samchain/econo-pairs-v1 huggingface dataset:
In this sector, there remains significant untapped demand for general insurance products as a whole. The low penetration rate of 1.4% for general insurance, which is measured in terms of premiums as a share of the nation’s Gross Domestic Product, is actually symptomatic of this. Thus, agents who move quickly to improve their digital outreach will have a first mover’s advantage and are likely to gain a growing group of digitally literate Malaysians. Thirdly, conducting robust suitability assessment for customers. One thing worth emphasising repeatedly is this; financial services offered must be suitable to the needs of the customers. While the Bank’s Guidelines on Product Transparency and Disclosure attempts this by stipulating the ‘rules of the game’, we look to insurers and the agency force to ‘play’ according to these rules and seek out ways to achieve the outcome of ensuring consumers obtain financial services that are suitable to their needs. Agents should develop their individual capacity to analyse customer requirements to identify their needs and develop risk profiles to match them with suitable products or combinations of products. For example in the case of motor insurance policies, agents should create awareness on optional add-on covers that are available and underwriting factors that will affect motor insurance premiums. Appropriate profiling of a customer can be crucial in helping agents identify customised product recommendations efficiently. Finally, perhaps I should bring your attention to two upcoming developments.

Firstly, we understand that the industry is in the midst of finalising a recent independently-conducted Customer Satisfaction Index (CSI) that will be a means to gauge the insurers’ performance against the enhanced insurance industry’s Customer Service Charter which was introduced in January 2018. This survey includes minimum service standards that reflect the guiding principles for good customer service. The results of the CSI survey is expected to be finalised by end-2018. I would urge you to familiarize yourself with the Customer Service Charter of your principal insurers and use it to guide you in your dealings with customers so as to ensure good customer experience. Secondly, the Bank is at a fairly advanced stage of finalising the policy document on fair treatment of financial consumers. This will address the Bank’s increased expectations on financial institutions, including insurers, to cultivate a culture of fair dealing and responsible behaviour. The onus will be on insurers to ensure agents observe new standards to exercise due care, skill and diligence in dealing with financial consumers. We should expect principal insurers to accord greater emphasis on the importance of (1) providing clear and concise product information to customers to enable them to make informed choices, (2) offering products that are appropriate to the customers’ needs and financial circumstances, and (3) providing individualised advice that is in the best interest of the consumer. Let me conclude.
Chart 9: Emerging market economies could be running to stand still in the future Average 2009-18 Probability density Average 1996-06 Impact of push factors 0.12 Impact of push factors with 2030 amplification due to shifting composition (col 3, chart 10) 0.10 0.08 0.06 0.04 0.02 0.00 -8 -6 -4 -2 Capital flows as a % of GDP  0  2  4  6  8  10  12  14  16  18  Sources: IMF, EPFR, IIF and Bank staff calculations. Notes: This chart shows conditional distributions of capital flows to EMEs post-the 2008 crisis (green), and conditioning on a one standard deviation negative “push shock” (red), as proxied by our global financial conditions index. The diamonds highlight the fifth percentile, which is our preferred measure of Capital Flows-at-Risk The dotted grey distribution results from increasing the sensitivity of the distribution to push shocks in line with the scalar in the third column of chart 10, assuming they apply through the distribution (rather than only to 5th percentile). Estimating the impact of these vulnerabilities on the full distribution is a rich area for future work. The teal distribution conditions on average push and pull factors 1996-06.

These actions will tend to increase the Treasury’s net interest costs and pull down the Federal Reserve’s remittances to the Treasury. Together, these two effects will sharply push up the Treasury’s net interest burden. To show how this may play out, let’s use as an illustration a “current policy” baseline based on information provided by the Congressional Budget Office, including its macroeconomic assumptions. Under these assumptions, the output gap is closed and monetary policy is normalized by 2017. As shown in Figure 5, net debt service is projected to rise to 3.3 percent of GDP by fiscal year 2020 up from 1.0 percent in 2011, based on an assumption that the interest rate for three-month Treasury bills will rise from around 10 basis points today to 3.8 percent by 2020 and the interest rate on benchmark 10-year Treasury securities will increase from around 2 percent today to 5 percent by 2020. On top of this, Federal Reserve remittances are projected to fall sharply. In its recent current law baseline projection, the CBO calculates that net remittances will decline from a peak of 0.55 percent of GDP in 2011 to a long-run average of around 0.2 percent by 2017 and beyond. Thus, on the current policy baseline, the combined effect of higher debt service and lower remittances will total 2 ¼ percent of GDP by fiscal 2020 relative to the current fiscal year (Figure 5). Of course, this assumes that interest rates follow the trajectory used in the CBO baseline.
Panel d shows the equivalent forecasts for CPIF inflation.2 Panels e and f show equivalent forecasts for two measures of resource utilisation, the output gap in panel e and the hours gap in panel f.  2  One may ask why CPIF should be focused on and not CPI. In a situation in which extensive repo rate changes have very large direct effects on CPI, I consider it to be more appropriate to focus on stabilising CPIF around the inflation target, instead of CPI. BIS Review 22/2010  3  Panels b and c in Figure 1 also show the mean squared gaps, which were introduced in an article in the Monetary Policy Report in October 2009.3 The mean squared gap for inflation measures the deviation between the inflation forecast and the inflation target or, more precisely, the mean squared gap between the inflation forecast and the inflation target during the forecast period. A lower mean squared gap for inflation entails a forecast of inflation closer to the inflation target, that is a better stabilisation of inflation around the inflation target. The mean squared gap for resource utilisation, measured as the output gap or the hours gap, measures the deviation between the forecast for resource utilisation and normal resource utilisation – more precisely, as the average squared gap during the forecast period. A lower mean squared gap for resource utilisation thus entails a better stabilisation of resource utilisation around a normal level.

In the most recently published inflation assessments, it was assumed that the price stability target was not threatened during the forecast period despite the growth of demand being so strong that use of capacity was under strain at the end of the period. The majority view of the Executive Board was therefore that there was no reason to increase the repo rate. This assessment was based on free resources in the initial situation, good productivity growth, low price increases on certain recently deregulated areas, low import prices and finally low inflation expectations. It is not per se strange that GDP can increase as much as 3-4% for a couple of years without inflation sharply accelerating, if the use of resources is low initially. If the pattern from previous cyclical upswings was to be repeated, price pressure should now increase. However, it has proven difficult to identify any exact and very stable correlation. As I mentioned earlier great changes have taken place in the Swedish economy. While there are still considerable deficiencies in competition in many areas, it is nevertheless not probable that inflation will accelerate strongly in the next few years. An important reason for this is that the price stability target has now  BIS Review 48/2000  4  obtained such strong support that inflation expectations are not increasing despite a cyclical upswing that is stronger than for a very long time.
I believe that these positive factors will be sufficient to offset weakness in other areas, such as net exports and fixed business investment that will continue to be adversely impacted by the still-strong dollar, weak foreign growth, and low energy and commodity prices. Putting this all together, I expect real GDP growth of about 2 percent in 2016, slightly below the average pace of growth in this expansion, but a bit above my estimate of the potential growth of the U.S. economy. If this materializes, then we should see some further reduction in the unemployment rate to around 4¾ percent – my estimate of the rate that I view as consistent with stable inflation over the long term. Turning to the outlook for inflation, on a year-over-year basis, both headline and core inflation have recently risen above the low levels that prevailed through most of 2015. Nevertheless, inflation still remains below the Federal Reserve’s 2 percent objective. As the FOMC noted in its March statement, this continued low inflation is partly due to declines in energy prices and non-energy import prices. Although energy prices have stopped falling and the dollar has stopped appreciating, earlier movements in these factors still appear to be weighing on inflation. A concern with this long period of low inflation is that it has the potential to reduce inflation expectations, which, in turn, would tend to continue to hold down inflation.

Our definition of price stability is that, in the medium term, prices have to grow less than but close to 2%. Inflationary expectations seen by various panels tell us that, over the next five years, inflation is seen at around 1.9%. I believe it is essential that citizens, savers and investors can trust in the fact that we will take all decisions necessary to ensure that inflation remains at these levels in the medium term. For three reasons: because it is our primary mandate; it is what citizens are asking us to do, and because it is a major contribution to sustainable growth and job creation in Europe. Where do you see risks of price increases? Further increases in oil and commodity prices and in goods and services prices due to past oil price increases. Also additional unexpected increases in administrative prices and indirect taxes. Then, more fundamentally, there are the so-called second-round effects, that is the risk of increases in wages and salaries that would derive from a loss of credibility regarding our capability in countering price increases. It is essential to intervene before these effects materialise. Do your concerns include the increase in VAT to be implemented in Germany in January? The increase in VAT in Germany, which was decided upon some time ago by the government, had already been incorporated in our analysis. BIS Review 87/2006  1  You were in Cernobbio, Italy, in early September. What was the mood among Italian entrepreneurs, politicians and economists?
Although they are second in the risk-bearing queue, debt-holders as well as equity-holders would be expected to shoulder, and hence price, this balance sheet risk. This could be done either by raising its cost or by restricting its quantity. Either way, debt would then serve as a restraining device on riskhungry, rent-seeking shareholders. In theory, this debtor discipline mechanism ought to work like a dream. Under the assumptions of Modigliani and Miller (1963) (MM), the pricing of risk by debt-holders ought to neutralise fully any effect of increased leverage on the value of the firm. Provided  12  Anglo-Continental Guano Works v Bell (Surveyor of Taxes) (1894) 3 TC 239. 13  Farmer (Surveyor of Taxes) v Scottish North American Trust, Ltd (1912), AC 118. 14  For example, the introduction of a separate corporate tax schedule in the UK in 1965 led for a time to the double taxation of equity. 15  These investors account for perhaps half of the US equity market and two-thirds of the UK equity market. 6  BIS central bankers’ speeches  shareholders maximise firm value, and the world behaves according to MM, debtor discipline ought to defuse completely incentives to gear-up. Figure 3 illustrates the point diagrammatically, showing payoffs to debt and equity. They are a mirror-image. The downside risk avoided by equity is assumed by debt and vice-versa for upside returns. In principle, then, combining debt and equity would lead to offsetting payoffs, neutralising risk-taking incentives.

US Treasury (2011), “Financial Stability Oversight Council 2011 Annual Report” available at http://www.treasury.gov/initiatives/fsoc/Documents/FSOCAR2011.pdf Walker, D (2009), “A review of corporate governance in UK banks and other financial industry entities”, available at http://www.hm-treasury.gov.uk/d/walker_review_261109.pdf  BIS central bankers’ speeches  17  Figure 1: Payoff profile for bank equity  Figure 2: Payoff profile for bank equity with higher leverage  18  BIS central bankers’ speeches  Figure 3: Payout profiles for bank equity and debt  BIS central bankers’ speeches  19  Chart 1: Estimated distribution of UK banks’ assets to GDP  Source: Sheppard, D.K (1971) and Bank of England. (a) Data before 1974 are from Sheppard, D.K (1971). The definition of UK banking sector assets is broader after 1966, but using a narrower definition throughout gives the same growth profile. (b) Data after 1974 include total assets of UK resident banks from Bank of England data. Assets of the Bank of England’s Issue department and Asset Purchase Facility are excluded. Notes: The density estimates are based on a normal kernel function and a number of observations in each subsample. Chart 2: Estimated distribution of UK banks’ return on assets  Source: Capie, F and Billing, M (2004), BBA and Bank calculations. Notes: The density estimates are based on a normal kernel function and a number of observations in each subsample. There is a definitional change in the sample in 1967 and again in 2010.
Without claiming to be exhaustive on such an ambitious subject, particularly in front of an audience of  1  Source: La finance islamique : une solution à la crise ? (2009), E. Jouini and O. Pastré, Economica. 2  Monitor Group and Fondazione Eni Enrico Mattei (August 2009), Analysis of Sovereign Wealth Fund Transactions During Q1 2009. 3  Monitor Group and Fondazione Eni Enrico Mattei (August 2009). 4  An IFOP survey, disclosed at the end of 2008, on the basis of interviews with 530 people of Muslim origin from various backgrounds, considered a representative sample of the French Muslim community. 2  BIS Review 118/2009  distinguished Islamic finance specialists, it seems to me nevertheless useful to briefly recall the following points: •  The fundamental principles of Islamic finance can be seen in different ways as far as financial stability is concerned. As you well know, Islamic finance prohibits the payment and receipt of interest at a fixed or predetermined rate. Instead, profit-and-loss sharing arrangements, purchase and resale of goods and services, and the provision of services for fees are the basis of Islamic finance contracts. Islamic finance is therefore systematically backed by real assets. Moreover, it prohibits speculation and the financing of production or trade in specific sectors. On the one hand, these principles can be considered to provide stability for the financial system. Indeed, in Islamic finance, unbacked expansion of credit is precluded, and banks cannot initiate or accentuate a speculative process.

Credit is based on real savings and savings can only earn a return if directly invested in creating activities. Finance and the real economy are closely linked. In the Islamic system, banks can neither carry highly leveraged exposures nor acquire risky financial structured products. By the way, even if the Islamic nature of their finance is not the only explanation, we can note that Islamic finance countries, compared with those of conventional finance, have been relatively less impacted by the crisis. But on the other hand, Islamic banks pose risks to the financial system that in many regards differ from those posed by conventional banks, with respect, for example, to liquidity, operational and legal risks. Indeed, Islamic banks face specific obstacles in liquidity management, as the prohibition of interest has led to the underdevelopment of funding sources. Moreover, operational risk and legal uncertainty can be amplified by the lack of product standardization and the lack of harmonization of Islamic standards, with for example possible differences between Shariah scholars' interpretations, accounting standards, and so on. In the same way, prohibition from financing specific sectors limits the kind of eligible assets for investment, which contributes to increasing the risk of concentration in potentially cyclical sectors such as real estate. This is what happened in certain Gulf countries. •  As the analysis of the principles of Islamic finance does not settle the issue of the relationship between Islamic finance and financial stability, it needs to be supplemented by an empirical analysis.
Speaking as chair of the Financial Stability Board’s working group on the resolution of crossborder firms, I can update you on the work already in train. Basically for the top roughly 25 banks and dealers, the authorities will work with them over the next 6-9 months to produce recovery and resolution plans. The effort will build on the existing supervisory colleges, but typically at a more senior level, and involving resolution authorities and central banks as well as line supervisors. After official level exchanges, there will be engagement with those firms, also at a senior level (say group CFO). The desired outputs will cover two things. First, recovery plans for “de-risking” a group where it can and should be maintained as a going concern. Second, a resolution plan when a firm needs to be wound down and put to rest, but with essential economic functions maintained somehow. The FSA has explained their contribution to the exercise. No one should think that this will be easy; or that anyone in the official sector is naïve about that. It will, in fact, be formidably difficult. The process is, for that very reason, designed to flush out the issues, so that they can be properly debated and reviewed.

But they also had no conviction about when, or indeed whether for sure, the music had to stop, and so feared individually that stepping away from the dance “too early” would crystallise business risk, as the dance would simply go on without them and their franchise would be undermined as customers migrated to their competitors. These seem pretty close to the circumstances that Federal Reserve Chairman William McChesney Martin had in mind, over 50 years ago, when he talked about Taking Away the Punchbowl just as the party gets going. An intervention of some kind is needed from someone outside the dance. Some commentators argue that the intervention should come via monetary policy. That as well as steering the path of nominal demand in order to maintain low medium-term inflation expectations, monetary policy should seek to tame the credit cycle. As MPC colleagues have already argued publicly, 6 we are very doubtful about that. It is likely that much higher rates would have been needed in the UK to choke off the credit boom, with the likely effect of pushing the economy into quite a prolonged recession, with a persistent and substantial undershoot of our inflation target. The business cycle and the credit cycle were simply not closely aligned. That is not to say that monetary policy should not take into account risks to the inflation outlook that accumulate slowly and with great uncertainty about when and how they will crystallise. But it makes a compelling case that monetary policy is not sufficient on its own.
The second risk that may arise after we have left the EU, is the related but perhaps more prosaic issue of the flexibility of the UK’s regulatory framework and allocation of responsibilities within it – the division of tasks between Parliament, Government and the regulatory authorities. Much of our financial sector legislation and regulation has been made at the EU level. This has increasingly taken the form of extremely detailed EU primary and secondary legislation directly applicable in Member States.4  This approach has been justified as necessary in the EU by the need to prevent divergences between member states. The cost, however, as some have observed, is an over complex and rigid regulatory framework.5 As a preparatory step for Brexit, Parliament has ‘onshored’ EU legislation and regulation and also the allocation of responsibilities that lie behind it. At some point, post Brexit, we will, I think, need to address this rigidity and hard wiring of detail to ensure we have a coherent, effective and flexible regulatory system with appropriate accountability. How we do that will have an impact on how we address risks, at firm and at system level, in a fast changing financial system. Financial stability post-Brexit With that nod to the future, I will leave Brexit - for today at any rate – and turn to the examination question you have set for today – financial stability post Brexit. I would like to focus on the question of debt.

But recent events suggest the market may be very sensitive to changes in expectations of growth or inflation. 20  For UK assets, there has been the additional impact of fluctuations in Brexit news and sentiment. The evaluation of Brexit outcomes seems to have dominated responsiveness to near-term domestic news. 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  As always, the risk picture is mixed. From a financial stability perspective, the right response to this picture is to ensure that the financial system is sufficiently resilient to a very severe but plausible correction in values should it occur. A colleague of mine recently asked me why the financial stability side of the Bank was so gloomy, always pointing to risks on the horizon and seeing the glass as half empty at best? My answer was that it was our job to worry about what could plausibly happen - and to ensure that if it did happen, the glass did not suddenly empty entirely. 14  All speeches are available online at www.bankofengland.co.uk/speeches  14