samchain/econo-pairs-v1 huggingface dataset:
A sense of self must be accompanied by a sense of the systemic. Consider four financial reforms that are helping to create this sense of the systemic and thereby rebuild trust in the system. First, ending Too-Big-To-Fail Perhaps the most severe blow to public trust was the revelation that there were scores of too-big-to-fail institutions operating at the heart of finance. Bankers made enormous sums in the run-up to the crisis and were often well compensated after it hit. In turn, taxpayers picked up the tab for their failures. That unjust sharing of risk and reward contributed directly to inequality but – more importantly – has had a corrosive effect on the broader social fabric of which finance is part and on which it relies. By replacing such implicit privilege with the full discipline of the market, social capital can be rebuilt and economic dynamism increased. The leaders of the G20 have endorsed measures to restore capitalism to the capitalists by ending too-big-to-fail and, in response, the Financial Stability Board (FSB) has identified systemically important institutions; made them subject to higher standards of resilience; and developed a range of tools to ensure that, if they do fail, they can be resolved without severe disruption to the financial system and without exposing the taxpayer to loss. This is the year to complete that job. Governments must introduce legislative reforms to make all systemically important companies, including banks, resolvable. Jurisdictions must also empower supervisors to reach agreements for credible cross‐border resolution plans.

We must therefore first do our utmost to stop the slow erosion of basic skills observed in the various international surveys (PISA, TIMSS). We must then ramp up the recent takeoff, since the 2018 Avenir Pro law and the 2020 1 jeune 1 solution plan, of apprenticeships, a fantastic tool for training and professional integration. The record number of close to 700,000 new contracts signed in 2021 must be just a starting point, from which to rethink the financing of work-study programmes. Page 11 sur 15 As regards seniors, France lags behind in terms of the employment rate and this gap widens as people approach retirement. This is another economic reason – in addition to ensuring the smooth financing of the old age insurance scheme – why it is necessary to reform our pension system. This reform must be fair, and companies will have to make more room for older workers. There remain three measures in order to raise the supply of labour for all workers: - beyond apprenticeships for young people, vocational training for all. The Personal Training Account, resulting from the 2018 reform, has proved a great success (demands for training have increased by 40% compared to 2019)xv. However, it will have to be optimised, in order to control its costs and above all to better steer it towards skill needs, in particular in the digital and industrial professions of the future. I have noted that, on the key issue of skill enhancement, France is still among the European laggards.
Against this backdrop, we are well positioned in Saudi Arabia to have a strong financial system that is serving the economy well. The system that has evolved over the years is broad-based and has a variety of institutions providing a wide range of financial services to savers and investors. It is efficient, technologically advanced, well-supervised and working on sound principles. It has demonstrated its strength and resilience during the Gulf conflicts  BIS Review 85/2007  1  in the 1990 and in 2003, and various financial crises in the past decades. On all occasions, its stability has remained uncompromised The Saudi Arabian Monetary Agency (SAMA) is at the apex of the Saudi financial system. It has almost completed fifty years of its existence. Over these years, it has played a crucially important role in the consolidation and development of the Saudi economy, by evolving a monetary system for the country based exclusively on national currency, striving for the promotion and maintenance of domestic price and exchange rate stability, and promoting the growth and ensuring the soundness of the financial system. It has also been managing the Kingdom's foreign exchange reserves, besides acting as a banker to the government. Before I describe the important contribution of commercial banks and deal with other sectors of the Saudi financial system to managing the domestic and international fund flows, let me mention some important achievement of SAMA. SAMA is ordained by its Charter to promote and maintain domestic price and exchange rate stability.

This account has been persistently in deficit, although there was a marked improvement in the deficit in 2006 to 6.3% of GDP. In the long run, however, this imbalance needs to be further reduced to a more sustainable level. This can only be achieved to the extent that growth is driven more by export-oriented activities and less by consumption. In view of the large amount of currency in circulation and your interest in ensuring a smooth changeover to the euro, what advice would you give to the public in this regard? As I said earlier, the amount of currency in circulation has been contracting and there is evidence that cash hoards and bank deposits are being converted into euro. We are trying to discourage this premature conversion because portfolio diversification at this stage is expensive and makes little sense. In the case of Maltese lira bank deposits, these will be converted automatically, and at no cost, into euro on the changeover date. As for cash conversions, people who are buying euro currency notes from banks and other financial institutions are having to pay exchange commissions; those who obtain euro notes outside the banking system are being offered an even more unfavourable exchange rate, besides running the risk of receiving counterfeit notes. These early conversions, moreover, constitute a drain on the Bank’s reserves. We are, therefore, encouraging the public to deposit Maltese lira cash holdings into the banking system and retain them in Maltese lira denominated deposits, thereby earning interest.
That is to say, we only intervene intensively in the event of likely failure, to ensure that insolvency is orderly and that depositors are paid out promptly. Recent work at the Bank investigated the predictive power of the regulatory returns for these firms.9 It found a significant and stable correlation between simple explanatory variables and the probability of default one, two and three years later. In most banking data sets, this structural relationship is obscured by the intervening hand of supervision - leaving few if any observable banking failures. The research has the practical application for focusing our scarce supervisory resources in a systematic and efficient way on those credit unions where they are most likely to be needed. The tool cannot yet be classified as ML, as there is no learning involved. But it does demonstrate how more advanced analytics can be used to enhance effectiveness of supervision, and we are beginning to experiment with introducing genuine ML into this tool. 7  I am grateful to Hermann Hauser for first bringing this argument to my attention. Professor Peter Gahan, University of Melbourne 9 Coen, J., Francis, W B., Rostom, M (2017) 8  5  All speeches are available online at www.bankofengland.co.uk/speeches  5  The task that lies at the heart of supervision – the third step I referred to above – is setting strategies to reduce prudential risks. For each firm that the PRA deems sufficiently critical, we form an assessment of the key risks to its safety and soundness.

•  And the regulation must be proportionate to the risk posed. Take for example internet-based payments or P2P lending that takes place outside regulated banks. •  2  We regulate banks chiefly because they take deposits. –  When they get into trouble, they have systemic consequences. –  So, we supervise their lending activity and their payments systems. BIS central bankers’ speeches  •  We do not regulate P2P lending platforms – as long as they do not take deposits. –  •  But if they get very large and pose macroprudential concerns, then we may consider regulation. Likewise, a payment service through the Internet will not automatically attract regulation –  These are typically small payments, often in connection with e-commerce. –  Only larger, more significant players that cross the materiality and other thresholds are regulated. –  Even then, we do not regulate them as banks and throw at them the whole kitchen sink of capital and liquidity requirements under the Banking Act. –  We regulate them under the Payment Systems Oversight Act or the Remittance Agents Act – modular regulation customised to address the specific risks or concerns they pose. –  But I must acknowledge we do not have ready-made regulations for all new technology solutions; often we must improvise the use of existing legislation, even as we draw up new ones. Third – actively promote the FinTech ecosystem and seek to harness its potential for good.
A fairer description is that the Riksbank has tried to do its bit to slow down a trend where housing prices and indebtedness have been rising rapidly and simultaneously for quite a long time now – where there appears to be some slowdown in periods of weaker economic activity, but where the direction is upwards, no matter what the economic situation, and there are few signs that this trend will be dampened. The longer such a trend continues, the greater the risk that it will be broken in the same abrupt way as in many countries in connection with the financial crisis – that is, when housing prices and debt finally adjust downwards, it is in a dramatic manner, with substantial price falls and drops in consumption, with large and long-lasting negative effects on the economy.15 In general, there is solid empirical support for the idea that the more households  15  Mian and Sufi (2014) describe this sequence of events in the US economy in connection with the crisis. In a really bad scenario, problems may also arise with regard to financial stability, see for instance Financial Stability Report 2014:1, Sveriges Riksbank. 6  BIS central bankers’ speeches  and companies borrow during an economic upturn, the greater the risk that this upturn will be followed by a deep recession and a very slow recovery.16 One can make a few reflections here.

25.04.2017  Testimony of the Governor of the Banco de España before the Spanish Parliamentary Budget Committee in relation to the draft State Budget for 2017 Luis M. Linde Governor  Ladies and gentlemen, I appear before this Committee at the start of the discussion and approval of the State Budget for 2017, the draft legislation for which, was approved by the Government on 31 March. Let me begin by referring to the international setting and the outlook for the Spanish economy, after which I will move on to the core aspects of the draft Budget and conclude with some reflections on the relationship between fiscal policy and our economic recovery. The external setting of the Spanish economy In recent quarters, the international economic setting has been marked by a high level of uncertainty, both in the United States, where there are doubts about the timing and scope of the new Administration's measures, and in Europe, as a result of Brexit and the elections scheduled for this year. For the moment, this uncertainty has hardly been reflected in financial indicators. The markets have continued to perform favourably and longer-term interest rates, which rose in late 2016, have stabilised at still moderate levels. Oil prices remained stable in the early months of the year, after the rise observed in the wake of the agreements reached by oil producing countries at the end of November 2016, although recent data show a higher degree of volatility.
Supervisory follow-up Let me now outline the next steps that the ECB plans to take to follow up on the results of our assessment of banks’ C&E disclosures. We have sent individual feedback letters to all banks under our direct supervision, setting out the key gaps in their disclosures and conveying our explicit expectation that they will take decisive action to address these gaps. In doing so, banks will ultimately ensure that their risk profile is transparently and comprehensively reflected in the information they disclose to the public. Addressing such gaps will also mean banks are well prepared to meet impending technical requirements. As I mentioned, the consequences of non-compliance with minimum transparency standards are only going to increase for banks, as legal and reputational risks are starting to materialise for banks which fail to step up the quality of their disclosures. More and more, clients, investors and other market participants want meaningful, comprehensive information on the climate-related actions of their banks. That way, they can make conscious, informed decisions about where their money goes. Moreover, failing to disclose exposure to risks, including C&E risks, constitutes a breach of the Capital Requirements Regulation. As such, we stand ready to use the full array of supervisory tools at our disposal to ensure banks’ C&E disclosures are up to our standards, and ultimately that eligible banks are prepared for the new regulatory requirements.

However, this improvement has been only marginal: as of 2021, seven in ten banks disclosed information about C&E risk management and governance – compared to five in ten in 2020 -, while only four in ten shared relevant information about the incorporation of C&E risks into their strategic considerations – up from three in ten in 2020. And, all in all, none of the 115 banks directly supervised by the ECB fully meets our supervisory expectations for disclosures. There is very little justification for this lack of substantial progress, particularly considering the vast amount and quality of climate-related data, tools and information shared by different international and European organisations and institutions in recent years. The sheer speed at which regulation and metrics are developing in this field should leave no room for any doubt: addressing climate-related and environmental risks, and publishing good-quality disclosures, is not optional. Banks can and must do much better to improve the quality of their disclosures, and they need to do it quickly. However, we see a considerable disconnect between banks’ perception of the importance of C&E risks as communicated to us, the supervisor, and what banks choose to publicly disclose. Banks are trying to compensate for the poor quality of their disclosures by issuing a great volume of information around green topics.
Finally, authorities will need new regulatory instruments to keep pace with the impact of new technologies – including high frequency trading, algorithmic trading and the new universal trading platforms, which are gaining ground very rapidly. Last week, the ESRB selected the members of its Advisory Scientific Committee to provide advice on analytical issues. We have also established the Advisory Technical Committee, which assembles experts from all central banks. The institutional set-up is completed and the ESRB will now focus on its substantive tasks, of which we will have a substantive review in June this year. Combining a focus on short-term risks with the medium- and longer-term perspective will be the major challenge. Conclusion Let me conclude. I believe we are now about halfway through the comprehensive reforms that the crisis has called for. We have achieved a blueprint of more stringent bank regulations that includes more loss-absorbing capital, better risk coverage and limitations for undue leverage. Countercyclical capital buffers are meant to lower pro-cyclicality. The oversight of financial institutions as well as markets and market infrastructure are being strengthened, and the organisational structure of financial supervision is being overhauled. But much remains to be done. The most important aspect is the implementation of these reforms. Moreover, the issue of systemically important financial institutions requires further reflection, and oversight of the proper functioning of financial markets in a way that avoids undue volatility, excessive influence of dominant players and oligopolistic market structures, while reinforcing transparency, needs to be addressed resolutely.

2  As used in the Norwegian debate, “parity policy” refers to the monetary policy of the 1920s, when the Norwegian krone was forced back to its former gold parity by means of highly deflationary policies. (Footnote not included in Norwegian text.) 3  See Ecklund (2008), p.43-44. 2  BIS Review 111/2008  The crisis in the 1930s, which severely affected the Norwegian economy, led to changes in views regarding economic policy. The parity policy experience was probably an important reason for this change. As a result, there were few objections when after liberation in 1945, the government with the Storting’s support made decisions that under the law were the responsibilities of the central bank. This was the start of a new era of reduced independence for the central bank. The discount rate, for example, was reduced to 2.5 per cent on the recommendation of the government in January 1946. The Bank's task was to implement the government's decisions. Norges Bank nonetheless played an important role in shaping monetary policy, for example serving as an interface with international financial community and acting as adviser and facilitator. 4 In the first decades after the Second World War, it was firmly believed that the economy could be fine-tuned in the desired direction by coordinating instruments established by the central authorities.
Beyond this, also banks’ management bodies – both in their managerial and supervisory function – have an impact on banks’ governance, performance and sustainability. I will now first focus on this  other dimension of governance: the role and composition of banks’ boards. Role and composition of banks’ boards Banks’ management bodies have an array of important responsibilities. They set the bank’s risk appetite and ensure that it is adhered to at every level of the institution. They ensure that any material risks to which the bank is, or could be, exposed are identified, monitored and mitigated. And they are responsible for communicating the bank’s strategic objectives, risk appetite and values, not only to external stakeholders through transparent disclosures, but also internally within the bank. In particular, management bodies play a key role in steering the strategic course of a bank and setting it on the path towards sustainable long-term objectives. Especially in times of crisis, a well-governed bank, with a clear understanding of its main risks and core revenue sources, is likely to adapt more quickly and perform better. First with the pandemic and now with the war in Ukraine, but also in the face of the climate and environmental crises, it is important that banks and their boards have an active strategy to tackle the challenges arising from events that can have a significant economic impact. As for the composition of banks’ boards, and given their importance, the ECB pays particular attention to assessing their collective suitability, diversity and effective functioning.

All this is not enough, but you should not doubt France too much, even in this election year. The soundness of our political institutions and majority system represent lasting advantages. From its significantly more positive economic situation, Germany should also continue with reform: demographic change is likely to result in a decline in the working population – and the present inflow of refugees will not change this to any significant extent. This means that growth will slow in the long term. However, it is obviously not for me to advise measures for your country. At European level, our competitiveness will depend in particular on creating a large digital single market. I know that when the French speak of coordination in Europe, Germans sometimes suspect it to be a new trick to avoid reform. We must break out of this dead-end: we need both national reforms and European coordination. As Helmut Schmidt repeated frequently, we must build economic union as well as monetary union. But this does not in my view mean a “Union of Transfers”, which Germany quite legitimately refuses. The second growth lever: create in parallel what I call a “Financing and Investment Union” (FIU). Why? Because numerous businesses in Europe wish to invest and innovate but are unable to find appropriate financing. Still, the funds are by no means lacking: the euro area has a savings surplus of 350 billion euro, i.e. more than 3% of GDP. The FIU would facilitate the mobilisation of these abundant savings towards investment.
But the detail of individual measures needs to be right too, to avoid perverse incentives which may lead to unintended consequences. When we started exploring reforms to the MA last year, stakeholders raised concerns about the potential for increased volatility in balance sheets. Our interaction with firms has helped to develop our thinking. In our DP, we outlined a new, less volatile design for the credit risk premium (CRP) component of the FS, and last week launched a targeted data collection exercise[8] to help understand the impact of that design, and various calibration choices that might be made within it. The aim is to achieve a valuation representing an accurate transfer value of matched portfolios of liabilities and credit assets, as well as the Solvency Capital Requirement (SCR) acting to absorb changes in those transfer values in a 1-in-200 stress over one year. This outcome is of the utmost importance for a tailored UK regime, given the nature of the products offered and the breadth of credit invested in by insurers. In the DP, we set out the PRA’s current views about the overall calibration of the CRP, including features such as averages, caps and floors to mitigate its volatility, and that the reasonable range for CRP sits between 35% and 55% of credit spreads through the cycle. This does not imply that all of the elements of the CRP need to be set at 35%.

However, the review does give an opportunity we are seizing, to deal with those areas of Solvency II that we know are not working as well as they could. Sam Woods and I have both previously discussed the PRA’s concerns relating to the current regime[2] [3]. Taken together, the improvements we want to make represent an important set of reforms and can achieve the objectives of the review. Page 3  Objectives for the Solvency II review The Government set three high level objectives for regulatory reforms, namely: 1. to spur a vibrant, innovative, and internationally competitive insurance sector; 2. to protect policyholders and ensure the safety and soundness of firms; and 3. to support insurance firms to provide long-term capital to underpin growth, including investment in infrastructure, venture capital and growth equity, and other long-term productive assets, as well as investment consistent with the Government’s climate change objective. These Government objectives are aligned with the PRA’s two primary statutory objectives of safety and soundness of regulated firms, and protection of policyholders. The PRA’s statutory objectives are reflected directly in one of the Government’s review’s objectives, and they underpin the other two: only a financially sound insurance sector can provide sustainable contributions to long-term investment. Similarly, the sector’s competitiveness depends on its operating under a robust prudential regime.