samchain/econo-pairs-v1 huggingface dataset:
9  All speeches are available online at www.bankofengland.co.uk/news/speeches  9  Rather, and in line with the way in which global governance has developed, it requires a relationship built on the assessment of similar outcomes, in a non-discriminatory way, paying due respect to home country regimes in line with FSB norms. Both the EU and UK have I think recognised principle. Second, future regulatory and supervisory arrangements between the EU and the UK need to be stable and built on good faith. This is not primarily because cross border activity beneficial to both sides will not be maintained in an unstable environment – true though that is. It is because abrupt disruption of cross border activity in the financial sector is in itself a source of risk. Of course, even in a relationship grounded on similar outcomes and deference, it must be possible for supervisory and regulatory arrangements to change over time – for one side or the other to conclude that due to changes in the regulatory framework or new challenges handled in different ways, financial stability risk cannot no longer be managed in the current framework. In such a case, additional controls and restrictions on cross border activity may be needed. But these need to be clear and transparent regulatory and supervisory decisions, grounded in evidence and applied within agreed procedures to ensure that their implementation itself does not become a source of risk.

This is demonstrated by the fact that we have the largest, deepest, and most open Chinese capital markets outside of the Mainland: half of our stock market capitalisation comprises Mainland related companies. At the end of August, our stock market was the sixth largest in the world and the second largest in Asia in terms of market capitalisation. It ranked first in the world in securitised derivatives turnover, and first in Asia for stock options turnover and exchange-traded funds turnover. It also ranked fifth in the world in total equity raised through IPOs. 4 In the other direction, many Mainland companies have set up regional headquarters or offices in Hong Kong as part of their strategies to step up their international presence. Continuously high growth in recent years has resulted in a vast accumulation of wealth on the Mainland and the authorities there are progressively liberalising the requirements for Mainland financial institutions to invest overseas. As a result, Hong Kong has benefited from the outward investment flows given our geographic, cultural and linguistic affinities with the Mainland and our ability to provide a broad access to numerous Asia-Pacific and global markets. The potential demand for wealth management thus presents capital-market intermediaries in Hong Kong with huge opportunities. We are also the first jurisdiction outside of the Mainland with the ability to conduct renminbi banking business and deal in renminbi-denominated financial products. The establishment of a renminbi bond market in Hong Kong last year marked a key milestone in the development of renminbi business here.
As we move forward with developing the framework and standards, we are reviewing current and emerging laws, regulations and guidance; further researching best practices; and identifying gaps in current assessment efforts. As we do this, we have identified a set of issues that are top of mind: 1. This is not just an IT issue  As I mentioned earlier, cyber isn’t just an IT issue. I don’t think I can say this enough. It is a business issue first and foremost and needs to be tackled as such. Cyber needs to be owned by the business leaders in the firm – partnering with the experts of course. There needs to be a foundational shift in thinking at the top of the house: it needs to be a regular topic on the agenda for the board of directors; it needs to be at the top of the priority list for senior management of the firm; and it needs to be on the mind of every employee, to some extent. It needs to be part of everyone’s vocabulary and recognized as a valid threat at every level. 2. Good risk management is the foundation  Good risk management and good IT practices set the foundation for a solid program to address cyber-related risk. It’s hard to imagine that a firm that doesn’t manage its IT risk well is ever going to be able to manage cyber risk well.

This bias is prevalent in complex and opaque situations which are surely predominant in the modern financial system. Turning to the indebtedness of sovereigns, we cannot put the blame for excessive indebtedness on financial incentives. But the overweighting of current benefits and the overdiscounting of future costs can easily be attributed to electoral considerations and the finite career of elected politicians, careers which become shorter when they cannot “seduce” their electorates. At a cognitive level, I would also put the blame on another factor that could be called a “Keynesian bias”. Here, I refer to the conviction that countercyclical policies should be activated in downturns to mitigate the social cost of output and employment losses, but that they need not be reversed in upturns. This conviction is based on the view that there is no natural, theoretical or even apparent practical limit to state indebtedness, at least for developed economies. This cognitive bias is, in my view, a major explanation for the observed structural deficits in government accounts leading to an ever-rising debt to GDP ratio. In the OECD as a whole, for instance, the public debt to GDP ratio has increased from 70% in 2000 to 103% today! While we can dispute the precise diagnosis, we cannot disagree with the fact that the present crisis should and will serve as a wake-up call. Sovereigns, like banks, need to build up a buffer ahead of potential unfavourable economic developments.
Flaws in the Swedish macroprudential policy framework In Sweden, Finansinspektionen has been given the main responsibility for macroprudential policy. In addition, there is a financial stability council – consisting of representatives of the Government, Finansinspektionen, the National Debt Office and the Riksbank – which is a  14  See Goodfriend and King (2016). BIS central bankers’ speeches  7  forum for the discussion of financial stability issues. I believe that there are significant flaws in several aspects of the Swedish framework for macroprudential policy. Firstly, experiences so far of the Swedish framework indicate clear inadequacies in decisionmaking power. An obvious example is the protracted discussions on the introduction of a binding amortisation requirement. An important cause of the problem is that the macroprudential policy objective is unclear and too narrow. For example, it should be made clear that macroprudential policy instruments may be used not just to manage risks to financial stability, but also to reduce risks created by the financial sector in the real economy. It must also be clear that macroprudential policy includes the entire financial system and not just the credit market. A clarified and broadened objective is also appropriate in order to bring Sweden’s framework in line with European standards. 15 There is also a lack of clear and expeditious procedures when new macroprudential policy tools are to be introduced.

Now that central counterparties are increasingly used, it also means that some of the risk individual banks previously had in relation to each other is instead concentrated to central counterparties, which makes these players extremely systemically important. We are therefore now faced with the question of whether they should also be given the opportunity to borrow money from the central bank to a greater extent than currently is the case. ELA from central banks may therefore come into question for a more complex set of players in the future. Where we draw the line regarding the type of institution that can obtain ELA and what conditions should hence apply are obviously questions that central banks now face. If, for example, central banks are in practice willing to give loans to institutions that are not covered by the previously mentioned regulations, do we not then encourage the emergence of new types of shadow banks and new risks? Increased need for foreign currency in the event of a crisis Widespread globalisation also means that many banks have substantial exposures in foreign currencies, currencies which the national central bank cannot create itself. 10 This is particularly relevant for Sweden, which has a very internationally active banking sector. When liquidity on the dollar markets slowed towards the end of 2007, swap agreements were established between the Federal Reserve and other central banks, including the Riksbank.
BIS central bankers’ speeches  1

Confidence among financial market participants remains insufficient. The pressure on participants who are still only able to refinance themselves in the market on a very short-term basis remains high. As long as uncertainty with respect to the scope of the credit problems exists, the disruptions on the money market are likely to persist. Second, the central banks have played a fundamental role in calming and stabilising the money markets through close consultation and targeted operations. The SNB reacted rapidly to the tensions in the Swiss franc money market. The flexibility of our monetary policy instruments demonstrated its value in this difficult setting. Above all, short-term interest rates calmed as a result of the measures taken. The difficulties in bank refinancing over longer terms and the rise in risk premiums in the money market came about through the loss of confidence. Central banks can not compensate this lack of confidence simply by injecting additional liquidity. On the contrary, the financial market participants themselves must take the fundamental steps needed to restore this confidence. Third, the crisis in the money market once again clearly demonstrates that liquidity management is a core task of each and every bank, falling within the direct accountability of bank executive management. Liquidity provisioning must begin in good times. It is critical that sufficient liquid assets be held. Only first-class securities are suitable for this purpose. These can be sold in the markets or mobilised via repo transactions, even in difficult conditions.
This made banks, and bank deposits, special in a different sense insofar as similar formal supervision and asset protection were not (at that time) extended to other financial intermediaries or their liabilities. These then are the respects in which banks have hitherto been regarded as special. Let me now move on to consider whether, or to what extent, the banks have kept their distinctive characteristics, or to what extent other financial institutions have developed similar characteristics so that banks are no longer special in that sense. To what extent have banks changed? It is certainly true, as I noted earlier, that banks engage in a range of financial activities besides those which I have described as distinctively banking activities. Major banks everywhere have increasingly diversified the products and services they offer, built up investment banking businesses and trading activities, extended into life insurance, and so on, sometimes on a single balance sheet or sometimes in separate non-banking entities. In the present context, however, the question is whether these developments have fundamentally altered the characteristics of the banking part of their balance sheets. It seems to me that the answer, generally speaking, is that they have not. On the liabilities side, while there may have been (indeed in some countries, where close substitutes for money, such as money-market mutual funds have taken off, there certainly has been) some erosion of the banks’ market share as a repository for liquid asset holdings, that erosion has generally been very gradual.

That, of course, is why the respective supervisors need to take an interest in all parts of a financial group and in intra-group exposures. But none of this, it seems to me, means that long-term savings institutions have taken on the distinctive special characteristics of banks. So far, I would hope, so good in the sense that perhaps most of you would agree that this particular distinction remains. But have I chosen this extreme example as an Aunt Sally? Well perhaps to a degree I have. So let me take some less obvious cases. What about money-market mutual funds, for example? Surely they at least have some of the characteristics of banks? They, too, act as a repository for liquidity and it is possible to make payments from some of them, which looks very like a banking arrangement? And so it does.
Looking at developing countries makes this point even stronger, since it can also apply to inventory management and other forms of common productivity shocks since the asynchronicity is much more significant. 2  BIS Review 74/2008  However, reforms regarding monetary policy have lagged noticeably in their adoption among developing economies. Central bank independence, inflation targeting and other related policy reforms have only materialized in developing economies beginning in the mid-90s which coincides with the fall in volatility in this group of countries. While structural changes, such as the increased openness, may have indeed helped economies become more stable, these changes must also include those related to monetary policy because the Great Moderation coincides with inflation control, suggesting that improved monetary policy has indeed played a major role. So, the relevant question is exactly how does monetary policy reduce the volatility of both output and inflation. We know that there is a tradeoff between output volatility and inflation variability, and monetary policy attempts to manage this tradeoff optimally. Policymakers have to decide how to reduce inflation to reach their goal. If they react forcefully to any inflation deviation, the outcome will be low inflation volatility, but large output volatility. Thus, in the long run, there is a tradeoff between inflation volatility and output volatility, although inflation has no effects on the full employment level of output. It is also possible to practice inefficient monetary policy, one which lags behind the output/inflation volatility frontier, making both of these inefficiently large.

And so when exchange rates move sharply, which they do, the currency mismatch results in large losses. 12. But I suppose we all learn from mistakes. We in Hong Kong did so the hard way in the early 1980s when the situation was compounded by uncertainties about the political future of BIS Review 115/1997  -3-  Hong Kong. We had our currency crisis in 1983, after nine years of operating with a floating exchange rate, against volatile capital flows, without any effective mechanism for monetary management or currency anchor. Our banks had been overly exposed to credit, maturity and currency risks, and a total of seven banks had to be rescued directly or indirectly through the use of public funds. In short, we had been complacent. 13. But, thankfully, never have we been in any doubt about the need to maintain free and open markets, and a liberal financial system. The correct response to financial turmoil is not to resort to controls or to apportion blame, but to put one’s own house in order, and ensure that one is in a position to cope. This we did through a series of reform measures to strengthen our monetary and financial systems implemented in the past ten years. This was, in part, also spurred by the desire to minimize the risk of possible financial disturbance ahead of and through political transition, and to provide the environment for Hong Kong’s continuing development as an international financial centre, as required under the Basic Law.
I am the Executive Sponsor of the Bank’s disAbility Network, a staff-led network whose objectives are to:   Raise awareness of the full spectrum of disabilities, be they visible or not; and    Provide support by identifying and removing barriers for individuals with disabilities and enabling them to reach their full potential. The Network celebrated its 10th Anniversary last year, and during that time has seen physical changes to the building, including an external wheelchair lift (no mean feat in a listed building), hearing loops in key rooms, and accessible toilets. But it is also important to create an inclusive and supportive culture that works for everyone. The disAbility Network is just one of ten staff networks, and it is only through fostering these initiatives, ideas and enthusiasm that we can attract and retain a truly diverse range of staff. So to conclude, diversity in payments does matter. It matters to the Bank; to the firms providing payment services; and to the businesses and individuals that use payments every day. The Bank is playing a leading role in facilitating and enabling that diversity through our policy-making, and through our current and renewed RTGS infrastructure, in order to promote a diverse, resilient and thriving financial system. 13  https://www.bankofengland.co.uk/-/media/boe/files/speech/2019/gender-diversity-speech-by-joanna-place.pdf  7  All speeches are available online at www.bankofengland.co.uk/news/speeches  7

Full and consistent implementation of the Stability and Growth Pact over time and across countries remains crucial to ensure confidence in the fiscal framework. At the same time, it is essential that all countries intensify efforts towards achieving a more growthfriendly composition of fiscal policies. We are now at your disposal for questions  2/2  BIS central bankers' speeches
Direct tests of Ricardian equivalence have produced conflicting results and do not allow us to draw any clear conclusions regarding its existence or its potential magnitude either for the United States or for the euro area. In the euro area the equivalence seems to have been disproved by a sample test conducted in a select group  26  Debrun, X., J. Pisani-Ferry and A. Sapir (2008), Government Size and Output Volatility: Should We Forsake Automatic Stabilization?, International Monetary Fund Working Paper, No 08/122. 27  Debrun, X., J. Pisani-Ferry and A. Sapir (2008), Government Size and Output Volatility: Should We Forsake Automatic Stabilization?, International Monetary Fund Working Paper, No 08/122. 28  Échevin, D. (2008), Social Polarization vs Income Polarization: An International Comparison, Cahier de recherché/Working Paper del Gruppo di ricerca in economia e sviluppo internazionale dell’Università di Sherbrooke, No 08-02. 10  BIS Review 135/2008  of 15 EU member countries between 1970 and 2000. 29 Yet private consumption would appear to respond better to increasing wealth in “less indebted” countries compared with those countries suffering from higher debt. In this connection, a higher public debt level could entail a more Ricardian form of conduct by European consumers and that, in turn, should discourage fiscal activism. 4.

[…] In sum, achieving price stability is not only important in itself; it is also central to attaining the other mandated objectives of maximum 12 sustainable employment and moderate long-term interest rates.” The ECB, for its part, aims to maintain price stability in the “medium term”, thus minimising economic fluctuation in the short term. In other words, in line with its mandate as enshrined in the Maastricht Treaty, the ECB is not indifferent to short-term economic growth trends. 2.4  Empirical results  So, on balance, what have been the factors underlying the difference in approach between European and US monetary policy? From the empirical results we see that the overall persistence of inflation is basically alike in the euro area and in the United States, even though inflexibility is far more pronounced in the euro area. Secondly, the evidence suggests that monetary policy impacts on the process whereby inflation expectations in the euro area are shaped. These expectations have remained basically in line with the quantitative definition of price stability provided by the ECB for the best part of the last ten years, and have displayed low variability, as can be seen in Table 1. Recent studies have confirmed the importance of a clear definition of price stability. For instance, the response of long-term interest rates (which should respond better to the 13 anchoring of inflation expectations) to economic news has virtually disappeared.
From Africa to London, technology and finance are being combined in unprecedented ways to deliver solar power to communities, drive investment decisions based on sustainability metrics and break down barriers to access. With growing inequality, environmental degradation and more uncertain global developments, the stakes are high. If banks do not take up the mantle of leadership within the community, at risk is their legitimacy in the longer term as vehicles for the efficient allocation of economic resources. Future-proofing the workforce for digital finance One can hardly talk about the quality of growth without addressing the workforce. This brings me to the third area that I would like to touch on. In a sense, the financial sector is arguably better positioned than most to transition its workforce as job profiles change in response to technological disruptions. For one thing, the financial sector has already been moving for a while in the direction of higher skilled jobs. Over the past three years, 91% of total jobs created in the financial sector were in high-skilled positions. As at the end of last year, high-skilled workers continued to comprise the majority of the workforce – representing 74% of the banking sector employees and 83% of the insurance/takaful sector employees. That said, more substantive considerations of the implications of technological disruptions for the financial sector workforce have generally been lacking.

On both counts, the financial industry can, and in fact ought to be, powerful agents of change. With a little ingenuity, digital finance can unlock new growth opportunities that were previously deemed to be not commercially viable. Indeed, disruptive innovations – whether in banking or beyond – often begin at the fringes of the market, such as the underserved and unserved segments. The much-lauded success of M-Pesa in Kenya is a shining example of this, where the humble mobile phone was transformed into a bank account for millions of people who were otherwise excluded by the financial system. We have our own success story in Malaysia with agent banks that were made possible with technology. Through the vastly expanded network of access points at a fraction of the cost involved to set up a branch, over 30,000 individuals who did not have bank accounts before now have access to banking services through agent banks. This is just the tip of the iceberg, with considerable potential that remains untapped – to achieve full financial inclusion with access to bank accounts for all Malaysians; to make it easier, through psychometric and big data analysis, for businesses that have no track record or collateral to qualify for financing as Malaysia embraces an innovation-led growth model; and to practice and influence sustainable business practices that protect our future. 3/5  BIS central bankers' speeches  With digital finance, these are commercially viable possibilities.