samchain/econo-pairs-v1 huggingface dataset:
With that in mind I’d like to take the opportunity today to look ahead, at the challenges and opportunities of what is waiting for us on the other side of the bridge –different, perhaps very different from the world we used to live in. Because we face a lot of uncertainty. Not only about the speed of recovery from recession. But about the extent and depth of permanent structural changes to the functioning of our economy brought about by adaptation to Covid-19 – and as I say, with a crucial role for the insurance industry to play in our economic recovery. I want to focus today not on the specific risks that this brings to the insurance sector – though those are real and large – but on the role of the insurance sector and its regulatory framework in supporting broader economic rebuilding in a changed landscape. Not on what the economy might do to insurers, but on what insurers can do for the economy. Of course managing your own risks and supporting the wider economy is not an either/or choice. A virtuous circle operates between the provision of financial services, and the strength of the economy, and hence the strength of the balance sheets of the providers of financial services themselves. In the case of insurance it seems likely that continued provision of new risk pooling and investment by insurers strengthens the economy and hence existing exposures on insurers’ own balance sheets.

This, by the way, is another example of how providing financial services to the wider economy – in this case financing low carbon alternative technologies, has a positive feedback to balance sheet strength by reducing risks on both the asset and liability sides.2  2  See speech by Anna Sweeney (2020): Paving the way forward: Managing climate risk in the insurance sector 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  Following the crisis some companies will enter the recovery phase with more highly leveraged balance sheets, some from a starting point that was arguably itself over-leveraged. And structural change will create opportunities for new enterprises, often better financed with equity than debt. In his June remit letter to the Chancellor, the Governor made the case for introducing more equity, or more equity-like finance to the mix.3 Equity issuance by public listed companies is already strong and at its highest level so far this year compared to the same point in any year in the past decade.4  With their long-term liabilities, insurance companies and pension funds are well suited investors in growth capital. For some time now, insurers have been increasingly turning to illiquid assets for a good return on their investments at a time of historically and enduringly low yields. This trend has been most noticeable for annuity providers, incentivised by the matching adjustment (MA) to invest in assets that, perhaps with some restructuring, mirror the illiquid nature and fixed cashflows of their liabilities.
Advances in technology, innovation, research, and market integration put us in a strong position to address these challenges. Indeed, there are few human enterprises where the application of technology and innovation can have as much social purpose and public good as in the area of protecting societies against natural disasters. Singapore’s insurance industry is committed to this goal. And I am pleased that NTU has been a key partner in many ways, contributing to our vision of being a global centre of excellence in insurance and risk management. Thank you and I wish you a meaningful time at the conference. 4/4  BIS central bankers' speeches

Gent Sejko: Intensifying mutual cooperation between Albania and Turkey Speech by Mr Gent Sejko, Governor of the Bank of Albania, at the signing of the Memorandum of Cooperation between the Bank of Albania and the Central Bank of the Republic of Turkey, Tirana, 6 November 2017. * * * Honourable Governor Çetinkaya, Your Excellency Ambassador Bayraktar, Dear members of the delegation from the Central Bank of the Republic of Turkey, Dear guests, Ladies and Gentlemen, I have the pleasure to have the Governor of the Central Bank of the Republic of Turkey, Mr Murat Çetinkaya, as our guest on a one-day visit to the Bank of Albania, on the occasion of the signing of a Memorandum of Cooperation. This memorandum is an expression of our common will and desire to continue and intensify the mutual cooperation that has been already in place for years. Opening addresses are supposed to be brief and I would rather not break with such tradition. However, I find it appropriate to share with you some thoughts on: (i) the international context surrounding the signing of this memorandum; (ii) the current level of the bilateral relations between Albania and Turkey; and, (iii) the main aspects of future cooperation. 1. International context Our institutions – the respective central banks – play a significant role in promoting and guaranteeing monetary and financial stability, supporting the sustainable development of our countries and the welfare of our citizens.
Inflation prospects difficult to assess One consequence of the Riksbank basing its analysis on conditions in Sweden — and not being guided by the actions of other central banks — is that in the past the repo rate has been held at a considerably lower level than in the United States. There have also been periods when our instrumental rate has been below that of the European Central Bank. The central factor when the Riksbank sets its instrumental rate is the prospects for inflation one to two years ahead. A prospect of inflation above the 2 per cent target normally leads to a repo rate increase, while if inflation is expected to be lower than the target level, the repo rate should normally be lowered, and if the rate of price increases is forecast to lie around the target level of 2 per cent, the rate should be left unchanged. The economic outlook in the rest of the world ought to imply a weak tendency in Sweden as well, with an attendant easing of inflationary pressure and consequently a further reduction of the repo rate. However, the decision-making situation is not that simple. Three things in particular make the picture more complicated: ·  Firstly, inflation is currently above the Riksbank’s 2 per cent target. The greater part of the increase is admittedly attributable to a number of clearly defined transitory factors that are calculated to drop out next spring. Food prices, for example, moved up in connection with mad-cow and foot-and-mouth disease.

It is therefore important to take very seriously the discussion going on within the trade union movement regarding larger than expected price increases. The weak exchange rate, with the potential economic stimulus it represents via exports, is more complicated. In the past, a marked improvement in costs for Swedish exports relative to the main competitor countries has tended to lead to an increased export market share. At the same time, there is no denying that the international economic slowdown is particularly evident in markets of importance for Sweden’s economy. As long as those markets remain weak, a larger market share for Swedish firms will not yield a notable increase in volume. Another matter here is that in the IT and telecom sectors, on which the Swedish economy became increasingly dependent in the 1990s, the problems are not dependent on the krona’s exchange rate; here it is more global factors that are decisive. However, it can also be noted that the order inflow to manufacturing is now falling less markedly than earlier this year. There are certain signs of a levelling out, usually an early indication of a possible upturn in the coming quarters. Analysts’ expectations of this year’s profits for listed companies have clearly worsened during the autumn but this has been accompanied by a substantial upward revision of next year’s profits. So the overall appraisal of the krona’s exchange rate and its stimulatory effect is not entirely self-evident. Finally there is the question of economic policy’s aggregate impact on demand.
In that case, national authorities would licence domestic banks that would face significant restrictions on the type and magnitude of cross-border activities they would be allowed to undertake; for instance, by limiting the size of foreign currency balance sheets and maturity mismatches and not allowing collection of foreign currency deposits in foreign branches. These banks would then be supervised by the national supervisor, their deposits would be insured by the domestic deposit insurance system, and the national central bank would be their LOLR. Those banks that want a European passport would be licensed and supervised by an EU authority, however; they would be part of an EU-wide deposit insurance system, and in most cases, their LOLR would be the ECB. Let me now say a few words about the national level. The key issue here is that, as long as global risks and EU flaws are not dealt with, individual countries are forced to take action to protect themselves: action that might contribute further to the retreat of cross-border banking. These might take the form of restricting international activities of home banks and placing much more strict prudential limits on foreign currency maturity mismatches. For example, when Iceland lifts its current capital controls on outflows, it will probably impose restrictions on both the size and composition of foreign currency balance sheets of home-headquartered banks. Some might see such restrictions as capital controls in another form, but I see them as prudential rules.

The swap lines are not at present a permanent and a reliable feature of the international monetary system; for instance, they have been strongly challenged in political discussion in the US. Furthermore, there are important unresolved governance issues, such as who should decide which countries get a swap line and which do not. It is thus an important item on the reform agenda to clarify the extent to which standing foreign currency LOLR facilities for solvent cross-border banks can be set up. In the meantime, cross-border banking will retreat because of this risk, and smaller countries in particular will be more reluctant to provide a home base for cross-border banks. BIS central bankers’ speeches  1  Let me now move to the EU/EEA level. Here the main fault line is the contradiction between, on the one hand, the area-wide permission to operate based on home licensing and a common regulatory framework (the European passport) and, on the other hand, national supervision, a national safety net of deposit insurance and LOLR, and national crisis management and resolution regimes. The underlying principle is the same as in many other areas of the EU: an equal and harmonious competitive position throughout the area. In that ideal world, the location of headquarters and the size of a banking system relative to that of a country should not matter. The crisis revealed that this framework is deeply flawed. First, it ignores the FX liquidity risk that I discussed earlier.
Growth has been good and this has contributed to maintaining demand for working hours. At the same time, demographic developments have been relatively favourable and there have been ample unutilised resources in the economy following the crisis of the 1990s. However, when it comes to the labour supply, there is less reason to be optimistic about future developments. Developments in working hours have been held back during recent periods for structural reasons. The demographic situation, with a declining percentage of the population of working age, will deteriorate significantly in the long term, particularly after 2010. In addition, working hours per person may instead tend to decline in the long run when greater prosperity is taken advantage of to increase leisure time. The assessment in the October Inflation Report is that employment, labour force participation and mean working time will rise during the economic upturn forecast for the coming years and will contribute to an increase in the number of hours worked of approximately 1 per cent a year during the period. In a longer perspective, it is more realistic to assume that the labour supply will not make any contribution to growth. The simulations in, for instance, the Long-term Planning Commission’s most recent report, indicate that the number of hours worked on average will not show any significant change. However, the simulations show that the situation could be improved significantly, at least in the short term, if measures were taken to increase the labour supply.

What makes Singapore attractive as an international financial and wealth management centre? Wealth desires stability. Singapore’s political and economic stability, transparency in governance, and sound and predictable regulation, are often cited by private bankers and clients alike as the fundamentals underpinning its attraction. Efficiency, connectivity, and sound infrastructure are added advantages. Singapore has been ranked by the World Bank, for the sixth year running, as the easiest place to do business in the world. Perhaps the decisive advantage is the larger financial eco-system that exists in Singapore. Strong capabilities in asset management, foreign exchange and derivatives trading, coupled with deep and liquid capital markets – these are the ingredients that make Singapore the ideal base for the intermediation of wealth in Asia. But to use a common phrase in the industry, past trends are no guarantee of future performance. Whether Singapore continues to do well in wealth management will depend critically on three imperatives.   First, we must raise competencies in the industry.   Second, we must enhance market conduct.   Third, we must keep the financial sector clean. Strong competencies Let me begin with raising competencies. The wealth management industry in Asia is facing a shortage of talent. Private banks are rapidly expanding to meet the needs of a growing affluent class. If Singapore is to sustain its growth as a wealth management centre, there is an urgent need to raise competency levels in the industry and to build a strong pipeline of talent.
Andrew Bailey: The state of the building society sector and the Prudential Regulation Authority’s approach to governance Speech by Mr Andrew Bailey, Deputy Governor of Prudential Regulation and Chief Executive Officer of the Prudential Regulation Authority at the Bank of England, at the Building Societies Association Annual Conference, Harrogate, 21 May 2015. *  *  *  It’s a great pleasure to be at the BSA annual conference again, and in Harrogate again. I note that Harrogate is confirmed as “the happiest place in England!”, so I feel a certain sense of expectation by inviting the prudential regulator to speak at the happiest place. My plan this morning is to cover two areas in my remarks: first, an overview of our impressions of the state of the building societies as a whole; and, second, some comments on the PRA’s approach to the governance of firms, to coincide with the publication today of consultation of our supervisory statement on board responsibilities. So, since we are in the happiest place in England, let me start in what I hope you will regard as an appropriate spirit, namely that even though the environment remains one of continuing low interest rates – and, as I always do at this point, let me stress that I am making no judgement on monetary policy whatsoever – the aggregate net interest margin for the building societies has picked up, arrears rates on loans remain low and net new lending has been strong over the last two years.

We are watching again very carefully, and I can assure you that as prudential regulator we want to see sensible outcomes that balance the objectives of all parties and ensure that we maintain a stable financial system that can support the activity of today’s customers. Nobody wants to see a world where ex-post enforcement weakens the capacity to support economic activity, and that means we must return as soon as possible to a world where the emphasis is on strong risk management, governance and forward-looking supervision. This review of risks covers much of our work programme for the year. Two other points I would note. First, we are reviewing the Sourcebook which since the beginning of April has been called a Supervisory Statement. The Sourcebook was first introduced in 2010 as a response to the crisis. We will consult on changes later this year and have already had two very useful pre-consultation meetings with the BSA and a number of societies. Let me assure you that this review is not the beginning of a major agenda to change how we supervise societies. Rather, a lot has happened since 2010, and we think a stocktake is in order. Second, recovery and resolution is an important focus of activity following the enactment of the EU Directive (the BRRD). Our objective is to ensure that orderly resolution is possible should it be needed, and thus to support our general approach that we are not a regulator that adopts a policy of no failures.
However, they will continue to grow above their 2000–2007 average. The change in composition and weight of this group of countries, where emerging economies – especially China – have sharply increased their share, explains this result. While in 2000 emerging economies weighed less than one third in the group of Chile’s trading partners, they are expected to be closer to one half in 2011 (figure 12). On the other hand, a drop in the terms of trade is expected. This last projection is based on a copper price of $ per pound in 2012 and $ in 2013, and a WTI oil price averaging around $ per barrel in 2012–2013 (table 2). In this scenario of reduced external impulse, the Chilean economy is forecast to grow in the range of 6.25% to 6.75% this year, in line with June’s projections. Up to the second quarter, output was growing above the trend and above expectations in the June Report; consumption was slowing down from its strong expansion but not as much as foreseen; the labor market continued to give signs of being tight and financial conditions were still favorable, with credit showing an increasing growth rate (figure 13). Our present scenario foresees that domestic demand will grow 9.1% this year, more than forecast in the last Report. This will reflect the impact of increased gross fixed capital formation of the first half, especially in machinery & equipment, as well as greater inventory accumulation.

Figure 15 Inflation expectations  Forward breakeven inflation based on swap rates  EES and FOS surveys (*) (percent)  7  7 7  (moving weekly average, percent)  7  6  6 6  6  5  5 5  5  4  4 4  4  3  3 3  3  2  2  1  2 2 1 1  0  0 06 07 08 09 FOS 1 yr ahead FOS 2 yrs ahead  10  11  EES 1 yr ahead  EES 2 yrs ahead  1 0  0 06  07 1 in 1  08  09 3 in 2  10  11 5 in 5  (*) The FOS uses survey of first half of the month, except for August 2011, which uses survey of second half of the month. Source: Central Bank of Chile. BIS central bankers’ speeches  15  Figure 16 MPR and expectations  (percent)  9  9  7  7  8  8  6  6  5  5  4  4  3  3  2  2  1  1  0  0 07  08  09  10  11  12  13  TPM  EES, August 2011  Forward IPoM septiembre 2011 Forward, Sep.2011 Report  FOS, second half August 2011  Source: Central Bank of Chile. 16  BIS central bankers’ speeches
Given a marked increase in credit rationing in capital markets and bank lending, the conventionally measured short-term riskfree real rate may not be the same summary statistic of monetary conditions as before the turmoil. It is currently necessary to undertake a richer analysis of monetary and credit conditions, which had been the broad theme of my earlier paper. But those remarks about money and credit were nested within a broadly common approach to the transmission mechanism and policy. To recap, the MPC’s more collective statements make us free to do our duty in revealing our individual thoughts without creating a misleading perception of cacophony when it is not really there. The challenge for central banks with different decision-taking structures would seem to be the opposite: (i) how to allow a range of views to be explored seriously so as to avoid intellectual or analytical inertia – or how to let in fresh air; and (ii) in terms of communications, how to demonstrate that there is true debate without individual pronouncements being confused with the collective pronouncements on policy made typically by the Chair. I think forecasts are central to this. And I would encourage Alan Blinder and his collaborators to extend their work on the production and role of forecasts in the decision-making of different central banks; and how the communication of forecasts interacts with the communication of other elements of the policy process.

4  BIS Review 145/2010  As I mentioned earlier, the Fund has become larger than we expected a decade or so ago as high oil prices have more than compensated for fairly low returns in international capital markets. Looking ahead, market prices suggest that interest rates are expected to remain low for many years. Real interest rates on long-term bonds have been depressed by central bank government bond purchases. Let us nonetheless assume an average nominal return on the Fund’s fixed income instruments of 3 per cent ahead. On the other hand, there are no signs that return requirements in equity markets are low. Dividend payments are high in relation to companies’ market value. Simple valuation models 9 indicate that shareholders require a rate of return between 8 and 10 per cent, a fairly normal level. This results in an overall nominal return of between 6 and 7 per cent. In addition, positive contributions to the return are expected from non-government bonds, active management and real estate. There is considerable uncertainty surrounding these estimates. Nevertheless, Norges Bank’s view is that it is still reasonable for the government to base its withdrawals from the Fund on an expected annual real rate of return of 4 per cent. The increase in the equity allocation from 40 per cent to 60 per cent does not provide a basis for higher withdrawals from the Fund, but reflects prospects for somewhat weaker returns in international markets today than was the case ten years ago.