samchain/econo-pairs-v1 huggingface dataset:
At the Bank of England, one of the questions we now more or less routinely ask in our MI work goes along the lines of “is the Street and/or is the fund community short volatility /gamma/vega in a big way  3  ‘The dynamics of US dollar interest rate adjustment’, Financial Stability Review, Issue 15, December 2003, page 22. 4  ‘Structured notes and the US dollar/yen exchange rate’, Financial Stability Review, Issue 14, June 2003, page 43. BIS Review 50/2005  3  in any particular market?” This is discussed further in the latest edition of the Bank of England’s Financial Stability Review, which is published next Monday. Regulators can put any general information gleaned from MI alongside their more granular sources on the positions of firms. A risk properly understood is, I hope, a risk that can be managed effectively. And so my analysis of the impact of options hedging on market dynamics does not cancel out the benefits that derivatives can potentially bring. For the reasons described earlier, the plugging of ‘missing markets’ is something to welcome. Innovation, competition, and risk management That so many markets are no longer ‘missing’ owes something to innovation in the wholesale financial services industry. The underlying forces driving innovation seem to be powerful, and indeed perhaps self-feeding. They may also give rise to some risk management challenges. One possible story – there are others – would go along the following lines. Core wholesale markets have become more efficient.

Our domestic Islamic financial system is one of the most developed, with its diversity of players and financial products and services in Islamic banking, takaful and the Islamic capital market. Today, we are witnessing the establishment of another dedicated Islamic banking subsidiary that will contribute towards further strengthening the Islamic financial institutional infrastructure in Malaysia the launch of Affin Islamic Bank Berhad as an Islamic banking subsidiary of Affin Bank Berhad. With the domestic Islamic financial infrastructure in place, the emphasis is now to become more internationally integrated with the international Islamic financial system, thus increasing our economic and financial linkages with other parts of the world. Our efforts are to position Malaysia as an international Islamic financial centre and thus facilitate this international integration process. In this regard, the establishment of an Islamic subsidiary also increases the opportunity for entering into strategic partnerships with foreign interests, thereby increasing the potential for greater interface with more extensive markets beyond our domestic borders. On the domestic front, while tremendous progress has been achieved, much more needs to be done. The Islamic financial industry needs to allocate more resources toward investment in research and development to create more innovative products. Consumer awareness and consumer education also needs to be enhanced to support the growth of the Islamic financial industry.
But post-crisis, bank profitability has come under pressure in a prolonged period of low growth and low interest rates. •  The banking industry’s return on equity (ROE) has fallen significantly since the financial crisis. •  The average ROE of the 200 largest banks has fallen from 17% before the crisis (2005–2007) to 9% in the period 2011–2013. Monetary policy, as it comes up against diminishing returns at the zero lower bound, is also not helping bank profitability. As policy rates are pushed into negative territory in a growing number of countries, the implications for financial stability need to be assessed carefully. In a low or negative interest rate environment, banks are likely to engage in market segmentation and charge different rates to different groups of clients. •  Banks are reluctant to impose negative interest rates on retail depositors. •  This means that, to make up for the interest they have to pay on their deposits with the central bank, they may have to charge a higher interest rate on their borrowers. High returns during the pre-crisis period were in part due to excessive risk taking or leverage, coupled with insufficient capital buffers against these risks. •  This has proven both untenable and perilous. •  A reduction in leverage and an increase in capital requirements are therefore desired outcomes of the reform agenda, to restore more prudent business practices and provide more sustainable finance over cycles. But sustainability in finance requires that banks are reasonably profitable.

Dynamic leadership  Your role in Investrust Bank Plc is very crucial. As the Management team, you are providing leadership. Your way of doing things must be exemplary, inspirational, and analytical, with drive and with integrity. Keep abreast with current affairs. As Financial Intermediaries in the economy, the public looks up to you for innovative and effective products. 2. Customer focus  The Bank of Zambia is keen to see that the Zambian public is offered quality service by the Banking industry. We wish to see more innovative products introduced on the market. I am glad to note that Investrust Bank Plc is part of some banks who teamed up under ZAMLINK to offer ATM services to their clients. Such collaboration is commended. It is in the same spirit that you have supported the RTGS and DDACC products. I will be pleased to learn that this conference will deliberate and resolve on how best the Bank will improve service delivery to greater heights. You need to develop financial products that reflect the country’s level of development and not just ape what is being done in developed countries. 3. Sound practices  In recent years, we have read of how “big” institutions have been brought down due to unprofessional conduct by their senior executives. I urge Investrust Bank Plc to pro-actively propagate Corporate governance standards at all levels of Management. I commend the Bank for the newly created dedicated function of Risk Management in its structure. This will provide prudential guidance in the other areas of operations.
BIS estimates that the average daily MYR forwards traded offshore is 4 times the amount onshore. This should not be the case as MYR is not an internationalized currency, and that all forwards should be backed by firm trade transactions. Given the sizeable volume and the opaque nature of such markets, I cannot help but ask: “What are we missing here? Who are the players in the ND markets? Are they hedging or speculating? “ Is it the lack of capacity of our local players to serve certain players? Or is it that the local regulatory and operating environment needs to be adjusted? These gaps should be identified and remedies formulated as the offshore market represents a loss of business opportunity for the onshore players. Fundamentally since the transactions are related to Ringgit, its activities should be captured onshore and transacted through the onshore market players. Ringgit exchange rate should be determined by onshore players, reflecting the underlying demand and supply of foreign currencies in the economy. It should not be dictated by any market other than Kuala Lumpur. Expectation and direction going forward As 2015 draws to a close, let us not allow the increasing challenges to stop us from advancing forward. Volatility is not likely to go away any time soon. It would be the norm. A new normal. Let us persevere, learn from the past and as a group forge ahead into the future. It is appropriate to have a retrospective here.

In fact, non-residents only hold 29% of government securities which should include the Sukuk or MGII. Furthermore, most of the outflows by non-residents arise from the sale of short-term bonds associated with short-term views while investors of Malaysia’s long-term bonds have remained steadfast in their investment holdings. We also observe since October 2015 the non-resident portfolio flows has becomes positive. In 2015, as part of our effort to improve transparency, we have embarked on an initiative to gather statistics on the ultimate beneficiary owners of Malaysian bonds and sukuks to give the market a clearer picture on the types and behavior of investors in our market. Preliminary data showed that of the total non-resident holders of Malaysian debt securities, 70–80% were stable long-term investors while the remaining minority was short-term investors. We are now looking at measures on how we can enhance the disclosure requirements of our bond holdings to be even more transparent so that our financial market would be on par if not better than the best practices adopted by advanced markets. Over the years, we have liberalized the foreign exchange administrative rules to promote competitiveness and reduce cost of doing business, attract foreign investors and create business opportunities for our local players. Ringgit bonds were allowed to be traded freely offshore, with some restrictions placed on ringgit funding and FX derivatives markets to contain speculation, with the aim to ensure financial stability. An unintended consequence of this liberalization was the emergence of offshore transactions relating to Ringgit such as NDF and NDIRS.
It left the punch bowl on the table and said “let’s party” ... Trichet: As regards the punch bowl, you are quoting William McChesney Martin, a previous Chairman of the Federal Reserve! Again, let me say that we are united in purpose. As regards the ECB, the very solid anchoring of inflation expectations is a major asset in all circumstances. FOCUS: However, you do sometimes make comments about the US Federal Reserve. When its Chairman, Ben Bernanke, was chosen as Time magazine’s Person of the Year, you commended him, saying that he had done extraordinary things under extraordinary circumstances. Were they also the right things? Trichet: When the financial crisis intensified in 2008, the ECB and the Federal Reserve cooperated closely, together with other central banks, including through swap agreements. We ourselves supplied US dollars on this side of the Atlantic as part of this very close cooperation. 2  BIS Review 7/2010  FOCUS: How important is it, in such dramatic situations, that the ECB is able to act independently of politics? Trichet: This is crucial. The European Central Bank is totally independent. This is guaranteed for us by an international treaty. It is essential for the confidence of our fellow citizens, economic agents and market participants. And “confidence” is the key word at the moment. FOCUS: Do you consider this independence to be a great advantage? The Chairman of the Federal Reserve was appointed by the President – and the Senate is currently deciding whether Ben Bernanke can have a second term in office.

BIS Review 7/2010  3  FOCUS: This problem will become even bigger if other countries – such as Bulgaria or Romania – introduce the euro. Trichet: Other European Union countries are indeed committed to joining the euro area. But only when the time is right. As you know, there are strict criteria governing the introduction of the euro, and these must be met in full. And they have to be met not just at a particular moment in time, but on a sustainable basis. The ECB is and will remain extremely vigilant in this respect. FOCUS: But what if new member countries doctor their figures – as Greece did – and trick their way into the euro area? Trichet: Let me be very clear on this. Never again will we accept budget figures that do not reflect the facts. Appropriate auditing must always be possible. As early as next month the European Commission will make proposals that will dramatically improve the relevant framework. This is absolutely critical. FOCUS: Your job and the crisis are both very demanding. Do you have the opportunity at all to see colleagues outside of work? Trichet: Yes, certainly. And that’s important, too, as the high level of mutual trust that exists within the ECB, between the members of the Executive Board and the Governing Council, is in my view absolutely fundamental. FOCUS: Is Frankfurt a good location for meetings outside of your official schedule? Trichet: I think so.
William C Dudley: Economics at the Federal Reserve banks Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the American Economic Association 2014 Annual Meeting, Philadelphia, Pennsylvania, 4 January 2014. *  *  *  It is a pleasure to be here today and to have the opportunity to talk about the role of economics and economists at the Reserve Banks. Economics is a critical discipline at the New York Fed, just as it is at the Board of Governors and the other Reserve Banks. Nevertheless, I expect that my perspective will differ a bit from that of Eric, Charlie, or Narayana.1 In part, this is because my background is different. Although I have a Ph.D. from Berkeley, unlike Charlie and Narayana, I never spent time in academia, and, unlike Eric, I spent most of my career not in public service, but working in the private sector. My focus during my time in the private sector was also somewhat different than my colleagues, with an emphasis on those issues that affect financial markets. Don’t get me wrong, I am very happy I got a Ph.D. in economics, the training has been invaluable. It’s just that my career path is a bit unusual relative to other central bankers, so that must influence my perspective. Of course, another important point of differentiation is where I am now and the unique role that the New York Fed performs within the Federal Reserve System.

The higher level of foreign participation in the Islamic financial markets which has resulted in the increase in cross border flows in the international Islamic financial system thereby, enhancing international financial linkages between financial systems. Liberalisation has also brought greater foreign institutional presence in Islamic financial systems resulting in greater diversity of players and strengthening further the international financial linkages. Malaysia has very much been part of this process. In 2003, the Islamic financial system was liberalised to allow for increased foreign presence. In 2007, the sukuk market was liberalised to allow the raising of funds by eligible corporates from any part of the world in any currency. And this year, the first foreign currency sukuk of USD1.5 billion was successfully issued by our petroleum corporation with a significant over subscription by investors from Europe, Middle East and Asia. As the international dimension of Islamic finance gains momentum, it is necessary to facilitate the potential for liquidity management across borders. As part of an international collaborative effort, a Task Force on Liquidity Management was set up by the IFSB and the IDB early this year to develop solutions to enhance the efficiency of Islamic financial institutions in managing liquidity at both the national and international levels. A further area of international collaboration is towards promoting value-added investment in human capital building as a long term solution to sustainable growth of the Islamic financial industry.
But what Lorie and I wanted to highlight was that, while Covid itself may have been truly exceptional, the financial market propagation mechanisms that turned that shock into a nascent systemic liquidity crisis reflected more structural trends: an increasing reliance by the real economy on core capital markets rather than banks; constraints on market intermediation capacity; and a range of unresolved vulnerabilities in non-bank firms that played an ever-growing role in those markets. In short, even if nothing as awful as Covid ever happened again, market dysfunction at a scale capable of threatening systemic stability could recur – and in all likelihood, would do so. And central banks needed to be ready to play their part. Our working group did not seek to provide a single definitive ‘playbook’ for such events – the range of potential shocks, and different national market and institutional structures, made that impossible. But it did set out a framework of principles and possible tool choices. [2] And that framework proved invaluable at the Bank of England when, late last year, vulnerabilities in Liability Driven Investment (LDI) funds amplified the impact of an abrupt change in fiscal stance into a selfreinforcing spiral in government bond prices. Long maturity nominal gilt yields rose by 130 basis points in a matter of days – three times the size of any comparable historical move – and we were  Page 3  required to intervene to safeguard financial stability.

Without clearer guide rails of this kind, we are destined to proceed somewhat messily from crisis to crisis, building a framework by circumstance rather than by design. Second, we need to work towards a more developed understanding of the tools that central banks need to deal with this new era of liquidity risk, and in particular the right mix between lending and asset buy/sell facilities required in different scenarios. Most of us share the instinct that lending tools are the right place to start – but progress on defining the set of non-bank firms that are needed, able and appropriately incentivised to participate has so far been limited. And there are important debates to be had about the regulatory perimeter. Whether a steady state  Page 13  toolkit will require buy/sell tools is an important debate – but at the very least it does seem that we are going to need to be able to reach for ‘break glass’ versions of such tools until and if more developed repo facilities are developed. Third, we need to debate the relative merits of standing vs discretionary facilities. Appropriately designed standing facilities could help reduce the incidence of future liquidity crises, by clarifying the circumstances in which public assistance would be available, replacing the sort of crude guesswork that constructive ambiguity can generate, and incentivising more effective self-insurance. But calibrating them accurately, and ensuring they are ready to function, requires sharply improved levels of understanding and operational readiness.
We depend on our ability to access it, analyse it, and draw conclusions from it to set policies. Effective management and use of data is how we meet our goals. 1  A foot as we now know it is 304.8mm 2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  Of course, we are far from alone here – many organisations rely heavily on their use of data. But we are, perhaps, different to many in that the vast majority of the data we want is generated by others rather than ourselves. The data we care about is the sum of millions of financial and economic interactions, taking place every second. And much of that data2 is captured and stored by financial institutions, as they go about serving their customers. We need to get our hands on that data. We need data on the financial system in aggregate and also on specific markets within it, to help us understand where risks are emerging and to help us calibrate policies to maintain stability. And we need data about individual regulated firms, for our work as supervisor and as resolution authority. So we have built data collection processes to give us that data. We publish reporting instructions. Firms then go through various steps: they interpret our instructions, identify the right data within their systems, put in place processes to integrate, cleanse and check the data, and then sign it off and deliver it to us.

2  Of course the Bank also relies on other data and data sources to meet our remit, for which we rely on many providers, and in particular the UK’s Office for National Statistics. 3  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  3  Plan to improve data collections In response to this challenge, as articulated by of our response3 to the Future of Finance report from 2019, we committed to review our data collections process, to find ways to reduce the burden on industry and to increase the effectiveness of the process. That led to a Discussion paper in 20204, and now, working with colleagues at the FCA, to our data collection transformation plan, published in February5. At the heart of the plan is our aspiration that the Bank gets the data it needs to fulfil its mission, at the lowest possible cost to industry. And we know that what data we need will change over time: the regulatory framework will evolve, with post-Brexit changes and the climate change agenda to name just two obvious developments that reporting will need to respond to. We need a reporting framework that can adapt to these new demands as smoothly, quickly and efficiently as possible. So how do we achieve that vision? We have identified three long-term reforms that we think can transform our data collections, and also bring wider benefits. I will mention the first two, before focusing on the third and most fundamental reform for the rest of these remarks.
Similarly, after five years in which housing production was well below what is consistent with underlying demographic trends, it now appears that we have worked off the excess supply of housing built up during the boom years of the last decade. Existing home sales remain on an upward trend, and a widely followed national home price index is up around 12 percent over the 12 months ending in July.1 Indeed, anecdotal reports suggest that this higher-thanexpected increase in home prices is due to a lack of homes for sale. However, a number of risks to the outlook are evident. Long-term interest rates, including mortgage rates, have risen significantly since early May. Since then, we have seen a sharp drop in refinancing mortgage applications, a more moderate but significant decline in purchase mortgage applications and fairly flat housing starts and new home sales. Although I do not anticipate that the rise in long-term rates will lead to a downturn in housing, these developments do suggest that higher mortgage rates have cut into the upward momentum of the housing sector. We will need to monitor upcoming data closely to assess more fully the impact of higher rates on the housing recovery. Another risk is that federal fiscal policy could exert further restraint on the economy during the rest of this year and in 2014. It is difficult to assess how much of the contractionary effects from sequestration, for example, have already occurred, or still remain ahead. A related issue is the high degree of uncertainty about fiscal policy.

Next, I’ll review recent developments in the national and regional economy, and at the end of my talk will be happy to answer any questions you have about the economic outlook. As always, what I have to say reflects my own views and not necessarily those of the Federal Reserve System or the Federal Open Market Committee. National economic conditions Let me begin by taking stock of where we are at the moment. Then I will address my expectations for the performance of the economy over the remainder of 2013 and into 2014. According to the National Bureau of Economic Research, which determines the timing of economic recessions and expansions, the current expansion began in mid-2009, more than four years ago. However, the expansion has been subdued so far, as the average annual growth rate of real GDP has been just 2.2 percent over the past four years. While that growth BIS central bankers’ speeches  1  rate is near most FOMC participants’ estimates of the U.S. economy’s longer-run growth rate as well as those of many outside analysts, a more rapid pace of growth likely is necessary to reduce meaningfully the significant economic slack that developed during the Great Recession. Consistent with the modest pace of economic growth, improvement in labor market conditions has been slow.