samchain/econo-pairs-v1 huggingface dataset:
What I would like to do here is to share with you our views on the following three issues that have profound impact on the way in which the banking industry, including that in Hong Kong, should structure itself:    Universal Banking vs. Segregated Banking    Universal Banking vs. Narrow Banking    Branch vs. Subsidiary Operations. Universal banking vs. segregated banking 2. First let me talk about “universal banking”, which may mean different things to different people. By “universal banking” I refer to a business model in which banks are allowed to provide a wide range of banking and other financial services to their customers, whether they are mass retail, high net-worth, SMEs or large corporates. In this connection, it may be appropriate to regard a universal bank as a one-stop financial supermarket. 3. Hong Kong has a long tradition of this type of universal banking. Notwithstanding the experiences of the recent Global Financial Crisis and the ongoing debate and scepticism in some jurisdictions, we continue to see merit in the model of universal banking. Why? Let me explain. 4. First of all, universal banking in the form of a one-stop financial supermarket provides what the customers need to meet their rising demand for investments in a wide range of financial and wealth management products. These customers can enjoy the convenience of a one-stop service, ranging from simple products such as equities, unit trusts, insurance, gold etc. to the more complex derivative or structured products that meet their investment needs.

Recognizing this inherent risk, the HKMA, in seeking to nurture the universal banking model in Hong Kong, must continue with its long standing conservative supervisory approach with even greater emphasis on prudence under-pinned by proactive and forward looking supervision. 20. Ladies and gentlemen, this is a rather long speech and I thank you for your kind attention. Thank you! 4  BIS central bankers’ speeches
Table 3 Household debt  (real annual change, percent) 20022008 2007 (1) IV  2009 IV  2010 I  II  III  2011 I  IV  Contribution to growth (2)  Share in debt  Mortgage Bank Non-bank (3)  14.1 15.3 8.2  12.9 13.1 11.7  7.3 8.6 -0.5  7.7 9.2 -1.6  8.6 10.0 -1.0  9.0 10.4 -0.5  7.0 9.0 -6.0  7.6 9.3 -4.3  4.2 4.5 -0.3  55.8 49.3 6.3  Consumer Bank Non-bank Retail stores CCAF (4) Cooperatives Other (5)  17.9 16.0 20.7 27.6 19.9 25.2 13.5  3.9 -0.3 9.1 9.3 9.6 11.6 7.6  1.8 2.2 1.4 -7.9 8.3 5.6 6.7  2.3 2.7 1.9 -6.4 7.5 3.3 7.6  4.7 5.1 4.3 -1.2 6.9 9.5 6.8  5.8 7.5 3.8 3.6 1.3 5.2 5.2  8.1 8.6 7.6 11.9 2.9 1.9 8.8  9.5 11.8 6.8 10.4 6.2 0.8 6.1  4.2 2.8 1.4 0.7 0.3 0.0 0.4  44.5 24.3 20.2 7.0 4.4 2.6 6.3  Total  15.8  8.7  4.8  5.3  6.8  7.6  7.5  8.4  8.4  100.0  (1) Average. (2) Percentage points. (3) Includes securitized mortgage debt. (4) Clearance houses (family). (5) Includes new car loans, college debt and insurance companies. Sources: Central Bank of Chile based on information from SBIF, SuSeSo and SVS.

The third lesson is that equity market returns have been high despite periods of substantial equity market declines. Estimates of the future return on the GPFG are highly uncertain, but a lower equity allocation would have pulled down the fund’s expected return. The Ministry of Finance estimates an expected real rate of return on the GPFG of 3 percent. Underlying the decision to allocate 70 percent of the GPFG to equities is an acceptance of expected fluctuations in the fund’s return, in the short and longer term. The investment strategy has enjoyed broad support since the fund’s inception. By adhering to the strategy through turbulent periods, the GPFG achieved a return equivalent to NOK 4 300 billion at the end of the third quarter. Historical developments since 1900 and since the GPFG’s inception underpin the expectation of higher returns in equity markets than in fixed income markets over time. Broad diversification to reduce risk is a key element in the overall investment strategy. At the 3/6  BIS central bankers' speeches  beginning of 2018, the GPFG was invested in more than 9000 companies in 72 countries. An important insight from financial theory is that the expected return on an investment is not determined by the risk associated with the investment in isolation, but by that investment’s contribution to systematic risk in a portfolio. An investor cannot be expected to be paid for the extra risk of pursuing a narrow investment strategy.
He knows market risk. He worked on the trading floor,” Lannoo said. Lannoo and the shadow committee are critics of the accord, saying its overly complex nature may in fact heighten systemic threats by “capturing” regulators who would be required to take a more active role in banks' daily operations. Revolution in the making The new accord, now over five years in the making, represents a revolution for the banks who will adopt it. It leaves the first accord's simple dictates behind and offers a menu ranging from basic to complex. A second Basel Committee member, who also requested anonymity, said he had few doubts that the technocrat Caruana was the right choice for the job due to his expertise in such a complex field. “This is not new territory for Jaime,” he said. Indeed, some critics of the accord say a technocrat like Caruana is just who is needed to make sure that the byzantine draft is moulded into shape before being finalised by the end of this year. Caruana, a 51-year-old Valencian, studied telecommunications engineering and then qualified as a government economist. Those who have worked with him say he is a real technology fan, which given his studies is no surprise. The current controversy over the Basel reform is probably a source of discomfort for Caruana, who keeps himself to himself. “He is very simple and discreet, and shys away from limelight,” says a former colleague.

Øystein Olsen: The role of central banks – a Norwegian perspective Speech by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the Official Monetary and Financial Institutions Forum (OMFIF), London, 1 November 2016. * * * The charts can be found at the Central Bank of Norway’s website. INTRODUCTION Let me begin by thanking the OMFIF for the opportunity to speak to you today about the monetary policy regime in Norway. Like other central banks, the central bank of Norway is facing new challenges in a post-crisis environment of persistently low interest rates and uncertainty. Today I want to focus on how Norges Bank is responding to those challenges. Inflation targeting was formally introduced as a framework for monetary policy in Norway 15 years ago. As in other inflation-targeting countries, our inflation targeting regime has become more flexible over time. The operational target of monetary policy in Norway is annual consumer price inflation of close to 2.5% over time. However, according to the mandate, interest rate setting should seek to achieve a reasonable balance between inflation and capacity utilisation. Monetary policy should also be robust, taking uncertainty into account and seeking to avoid adverse outcomes. I will reurn to this topic in the following. The reasoning behind the policy rate decision taken by Norges Bank’s Executive Board is published in our Monetary Policy Report. The evolution of inflation targeting in Norway reflects the practical experience we have gained since it was introduced. The trade-offs have been challenging at times.
There is a further consideration that I have raised on previous occasions – one that would enhance the effectiveness of the intermediation role in our financial system, and address some of the funding gaps, resulting possibly in instances of market failures. Malta lacks a 4  BIS central bankers’ speeches  consistent supply of long term finance that would efficiently fund a project addressed to SME funding needs or to finance structural, economic, social and environmental policies in connection with the long term financing of priority projects. If we look at other countries, such as Germany and France, they managed to cater for SMEs as well as for other environmental and infrastructure investment through promotion or development banks. A development bank would contribute to economic growth by funding sectors and projects that are not catered for by commercial banks on their own. The Central Bank looks at such an initiative as a necessary diversification of our financial base. I understand that progress is being made on this initiative and I find this to be a very positive development. The road ahead Against a rapidly changing economic landscape, Malta needs to be attentive to take advantage of its flexibility and adaptability. In the past years, the Maltese economy went through significant structural change. Not only by diversifying into a number of new growth sectors such as aviation services, pharmaceuticals and internet related activity, but also by upgrading its investments in the traditional sectors.

This process of rationalization, which occurred only a few years before the start of the crisis in 2008, made the overall economy resilient and in a better position to weather adverse events in external markets. Post-2008 growth was enabled by the smooth entry into the Euro area, which coincided with the start of the crisis in 2008. The transition was facilitated by the fact that in the preceding decades, there was no recourse to monetary financing of government debt, generally no recourse to currency depreciation to offset internal competitiveness issues, while fiscal policies were in large part prudent. BIS central bankers’ speeches  1  Another consideration relates to the growth of new sectors which improved the capacity of the economy to offset downturns in external demand. Diversification is often more difficult to achieve in relatively small economies. However, the degree of diversification in the private sector in Malta is remarkable, and has resulted primarily from the growth of financial services, internet related services and aviation servicing, along with the reorientation of both the tourist sector and manufacturing. Although we have experienced higher GDP growth, we must be aware that some of our competitors are starting to benefit from the structural reforms and internal devaluation that they went through in response to the impact of the financial crisis on their economies. Chart 2 displays unit labour costs in the Euro area since 2002, distinguishing between the stressed economies and the relatively unstressed ones. The path of Malta’s ULC is displayed separately.
And output has risen in every single quarter since the middle of 1992, something that is true of no other G7 economy. Why were the 1990s so successful? And can that success continue? Four features of our economy lie behind this improved performance. First, the new monetary framework - based on an explicit target for inflation, a high degree of transparency, and, since 1997, independence of the Bank of England made it clear to everyone that monetary policy was, and would continue to be, targeted on maintaining low and stable inflation. Second, a substantial fiscal consolidation turned a deficit of 8% of GDP in 1993 into a sustainable position for the public finances based on a set of clear rules for government debt. Third, a continuing programme of supply-side reforms, over a period of 20 years, made it possible to reduce unemployment without generating higher inflation. Fourth, although the unexpected twists and turns of the world economy did pose real challenges to monetary policy, especially in the latter half of the decade, those shocks tended to average out over time rather than cumulate in either an upward or downward spiral. In other words, the economic surprises alternated between good one year and bad the next, rather than adding up to “one damn thing after another”. In that sense, Lady Luck smiled on us. Of course, we were not alone in enjoying the 1990s.

As the financial system changes shape, it seems plausible to think that further change could be necessary. If so, that change would benefit from further research on the costs and benefits of the extended regulatory and central bank safety net. (f) The Macroprudential Policy Framework: As a still-fledgling framework, there are a wide range of questions still surrounding the macroprudential framework. There is no settled, practical approach to defining the breadth of objectives of a macroprudential regime. Should the potential for aggregate demand externalities associated with a debt overhang in the household sector, for instance, fall under the purview of a macroprudential authority? Nor, in the main, is there any settled approach to defining the appropriate set of macroprudential instruments, whether for banks or especially for non-banks, or the optimal strategy for their use to address emerging vulnerabilities. If household debt externalities are within scope, is it better to deal with this risk by restricting mortgage lending directly via loan to income or loan to value limits, or by adding a macroprudential overlay to risk weights on mortgages (Turner (2017))? This lack of a settled approach has some benefits, in making for a diverse range of cross-country experiences. This is giving rise to a period of “learning by doing” among regulators. It does, however, come at some cost. A regime without especially well-defined objectives is likely to suffer greater problems of time-inconsistency. It may also increase uncertainty among outside participants about the likely regulatory policy reaction function.
The European Central Bank, indeed, has always been very clear that its monetary policy decisions are not automatically and exclusively driven by its inflation forecasts. In particular, a close monitoring of money and credit trends – whose impact does not necessarily manifest in the inflation forecast at the two years horizon, but instead informs the assessment of inflation risks at the medium-tolong-term frequencies – plays an important role within its policy process. A key rationale for including a monetary analysis within the Euro area’s monetary policy framework has been to “cross-check” the signals coming from the so-called “economic analysis”, which typically pertains to the short-to-medium term, with the longer-term information coming from the evolution of monetary and credit aggregates. The financial crisis has led to a reassessment of the merits of the Euro area’s monetary policy framework, and its reliance on a thorough and broad-based analysis of the evolution of monetary and credit aggregates. As I previously discussed, indeed, long-term historical evidence shows that periods of output and inflation stability have often been associated with the slow but relentless build-up of financial imbalances. A key problem for the traditional position of just focusing on the inflation forecast at (say) the two-year horizon is that typically these bubbles burst only after having built up over several years, but meanwhile, most of the time they do not appreciably impact upon inflation projections.

The common interest is to keep the Basle standards at a level sufficient to ensure financial soundness, a minimum above which banks will choose to operate. To achieve this, we must fashion a set of standards that does not greatly distort incentives. Supervisors acknowledge that the current regulations and ratios need to be updated to be more meaningful, given the full range of risks banks face today. Supervisors are always challenged to keep pace with financial innovation and improvements in risk management practices, and this suggests that we will need a frequent monitoring and maintenance program for the present and future Accord. In closing, I would like to summarize the key supervisory objectives that we are mindful of as we look to revise the Accord and enhance the overall capital framework. Our first objective, of course, is to promote the safety and soundness of the financial system. Our second is to enhance competitive equality, while allowing for differences among banks based on  5  BIS Review 32/1999  differences in their risk profiles. These were the original goals of the Accord. Our third is to develop standards that are fundamentally applicable to banks of varying levels of complexity and sophistication, including those in emerging market nations. In developing this capital framework over the next year, we plan to consult closely with the financial and supervisory community and communicate openly about our progress. By yearend, we hope to have made great strides in furthering our objectives.
We do want to see firms invest in ways that support the wider economy, including to manage the risks arising from climate change. However when assessing capital requirements, and here I am thinking of ‘green’ assets and ‘productive finance’, we must as a prudential regulator consider the risks in individual assets. A departure from such an approach reduces the resilience of firms and potentially the wider financial system. However, as Sam also said we are open to removing unnecessary barriers. A significant constraint currently is the binary nature of MA approvals, and in the course of supervisory engagement firms have raised the risk of the loss of the MA where breaches have not been rectified within two months. As part of considering the responses to HMTs Call for Evidence on Solvency II reform, we will review the MA approvals process. And, whether changes there need to be balanced by stronger post-approval supervision to ensure the MA framework continues to work as intended. 3. Supervisory analysis on sizing the MA Once assets are in the MA portfolio, Solvency II sets out the mechanism for deriving the fundamental spread (FS), which reflects an allowance for risks retained by insurers. Deducting the fundamental spread from the credit spread, gives the quantum of the MA [Chart 7].

The theoretical foundations he developed have since been applied to solve puzzles such as why the leaflets on a pinecone follow the Fibonacci sequence and to explain the pattern of animals’ coats from cats to zebras. This work of a lifetime helped lay a cornerstone in theoretical biology. It was, however, the workings of the human mind that inspired Turing’s greatest contributions to human knowledge and our lived experience. Turing answered a fundamental question: whether there is a definitive method that could be applied by machine to solve all mathematical problems. Once again, Turing’s genius lay in his ability to think across boundaries, applying mathematical logic to a problem others had viewed as one of physics. The answer he supplied – captured in his 1936 paper On Computable Numbers5 – provides the very foundations of computer science. Turing envisaged a machine that could be turned to any well-defined task by supplying it with the appropriate program. The eponymous Universal Turing Machine, fed instructions through symbols on an infinite piece of tape, was an abstract concept in his time, but it’s something that recognisably embodies the core principles of a modern computer and the logic of binary code. Moreover, his insight that only computable functions can be calculated is vital to software design. In recognition of the importance of this work, Turing was elected a Fellow of the Royal Society in 1951. Enough for two lifetimes. Cryptographic History of Work on the German Naval Enigma, by C H O'D Alexander, a colleague of Turing’s at Bletchley.
What I confess I did not anticipate at that time was the difficult international environment in which we've had to operate over the past four years - including both the global economic slowdown and the persistent strength of sterling against the surprisingly weak euro. It must be that external environment - which has clearly had a dampening effect on demand and output in this country - that is, for us, the frost that burns. 2  BIS Review 64/2002  There was nothing that we could do ourselves directly to address the causes of these problems which had their origins abroad. What we could do - and indeed have done - is to offset as best we could the effects of the external frost by turning up the domestic heat in our economy, cutting interest rates to their lowest level for 40 years - which is where they've been for the past 12 months - consciously encouraging consumer spending on the back of rising house prices and a rapid build up of household debt. So although we've been reasonably successful in maintaining stability in the UK economy as a whole, we've had to live with a painful imbalance within the economy - between the internationally exposed sectors, including much of manufacturing, which have been having a torrid time, and the domestically-oriented sectors which have been doing relatively well. Essentially, faced with the external frost we've turned up the domestic heat - without that we'd all have felt cold! But this approach is not without risks.

In our latest assessment this was based on the belief that inflation was somewhat higher than now proves to be the case. But monetary policy does not have such a degree of precision that it can control inflation to a tenth of a degree. And, moreover, inflation in July was high and far above the inflation target even after the downward revision of the figure. In the discussion ahead of the interest rate decision, I and other members of the Executive Board highlighted the weak labour market indicators which uniformly pointed to a weaker development of employment, which is also in line with the Riksbank's forecast. After the decision, the Labour Force Survey for August has been presented. This shows that employment increased by a moderate 0.5 per cent on a 12-month basis, which is marginally lower than the Riksbank's forecast. At our September meeting, we had access to the initial version of the National Accounts for the second quarter. These showed that GDP did not increase at all compared to the previous quarter and increased by only 0.7 per cent on a calendar-adjusted12-month basis. Now that the revised version of the National Accounts has been published, we can see that growth in the first two quarters has been marginally adjusted downwards in both cases. This means that growth in the first quarter was 2 per cent on a 12-month basis and with calendar effects taken into account. The corresponding figure for the second quarter was 0.6 per cent.