samchain/econo-pairs-v1 huggingface dataset:
Part of solution to this is to create a more diversified and contestable financing mix, such that if banks finance becomes too expensive or scarce, non-bank finance can efficiently substitute for it. This is what the ongoing agenda to deepen and integrate capital markets in Europe aims to achieve – the so-called Capital Markets Union. Non-banks such a private equity investors or institutional investors can also play an important role in filling financing gaps, especially for the latter in long-dated lending such as infrastructure that matches their liability profile. But we also know that for certain types of lending that are the preserve of banks, in particular SME financing, asymmetric information problems and high costs of monitoring means banks cannot easily be replaced by non-banks. And perhaps even more importantly, such lending cannot quickly be replaced by other banks, as exit from the market tends to destroy the relationship networks – or “soft information” – that is crucial for small business lending. 3 In this way, exit can in fact create a form of hysteresis in the banking sector. What this shows is that, as policymakers, we cannot be agnostic as to how banks adapt to the current environment. We need to stay alert to the fact that actions by banks that are rational at the microeconomic level can create negative externalities at the macroeconomic level – analogous to the “fire sales” problem during financial crises. 4 And where those externalities risk becoming sufficiently large, there is a justification for policy actions.

This is consistent with the Terrorism Financing Regional Risk Assessment findings at the 2nd CTF Summit in 2016 in Bali, where one of the priority actions identified was for FIUs to improve the visibility and insights into the nature of terrorism financing in the region. The idea is intended to help FIUs gain better insights into the role of financial and transit hubs in regional and international terrorism financing networks. Closer international cooperation Another area to ensure an effective mitigating strategy requires closer regional and global cooperation, particularly in the sharing of intelligence and technical know-how. Terrorism and terrorism financing are global issues that demand global solutions. Sharing of intelligence and expertise across borders will go a long way towards enhancing the effectiveness of our risk management framework. In this regard, the various working groups under the CTF Summits, the Financial Intelligence Consultative Group and International Community of Experts have done commendable efforts and initiatives in building capacity and sharing operational experiences in the region. This must continue to be strengthened given the challenges that we will face. Conclusion The fight against terrorism financing is an on-going battle that will continue to evolve in line with the ever-changing landscape of the financial industry. In the era of rapid technological advancements, it is essential that the financial sector’s risk management strategy remains agile in order to mitigate emerging risks.
Nonetheless, identifying the role of pull versus push factors poses problems akin to those of separating supply and demand. There is still room for research that finds clever identification strategies to settle this question. Under most conditions, a situation of abundant capital inflows and low global interest rates is good for developing countries. Theory tells us that, in the absence of frictions, international capital flows not only contribute to expand a country’s productive capacity, but also allow their citizens to share risk with the rest of the world. However, the presence of pecuniary externalities, of inefficient fluctuations in credit standards, or of other types of financial frictions may lead to perverse situations where these inflows result in excessive credit growth, risk taking, or misallocation of capital. An important amount of recent research has been devoted to understanding how an economy may borrow in excess and miss‐allocate credit.3 Of course, if we believe that these frictions are present and strong, first‐best policy actions should aim to undo them. But this may not be feasible, either because we are unsure about the presence, type, or magnitude of the frictions involved, or because first best policies cannot be implemented in the timeframe required. In such a situation, policymakers may have to resort to second best policies. We will address some of the roles of financial frictions in the transmission of foreign shocks in the presentation by Javier García‐Cicco this afternoon.

This should also help to reduce pressure on the rental market, where there is evidence that from being at the lower end of cross-country rent-to-wage ratios, we have moved relatively quickly to being close to ratios found in the most expensive European cities. Besides the impact that this rise could have on our capacity to attract foreign workers, we need to consider its impact on Maltese tenants, which in turn will impact on the broader costs of doing business and, consequently, competitiveness. We believe that, going forward, if we continue to grow at the rates observed in recent years, we will need to have a much more dynamic housing market. But before discussing private provision, let us discuss social housing. Recent developments have reinforced the case for replenishing our social housing stock. However, this expansion needs to be accompanied by a change in approach. In recent years, most of Malta’s benefit system has been changed so as to create clear incentives to shift from benefit dependence to participation in the formal labour market. The only area where this is not happening yet is social housing, where the tendency remains that, once allocated, social housing tends to become a lifetime entitlement. We need to change this so that social housing schemes act to activate individuals and empower them rather than encourage passivity. Such a transition could itself be helpful in financing the expansion of social housing.
Mark Carney: Putting the right ideas into practice Speech by Mr Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, at the Institute and Faculty of Actuaries General Insurance Conference, Wales, 25 September 2014. *  *  *  Introduction It is an honour to be invited to address you today. Insurance is at the core of the new Bank of England. As regulator, we are tasked with ensuring the safety and soundness of the UK’s insurance companies and the protection of their policyholders. To discharge these responsibilities, we draw on the entire resources of the Bank. Fully one third of our regulatory staff – over 200 supervisors and 50 actuaries – are engaged in supervising insurance companies. But that is just the start. Our supervisors are supported by hundreds of credit risk analysts, scores of monetary policy experts and macro-financial analysts. As a central bank with responsibilities for both monetary and financial stability, we have a view of both the asset and liability sides of your balance sheets. And as a highly active participant in global financial reform, we influence the measures that are reshaping the global system. In all of our actions, we recognise the importance of insurance to the economy. The UK insurance industry makes a major, direct contribution: £ to annual GDP and 300,000 high-paying jobs including many of the 14,000 members of the Institute & Faculty of Actuaries. It is a major exporter with about 30% of premiums earned overseas.

That sorry experience highlights the need to understand all the activities in which insurers are engaged, including on occasion substantial business beyond the boundaries of traditional insurance. Regulators have grouped those activities as “non-traditional” and “non-insurance” – including business involving extensive use of market instruments, like derivatives, and instruments that engage in substantial maturity transformation. Where this type of business is carried out in scale or across borders, risks to the system can be substantial. The crisis also showed how particular insurance markets can affect systemic stability. BIS central bankers’ speeches  5  The Monolines demonstrated how sub-sectors that are excessively concentrated or undercapitalised can amplify shocks. The failure of multiple insurance companies in response to economic stress can disrupt the provision of critical economic functions. It can also suddenly transfer risks to other parts of the financial system that may be ill-equipped to manage them; or shift assets around in a way that can amplify and spread distress. As I said previously, the insurance sector is systemic in a positive way. Insurance companies have different risk bearing capacities than many other financial institutions. They play a stabilising role by deploying funds over a longer time horizons, in a manner less vulnerable to sudden outflows. The resilience of large insurers is therefore important to safeguard that positive contribution to the global economy. The starting point for the application of global standards has been the identification of systemically-important insurers.
Chart 12: Dispersion of inflation and GDP growth outturns since 2007Q3 across the quintiles of the one year ahead Inflation Report fan chart distributions Percentages of outturns GDP growth  70  Inflation  60 50 40 30 20 10 Lower  Higher  Lower  Higher  0  Source: Bank calculations. Notes: For further details on the methodology please see Hackworth et al (2013). 22  BIS central bankers’ speeches  Chart 13: Estimate of the proportion of MPC minutes covering the topic of “banking”  Source: Bank calculations. Notes: This chart shows the estimated allocation of each month’s MPC minutes to a topic which we label “banking”. The words used most frequently in the topic are bank(s)/banking/banker(s), credit(s), financial/finance, market(s), asset(s), condition(s), money and lend(s)/lending/lender. The estimation of the topics, and the allocation of each set of minutes across all topics is completed using latent Dirichlet allocation as applied to FOMC transcripts in Hansen et al (2014). The lines correspond to: September 2007 when Northern Rock received a liquidity support facility from the Bank of England; September 2008 when Lehman Brothers filed for bankruptcy; June 2011 when speculation and uncertainty about the euro area sovereign debt crisis started escalating; June 2011 when ECB President Mario Draghi delivered his “whatever it takes” speech. Chart 14: Estimate of the proportion of MPC minutes covering the topic of “banking” and major UK banks CDS premia  Source: Bank calculations and Bloomberg. Notes: The blue and vertical lines are the same as Chart 13.

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What remains is for financial institutions to internalise the impact of the transition for businesses, customers, and stakeholders, and drive transformation in pragmatic and meaningful ways. With that, I wish all of you an insightful and productive programme. Thank you. 3/3  BIS - Central bankers' speeches

Joseph Yam: Fourth Hong Kong Monetary Authority Distinguished Lecture: opening remarks Opening remarks by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, at the Fourth Hong Kong Monetary Authority Distinguished Lecture on the theme of Monetary Policy and Financial Stability, Hong Kong, 13 February 2001. *  *  *  It is an honour for me to welcome Mr Andrew Crockett to deliver this Fourth Hong Kong Monetary Authority Distinguished Lecture. I am also delighted to welcome Dato’ Dr Zeti Akhtar Aziz as the Discussant. Both are good friends of the HKMA, and it is a special pleasure to see them here today before this large and diverse audience. I extend to all of you, on behalf of the HKMA, a very warm welcome. The subject matter of this Lecture – monetary policy and financial stability – is at the heart of central banking. Much attention has been given to resolving the apparent conflicts between the two desirable objectives of monetary stability and financial stability, at the policy as well as the operation levels. The recent experience of a number of jurisdictions has indicated problems in achieving both simultaneously. Some have gone as far as to introduce institutional changes to alleviate the tension, or the embarrassment, or the risk of policy credibility being undermined as a result of such conflicts.
Timothy F Geithner: Restoring market liquidity in a financial crisis Welcoming remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Second New York Fed-Princeton University Liquidity Conference, New York, 13 December 2007. *  *  *  Welcome to the New York Fed and to this conference on liquidity. You are addressing some of the most important issues affecting financial markets today. Your timing is good, perhaps too good. We are all going to need some time and perspective before we will know enough to draw conclusions and recommendations from the events of the past six months. The conditions that led to this crisis took a long time to develop and they will take some time to resolve. I think it is appropriate, though, that as central banks act to address the challenges in markets today, we also begin to define the agenda for future research and policy. On December 12, the Federal Reserve and several other major central banks, announced a series of actions in response to the elevated pressures in funding markets. Together, these actions provide a more flexible and potentially more effective set of instruments, alongside our conventional monetary policy instruments, to help mitigate the risks that liquidity pressures in markets going forward could pose to the broader economy. With this framework of tools, we have the capacity to calibrate our response as market conditions change.

The symptoms of this are apparent in the high risk premia across a range of assets, as well as in the dramatic contraction in the volume of transactions for certain assets and the securities that reference those assets. Elevated term premia in the interbank market has the effect of tightening overall financial conditions, offsetting some of the impact of reductions in the target federal funds rate. The danger this poses is the risk of an adverse, self-reinforcing dynamic in which concerns about overall liquidity magnify concerns about credit problems. As financial institutions prepare for a more challenging funding environment, in part by conserving capital, and as they anticipate the higher potential losses that would normally accompany an economic slowdown, their response, in aggregate, makes markets and the economy potentially more vulnerable to that adverse outcome. The risk is a greater contraction in the availability of credit beyond what might have otherwise occurred, with attendant risks to growth. BIS Review 149/2007  1  Monetary policy has an important role to play in addressing these dynamics in markets. By adjusting policy proactively as the risk to the outlook changes, central banks can help reduce the probability of the extreme adverse outcome. And this can positively affect the incentives that might otherwise lead market participants to protect themselves against the extreme outcome. Central banks have been employing a range of different tools to help reduce the incentive for an excessive level of liquidity hoarding by banks that might impede an efficient flow of liquidity among banks.
The medium term agenda We all have lessons to learn from the turmoil of the last fifteen months. I would like to pick out three in particular, two of which are international and one UK specific: •  the need to develop new “macro prudential” policies to bridge the gap between monetary policy and the regulation of particular institutions and markets;  •  the need to establish a more effective regime in the UK for handling failing banks; and  •  the need to improve the handling of cross border crises and bank failures. Central Banks have always paid close attention to asset prices and credit growth in deciding monetary policy but they are setting interest rates for the whole economy and there is no guarantee that the rate or the rapid changes in rates that could be needed to dampen asset price growth will be appropriate more widely. On the other side, regulation and supervision are focused on the resilience and conduct of individual institutions: their management, risks controls, capital and liquidity and so on. What we have found in the last few years is that the sum of what makes sense at the level of individual institutions does not necessarily add up to what is needed for the system as a whole. We need to develop what are called “macro prudential” policies to bridge that gap.

The focus of their concerns shifted from future profitability to future survival. CDS premia rose to unprecedented levels (Chart 6), bank equity prices fell sharply and the money markets seized up. Interbank lending spreads widened dramatically (Chart 7) and lending became almost entirely concentrated in the overnight market. The shortening of interbank maturities generated a dangerous “snowball” effect as maturing term funding had to be rolled overnight. It was to tackle that wider loss of confidence that the UK authorities announced on 8th of October its comprehensive package of support for recapitalisation, guaranteed funding and enhanced liquidity. It was designed to remove solvency fears by ensuring that banks had more than sufficient capital to survive a severe economic downturn and thus to enable them to continue to lend on normal criteria to good credits. The new capital and the government guaranteed borrowing and liquidity support was designed to ensure and be seen to ensure that banks would be able to sustain their businesses through a downturn. With the banking system fully solvent, guarantees could be extended without exposing taxpayer to unacceptable risks. In a remarkable show of international consensus, a similar approach was quickly adopted by many other countries both in the US and EU and more widely. Looking ahead The early signs suggest that the package is underpinning the banking system both directly and as a demonstration of the authorities’ determination to do whatever is needed to reestablish confidence. In particular CDS premia for banks have fallen markedly (Chart 6) since the package was announced.
4  BIS central bankers’ speeches  We expect banking organizations of all types and sizes to have the capacity to analyze the potential impact of adverse outcomes on their financial condition. Stress testing can be a means to carry out such analysis. Certain portions of existing supervisory guidance – which cover capital planning and management of funding and liquidity risks – discuss using stress testing or addressing potential adverse outcomes in order to enhance risk management practices. This guidance is applied commensurate with an organization’s size, complexity and risk profile. For example: •  Community banks – those with below $ billion in assets – are not expected to conduct the type of stress testing required or expected of larger banking organizations, as indicated in recent rulemakings, proposals and guidance. A community bank may still employ certain other types of simpler stress testing to augment their risk management – as many community banks have been doing for some time. •  In contrast, regional banks – which are typically those with assets between $ and $ billion – are indeed required to conduct a company-run stress test on an annual basis. Still, regional banks are not subject to many other stress testing requirements imposed on larger firms, such as going through a supervisory stress test or conducting an additional stress test each year. Moreover, our reviews of those company-run stress tests are focused primarily on the quality of the processes those firms employ and not necessarily the results.

Firms have begun to take a hard look at their legal entity structures, including having identified and mapped material legal entities. This was a necessary first step for a lot of firms, which have begun the difficult task of making sense of their legal entity structures. This will be a focus of our future supervisory work on firms’ preparedness for recovery and resolution planning. Another positive step was recently made in the area of financial contracts – wherein 18 global firms recently agreed to sign a new ISDA Resolution Stay Protocol. The Protocol will provide for a stay of certain early termination rights triggered by resolution proceedings. The stay is intended to give jurisdictions time to orchestrate an orderly resolution of a troubled institution. It will be important that firms adhere to the protocol and amend ISDA Master Agreements consistent with the terms of the protocol. Firms should carry out a similar effort with respect to other types of financial contracts not covered through the protocol.