samchain/econo-pairs-v1 huggingface dataset:
The new techniques employed could lead to a lower cost of capital. In addition the market and its capabilities began to highlight the ineffectiveness of national barriers, and restrictive practices. It gave governments the courage to dismantle restrictions and barriers despite protest from those who, in a series of big bangs, lost their franchises. The examples of the international Swiss Franc - and Sterling - debt markets highlight this. In each case the authorities  2  Glenn Hoggarth and Victoria Sapporta “Costs of Banking System Instability: Some Empirical Evidence”. Bank of England Financial Stability Review (June, 2001). 2  BIS Review 5/2004  in the 1970’s imposed flow controls on new bond issues through queues. But this could be bypassed. As derivatives and swaps developed, so Swiss Franc liabilities could be created by borrowing $ on an unrestricted basis and swapping them outside the jurisdiction of the Swiss authorities into Swiss Francs. So this caused a gradual rethink, as the national grip of the authorities had ceased to be effective. 6. Consequences of technological advance  While liberalisation was an important trigger, technological advance also played a vital role. We may not understand its full impact yet: just as it took us time to exploit fully the benefits of the printing press, electricity, and the motor car. But the advance and speed of communication with its erosion of geographical and national barriers spawned the development of often derivatised financial instruments and risk transfer techniques. The concepts involved in this risk transfer may not be new.

But in general, transparency of process can contribute to confidence. Some indeed argue that you should improve transparency generally to a point where lender of last resort support could be withdrawn altogether. And let the market take the fallout from, and absorb, the shocks as they arise. This I fear gets into the realms of philosophy and political thought, and as a mere central banker I would prefer to go no further! Some countries are less inclined to such opacity. To quote Governor Heikensten of the Riksbank “Those who have lived through a crisis are generally in favour of a transparent process”5  14. Conclusion  I have ranged widely on the many factors which - at least in my view - arerelevant to financial stability oversight. So in concluding, let me try to draw together some of the principal themes in what I have been saying. I am naturally well aware that there are many positive features to today’s environment. But central bankers are sometimes accused of being pessimists and seeing the glass half empty. In our defence I suppose it is our job to think out what could go wrong and to be ready accordingly. The first message to leave you with is that we are concerned about financial stability because of the potential economic and social costs arising from financial instability. Private markets will not always reflect these costs fully and prima facie there is a need for public oversight. Second, the degree of complexity and interconnectedness has increased dramatically in recent years.
Uncertain times Speech given by Ben Broadbent, Deputy Governor Monetary Policy, Bank of England  At the Wall Street Journal, The News Building, London 5 October 2016  I would like to thank my fellow MPC members and other Bank colleagues for their helpful comments. The views expressed are my own and do not necessarily reflect those of the Bank of England or other members of the Monetary Policy Committee. 1  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  Before August, the UK’s official interest rate had been held at ½% for over seven years, the longest period of unchanged rates since 1950. No-one on the current MPC was on the Committee when rates were previously changed, in early 2009; indeed there are children now at primary school who weren’t even alive at the time. So although the August Inflation Report gave a pretty full account of the reasons for the MPC’s decision it wouldn’t do any harm to expand on these things a little further. That’s what I plan to do today, focussing on two areas. The first involves one of the main reasons for the revised – and weaker – economic projections we made in the August Inflation Report and the policy easing that accompanied it. This was not a judgement about the ultimate economic effects of the UK’s exit from the EU, not least because we are unlikely to know, for quite some time, what that will entail.

If you collapse the range of alternatives to the worst possible outcome – now you know for sure that a project isn’t worth pursuing – that would obviously hit investment, 7  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  7  despite the drop in uncertainty. If it keeps open the possibility of better outcomes a lack of clarity may sometimes be worth putting up with. Monetary policy and DB pension schemes  Let me turn now to my second topic, the interaction between low bond yields, QE and the financial position of defined benefit (DB) pension schemes. These funds do exactly what they say on the tin: they promise their beneficiaries a fixed future payout, not unlike the coupon on a government bond. That’s why they’re obliged to discount these liabilities by the longer-term bond yield. That, in turn, means the present-value cost of those liabilities goes up when the bond yield falls. And because easier monetary policy tends in the first instance to do precisely that – to depress yields – central banks have been criticised in recent years for worsening the financial position of such funds. Since its decision to ease monetary policy in August, both by lowering Bank Rate and expanding its asset purchases, the MPC has again encountered this concern. Just as this point isn’t new, nor is what I’ll say in response.
The FOMC stated that it expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with its assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.7 In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $ billion per month and of agency mortgage backed securities by at least $ billion per month until substantial further progress has been made toward the Committee’s maximum employment and price stability goals. In other words: Despite uncertainties, we are fully committed to supporting the economy through this period and reaching our maximum employment and price stability goals. We will continue to watch and learn and remain committed to using our full range of tools to help assure that the recovery will be as robust as possible. Conclusion I’ll conclude with this: Despite the progress so far in recovering from the recession, some of the numbers that I’ve shared are staggering. Families, businesses, and communities are struggling. Almost a year into the pandemic, there is still so much uncertainty. But despite the near-term challenges, the longer-term outlook for the economy has improved, and our actions of the past year position monetary policy well to support a strong, full recovery and achievement of our goals of maximum employment and price stability. With this progress in mind, I am hopeful for a time soon that looks “more like normal." Thank you.

The world is undergoing dynamic shifts The world around us is shifting dramatically. To understand this shift, we should pay attention to five megatrends. The first is the shift in global economic order with the rise of Asia, including the rising prominence of ASEAN. The gravity of the global economy is moving to the East. Being the sixth largest economy and home to around 650 million people, there is an abundance of opportunity, hope and dynamism in this region. The financial sector will no doubt, be a key player in further catalysing the growth of ASEAN countries. The second is the risks brought about by climate change. Tackling climate change may be one of the biggest challenges for humanity in building a sustainable and prosperous future. It could lead to devastating, wide ranging and irreversible damage to our economy, society and the way we live. Economic losses in itself could be very significant, as high as USD20 trillion. Insured losses from effects of climate change have already increased five-fold in the past 30 years. The third is the rising income inequality that can threaten the fabric of our society. Consider this. The top 1% of the population has captured twice the global income growth of the bottom 50% since 1980. Worse still, inequality has persisted despite large transfers of public to private wealth in many countries. The fourth is the rising populism and protectionist policies. This can be seen in inward looking policies and anti-establishment views that have become more entrenched in parts of the world.
The condition of the banks which perform the financial intermediation function is of key importance for the whole economy. This accounts for the Bulgarian National Bank’s enormous responsibility for the fulfilment of the mandate entrusted to us by law and specifically for maintaining the stability of the banking system. This requires that we stay traditionally focused on the high capital and liquidity requirements for banks. These requirements are not ends in themselves, but follow from the need for banks to have reserves at hand. On the one hand, the reserves allow them to absorb costs and losses arising from the worsened quality of assets in the adverse macroeconomic environment. On the other hand, they support banks’ lending capacity. Consequently, it is logical to expect that we would continue to apply the measures of the anticrisis package, approved in March this year. Furthermore, we analyse, on an ongoing basis, the situation, and as a macroprudential supervisory authority we consider the likely scenario of a worsening economic crisis and the related significant deterioration in loan portfolios. Under this scenario, banks may need to temporarily operate under the combined capital buffers requirement, being ready to draw up and implement plans for rebuilding them. The prospect of continuing negative developments in the economy is a reason for us to expect materialization of credit risk and deteriorated quality of assets on banks’ balance sheets. It seems very likely that the trend of decreasing amount and share of non-performing exposures, seen over the last few years, may reverse.

Dimitar Radev: The Bulgarian banking sector in 2020 – how have we coped and what is forthcoming Publication by Mr Dimitar Radev, Governor of the Bulgarian National Bank, in the Bulletin of the Association of Banks in Bulgaria, issue 64, December 2020. * * * Dear Colleagues, We are approaching the Banker’s Day in a year of unprecedented challenges: first, in relation to the consequences of the COVID-19 pandemic; andsecond, with the completion of the strategic project of the entry of the Bulgarian Lev into the European Exchange Rate Mechanism (ERM II), simultaneously with the accession of our country to the European Banking Union, including to the Single Supervisory Mechanism and the Single Resolution Mechanism. From the banking sector’s perspective, there are two key questions: how we have coped to date, and what is forthcoming? Our goal, defined as early as the start of the crisis, was for the banking sector to generate solutions, rather than problems. As a result of our effort in the recent years, we were well positioned for the attainment of this goal. The banking sector ‘entered’ into the crisis with a Common Equity Tier 1 capital adequacy of over 19%, and with a liquidity coverage ratio of over 260%, i.e. times above the regulatory requirements. Regardless of the good starting position, we were aware that, because of the abrupt deterioration of the environment in which banks operated, there should be new measures for further strengthening of their capital and liquidity positions.
For those of you who have not been home for a while, cleanskin wine is quality wine that is sold more cheaply because it is unlabeled. So, you are getting something good but you don’t know why because you don’t know what it is. Half an hour ago, the Thai economy this year to many of you was like cleanskin wine. You know the economy is doing better but you don’t know why. BIS Review 50/2004  3  In this brief space of time, I hope I have given you an adequate account of how we at the Bank of Thailand see the Thai economy evolving this year, and hopefully have helped improve your understandings of the economy. As with the cleanskin wine, I will definitely go back for more. I only hope you will do the same by continuing to have confidence in the Thai economy and remain a trusted friend and a dependable partner of Thailand for many many years to come. Thank you. 4  BIS Review 50/2004

Our latest Inflation Report forecast published last week - based on constant 6% interest rates, and on reasonable central assumptions about certain other key elements in the forecast - projects continuing overall output growth - of around 3% initially, moderating to around 2½% from around the end of this year - with continuing low inflation - at a rate of around 2% this year but rising back to around the 2½% target in the course of next year, with the risks - on these assumptions - modestly on the upside. But, given the current uncertainties, individual members of the Committee quite naturally prefer their own alternative assumptions about some of the key variables - most notably the likely future path of the exchange rate and the size and duration of the effect of the downward pressure on margins. And these varying assumptions could either raise or lower the rate of inflation two years ahead by up to ½ percentage point. That, Mr Chairman, is all fairly technical stuff. The point to hold on to is that, on a reasonable range of assumptions, the prospect for the economy as a whole over the next couple of years is for continuing steady growth with low inflation, and most of us would happily settle for that. The debate is about just how strong the growth and just how low the rate of inflation.
But encouraging a strong focus on providing as much clarity as possible in setting the risk appetite for the organisation sets the tone and internal conditions for ongoing improvements in risk culture; it provides better alignment between business decisions and a firm’s risk tolerance; and ultimately, delivers a better balance between taking on too much risks and inhibiting the kind of innovation that we depend on to build successful businesses and economies. Achieving these outcomes is more urgent than we might think. In an online poll by Marsh last year, 91% of risk professionals agreed that understanding technological innovation is crucial to stay at the forefront of their industry. This corroborates the 2017 Excellence in Risk Management report – also by Marsh and the Risk & Insurance Management Society – which revealed that more than 90% of companies are either using or evaluating disruptive technologies, such as the Internet of Things and wearable technologies. Yet, more than half of organisations have not conducted risk assessments to deeply understand the risks associated with disruptive technologies, much less define the organisation’s appetite for such risks. Less than half (48%) of respondents said they have a cross-functional risk committee that manages these risks, never mind how effectively. And even this percentage has dropped from 52% in 2016 and 62% five years ago. These observations point to considerable scope to improve current approaches to risk management – at a time where business lines are already venturing into unchartered territory.

Moving beyond risk measures to risk narratives Innovative risk management will also require new ways of looking at measures of risk. While financial measures of risk are not likely to go away anytime soon, a good place to start is by acknowledging that financial models do not, nor are they likely to, fully and perfectly account for how firms will be affected by risk events. In his book, “The End of Theory”, Richard Bookstaber who was also a former regulator at the US Securities and Exchange Commission, wrote that we cannot know where we will end up until we take the journey. And we cannot retake that journey once completed. This raises some important issues for how firms set and maintain limits that define their risk tolerance. It does not mean that we should necessarily throw out conventional risk measures. But it does mean that we need to supplement them with the ability to develop and maintain a richer risk narrative that is perhaps less precise, but much more informative. Moving away from more mechanistic approaches to controlling risk calls for strong discipline and higher levels of competence among business and risk managers. Where there are no bright lines, effective risk responses will depend on firms setting up a process that can bring together diverse perspectives and data sets; encourage rigorous debate and dialogue on risk developments; and build an informed consensus on how much risk an organisation should be willing and able to take to achieve its business goals.
The other relates to global imbalances: deficit and surplus countries should both take action in a cooperative manner. Again, a core element of any of these proposals is complementarity between sound domestic policies, international cooperation and a robust global financial safety network that accommodates both regional and multilateral actors. Conclusions In short, the multilateral economic cooperation system, despite its limitations, has allowed significant development in many countries over the last few decades. Today, more than ever, its defining principles of cooperation, rules, universality, formality and sovereign equity need to be preserved to enable the various global challenges ahead to be addressed. Notwithstanding this, the new economic, social and geopolitical realities call for a reform of multilateralism. We must work to adapt multilateral institutions to the new realities, eliminating obstacles that hinder collective action, making them more flexible, efficient, representative, transparent and accountable. They also need to become more cooperative and to better complement regional arrangements and institutions. Thank you. 8/8

A £ note may also have had a symbolic meaning to her, as it was the amount she was paid by publishers Crosby and Co. for her first novel, Susan. 2  Just as a £ banknote might have evoked memories for Jane Austen, so does money serve as a collective 3  memory for a country and its people. Our banknotes have cultural as well as economic value. Through the characters on our banknotes, we celebrate the breadth and depth of achievement across the United Kingdom, in fields ranging from literature to the visual arts, science and statecraft. Once she replaces Charles Darwin on the £ banknote this September, Jane Austen will sit alongside Winston Churchill on the new £ Adam Smith on the £ and Boulton and Watt on the £ Around the end of the decade, Smith will be replaced on the £ by JMW Turner. These individuals have advanced British thought, spurred innovation, exerted exceptional leadership, and more generally helped to shape this diverse society and forge our common values. 4  As the “mother of the great tradition of the English novel”, Jane Austen’s place in this august group is assured. Sir Walter Scott’s praise for Austen’s “talent for describing the involvement and feelings and characters of ordinary life which is to me the most wonderful I ever met with” is a sentiment that those reading her work today would recognise and endorse.
But recall that the last two vintages of subprime pre-crisis were twice as likely to default as their predecessors, and that the leveraged loan market shows few signs of slowing. ******************** Turning finally to the lie that “This Time is Different”. If the experience of the financial crisis teaches us anything, it’s humility. We cannot anticipate every risk or plan for every contingency. But we can, and must, plan for failure. That is how we can create an anti-fragile system that is robust to both the intensification of known risks and the crystallisation of Rumsfeldian unknowns. An anti-fragile system requires resilient banks. A decade ago, major banks were woefully undercapitalised, with complex business models that relied on the goodwill of markets and, ultimately, taxpayers. Large global banks can now stand on their own. 34  See FSB Policy Recommendations to Address Structural Vulnerabilities from Asset Management Activities (2017). FPC record (Q3 2018). 36 Over the past year, leveraged lending has grown by around 15% (or 10% of total advanced economy credit to corporates) as compared with an estimated 13% growth (or 13% of the total share of US mortgages), for the sub-prime market to 2007. 37 With maintenance covenants falling from close to 100% in 2010 to around 20% now. 35  10  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  10  Their common equity requirements and buffers are now ten times higher than the pre-crisis standard.

The FSB has identified a similar menu of tools under its Misconduct Action Plan, which its members can draw from. Thus far, however, action to promote good conduct has varied widely across the G20.25 The FSB’s compensation standards have been written into G20 regulatory rules, but not yet fully deployed.26 Although adjusting in-year pay is common, clawing back bonuses later on is not, even though it typically takes several years for evidence of misconduct to emerge. And few jurisdictions have put in place either formal mechanisms to ensure that boards and senior managers are explicitly responsible and accountable for what happens at their regulated firms or regulatory references to stop those with poor conduct records moving from firm to firm. 20  Fair and Effective Markets Review Final Report, HM Treasury, Bank of England and FCA (June 2015). PRA Supervisory Statement | SS28/15 Strengthening individual accountability in banking, May 2017. 22 FX Global Code (2018). 23 FMSB stands for Fixed Income, Currencies and Commodities Markets Standards Board. See Carney (2017), Turning back the tide. 24 Allen, T., (Q3 2018), Strengthening the link between seniority and accountability: the Senior Managers and Certification Regime, Bank of England Quarterly Bulletin 25 FSB (April 2018), Strengthening Governance Frameworks to Mitigate Misconduct Risk: A Toolkit for Firms and Supervisors. 26 FSB, (2017), Implementing the Principles for Sound Compensation Practices and their Implementation Standards, Fifth Progress Report.