samchain/econo-pairs-v1 huggingface dataset:
This will remove a reliance on Libor benchmarks, which have long-standing weaknesses, and replace them with a robust alternative. In readiness for that, from July, the Solvency II risk-free discount rates for Sterling will switch from Libor to SONIA. We know this interacts with potential changes coming from the Solvency II review in the areas that I have been talking about today. So we are going to use the QIS as an opportunity to get granular data to allow us to understand the likely impact for different firms and sectors, and the interaction with the Solvency II review. Stress Testing The Solvency II review is a chance to build a regime that is strong, robust and meets the needs of policyholders, the UK market and the broader economy. As prudent regulators we want to ensure that whatever is built will be able to withstand the high winds and earthquakes which it may be hit by over the years. One of the ways we look to do that is through stress testing. Helping supervisors and firms 5/6  BIS central bankers' speeches  understand the effect on their balance sheets of real-world events. We have run a stress test every other year since 2015, and we plan to do so again next year. Over the slightly longer term, we have aspirations to use stress testing increasingly centrally in our supervisory approach. We do not intend some radical departure from the current ways of setting capital requirements.

Among the services that will be available are advisory services on banking, insurance & takaful and SMEs financing related matters; retrieval of personal credit status through the Central Credit Reference Information System (CCRIS); and advisory on any other financial related matters under the purview of the Bank. The introduction of MobileLINK complements the series of consumer financial advisory initiatives that have been introduced by the Bank since 2005 with the establishment of BNMLINK at the Bank’s six offices; the Bank’s call center, BNMTELELINK; as well as BNMLINK mobile counter services in semi-urban areas to provide access of financial information and consumer redress mechanisms. The introduction of MobileLINK also provides a platform for enhancing financial literacy and financial capability of consumers to make well informed and responsible financial decisions and thus participate meaningfully and effectively in the financial system. Akhir kata, saya ingin merakamkan penghargaan kepada semua hadirin sekalian yang memberi sokongan kepada inisiatif “MobileLINK” ini. Kami berharap inisiatif ini akan dapat merealisasikan usaha Bank dalam mencapai rangkuman kewangan yang menyeluruh. Bagi mencapai objektif ini, kerjasama pihak yang hadir pada hari ini dengan Bank Negara Malaysia adalah dialu-alukan bagi memastikan usaha yang lebih bersepadu dan berkesan dapat digembleng bersama. 2  BIS central bankers’ speeches
But alongside low inflation we’ve had the lowest nominal interest rates that most of us can remember. Short-term rates have averaged some 6¼% compared with some 11¼% over the preceding decade. And 10-year government bond yields have fallen, with inflationary expectations, to around 5¼% which apart from a brief period last year is the lowest they’ve been for nearly 40 years. Much more fundamentally we’ve enjoyed the longest period of uninterrupted, quarter by quarter, economic growth since records began some 45 years ago - with annual growth averaging 2.8% - between ¼ and ½% above most estimates of our underlying trend rate. The number of people in employment is the highest on record. And unemployment has fallen from a peak of 10½% on a claimant count basis to the present rate of 4%. That is the lowest for 20 years in the UK as a whole, and just about the lowest in nearly every region. This is not just past history. Having come through the global economic slowdown a year or two ago, the economy as a whole is now again growing at well above trend, with inflation a bit below target; and the broad prospect for the next couple of years - on most forecasts, including the MPC’s February forecast based upon our collective best assumptions - is for continuing relatively strong growth with relatively high employment and relatively low inflation.

We are among the most transparent central banks anywhere in the world. Our debate is informed by a huge input from our very able professional staff both in London and in our Agencies throughout the UK, and I’d frankly be surprised if you were able to identify any relevant issue that we have not considered in one way or another. Indeed I would very much hope that you would let me know if you did. I don’t plead ignorance; I plead intrinsic uncertainty. Monetary policy operates with a lag, having its full effects only after about a couple of years. Unlike some outside commentators apparently we know we don’t have a crystal ball. Our judgements are necessarily based upon a very careful assessment of the balance of risks at the time, continuously updated in the light of the constant flow of information of all kinds relevant to that assessment. That’s the nature of the process. Given that, I would not expect, and you would not reasonably expect me, to be able to demonstrate to you that we have precisely the “right” answer at any particular time. But I can promise that if the evidence changes in either direction so too will our assessments. You can of course question our processes, our interpretation of the data or the quality of our analysis - it’s there for all to see. But ultimately the proof of the pudding is in the eating, and it is only on average and over time that our policy decisions can sensibly be judged.
Run Lola run! The good, the bad and the ugly of FX market fragmentation – and what to do about it Speech given by Andrew Hauser, Executive Director, Markets  Tradetech FX 2019, Barcelona 13 September 2019  I am grateful to Grigoria Christodoulou, David Edmunds and Joann Spadigam for their help in writing this speech, and to Benjamin Bowry, Rohan Churm, Amber Evans, Michael Foster, Frederick Ladbury, Ankita Mehta and James O’Connor for their input and guidance. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches  Introduction I wonder if anyone remembers ‘Run Lola Run’ – a somewhat ‘experimental’ German film from the late 1990s? In it, the lead character runs the streets of Berlin, racing against the clock to save her hapless boyfriend Manni from a ganglord, whose money Manni has left on a train. The big idea of the film is that Lola’s race is shown in three alternative realities. In the first, she secures some replacement money, but is tragically shot in a police standoff. In the second, she gets the money a different way, and repays the ganglord – but Manni gets run over by an ambulance Lola has distracted. And, in the third, Lola and Manni both secure their own money, leaving them quids in after the repayment, and living happily ever after. What on earth does all this have to do with the FX market? I certainly draw no comparison to the handling of ill-gotten gains.

The latest data from the Bank for International Settlements showed that $ trillion of FX products were traded daily in 2016 – and the London market, the largest single centre, has grown by a third since then. That suggests that global FX turnover may now be more than 20 times the equivalent measure of global economic output, across an exceptionally wide range of products, participants and financial centres (Chart 1). For analysts, investors and policymakers, movements in floating FX rates provide a fast and comprehensive synthesis of market perceptions of economic news. And a huge empirical literature finds little evidence that excess returns are systematically predictable: a formal definition of ‘efficiency’. Even a harsh examiner would score FX markets ‘very good’ on this heading. Chart 1: The global FX market at a glance  Sources: London Foreign Exchange Joint Standing Committee April 2019 survey, Bank for International Settlements triennial surveys, Bloomberg LP, International Monetary Fund and Bank calculations. 3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  A resilient market is one in which markets continue to function in good times and bad, ensuring that prices give a consistently accurate signal about the balance of demand and supply. Again, the experience here is positive. FX markets have rarely ‘closed’.
In the context of the end of the long cycle of high commodity prices, this policy framework helped the economy to walk the path of the necessary adjustments it had to make, which required low real interest rates and a depreciated currency. Thus, although inflation soared in the years 2014 and 2015, monetary policy was eased, because despite the higher inflation, we saw that medium-term pressures were pushing down. This countercyclical operation of monetary policy was accompanied by a policy of structural fiscal balance that allowed the budget’s automatic stabilizers to act. The combination of both elements and their rigorous application throughout the cycle allowed to attenuate its inherent volatility, and therefore its social costs. But as the fiscal policy framework assumes a rather passive role for it, monetary policy has been, and will continue to be, the first line of defense. The continuity of the monetary policy framework and its fiscal counterpart over sixteen years has proven effective during booms and busts, passing difficult economic and political tests. Thus, the continuity with the outlines that our Central Bank has built is not only an expression of its soundness as an institution, but a logical course of action, when its objectives have been clearly achieved. Continuity provides a sound base to face new challenges and to build and strengthen the institutions.

A more pessimistic reading could be that many European economies are instead less flexible and more beset by rigidities, not least in the labour market, so that they have more difficulty in implementing and subsequently benefiting from the new technology. It might be argued that the high stock-market levels in some countries do represent an expectation of higher productivity growth. Stock-market assessments of individual companies are expressed in share quotations; the sum of these assessments and prices gives us an indication of what is expected of the stock market as a whole and this can be presumed to mirror how the total economy is expected to develop. And if current share prices are to be regarded as reasonable, there will clearly have to be an appreciable increase in future profits. This can then be interpreted as expectations of an overall increase in productivity and thus of a higher potential output. An alternative interpretation could be that the stock market is at least partially over-valued. A third possibility is, of course, that the development of share prices is explained by a combination of these two factors. All in all, it seems that one cannot yet be sure that economic relationships in Sweden have changed to such an extent that a higher speed can be maintained continuously without risking an acceleration of inflation.
The large deficits on the US current account and federal budget are another element that has long been one of the key risk factors in the international outlook. The question is not so much whether this situation is sustainable or not. There are many reasons to expect that the deficits will shrink in the period ahead. A weaker dollar and higher US interest rates are likely to be natural features of such a development. The concern revolves mainly around how big the changes in interest rates and exchange rates might have to be and how quickly they might come about. Domestic demand to take over in Sweden Like abroad, the Swedish economy showed signs of a slowdown around the turn of the year following a high growth rate last year. As regards the Swedish economy, too, our assessment in June – that it was a question of a temporary slowdown – seems to have been correct. Economic growth seems to have increased over the course of the year. Revised statistics have also shown that developments at the beginning of the year were not quite as weak as was first indicated. During the second quarter GDP growth picked up as we forecast in June. One question, of course, is whether we, with the benefit of hindsight, overdid it when we cut the repo rate in June. I don’t think so.

In the forecast of inflation that we will be presenting in the Inflation Report to be published next week, we will no longer be basing our forecast on the assumption of an unchanged repo rate. The point of departure instead is the policy rate expected by the market in the period ahead, as reflected in implied forward interest rates. With this point of departure - and taking into account the different risks that we envisage - it is reasonable to believe that inflation one to two years ahead will approach our inflation target of two per cent. When the Executive Board convenes to discuss monetary policy on Wednesday next week, future inflation prospects will of course will the decisive factor for our decision. It is likely that we also will have a discussion regarding how we should view the continued rise in house prices. Personally, I do not think that there is any immediate hurry to raise the repo rate, something that the Executive Board also communicated in August. But it is clear nonetheless that this is the next natural step if the current outlook remains unchanged. When it may become appropriate to modify the currently very expansionary monetary policy depends, of course, as usual primarily on economic developments in the period ahead and on the assessment of future inflation. 4/4
In major advanced economies, stimuli from fiscal policies diminished. Moreover, in the second quarter in particular, international economic growth suffered from the effects of the Japanese earthquake and tsunami. The destruction of production plants for important intermediate goods for the electronics industry led to substantial supply problems worldwide, which resulted in production losses. Finally, the concerns about fiscal problems in many advanced economies increased. In particular, the risk that the European sovereign debt crisis might escalate hung like a sword of Damocles over the outlook for the entire international economy. The debt crisis did indeed escalate in the second half of the year. While, initially, it was only the small peripheral states of the euro area that encountered problems because of their high levels of debt, the loss of confidence increasingly affected the larger economies of Europe as well. At the same time, there was growing concern about the stability of European banks. Given these developments, uncertainty in financial markets increased sharply in the second half of the year. At the same time, the demand for safe-haven investments soared. As we all know, these investments include those in the Swiss franc. The Swiss currency had already gained in value in the second quarter. However, between July and the beginning of August, it appreciated very substantially within a very short period. In August 2011, the Swiss franc reached an all-time high against both the euro and the US dollar, in both nominal and real terms.

This year, it appears that wage increases will be especially high in the public sector and in parts of the private service sector. Although it is too early to draw final conclusions, there are some indications that wage formation in Norway is changing: •  The social partners do not appear to be placing as much emphasis as previously on developments in wage growth among our trading partners. •  There are also signs that the social partners may be placing less emphasis on the impact on total unemployment when negotiating wages. •  Some features of this year’s wage settlement point to a somewhat greater degree of decentralisation in wage formation. An example of this is the municipal sector, where the Federation of Professional Associations will, as from this year, hold local negotiations on pay increases. On the other hand, centrally negotiated pay increases were very high this year. •  In public sector wage settlements, little emphasis appears to have been placed on the assumptions concerning wage growth on which government allocations are based. This has a negative impact on service production in many areas of the public sector. The experience of this year’s wage settlement also indicates that profitability in the internationally exposed sector has been given less emphasis in wage negotiations than earlier. A shortage of labour in more sheltered industries may thus have a greater influence than previously on overall wage growth. Inflation would then be determined by domestic factors to a greater extent than in the past.
What all these lead us to is that a currency cannot be a true global currency on the basis of current account convertibility alone. It needs to be convertible also on the capital account. However, a significant opening of the capital account is the deep water in China’s quest to globalise the RMB. It is like the RMB sailing out of the calm waters of the harbour into the choppy waters of the wide open seas. Having the support of the five fundamental factors I have discussed will ensure that the RMB is better prepared to navigate those choppy waters. To ensure sustainable RMB internationalisation would require patience, persistence and careful thought – both on the part of Chinese policymakers as well as those outside China. How an internationalised RMB could change the global landscape Let me now move on to briefly delve on the implications of a global RMB on the global monetary landscape. In today’s global monetary system, nobody can deny that there is a lack of choice when it comes to global currencies. This situation is rather precarious. We saw during the Financial Crisis in the Advanced Economies how financial markets globally seized up and the global  BIS central bankers’ speeches  3  monetary system came to the brink of collapse. A more multipolar monetary system should engender greater global financial stability. If global liquidity was represented by more currencies, then the likelihood of any one currency being a determinant of global liquidity would be significantly reduced.

8  The Archbishop offered these comments at an October 12, 2014 panel discussion that was part of the International Monetary Fund 2014 Annual Meetings. A video of that discussion is available at http://www.archbishopofcanterbury.org/articles.php/5426/archbishop‐to‐take‐part‐in‐imfworld‐bank‐panel‐ onethics‐and‐finance. Notably, the Archbishop described his role at the conference as a “lion in a den of Daniels.”  9  Even the skeptics of cultural reform concede that there is “almost universal accord that remuneration structures contributed to excessive risk‐taking in financial institutions and that excessive bonuses paid on anticipated accounting profit at the time of deal origination distorted decision‐making and resulted in asymmetric riskholding.” Paradigm Risk Consulting, To boldly supervise . . . , February 2014. 10  See Dudley, Enhancing Financial Stability by Improving Culture in the Financial Services Industry, supra n.4. 4  BIS central bankers’ speeches
In the medium term, it is also important to set up governance changes that first, limit government deficits and debt, and second, protect national competitiveness. On the subject of fiscal consolidation, there is a broad recognition across the EU that fiscal governance has to be strengthened and that the Stability and Growth Pact should be reinforced. The current thinking is that, to avert the recurrence of the crisis, fiscal consolidation should be enshrined in the governance structure of every country. To this end, the well-known Fiscal Compact obliges all euro area countries to run a structurally balanced budget each year. Surveillance will be enhanced and the monitoring of economic policies will also be comprehensive. In particular, the problem of sustainable budget planning was addressed by introducing a country-specific medium-term budgetary objective, which involves a cap on growth of public expenditure that is in line with the medium-term rate of growth. The Fiscal Compact will also accelerate the excessive deficit procedure by introducing sanctions when the debt and deficit to GDP ratios are excessive. Concerning the second issue (the enhancement of competitiveness), an excessive imbalances procedure seeks to identify and correct macro-imbalances and shortfalls in competitiveness. Preventive recommendations will be made to member countries at an early stage in the formation of imbalances. On the financial stability side, European authorities have strengthened the financial sector surveillance framework.

The recent IMF report that I mentioned earlier noted the strong performance of Malta’s financial sector but also stressed the importance of strengthening the resilience of the sector. 8  BIS central bankers’ speeches  The elevated levels of credit and concentration risks call for stronger financial buffers, through higher provisioning and retention of profits. Such measures would strengthen the banks’ ability to absorb potential shocks and would also allow them to prepare themselves for compliance with stricter Basel III regulatory requirements. On the positive side, credit risk is being mitigated by prudent credit standards and cautious lending behaviour on the part of the banks. On the funding side, the resilience displayed by the banking system in the face of adverse international conditions is explained by the business model that has been a traditional characteristic of domestic banks, which rely strongly on retail deposits. Another indication of the overall prudent bias of the Maltese domestic banks is evident in the first chart presented earlier, which shows that leverage ratios of Maltese banks are considerably lower than in euro area in general. While the euro area average has declined on account of widespread deleveraging, the ratio remains significantly higher than the Maltese ratio, which has been quite stable. A further indication of the traditional funding model is the loan to deposit ratio, as shown in Chart 8, which is significantly low when compared with the major economies. This business model has served the domestic banking sector well.