samchain/econo-pairs-v1 huggingface dataset:
This process of re-intermediation put considerable  2  BIS Review 139/2007  pressure on the profitability, asset quality and capital adequacy, to the extent of creating great tension in the inter-bank market, as financial institutions hoarded liquid funds. Ninth, as you all know, major central banks had to step in to provide liquidity in order to ease tightness in the money market. They have been doing so for about three months now, which is not a good sign, because of the implication of a continuing lack of trust among financial institutions in lending to each other. In one particular jurisdiction, a problem at the wholesale money market level triggered a breakdown of depositors’ confidence at the retail level, resulting in a bank run. In the United States, the Fed further responded with a shift in monetary policy, notwithstanding continuing concerns over rising inflation, and cut interest rates twice, presumably to pre-empt credit tightness from adversely affecting economic prospects generally and the property market in particular. Tenth, meanwhile, financial institutions in the United States are writing off large amounts quarter after quarter and this is affecting the general availability of credit and prospects of the economy, notwithstanding lower interest rates, and increasing the probability of a recession, although many still put this at less than 50-50. This seems to be the general sentiment currently reflected in financial market performance in the United States. There has also been much greater short-term volatility, as new information is absorbed by the market, indicating considerable nervousness.

I should of course start by re-iterating the firm HKSARG policy of keeping our exchange rate to the US dollar within the range of 7.75 to 7.85 through the linked exchange rate system, characterised by currency board arrangements that require our monetary base, and any changes in it, to be 100% backed by US dollars. With the weakening US dollar and the strengthening renminbi; with the local inflation rate, excluding the temporary effects of tax relief, edging higher; with an “asset bubble” on the lips of many commentators; with the exchange rate hitting the strong side Convertibility Undertaking late last month, requiring our passive and un-sterilised foreign exchange intervention, injecting quite a lot of Hong Kong dollar liquidity into the inter-bank market; and with current US monetary policy possibly becoming inappropriate for Hong Kong; questions have understandably been raised on the appropriateness of the system. Let me provide answers to these questions. First, the appropriateness of the linked exchange rate system should be judged by its ability to deliver monetary and financial stability in Hong Kong through economic cycles, and should not be judged by the short-term cyclical conditions of the economy relative to that of the US economy. The linked exchange rate system has served Hong Kong extremely well since its establishment.
This means that, over the same period, borrowers have become markedly more vulnerable to interest rate rises. Overvaluations in residential real estate  I would now like to turn to the residential real estate market. Numerous indicators point towards overvaluations in this market, since price increases in recent years have been steeper  Page 8/12  than can be explained by fundamental factors. This applies across all residential segments, i.e. single-family houses, privately owned apartments and apartment buildings. The extent of overvaluation is difficult to quantify. Slide 4 illustrates this, using the privately owned apartment segment as an example. It shows two simple indicators and the results of two models, used to measure the valuation of privately owned apartments. Both indicators, i.e. the price-to-rent ratio (in light blue) and the price-to-GDP ratio (orange), reveal an overvaluation of around 30%. An econometric model (red), which explains current prices based on developments in GDP, housing stock and interest rates, shows an overvaluation of roughly 20%. 10 Finally, the ‘user cost model’ (dark blue) reveals a broad range of overvaluations, depending on different assumptions regarding future interest rate and rental developments. 11 Assuming for example that real mortgage interest rates will return to their historical average of 2.6% over the long term, the resulting overvaluation amounts to roughly 30%. If, by contrast, the assumption is a real mortgage interest rate of 1% over the long term, the overvaluation decreases to around 5%.

I have just seen that our two main banks are moving in this direction and are also giving preferential treatment to mortgages. You also have to remember that a bank manages two sides of the balance sheets. It collects interest from borrowers but it pays interest to depositors. It is the efficient management of the difference between interest earned and interest paid that earns a bank its profits. Given that both lending and deposit books may differ from one bank to the other, there could be various reasons why the full interest rate cut is not passed on to the customer straight away. Are you optimistic that these interest rate cuts are enough to stave off recession? Monetary policy is just one instrument available for macroeconomic adjustment, so it has a limited capacity. It just tries to achieve price stability, because without price stability you cannot have long-term investment plans plus economic growth and employment. The problem is deeper than that. We need a coordinated effort at the political, central banking and regulatory levels. There is talk of a looming recession in Malta. Do you agree with this argument? I have not seen any economic indicators which at this point in time suggest that this scenario is imminent. I would rather wait to see the figures as they come out. So far we have an average growth rate of over three per cent for the first half of the year.
As transactions are processed, the machine learning applications assigns a risk score and  Page 6  this allows card issuers to block potential fraud losses before the transaction proceeds. The Bank, PRA and FCA will publish a Discussion Paper later this year on how the current UK regulatory framework applies to artificial intelligence and machine learning. The paper will also explore how policy can best support further safe and responsible adoption and whether additional clarification of existing regulation may be helpful. Financial market developments: a real-time case study Let me return from the possible futures represented by the adoption of AI to the here and now and the financial market developments we have seen this week in the UK which have meant that I haven’t been able to join you in Vilnius. As is the case for all central banks the Bank utilises various data to provide detailed coverage of financial market developments, ranging from real time quantitative data from wholesale markets through to qualitative market intelligence (MI). We complement the views of external market contact base with the views of our own specialist experts among Bank staff[12]. The Bank’s focus is primarily around those financial markets closest to our mission. The backdrop to the latest events is that financial markets globally have been volatile in recent months, with increases in government bond yields and falls in risky asset prices. While largely orderly in most markets, pressures were observed in parts of the financial system, including challenging liquidity conditions across some markets.

In the US, households had to borrow if they wanted to increase consumption. “Let them eat cake” had become “let them eat credit.” Financial innovation made it easier to do so. And the ready supply of foreign capital from the global savings glut made it cheaper. Most importantly – and this is the lie – complacency among individuals and institutions, fed by a long period of macroeconomic stability and rising asset prices, made this remorseless borrowing seem sensible. After the reckoning, the ensuing crisis and feeble recovery would look very much like all others that have followed prolonged credit booms. Policymakers quickly disassociated themselves from the received wisdoms of the Great Moderation and scrambled to re-learn the lessons of the Great Depression. That process continues today as central banks contemplate current parallels with the late 1930s. The aftermath of the global credit crunch has been severe. Global output is now ten percent below its pre-crisis trend, and with global nominal growth running two percentage points short of its pre-crisis average, the challenge of deleveraging remains acute. These challenges appear more pressing as some are now questioning their faith in another new era – China’s glide path to global economic hegemony. China’s economic miracle over  2  2  For an extensive survey, see Reinhart, C and Rogoff, R, (2009), This time is different: eight centuries of financial folly, Princeton University Press.
First, the spending decisions of the older age cohorts are less likely to be easily stimulated by monetary policy. That is because such age groups tend to spend less of their incomes on consumer durables and housing. Second, as the population ages and the number of retirees climbs, the costs associated with Social Security, government pensions, and healthcare retirement benefits increase. This creates budgetary pressure and leads to a choice of raising revenue to fund these costs, cutting other government programs, or cutting benefits. Now if this all had been fully anticipated by retirees and near-retirees, then this would already be factored into their spending and saving decisions. But, I doubt that this has been the case. I suspect that many have been surprised by the swift change in economic circumstances as the housing boom went bust. I doubt that many fully anticipated the budget crunch and the prospect that their future retiree and healthcare benefits would likely be curbed or their taxes would have to rise in the future. When households begin to anticipate this, they reduce their assessment of their sustainable living standards. This downward reassessment then feeds back to current spending and saving decisions. A fourth reason why the recovery has been slower than expected may be that we overestimated the capacity for fiscal policy to continue to provide support to growth until a vigorous recovery was achieved.

There are, however, some institutional responses that will take place if the Bank is not able to return the exchange rate back to its initial range, as defined by the mandate, without contributing to inflation or a deflationary recession. I will come back to this issue later in my speech. 1  BIS Review 101/2000  The base drift problem If the inflation rate in Norway deviates from the inflation rate in the euro countries, the nominal exchange rate will need to adjust over time. However, some of you may object that stabilising the Norwegian inflation rate at the level aimed at by the euro countries may not be sufficient to stabilise the nominal exchange rate. The reason is that inflation in both Norway and the euro countries will be subject to stochastic shocks. This means that even if the expected inflation rates in Norway and the euro countries were the same, the actual inflation rates would deviate. Technically speaking, the relative price levels will be subject to base drift, and so will the nominal exchange rate. Professor Larry Ball has discussed this in a paper on Norwegian monetary policy. Keeping the relative price level constant would require that we target the price level and not the inflation rate. However, in the 1920s Norway experienced that a policy aimed at achieving a specific level for the purchasing power of money led to substantial macroeconomic instability.
The survey showed that financial institutions are planning to oﬀer 1,800 newly created jobs and 2,000 traineeships during these 12 months. https://www.mas.gov.sg/news/speeches/2020/gearing-up-for-new-and-evolving-jobs-in-financial-services  6/18  04/12/2020  "Gearing up for New and Evolving Jobs in Financial Services" - Remarks by Mr Ravi Menon, Managing Director, Monetary Authorit…  The newly created jobs are distributed across diﬀerent job functions. The largest hiring demand is in technology, as you can see from the chart, with 880 jobs. The top new job roles in technology include application developers, application architects, and business analysts. This is followed by private banking and wealth management at 12%, in roles such as relationship management, process excellence, and digital transformation. The remaining 40% of new jobs are spread across other business segments, including insurance, corporate banking, consumer banking, investment banking, and asset management, as well as in corporate roles such as finance and human resources. https://www.mas.gov.sg/news/speeches/2020/gearing-up-for-new-and-evolving-jobs-in-financial-services  7/18  04/12/2020  "Gearing up for New and Evolving Jobs in Financial Services" - Remarks by Mr Ravi Menon, Managing Director, Monetary Authorit…  Let’s take a closer look at the 880 technology jobs on oﬀer in the financial sector. There are three broad types of job roles that financial institutions are hiring for their technology departments. First, advanced tech roles, such as enterprise architects and infrastructure architects. These are specialist roles that require highly technical skills. Take for example, enterprise architects.

The COVID-19 pandemic is creating some fundamental changes in industry structure, work processes, and job functions. If we do not retrain to take on new tasks or move to new roles, we will be le behind by these changes. That is why government agencies are working together with their respective sectors of the economy to prepare their workers for the jobs of the future. https://www.mas.gov.sg/news/speeches/2020/gearing-up-for-new-and-evolving-jobs-in-financial-services  2/18  04/12/2020  "Gearing up for New and Evolving Jobs in Financial Services" - Remarks by Mr Ravi Menon, Managing Director, Monetary Authorit…  MAS is focused on the financial sector, working with IBF and the industry to drive an active jobs and skills agenda. Among central banks, MAS is probably unique in playing such an active role in the training and development of our financial sector workforce. As I had mentioned in 2017, “jobs and skills have moved to front and centre of MAS’ financial sector development agenda.” Growing Timber - The Financial Sector Jobs and Skills Agenda  This is where the Growing Timber series comes in. MAS wants to deepen and broaden our partnership with the financial industry and finance professionals to strengthen the Singaporean core in financial services.
A key issue is how emerging markets will be impacted by tighter financing conditions (and the ensuing capital outflows) and to what extent this will have repercussions for euro area foreign demand. Against this background, ensuring the continued resilience of the euro area economy is paramount. Second, there are policy challenges related to our financial markets. The euro area financial system weathered several episodes of stress in the second half of last year. This is a sign that a lot has already been achieved with the establishment of banking union, which, however, is not complete yet. To make our financial system truly safe and sound we need to progress in two main domains, which complement each other. On the one hand, we need to finalise and implement the work we started when establishing the Single Supervisory Mechanism and Single Resolution Mechanism as the initial pillars of banking union. This includes further regulatory work to harmonise our rules for supervisory action and ensure a consistent application of the Bank Recovery and Resolution Directive’s bail-in provisions. On the other hand, we need a common public backstop for the Single Resolution Fund to strengthen its credibility and we need to ensure that confidence in the safety of deposits is equally high in all 2  BIS central bankers’ speeches  euro area Member States by establishing a European Deposit Insurance Scheme.

“Riskreduction” and “risk-sharing” measures are two sides of the same coin and should be pursued in parallel: they are all essential to protecting the stability of the European banking sector. Third, there are challenges related to the fiscal and economic policies of Member States that require decisive policy action. Fiscal policies should contribute to the economic recovery. At the same time, they should be in full compliance with the requirements of the Stability and Growth Pact. This is important to maintain confidence in the European fiscal framework and in the sustainability of public finances. Moreover, countries would benefit from a more growthfriendly composition of fiscal policies. This could involve greater efficiency of public sector services as well as moving to a more growth-friendly tax system. But the ongoing cyclical recovery in the euro area should also be supported by effective structural policies, particularly actions to improve the business environment, including the provision of an adequate public infrastructure. Such actions are vital to increase productive investment, boost job creation and raise productivity. If reforms are credible, carefully chosen and well designed, their positive effects can be felt quickly, particularly in the context of our supportive monetary policy stance. Fourth and finally, there is still political uncertainty surrounding the European project. This is true in the broader context of our Union. A solution that would anchor the United Kingdom firmly within the EU while allowing the euro area to integrate further would boost confidence. The Economic and Monetary Union architecture also remains an unfinished construction.
The Central Credit Reference Information System, or CCRIS, (owned and operated by Bank Negara Malaysia) was established in October 2001 and has since been acknowledged as one of the most comprehensive public registries in the world. The operationalisation of CCRIS expanded the role of the credit information registry beyond a supervisory focus to supporting prudent and more efficient credit and financial management decisions among Malaysian borrowers and financial institutions. CCRIS enables real time access to both positive and negative credit information on all borrowers in the banking system and of a selected group of non-banks. At present, the system contains more than 21.9 million outstanding credit accounts and 7.6 million borrower records. The system is supported by rigorous controls that protect the integrity of such information, which in turn, enables the Bank and supervisors to perform granular and multidimensional analysis and assessments of credit risks and credit-related vulnerabilities in the banking system. For banking institutions in Malaysia, the ability through CCRIS, to tap into ten years of borrower credit records spanning the entire population of banking institutions has been  BIS central bankers’ speeches  1  instrumental in accelerating enhancements to the management of credit risk by banks, in particular the development and validation of credit scoring models. Today, information extracted from CCRIS is used as a key input in banks’ credit decisions. The availability of current information has also facilitated more expedient and robust credit decisions.

And the G20 fulfilled the most optimistic anticipations as it reacted promptly and strongly to the crisis. Beyond this, the G20 has also agreed on an ambitious policy agenda, aiming for the long run. The G20 Roadmap does not only aim at one particular aspect of the global economy; it is very encompassing. One aspect of it is macrorebalancing, another is on financial regulation and global financial safety nets. The G20 agenda is focused on crisis prevention by coordination in order to avoid, or at least dampen overheating and boom/bust cycles. How are these issues related? First I will briefly tackle the important question of the link between the financial crisis and global imbalances. Second, I will go through the main implications of this link and outline the key features of the policy agenda of the G20. In this second part I will mostly focus on the so-called “G20 Framework for a Strong, Sustainable  BIS Review 93/2010  1  and Balanced Growth” and on financial safety nets. In the last section I will focus on financial regulation issues more specifically. Why and how do the financial crisis and global imbalances interact? An overwhelming body of research has established the clear relation between global imbalances and financial issues, some of which were behind the financial crisis. Indeed, global imbalances were not just the result of cyclical factors, such as business cycle fluctuations, changes in oil and other commodity prices, etc.
But even this combination, which can only be temporary, cannot in the long run prevent a sharp rise in prices if the gap between demand and supply is too wide - as demonstrated by the rise in prices after 1980.” In Norway, the efforts to develop an economy under strong centralised coordination and control culminated in the 1973 proposal to establish an incomes policy council.5 According to the proposal, the social partners would undertake a commitment through the council to keep negotiated wage increases within specific limits. It was also stipulated that demand management policy should be included as part of incomes policy. The proposal to establish an incomes policy council did not receive support. There was ultimately too much control and coordination. Now, only 30 years later, virtually nothing of this system remains. The structure was not solid enough. We know from experience that fiscal policy alone cannot ensure a high level of employment. The structure of the labour market and wage formation are probably of greater importance. The direct regulation of credit, interest rates and capital movements collapsed and was phased out in the 1980s. The krone is floating. Price regulation no longer plays a role as a macroeconomic instrument. The scope of business policy has become more general. State ownership in the Norwegian business sector remains extensive, but ownership management has been reorganised following the negative experience of companies in Kongsberg, Mo i Rana and Syd-Varanger. The economic policy of the 1970s and 1980s contributed to wide fluctuations in the Norwegian economy.

6  BIS Review 36/2004  Both the formulation of a precise inflation target and the aim of striking a balance between the objectives of stable output and inflation could invite a repeat of earlier attempts at fine-tuning. But here it is important to adhere to the lessons drawn from the 1970s and 1980s. The uncertainty underlying the decisions taken must not be underestimated. There is uncertainty as to the current state of the economy, the underlying driving forces and the economy’s functioning, including expectations formation and the impact of monetary policy. Economic models are tools that help us address some of this uncertainty. Inflation targeting places new demands on our models and our use of models. In an uncertain world, risk analysis is a very important part of the work. The aim is as much to understand the economics of the forecast as to produce quantitative estimates. In central banks, dramatic developments in macroeconomic modelling have taken place over the past 10 years. At Norges Bank, we have started work on developing modelling tools for inflation targeting. We are inspired by and work closely with other central banks and the IMF and draw on our long experience of model building in Norway. We are working on several different models and we are assessing other building blocks that we need to support our work in setting interest rates under an inflation targeting regime.