samchain/econo-pairs-v1 huggingface dataset:
First, progress must continue on the “resolution” of central counterparties – their treatment in the event of difficulties –, as they have become systemically more important with compulsory centralised clearing for derivative instruments. Above all, we must ensure a balance between financing channels. All discussions on the shadow banking system must continue in order to take account of the risks that may have moved into this sector as a result of the ramping up of requirements in the regulated sector, and for banks and insurers in particular. It has been estimated that the segments that may pose financial stability risks represented a total of USD 34 trillion.14 The priority has now shifted from the solvency of banks, which has improved substantially, to the liquidity of the shadow banking sector, particularly funds and asset management companies that are exposed to the risks of sudden panic-driven runs. Lastly, progress is required on FinTechs and above all on the major digital platforms and businesses, which, if they carry out financial activities, will have to comply with similar regulations sooner or later. 3) The third challenge is evaluation. Evaluation is essential to the credibility of the financial reforms that have been adopted worldwide, and to this end, the G20 adopted a postimplementation evaluation framework this summer. This framework should allow us to determine whether the reforms have actually achieved their desired results, without any unexpected, adverse effects, and to make adjustments if this is not the case.

But undoubtedly, finance without rules could be the ruin of the economy. To be sure, financial regulation is necessary particularly because financial crises often have considerable economic and social costs, with serious and lasting repercussions. A study by Laeven and Valencia 8 in 2013, which considers 147 banking crises between 1970 and 2011, estimates the median output loss between the peak of activity before the crisis and the three years after at around 23% of GDP, and the median increase in public debt over the same period at 12% of GDP, while total government bailout spending amounts to almost 7 percentage points of GDP. Moreover, beyond the immediate effects, financial crises reduce the economy’s longterm potential: companies cut back on their R&D, capital and infrastructure investment, which results in a decline in productivity and a slowdown in technological progress. The 2007–2009 crisis is unfortunately an illustration of this; it was the worst crisis since that of the 1930s. The financial imbalances generated by the bursting of the subprime bubble in the United States spread rapidly to the global economy. The crisis affected both the level and trend of GDP, leading to a permanent loss in wealth. Cumulative GDP losses compared to the pre-crisis trend are estimated at a quarter of global GDP. 9 In a number of countries, in particular in southern Europe, GDP has still not returned to its pre-crisis level. II.
The question is whether it is expected to become better or worse. Consequently, these variables are not good measures of the level of resource utilisation, but rather of whether this is increasing or decreasing. However, the business tendency surveys also include variables that measure levels. For example, this applies to the shortage of labour in the business sector and capacity utilisation in the manufacturing industry. These have both increased recently and it cannot be ruled out that these will reach normal levels by the end of this year. (Figure 8. Shortage of labour in the business sector and capacity utilisation in the manufacturing industry). It is also interesting to compare shortage of labour with unemployment. These co-varied significantly before the crisis. However, shortage of labour is now increasing more rapidly than unemployment is falling. This indicates that there may be significant matching problems in the labour market long before unemployment comes down to a normal level. (Figure 9. Shortage of labour in the business sector and unemployment). At the Riksbank, we have also developed a special indicator to measure resource utilisation, the so-called RU indicator. 11 This uses a principal component method to extract common information from a large number of business cycle indicators in levels. The RU indicator also indicates that resource utilisation in Sweden was about as high in 2007 as at the previous peak in 2000. This contrasts with the GDP gap based on HP trends, which was much higher in 2007 than in 2000. (Figure 10.

The negative gap at the recession’s lowest point in 2009 has been estimated at – 4 per cent by the European Commission and at – 7 per cent by the OECD. The GDP gaps of 2010 and 2011 according to both of these institutions can be disregarded, as their reports were compiled before the summer and, since then, GDP outcomes have been surprisingly high. In its latest report, the IMF reckons with a GDP gap of approximately 2.5 per cent for 2007, followed by a decrease to almost – 5 per cent in 2009 before reaching – 1.5 per cent in 2011. 8 (Figure 5. The GDP gap according to the Riksbank, the OECD, the IMF and the European Commission). All three organisations reckon that potential GDP has fallen in conjunction with the crisis. For example, the OECD estimates that potential GDP has decreased by an average of approximately 3 per cent for the countries in the OECD area, as a consequence of the crisis. Approximately two-thirds of this decrease is due to higher capital costs caused by the return to normal risk and interest rate levels after the abnormally low levels prevailing prior to the crisis, which is having a dampening effect on capital intensity. The remaining third is due to an increase in structural unemployment and a decrease in labour supply. As regards Sweden, the dampening effects of structural unemployment and falling labour supply are deemed to be below average, however.
In this regard, one of the primary methods the AIG uses to promote cross-border co-operation is to encourage home supervisors of the 50 or 60 largest internationally active banks in Basel Committee member countries to engage in practical outreach to host supervisors and the bank to open clear lines of communication and co-operation. While these outreach efforts were initially considered to be “case studies”, they have since evolved into actual implementation planning. Since one of the most important aspects of this planning is the bank’s own Basel II implementation rollout plan, it is important that internationally active banks not only have such a plan in place, but also that this plan should be communicated within the bank, especially to subsidiaries that are significant in the context of the overall bank or of a particular market. This cross-border work has accelerated over the past year, but the Committee recognises that more must be done in order to foster greater consistency. We will continue to work with groups like the IIB to identify high-priority implementation issues for the industry, and we will also continue to encourage home and host country supervisors to develop detailed, practical implementation plans that are tailored to each bank’s unique circumstances. 2/3  Outreach to non-G10 The third area of implementation that I would like to address is outreach to supervisors outside Basel Committee member countries, especially since the IIB has actively encouraged the Committee to promote consistent standards for cross-border implementation.

Without finance, terrorism cannot progress. So, steps taken by countries to ensure that the funding lines to terrorism and money laundering are cut off, that terror financing transactions are interrupted or stopped, and that there is worldwide co-operation to track down persons who are suspected of being involved in terror financing in whatever way, is of vital importance. Just take a small example. If at the end of the month, you do not receive your salary, you will find it difficult to comfortably progress with your next month’s activities. In the same way, if we can stop the funds going to terrorist activities, that will put a dampener on their activities. It is very simple to understand. Therefore, not only should we deal with terrorists on a military basis, but we should disrupt their progress by cutting off and interrupting their funding lines. By doing so, we complicate their agenda. In order to do so, and to continue to do so, we have to equip ourselves. The judiciary, the law enforcement agencies, the regulators, the media, the bankers, the prosecutors, all of these groups, have to equip themselves with whatever it takes, to meet with this challenge. We have to learn from each other. We have already learnt many lessons during our own activities in this field. But, it is important that we share such knowledge and experience with others as well.
While conditions in the world economy have improved, the growth prospects going forward is expected to remain modest for an extended period of time. Several important lessons have emerged from this recent global financial crisis. The first relates to the exponential expansion of the financial system which did not commensurate with the expansion in economic activity. This resulted in a significant disconnect between the financial sector and its role in serving the economy. A number of factors contributed to the weakening of the link between financial intermediation and productive economic activity. Deregulation had opened up new opportunities for financial institutions to expand the scope of their activities. Increased competition, reinforced by advances in technology intensified the pace of innovation. And, the extended period of low interest rates in an environment of low inflation also prompted greater risk taking which in turn contributed to the significant build up of financial imbalances. The role of leverage in the global financial crisis, both in the public and private sectors, was also a particularly important contributing factor. It has also become a factor that is now holding back growth. At the height of the global financial crisis, the total leverage in the major industrial economies increased significantly. In the US, private sector leverage alone had reached over 200 percent of GDP in 2008. Other reports place the average debt level to GDP of major advanced economies at over 300 percent in 2010.

As part of its contribution to improved business reporting last year, the Bank of Zambia invited Mr Allan Beatie, International Business Editor, with one of the leading global newspapers, the Financial Times, to share views with journalists here in Zambia. Distinguished Ladies and Gentlemen, there are a myriad of pointers that can be given to where economic, business and financial information can be found. As a starting point, I would like to suggest that journalists look around this room and will no doubt recognize the rich collection of invited guests who hold significant information from which we can learn a lot. These are people who can stimulate debate, provide relevant information, validate it, and explain its proper use. Colleagues, allow me now to focus on one key stake-holder mentioned above, namely the business and financial writers’ fraternity. It is heartening to note that the judges feel that the standards of reporting have improved significantly. I am also pleased to note that those who have been past prize winners are continuing to apply themselves effectively and raising the standards of the profession as a whole. It is therefore my delight to be able to officiate at August gathering of business and financial writers knowing they are all putting in a more than average effort to attain today’s awards. Ladies and Gentlemen, the top prizes over the last 3 years have been designed to build capacity in the journalists nominated.
Recent crisis indicated that we all sail in the same waters and we may resist the waves, only if we confront these  2  BIS Review 30/2009  challenges together. Export is a generator of foreign currency flows needed so much for the currency stability, which is related to all other balances, financial system’s stability also included. Under these conditions, we should be aware that a joint action, of national importance, deeply patriotic for the values and future of the country is needed. Make the market more lively, more competitive and more innovative. Now the financial infrastructure is complete and it is up to you to use it more efficiently. It is the time to try to seek other balances in terms of foreign currency flows into the economy. Remittances have been important for a long time. They were the largest foreign currency serum in the economy. However, we should be aware that other indicators, such as exports and foreign direct investments will be prior items in the total foreign currency flows in the future. This should be realised by everyone and based on this ground, let us work together for the future. Dear participants, International initiatives are in the process. The Berlin meeting was extremely important in this regard. There was broadly discussed and converged into the idea that there is room for more coordinated actions, and protectionism is not the answer to the crisis. The London meeting will make new steps in this regard.

Important industries, such as the financial industry or that of machineries are undergoing the worst situation over 50 recent years and governments of these countries are obliged to approve aid packages, to guarantee their survival. According to the most optimistic assessment, this situation will not be improved, at least until the end of this year. Therefore, I emphasise that exporters should adopt new philosophies. They should be innovators, increase products and discover new markets, beyond the traditional ones, which have currently been hit from the economic and financial crisis. Global developments impose adoption of new approaches. The country’s economic and financial development stage and passing into the group of the developing countries have created conditions for businesses in general and export industries in particular to adopt new standards in business management. Businesses should understand that the optimal regime of their activity requires new elements. Current developments of the world economy make necessary the increase of prudence for managing the financial asset portfolio, overall risk and exchange rate risk in particular, as well as for identifying alternative financial methods and instruments. Businesses should invest in increasing analysing and forecasting capacities. They should build their development scenarios, including even the envisage of their possible financial losses from non-operation. They should also employ capable human resources, specialised, educated, that is professional ones, in order to ensure an efficient activity. To this end, I invite you to cooperate more with the banking system, to stand by banks, but also by the Bank of Albania and be open with them.
Note that the resulting demand curve will be downwards sloping (strictly, in steps), as the share of funds allocated against wider collateral rises, the stop out spread falls. If market conditions deteriorate such that the value attached to borrowing against wider collateral relative to borrowing against narrow rises, this demand curve will shift higher. Because bids in the auctions should provide accurate information on individual banks’ demand for liquidity and the prices they are willing to pay for it, the Bank can use the pattern of bids in each auction to assess the extent of stress either in the market as a whole, or at individual institutions. In turn, it can use that information to inform its decisions on the size and maturity of future operations, or to engage individual institutions in a dialogue to understand their funding needs and plans. For example, consider two variants on our example laid out in Table 1. In the first, an exogenous shock hits the market, reducing interbank lending volumes and impairing the mechanism by which banks transfer liquidity amongst themselves. The result is that banks, individually, bid more aggressively for funds (Table 2 and Chart 6 show an illustrative example). That pattern results in an upwards shift in the aggregate demand curve, leading to a rise in the share of funds allocated against wider collateral, and hence providing liquidity insurance to the banking system. BIS central bankers’ speeches  9  In an alternative example, assume that an individual counterparty suffers a liquidity shock.

Paul Fisher: Recent developments in the sterling monetary framework Speech given by Mr Paul Fisher, Executive Director, Markets, and Member of the Monetary Policy Committee of the Bank of England, at the Manchester Economics Seminar, Manchester, 30 March 2011. All speeches are available online at www.bankofengland.co.uk/publications/speeches. *  *  *  I would like to thank Sarah Ashley, Roger Clews, Ronnie Driver, Tarkus Frost, Chris Salmon, Olaf Weeken, Iain de Weymarn and Richard Whisker for their help in preparing this paper. Introduction During the recent financial crisis and ensuing recession, the implementation of monetary policy has been the subject of intense debate. Most visibly, that debate focused on the Bank’s use of large-scale asset purchases – otherwise known as “quantitative easing” (QE) – as a monetary policy tool. But other aspects of the mechanics of setting policy have also been of great interest. In this paper, I want to focus on two issues which go to the heart of central banking: (i)  The first concerns how the Bank should seek to implement the Monetary Policy Committee’s (MPC) decisions on the official interest rate (known as Bank Rate), so as to best deliver a flat money market yield curve between one MPC decision and the next. (ii)  The second is about how best to provide liquidity insurance to the banking system as a whole, while also encouraging banks to manage their day-to-day liquidity needs, and subject to minimising the credit risk taken on the Bank’s balance sheet.
Prudential Regulation Authority (2020), Supervisory Statement 2/16: The Prudential Regulation of Credit Unions – https://www.bankofengland.co.uk/prudential-regulation/publication/2016/the-prudential-regulation-of-credit-unions-ss 7  5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  I mentioned earlier the scale of ring-fencing in the UK banking sector. As would be expected from such a significant change to the UK’s financial landscape, we have seen some wider impacts, in particular in the nature of competition for mortgages and the compression of lending margins in this market. Sam Woods mentioned in his speech to the Building Societies Association in May last year8 that mortgage risk-weights for large firms using internal models have been declining significantly over the last decade. And the average modelled mortgage risk-weight in the UK is lower than in many other jurisdictions. We have therefore been reviewing the implications of this, with an eye both to the safety and soundness of the larger firms using IRB models for mortgages, and to the competitive impact on other mortgage lenders using standardised risk weights. Our review includes the desirability of mortgage risk weight floors. And it is relevant to note in this context that others have already gone down this path – both Finland and Sweden have implemented portfolio floors at 15% and 25% respectively. Our hope is that in combination with other measures, including stress testing and the refined Pillar 2A approach I mentioned earlier, we might reduce unwarranted benefits from internal models.

Different parts of the climb will be more relevant to different banks at different stages of their journey, and indeed to different business models and sectors. New subsidiaries of international firms may be able to take a path well-trodden by their Group, for example. (When I say ‘bank’ I am of course speaking loosely as we regulate banks – both UK based and the UK operations of those based overseas – building societies and credit unions.) Whatever the firm, an important part of the financial sector’s resilience is its ability to grow safely, and to respond to and to recover from stress. To support that, the regulator needs to be clear in setting out what is expected so that each bank can make business plans for when things go well and contingency plans for when things go wrong. And banks need to be able to do so safe in the knowledge that the regulatory path up the mountain is clearly mapped out, and that there is a way back onto the path – or indeed off the mountain – should they stumble. 5  The PRA has authorised 50 new entities in total since its creation in 2013, including subsidiaries and branches of overseas banks and entities established as part of ring-fencing.
Stability on the playing field was restored, and Hong Kong remains an open market, and, we believe, like the Rugby Sevens, attractive to participants from all over the world who are keen to play a fair game. 22. We have been taking another look at the rules of the market to ensure that its free workings receive the best safeguards possible. The reforms include the currency board measures, now in place, and the proposed reorganisation of the securities and futures markets that I have already mentioned. It has to be stressed, however, that there is a limit to what can  BIS Review 35/1999  6  be done locally in an international financial system that still lacks international forms of regulation. There is consensus that some international action is now needed to build a global financial architecture that can cope with volatile fund flows more effectively than can individual jurisdictions on their own. Various international agencies and forums have been grappling over the last six months with this issue, and Hong Kong, with its direct experience of speculative attacks, has been pushing as hard as it can for an internationally backed and non-intrusive system of disclosure and indirect regulation of cross-border fund flows.

I shall come to this episode later on. But first I should like to go a little more deeply into the characteristics of international capital flows. I shall then discuss the implications, practical and philosophical, that they have for free and open markets, which collectively make up an increasingly seamless international financial system, but which continue to rely largely on their own limited resources when they encounter the problems that this system throws up. International capital flows 4. Like wind currents and weather patterns, international capital flows carry with them a mixture of benefits and risks. Let me try briefly to pin down what makes them so powerful and so protean in their effects on the international financial landscape. I find it helpful, as a mnemonic, to think of their main characteristics in terms of what I shall refer to as the six ‘V’s: Virtue, Volume, Variety, Velocity, Volatility, and Viciousness. 5. By Virtue, I mean simply that international capital flows, by promoting an efficient and balanced use of financial resources, bring enormous benefits throughout the world. Over the past few decades they have been of crucial importance in developing new economies and revitalising old ones. When they work smoothly, international capital flows help to relieve shortages of capital in previously segmented markets. They provide a competitive environment that encourages innovation. And, by affording better returns to investors, they help to put spare capital to the best possible use.