samchain/econo-pairs-v1 huggingface dataset:
The performance of foreign-owned firms captures some of the wider benefits of cross-border flows (foreign capital, ideas and people). The productivity differences with domestically-owned firms are even more 30  striking. Productivity is around twice as high in foreign-owned firms. These stylised facts suggest external openness is an important driver of productivity. Whether it can explain the UK’s productivity gaps is, however, more questionable. The UK in fact scores highly on all the external openness metrics. Given that degree of openness, its productivity under-performs other countries; it sits beneath the regression line of best-fit (Charts 8-11). Openness cannot, on the face of it, easily explain the UK’s productivity gap with other countries. Nor can it explain the UK’s productivity slump since the crisis. Over recent years, most measures of the UK’s external openness have been increasing, not decreasing. Cross-border flows of people, direct investment and trade into the UK have risen to their highest levels in a generation in the past few years, while flows of information have risen to their highest-ever levels, at the same time productivity has flat-lined. 26  For example, Feyrer (2009a) and Feyrer (2009b). Baddeley (2006). 28 The indices of openness come courtesy of the McKinsey’s Global Institute as shown in Manyika et al (2016). 29 For example, Frankel and Romer (1999), Feyrer (2009a) and Feyrer (2009b). 30 Batten and Jacobs (2017). 27  8  All speeches are available online at www.bankofengland.co.uk/speeches  8  A similar openness puzzle is operating at a global level.

Chart 11: Overall openness and productivity GDP per hour worked 100 90 80 70 60 50 40 R² = 0.4635  30 20 10 0  400  300  200  100  0  Total MGI Connectedness Ranking Sources: McKinsey Global Institute, OECD and Bank calculations. Notes: Data for 2014. GDP per hour worked in $ at constant prices, in 2010 PPPs. UK marked in red. 34  All speeches are available online at www.bankofengland.co.uk/speeches  34  Chart 12: Productivity for exporting and non-exporting firms Density 0.018 Non exporter  0.016  Exporter  0.014 0.012 0.01 0.008 0.006 0.004 0.002 0 -0.002  -50  0  50  100  150  200  250  300  GVA per worker, £ Sources: ONS Research Databases and Bank calculations. Notes: Kernel density estimate; real GVA per worker for 2013 and 2014. Chart 13: Productivity for foreign-owned and domestically-owned firms Density 0.016 Domestic  0.014  Foreign 0.012 0.01 0.008 0.006 0.004 0.002 0 -0.002 -50  0  50  100  150  200  250  300  350  400  GVA per worker, £ Sources: ONS Research Databases and Bank calculations. Notes: Kernel density estimate; real GVA per worker for 2013 and 2014.
And the state has underwritten any losing streak. Clearer practical examples of a policy timeconsistency problem are unlikely to exist. 4. Resolving the time-inconsistency problem  In addressing this time-consistency problem, two broad approaches are possible: redesign of the financial system to reduce the scale of insurable risks; and redesign of the social safety net to make it less susceptible to gaming. (a)  Redesigning the financial system  What options best tackle excessive risk-taking incentives? A number suggest themselves, some modest, others more radical. •  Introducing leverage limits: One simple means of altering the rules of the asymmetric game between banks and the state is to place heavier restrictions on leverage. European banks were not subject to a regulatory leverage ratio in the runup to crisis. They exploited that loophole. Closing it would bring about a clockwise rotation in banks’ payoff schedule, lowering the beta of banks’ equity returns and reducing risk-taking incentives. This is an easy win. Simple leverage ratios already operate in countries such as the US and Canada. They appear to have helped slow debt-fuelled balance sheet inflation. The Basel Committee is now seeking to introduce leverage ratios internationally. To be effective, it is important that leverage rules bite. They need to be robust to the seductive, but ultimately siren, voices claiming this time is different. That suggests they should operate as a regulatory rule (Pillar I), rather than being left to supervisory discretion (Pillar II). It is important, too, that leverage limits are set at the right level.

Trading assets are marked to market prices, thereby increasing their sensitivity to aggregate market fluctuations (beta). To illustrate, assume that a bank holds 90% of its assets in the banking book (with a beta of zero) and the remainder in the trading book (with a beta of one). That gives an asset beta of 0.1 and an equity beta of unity (Figure 1). But if the size of the trading book is doubled to 20% of assets, this doubles the equity beta of the bank (Figure 2). Chart 8 plots a cross-section of global banks’ trading assets as a fraction of their total assets against their leverage. It suggests that efforts to expand balance sheets through higher leverage were focussed on trading assets. In the first part of this  13  Barro (1979). BIS Review 139/2009  5  decade, rising asset prices delivered mark-to-market gains on banks’ expanding trading assets. This boosted their profitability and returns on equity. As long as asset prices rose, this created an Alice in Wonderland world in which everybody had won and all had prizes. But when asset prices fell, reality returned. The same institutions suffered enormous mark-to-market trading book looses. Across global banks, trading book losses since the start of the crisis total over $ In a number of cases, these losses necessitated state support. Trading book expansion also allowed banks to import the upside and export some of the downside.
The Riksbank being able to stand for strength and security is crucial if we are to successfully meet present and future challenges. The Riksbank has a statutory independence to be able to take decisive action in difficult monetary policy situations and to be able to act effectively in the event of a crisis. It is important to safeguard this independence. But being alone is not strong. And this constitutional independence does not prevent us from actively working together with other authorities in Sweden and with international organisations. Cooperation is necessary not least to tackle climate change. Emissions are local but the effects are global. Other policy areas have more effective tools than central banks to reduce carbon emissions and limit further global warming. I believe that the analysis performed indicates that a global price on carbon should be at the top of the list of priorities in global negotiations. However, this does not stop the Riksbank, and other central banks, from using the means within our mandate to help. Today, I have discussed what the Riksbank is doing and will do in the years ahead in this area: we will continue to research and analyse the effects of climate change  34  Green bonds can be government bonds, intergovernmental bonds, municipal bonds and corporate bonds. Globally speaking, the share of green bonds as a proportion of the total stock is negligible. However, Sweden has been a leading country in green bonds.

Moreover, risk related to borrowers has diminished as the economic recovery has progressed and debt levels have fallen; indeed, at the end of 2015, total private sector debt was down to around the level last seen in 2000. Financial system risk is assessed four times a year by the Systemic Risk Committee and the Financial Stability Council, greatly increasing the monitoring that takes place. The Central Bank publishes its Financial Stability report twice a year, with the next issue forthcoming on 20 April. I will not expand further on this here. BIS central bankers’ speeches  5  However, I think it appropriate to mention four issues that, in the near future, could have a major impact on long-term developments in the financial system. The first is technology, which is advancing rapidly worldwide. In addition, we are engaged in renewing many of Iceland’s key financial market infrastructure elements and, in doing so, adopting new technology. This could create excellent opportunities to enhance security and reduce costs, including through joint utilisation of infrastructure elements, while increasing competition in areas where economies of scale are less in evidence. The Bank’s Financial Market Infrastructure report, to be published later this year, will discuss this in greater detail. The next is culture and ethics. In international discussion, it is widely emphasised that postcrisis reform will not achieve its goals in the long run unless it involves an improvement over the pre-crisis situation. It seems to me that considerable improvements have already been made here in Iceland.
However, with Italy the epicentre of European trade, you could still run a proper business facilitating transactions only. Later, the House of Medici and its peers took banking as well as bookkeeping to the next level. Around the same time, the famous Knights Templar were also chipping in with innovations in payments and banking. They provided services for long-distance payments, one of them a system akin to international cheques. Europeans involved in the Crusades were faced with a long and dangerous journey to the Holy Land, where carrying valuables was risky. Instead, the Knight Templars offered their clients to deposit their belongings at home against a letter. This - the cheque, basically - could be presented to other Templars upon arrival to ‘withdraw funds’. The Templars also provided loans to various nobles and monarchs. The most heavily in debt was King Philip of France, who was one day denied further borrowing to finance the Hundred Years War against the English. Infuriated, and jealous of the wealth of the order, the king accused the Templars of heresy and ordered their arrest. Ultimately, this led to the latter’s downfall, with many Templars being burnt at the stake. Although we sometimes disagree, we can all appreciate that today’s public-private sector relationship is more stable and civilised. Despite new banking services, the problems with the coin system were not resolved. In 1609, in Amsterdam, a trade centre with many currencies in circulation, the city council decided enough was enough and set up Amsterdamsche Wisselbank.

My congratulations go to the four winners, as well as to the other participants for some brilliant ideas in response to the four problem statements. I am truly impressed by all the solutions, and I hope to see our banking community benefit from similar solutions in the near future. Maybe the HKMA should also explore the use of some of those solutions as well. 15. Apart from the Global Regtech Challenge, the HKMA has launched multiple initiatives to grow Regtech in Hong Kong. Some of those include the Fintech Supervisory Sandbox, the Fintech Career Accelerator Scheme, and a Regtech skills framework that we will be releasing in the coming months. 16. Industry associations also play a key role in promoting Regtech adoption in Hong Kong, because they help foster greater industry collaboration and communication. It was good to hear in our ‘Path Forward’ panel that following the publication of our Regtech white paper in November last year, there has been a higher level of engagement with Regtech-related associations in Hong Kong. We will continue to maintain close dialogue with the industry associations. Working together to achieve our Regtech 2025 vision 17. Looking ahead, we expect the demand for Regtech solutions to continue to grow. The HKMA will provide more guidance to the industry by issuing the Regtech Adoption Practice Guides, developing a Regtech skills framework, and building a Regtech knowledge hub. 18. But we will only achieve our Regtech 2025 vision if the Regtech ecosystem works together towards the same goal.
Financial markets continue to highlight downward liquidity premiums and inflation. The interbank interest rates have further declined, remaining close to the key interest rate and displaying low volatility. A more moderate government demand for funding and the shortterm interest rate cut in the money market have been reflected in an overall decline in the yields on primary market government securities. Our assessments on economic outlook suggest a moderate economic growth for the remainder of the year and for the next year. Boosted uncertainties surrounding the global economy make their impact on current and expected developments of the Albanian economy. In particular, the situation of our trading partners is expected to be reflected in a sluggish foreign demand for Albanian goods and services. Also, the need for maintaining budget deficit and public debt parameters is expected to materialize in the public sector’s lower contribution to aggregate demand over the period ahead. Under these conditions, the performance of economic activity at home will be determined substantially by the extent and speed of recovery of the private sector demand – consumption and private investments. Despite the positive growth, aggregate demand is expected to remain below the potential of the Albanian economy, determining the incomplete capacity utilization in the economy and generating demand-driven low inflationary pressures. Considering the materialization of these expectations and projections for further weakening of inflationary pressures from global conjuncture, annual inflation is expected to be within the Bank of Albania’s target in the medium run.

To protect against risks that banks think are low but are in fact not, a global definition of a simple leverage ratio has been agreed. In the UK, the Bank of England has just recommended powers to set a simple leverage ratio for domestically-regulated banks, building societies and investment firms. This will enhance the resilience of banks against risks that are hard to model.4 And it will ensure off-balance sheet exposures are properly capitalised. 3  Table 2 shows that the risk weighting of trading book assets has more than doubled. Despite accounting for only 5% of overall risk weighted assets, trading assets contributed more than one third of the overall increase in RWAs resulting from new regulatory requirements. Banks have responded by shrinking trading books. Chart 2 shows that across all advanced economy SIFIs, the share of such assets on bank balance sheets has almost halved. 4  Chart 2 shows that, for more than a decade before the crisis, average risk weights declined and, as they did so, banks increased leverage. This trend was central to the erosion of confidence in risk weightings. Since the crisis, average risk  BIS central bankers’ speeches  3  Retention and capital requirements for securitisations now have more closely aligned incentives between originators and investors. New requirements for money market funds have closed the gap between retail investors’ perceptions and their exposures. International standards are agreed to capture properly and limit off-balance sheet exposures.
The PRA survey finds that a majority of banks now see them as financial risks – rather than just a reputational or corporate social responsibility issues. As such, oversight of climate-related risks and overall responsibility for setting the climate risk strategy, targets and risk appetite has been elevated to Board level. Banks have begun considering the most immediate physical risks relevant to their business models – from the exposure of mortgage books to flood risk or, for globally active banks, the impact of extreme weather events on country risk. And they have begun to assess exposures to transition risks where government policy is already pulling forward the adjustment. This includes exposures to carbon-intensive sectors, consumer loans secured on diesel vehicles and buy-to-let lending given new efficiency requirements. But many banks have indicated that there is some way to go to identify and measure climaterelated risks more comprehensively, including given the need to improve data and expertise. This includes developing their approaches to stress testing for climate-risks as well as, over longer horizons, more dynamic scenario analysis. It is clear, however, that the TCFD framework is helping, including to identify metrics and promote use of climate-related scenario analysis. 6  Bank Underground post, forthcoming, See PRA (2015), The Impact of Climate Change on the UK Insurance Sector, https://www.bankofengland.co.uk/prudentialregulation/publication/2015/the-impact-of-climate-change-on-the-uk-insurance-sector 7  7  All speeches are available online at www.bankofengland.co.uk/speeches  7  Fourth, financial policymakers.

The fourth lesson is on capital flows: Deal with the inflows if you want to avoid the risk of having to introduce comprehensive capital controls on outflows, which can work as in Iceland but have increasingly negative side effects on the economy. The measures that can be taken to deal with the inflows include adopting correctly aligned macroeconomic and macroprudential policies, leaning into the wind by buying part of the inflows into foreign exchange reserves, and even in extreme cases, deploying selective capital inflow management tools. The final lesson from all of this is that if we are going to reap the benefits of financial globalisation, we must make it safer. 4  BIS central bankers’ speeches  BIS central bankers’ speeches  5
Data is incomplete, theory patchy, policy experience negligible. Monetary policy then was conducted by trial and error. The same will be true of macroprudential policy now. Mistakes will be made. But as experience with the other arms of macroeconomic policy has taught us, the biggest mistake would be not to try. BIS Review 168/2010  25  Annex 1: Model proofs  Reputational probabilities: Here we motivate the conditions that . Suppose the market has prior that a banker’s ability is high. If a banker is of low ability, she achieves positive returns on loans with probability when the macro state is good, while high ability bankers achieve positive returns on loans with probability 1 when the macro state is good. When the macro state is bad, all bankers achieve zero returns. Let be the probability that the macro state is good. Let the market conjecture that under a risky policy and a bad state of the world, earnings are positive with probability , while under a risky policy and a good state of the world, earnings are positive with probability . Conditional on risky policies and observing positive earnings, the probability of being of high ability is  which is increasing in  . Similarly, under tight policies,  which is decreasing in effects. . The conditions in the text that  capture these  Equilibrium: Our model satisfies following conditions, set out in Morris and Shin (2003), viz. : Condition 1: Action Monotonicity:  is non-decreasing in .

Ravi Menon: Asia's digital transformation Remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the GIC Institutional Investors Roundtable, Singapore, 31 October 2018. * * * Ladies and gentlemen, good morning. I thank GIC for the invitation and am pleased to meet all of you. Why FinTech? About three-and-a-half years ago, the Monetary Authority of Singapore (MAS) made a momentous decision - to promote an innovative and dynamic financial sector by working with the industry to harness the power of technology. We saw that technology was transforming the way people live their lives, the way companies deliver products and services, and the way cities work and connect. Meanwhile, the financial industry globally was facing the headwinds of slower economic growth, tighter regulation, and keen competition from non-financial technology players. Technology presented an opportunity to inject new dynamism and new growth in financial services. It was an opportunity to increase efficiency in an industry that had some of the most archaic practices around – just think of interbank payments and settlements. It was an opportunity to manage risks better: financial institutions were pouring ever more resources into compliance and risk management – and still getting into trouble. Most of all, it was an opportunity to improve people’s lives to bring financial services to the unbanked and uninsured in Asia; to help a growing middle class plan its finances more holistically and efficiently; to help enterprises raise money, make payments, and tap new markets.
Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council judges that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases under the pandemic emergency purchase programme (PEPP) than in the previous two quarters. We also confirmed our other measures, namely the level of the key ECB interest rates, our forward guidance on their likely future evolution, our purchases under the asset purchase programme (APP), our reinvestment policies and our longer-term refinancing operations, as detailed in the press release published at 13:45 today. We stand ready to adjust all of our instruments, as appropriate, to ensure that inflation stabilises at our two per cent target over the medium term. I will now outline in more detail how we see the economy and inflation developing, and then talk about our assessment of financial and monetary conditions. Economic activity The economy rebounded by 2.2 per cent in the second quarter of the year, which was more than expected. It is on track for strong growth in the third quarter. The recovery builds on the success of the vaccination campaigns in Europe, which have allowed a significant reopening of the economy. With the lifting of restrictions, the services sector is benefiting from people returning to shops and restaurants and from the rebound in travel and tourism. Manufacturing is performing strongly, even though production continues to be held back by shortages of materials and equipment.

2  BIS Review 55/2007  4. Fund managers/dealers/traders  Interbank market The tight monetary policy stance adopted by CBSL and its possible continuation would result in increased reliance by banks on the inter-bank call market. Given the self imposed limits by banks on lending to each other, if a few banks attempt to raise a large volume of funds from the inter-bank market , there could be volatility in interest rates. Banks should not often rely on a potentially volatile call money market as an alternative to mobilizing deposits or exploring other funding sources. The heavy reliance by some banks on the call money market drives short term interest rates and make borrowing costs to investors and business community to very high levels. The volatility in the call market also creates uncertainty among the businesses and that adds to inflationary expectations. Forex market Given the current account imbalances, there is a mismatch in foreign exchange inflows and outflows. Sri Lanka’s foreign exchange market is not deep enough to absorb relatively large transactions, though its size and operations have gradually increased. In such a market, huge speculative trades could be rather disturbing and they could move the exchange rate against economic fundamentals. No doubt, forex market is a key source of foreign exchange income to banks. Its price, which is the exchange rate, is determined according to demand and supply forces.