements about the likely path of interest rates over somewhat longer time horizons, markets do require some information from the central bank.

For many years, the Bank operated several times a day in  BIS Review 61/2006  1  the money markets, but that hyperactive approach did not succeed in stabilising the overnight interest rate which remained more volatile than in most other advanced countries. It was important to move to a simpler system in order to reduce that volatility, and the new system of money market operations, which was introduced last month, has done precisely that. The Bank now deals in the markets only once a week. Almost all banks and building societies now have access to the Bank. And they no longer have to balance their books with us at the close of business every day, but instead must achieve a target balance with us on average over the month running between MPC meetings. For the first time in its history, the Bank pays interest on reserve balances held by the commercial banks with us. The rate paid by the Bank on those reserve balances is the rate set by the MPC - Bank Rate is back. Great credit is due to the teams led by Andrew Bailey and Paul Tucker who together managed the introduction of the new system, proving that, as Cameron Cobbold remarked in 1958, “the Bank is a bank, not a study group”. The 1997 reforms also changed the rules of the game for communication between the Bank and financial markets, and I would like to say a word about what they are.
Against this background, most central banks aim for a reasonable compromise between these two extremes. They strive to fulfil the inflation target in the medium run by being forward-looking and accept the occurrence of limited deviations (downwards as well as upwards) in the short term. A monetary policy that acts on current inflation is by definition not forward-looking. Similar arguments apply to a strategy whereby the central bank is guided by nominal GDP outcomes, a question that was discussed last year in this Association. Besides the disadvantages I just mentioned from not looking ahead, a nominal GDP strategy has the drawback that the national accounts frequently have to be revised. Whereas the CPI figures are mostly definitive when they are first published, the GDP outcome data are often changed substantially, sometimes after an interval of several years. The relatively long time lag before monetary policy affects the economy makes it necessary to accept that inflation will sometimes deviate from the target. The alternative would be marked fluctuations in employment and output. This is clear from what happens when one of the Riksbank’s models is run with a monetary policy for correcting inflation quickly. We assume that the rate of inflation suddenly rises from 2 to 3 per cent and the Riksbank immediately tries to counter this by raising the repo rate in a single step of between 4 and 5 percentage points.

It is intuitively hard to see why a central bank would prefer to stabilise the money supply, which does not directly affect public prosperity, rather than stabilising price movements and output more directly. If the relationship between the money supply and inflation is not exact and stable over time, the significance of the money supply should be demoted to that of one of several indicators in an inflation targeting strategy based on forecasts. While the money supply is an important indicator of inflationary pressure, it is not the only one. There may be grounds, on the other hand, for highlighting the significance of the money supply (or rather perhaps its mirror image of the loan stocks in bank balance-sheets) as a source of information about the financial system’s future stability. In the past, the build-up of a sizeable financial bubble has nearly always coincided with a major expansion of credit in the financial system. Sweden’s bank crisis about a decade ago is a case in point. Against this background, the money supply and credit flows should belong to the arsenal of indicators of both monetary and financial stability that a central bank ought to follow closely. Inflation and the output gap Yet another alternative way of conducting monetary policy is to set the interest rate as a function of the rate of price increases and some measure of the difference between actual and potential growth.
In particular, we invest in green because we see it as a driver of long-term value, in addition to wanting to do the right thing. Contrary to some perception that investing in green undermines return, our experience shows that many green investments that are good for the environment can also be good for investors over the long term. I see the application of green and ESG in investment as just another balancing act that investors have to perform. Exactly where and how to draw the line depends on the specific circumstances at hand. While some green bonds may produce slightly lower yield or returns as compared with the conventional bonds, I truly believe that time has come for asset owners to take a more progressive and proactive stance in supporting green finance. I don’t think there is much disagreement amongst the stakeholders on whether green finance can make a difference in promoting long-term environmental sustainability. The big question is whether the 1/2  BIS central bankers' speeches  stakeholders, especially the asset owners, be they pension funds or sovereign wealth funds, want to make a difference by taking concrete steps to invest in green finance. We in the HKMA are prepared to play our part and I sincerely hope our peers will join us in owning and pursuing the goal of supporting green finance. 8. Ladies and gentlemen, we have today a rich agenda and the presence of many distinguished speakers.

As a small, open economy, Sweden must in principle accept the international real interest rate as a given. Monetary policy is not able to affect the real interest rate to any great extent in the longer run, but it affects inflation and inflation expectations. In recent years, the IMF and other forecasters have revised down their forecasts for GDP on several occasions. If one looks at real interest rates, these began to fall even before the financial crisis and real interest rates have also fallen during periods of higher growth. Opinions differ with regard to the causes of this slowdown. The more pessimistic line talk about secular stagnation, where savings have increased and willingness to invest has declined as a result, for instance, of the composition of the population, of growing income gaps and weak technological innovations. This has in turn pushed down the interest rate level compatible with normal resource utilisation. The other more optimistic line say that remaining effects from the global financial crisis, such as deleveraging and increased political uncertainty, explain the slowdown but that these effects are transitory. 1  1  See Deputy Governor Henry Ohlsson’s speech on 18 March 2016 “Decision today, consequences far into the future”, for a longer review. BIS central bankers’ speeches  1  Lower real interest rates and inflation But it is not merely real interest rates that have fallen. In recent years, inflation has also shown a downward trend.
This speech is focussed on the PRA. Page 9 5. The UK hosts around 150 branches and around 100 subsidiaries of international banks. These include branches and subsidiaries of all the banks identified by the Financial Stability Board (FSB) as Globally Systemically Important Banks (G-SIBs). The UK hosts around 200 branches and subsidiaries of international insurers. 6. For banks, see PRA Supervisory Statement 5/21 – 'International banks: The PRA's approach to branch and subsidiary supervision', July 2021. For insurers, the PRA’s current approach is set out in PRA Supervisory Statement 2/18 – ‘International insurers: the PRA’s approach to branch authorisation and supervision’, March 2018. During 2023, the PRA plans to complete its assessment of any outstanding branches of international insurers currently within the Temporary Permissions Regime as well as to set out its proposed supervisory approach to branches. See ‘Letter from Charlotte Gerken and Shoib Khan “Insurance Supervision: 2023 priorities”’, January 2023. The PRA also plans to remove capital requirements for branches of international insurers operating in the UK as part of the upcoming Solvency UK package. See 'Fundamental Spreads − speech by Sam Woods', 20 February 2023. 7. The PRA currently has 79 supervisory cooperation and information sharing Memorandums of Understanding (MoUs) in place with authorities across 51 jurisdictions. Since the UK left the EU, the PRA has signed 34 MoUs with EU institutions and Member States. The PRA is in the process of seeking to agree eight further MoUs with non-EU countries. 8. New agreements include those with New Zealand and Australia.

They should tell people whether we are meeting our commitments to regulate in a way that harnesses the UK’s strengths as a global financial centre, that maintains trust, and that is tailored to UK circumstances. They should also be designed in a way that is consistent with how Parliament has  Page 8  ranked our objectives – they should make it easy to see how we have pursued our new objective properly subject to advancing our primary objectives. For example, we know that the operational effectiveness of the PRA is important for the UK’s success as a global financial centre. That is why we have committed to increasing the frequency with which we report on our efficiency handling regulatory transactions, including authorisations. We will also provide more information on the time taken to determine cases and provide new breakdowns of these metrics by type of firm. [25] Amongst other things, this will help people understand how long it takes to set up a new bank or insurer – which clearly matters for the UK’s competitiveness. Conclusion Let me briefly sum up. Be in no doubt that our new objective will lead to big changes in how we make rules. We have already been working hard developing our ideas about what competitiveness means for the financial services industry and how it is connected to growth. We have a plan for pursuing the new objective. That plan recognizes the hierarchy of our objectives and it is focussed on what we can control.
Moreover, this framework should be flexible enough to allow countries to give a response according to the features of the crisis specific to the respective country. Anyway, clear principles for preventing legal bottlenecks and the cross-country spillover of negative effects should be put in place, and countries should share the fiscal burden of a cross-border crisis in line with those principles. BIS Review 56/2009  3  6. The IMF strengthened its role after being criticised for not having foreseen the Asian crisis. A few years ago, many economists expected a sharp decline in the IMF's role in the current economic context. Against the background of the current crisis, the world seems to rediscover the role of the IMF. The institution's funds have recently been increased in order to meet the requests of different countries for financial and technical assistance. The statements of the G20 leaders are indicative of the fact that the IMF will assess regularly the measures taken and the global actions necessary to be initiated. Furthermore, a close cooperation between the IMF and the Financial Stability Board (FSB), which will include all G20 countries, members of the Financial Stability Forum, Spain and the European Commission is envisaged. Together, the IMF and the FSB will convey early warnings on macroeconomic and financial risks and will indicate the necessary actions to address such risks. My opinion is that the current financial crisis highlights the fact that in such difficult times, an institution having an image of each economy in the global context is required.

Even though changes in the krone exchange rate do not influence the GPFG’s international purchasing power, the fall in the fund’s value may have been perceived as less dramatic as a result. Equity markets have not always rebounded after a steep decline as rapidly as after the 2008 financial crisis. The chart shows developments in a global equity index in the period after the dotcom crash in 2000. From the peak in winter 2000 to the trough in winter 2003, equity prices plunged at the fastest pace since the early 1930s. Fluctuations in the krone exchange rate amplified the fall in the GPFG’s value measured in NOK. The value of the GPFG at the beginning of 2003 was 30 percent lower than assumed in the National Budget for 2002. Investors buying equities in Japan’s equity market at the end of 1989 experienced even more dramatic developments. The market fell and stayed there. The value of the shares traded on the Tokyo Stock Exchange is still no higher than the 1989 levels. From being the largest in the world in 1990, accounting for almost 40 percent of global market capitalisation, Japan’s equity market now accounts for less than ten percent. However, it is important to remember that these developments apply to only one country. Global equity markets in general have shown completely different developments since 1989. 2/6  BIS central bankers' speeches  What can we learn from these crises? The first lesson is that crises will occur.