samchain/econo-pairs-v1 huggingface dataset:
Like 3/5  BIS central bankers' speeches  financial institutions, we need to balance the significant benefits of financial innovation with its risks. We are also mindful that the calls we make in regulating and supervising the industry can themselves sometimes, restrain innovation. Our responses to new financial technologies will continue to be primarily concerned with the risks that they pose to financial stability and consumer protection. In finding the right balance in our overall regulatory and supervisory posture, we will continue to consult widely with the industry and experts in the field. A key priority for the Bank is to ensure that our regulatory and supervisory system is appropriately calibrated to encourage innovation, but also has the agility to shift gears when required to respond to new risks. This recognises that innovation without stability ultimately destroys value, confidence and undermines our future. What does this mean in practice? There are at least three things, which are each a reflection of our ongoing efforts to build an enabling, yet safe environment for innovation: First, building interoperable infrastructures. This will start with open and fair access to a shared payment infrastructure for banks and non-banks alike. It is also important to recognise the need for other digital public infrastructures as key enablers to harness the full potential of fintech. These include having a national digital identity system, framework for open API and open banking, clear cloud policy and nationwide broadband connectivity.

The depreciation of the RMB, alongside a pullback of foreign funds from the region, triggered downward pressures on the region’s currencies. Since the RMB move on 11 August, Emerging Asia currencies have depreciated by an average of 3.2% against the US Dollar, with some falling by as much as 7%. 2  While markets seem to have calmed somewhat, a sense of uncertainty prevails and the risk of renewed volatility remains. What is happening? Financial markets are essentially coming to terms with four significant “re-pricings”. •  First, the stock markets in China are adjusting downwards from unsustainably high levels. •  Second, the RMB has become de-coupled from the US Dollar and is moving towards a more market-determined exchange rate. •  Third, oil and commodity prices have eased considerably this year, marking the end of what some have called a “super-cycle”. 1  Emerging Asia economies refer to China, India, Korea, Hong Kong, Taiwan, Singapore, Thailand, Malaysia, Indonesia and the Philippines. 2  Excluding the Hong Kong Dollar. BIS central bankers’ speeches  1  •  Fourth, the effects of an impending interest rate hike in the US – the first after seven years of extremely easy monetary policy – are being priced in across Asian markets. These are not necessarily unwelcome developments. The correction in China’s stock market is not surprising given the stretched valuations that had developed over the preceding year.
The liabilities side was therefore mainly not remunerated (we do not pay any interest on notes and coins), while we collected interest on government bonds. With interest rates around 4 per cent, the Riksbank could finance its current operations and yet deliver a surplus of several billion SEK a year to the central government budget. Today, the balance sheet looks completely different (see Figure 11). The balance sheet total now corresponds to 28 percent of GDP, and the liabilities side is dominated by debt securities. And since the debt has a very short maturity (overnight or one week) while the bonds on the asset side have long maturity, the interestrate risk is considerable.29 The rapidly rising interest rates recently therefore mean that the Riksbank will report a large loss this year. There are different ways of explaining how the level of interest rates affects the Riksbank's results. The easiest way is probably to use market values as a base: The Riksbank has purchased fixed-rate bonds. When interest rates rise, the market value of the bonds falls. Another approach is based on the Riksbank's liabilities side: On the assets side. the Riksbank has fixed-rate bonds. The return on bonds therefore does not change when interest rates rise. But our bond purchases have been financed by an increase in our monetary policy debt – the monetary base. In other words, we have paid for the bonds through the commercial banks having received a claim on the Riksbank.

Credit volumes, house prices and the level of economic activity should only affect monetary policy to the extent that they affect the forecasts for inflation and resource utilisation. Credit volumes and house prices are not targets for monetary policy. One can claim, however, that the repo-rate path chosen should not threaten financial stability. This may mean that one avoids repo-rate paths with very high repo rates in a situation in which financial stability is fragile and there is a lack of instruments to deal with this. It is also possible that in certain situations this can justify the avoidance of very low repo rates. But, as long as financial stability is not threatened I see no reason to rule out any reporate path at a monetary policy decision. The extended repo-rate path has the same effects as the lower repo-rate path This leads me to the latest monetary policy decision. One of the reasons why different people may prefer different repo-rate paths is of course that they have different views about underlying – of monetary policy independent – economic developments in Sweden and abroad. One may for example have different views about international growth, wage bargaining outcomes and productivity growth. Here I would like to make it clear that I share the view of underlying economic developments in Sweden and abroad presented in the latest Monetary Policy Update.
In the same spirit, recent ETFs innovations underline the need for securities regulators to work closely with bank supervisors and macroprudential authorities on shadow banking and what I earlier called “financing markets”. For both physical and synthetic funds, the underlying collateral pools are being swapped to provide financing for dealers and banks. It is not clear whether bank supervisors have caught up with this, or whether the risk of the collateral swaps being called is treated appropriately in regulatory maturity-mismatch ladders. Who would have guessed that vanilla collective investment schemes, could be turned to this purpose? The truth is that any pool of assets can be. While the FSB has already called for authorities to act to keep the evolution of ETFs on a sustainable path, the broader lesson is that securities regulators need to be alive to the need  11  Securities and Exchange Commission, Release No. 33-9117, Asset-Backed Securities (April 7, 2010). 12  The FSB took a small step towards addressing this issue in its March 2011 publication, “Thematic Review on Risk Disclosures Practices: Peer Review Report”. This did not get much traction at the time, but the FSB’s Vulnerabilities Group, chaired by Jaime Caruana and on which I sit, plans to draw on that Review in its own work programme. In the US, as noted, the SEC has begun to grapple with this set of issues. Its April 2010 notice proposed enhanced disclosures requirements for asset-backed securities sold privately as well as via the public (registered) transactions.

The same in Japan, which has the most active OTC derivatives market in Asia and where the country’s first repository was approved in March this year. In Europe, it is expected that the European Securities and Markets Authority will adopt a decision on the registration of trade repositories still this month and that counterparties will start to report all asset classes to the repositories as of January next year. So, on the surface, it appears we have achieved our goal. But have we really? Does, for example, the supervisor responsible for the supervision of a large cross-border financial institution at the consolidated level have direct and immediate access to information on OTC derivatives transactions that encompass all transactions entered into by all entities of this group? Is the information accessible, in other words can it be easily aggregated across trade repositories and jurisdictions? My answer would be a clear no! 2  BIS central bankers’ speeches  In the Single Supervisory Mechanism, the ECB, as I’ve already said, will be responsible for the supervision of such large banking groups, some of which are global systemically important financial institutions (SIFIs) with large derivatives businesses. The access to data relating to foreign (that is non-EU) subsidiaries of financial groups, where an authority – in this case the ECB – has supervisory responsibility at a consolidated level, is key to assessing the overall risk exposure of a given banking group.
However, there are notable differences across the region: the Baltic states (especially Latvia and Estonia) and South-East European countries (especially Croatia and Bulgaria) seem to have approached or even reached the equilibrium by 2004 or 2005, whereas in the case of the Visegrad countries (especially the Czech Republic and Poland) the credit-to-GDP ratio seemed to remain below its estimated equilibrium level at that time. Of course, it might well be that some of the CEE economies have overshot the  1  Kiss, G., Nagy, M., Vonnák, B.: Credit Growth in Central and Eastern Europe: Trend, Cycle or Boom?, MNB Working Paper No. 2006/10, November 2006 and Egert, B., Backé, P., Zumer, T.: Credit Growth in Central and Eastern Europe: New (Over)Shooting Stars?, ECB Working Paper No. 687, October 2006. BIS Review 137/2007  1  equilibrium only recently, but one has to wait for a while until the relevant data become available before this overshooting can be captured in empirical analyses. The general upshot of these papers is that the rapid credit expansion in CEE economies has mainly been fuelled by demand factors: the buoyant economic growth and the ensuing increases in disposable incomes, rising expectations with regard to future income prospects related to EU accession, remarkable decreases in interest rates, and falling or low and stable inflation rates.

This assessment should according to me follow a four-pronged approach, with four key indicators:  First, actual inflation data, focusing on underlying inflation, as this is the part for which monetary policy is relevant. In particular we should look at measures of HICP excluding energy and food, and at negotiated wage growth: by the way, we don’t see so far signs of a generalised wage-price spiral. A turning point – which we don’t see yet – will be when underlying inflation is peaking. 7  Page 8 sur 14  Alternative measures of underlying inflation are less noisy than the standard index excluding food and energy and thus can better signal the medium term inflationary pressures. Indeed, in the aftermath of the pandemic, the three alternative measures shown on this slide (persistent and common component of inflation, trimmediii and finecoreiv) have turned up earlier than the standard core index. And both in 2008 and in 2011-2012, they have also signalled earlier the easing of inflationary pressures.  Second, future inflation. We will obviously use our models and forecasts, but we should also give a strong attention to inflation expectations by financial markets and still more by economic agents: entrepreneurs and households are the real price- and wage-setters. Here so far, 3 to 5 year inflation expectations remain well anchored in markets, but with some mixed signals from businesses and households. Any sign of stronger de-anchoring would call for a stronger monetary reaction.
As I see it, an organization’s culture gets into trouble when it equates “what is right” with what is legally permissible, and when “what is wrong” becomes viewed as what is legally impermissible. A proliferation of rules—followed by the gaming of these rules—can be ultimately self-defeating. The end result may not only be a loss of trust, but also over time a more burdensome regulatory regime than would otherwise be the case. So, while regulation and supervision are necessary to ensure a resilient and robust financial system, I very much doubt that they are sufficient. They need to be supplemented by bank management that pays close attention to incentives, conduct, and culture. As I have previously said, incentives drive conduct, which establishes the social norms that help define a firm’s culture.11 The first step is for firms to evaluate the incentives that they have in place with respect to personnel evaluation, compensation, and promotion and to make sure they are consistent with the type of behaviors they want to encourage. For example, how are compliance violations treated in compensation and promotion decisions? Are incentives in place to encourage people to speak up early, when problems are smaller and more manageable? When employees do speak up, how are they subsequently treated?

Total lossabsorbing capacity, or TLAC, of the old parent company would be available to absorb losses and could be used to recapitalize the new parent company. But, the task of operationalizing resolution for large, global banks—including achieving full clarity on the roles of the home and host supervisors—is still not complete. It is key that work continues on this front to ensure that a systemically important firm can fail without threatening to topple the rest of the financial system— an important step toward ending “too big to fail.” Third, some of the obvious systemic vulnerabilities exposed by the financial crisis have been remedied. Important changes include mandatory clearing of standardized over-the-counter derivatives through central counterparties, or CCPs; more intensive supervision of systemically important CCPs; and reforms of the tri-party repo system and the money market mutual fund industry. But, even as we reduce or eliminate old vulnerabilities, we must not rest on our laurels, for new vulnerabilities will inevitably take their place. These accomplishments notwithstanding, I have no doubt that the current regulatory framework could be improved. Indeed, the official sector should assess the efficiency and effectiveness of regulations on an ongoing basis. I agree with Vice Chairman Quarles’ observation that there is more we can do to make the regulatory regime more efficient, transparent, and simple— including relief for small banks, greater tailoring based on a firm’s level of systemic importance, and simplifying the Volcker Rule. 5 Some of these changes have already been adopted or are in process.
For this purpose, they will have to undertake the downsizing of the sector and, at the same time, push through measures to raise efficiency through cost containment and through the introduction of improvements in their risk control and management mechanisms and of ongoing innovation in product marketing and in the implementation of technological and organisational improvements. And  4  BIS Review 27/2010  the government could crown the significant financial reforms made so far with one directed at savings banks. I am thinking of the reform needed so they can raise high-quality equity funds that enable them to grow and continue serving Spanish society while complying with the requirements to which they will be subject in the new international regulatory environment in the coming years. The financial system reforms adopted to date might suffice for the Spanish banking system to get through the crisis and be in a position to extend credit to those needing it in the recovery phase. But this will only happen if the reactivation of the Spanish economy comes in a form that substantially reduces the number of unemployed, improves its competitiveness and increases productivity. If this does not happen, obviously the restructuring task that we would have would be much greater than that facing us at present. Thanks to the reforms adopted, the Spanish banking system has not been an additional problem during the crisis.

The same can be said of the banking system, since if we undertake sufficiently extensive reform, we will be able to reasonably negotiate the current crisis; otherwise, banks would have to ultimately focus on the battle against bad debts and on the difficulties in obtaining external funding, and the authorities would have to focus on restructuring the banks that have deteriorated to the point of being clearly inviable. However, if we take advantage of this historic moment and carry out far-reaching labour reform, we will face a more positive scenario in which Spanish firms could promptly raise their competitiveness in the difficult (for these purposes) environment of a monetary union. Spain would enter a scenario in which increased productivity would provide a significant boost to its best firms. This would be particularly positive for SMEs, which find it most difficult to take advantage of the flexibility mechanisms offered by the current institutional framework, and they would benefit enormously from the implementation of a more flexible and simpler system. Meanwhile, budgetary consolidation could be achieved without swingeing cuts in expenditure and the banking system would be in a position to support this new growth phase. It would thus be a mistake to opt for small-scale labour reform, as if we could even afford to tackle this reform slowly, in various phases over various years. This would have been possible 5 or 10 or 15 years ago, when the last expansion phase started and the need for labour reform was not pressing.
3- Indeed, it is quite clear that crypto-assets undergoing technical and economic trials bring  about not only opportunities to improve our payment systems but also material risks which on the contrary might weaken them if unaddressed, both from an efficiency perspective and a safety perspective through the introduction of new sources of fragmentation, instability and fraud. As many central bankers have pointed out, today’s crypto-assets do not satisfactorily offer  the qualities expected from a settlement asset to be used interchangeably with commercial bank money and central bank money, let alone to displace central bank money as the central reference of value, as the privileged settlement asset for wholesale transactions and as the last recourse settlement asset given its legal tender status. The reasons for this assessment are well known and documented and boil down to stressing that there are misnamed as « currencies » for three reasons: First, their value fluctuates enormously, preventing them from being used as units of account. For instance, the value of Bitcoin (not however representative of all crypto-assets) went up to more than 19 300 euros in December 2017 and has since fallen down to 7400 euros in September this year. And stablecoins represent an imperfect improvement in this field: their value aims to be relatively stable based on backed assets, but in fact fluctuates, in particular if they are not backed on safe assets.

This improvement in the functioning of payment systems represents a huge step for liquidity circulation. Third, a broader range of participants: the payments market has expanded to include competition from big techs and major retailers, which are following a wide range of strategies in this respect. The flipside of this trend is that the increasingly global nature of the market is raising sovereignty issues, including those relating to the control of data when the providers are located outside the region or jurisdiction where they offer their services. Last, the crave for blockchain technology: all around the world, market participants and big techs have launched or are preparing to launch new projects for tokens designed to serve as means of payment or settlement using the blockchain technology. We all have in mind firstgeneration crypto-assets like Bitcoin and Ethereum, but there are now many others coming or foreseen, like the JP Morgan Coin, the UBS’ Utility Settlement Coin or The Facebook’ Libra. 2- The development of crypto-assets are part of the innovations fueled by these underlying trends affecting payment instruments and systems, combining the search for anonymity, management of non-intermediated peer-to-peer payments and the use of entirely web-based technologies. But they also have their specificities. Actually, they have unique financial, monetary and  technical features which set them apart from the currencies and payment instruments issued by financial institutions and central banks.
30  9  All speeches are available online at www.bankofengland.co.uk/speeches  9  During the first three Industrial Revolutions, the skills workers needed to keep one step ahead of the machine were largely cognitive. Machines undertook largely manual (“doing”) tasks, which had previously used labour-intensive technologies. Cognitive (“thinking”) tasks remained, by and large, the exclusive domain of humans. So institutions emerged to nurture thinking skills, largely in children and young adults, to increase the chances of successful transition to the cognitively-intensive future world of work. In children, the most important of these institutional innovations was probably compulsory schooling. For children between the ages of 5 and 10, this was formally introduced in the UK with the Elementary Education Act of 1880. It was extended to age 11 in 1893 and age 12 in 1899. The Fisher Act of 1918 provided for compulsory education to age 14 and part-time education to age 18. Compulsory full-time education was extended to age 15 in 1947 and age 16 in 1972. 33  As these pieces of social infrastructure developed, so too did standards of educational attainment and cognitive skills. The fraction of the population aged 15 and over that attended secondary school rose from 23% to 60% between 1950 and 2010. 34  In the 1950s, less than 11% of the relevant age group passed five  or more GCSE O levels in England and Wales. By 2010, that had reached almost 80%.

I am sure you will all agree with me when I say, in today’s integrated markets when any country catches a cold there will be many others sneezing. In such an environment we are now increasingly aware of contagion risk. Financial security and financial stability… Within this framework, I would like to emphasize the close linkage between financial security and financial stability. In my opinion, financial security can be enhanced by the existence of a smoothly operating infrastructure. This actually is a comprehensive concept and includes the payment system, the technological infrastructure, as well as the regulatory and supervisory framework. Overseeing the payments system is an essential duty of the central banks. In this respect, a basic continuing responsibility of any central bank is to assure stable and smoothly functioning payment  2  BIS Review 76/2007  systems. Linked to this is the lender of last resort function of the central banks. Emergency liquidity assistance, perhaps the most traditional function for dealing with financial instability, is a way out provided by central banks. Central banks can have a calming influence on markets in case of a market disruption simply by standing ready to provide liquidity assistance if necessary. It includes both the provision of liquidity to the financial system as a whole through market operations, as well as emergency lending to individual banks. Altogether these two important functions facilitate the security in the system. Technological infrastructure is another component to secure financial operations.