samchain/econo-pairs-v1 huggingface dataset:
Publication of aggregate results allows the regulator to communicate to the market and the public our view on the resilience of the sector in plausible, narrated stresses, and identify sector-wide risks. This serves our accountability and can enhance confidence in the capacity of the insurance sector as a whole to continue to support the wider economy through provision of essential financial services. We should also think about whether it will be valuable in the longer term not only to give a sector view but a firm-specific view as well. In stress testing the banking system through the annual cyclical scenario (ACS), the Bank publishes the results for the seven participants. The objectives for the ACS test include improving firms’ risk management and enhancing market discipline, with confidence in disclosures contributing  7  See Discussion Paper 'The 2021 biennial exploratory scenario on the financial risks from climate change' (December 2019). 5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  positively to access to capital markets. Publication has been helpful in cementing the integrity of the exercise and being part of the regulator’s accountability. These are valuable benefits, and the current consideration of both the future regulatory framework and the review of Solvency II, on which HM Treasury recently published a call for evidence, suggest we should look carefully at both what we are seeking to achieve, why, and how.

Let me again make some observations from my home country:  Norway had a severe banking crisis around 1990. Three of the four largest banks failed and the direct capital injections required were alone more than 3½ per cent of GDP. Just to put this figure into perspective, the 106 billion euros the European banks need for recapitalisation now is less than 1 per cent of GDP in the euro area. Ever since the Norwegian banking crisis in the early 1990s, our banking industry has been regulated more strictly than banks in comparable countries.   For instance, bank capital definitions have been tighter and the financial supervisor has been more actively restricting banking activities.   Another example is that packaging loans into complex financial instruments was in practice not permitted until 2007 when new regulations provided for the issuance of covered bonds. The complex instruments central in the creation of the subprime crisis were never introduced, and Norwegian banks did not invest in them. Our GDP growth rates have still been high during the years up to 2008, also outside the petroleum sector. And the downturn we experienced in 2009 was modest in relation to comparable countries. At the early stage of the banking crisis in the1990s, the Norwegian central bank provided a large liquidity loan to a savings bank. It soon became clear that the loan would not be paid  2  BIS central bankers’ speeches  back. A liquidity problem turned into a problem of solvency.
A model to reanchor finance to the real economy While the global financial stability efforts have made progress in generating an enabling environment for a new equilibrium of financial stability, a key consideration as we move forward is the need to redefine the fundamental character of modern finance and how it would interface and interact with the economy and the broader society. New considerations that prioritise justice and fairness, sustainability and inclusion have also become essential underpinnings of such a financial ecosystem. The recalibration of finance should aim to serve the needs of the real economy and more importantly the broader society. This would generate positive externalities that would in the medium term lead to more sustainable financial systems, and in turn contribute positively to growth and development. A core underpinning of Islamic finance is the tenet that requires Islamic financial transactions to be supported by genuine productive economic activity. Islamic finance is also a financial regime that places emphasis on risk-sharing, thereby strengthening further the link of finance to the real economy. Thus, it provides a greater understanding on the fundamental relationship between the financial sector and the real economy. The concept of risk-sharing in finance is not new. While risk-transfer activities currently dominate the conventional financial systems, risk-sharing in the form of equity has long been a cornerstone of capital markets with vibrant stock exchanges. Techniques used by venture capital financiers also have similarities to risk-sharing contracts in Islamic finance.

Christian Noyer: Challenges and outlook for the global economy Speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at a press conference, Saint-Denis, Reunion, 14 November 2011. *  *  *  Secretary General of the Prefecture, Elected representatives, Consul General of China, Representatives of civil and military authorities, Ladies and gentlemen, It is a great pleasure to be here today. And not only because it is 20 degrees warmer than Paris at the moment, or because I spent the weekend enraptured by the beauty of your island and the friendliness of its people. I am particularly pleased to be here today because it is extremely important for me to have the opportunity to talk directly to local economic players throughout the French territory, listen to their views and explain our actions. Above all, in these complex times, such exchanges are tremendously valuable. I would especially like to extend my regards and thanks to the Mayor of Saint-Denis for receiving us in this beautiful venue. I will start by rapidly recalling the crisis to date and the solutions that have been implemented. In the past months we have witnessed a succession of serious and complex events. It is therefore logical that feelings of confusion and uncertainty have developed in society. I will thus attempt to provide some useful insights into the situation that we are currently facing.
In due course, it would be beneficial to bring an EMF into the fold of the Community method, which means anchoring this institution in the framework of Union law [the Commission has suggested proceeding on the basis of art. 352 of the TFEU]. Within this framework – and only within it – it would make sense to entrust an EMF with a broader surveillance mission, including the task of monitoring compliance with the common rules, a role that is today assigned to the European Commission. II. A micro accelerator, including the completion of the banking union Let me now turn to the micro accelerator for the Economic Union: a Financing Union for Investment and Innovation. The aim is to better steer the euro area’s EUR 350 billion annual savings surplus towards productive investment, notably by shoring up equity which is the key to an innovation economy. Thanks to unified governance, this Financing Union would help circumvent bureaucratic barriers and foster synergies between the existing building blocks: the Juncker Investment Plan, the Capital Markets Union and the Banking Union.

A subject that often comes up for discussion is the cost of living allowance or COLA. It has to be recognized that in Malta the allowance is determined on the basis of a basic or social wage, and COLA is a flat euro amount, granted regardless of the level of pay. This limits its impact on competitiveness. Nevertheless, the award of COLA is disconnected from productivity gains and hence may constrain firms’ ability to respond to changing market conditions. It also raises the risk of secondary cost increases after an initial price shock, which may come for example from an increase in imported prices. It may not be possible to neutralise such increases in imported prices and simply compensate for them in wages without significantly losing competitiveness of the enterprises concerned, especially if our competitors are absorbing these external shocks through an internal devaluation. It is relevant to note that the world economy is going through unusual times where some countries are undergoing internal devaluations. Malta cannot afford to be oblivious of the impact that these realities exert on its competitiveness. The list of euro area countries passing through significant corrections is impressive, namely: Ireland, Portugal, Spain, Italy, Slovenia, Cyprus and Greece. This apart from other non-euro area member states that are also going through difficult and corrective changes in their economies.
Broadly speaking, the responsibilities of the Federal Reserve System include setting and implementing monetary policy, regulating and supervising certain financial institutions, acting as fiscal agent for the United States Treasury, and helping to maintain financial stability. Not every responsibility is shared by each component of the Federal Reserve System. For example, the Board of Governors regulates financial institutions. The Federal Open Market Committee sets monetary policy. And the New York Fed serves as a fiscal agent for the United States Treasury. But, collectively, these are the functions of the central bank of the United States. The New York Fed, where I serve as general counsel, is one of the twelve regional banks. Its district includes New York City—the financial center of the United States. The New York Fed implements monetary policy pursuant to the directives of the Federal Open Market Committee. Monetary policy refers to the actions taken by the Federal Reserve to influence the availability and cost of money and credit to help promote economic goals. The New York Fed helps to accomplish these goals by, among other things, purchasing and selling securities. And, like other Federal Reserve Banks, we make loans to commercial banks and pay interest on deposits by commercial banks. In addition, the New York Fed manages the operation of wholesale payment services—known as Fedwire® Services—on behalf of the other Federal Reserve Banks. The New York Fed also participates in the regional and international distribution of United States currency and coins.

Pursuant to authority delegated by the Board of Governors, the New York Fed plays a significant role in the supervision of some of the largest financial institutions in the United States and most of the foreign banks that do business in the United States. Supervision means the monitoring, inspecting, and examining of financial institutions to ensure that they comply with rules and regulations, and that they operate in a safe and sound manner. Supervision of financial institutions is tailored based on the size and complexity of the institution. The New York Fed also participates in much of the Federal Reserve’s work in the international arena. We manage the foreign reserves of the Federal Reserve System and the United States Treasury. We offer deposit and custody accounts, and provide related services, to foreign official institutions, including other central banks. And we maintain a current understanding of foreign markets and laws. Our analysis helps us to carry out our responsibilities and to assess the risks posed by an increasingly interconnected global financial system. Risk in banking Now that you have some idea of what the New York Fed does, I will share some thoughts on the roles of risk in banking. For starters, and to state the obvious, risk is inherent in banking. Economic growth requires taking chances. Taking risks is part of what banks do. When depositors leave their money in a bank, they are actually lending it to the bank.
‘UK Monetary Policy – ‘Crossing the river by feeling the stones”, speech given at the Confederation of British Industry, Newcastle upon Tyne. Saunders, M. (2022). ‘The route back to 2% inflation,’ speech given at the Resolution Foundation, London. Weale, M. (2014). ‘What to do when we don't know: Policy-making when spare capacity is uncertain,’ JSG Wilson Lecture, Hull. 1. Consumer price inflation, Office for National Statistics  , April 2022. 2. See Chart 3.8 in ‘Monetary Policy Report - May 2022’, Bank of England. 3. ‘Bank Rate increased to 1% - May 2022’, Bank of England. 4. The inflation target is set by Government, on the basis of the Bank of England Act 1998. The Chancellor of the Exchequer sets out the inflation target and other details of the remit in an annual letter  to the Governor. 5. See the Governor’s opening remarks to the Monetary Policy Report press conference on 5 May 2022. 6. ‘Monetary Policy Report - May 2022’, Bank of England. 7. See Pill (2021, 2022) and a speech by one of my predecessors on the MPC, Martin Weale (2014). 8. See Evans et al. (2015) for a rationalisation of the ‘risk management’ approach to monetary policy, which has been used to underpin this supportive stance.

BIS Review 113/1999  2  Until a decade ago, one might have been fooled into thinking that there were in fact two separate European identities supported by two distinct economic systems. However, this would be to deny the close ties which still existed, even under the difficult circumstances of the time, between countries both east and west of the Iron Curtain. Events since the fall of the Berlin Wall have now shown that this difficult period did not destroy but merely delayed a process of further European integration – including both East and West – which is a natural consequence of our shared political and economic interests and our common cultural heritage. Ever since the velvet revolutions which swept across central and eastern Europe a decade ago, it has been apparent that, as part of their difficult transition to properly functioning market economies, these countries would become increasingly integrated with the economies of western Europe. Moreover, it was clear that this process, with its ultimate objective of accession to the European Union, could not be achieved instantaneously, but would have to be extended over a period of time, in some cases a considerable period of time. No other scenario could be foreseen, given the largely uncharted path which these countries had to tread in dismantling the old system of central planning and replacing it with the structures necessary to support a properly functioning market economy.
This is not a side issue for central bankers, as we are now in charge of financial stability as well as price stability. Moreover, a robust and profitable financial sector is one of the prerequisites for the proper transmission of our monetary policy. 1. Where do we stand in the euro area with respect to monetary policy? I am fully aware of the heated debate here in Germany surrounding our monetary policy. A debate that is fully legitimate, but let us try to keep it rational, and avoid getting emotional. “Mehr Licht!” (more light!) if you allow me to quote Goethe’s last words. This is exactly what I would like to do today: to shed light on our reasons and our progress. As you know, the ECB was shaped according to the model of the Bundesbank, and I do believe that the Eurosystem’s collective monetary policy is very much aligned with the German values that I fully share and admire: independence, respect of the Treaties, price stability and a longterm approach. As price stability is the mission entrusted to us by the European Treaties, we have a duty to make it our primary focus. Price stability means an inflation rate of close to, but below, 2% over the medium-term. This has been our definition since 2003, and it is a definition that most central banks in developed countries share – what Jean-Claude Trichet rightly terms as “a great convergence".

As regulators, we obviously have a part to play in helping the finance industry adapt. We should strive to reduce uncertainties as much as possible. One source of uncertainty today is the regulatory framework. Nearly ten years after the crisis, our priority must be to stabilise the rules. The main elements of the Basel III package have already been approved in 2010–11 and have largely entered into force. But there are still ongoing discussions regarding the measurement of risk on bank balance sheets. The objective, as you know, is to reduce the unwarranted variability of results between banks and across jurisdictions. And as the German G20 reiterated last week, the completion of reforms must not result in a “significant increase in overall capital requirements”. We have not yet reached an agreement. Thanks to our mobilisation and that of our European partners, we have avoided a bad agreement. For the coming months then, our objective is to reach a good one. Another source of uncertainty is Brexit. With article 50 about to be triggered, we obviously cannot prejudge the outcome of the future negotiations. But it is essential to bear one principle in mind: in the single market, you cannot separate access and rules. In financial services in particular, you can hardly expect to have a European passport if you don’t accept the single market’s rules. Let us be clear: we are saddened by Brexit, and we are not the ones who have decided to have a so-called “clean Brexit".
In the UK and US, they have fallen from around 6 years in 1950 to less than 6 months today. 18 Another diagnostic on short-termism is found by looking at company pay-out behaviour. Chart 2 compares dividend pay-out behaviour among companies during two eras – the mid19th century period before shareholder primacy took hold, and the period since 1980 when it has been uppermost in the minds of management (Haldane (2010)). 16  Haldane (2011). 17  Recognition of this problem lay at the heart of John Kay’s proposals, in his review, for an “Investor Forum”. This was a mechanism for bringing together in particular institutional investors to mobilise and strengthen their hand (Kay (2012)). 18  See Haldane (2010). Within this, the move to high frequency trading has contributed to a downwards shift in this average holding period. 8  BIS central bankers’ speeches  In the earlier period, dividends decreased as often as they increased. This is as we would expect if profits fluctuate both up and down. After 1980, however, we see a one-way street. Dividend payout ratios almost never fall. This is evidence that the short-term quest for smoothing shareholder returns has come to dominate payout behaviour, almost irrespective of profitability. Another way to remit profits to shareholders is through share buybacks. These, too, have risen in prominence. Among UK companies, share buybacks have consistently exceeded share issuance over the past decade, albeit to a lesser degree more recently (Chart 3).

Today, that fraction is less than 15%. There has also been a sharp fall in the fraction of shares held directly by individuals, from more than 50% in the 1960s to little more than 10% today. Today, these individual holdings tend to be indirect, operating through investment intermediaries of various types. That means the beneficial owners of shares – individuals – tend to have little direct communication with, involvement in, or indeed knowledge of, the firms in which they are investing. One consequence of a more dispersed and disinterested ownership structure is that it becomes harder to exert influence over management, increasing the risk of sub-optimal decision-making. 17 There is some empirical support for this hypothesis. For example, companies tend to have higher valuations when institutional shareholders are a large share of cashflow, perhaps reflecting their stewardship role in protecting the firm from excessive risk-taking (La Porta et al (2002), Claessens et al (2002)). (c)  Short-termism  A third friction in the manager/shareholder relationship, distinct but related, arises when different classes of shareholder have different rates of time preference. In particular, there have been concerns about the rising share of investors with excessively high discount rates and low holding periods – in other words, about “short-termism” (Kay (2012)). There is clear evidence of the investor scales having rebalanced in this direction over time. Average holding periods of shares have been in secular decline in a large number of countries for a number of decades (Chart 1).
that a significant proportion of these payments should be deferred over time, allowing for possible reductions in case losses materialize. This is an area, more than in any other where “business as usual” cannot apply anymore. Considering, especially, recent profits, it is clear that they would not have been possible without the wide array of public support and guarantees which have benefited the financial industry. It is only legitimate to ask that those profits should primarily be used to bolster capital and allow banks to focus on their core task of financing the economy. Tomorrow’s meeting will be an opportunity to ascertain that we have made a lot of progress but that much work remains to be done. It is an ongoing process, best described as “rebuilding the plane as we fly it", clearly a very challenging and perilous task. 2  BIS Review 104/2009

Norwegian money market premiums are expected to edge down ahead in line with premiums in global markets. BIS Review 37/2009  3  The global downturn led to a marked fall in prices for oil and other commodities through autumn 2008. Oil prices have for a period now hovered around USD 45 per barrel. Oil futures prices have fallen and indicate an oil price of around USD 55 per barrel in 2010. Other commodity prices that are important for the Norwegian economy have also fallen sharply. Metal prices are particularly sensitive to cyclical developments. Futures prices for a selection of raw materials indicate unchanged or moderately rising prices in the next few years. Many countries that have been hit by the economic setback will see an improvement in their terms of trade and growth in their disposable income. 4  BIS Review 37/2009  The current downturn followed a period of very high global and domestic economic growth, supported by favorable trading conditions. Few countries benefited more than Norway from the economic upturn, which drove up prices for oil, gas and other export commodities. At the same time, an increasing number of cheap consumer goods were imported from new EU countries and from Asia. Norway’s real disposable income increased by more than 40 per cent from 2002 to 2008, more than that of any other western country. But our terms of trade are now deteriorating.