samchain/econo-pairs-v1 huggingface dataset:
Second, the imposition of such an additional capital requirement may also inhibit the expansion of banks’ balance sheets, so dampening the upswing of the credit cycle. This second mechanism obviously requires the Modigliani-Miller theorem to fail, in the short run at least; if it doesn’t then there is no reason for a bank’s management to prefer debt finance to equity finance. Now the most obvious reason why the Modigliani-Miller theorem fails for banks is the implicit subsidy to debt finance that comes from being “too big (or too complex) to fail” so that taxpayers, rather than creditors, pick up the tab if capital is insufficient to absorb losses. Recent and prospective regulatory reforms seek to reduce the too big/too complex to fail problem, but eliminating it entirely may be an aspiration too far. Moreover, there are likely to be other frictions to raising capital which mean that raising capital requirements will inhibit balance sheet growth, providing traction for the countercyclical capital buffer. However, this is an area where empirical evidence is in relatively short supply (though for some examples, see: Macroeconomic Assessment Group, 2010; and Aiyar et al., 2012). The second tool is the ability to vary capital requirements by type of asset, allowing the FPC to target excessive exuberance in specific sectors. The EU will permit national authorities such discretion in regard to residential property, commercial property and intra-financial sector exposures.

PART 1: The main features of the Eurosystem monetary policy strategy Let us see what are the main features of the single monetary policy, conducted by the Eurosystem, in terms of institutional and operational framework as well as on strategic issues themselves. 1. The institutional and operational framework is founded on modern concepts Let me recall first that over the past decade, a large body of literature has been devoted to questions surrounding central bank independence, the concepts of transparency and monetary strategies, and the communication of monetary policy decisions. Drawing on this analytical expertise and the experience of the national central banks of the participating countries, the Eurosystem is first and foremost based on a modern institutional framework, founded on the principles of independence, transparency and accountability and, lastly, operational decentralisation. 1.1. The independence of the Eurosystem fosters price stability The Eurosystem’s primary objective, as enshrined in the Maastricht Treaty, is to achieve and maintain price stability. As many empirical studies have shown, a country’s ability to fight inflation appears very closely correlated to the degree of independence of its central bank. The independence of the European Central Bank and the 12 national central banks of the Member States of the euro area is therefore anchored in the Treaty. In operational terms, this means that, in the conduct of their duties, neither the European Central Bank nor the national central banks of the Eurosystem may request or take instructions from the Community institutions, national governments or any other body.
The projections for inflation were the highest ever published by the Bank, while the forecasts for output growth were the lowest ever published. In other words, these projections highlighted the difficult trade-off facing the MPC in keeping inflation close to target, while supporting output and jobs growth in the economy. In the MPC’s judgement in November, managing this trade-off was best achieved by maintaining the current monetary policy stance, with a neutral bias on the direction of the next move in interest rates. Consistent with this neutral bias, the MPC judged the risks to inflation and output to be broadly symmetric and, given heightened uncertainty since the referendum, larger than usual. My own personal judgement on the appropriate monetary policy stance is close to the MPC consensus. In August, I believed the risks to inflation and output lay to the downside, even after the stimulus measures. 20  See http://www.bankofengland.co.uk/research/Pages/onebank/decisionmakerpanel.aspx. 12  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  12  That is why I supported forward guidance on a further lowering of interest rates in the run-up to the end of the year, provided the economy evolved in line with the MPC’s projections for inflation and output at the time. In the event, output has out-performed those expectations, while expectations of inflation have picked up, largely as a result of sterling’s depreciation. That configuration now leaves me comfortable with the current stance of monetary policy, with no bias on the direction of the next move in interest rates.

To complete the picture, net wealth has also risen across the majority of regions since 2008, on average by 13% (Chart 13a). In only three regions (the North East, East Midlands and West Midlands) has net wealth fallen. These patterns are broadly as we would expect if monetary policy has loosened credit conditions, boosted asset prices and wealth and thereby supported domestic demand, at least in the short-run. That said, this is a rather imperfect experiment. Factors others than monetary policy are also likely to have contributed to movements in GDP, unemployment and wealth (in particular housing wealth) over that period. To pinpoint the specific contribution made by monetary policy, we need a model of the economy. By using the Bank of England’s suite of macro-economic models, we can quantify the specific role played by monetary policy in explaining movements in incomes and jobs, albeit rather imperfectly given that all models are imperfect. Charts 11b, 12b and 13b plot the change in real GDP per head, unemployment and wealth respectively since 2008, under the hypothetical assumption that monetary policy had not been loosened over the period but had remained at levels prevailing in 2008. 17  This paints a stark picture of what might have been in the  UK. 16  This is set against a trend decline in global real interest rates and what economists refer to as the ‘neutral’ level of interest rates.
These public investments will partially take  BIS Review 46/2007  5  up the slack in the first half of the year as well as speed up private investment through a crowding-in effect. Of course, there remains the issue of political incidents which can still make things less rosy. This would not be under policymakers’ control; the government, however, is doing its best to take necessary safeguard measures in order to assure people of the state of security. Ladies and gentlemen, being confident of the medium-term outlook does not mean that we will be complacent. After all, we are in an environment of an ever-increasingly competitive global arena, more integrated financial markets, volatile capital flows, more inter-linkages between economies, and increasing trends toward liberalization. For policymakers, this means that the conduct of policy will become more demanding in the periods ahead. This leads to my third and final point. That is, to ensure that growth and stability are sustained in the long run, we need policy tools and persistent reforms going forward. From a long-term perspective, the critical challenge for the Thai economy is how to continuously improve its flexibility, efficiency, and competitiveness. In this respect, a crucial policy effort is a combination of financial and real sector reforms and policies that promote a sound and stable macroeconomic environment. To mention a few, infrastructure building will continue to be strengthened particularly through amendments and introduction of a number of legislation.

The stability and credibility of the banking groups operating here, supported by close cooperation between Baltic and Nordic countries also help Estonia overcome the crisis. Banks in Estonia have sufficient funds to support restructuring in both the business sector and the entire economy. Eesti Pank's analyses confirm that the current capitalisation is sufficient to cover possible larger loan losses without banks having to include additional capital. The resources of banks allow their lending decisions to be based on favourable medium-term and longer-term economic outlooks, since Estonia's economic convergence, i.e., the movement of our income level towards that of EU richer countries, will continue also in the future. Thus, the goal of banking and financial sector policy is cooperation with the home countries of the banks operating in the EU and Estonia to ensure the functioning of the common banking market and group-level stability. The steps taken by the home countries of the banks operating in Estonia have considered the interests of the entire group and thus supported financial stability in Estonia. In this light it has to be emphasised that the measures to support the economy approved in Estonia allow state aid also in a situation where financial markets no longer function normally. But the main aim of the state support measures is to organise the financing of starting and exporting enterprises. The total debt burden of Estonia's enterprises is relatively big and a decline in the total volume of debt in 2009 is a natural reaction to previous years' rapid increase.
Dimitar Radev: Bank supervision and resolution within the Single Supervisory Mechanism and the Single Resolution Mechanism Publication by Mr Dimitar Radev, Governor of the Bulgarian National Bank, in the Quarterly Bulletin of the Association of Banks in Bulgaria, issue 62, October 2020. * * * As of 1 October 2020, Bulgaria joined the Single Supervisory Mechanism (SSM) by establishing close cooperation between the Bulgarian National Bank (BNB) and the European Central Bank (ECB). The accession to the SSM comes as a result of Decision (ЕU) 2020/1015, made by the ECB on 24 June 2020. With its accession to the SSM, Bulgaria also joined the Single Resolution Mechanism (SRM). The SSM and the SRM are the two currently operating blocks of the so-called Banking Union in the euro area. Accession to the Banking Union was a precondition for the inclusion of the Bulgarian Lev into the Exchange Rate Mechanism (ERM II). 1. Participation in the Single Supervisory Mechanism The SSM is the name of the banking supervision system in the euro area. It comprises the ECB and the national supervisory authorities of participating Member States. Applicable to Member States outside the euro area is the so-called regime of close cooperation between the relevant national supervisory authority and the ECB – the mechanism established for Bulgaria. The main objectives of the SSM are to ensure the safety and soundness of the European banking system, to enhance financial integration and implementation of consistent supervision.

Why didn’t the markets and clearing institutions react to the large build-up of risk? And why didn’t the lenders adjust their margin calls to correspond to the risk concentration? Better disclosure of Amaranth’s risk profile, from the authorities, the markets, the clearing institutions and individual lenders would probably have increased the chance of detecting the risk positions being built up. Conclusion New financial crises will occur and hedge funds, which have become an integral part of the modern financial markets, will probably be involved. The large capital flow to the sector has meant, not unexpectedly, that profitability has declined and it is not unreasonable to expect that a number of funds will consequently be forced to close down after more or less substantial losses. However, the advantages of the hedge funds’ operations exceed the risks from a welfare perspective. The Riksbank’s view as regards further regulation is that the focus should be on the hedge funds' counterparties - particularly the systemically-important banks - being able to manage their risks. Improving the banks’ risk management with regard to hedge funds has been the objective of a number of initiatives by the Basel Committee on Banking Supervision and other organisations ever since the LTCM crisis in 1998. From a stability point of view, the central issue is that the systemically-important banks should manage their counterparty exposures correctly – take sufficient collateral, have appropriate limits and be capable of managing potential liquidity problems. The arguments for further regulation of hedge funds are in this context weak.
In addition, a monopolist may have few incentives to engage in product development. In most cases, therefore, efficiency will be higher with several competing producers of payment services. A genuine possibility that new participants may enter the market may prevent monopolists from taking out a monopoly profit. This may also encourage the producer to maintain a high level of operating reliability and to further develop the services. Strong customers may also contribute to reducing the power of the large producers. Customers’ bargaining power normally depends on their size, and small banks can collaborate and form alliances to increase their bargaining power as buyers. However, the majority of the banks’ customers will not have bargaining power vis-à-vis banks, so it is important that there are many banks competing to supply payment services to customers. Efficiency in the Norwegian system Overall, the Norwegian system for retail payment services is fast, reasonably priced and safe. 3. Productivity gains in the 1990s Per cent  20  15  10  20  Financial services  15  Financial services, average  Mainland Norway  10  -5  0 '0  98  96  94  0  92  0  90  5  88  5  -5  Retail payments are settled in Norges Bank twice a day. Depending on the time of day that the payment is made, the funds will be available in the payee's account on the same day that payment is made or the next working day.

When many banks encounter problems at the same time, history shows that the authorities have little recourse other than to help them. In that case, being different brings little gain. When they are all in the same boat, bank executives can easily argue that the problems were not self-inflicted. However, the loss associated with being different is considerable if a bank is alone in encountering problems. The result is that banks engage in herd behaviour and the risk in the financial system becomes excessive. So far I have spoken about how various forms of market failure in the banking system lead to systemic risk that is higher than what is socially optimal. The level of credit in the economy may also become excessive. The economy then becomes vulnerable. The reason is external effects between banks and the wider economy. Loan collateral can give rise to such external effects. One reason banks demand collateral is because they do not have complete information about loan applicants. The collateral value is a security and a restriction on the amount that can be borrowed. When overall credit increases, the value of residential and non-residential property rises. Other economic agents experience a rise in their own collateral values, which they then use to borrow more. But rapid credit growth increases the risk of a deep economic downturn. The interaction can go into reverse. Borrowers that have to sell the collateral to deleverage, push down the collateral values of other borrowers.
A private-sector-led panel will be set up later this year to advise the Ministry of Finance and the Monetary Authority of Singapore on matters relating to corporate governance, disclosure requirements and accounting standards. Through feedback from market players and continual reviews, we will continue to refine our regulations to promote competition and innovation whilst maintaining high prudential standards and the stability of the financial system. The future of SEACEN The Asian financial crisis clearly demonstrated that the world has become more inter-linked. Liberalisation of markets in the region resulted in the fortune of each economy being more intertwined to one another than ever before. There is much scope for co-operation, and room for economies to learn from the experiences of one another. Over the past couple of years, there has also been a proliferation of regional and international foras, bringing together regulators and government officials to deliberate the intricacies of financial stability. In this regard, the challenge for SEACEN is to remain attuned to the needs of its various members, and to maintain its relevance by reaching out to its members. The SEACEN Centre has played an important role in facilitating the exchange of information and expertise on financial supervision and the conduct of monetary policy among the staff of SEACEN central banks. There is room for greater co-operation among regulators, as well as with other regional groupings and international financial institutions. SEACEN should explore ways to leverage off the expertise of these various groupings, and to create greater synergies through partnership and co-operation.

These stones could be as large as 12 feet in diameter and represented a value determined by both by the stone’s size, the quality of its craftsmanship and the history associated it. 5 See for example, ‘Money: the unauthorised biography’ by Felix Martin. 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  Societies do not need to have such social technology – there are examples in history of quite advanced 6  societies that have not used it. But modern economies and the changes to living standards to which we have become accustomed would almost certainly be impossible without it. This social technology is of course supported by other technologies - physical, legal and institutional. But these can be very different in different societies and they evolve and change over time. The claims we hold on each other and exchange can be expressed in physical form, like coins or as records in a paper or an electronic ledger. They can be issued or authorised by the state and governed by law - but they do not have to be. In the end, what counts is that the social convention that is money continues to hold. When it fails, when it gets ‘out of order’, the damage to society can be very great. And though money can exist without them and although they can vary, what I have called the supporting technologies matter hugely.
4/6  BIS central bankers' speeches  As we continue to see the impact of technology and big data in other parts of financial services, one interesting question is how innovation and enhanced technology will support the measurement and management of culture. The potential of big data analytics to revolutionize approaches in many areas of business has been talked about for years, and is now beginning to become a reality. For example, we might see firms routinely leverage broader data to make stronger predictions about potential misconduct risk, which could be useful to help focus scarce compliance resources. Some may view the official sector as an impediment to the adoption of new technologies, but I don’t think that needs to be the case. In the context of compliance risk management in the U.S., the five federal banking agencies recently encouraged financial firms to explore innovative approaches to meet their compliance obligations related to money laundering and further strengthen the industry against illicit activity.15 Similarly, in the U.K., Rob Gruppetta, head of the Financial Crime Department at the Financial Conduct Authority, has spoken about the “balancing act” the FCA faces as a regulator trying to encourage progress and innovation while also mitigating danger and imprudent risk-taking. He points out that data from new technologies has also allowed the FCA to be more consistent, effective, and risk-based in its supervisory approach toward conduct risk.16 This leads to a question about how firms can use similar tools and techniques to mitigate misconduct risk and promote healthy cultures.

Ladies and Gentlemen, Let me now turn to the last success factor: inclusiveness, which is probably the weakest achievement among the three success factors so far. However, inclusiveness is something that has increasingly gained attention from Thai policymakers in recent years, as it was part  4  IMD, 2010. BIS central bankers’ speeches  3  of the root cause of political unrest. I believe that inclusiveness will be one of the long-term solutions for Thailand political stability. Yet, I should stress that inclusiveness has a different concept from equality. It focuses on creating equal opportunity rather than equalizing income. Income equality ultimately means that the reward system is independent of performance which erodes efficiency. Inclusiveness, on the other hand, refers to having equal opportunity which still preserves efficiency through reward incentive system while allowing the rich and the poor to have the same economic opportunity. As such, inclusiveness refers to equal access to public infrastructure such as education, fair competition and equal treatments of law and regulation to all. In this way, inclusiveness will provide equal exposure to yield the benefits from economic prosperity. Improving inclusiveness in Thailand will be a long process but some initiatives have already been put in place. These include decentralization of public spending, better access to education, informal sector debt alleviation, and better credit access for low income group.