samchain/econo-pairs-v1 huggingface dataset:
Some said that the development in the last three decades was a miracle and was almost incredible. Instead, I would describe it as a “world-shaking” development. Having encountered enormous difficulties and challenges at every single stage of reform and opening up, China, as the country with largest population in the world, managed to carry out an unprecedented transformation from a planned economy to a market economy. As there was no precedent to learn from, China could only rely on its own efforts and took one step at a time. Hong Kong has played an extremely important and irreplaceable role during the process of China’s reform and opening up. At the initial stage of opening up, China focused on attracting foreign investors to set up manufacturing factories. Hong Kong manufacturers were the first to move their operations to Mainland China. In the past 30 years, Hong Kong has always been the largest source of direct investment in the Mainland. In 2009, Hong Kong invested $ billion in China, accounting for one half of the total foreign investment in the country. In the course of investing in China, not only has Hong Kong injected capital but, more importantly, it has introduced skills in production and management. In the past decade, the Mainland projects in which Hong Kong invested have gone through some significant changes. The focus has been shifted from investment in the manufacturing industry to a range of diversified and multi-dimensional investments that include investment in all kinds of service industries.

In addition, Hong Kong will contribute to the improvement of the regulatory standard of Mainland financial institutions through regulatory co-operation, technological exchanges and staff visits between the regulatory bodies in Hong Kong and on the Mainland. Secondly, with the expansion and diversification of international trade and investment activities in China, Mainland financial institutions (particularly banks) have to expand and engage in cross-border and overseas businesses. However, banks on the Mainland have to be cautious when “going global” because the operating environment, legal and regulatory requirements and staff employment system of the Mainland market are very much different from those of the overseas markets. Therefore, Hong Kong acts as a suitable “window” or “springboard”. Many Mainland banks, such as the Bank of China, have a long history in Hong Kong and have accumulated much operating experience. These banks are generally trusted and welcomed by the Hong Kong people due to their pragmatic ways of doing business. In 1996, the total asset of Mainland banks in Hong Kong was $ billion, accounting for 11% of the total assets of banks in Hong Kong. In 2009, the total asset of Mainland banks in  2  BIS Review 166/2010  Hong Kong increased to $ trillion, accounting for 19% of the total assets of banks in Hong Kong.
Or, caps could be imposed on either an aggregate or per counterparty basis in order to limit total usage. The amount of funds invested in the facility is likely to be sensitive to the spread between the posted interest rate and comparable money market rates and the level of caps placed on usage. The narrower the spread to comparable money market rates, the greater the participation is likely to be. In our ongoing tests with this facility, the New York Desk has varied the RRP rate from 1 to 5 basis points and the cap on usage by counterparty has gradually been increased to its current level of $ billion. As expected, narrower spreads to comparable money market rates and larger caps have led to greater usage. Although the testing process is still ongoing, early results suggest that the overnight RRP facility will set a floor under money market rates. Treasury repo rates have generally traded no more than a basis point or two below the overnight RRP rate. 2 2 Thus, the early evidence suggests that this facility would help strengthen our control over money market rates. Two issues with the overnight reverse repo rate warrant careful consideration. The first is how big a footprint the facility should have in terms of volume.

Money market mutual funds and other providers of short-term financing could rapidly shift funds into the facility away from assets such as commercial paper that support the private sector. In contrast, in the current regime, when financial crises lead to flows into less risky assets, their interest rates fall, limiting the appetite for these less risky assets. Consequently, under a full allotment setup, runs could be larger and these runs could  2  6  The floor has been more solid since the testing was extended in January for a full year. In part, this is likely because the extension allowed market participants to plan ahead knowing that they could rely on the facility. Raising the caps has also been a factor in solidifying the floor. BIS central bankers’ speeches  exacerbate the fall in the prices of riskier assets. Note that the risk here is how quickly financial flows could reverse from one day to the next, not the average level of take-up of the facility over time. Fortunately, this risk seems relatively easy to address. One could design the facility to prevent rapid inflows during times of financial stress. This could be done by building in circuit breakers such as caps on overall usage of the facility. The circuit breakers would not affect the amount of take-up during normal times or prevent take-up from rising at moderate rates. Instead, they would be in place to limit the pace and magnitude of inflows during times of stress.
As prudent regulators we cannot bank on the monetary and fiscal firefighters always being able to deploy as many resources to douse the flames of a future crisis. Rather we should follow John Dewey’s maxim to reflect on the experience we gleaned from this fire before the next one starts. Otherwise, we may live to regret it. Thank you. 13  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  13  Annex Table 1: Baseline results on CCYB releasability CET1 ratio Mortgage lending (%) flows (%) (1) (2) Post-Covid x Dummy if bank has high CCyB pass through rate Post-Covid x Dummy if bank has low prepandemic effective surplus Bank controls Bank FE Time FE No. of observations R2 (Within)  Non govt. guaranteed lending flows (%) (3)  -0.946**  0.574  0.767  (0.047)  (0.848)  (0.818)  0.377  -1.331  -14.369*  (0.345) Yes Yes Yes 795 0.433  (0.440) Yes Yes Yes 212 0.082  (0.070) Yes Yes Yes 228 0.084  Notes: A “high CCyB pass through rate” bank is one with more than 50% pass-through rate in 2019. ***/**/* indicate significance at the 1%, 5%, and 10% level respectively. P-values reported in brackets are based on bank clustered standard errors. All columns contain bank and time fixed effects.

This is especially the case if no other firm in their peer group is subject to these measures, creating a collective action problem: firms, acting out of perceived individual interest, may choose to restrict their lending to the real economy rather than dip into their CCoB. But actions that can seem rational for each firm individually can prove damaging in aggregate for the economy and banking system as a whole. By way of illustration: stress tests carried out by the Bank of England in the early phases of the Covid crisis suggested that the direct gain to banks of preserving capital by not lending were small – adding c. 0.1 percentage points in capital ratio terms. In contrast, they showed that the costs to the wider economy, and ultimately the banking system, from not lending could be very large: reducing aggregate bank capital ratios by as much as 0.8 percentage points due to negative feedback to banks’ credit exposures from worse unemployment and corporate insolvency outturns over time when lending is restricted.11 Finally, just before management buffers are Countercyclical Capital Buffers (CCyB) which, when non-zero, operate as an extension of the Capital Conservation Buffer and can be released during generalised stresses.12 The key issue here is that there may be stigma associated with use of a regulatory buffer.
We have given advice principally on core functions such as monetary policy and operations, the development of money markets and payment systems, the management of government debt, and banking supervision; but our help has also been sought in some less obvious matters such as the physical security of central bank buildings and their contents. The assistance is provided through our experts visiting other central banks and by their staff coming on study visits to London, as well as through seminars and workshops here and abroad. In the earlier years most of these events were essentially training courses. But increasingly the participants from many countries are able to contribute more themselves to the discussion so that they are now learning not only from our own experience as central bankers, BIS Review 33/1997  -2-  but also from each other. And in some instances, their experience may well hold lessons for us. Since 1990 over 4,000 staff of other central banks - two thirds of them from the transition economies - have participated in these various events. The work of the Centre for Central Banking Studies, and the other inter-bank links we maintain (notably between supervisors) give us, I believe, a privileged perspective on the development of central banking across Europe. The analysis below - particularly the Eastern European sections - is very largely the work of Lionel Price, the Centre’s Director, and his staff.

What is harder to judge is the extent to which the Bank of Japan’s decisions may have been influenced at times by recognition of the latent ministerial powers. Notwithstanding those nuances, what can be seen from Figure 2 is that the Bank of England is quite distinctive amongst the five leading industrial countries. We have: •  the least independence in setting interest rates;  •  the most comprehensive responsibility for banking supervision (though some other banks have broader financial regulatory responsibilities);  •  the greatest role in managing government debt - we provide substantial policy input as well as actually handling auctions as issuing agent for the Treasury;  •  the smallest branch network - we have consciously reduced the scope of our private banking activities in recent years (focusing on areas of  2 Charles Goodhart, Forrest Capie and Norbert Schnadt, “The development of central banking” in  The future of central banking, the tercentenary symposium of the Bank of England, Cambridge 1994, page 169. BIS Review 33/1997  -4-  comparative advantage as a public sector institution) and are now also leaving note distribution to be handled largely by the private banks; •  a comparatively limited but increasing role in the operation of payment and settlement systems - typically, the Bank of England participates in payments systems which are run by the private sector, and has only involved itself in the establishment and operation of settlement systems when the private sector has not itself succeeded in doing so.
Norman T L Chan: Latest developments of renminbi business in Hong Kong Briefing by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, on the latest developments of renminbi (RMB) business in Hong Kong, Hong Kong SAR, 23 December 2010. *  *  *  Good afternoon. Today I would like to provide an update on the latest developments of renminbi (RMB) business in Hong Kong. With the strong support from the Central Government and the relevant Mainland authorities, the development of RMB business in Hong Kong has been encouraging this year. Significant growth and progress have been seen in various areas, including cross-border trade settlement, deposits, bond issuance and the introduction of financial products in the second half of this year. The total amount of RMB deposits increased markedly from RMB 60 billion at the end of last year to RMB 220 billion in October and RMB 280 billion in November this year. Of these deposits, those from personal customers amounted to RMB 120 billion, with a total of 2.2 million accounts and an average deposit size of RMB 54,000. Deposits from corporate clients amounted to RMB 160 billion at the end of November, with 117,000 accounts and an average deposit size of RMB 1.3 million.

Along this positive trend, and with the number of Mainland enterprises eligible for the cross-border RMB trade settlement scheme increased substantially to 67,000 recently and with the refinements that we are going to introduce, I am confident that the offshore RMB market in Hong Kong will continue to develop progressively in the coming year, both in terms of the depth and breadth of the market and product development. Four Hong Kong banks have been approved to participate in the Mainland’s interbank bond market, and the applications by a number of banks are being processed by the Mainland authorities. This will provide a channel for the circulation and capital preservation for the RMB funds in Hong Kong. Meanwhile, we have just been informed that HKMA’s eligibility for investing in the Mainland’s interbank bond market has been approved by the PBoC. We are working closely with the PBoC on the implementation arrangements. Finally, to further promote the development of the RMB offshore business in Hong Kong, the HKMA is making preparations for overseas roadshows with the financial industry, focusing on locations which have growing trade and investment flows with the Mainland. We believe that with our joint efforts, Hong Kong will be able to play its role as an RMB offshore market to the fullest, thereby promoting and supporting the nation’s increasing cross-border trade and investment activities while enhancing and consolidating the status of Hong Kong as an international financial centre. BIS Review 175/2010  3
For the longer term, vulnerabilities centred rather on the effects of higher cost of capital and the risk of erosion of asset quality. The report included a detailed analysis of the quality of the banks’ loan portfolios. Although the conclusion was that the banks were well prepared to face rising defaults and loan losses at that time, particular attention was drawn to the fact that the previous year had seen increases in the ratio of large exposures to capital and in the proportion of holding companies among borrowers. The report emphasised that there was  2  BIS Review 22/2009  good reason to scrutinise this development closely. The Central Bank had actually noted this in earlier publications as well. For the near term, the banks’ most critical task was to guarantee access to foreign credit and reduce their borrowing requirement. Furthermore, confidence among investors and depositors was of vital importance. It was deemed unlikely that conditions in the international markets would improve to any dramatic extent in the near future, and when they did, investors would undoubtedly demonstrate more caution and conservatism than they had previously. In addition to this, the report shed light on the banks’ very large re-financing needs in the next few years: They would need to re-finance 35 billion euros in foreign bonds through 2012, including 17 billion in 2009 and 2010.

This latter factor causes the current “premium” observed on electricity prices in France that are expected in the future markets for next winter. The bottom line is that it is not really possible to disentangle domestic and external factors in the rise in electricity prices, and thus to compute the additional “external tax” due to electricity. II. The ex-ante and ex-post distribution of the external tax Let me now turn to the second key issue: the question of the distribution of the external tax, or in other terms the burden sharing of the shock. I will illustrate this issue in the case of France for the energy bill only, for which more data is available at a granular level. Analysing this question involves three logical steps. First, how the increase in the energy bill is distributed “ex-ante” (as economists say) among households, firms and the general government, based on their respective volumes of energy  Page 9 of 14 consumption in the year before the price shock. In a second step, we need to take into account the fiscal measures put in place in 2021 and 2022 by the government in order to limit the energy bill of households and businesses – since they modify the distribution of the external tax. The third step should involve taking into account all the macroeconomic adjustments, in particular the pass-through of cost increases by firms in their sales’ prices and the response of wages to prices.
The government has translated[1] this into three objectives: to spur a vibrant, innovative, and internationally competitive insurance sector; to protect policyholders and ensure the safety and soundness of firms; and to support insurance firms to provide long-term capital to support growth, including investment in infrastructure, venture capital and growth equity, and other long-term productive assets, as well as investment consistent with the government’s climate change objectives. These are consistent and mutually supportive objectives. Safety and soundness underpin the other two objectives: the sector can only be internationally competitive if it operates within a robust and reliable infrastructure, which includes the prudential regime as well as things like the legal system; and only a financially sound insurance sector  Goldilocks and the three pillars: how much capital is just right? ‐ speech by Anna Sweeney | Bank of England  Page 2  can make a sustainable contribution to long term investment. Conversely, an innovative sector, that supports the wider economy through long term investment, is ultimately a sounder one. Tailoring will mean reforms to specific aspects of the regime that are not well-designed or imperfectly calibrated for the UK, and are currently distorting incentives and behaviour. The risk margin is probably the best known example. The concept – a margin over best estimate of liabilities so that they are held on the regulatory balance sheet at an estimate of their transfer value – is sound.

But of course the existence of this safety net blunts the policyholder incentive to distinguish between a high risk and a low risk insurer at the point of taking out a policy. Paradoxically the stronger the safety net, the stronger the other two regulatory pillars need to be to hold it up. The less the market and policyholders discipline a firm, the more the regulator needs to do it for them, including by policing financial standards. Pillar 2: intervention and risk management Pillar 2 contains a range of qualitative measures, but broadly speaking they can be divided into the ladder of intervention, and requirements for good risk management, including the prudent person principle. These are both intimately connected to how we define capital adequacy. The ladder of intervention is critical to preventing gambling for resurrection: it formalizes and defines the power to intervene before the interests of shareholders and policyholders diverge, in the same way that debt covenants protect creditors by giving them the ability to intervene in clearly defined circumstances under which their interests will diverge from those of the providers of equity capital. The role of regulatory capital in relation to the ladder is to buy time for that intervention.
What considerations need to be made regarding Treasury market clearance practices given the growth in activity by participants who are not central counterparty members? Will the evolving settlement marketplace introduce new challenges to Treasury market participants? How must practices and culture evolve as market structure does? And, how will the interplay of all of these issues affect the future of the Treasury market? Today’s conference provides an excellent opportunity to discuss these issues. Thank you for coming. I look forward to today’s dialogue and the ongoing engagement between the Joint Member Agencies and the public as we all strive to ensure the continued sound functioning of this essential marketplace. 1 Joint Staff Report: The U.S. Treasury Market on October 15, 2014, U.S. Department of the Treasury, Board of  Governors of the Federal Reserve System, Federal Reserve Bank of New York, U.S. Securities and Exchange Commission, U.S. Commodity Futures Trading Commission, July 13, 2015. 2 Ellen Correia Golay, Frank Keane and Nathaniel Wuerffel assisted in preparing these remarks. 3 The Joint Member Agencies are the U.S. Department of the Treasury, the Board of Governors of the Federal  Reserve System, the Federal Reserve Bank of New York, the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission. 4 Best Practices for Treasury, Agency Debt, and Agency Mortgage-Backed Securities Markets , Treasury  Markets Practices Group, Revised February 2016. 5 Banking Conduct and Culture, Group of 30, July 2015.

Over the next few years, the return on the Pension Fund is expected to rise roughly in line with government expenditure on retirement pensions through the national insurance scheme. Revenues from petroleum activities will nonetheless gradually decline, pulling down growth in the Fund. Over time, therefore, the national insurance scheme’s retirement pensions will grow considerably faster than the expected real return on the Fund. (See Chart: Generational account.) However, it is wrong simply to compare the Pension Fund and obligations under the national insurance scheme. The government has the option of taxing households and businesses, and this naturally also has a considerable net present value. Generational accounts allow for this. These accounts show whether there is a need to raise taxes or lower expenditure for the government budget to balance in the long term, based on forecasts for benefit and pension payments and oil revenues. The generational accounts reveal that there is currently a need for fiscal tightening equivalent to 10 per cent of GDP or of the order of NOK 200 billion. Longterm forecasts from the Ministry of Finance, that also take the pension reform into account, show a shortfall of around 6 per cent of mainland GDP. Calculations by professors Alf Erling Risa and Erling Vårdal here in Bergen paint a similar picture. The need for fiscal tightening roughly corresponds to current spending of oil revenues. Estimates of this kind are highly  16  Revised National Budget 2010.