samchain/econo-pairs-v1 huggingface dataset:
Consequently, investors remain ignorant of the precise condition of the intermediary to whom they are lending, or of the securities that back their loan. However, once conditions worsen, suddenly the nature of the debt changes, in that the people and institutions that hold the debt  9  See Greenwood, Hansen, and Stein (2010, 2015), Krishnamurthy and Vissing-Jorgensen (2012), and Carlson et al. (2014). 10  This finding is further supported by the finding that the share of safe assets in the economy has been relatively steady since the 1950s. Others confirm those results and show that the substitution of privately-created shortterm debt for the Treasury’s supply of short-term debt has been a consistent feature of the U.S. financial system since 1875. See Gorton, Lewellen, and Metrick (2012), and Krishnamurthy and Vissing-Jorgensen (2015). 11  See Dang, Gorton, and Holmstrom (2009, 2012). 6  BIS central bankers’ speeches  realize they must expend resources to monitor their borrower. But, at that point, they are not in a good position to monitor that firm, so they simply refuse to extend the loan to it when the loan comes due, greatly amplifying the initial cause of the need to monitor further. This has the effect of the old-style bank run: suddenly the financial intermediary is caught short of the ability to finance its portfolio, and must reduce its indebtedness quickly, again, possibly triggering fire sales and creating negative externalities to others.

Measures to gradually open up the equity market to foreigners are also underway. In 1997, foreigners were allowed to participate in Saudi equity market through a country fund, the Saudi Arabian Investment Fund (SAIF), instituted in London. Since November 1999, foreigners have also been allowed to participate in Saudi equity market through open-ended mutual funds offered by Saudi banks. GCC citizens are permitted to directly participate in the Saudi equity market. In 2006, expatriates residing in the Kingdom have been permitted to invest directly in the stock market. There are no restrictions on foreigners' investment in government securities. The role and participation of regional and international banks in the Saudi financial market has evolved over time. Many international banks had presence in Saudi Arabia since the 1950s and their contribution in developing the banking system has been significant. Many other regional and international banks have also been active both as borrowers and lenders to Saudi counterparties. In the 70's and 80's, their main role was to act as a conduit for transferring the surplus funds and liquidity in Saudi Arabia to international financial markets. However, with the expansion of economic activity and increasing demand for credit, many regional and international banks have participated in direct and syndicated loans to Saudi private and government sector and invested in government securities. Looking ahead, the government has identified the expansion of Saudi economy as a major objective to meet the expectations of a rapidly growing labor force.
And the Bank, through the Prudential Regulation Authority, supervises the banks, insurance firms and broker-dealers active in financial markets. Given the FX market’s global importance, it is vital that it operates to the highest standards. Those standards fell unacceptably short in the years running up to, and following, the financial crisis. And that is why in 2015 the Fair and Effective Markets Review (FEMR), which I led, called for a new global Code, setting out principles to promote the integrity and effective functioning of the market. That Code was launched two years later, here in London, and is now overseen by a Global FX Committee, comprising public authorities and market participants from 18 countries around the globe.1 As of mid-June, the Global Index recorded over 900 public commitments from organisations across all geographies and sectors of the market to abide by the terms of the Code2. Perhaps the most depressing aspect of past FX abuse was the light it threw on historic behaviour in parts of the market, called a ‘bro-culture’ by some,3 in which inappropriate, sometimes illegal, behaviour became the norm through a process of what we termed in FEMR ‘ethical drift’. Groups calling themselves the ‘A-team’, the ‘3 Musketeers’ or (perhaps more aptly) the ‘Semi-Grumpy Old Men’ attempted to pervert the multi-trillion dollar foreign exchange market on which everyone in the world in one way or another depended. For some of those active in the industry at that time, the culture from which this extreme behaviour emerged may have seemed wearingly familiar.

I should also note that evidence on the impact on productivity resulting from greater working from home is not clear (Barrero et al., 2020 and Haldane, 2020). Reduced travel time is a positive, but there may be lower innovation and creativity which would otherwise come from people being together more. I want to finish this section on the economic implications of Covid by highlighting two longer-term and important developments, both of which pre-date Covid, and neither of which is helpful. First, the UK has experienced a fall in the average rate of growth, reflecting slower growth in potential supply capacity. Chart 3 illustrates the four-quarter GDP growth rate since 2000. It is apparent that the average growth rate has fallen from around 2.5% in the years before the global financial crisis, to around 1.5% in the period immediately prior to the Covid pandemic. Chart 4 shows the same timeline for aggregate labour productivity per hour over the last twenty years. Again, the story is not encouraging. Another way of representing this, is to note that the level of activity in the UK following the global financial crisis is significantly below its level at the equivalent stage following the 1930s Depression (Haldane, 2021). Issues arising in the recovery from Covid  I want to return now to the four important points I set out at the start. First, Covid has been a shock to both demand and supply in the economy. Using an output gap measure on its own fails to capture the importance of this story.
Real interest rates in Japan are probably higher than warranted by the state of its economy. But the effects of further monetary easing are not expected to be decisive. Nor is it clear that fiscal stimulus will lift the economy on a sustained basis. 11. The biggest drag on the Japanese economy is its demographics. Japan’s working age population has been growing by just 0.2% per annum over the last ten years. Together with a declining participation rate, the labour force has contributed negatively to GDP growth in almost every year since 1998. A firm turnaround in the Japanese economy requires a sustained increase in productivity, which entails structural reforms to enhance product market flexibility and spur competition and innovation in the services sector. Emerging Asia: the rise of domestic demand 12. In comparison, Emerging Asia has weathered the financial storm best, with the region’s total production now one-third higher than what it was in 2008. 13. China secured a quick and vigorous rebound from the depths of the global trade collapse in early 2009. It has since reined in inflationary pressures and indications are that it has achieved a “soft landing” of its economy, registering an estimated 7.8% growth last year on the back of solid consumer demand and infrastructure investment. While China faces significant economic restructuring challenges, its impressive growth trajectory appears intact for now. 14. India too rode through the global financial crisis comfortably but is now going through a weak patch.

But if it regains its reform momentum and begins to address its infrastructure deficit, growth should pick up to levels closer to those seen in the last decade. 15. In the ASEAN–4 economies of Indonesia, Malaysia, Thailand and the Philippines, domestic demand has displayed surprising resilience. This has held up economic growth, despite prolonged weakness in external demand and continuous terms-of-trade shocks. 16. But Emerging Asia is also not without its risks. While the advanced economies are deleveraging, Emerging Asia is re-leveraging. Credit growth has been climbing steadily, from an average 8% in 2009 to 15% in 2011, before easing to 12% in last year. The private  2  BIS central bankers’ speeches  credit-to-GDP ratio for the region, at 120%, is higher than during the Asian financial crisis. There is good reason for policymakers to be on their guard. Macro policies: the unfinished agenda 17. So, where is the global economy on its post-crisis journey? While economic prospects for 2013 look slightly brighter and tail risks have diminished, the global economy and financial markets remain fragile and vulnerable to shocks. 18. But this halfway point provides us, perhaps for the first time since the crisis, the opportunity to look ahead and pose the question of what is required to ensure a smooth return to normalcy. •  The advanced economies need to achieve fiscal consolidation alongside economic growth and chart an effective exit strategy from unconventional monetary policies.
7  All speeches are available online at www.bankofengland.co.uk/speeches  7  My colleague Ben Broadbent has suggested that one effect of the crisis and perhaps of other changes in the world of work and in workers’ perceived pricing power has been to lower or remove that ‘norm’. 15  I suspect changes in workers’ perceived pricing power and perhaps their appetite for risk have been responsible for some of the behaviour of pay and employment post crisis. If this has happened, and I will come onto why it might have done in a moment, the effect could indeed have been to lower the Phillips curve. With one caveat, the policy implications of a lower Phillips curve are the same whether the driver is a lower natural rate, lower/more anchored inflation expectations, or some change in real pay increase norms net of changes in productivity growth. The evolution of unemployment and pay growth will trace the same shape of curve, but pay growth, and hence domestic inflation pressure, will be lower for any given level of unemployment. All else equal the policy maker can therefore tolerate a lower level of unemployment before worrying about domestic inflation pressure in the pipeline. The caveat, and it is a very important one, is that if the Phillips curve has been lowered by the anchoring effect of central bank credibility on inflation expectations, attempting to exploit that change might damage the central bank’s credibility and increase expected inflation, shifting the curve back up again.

And, in my view, there are certain features of U.S. law that might give rise to conflict between organizational values and FCPA compliance. The Foreign Corrupt Practices Act was enacted in 1977, and it represents a Congressional response to revelations of widespread bribery of foreign officials by U.S. companies. One purpose of this legislation is stopping official corruption. Then, and continuing to the present time, the United States led the world in enacting laws designed to stop official corruption, and perhaps more importantly, in enforcing these laws. Let me say that, as an American lawyer who spends significant time outside the United States, this is a part of our legal infrastructure that I take pride in. With all of that said, there is one part of the FCPA that makes me uncomfortable. The FCPA’s bribery prohibition, and the compliance officers in the audience will know this well, contains a narrow exception for “facilitating or expediting payments” made in furtherance of 2  BIS central bankers’ speeches  routine governmental action. Some of the cynical among you might know this provision as permitting so-called “grease” payments for non-discretionary acts, like processing visas or providing phone service. But, let us face it, this statutory exception permits a certain limited form of governmental corruption. While I understand that the exception is grounded in a practical reality, I feel that zero tolerance for official corruption would have been a better choice.
So what could account for the recent poor productivity performance? One possibility is that the weakness of measured productivity growth may exaggerate the true extent of underlying weakness. Let me explain. An encouraging aspect of the recent recession is that although unemployment increased, it rose by far less than we might have feared given the depth of the recession. The recent data on employment and unemployment are worrying in that context, with unemployment edging up over the summer, after having previously fallen by over 50,000 from its peak in early 2010. If this weakening in the labour market continues that could materially change the relationship between output and employment. But to date, companies appeared to have held onto a greater proportion of their labour force than in past recessions. My own experience of speaking to businesses at the depth of the recession is that this was driven by a desire to retain valuable skills and experience. Many companies had learned from past experience how difficult it is to re-employ skilled workers once let go. But a consequence of this labour hoarding is that the amount of output produced per worker fell very sharply, in many cases partly because working hours were cut back. And although there has been some rebound since then, the level of labour productivity has still not recovered to its previous level. This greater retention of labour suggests that firms may be sitting on a substantial degree of spare capacity.

Since then, MAS has been actively refining the regulatory framework and approach. We are currently undertaking a comprehensive review to enhance the risk-based capital framework, taking into account evolving international standards and market developments. In particular, we are seeking to improve the comprehensiveness of the risk coverage and the risk sensitivity of the framework. Conclusion Let me conclude. The operating environment – be it for individuals or enterprises – is becoming more complex and uncertain. Managing risk has become an increasingly important part of our existence, and doing it well has become a key determinant of success. Insurance – at its core – is about managing risk. You are in an industry that serves a larger public purpose. You are also in an industry that has great promise. Asia offers tremendous opportunity for the insurance industry. As the leading insurance and reinsurance hub in Asia, Singapore is well-equipped to serve the growing needs of the region. But to become a global marketplace for insurance, we have to continually reinvent ourselves. The industry’s support and partnership are critical to the achievement of this vision. Let us work together to build a truly global insurance marketplace in Singapore. Thank you. 6  BIS central bankers’ speeches
Benoît Cœuré: Why the euro needs a banking union Speech by Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, at the conference “Bank funding – markets, instruments and implications for corporate lending and the real economy”, Frankfurt am Main, 8 October 2012. *  *  *  I would like to thank Carmelo Salleo for his contribution to the speech. I remain solely responsible for the opinions expressed herein. Introduction Ladies and gentlemen, It is a great pleasure to be here with you this evening as part of this conference. I firmly believe that good research underpins policy choices and, as you know, the European Central Bank (ECB) is very committed to carefully conducted, high-quality analysis as the bedrock of its decision-making. Bank funding has been the focus of policy-makers’ concerns for the past few years, ever since the collapse of Lehman Brothers, which brutally reminded us all of the systemic dimension of liquidity and funding risk. Such a cataclysmic event elicited a host of responses, ranging from central bank interventions to prevent a meltdown of the financial system to the design of new regulations to limit risk-taking by financial institutions. The shock was global – and the response has been global. However, much work still needs to be done, so I welcome opportunities such as this conference to gain a better understanding of the dynamics and determinants of bank funding and of their implications for the financial system and the real economy.

Finally, in order to cut the ties between individual sovereigns and banks and achieve a fully integrated banking system that mirrors and supports a fully-fledged Economic and Monetary Union, we need to construct a banking union. Let me first define what I mean by a banking union. It is an institutional framework which ultimately should have three legs: a single supervisory mechanism (SSM), a common resolution structure and a shared deposit insurance. The SSM would bring all supervisory decisions about euro area banks under one roof, at the ECB, allowing supervisors to take into account externalities and general exposures to systemic risk. The common resolution structure, with a unified resolution regime and single resolution fund, would manage efficiently the wind-down even of large cross-border banks. Shared deposit insurance would reassure depositors that their money is safe in any euro area bank, regardless of its country of operations or legal domicile. These three elements, when operational, would effectively sever the link between banks and sovereigns, and support the functioning of the EMU. Euro area institutions would be responsible for the euro area banking system, and the euro area sovereigns as a whole would back it. What I would like to stress here is that the banking union, agreed upon by the Heads of State or Government at the end of June, is both a game changer for the crisis and a leap forward for Europe. It will change the dynamics of investors’ decisions.
This thinking lay behind the Committee’s decision to issue a statement after its July meeting that the recent upward movement at the near end of the yield curve was “unwarranted”. More generally, the explicit guidance provided in August should also serve to emphasise that UK monetary policy decisions are taken with reference to the domestic outlook and will only be influenced by developments elsewhere in so far as they affect that outlook. There is mixed evidence thus far on whether guidance has helped to de-couple movements in UK short-term rates from those overseas. The prime exhibit against this having happened is the high degree of correlation between UK and US interest rates at the time of the FOMC’s unexpected decision at its meeting on 17/18 September not to begin to taper its asset purchases. As far as market participants were concerned, this was surely primarily news about the FOMC’s policy reaction function, not about the US economic outlook. So it ought also to have had little impact on UK interest rates. As Chart 7 shows, however, the movement in UK one-year interest rates two years ahead was almost as large as for the corresponding US series. That, together with the high co-movement prior to the September FOMC meeting when US interest rates rose, suggests that market participants may have not yet grasped the extent to which decisions over the level of Bank Rate will be driven by the domestic outlook. There is, however, other evidence which suggests that some de-coupling may have taken place.

39 As an example, recently we collaborated with the Asian Bureau of Finance and Economic Research (ABFER) and NUS Business School to bring together global academics for our Workshop on Digital Currency Economics and Policy. I encourage more of such forums. In fact, I would not be surprised if the themes I have touched on have been discussed in research forums and this Cavalcade. 40  Thank you. 5/5  BIS central bankers' speeches
At the outset, let me say that I do not have all the answers and do not mean to suggest that these are the only areas that need improvement. But, these issues are ones where more investigation into possible solutions may be warranted. As I discussed earlier, we have made substantial progress in raising banks’ capital buffers. But, I believe it would also be worthwhile to evaluate other changes to our capital regime to encourage earlier action by banks when the economic environment deteriorates. Banks are naturally reluctant to raise capital due to concerns about stigma and potential equity dilution. This hesitancy was demonstrated clearly during the financial crisis. Bank management may also delay such a move because they may be prone to over-optimism about the outlook for their firm or the economy. There is also an externality problem, as a bank does not internalize the benefit that accrues to the financial system when it takes steps to strengthen its own financial condition. Although supervisors have tools available in such circumstances, these require a safety-andsoundness basis that may not always be available in a timely manner. Changes in the 2018 Comprehensive Capital Analysis and Review program enable banks to avoid a Federal Reserve Board objection based on the quantitative assessment by raising new capital. While this is a step in the right direction, the current regime may not be sufficient to ensure that banks will raise capital more proactively. Compensation is also a powerful incentive.

The financial crisis is a vivid reminder that there can be many risks to financial stability, and of the need for strong internal and external constraints on banks. Here, the “three pillars” of regulation, supervision, and bank culture must all play effective roles. Regulation establishes what is legally permissible for banks to do; supervision helps to reinforce those rules and evaluate whether the bank’s controls and other processes are conducive to safety and soundness; and bank culture sets the norms for what is appropriate behavior. 9 But, at the same time, these pillars are mutually reinforcing. Regulation and supervision, for example, attempt to address various market failures in banking that can contribute to excessive risk taking.10 Bank culture, in turn, helps establish norms in areas where regulation may be silent. In this way, regulation, supervision, and bank culture are complements, and deficiencies in any of these pillars can be problematic. For example, as we have seen in cases of unsafe or unethical behavior in recent years, strong regulation and supervision cannot substitute for deficiencies in bank culture—especially not on a timely basis. It is the public sector’s job to establish and enforce rules, but rules are inherently limited in their ability to constrain conduct and behavior. Much of our regulatory regime has been developed in response to financial problems that have arisen over time. Because regulation is typically reactive in this way, it may not always keep pace with the evolution of the financial system or the broader economic environment.