samchain/econo-pairs-v1 huggingface dataset:
The prudential apparatus has worked in the past on the presumption that all movements in asset prices were based on fundamentals. The burden of the proof was on those who thought that something was going wrong. And, of course, it is impossible to prove the existence of a bubble until it is too late. And, at least in the initial phase of a bubble, there is no lack of rational explanations for observed movements in asset prices. It may be useful, in a macroprudential perspective, to consider some rebalancing in the burden of the proof. Significant and lasting departures from past levels or trends in key asset prices, risk premia or credit aggregates should systematically trigger a macroprudential review, with the implicit assumption that a bubble may be occurring unless proved otherwise. This seems to me justified when looking at the current social costs of previous hesitation. This is also a rational course of action. Bubbles develop because investors have an incentive to ignore the "tail risk" that the bubble may burst. Where does this incentive come from? Bubbles are mostly financed by credit, which makes it possible for investors to shift most of the risk to lenders, while keeping most of the profits for themselves (especially when those profits are booked, and distributed, in real time). This asymmetry in incentives is extremely difficult to eliminate ex ante.

But in the meantime I thought it might be worth us raising our sights a little and having a look at some of the regulatory issues that lie on the other side of the bridge: strong and simple, leverage, MREL and mortgage floors. Strong and Simple I’ll start with strong and simple. Avid followers of my speeches – of which I am regularly assured there are at least three across the country, one of whom is Robin – might recall that in November last year I gave a speech titled ‘Strong and Simple’. Indeed, it turns out that Robin is such an avid reader of my speeches that he has themed this entire conference day as ‘Strong and Simple’! I’m not quite sure what to make of that but I took the hint about what he hoped I’d cover. Let me first remind you that we have already made a significant down-payment in this area. Credit union attendees here today will know that in 2019 we implemented a radical simplification of credit union capital requirements. This aimed to remove barriers to growth while delivering greater resilience for smaller credit unions. It was an example of how regulatory simplification can promote both our primary objective of safety and soundness, as well as our secondary competition objective. Having left the EU and acquired more regulatory flexibility, we have now turned our attention to a simpler prudential framework for the next layer up of our deposit-takers – small banks and building societies.
The Basel Committee has proposed several reforms to minimise the risk of failure of global systemically important banks (“G-SIBs”), and to minimise the impact if any of them should fail. It is also recognised that some banks are systemically important within their own domestic markets even if they are not internationally active to the same extent as the G-SIBs. The failure of these domestic systemically important banks (“D-SIBs”) can have a major impact on an economy, and indeed unpredictable consequences for a broader region. Bankia for example, is not a G-SIB. The Basel Committee has recommended higher loss absorbency requirements for G-SIBs, and is studying an appropriate regulatory framework for D-SIBs. MAS is very much part of that discussion. However, in order to keep to the spirit and intent of the new measures, sensible judgement will be the key to implementing the new rules. Sensible implementation requires national regulators to take into account the impact of their actions on economic growth and international finance even as they exercise national discretion to address prudential issues in their banking system. There are two risks of a broader nature that we have to keep clearly in focus in international discussions, so that what we do now to strengthen our respective national systems does not lead to new problems and vulnerabilities internationally, further down the road. First, we have to ensure that the cumulation of enhanced capital and other requirements on global banks do not impede them from playing their critical roles in global finance.

Deleveraging by some international banks is leading to a pull-back into home markets. But some regulatory responses, not just market responses, may reinforce this pull-back, by restricting the flow of capital and liquidity outside home markets. Not only will this ring-fencing of national systems weaken international banking and trade, it may introduce new risks to financial stability when global banks are not able to deploy liquidity from one part of the banking group to other parts in need. Better international co-ordination in the implementation of rules is therefore needed to ensure that they serve their intended national objectives without weakening the global system as a whole and introducing new vulnerabilities. A sound financial system anchored by a core of strong local banks Just as we derive lessons from troubled banking systems, it is worth looking too at those that have not run into problems. It is notable that among the jurisdictions with systemically important financial centres, Canada, Australia, Hong Kong, and Singapore have held up well during the global financial crisis. A little remarkably, the top ten banks in Bloomberg’s latest annual ranking of the world’s strongest banks included four Canadian banks, the three Singapore local banks and two Hong Kong banks. There is no room for complacency – the financial crisis has shown how volatile financial markets can be and the speed with which contagion can spread. Banks have to be constantly vigilant against the build up of risks and maintain strong buffers against contingencies.
Peter Praet: The financial cycle and real convergence in the euro area Speech by Mr Peter Praet, Member of the Executive Board of the European Central Bank, at the Annual Hyman P. Minsky Conference on the State of the US and World Economies, Washington DC, 10 April 2014. *  *  *  Ladies and gentlemen1 Thank you for inviting me to address this conference. The latest data confirm that the euro area on aggregate is proceeding slowly along the path of economic recovery. Yet, a key issue that faces policymakers today, and that will continue to face them for several years to come, is how to deal with persistent divergence between national economies. Some euro area countries are experiencing steady growth, while in others growth remains anaemic. Some have unemployment rates under 5%, while in others unemployment exceeds 25%. In the euro area, which is a monetary union but not a formal political union, there are risks if such divergences remain unaddressed. Without fiscal equalisation mechanisms, real economic convergence is important to gradually reduce cross-country income gaps, and this in turn ensures the economic and social cohesion of the single currency. This issue of real convergence is what I would like to focus on in my remarks today – in particular, why the first decade of Economic and Monetary Union (EMU) failed to produce real convergence, and how the euro area can produce a sustainable convergence process going forward. My main argument is as follows.

Anita Angelovska Bezhoska: Payments in the digital era - inside out Speech by Ms Anita Angelovska Bezhoska, Governor of the National Bank of the Republic of North Macedonia, at the 13th Conference on Payments and Market Infrastructures, jointly organised by the National Bank of North Macedonia and the Netherlands Bank, Ohrid (digitally), 9 December 2021. * * * Dear Governor Knot, Minister Besimi, Dear speakers and participants It is my great pleasure to welcome you to our traditional conference on Payments in the Digital Era: Inside Out, hosted by our central bank together with the Dutch Central Bank, for which I express my deep gratitude to governor Knot and his colleagues. Our lives are becoming increasingly digital as a result of the proliferation of new technologies that transform public and private services making them more convenient and accessible to consumers. As our lives have gone digital, so have our payments. The digitalisation of consumer payment behaviour, which has been going on for years, has been accelerated by the pandemics that shifted it in a higher gear. Globally, last year cash payments declined by 16%, while the number of non-cash transactions increased by 6%. The pandemics has particularly accelerated the shift towards real time/instant payments that grew by 40%. In the euro area, according to the ECB survey on payment attitudes (2020)1, 40% of the respondents stated that since the onset of the pandemic they have used less cash and more cards (contactless in particular).
At the same time, the rate of the ruble remains floating, and continues to be influenced by market factors. However the impact of operations conducted on the nominal exchange rate is very limited, as the volume of monthly currency purchases will not exceed the volume of additional monthly budget oil and gas revenue from the excess of the actual oil price levels that are budgeted. I would also like to point out that the short-term inflation risks associated with the Ministry of Finance starting to make foreign currency purchases, evaluated by the Bank of Russia in its decision-making processes at the start of the year, have not been realised. Clarity is extremely important for monetary policy, not only in relation to the budget, but also to changes in the tax system. Now both a tax manoeuvre and other taxation innovations are under discussion. And in our view during such discussions it is very important to take into consideration the possible impact on inflation and inflationary effects, and to make informed decisions on this basis. We hope that this will also be carried out by the Ministry of Finance and the government, in collaboration with the Central Bank. We also are in support of the project – long under discussion – for the issuing of OFZ securities to the population.

And we hope that such cooperation will continue into the future. I wish you all success. Thank you. 4/4  BIS central bankers' speeches
Cognisant of the important role this resource can play, it is noteworthy that African countries embarked on financing economic development using $ billion held by domestic pension funds in 2007 in an effort to reduce reliance on foreign aid and foreign direct investment. 3 The report indicates that pension funds in South Africa, Ghana and Nigeria have already invested around $ million to fund pan-African infrastructure projects. In Zambia, a study by FinMark Trust in 2007 indicated that pension and provident funds are a major potential source of capital. As regards the total amount of funds available in pension funds, the capacity of public and private sector funds is estimated to be greater than K2.5 trillion (about $ million). This is a considerable amount of resources which could be used in infrastructure development and other economic activity without resorting to expensive external financing from international financial institutions. Currently, most pension funds in Zambia make short-term investments in highly liquid securities when they have the potential to do much more. It is imperative upon African Governments with the collaboration of cooperating partners to devote as much attention and energy to domestic savings mobilisation for investment purposes. In Zambia, for example, part of the reform process in the financial sector has been to establish investment guidelines for the public pension funds and the aspect of investment in infrastructure and other economic activity can be part of the guidelines to enhance the use of domestically generated savings in financing development in Africa.

For instance, in 2007 total foreign reserves held by African countries amounted to $ billion translating into an average of 9.2 months of import cover for each country. In the same year the African Development Bank (AfDB) raised funding from international capital markets amounting to UA724 million $ million) at a weighted average cost of 6-month US Dollar LIBOR minus 32 basis points. 2 The amount raised by the AfDB accounted for a mere 0.3% of the total reserves for African countries as at 2007. Hence, an allocation of some of African countries’ foreign reserves to fund African development institutions in which most of the countries are members would greatly enhance  2  2  African Development Bank Annual Report, 2007. BIS Review 126/2009  the capacity of these institutions in the provision of development finance, thereby assist the continent’s development programmes and poverty reduction efforts. In summary, it is important for African countries to consider alternative ways of making use of foreign reserves in the financing of development using resources that are already available, including the direct use of foreign reserves in financing development and making available part of the reserves to African multilateral development institutions to augment the resources available in the financing of African development. (b)  Pension funds  African countries need stable sources of development finance and as long-term investment vehicles, pension funds seem intuitively to be one potentially good source of domestically generated financial resources.
1323; and Angelini E., A. Dieppe, B. Pierluigi (2013), Learning about wage and price mark-ups in euro area countries, ECB Working Paper No 1512. 14  See Gomes S., P. Jacquinot, M. Pisani (2010), The EAGLE. A model for policy analysis of macroeconomic interdependence in the euro area. ECB Working Paper No 1195. 6  BIS central bankers’ speeches  studies done for other countries.15 The simulations exclude the reforms that enhance total factor productivity, which I mentioned earlier. These would further add to the impact on GDP and employment. To conclude, Portugal can already count on key achievements in labour and product markets that were thought impossible only a few years ago. The support of its European partners has been and will remain instrumental in this process. Structural reforms always take time to have their full beneficial impact on the economy. Having entered the second half of the adjustment programme, these benefits should increasingly become tangible. I do not underestimate the pain that these changes inflict. But they are necessary in order to lay the foundations for robust and sustainable growth. Growth-oriented policies are no substitutes for fiscal and external adjustment: they are mutually reinforcing. If designed in a way that reduces rents and fights vested interests, they will not only improve the efficiency of the adjustment process but also its equity, to the benefit of the poorest, the youngest, and of future generations. They will support medium to long-term growth and therefore employment and fiscal sustainability.

In countries where the banking sector has experienced large balance sheet shocks related to deteriorating sovereign debt, access to bank credit has tightened substantially. Elevated risk premia in the stressed countries have in turn had repercussions on access to finance, in particular for SMEs. In contrast, large corporations can resort to corporate debt instead of bank loans, especially during financial crises, or to foreign loans instead of domestic loans in the case of large multinationals, as happened, for instance, in Ireland.12 SMEs employ around three-quarters of the euro area’s workforce and they generate around 60% of its value added. Their restricted access to finance in a number of euro area countries is clearly a threat to economic recovery. A number of governments, including Portugal’s, are implementing measures to support the financing of SMEs. We see these measures together with the use of EU financial instruments (EIB and EU structural funds) as very important in unlocking access to funding and investment growth. The ECB has  9  See Blanchard O., D. Leigh (2012), Global Forecast Errors and Fiscal Multipliers, IMF Working Paper No 13/1. 10  See Roeger W., in ‘t Veld J.
Of particular concern here, are the arrangements for asset managers to delegate portfolio investment and risk management functions across borders to entities in other jurisdictions. This has become a central element of the asset manager business model and is now an international norm. The existing EU delegation regimes allow European investors to access investment opportunities around the world, as well as allowing foreign investors to add European exposure to their portfolios while maintaining the management of their total portfolio in another jurisdiction. It has very probably helped UCITS funds become a global investment brand. The pooling of asset management through delegation enables asset managers to benefit from economies of scale to meet cost pressures, delivering higher returns on investment. It allows investment firms to access global markets and the best available talent in terms of investment professionals in those markets for the benefit of all investors, regardless of where those markets and that expertise are based. The concentration of asset management activities in particular centres can enable specialisms to develop. For example, analysis suggests that UK-managed funds domiciled in the rest of Europe may be 21  These estimates have been made for the EEA given access rights operate across the EEA. Given the size of economies within the EEA but outside the EU, the estimates should hold for the EU. 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  more focused on non-European assets, such as emerging markets, when compared with such funds managed in other EU countries.

10  For example, foreign currency debt securities were at the heart of the Latin American debt crisis in the 1980s in which bond investors played a significant role in volatile capital flows and ultimately in sovereign crises. 11 Recent Bank research shows that during the 2013 ‘taper tantrum’ asset managers sold bonds as prices fell, perhaps exacerbating the episode. See Czech and Roberts-Sklar (2017). 12 Whilst price-based measures of liquidity in fixed-income markets, such as quoted bid-ask spreads, are in line with historical standards, volume-based measure have deteriorated. In US and UK government bond markets, turnover ratios have declined materially since pre-crisis. In corporate bond markets, average large trade sizes have fallen. US corporate bond dealer inventories are over six times less than before the pre-crisis period and Sterling and US corporate bond inventories have been steadily declining since 2011. 13 Bank of England Financial Stability Report, Box 2, December 2015 6  All speeches are available online at www.bankofengland.co.uk/speeches  6  It is also less clear now that other investors like pension funds and insurance companies would come in to stabilise a falling market in the way that they may have done in the past. A Bank of England-led study in 2014 found evidence that in some instances, insurance companies and pension funds might indeed act pro rather than counter-cyclically in a severe episode of stress, selling into a falling market.
With great efforts on the part of the authorities and banks involved, we have submitted the assessment of the bank portfolios to a unified assessment scheme. The asset quality review has given us a deeper insight into the banks’ 2  BIS central bankers’ speeches  procedures, thereby making it possible for us to check which differences between banks are justified and to ascertain where we need to probe critically. We will use the knowledge that we have obtained through the peer group review for other supervisory activities as of 4 November. Thus far, these processes have been carried out at the national level. We are now going to harmonise them throughout the euro area, thereby making it easier to compare the respective risk situations of banks, thus enabling us to target our supervisory activities better. Federal structure – central decision-making Critical voices have warned us in the past about losing sight of the diversity of the European banking sector and wanting to typify a “European” bank. I admit that, in the process of harmonising and centralising decision-making powers, there is always also a danger of seeing everything at par. The ECB is, however, protected from such developments by institutional barriers. As national supervisory authorities participate in the supervisory process, the ECB remains close to regional market and banking structures. Moreover, the ECB’s staff will take a keen look at the business models and risk profiles of each directly supervised bank.

The heads of Joint Supervisory Teams will come from a country other than that in which the institution it is supervising is established. “In concrete terms: the head supervisor for Deutsche Bank will be a French lady; BNP Paribas will be supervised by an Italian man.” *  *  *  Ladies and gentlemen, In precisely two months’ time, we will usher in a new era in the euro area. With the establishment of the Single Supervisory Mechanism (SSM) on 4 November 2014, the European Central Bank (ECB) will assume key competencies in the field of banking supervision. However, unlike the introduction of the euro banknotes and coins in 2002, this step towards further integration will not entail a major symbolic change that is tangible for all citizens. Nevertheless, the start of the SSM means progress, not only in European integration, but also in day-to-day supervisory work. The ECB – one of the world’s largest supervisors The ECB will take on the direct supervision of around 120 credit institutions and more than 80% of the aggregated balance sheet for the euro area banking sector. In absolute figures, this means a total of more than € trillion as per 30 June 2014. In addition, the ECB will be indirectly supervising the less significant institutions, of which there are just over 3,500. Here, we will shape supervision by setting binding supervisory standards. This will make the ECB one of the world’s largest supervisors.